In any governmental transition, the leadership at the U.S. Department of Housing and Urban Development (HUD) is important, but this time it might be especially crucial. After all, we're in the midst of a pandemic that has caused widespread unemployment and sent the country into a recession. A federal eviction moratorium is set to expire at the end of 2020, and many people could become homeless.
Biden has made affordable housing part of his platform. He committed to spending $640 billion over the next 10 years to make sure people have access to affordable housing. In November, he announced a transition team for HUD that had many people buzzing about who the next leader of HUD might be. In what was a bit of a surprise, President-elect Biden has selected Marcia Fudge, a Democrat and the Congressional Representative for the 11th District of Ohio. The 11th District includes areas between Cleveland and Akron. Fudge was expected to be on the shortlist to be the secretary of agriculture, and a month ago, when making her case for that position, she said, "You know, it's always ‘we want to put the Black person in labor or HUD.'"
Fudge seems to have changed her opinion on the job and she brings an interesting skill set to her potential new position.
Who is Marcia Fudge?
Rep. Fudge was first elected in 2008 in a special election after the death of Stephanie Tubbs Jones. She has served on the House Committee on Agriculture and House Committee on Education and Labor. She is also the Chair of the Committee on House Administration Subcommittee on Elections and Chair of the Committee on Agriculture Subcommittee on Nutrition, Oversight, and Department Operations. On her government website, she doesn't list housing as one of her core issues, but she has put a focus on alleviating poverty.
Fudge was the mayor of Warrensville Heights, Ohio, a suburb of Cleveland, for eight years. Representative Stephanie Tubbs Jones administered the oath of office when Fudge was sworn in as mayor. The two were friends from their time together in the Cuyahoga County Prosecutor's Office, and Fudge served as Tubb Jones' chief of staff when she first became a U.S. Representative. While Fudge was the mayor of Warrensville Heights, the city added 200 new homes.
What is she likely to focus on?
Fudge's role as the mayor of a suburb with a low level of homeownership and an above-average poverty rate may make her sensitive to the issues facing renters throughout America. She voted for the HEROES Act and has been an advocate for programs to support the poor. She has introduced a resolution to create a "Poverty Bill of Rights." That bill includes a right to safe and affordable housing.
One of her first initiatives may be to secure more funding for HUD. Last February, President Trump and current HUD Secretary Ben Carson released a budget that called for an $8.6 billion cut to HUD's funding. The proposal from the Senate puts HUD's FY 2021 spending at $59.5 billion, which would be $11 billion over the president's request but nearly $2 billion less than the proposal from the House.
Her most housing-centric piece of legislation during her tenure as a representative was being part of the creation of the Restore our Neighborhoods Act in 2013. The bill was designed to create bonds to demolish foreclosed and blighted homes in areas hardest hit by the last foreclosure crisis. Should the foreclosure rate rise again, it's likely she will be sensitive to how it could impact communities with a large number of vacant homes.
Another move may be to reverse a decision from Carson to terminate the Affirmatively Furthering Fair Housing (AFFH) regulation issued in 2015 during the Obama administration. It's likely that she will be looking at fair housing and how to expand African American homeownership, which tends to be lower than other groups.
Her biggest job may involve balancing the desire to protect renters from eviction with the need to make sure that landlords of Section 8 housing are made whole. A second government stimulus may provide some relief, but it's' likely that more interventions will be needed.
The Millionacres bottom line
Fudge may not have experience with many of the complexities of affordable housing, but her long-standing commitment to making lives better may help her steer HUD through what is likely to be a very challenging period. For investors, a well-funded HUD could mean more vouchers and programs to support landlords as well as aspiring homeowners.