President-Elect Barack Obama announced New York City housing chief, Shaun Donovan, as his choice for the Secretary of Housing and Urban Development.
Donovan has an extensive background in affordable housing issues, including a stint as a Deputy Assistant Secretary at HUD during the Clinton years, overseeing multifamily housing policy.
It appears that he has a reputation for being pragmatic and open to innovative housing policies. He has been a proponent of inclusionary zoning–a scheme whereby builders get to build at a higher density if they dedicate a small percentage of units to affordable housing. The effect is to soften the burden of high housing costs to working families in hot real estate markets.
He has also encouraged architectural innovation and quality design in public housing construction in New York–perhaps stemming from his architectural training.
He does come to the job with some potentially controversial opinions. He has been an advocate for lowering the cap on the tax subsidies given to home owners who deduct their local property tax and mortgage interest. As it stands, deductions up to a million dollars can be taken. It has been reported that Donovan argues that by lowering the subsidy excess funds could be used for affordable housing projects.
Calls for reducing or eliminating the deduction for mortgage interest and property taxes have been heard for a long time. Most recently the call came from Bush’s tax reform advisory panel. You probably didn’t hear about it since this tax subsidy is one of the most cherished by middle- and upper-middle class voters.
It will be interesting to see if Donovan calls for this type of tax reform to fund affordable housing. It will certainly not be politically popular and such a position can be easily spun by critics to the point of irrationality. But, the subsidy is a bit absurd–a million bucks is quite a bit of money; plus you can deduct the interest on your second home.
Given that the HUD director doesn’t have much influence over tax policy, Donovan’s opinions on this issue are probably superfluous. But it wouldn’t be surprising to see a cantankerous senator bring it up during his confirmation hearings.