HOUSING LEGISLATION OF 1964

WEDNESDAY, FEBRUARY 26, 1964

U.S. SENATE,

COMMITTEE ON BANKING AND CURRENCY,
SUBCOMMITTEE ON HOUSING,

Washington, D.C.

in room

The subcommittee met, pursuant to recess, at 10:15 a.m., 5302, New Senate Office Building, Senator John Sparkman (chairman of the subcommittee) presiding.

Present: Senators Sparkman, Douglas, Clark, Tower, and Javits. Also present: Senator Gruening.

Senator SPARKMAN. Let the committee come to order, please.

We have several Senators that are due to be here, but they seem to be late in arriving. In fact, our first witness was supposed to be Senator Gruening of Alaska, I think, though we cannot wait longer for him.

We will call Mr. Irvine H. Sprague, deputy director, Department of Finance for the State of California, accompanied by Alfred Stalford, special consultant on housing to Governor Brown, both of these gentlemen representing Governor Brown of California."

Gentlemen, we are glad to have you with us. You proceed in your own way. We have your statement, and, as you know, it will be printed in full in the record. You proceed as you see fit.

STATEMENT OF IRVINE H. SPRAGUE, DEPUTY DIRECTOR, DEPARTMENT OF FINANCE, STATE OF CALIFORNIA, AND ALFRED STALFORD, SPECIAL CONSULTANT ON HOUSING TO GOVERNOR BROWN, OF CALIFORNIA, SPEAKING ON BEHALF OF EDMUND G. BROWN, GOVERNOR OF CALIFORNIA

Mr. SPRAGUE. Thank you, Mr. Chairman.

We appreciate very much the opportunity of appearing here this morning.

Housing legislation I believe can be described as the No. 1 priority in the program of Governor Brown of California. He is totally and completely behind the work that this committee is doing. He offers whatever support he can in helping to get the votes that you need to get the program enacted.

He thinks that this is really a minimum program and would hope that in many areas you can expand and improve on what you are doing, recognizing, of course, the legislative problems involved.

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Senator SPARKMAN. May I say, Mr. Sprague, that we have had the privilege of having Governor Brown appear before the committee on different occasions. I know his deep interest in housing-decent, safe, sanitary housing-for every American family.

I notice that the statement you are presenting is really a statement for him.

Mr. SPRAGUE. That is correct.

Senator SPARKMAN. I wish you would extend our greetings to him and express our appreciation for his taking the time and the trouble to make his presentation to us.

Mr. SPRAGUE. As early as the first of the week the Governor had hoped personally to be here. As you probably know, the California State Legislature is now having its budget session, and he is involved in getting a good balanced budget for California today, and that had to take priority. That is the only reason he is not here. Senator SPARKMAN. No increase in taxes?

Mr. SPRAGUE. No increase in taxes.

Senator SPARKMAN. Things sound very encouraging these days. Mr. SPRAGUE. There are three points in summary of the Governor's

statement.

First, this legislation has his full support.

Second, whatever bill you finally write, he would hope that you have a major emphasis on housing for migratory workers, housing help for the low-income families, and for the elderly.

The migratory worker problem is acute at this time in California with the phasing out of the bracero program. We are going to have a critical period in California.

As to the present housing in California, surveys of last year showed that 80 percent of the farmworkers are now living in homes that are absolutely disgraceful. Thirty-five percent of them do not even have running water.

Senator SPARKMAN. What percentage was that figure you gave first? Mr. SPRAGUE. Eighty percent do not meet even very minimum housing standards.

Senator SPARKMAN. Is that migrant workers?

Mr. SPRAGUE. That is the farmworkers, including the migrants and those

Senator SPARKMAN. All farmworkers?

Mr. SPRAGUE. All farmworkers. It is a disgraceful figure.

When you run down the other figures, 33 percent do not have inside plumbing at all. The fourth of them have to go to a well for water, carry it sometimes hundreds of yards.

It is a situation that just cries for attention, and I know your committee is going to do something about it.

Mr. Stalford will have some specific recommendations on that in just a moment.

Third, for the record, I would like to point out that the Governor has supported and continues to support an exanded public housing program, urban renewal, community development planning, and also the new concepts that you are talking about this year, subsidizing of existing older buildings for low-income housing, and particularly the planning for suburban communities, a concept which will be of real importance to California.

We have a thousand new people moving permanently into the State every day, a thousand new babies born every day. Our population now is 17 million, and in 17 years it will be 28 million.

Senator SPARKMAN. By the way, last year when Governor Brown was before our committee he said that during the year-in fact, he

set the date for the 21st days of December when California would pass New York in population. I asked him if as a special favor to me he would not move that back to December 20, which was my birthday [laughter] and he did. But, now, did it?

Mr. SPRAGUE. Yes, it did, unequivocally.

Senator SPARKMAN. I will take your word for it.

Mr. SPRAGUE. There are still some statistical arguments going on, but as of now I think all concerned, including the Census Bureau, will concede that as of this moment California is first.

Senator SPARKMAN. I thought you ought to get that plug in. You may tell the Governor that I remembered his promise.

Mr. SPRAGUE. He will be glad to get that word. I am going out to see him tonight and I will tell him tonight.

Senator SPARKMAN. Good.

Mr. SPRAGUE. As you know, in 1961, the Governor appointed a special housing advisory committee which went into the housing program in some great detail. They now have completed their report, which spells out the problem and proposes solutions.

One of the solutions is to establish a State housing agency. The Governor has now before the legislature such a proposal, and we are hopeful it will be enacted.

The Governor, in anticipation of this, recently appointed Mr. Alfred Stalford as his housing consultant, and the best recommendation I can say for Al is that he has been in the business for 25 years and he knew it well enough to be retired at the age of 41.

At this point I would like Mr. Stalford, with your permission, to hit a couple of highlights of his specific recommendations that we feel should be considered by your committee. These should be identified as Mr. Stalford's recommendations.

Senator SPARKMAN. Very well. We shall be glad to hear from you, Mr. Stalford.

Mr. STALFORD. Thank you, Senator.

Our legislative suggestions in detail are attached as an addendum to the Governor's statement. I have highlighted each of the items, and if time permits I would like to go through them with just the pertinent facts to call your attention.

We have left the most important to last; namely, the agricultural housing for homebase farm labor.

The first item is urban renewal and concerns local noncash grantin-aid credits to the community.

Our problem is that facilities of communitywide service serving an urban renewal project area should not be excluded for credit as local noncash grants-in-aid as is presently done through administrative procedures.

The urban renewal program can be used effectively to encourage the development of rapid transportation systems. Before the Urban Renewal Administration will permit adequate local noncash grants-inaid for rapid transit improvements, it will be necessary for Congress to provide guidelines to the HHFA on the liberalization of providing such credits.

The next point is that under the Housing Act of 1956, title I of the Housing Act of 1949 was amended to permit a tax credit to be considered as a part of local cash grants in aid where land owned by a

local public agency in an urban renewal area was not subject to taxes and no payment in lieu of taxes was made with respect to it. Under existing procedures, however, and a ruling of the Bureau of the Budget, no grant-in-aid credit is given with respect to such taxes or payments in lieu of taxes after improvements on property acquired by the local public agency have been removed.

This has encouraged communities to delay the demolition of vacated buildings which become fire, health, and safety hazards. Communities not receiving tax payments or credits for taxes on cleared land not yet developed have tended to delay the undertaking of additional projects. This has resulted in an end-on-end approach to urban renewal projects where an overlapping program would be more appropriate.

Local redevelopment agencies across the country suffer from the criticism of taking land off the tax rolls.

The next point is early land acquisition. The Housing Act of 1949, as amended, provides for early land acquisition loans to communities in order to enable them to purchase land in project areas under planning prior to the execution of the project. However, the administrative provisions for these loans are extremely cumbersome and have proven unworkable in practically all communities of the country. The principal reason for the lack of use of these loans lies with the legal and fiscal problems at the community level of guaranteeing the Federal loan for early land acquisition purposes.

It is especially desirable for localities to be able to purchase land in proposed project areas during the 18- to 24-month average period required for planning a project. Such land could be used for demonstration purposes and especially for constructing housing for families or single persons of moderate income in order to allay the fears of residents about forthcoming relocations.

The next item is housing for individuals. The housing bill of 1964 establishes a responsibility toward single persons' relocation heretofore restricted to that of families. However, local agencies should not on the one hand be given an extra burden or duty yet denied the full use of practical tools to carry out that responsibility. This is done in the proposed legislation by difference of treatment accorded elderly versus other single persons.

This can be corrected by amending section 221 (a) of the National Housing Act to include all single persons for occupancy.

The above highlights another restriction in that the monthly rent. supplements under section 101 of the bill are not available to individuals under 62 years of age. Logic and consistency require elimination of the age limit in said section 101.

Next, Federal incentives for tax abatement. Through providing a noncash grant-in-aid credit to localities for part or all of any taxes foregone by a community through tax abatement, the Federal Government would be providing an incentive to the States to adopt legislation to provide for tax abatement or subvention for housing designed for those of low and moderate income.

The next item on urban renewal concerns FHA section 220. Nondwelling facilities in such projects are now limited to those facilities. as designed to serve the occupants and other housing in the neighborhood. Often the best economic use of the land is not utilized because of this limitation.

The next item concerns housing for low income. Section 221 (d) (3) created under the Housing Act of 1961 is the only insured loan program providing much needed rental housing for low and moderate income families. The full utilization of this highly desirable program has been restricted by a legislative requirement that these projects may only be built in a community having a workable program.

Currently, only a handful of California communities have workable programs in force, and, as a result, hundreds of thousands of low-income residents of California are denied housing units at rentals they can afford simply because, through no fault of their own, their community does not have a workable program.

I am in full accord with the principle of all communities adopting workable programs and energetically preventing the spread of blight, but the low and moderate income groups go without decent housing while their community fails to act.

Another problem exists in those communities having workable programs; namely, that present law requires the workable program be current at the time FHA is ready to issue its commitment. It has been brought to my attention that sponsors have filed applications with FHA when a workable program is current only to find that such workable program has expired by the time the FHA commitment is ready for issuance.

Sometimes the community has failed to apply to HHFA for recertification, and other times there are extended delays until recertification is approved. In either case FHA is barred from issuing its commitment, which has discouraged sponsors from entering the program.

In that connection we recommend that section 221 (d) (3) be amended to eliminate the requirement of "workable program."

On the subject of public housing, one of the main limitations of the program has been its rigid rent-limitation requirements for admission and continued occupancy. Income limitations have been responsible for frequent turnover in the projects and for giving the projects too institutional an aspect. Many eligible families refuse to apply for occupancy because of overfrequent review of their incomes and constant uncertainty of their tenure.

When a family improves its income, it should not be penalized by being forced to pull the children out of school, give up neighborhood associations and move back to a substandard unit. The tenant who earns more money should be permitted to pay a higher rent and cease to be subsidized.

Present Federal regulations permit participation by public agencies in the sections 202 and 221(d) (3) programs except in cases where the public agency receives its only source of income pursuant to the 1937 Housing Act.

Thus far, present law restricts the eligibility of local housing authorities for such projects. A clarification permitting local authorities to qualify for such projects as nonprofit agencies would help expand the available housing for lower income families.

Present Federal authorizations cover approximately 100.000 units for the whole country after allowing for the additional subsidy for housing for the elderly. It is manifest that this figure for national needs is inadequate and should be expanded by Congress-particularly if more urban renewal authorizations are made and more displacements effected.