5. The Federal Government's "take" on these programs is 12 percent of total funds. The taxpayer has had to put up $1 to cover Federal overhead for every $7.5 that has been returned to his community in subsidy funds money which should have stayed in the community in the first place.

Even if substantial reductions could be achieved in the Federal overhead costs, we estimate that they would aggregate about $7.66 billion for a fair-share subsidy program-an amount greater than the unpaid commitments, $7.2 billion-as of June 30, 1962. In other words, it would be less expensive to write off the present programs than to pay the huge Federal overhead on a fair-share program.

A conclusion which can be drawn from our study is that the Federal urban renewal and public housing programs are not meeting the basic problems, and are not serving the most vital purposes expressed by the Congress in the laws which established these programs.

In the Housing Act of 1937, as amended, the Congress said:

It is hereby declared to be the policy of the United States to promote the general welfare of the Nation by employing its funds and credit, as provided in this Act, to assist the several States and their political subdivisions to alleviate present and recurring unemployment and to remedy the unsafe and insanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of low income, in urban and rural nonfarm areas, that are injurious to the health, safety, and morals of the citizens of the Nation.

In the Housing Act of 1949, as amended, the Congress stated: The Congress declares that the general welfare and security of the Nation and the health and living standards of its people require housing production and related community development sufficient to remedy the serious housing shortage, the elimination of substandard and other inadequate housing through the clearance of slums and blighted areas, and the realization as soon as feasible of the goal of a decent home and a suitable living environment for every American family, thus contributing to the development and redevelopment of communities and to the advancement of the growth, wealth, and security of the Nation.

Because the urban renewal and public housing programs are not serving the intent of the Congress, the justification originally given can no longer be applied and, for this reason, the programs should be terminated, not expanded as proposed in S. 2468.

Evidence of abuses

Our third point is that there is increasing evidence of abuse in the administration of the Federal urban renewal program.

Among the examples of apparent abuse are those reported by a committee of the Congress-Subcommittee No. 4 of the House District Committee which examined the Columbia Plaza project in the District of Columbia.

A summary of the conclusions drawn from extensive testimony before the subcommittee and printed in the Congressional Record of December 19, 1963, on pages 24045 to 24049, include the following statements. (Appendix A contains the full text of the subcommittee summary but does not have the same page numbers as used in the Congressional Record.)

Subcommittee Chairman Dowdy said (p. 24047):

The testimony received during the hearings and the documentation examined by the committee revealed actions which raise substantial questions of legality and propriety.

.

Congressman Horton says about the investigation (p. 24046):

The evidence accumulated before that subcommittee of which I have the honor to be a member indicates that, in Columbia Plaza at least, the law has been misused. Reports from other cities suggest that similar abuses of discretion may have developed in other cities.

Mr. Horton says further:

* Subcommittee No. 4

* has uncovered enough abuses of the law to suggest that the appropriate committee or committees of the Congress, or a special committee created for that specific purpose, should make a thorough investigation of urban renewal.

In commenting on the eligibility of the Columbia Plaza urban renewal project, Subcommittee Chairman Dowdy said (p. 24047):

Testimony and documents indicate clearly that slum and blight did not exist to the extent of 20 percent. No slum residential structures were in existence at the time the project plan wa approved.

In stating an opinion on the creation of a special rule established by the Redevelopment Land Agency, the summary says (p. 24047):

The clandestine establishment and use of the 50-percent rule and the acknowledged aid and assistance of public officials in guiding the "chosen instrument" group appears to the committee to clearly indicate subversion of public powers and processes for private purposes.

Mr. Dowdy said (p. 24048):

The land appraisal procedures used create many questions of propriety.

In commenting on the financial responsibility of the redeveloper, the chairman said (p. 24048):

The first sentence of the draft carried the false statement that the builder had acquired the major land ownership in the project area.

The summary statement said this about the corporation formed to undertake redevelopment activities (p. 24048):

Examination of stock records was essentially futile. The stockbooks were stated to be lost *** shares called in and canceled were likewise lost. Although several parties were not stockholders in the early months of the corporate existence, the shares presently issued are all dated as of the date of the first corporation meeting.

The summary report also says (p. 24048):

At this point in the examination, the committee would find that there was no legal basis for establishing an urban renewal boundary or for the subsequent approval of an urban renewal project.

Near the end of the statement, the subcommittee chairman says (p. 24048):

In any other area of contractual relationships with Government agencies, the selecting out of a "chosen instrument" with rules known only to such party, accompanied by the advice, counsel, and coaching to include an agreement which dissipates public funds, such would be labeled collusion or conspiracy.

Other members of Subcommittee No. 4 of the House District Committee have added other statements expressing general concern about the conduct of the Federal urban renewal program.

Congressman Harsha said (p. 24049):

During the course of the hearings on Columbia Plaza we had occasion to hear some testimony from my State of Ohio which seems to confirm the impression that conditions found in the District are national as well as local.

Mr. Harsha also said, in connection with the investigation of the abuses of the Columbia Plaza project (p. 24049):

They impose upon us an obligation to investigate this matter further and to reexamine the entire content of the urban renewal legislation.

Congressman Widnall said (p. 24049) :

Any one of these developments, in my opinion, would be sufficient for an indepth study by the Urban Renewal Administration as well as the Congress. These statements concerning the abuses of the Federal urban renewal program add to the national chamber's concern about the centralization in the Federal Government of responsibility and authority for dealing with community problems of growth and change. These statements which originate from an investigation by a congressional committee militate against the expansion of the Federal urban renewal program as provided by section 304 of S. 2468.

Procedures for local leadership in community development

We want to make very clear that the national chamber is in favor of progress in community development. We are fully aware of the population explosion and the technological change which are affecting the people in urban areas. We recognize that the renewal of the older areas in our cities is necessary. We are for more and better community planning.

We also want the most effective methods used in community development effort. We are certain that significant change and improvement in community development techniques has taken place during the last 15 years and that further improvements in procedures may be possible.

Our fourth argument against further centralization of Federal power over communities is that communities can do a better job of housing and renewal through the use of their own resources.

Communities are the centers of wealth. They are the centers of leadership. These are the resources needed to solve local problems of local development.

Federal Government direction of local development is not needed and, furthermore, cannot be as effective as local decisionmaking.

The action proposed in S. 2468 would not take advantage of all the improved ways to meet urban problems. In fact, S. 2468 would perpetuate certain patterns and procedures which now stand in the way of progress. We have better procedures with which the outmoded Federal patterns should be superseded.

We have developed new concepts which are basic to the formulation of community development plans and to the development of projects. These new concepts are stated in the book, "Basic Decisions in Community Development," on pages 23, 25, and 26. The six concepts are shown in the appendix B of this statement.

On the basis of these concepts the national chamber has developed a new division of labor in public affairs. It makes possible the mobilization of more local resources than ever before for the selection of community goals and the establishment of action priorities among all the problems with which a community may be faced. The new division of labor helps secure widespread public understanding and support without which community development programs cannot succeed.

The Federal Government approach to community improvement fails to utilize the faster, better, and less costly methods now available. The postive program created by the national chamber can be applied to any community. It is described in the attached brochure. Copies of each of these publications described in this brochure will be made available to the clerk of this committee. The materials to which I refer are these four publications.

Mr. Chairman, I wish specifically to state that section 202 of the bill-the Davis-Bacon provisions applying to housing is also opposed by the national chamber although not so stated in this statement.

Our summary

The national chamber supports the concept of local responsibility for the solution of community development problems-problems involving industrial and commercial development, housing, transportation, and community facilities and urban renewal.

We conclude that the public interest is not served by enlarging the Federal control over communities through the increase of urban renewal and public housing subsidies.

The national chamber opposes the centralization of authority and responsibility for community development and, therefore, opposes sections 304 and 405 of S. 2468.

This position is based on policy of the national chamber which was reviewed by appropriate committees in 1963, reaffirmed at the May 1963 annual meeting, and approved by the vast majority of local and State chambers of commerce, trade and professional associations, and business firms whose members contribute significantly to community leadership in our Nation.

For these reasons, the national chamber opposes sections 304 and 405 of S. 2468.

We will be pleased to answer questions of the members of the committee.

Senator SPARKMAN. Thank you very much, Mr. Steiner. You have packed a lot into that statement. We appreciate it.

Senator Bennett?

Senator BENNETT. I have a list of questions here, Mr. Chairman, which were given to me by Senator Tower who is not here today. I would like to ask them, with the understanding that in some cases the witness may not be able to give the verbal answers but would like to take the question home and submit a written answer.

Senator SPARKMAN. Very well.

Senator BENNETT. The first question: What substitute do you have for public housing?

I suppose your answer is this information you have been giving us, and this book to which you referred?

Mr. STEINER. Yes, sir; that is part of the answer. My two associates are well skilled in these separate fields, Mr. Hallenbeck having made this extensive study; Mr. Evans having traveled the country and counseled with many community leaders. I would like to ask Mr. Evans to comment on your question.

Mr. EVANS. Senator, this basically involves the comparison between the present public housing program and possible alternate programs. I would like to comment first on the present public housing program and some of the things that we are particularly concerned about there.

The first thing is, and I think that this has been conceded even by proponents of the public housing bill, that public housing does not take care of the lowest income families. They have a problem that can't be met by public housing. So public housing is not a complete answer. This can be documented to a considerable extent.

A second thing that we are very much concerned about is the discretion that has been allowed to develop in the selection of the people who are admitted to public housing. The administrators of public housing have to develop a rent pattern. And this enables them in some instances to allow people with annual incomes or more than $8,000, to be eligible for admission to public housing projects.

This discretion in the selection, in the creation of the pattern, frequently creates long waiting lists. I understand that there are at least 6,000 here in the District of Columbia who are waiting for reconsideration of their applications to public housing.

If this kind of discretion is exercised in a political atmosphere, and the indication is that, if you want to be selected you had better be right politically, it becomes a tremendous tool to be used by a party in power to maintain itself in power.

At the other end of the public housing eligibility list are the people who have been admitted to public housing but who used to be automatically ejected when certain income limits were reached. The Congress in its wisdom has seen fit to create discretion there to say that, under certain circumstances, the people who run public housing can allow individuals to stay in public housing after they have ex

ceeded those limits.

This discretion again creates great pressures on the people who are there and who in some cases have a differential which may be as high as a hundred dollars a month between being allowed to stay in public housing and having to go out and seek private accommodations. And they will try to be right politically in order to continue their eligibility for public housing.

Now, let's go over to the other side and see what possibilities there are for meeting this problem in ways other than the public housing pattern.

From the point of view of construction, the experiment by the National Association of Home Builders with section 221-D(3) may help, to the extent that new construction can help. We understand the National Association of Home Builders has a demonstration underway in Tulsa which is very promising.

We are, however, thoroughly convinced that to take care of the majority of these people, existing housing must be used.

My final point in answer to the question would be this: that studies in the field indicate that the development of a program of housing, which is just structures as such, will never solve this problem; because even the best structures, if they are permitted to exist in a slum, will soon deteriorate to the point where they are substandard.

Conditions exist in many cities where neighborhoods, which normally could become substandard, have not been allowed to become substandard because the people in these neighborhoods have said, "We are going to organize and maintain them on a basis so that they won't be slums."