under the proposed Section 23 program be required to assume the responsibilities, risks and relationships with the Indeed, renting families normally assumed by private owners. considering that owners can call upon the LHA's for eligible applicants and are assured of the difference between what the families can pay and fair market rents, owners willing to provide acceptable housing at a fair market rental should find the program attractive.

As to the technical legal authority to issue the regulations for the revised program (in additon to the general authority under Section 7 (d) of the Department of Housing and Urban Development Act (42 U.S.C. 3535 (d)), we rely on the provisions of Section 10 (b) of the United States Housing Act (42 U.S.C. 1410 (b)) as follows:

Annual contributions shall be strictly limited
to the amounts and periods necessary, in the
determination of the Authority (HUD), to assure
the low-rent character of the housing projects
involved. Toward this end the Authority (HUD)
may prescribe regulations fixing the maximum
contributions available under different
circumstances, giving consideration of cost,
location, size, rent-paying ability of pro-
spective tenants, or other factors bearing upon
the amounts and periods of assistance needed
to achieve and maintain low rental. Such
regulations may provide for rates of contribution
based upon development, acquisition or

administration cost, number of dwelling units,
number of persons housed, or other appropriate
factors.

We will be pleased to answer any further questions.
Sincerely,

Rovert Rott

Robert R. Elliott

Acting General Counsel

34-636 O-74-3

RUNOUT COSTS OF HOUSING SUBSIDY PROGRAMS

Mr. TALCOTT. Millions of poor Americans have been provided with a decent place to live under our housing programs. My concern is at what cost to the taxpayer? What do you expect the total cost to be over the next 40 years to the Federal Government for the housing programs that we have? You mention two in your preliminary remarks. They amounted to some $80 billion, and Secretary Moskow in some of his statements has said there could be a total of $86 billion for some of the subsidized housing programs.

That is not all inclusive. That is only for two of the programs, as I understand it.

Secretary LYNN. No; I don't think that is quite right. This includes sections 235, 236, rent supplement, and public housing, both owned and leased, and section 221 (d) (3), below market interest rate, and section 202. That is only through fiscal year 1973.

In other words, by that I mean for those that we commenced payment on that we have programed reservations on through fiscal year 1973-the figures are a range from $60-plus billion to about $81 billion. There are additions to that. One thing I might mention is operating subsidies on public housing which are not included at all in those range figures that I have given you.

Another group of dollars that will be added are for the things we have had program reservations on since the beginning of fiscal year 1974. The figures are substantially higher than these.

Mr. TALCOTT. It could range up to $100 billion?
Secretary LYNN. I would certainly think so.

AVERAGE PER UNIT RUNOUT COSTS FOR PUBLIC HOUSING

Mr. TALCOTT. Can you give us the annual cost per public housing household which taxpayers are forced to pay? We have an overall picture of the range from $60 billion to almost $100 billion, but that is the total. How does it relate to each individual unit?

Secretary LYNN. Runout cost per unit on public housing?

Mr. TALCOTT. Yes.

Secretary LYNN. On public housing, our figures show on an owned public housing unit, as opposed to leased, a runout figure of about $31,000. Mind you, this is an average figure over a period of time, which means that you have some units that are included in there at much lower cost than you have under present construction circumstances.

These figures do not include, Congressman, the indirect costs involved. These are only the amount of subsidy that we pay out directly one way or another out of tax dollars. It does not include tax revenues forgone through the tax-exempt financing that local public housing authorities use. You should have to add a substantial amount of money to that.

EFFICIENCY OF LOCAL HOUSING AUTHORITIES

Mr. TALCOTT. Some of us were interested in local housing authorities and their function and their costs. The local housing authorities in some sections of the country performed admirably.

Secretary LYNN. I agree with that.

Mr. TALCOTT. In other sections they performed almost scandalously. The reason that we terminated a lot of the housing programs was because of the bad performance in some places. This penalized the housing programs in areas that were performing very well. We had the investigative staff make an investigation of local housing authorities which indicated large ones were generally run ineffectively and are very costly. This is where most of the problems were. Many of the local housing authorities in small towns and rural areas were operating at breakeven of better and required no operating subsidy at all. Do you find that true?

Secretary LYNN. We have found a number of the smaller housing authorities that have performed quite well. But having said that, even though there may be no scandal, even though they may be run well, even though they may be run efficiently, you do get into cost comparisions as to the ways of helping those lower income families.

To the extent that we do avoid State or local authority tax-exempt financing, we do find that the cost per family of a certain income level can be reduced substantially. Of course, the new section 23 program would enable us to take care of some of those families at least without State tax-exempt financing so there could be a substantial cost saving.

Mr. TALCOTT. Even if the small ones have been run without loss, without problem in the community, you think there will be a great saving?

Secretary LYNN. There could be savings under section 23, yes, sir. Mr. TALCOTT. Thank you very much.

BUDGET REQUESTS SUBMITTED TO OMB

Mr. BOLAND. I presume, Mr. Secretary, that you have had some considerable discussions with the OMB with reference to your revised budget, and I think it is fair to say that that perhaps occasioned a considerable amount of delay.

Secretary LYNN. Not really, Mr. Chairman. It took a little time with the OMB. Most surely, they had to review what we were proposing. I would say the most substantial reason for the delay was for us to get a better feeling as to the kind of legislation that was coming through the House of Representatives.

As you know, the bill H.R. 14490 was reported by the subcommittee some 3 weeks or so ago.

Mr. BOLAND. Using the budget authority table, which is attached to your statement, can you tell the committee what HUD's original request to OMB was for the major items listed here?

Secretary LYNN. I don't have that with me, sir. I certainly can provide it for the record.

My recollection is that on the Better Communities Act the figures that are shown there are exactly as I proposed them.

Mr. BOLAND. You didn't propose transitional funds at the time that you submitted your budget?

Secretary LYNN. Original budget or when I went for the budget amendments?

Mr. BOLAND. What did you request of OMB in the original budget and the budget amendments?

Secretary LYNN. In the original budget we requested $2.3 billion. In he budget amendment we requested $2.5 billion, including the $100 nillion of transitional moneys that are shown there.

Mr. BOLAND. Supply for the record the other information with reference to what you requested of the OMB in the original budget and also in the revised budget.

Secretary LYNN. Yes, sir.
[The information follows:]

COMPARATIVE SUMMARY OF FY 1975 BUDGET REQUESTS
TO OMB AND SUBMISSIONS TO CONGRESS

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