These requirements arise because the number of new families being formed each year will rise sharply after 1960. Reasonable progress toward slum elimination requires construction of 2 million new homes per year from 1955 to 1960, with increases to 2.4 million by 1965-70. Lower rates of new construction imply a deterioration of our housing standards, or such low rates of replacement that slums will not be cleared during the next two generations. With the rapid increases in gross national production which have occurred in recent years, the production of 2 million to 2.4 million homes a year is an economically feasible goal. If national output continues to grow at the rate of the last 25 years, we can achieve our housing goals even though we spend no more of our national income for housing than we have in the past. A decreasing proportion of our output could achieve these goals. Indeed, unless we can achieve and maintain a higher level of housing production, we will be unable to maintain full employment and an expanding economy. Recent housing production has been built to serve predominantly those families in the upper income groups. Rapid increases in family incomes have made possible the continued sale of homes to these families. In the future, however, we must increasingly produce homes for middle and lower income groups. If we are to sustain a high level of housing construction, we must produce homes in the broad price-classes suggested below: This suggests that 1 million to 1.2 million homes can be sold or rented each year under the systems of financing and Federal aids now available. About 600,000 additional units of private housing should be produced and financed annually to meet the needs of middle-and lower-income families who are not now able to afford new homes. An additional 200,000 units of public housing are needed to meet the needs of low-income families. In addition, more than 200,000 units per year are needed by farm families to replace substandard units. Cost estimates: All cost data are FHA estimates for new homes built under sec. 203 and insured in 1952. perating expenses, taxes, and insurance are as follows for the several price classes: $10,000-$18.80, $9.20, 1.50; $9,000-$17.93, $8.43, $1.24; $8,000-$16.75, $7.10, $1.15; $7,000-$15.77, $6.41, $1.02. Cf. HHF, 6th inual rept., p. 280, table 27. In all cases costs used are for value class below price shown to allow for difrence between FHA value and market price. Northern cities: FHA cost data are national averages. They therefore understate heat and utility costs t northern cities. Four dollars have been added to FHA estimates to cover this difference in northern ties. Average cost areas: FHA cost data. Low-cost areas: FHA cost data for $8,000 and $7,000 homes probably represent cases occurring almost clusively in southern areas and in smaller towns in such areas. Available data do not reveal major cities which $7,000 homes are currently being marketed in significant quantities. Single homes: All data are for single homes sold for owner occupancy. Rental housing: Structures of similar floor area built for rent in typical rental housing projects would obably rent for $4 to $8 per month more than the figures shown. This cost difference would arise from gher maintenance and management costs. Cooperative housing: Cooperative housing projects offering accommodations with similar floor areas ight achieve slightly lower rents or purchase prices than those shown above as a result of group purchasing maintenance materials, fuel, and utilities. Financing terms: (1) Conventional FHA-insured, 20-year loan. The insurance charge is approximate. (2) FHA-insured, 30-year nortgage, at 41⁄2 percent, plus insurance as proposed in pending legislation. (3) FNMA-made, FHA-insured, 40-year loan, at 42 percent, plus insurance. This proposal differs from nding legislation in that it omits a 2 percent servicing charge. (4) A 31⁄2 percent 40-year level payment loan. (5) A 21⁄2 percent 40-year level payment loan. (6) A 21⁄2 percent 40-year level payment loan, assuming a 10 percent reduction in purchase price. (7) Only 4,000 homes built in this price class in 1952. Cf. idem, and ibid., p. 240, table 7. The CHAIRMAN. The next witness will be Mayor Russell G. Hileman, of Michigan City, Ind. Mayor, we are happy to have you here this morning. You proceed in your own way. STATEMENT OF RUSSELL G. HILEMAN, MAYOR, CITY OF MICHIGAN CITY, IND., ACCOMPANIED BY JOHN P. DONNELLY, EXECUTIVE DIRECTOR; AND GEORGE N. HALL, ARCHITECT AND ENGINEER FOR MICHIGAN CITY HOUSING AUTHORITY Mayor HILEMAN. My name is Russell Hileman, and I have with me this morning John Donnelly, executive director of the Michigan City Housing Authority, and George Hall, of Beine, Hall & Curran, architects and engineers for the Michigan housing project. We have a prepared statement, and I think that I will just touch those points which we hope to- The CHAIRMAN. You would like to have us place your statement in the record? Mayor HILEMAN. That's right. The CHAIRMAN. Without objection, your statement will be placed in the record at the end of your remarks as prepared, and anything you say extemporaneously will likewise be placed in the record. Mayor HILEMAN. Thank you. In the year of 1942 a group of citizens in our community established themselves into an unofficial committee to try and clean up a slum-clearance situation that we had, which was referred to as the "patch." We were unable to do this under existing laws at that time, or through private financing. We worked along with the problem a good many years, until I became mayor of Michigan City, and the idea of low-rent public housing in the community was conceived. We went into this program in the year of 1951, and from then on we were dealing with the Chicago Housing Authority, in setting up and establishing the kind of program that would fit Michigan City. A very thorough survey was made by them, in Michigan City, and several plans were talked about. In the process of getting the job done the project directors of the Chicago authority were changed, and in most cases they changed the entire set of plans for the development. This went on until we reached the stage of where we did have an acceptable plan. This plan was presented to the authority in Chicago, and was finally sent on to Washington. Then, of course, the money was tied up and the project was temporarily abandoned. At the present time the people of our community who have, after very serious thought, gone along with the public housing program, and the persons involved in the program since the year of 1951, have been encouraged by the thought that we would have some plan to take care of them. We find that the new bill, as it is written, is one which certainly would be of benefit to everyone. But we do think there is some responsibility on someone, as far as smaller communities, who have gone into public housing programs in very good faith and have been left without anything to do in their particular case. We in Michigan City have worked on this for a good many years, thinking that this was the final solution for it. We believe that a lot of small communities in the United States who do not have the adequate means and do not have the legislation in their States, and in small cities, are left without a solution to their problem. We would like this particular type of project which has gone so far, with some small amount of money, that it could be seen through to its completion. The CHAIRMAN. What you are recommending is that we continue public housing, particularly small towns. Mayor HILEMAN. Yes. Particularly in those cities which had preliminary contracts on a long-range basis. Ours extended over a period of 4 years, and through no fault of our own it couldn't be finished. We think that in the larger communities those problems were taken care of. The CHAIRMAN. I would like to have the record show at this point that Senator Burke from Ohio is with us. While the Senator is not a member of this committee, we are delighted to have you, Senator. Senator BURKE. Thank you. The CHAIRMAN. If you care to ask any questions, we will be delighted to have you do so. Senator BURKE. Thank you. The CHAIRMAN. Is it your position that the bill Mayor HILEMAN. I do believe the bill provides for a slum clearance program which is necessary. In our case we would have to go back and set up an entire new organization. The CHAIRMAN. In other words, you want to make certain that you might have a continuity of action on it? Mayor HILEMAN. That is exactly right. The CHAIRMAN. Without any stoppage or any delay? Mayor HILEMAN. That's right. The CHAIRMAN. You are fearful we do not have that in the bill? Mayor HILEMAN. That is the way we feel; yes, sir. The CHAIRMAN. We will certainly get into that, and will give every consideration to it. Mayor HILEMAN. Where small cities The CHAIRMAN. I don't know of anything in the bill that changes the public housing situation. As a matter of fact, there is nothing in the bill that relates to public housing. Public housing will be handled by a separate bill. It has always, in the past, been handled by a separate bill. Of course, public housing, in the Congress, has been slowed down by the Appropriations Committee over the past 2 or 3 years. It has not been in this committee. It has not been in the basic legislation authorizing public housing. This committee back in 1949 recommended 800,000 units over a period of 5 years, and the Congress authorized them. Then the Appropriations Committee have reduced them and reduced them and reduced them. You say, "With this history and background it is the earnest plea of the city of Michigan City, Ind., that the Senate Banking and Currency Committee give favorable consideration to an amendment of existing legislation, which amendment would have the effect of repealing earlier amendments to appropriation measures, so as to permit the city of Michigan City, and other small cities and towns which may be at a similar state of public housing programing, to reactivate its public housing project and to have a realization of what has been so seriously and thoroughly planned and what is so necessary and important for healthy community life and growth." Mayor HILEMAN. That's right. I would like to ask Mr. Donnelly if he has anything to add here. The CHAIRMAN. Yes. Mr. DONNELLY. Mr. Chairman, Senator Burke, the city of Michigan City, and its local housing authority has been primarily concerned, as the mayor mentioned, with the elimination of this very serious blighted area, blighted residential area, in the community. We feel that if in the urban renewal program, which is part of this bill, capital grants-in-aid are made available to public-housing authorities at the local level, local public-housing authorities, for use in aiding slum clearance, and without having to set up another local agency at the local level to handle it, it would be highly desirable. In Indiana, for instance, under 1953 legislation, we can set up an urban redevelopment commission, which is a separate taxing unit. We would like to get away from that, in communities which are in our situation. Where they have gone so far, with the plans all worked out for slum clearance, and then they are not able to proceed under the publichousing program, because of the lack of appropriations for that program. The CHAIRMAN. You want continuity? Mr. DONNELLY. That's right. The CHAIRMAN. You don't want any vacuum, and you don't want changing of the rules in the middle of the stream? Mr. DONNELLY. That's right. The CHAIRMAN. You entered into a program out there in good faith, and you want the Government to continue its aid in good faith and have continuity? That is really your big complaint and that is really your recommendation. Mayor HILEMAN. That's right. The CHAIRMAN. Thank you very, very much, unless you have something further to state. Do you have any exhibits you want to place in the record? Mr. HALL. I think it should be stated, Mr. Chairman, that we have been consistent all through this time. That we have been absorbed in the development of a plan to provide slum clearance programs as such The CHAIRMAN. I know you have done a great job up there. Mr. HALL. The rehabilitation of a bad area has been our primary premise. The CHAIRMAN. That's right. It was to eliminate the slums, and you deserve congratulations. You are doing a good job, and your position is that you want to continue to do it? Mayor HILEMAN. That's right. The CHAIRMAN. You don't want the Congress to do something that will stop you from doing a good job for the people of Michigan City! Mr. DONNELLY. Mr. Chairman, we do have one exhibit we would like to put in the record. The CHAIRMAN. Oh, yes; this is that "patch" section. |