Mr. LINDSAY. The answer would be "no," that within the general thrust of the principal testimony that I was giving, Congressman Barrett, there are two key things. One is the level of funding of existing programs and the other is those steps that are being taken to control inflation but which are having the impact now of making it impossible to move forward on housing construction. If the priorities of the country were redirected to give a higher place to produce housing that people can afford and rent that people can pay which means interest rates that people can stand-if the priorities were higher in this area-we would be in better shape.

Mr. BARRETT. I have another question I am going to ask you but I just want to conclude this question by saying we are all practically, I think, in the political arena, and we are all accustomed to that old cliche "the squeaking wheel." Would it not be more helpful to the cities if we can get the mayors to start letting this administration hear them scream about getting money down to the level where we can get more units for the low- and moderate-income families? Maybe here at this level our screaming has gotten to reach the point like the howling in the woods-they are used to it. And I think if it comes directly into HUD from the mayors of these various cities we might get some action.

Mr. LINDSAY. Well, I think the Conference of Mayors and the Urban Coalition and other organizations have increasingly been working together in order to focus on this problem and provide more political clout in order to get the necessary results. It is a long road, and I don't think it is going to be easy, but we keep trying.

Mr. BARRETT. You know, I want to correct the gentleman from New Jersey here in his statement saying that you represent the greatest city in the country. I would say he should have made that statement a little differently and said that you represent the city with the greatest population. He must have forgotten that Philadelphia is the greatest city.

Mr. LINDSAY. They are both great cities, Mr. Barrett. We realize that. If Philadelphia wasn't a great city, I wouldn't have gone to Philadelphia to get our police commissioner, Howard Leary.

Mr. BARRETT. I knew you were going to give him a plug. That is why I did it.

Mr. Mayor, I just want to ask you this one question. Last year in our hearings we were told a substantial number of Mitchell-Lama housing units already constructed were faced with substantial rent increases because of the rise in interest rates, and I was wondering if you can tell us for the record how this problem came about and approximately how much Federal assistance would be needed to avoid the rent increases.

Mr. LINDSAY. That is a hard question. It would certainly be in excess of $20 million?

Mr. WALSH. $20 million is just for the new.

Mr. LINDSAY. That is just new, yes.

Mr. WALSH. It is a difficult question, Mr. Barrett. We have computed that for the projects now in construction-and these are largely in the city and State Mitchell-Lama programs that we would require $20 million in 236 interest subsidy to bring the interest rate down to

the point where these would come in initially at reasonable rentals or carrying charges if they were to be co-ops, and a great majority of them are cooperative projects.

We have attempted, as the mayor said, to solve the problem of increasing rents and increasing carrying charges by increasing the amount of tax abatement, but we have reached the bottom of that particular barrel in most of the projects. The city of New York is now granting tax abatement to middle-income projects equivalent to the tax exemption granted to low-rent public housing. That is down to the 10 percent of shelter-rent formula. So there is nothing more, realistically, there that can be done. And that is alleviating a rent or carrying charge increase that varies between $3 and $5 per room per month. The Mitchell-Lama program at a 50-percent tax abatement level, which was the traditional level, is now coming in at about $55 per room per month.

So if you simply assume a typical 41%-room apartment, you can see that the rent of that apartment is $225 a month or better. That is not really meeting the needs of the middle-income family in the city of New York and should be reduced even in today's market down to the $30 to $40 range. To reduce that to the $30 to $40 range on existing housing, of which we have almost 60,000 units, Mitchell-Lama unitsexisting housing, not in construction, at the rate of, it has been about $1,400 to $1,600 a year for the interest subsidy down to 1 percent, so taking that at a maximum it is probably $60 million a year or more. It would not be a maximum because that would not be required in every case. But to offset these rent and carrying charge increases then I would assume that somewhere probably from an additional $20 to probably $40 million over and above the $20 million that we require for new construction.

Mr. BARRETT. That is all, Mr. Chairman.

Chairman PATMAN. Mrs. Dwyer.

Mrs. DWYER. Mr. Chairman, I just want to join with my colleagues in welcoming the great mayor of the city of New York to this committee. I haven't any questions, Mr. Chairman.

Chairman PATMAN. Thank you.

Mrs. Sullivan.

Mrs. SULLIVAN. Thank you, Mr. Chairman.

I will join the crowd and welcome you, too, Mr. Mayor. You are always a good addition to witnesses before us.

Mayor Lindsay, do you think that inflation has been or is being halted, or, do you think, as I do, that major policies of the administration intended to stop inflation are actually causing more inflation. by, one, raising interest rates higher and higher, and thus, two, raising cost and prices, and three, sending up the Consumer Price Index, which in turn, four, leads to and forces higher wage rates?

Mr. LINDSAY. The current policies have not worked. The housing market in the cities suffer as a result, and the city dweller is caught in a bind in the most terrible way. I have taken the position for quite a period of time going back many, many months that selective wage and price controls should have been imposed. The measures that were being taken either had the effect of not curbing interest rates and consumer costs or were, or as you say conceivably were adding to them.

I don't know the answer to that. I do know that it hasn't worked for one reason or the other, and that is why I am here today, because we can't move forward on housing under present conditions.

Mrs. SULLIVAN. You brought up the price and wage controls. If you were President, would you welcome and possibly use the credit controls that were voted by Congress this past year, which President Nixon not only opposed but says that he has no intention of using? And I am thinking mostly of credit controls on commercial paper, commercial loans.

Mr. LINDSAY. Well, that is a hypothetical that I couldn't possibly answer as a humble local mayor. I can only say that from our point of view, because we are in the trenches where the squeeze is really felt, that some fairly drastic steps would have been welcome. That is the reason that I called for selected wage and price controls sometime ago, because when the squeeze is felt as hard as it is in a big city like ours, it has the effect of increasing tensions and disaffection, and that all lands right in my lap in city hall. We take the heat. So we feel that whatever the country can do to make life easier for us, which means reducing the pressure under which the ordinary family lives, is helpful.

Mrs. SULLIVAN. The chairman mentioned before that when business borrows huge sums it makes no difference what interest they pay, and I have contended all along that the higher rate of interest that the business has to pay, in order to increase his production, this cost of money is going right back into cost of the product that the business is producing, and in order to buy that product, the wage earner has to have more money-an increase in pay. So it is a constant spiral of inflation, and it would seem to my way of thinking that if they would curtail in someway heavy borrowing for unneeded expansion of business and have some control on the credit of this type of business borrowing, that we could have some stoppage of inflation.

I noticed, Mayor Lindsay, that in the past 2 weeks, New York City had floated an issue of tax-free municipal bonds at an interest rate of 7.4 percent, and I think this is a shocking example of this era of high interest rates. Can you tell us how much of the city's budget, or your city's budget goes for interest on such bonds and how long can the city finance its capital needs at these high rates?

Mr. LINDSAY. I will have to get the dollar figure for you on that. That last capital construction bond issue at 7.4 was very expensive and very high. We have four of those a year for our capital construction needs. Nevertheless, it is a good buy. Our city has a very sound fiscal base.

Mrs. SULLIVAN. Maybe so for the investor, but look what it is doing to the cost to the city to use this money and to borrow the money. Mr. LINDSAY. Yes. It is very difficult.

Mrs. SULLIVAN. The only thing I would like to say in closing, Mr. Mayor, is that I am glad that New York City has not taken the steps necessary to get into the food stamp program. All the while we have been fighting for this, we have always had the support of New York City members. They never got to use it, but they supported it anyway, so I am glad that the program will now be put into effect in New York City, because I think it will be a great help to many of your low-income families.

Mr. LINDSAY. I agree.

Chairman PATMAN. Mr. Halpern.

Mr. HALPERN. Thank you, Mr. Chairman.

Mr. Chairman, it is certainly a pleasure to welcome our distinguished mayor to this committee. Mayor Lindsay needs little introduction to a committee of Congress. We are all aware of his outstanding record as a Member of the House. As one who came to Congress with John Lindsay in 1959. I take particular pride in welcoming him here as one of the most respected men on the national scene, as a great mayor of a great city and as one of the most knowledgeable witnesses on the question of meeting the ever-growing needs of our urban centers. I am sure you, Mr. Mayor, have contributed much to our deliberations and I know I reflect the views of the entire committee in welcoming you here today.

Mr. Mayor, many families seeking single-family housing in the New York metropolitan area are faced with serious cost problems, as you well know. In New York, for example, a $25,000, 30-year mortgage will cost a homeowner $157 a month, and that does not include property taxes and insurance fees which would add $100 or more to his monthly costs. There is much talk about the higher income levels in large urban areas. What is the average earning level of a New York family and can it really afford to pay $257 a month for a new house? Mr. LINDSAY. No, it can't. I mentioned in my main testimony a little bit earlier that one-third of our working force in New York City has a wage level of just under $100 a week, and the average working man in New York city will find himself in the area of $8,000 to $9,000 in the middle income groups. The Bureau of Labor Standards has concluded that an annual wage and salary of $9,000 a year is what it takes for an average family of four to get along in New York without assistance. Thus, the figures that you give and the housing value you mention are not ones that the average person can stand.

Mr. HALPERN. We are concerned today with how to get more money into urban housing, but it seems to me that one of the problems is the money taken away from housing by local property taxes. Property taxes, of course, impose a disproportionately heavy burden upon housing. Property taxes as percentages of actual cash outlay for housing have been estimated at 30 percent or more for a single-family house and multifamily properties in New York City. This high tax on housing moreover places a greater burden on the poor who must spend a larger part of their income on housing.

What efforts can urban governments make to reduce this burden on housing and place it on less essential and socially desirable forms of public consumption?

Mr. LINDSAY. We see the answer to that, Congressman Halpern, as an increasing shift to broader-based structures. New York City's average real estate taxes are slightly lower than those in the surrounding suburban communities outside of New York, and our property owners have a slight break in that regard. However, we make up for this difference in other areas. We have a New York City income tax and commuter tax and various other measures, so that it is evened out with the surrounding areas.

The mayors of the big six cities of New York and the New York State Conference of Mayors, largely because of the pressures on prop

erty taxation and the burdens on the cities homeowner, have joined together to ask the State to begin a step-by-step takeover of all costs of local primary and secondary education. Some States such as Michigan are beginning to move in this direction.

Secondly, we are asking for tax-sharing with the State. We have a fixed tax base that gives us normal increase in revenues of only between 5 and 7 percent, but the cost of doing business goes up each year at slightly over 15 percent. That is to pay for school teachers, policemen, firemen, and all the rest of the gamut of services that we provide. So each year we are in a bind and the only way out of it is by having a broader-based tax policy which includes a share of the one elastic form of revenue that there is, which is the income tax. States and localities are also asking the Federal Government to move in this area simultaneously. We see no other way out.

Mr. HALPERN. The New York Times has said that New York City costs are hiked by 15 to 20 percent, I understand, because contractors add a kind of carrying charge to cover the city's month late delayed payment practices. Why are payments so late, Mr. Mayor?

Mr. LINDSAY. The payment of bills is largely in the comptroller's office, and the new comptroller, Comptroller Beame, has pledged to reorganize the office as much as he can, in order to speed the bills. All bills as well as salaries and other checks are handled through the comptroller's office.

Mr. HALPERN. But is it true that the costs are hiked as much as 15 or possibly 20 percent?

Mr. LINDSAY. No.

Mr. HALPERN. That is not true?

Mr. LINDSAY. No.

Mr. HALPERN. There are no carrying charges?

Mr. LINDSAY. No.

Mr. HALPERN. No charges of 15 to 20 percent?

Mr. LINDSAY. No.

Mr. HALPERN. I thank you, Mr. Chairman.

Chairman PATMAN. Mr. Ashley.

Mr. ASHLEY. Thank you, Mr. Chairman. My good friend who has the toughest job in the country, I am delighted to see you, as are all of us.

I think that you made an impressive case for the need for continuity of the credit for all kinds of housing, market housing and assisted housing. I would like to direct my questions for the moment to the need for some kinds of mechanisms that may be appropriate for the support of federally-assisted housing.

Do you find that the result of monetary policy, which of course has driven interest rates to a historically high level, is to discourage potential nonprofit sponsors from the 235 and 236 and the other federally assisted programs?

Mr. LINDSAY. I think the answer is that it does not have the effect of discouraging them if money is available. If money is not available from any source at all, why then of course it does.

Mr. ASHLEY. But by definition, a stringent monetary policy curtails the amount of credit that is on hand

Mr. LINDSAY. Right.