the administration is trying to expand its spending on these programs. And obviously it is not.

Dr. MULLINS. Mr. Chairman, I would be glad to comment on this point.

There are many fields of study which students cannot pursue at community colleges or in many cases at 4-year colleges.

For example, in the field of engineering in our State, there is only one college of engineering that one can attend-at the university Therefore, students who wish to pursue courses in any engineering fields must of necessity attend the university. And I think that is perhaps repeated in a good many other fields and a good many other States.

Senator PROXMIRE. Furthermore, we are trying to provide that the gifted but financially strapped student has an opportunity to get a scholarship so he gets some assistance.

Dr. MULLINS. That is right.

Senator PROXMIRE. Of course, work-study opportunities and there is a greater abundance of jobs now perhaps than before. So there is some opportunity if a student can work his way through, although more and more, it is requiring the full time of the student, specialists, the graduate level and these technical levels, to be a competent, acceptable student.

Dr. MULLINS. That is right.

We have another factor that is operating to increase enrollment quite rapidly in our State, in our general area. That is, we are shifting rapidly from primarily an agricultural economy to a mechanized agricultural economy and an increasing industrial economy. Therefore, whereas the percentage of students attending college in our State and in our region has been much less than the national average, we are rapidly moving toward the national average. And that is causing increases in enrollment which are much greater than would be expected in terms of the number of youth of college age within the State.

Senator PROXMIRE. I am sure that is true in Arkansas, but I think it is also a national trend. It is true even in my State. And I think it is true generally throughout the country, with a few exceptions, that we are becoming, as you say, a mechanized agricultural society requiring more education and an industrialized, automated society, requiring a great deal more skill and professional training.

Dr. MULLINS. We feel this college loan program has enabled us to take care of students during this period of rising enrollment which otherwise would not have been possible. We believe that if it is severely restricted, we will not be able to take care of the students who will be seeking admission in the next several years.

Senator PROXMIRE. Thank you very much, gentlemen. I appreciate it. A fine statement.

Dr. MULLINS. Thank you.

Senator PROXMIRE. Our next witness is Mr. John H. Haas, General Improvement Contractors Association.

I apologize for the late hour.

Proceed in your own manner.

STATEMENT OF JOHN H. HAAS, EXECUTIVE VICE PRESIDENT,

GENERAL IMPROVEMENT CONTRACTORS ASSOCIATION

Mr. HAAS. I will be brief and to the point.

We have submitted a detailed statement

Senator PROXMIRE. That statement will be printed in full.

Mr. HAAS (continuing). In which we have given our views about the urban housing problems which are, of course, our main concern. We are mainly interested in the existing inventory, and there is plenty of it. According to latest statistics, there are at least 5 million-maybe 10 million, according to some guesses dilapidated or substandard homes in this country. These homes have to be attended to. Somebody has got to do it. As a rule, we do it.

Now, we cannot do it alone. We need help. We need help from other trades, from the cities, from other professions. And we need help from Congress.

Congress has given us this help in many cases for many years in the form of housing programs. But now we are running up into some disturbing observations. They are the subject of our written statement and of the few explanations I would like to point out at

this time.

We find out that the housing programs that have been developed and passed by Congress and enacted over the last years do not work so well. We find defects, some of them very substantial. We think we know the causes.

I am not going into that in detail, but I would like to give you three instances which seem to demonstrate that these problems and these defects are not only existing, but they are threatening. I think this is very important when you have to consider new and additional housing programs.

An old example which we all know is the workable program— Senator PROXMIRE. All know what, sir?

Mr. HAAS. The workable programs. Since they were established, 2,600 cities were approved and have initiated, at one time or another, such a workable program.

As of January 1 of this year, only 946 of these 2,600 still have an active program; 343 have recertification pending which may or may not be approved.

But-and this is the most disturbing figure-over 1,300 cities have given up the ghost. Something must be wrong.

No. 2, you have initiated and enacted certain loan programs with the best intentions, particularly for the purpose of restoring or preserving the existing inventory.

Take title I loans. A very good program, used to have a volume. of about 1 million cases a year. In 1965, the volume was 500,000. It has shrunk. Not necessarily because it was neglected.

I think it was not neglected. It was taken up by many lenders, many of which developed their own parallel programs. But it is not quite up to the point today because the loan limits of this program are still the same that they were many, many years ago when costs and living standards, et cetera, were much, much lower.

So this is one item that you might keep in mind.

Then, later on came 203-k which was announced with great enthusiasm, as you know. Since it was initiated, the Federal Housing Administration has insured a grand total of 2,000 loans-2,000 loans, that is all.

At the same time, roughly, came section 220-h which you know is the rehabilitation loan in urban renewal project areas.

Well, that situation is ridiculous because the sum total of insured loans under this program is exactly five.

The latest example are the $10,000 3-percent loans enacted under section 312-a of the 1964 Housing Act. It is true they were delayed 1 year by lack of appropriations, but appropriations came through last year. As of today, we still have not got one loan, although I recall that there has been some writing in the papers that one was finally approved in March somewhere in the Midwest.

And finally, as another illustration, the multiple-unit mortgages under section 220; add to them all the multiple-unit mortgages under section 221-d-3, and you get a total of insured mortgages of exactly

624.

If you take only the below-market-rate-interest mortgages under section 221-d-3, you find a total of 283 projects insured.

Now, each one of these figures is substantially below the number of workable programs still in existence, which means this: Two-thirds of these cities with active workable programs have not even used a d-3 mortgage as yet. And only two out of three have used one of the various multiple-family-unit programs that are now active. This is a disturbing picture because these mortgages were created by Congress with the intention to be used. And this, of course, includes new construction as well as rehabilitation.

Well, if our statement goes on at this rate, you will probably consider me a hostile witness. And I think I am. I am hostile to optimism, to overoptimism, and to dreams. And it seems that due to these facts that are, incidentally, taken from official statistics, somebody is rocking the boat. And we ought to find out who is doing it. Because on top of these deficient or partly deficient programs, we are now expected to accept and be enthusiastic about a new program such as, for instance, the Demonstration Cities Act.

Now, as contractors, we have a principle: When you build an addition you want to build on safe ground. If the ground is not safe, you do not build-or, you make it safe first.

And this is the reason I am bringing these facts out to you because I think we ought to look back and see what has gone wrong.

Now, in connection with this desire, you will also, of course, know that more recently rehabilitation has become the big word, the big headline, for programs in urban improvement. We are very sensitive about this. We like it. We love it. It is our livelihood; but we think you also ought to know that there are some problems that are important and that cannot be solved by the trade alone or by the city alone. They must be solved by Congress.

One, for instance, is lack of tools such as mortgage programs or loan programs that would function properly.

We have a 221-d-2 mortgage program since 1954 which can be used and has been used for rehabilitation. Well, if you figure it all up in

62-551-66-pt. 1-20

these 12 years, there have been more than 300 mortgages insured per year per State.

Maybe this is an awkward comparison, but it shows a total of 180,000 mortgages of this particular, important program insured in 12 years. And that is pitiful. We think we know the reasons for this poor percentage, and we have pointed it out in our statement.

Then, there is 221-d-3 which was called the program of the century when it was inaugurated. Well, it has had a very deplorable effect on urban improvements, primarily due to one feature: the founding of this program on the basis of a nonprofit sponsor. This has had disastrous effects in hundreds, if not thousands, of communities because when the program came out-and d-3 is a wonderful program except for this particular item-everybody and his uncle was going to improve, rehabilitate, build new ones at wonderful rates, at low cost, and at great help from FHA and local agencies. When they started looking into the matter, they found out they could not do it because they had to be a nonprofit or cooperative sponsor.

That was not enough. In order to be eligible as a sponsor, you had to go through a large number of requirements, of special provisions that had to be built in. There was a question of financial responsibility. It came to the point where some of these nonprofit organizations had to go to foundations or to the Office of Economic Opportunity for money to get started.

And, of course, funds of that type should not be used as a financial foundation for a commercial or economic enterprise. I do not think that the Congress intended this type of funding to be a possible source of eligibility.

The low-market-interest-rate mortgages insured total 283 up to the 1st of January. That is a very poor figure, considering the good intent that went into making this program. But in the field, on the operative level, it just does not work. These 283 mortgages are exceptions from the rule, and they are certainly pitifully few.

Then, on top of all this, came the rent subsidy program. A wonderful program, a marvelous idea that would help tremendously in every city. It cannot work because that, too, is tied into the sponsorship by a nonprofit or cooperative organization.

If you knew what goes into the making of such an organization to become eligible, you would agree with me that it is a pretty hopeless situation. That means, of course, at the same time that our rent subsidy program is on the rocks regardless of whether the money is coming forth or not.

Another problem is skills. We do not have the skills. We do not have the manpower to rehabilitate on a scale that is necessary or commensurate with the needs. There are in the entire United States today not more than perhaps 50 people who can act knowingly and knowledgeably as rehabilitators because rehabilitation is not something that you can do with a computer or with automated machinery (notwithstanding the latest New York example where they do do it with automated equipment). But the typical rehabilitation process is tedious, it is diversified, it is individual. It must be done by people with skill, not only manual skill but many other skills.

I need not go into details; you will find them in our statement. We do not have these people. We have maybe 50. We need 5,000.

Where are we going to get them? There are no volunteers. We have tried. We have tried very hard, but, no volunteers.

We need a training program. We need a national training program that will teach people-not overnight, but in months or perhaps years-how to rehabilitate, what and when to rehabilitate.

Finally, there is a terrific lack of information. There is a gap in communications between the laws, the administrative agencies, and the market.

I noticed, Senator Proxmire, your particular interest in the urban information center. Two years ago, we submitted in a statement that I delivered before this committee, a suggestion about an "urban housing agent." It has not gotten anywhere. We have reiterated it and implemented it again this time in our statement.

We think that our idea of the urban housing agent is worth looking into because it does not apply to some prospective superstructure or vague planning or demonstration program. It applies, as we see it, to the communications gap, to the terrific lack of information that exists today in every city-in every city. And we think it is relatively simple to create such an urban housing agent who can fill the demands from both sides-from the government level and from the private

sector.

You will notice that similar ideas that have now come before you, such as the Federal coordinator and the urban information center, deal primarily with the government level, Federal, State or local. Nobody gives a hoot about the private sector. And that is where the ignoramuses are. Contractors, private citizens and even some of the local housing officials, do not know what is involved in rejuvenating a city or an older neighborhood or an old house. They do not know what the programs are that are available or not available, what the tools are and so forth.

We need something like the agricultural worked so beautifully over so many years. of it in every community that wants one. create that.

county agent which has We need the equivalent And only Congress can

I am not going any further except to say that you can now probably guess our view of this new Demonstration Cities Act. It is a superstructure; gigantic, important, grandiose, a duplication and conglomeration of many things we have had before. And if we put it on top of what is not properly functioning now, we are going to have a brandnew 10-gallon hat sitting on an old head that is full of sores. It is going to cover them up, but it is not going to cure them. It may be good for the Fourth of July, but not for the other 364 days of the year. So, let's first go through the process of making our existing programs sound.

This is the only ax we want to grind. And we want to put it right into your hands and ask you, "Please chop down some of the rotten wood that is now in our housing programs."

It is not so important how much we do, but how well we do it. In that respect, we have been lacking, and, in some respects, lacking badly. It is not a pleasant task to bring these facts out into the open, but we try to be constructive in our criticism—our statement should prove that.