The median rent for public housing for the elderly is $33 per month, and the average income for these tenants is $1,400 per year. Obviously many thousands of elderly people have their best, if not their only, chance at good and suitable housing through the public housing program. While public housing has shown a general flexibility and in many instances accept older families with incomes of over $3,000, yet, for each such family it accepts, it must deny housing to others with little or no income who tend to live in the most dilapidated dwellings or in areas sheduled for redevelopment.

It is distressing to note that because of the shortage of housing, necessary priorities in the screening of applicants, and the financial requirements of the public housing program, many older people cannot qualify for this housing. Even with annual contributions to meet debt service, payments in lieu of taxes, and the subsidy of $120 per year for the elderly, many older people cannot afford to pay the required rent-even in public housing-without additional subsidy from some source. A letter from an older woman to the national council will illustrate this problem. She writes, in part:

"I am 67 years old. I get $62 per month from social security. That is all I have. Out of this I must pay $27 per month for rent. I live in a terrible place, and it is hard to manage all around. I was just in the hospital with pneumonia. My doctor says I have to move or I might get sick again. He told me I ought to get into those nice puplic housing apartments. When I saw the puplic housing people they told me I did not have enough money to carry the rent and would have to go to welfare for the difference. After working so hard all my life I do not want to spend the rest of my days on welfare. The public health nurse came to see me. She said even then she did not think I would get help from welfare because I had as much money as they allowed their people. She said she would check. She found that the most welfare allows any older person is $63 per month in cash. They would not take me on for just the $1 a month difference. I do not know what to do."

In short, like so many, this lady's income is too low for public housing and just too high for an old-age assistance grant in her State. (In nearly half of the States, old-age assistance cash grants range only from $42 to $75 per month.)

The plight of the older people who cannot meet the rent requirements in public housing, who otherwise would not need to apply for public welfare for partial rent subsidy, could be alleviated if Congress would increase the present subsidy of $120 per year to an amount more adequate to take care of every older person with low income.

Recommendation No. 1.—Public Housing Administration should be enabled to expand its construction of special housing for older people, and should be permitted an increase over the present subsidy of $120 per year per older family, to an amount more adequate to take care of every older person with low income.

Senator SPARKMAN. Thank you very much, Miss Diamond, and you gentlemen. It was a very good presentation. It is a program that we are certainly greatly interested in.

The next witness is Mr. Robert W. Kean, Jr., first vice president, National Water Company Conference, accompanied by Jim M. Milligan, administrative director, and Mr. Alvin Friedman, counsel. Will you gentlemen come around, please.

Go right ahead, Mr. Kean.

STATEMENT OF ROBERT W. KEAN, JR., FIRST VICE PRESIDENT, NATIONAL WATER COMPANY CONFERENCE; ACCOMPANIED BY JAMES M. MILLIGAN, ADMINISTRATIVE DIRECTOR; AND ALVIN FRIEDMAN, COUNSEL

Mr. KEAN. Mr. Chairman, I have with me Mr. James Milligan, the administrative director of our conference, and Mr. Alvin Friedman representing his partner, Mr. Feldman, who could not be with us today.

Our written materials are already filed, so I will try to be brief. Senator SPARKMAN. Was your father Congressman Bob Kean? Mr. KEAN. Yes sir. I saw him this morning. He asked me to give you his warmest regards.

Senator SPARKMAN. Same to him.

Mr. KEAN. Thank you.

I am president of the Elizabethtown Water Co. in Elizabeth, N.J. We are a shareholder-owned, investor-owned public utility serving water to more than 700,000 people in 40 communities in north central New Jersey.

I am also privileged to serve as the first vice president, directing officer, of this national water conference which is our national association of similar water utilities which we estimate provide water service to more than 20 million Americans.

You gentlemen have before you S. 2977, a bill which offers amendments to the Housing and Urban Development Act of 1965. Our organization has no argument with this bill other than one subsection which discriminates clearly against, we believe, and in effect legislates out, any participation by our type of utility.

This subsection is section 204 (c) (3), which includes the wording: ** regarding which he

meaning the Secretary

receives assurances, satisfactory to him, with respect to eventual public ownership of the system and with respect to the conditions and terms of any sale or transfer.

This language originally appeared also in the Housing and Urban Development Act of 1965, section 1005, was recognized by this Housing Committee at that time, and was eliminated.

We are merely requesting here that the same language be eliminated at this time.

Now, I think I should say a word about the record of investor-owned water companies particularly in the

Senator SPARK MAN. Let me ask you, Mr. Kean: You are objecting to a provision in the bill this year. What about the provision we wrote into the law last year? Were you satisfied with that?

Mr. KEAN. Yes, sir; we were.

Senator SPARKMAN. I do not know how the others feel about it, but I rather feel that we will follow last year's precedent if we legislate in the subject again this year.

Mr. KEAN. That is exactly what we are attempting to accomplish, sir.

Senator SPARK MAN. I should think we would have uniformity. We felt last year that the contention you are making now was a good The Committee made the change which became law. And I feel quite certain that we will follow the same pattern this year. Mr. KEAN. Thank you, sir.

one.

Could I ask Mr. Friedman to say a word on this subject, sir? Senator SPARK MAN. Yes indeed.

Mr. FRIEDMAN. Thank you very much, Senator. I would like to just explain briefly that our concern this year was occasioned by our understanding from several people in the Department that they were

going to press quite hard for this kind of change which is reflected in the present (c)(3), and as a result we thought that we should make a determined effort, including an appearance here.

Senator SPARKMAN. I fully agree with you. You should. We are glad you came. And I think you are right.

Of course, I do not control the whole committee.

Mr. FRIEDMAN. Thank you very much.

Mr. KEAN. Sir, I will terminate my remarks and quit while I am ahead, if I may. [Laughter.]

Senator SPARKMAN. You know, there is an old saying among lawyers that when the judge is on your side, quit talking.

Mr. FRIEDMAN. Absolutely.

Senator SPARKMAN. However, I am not the judge. I'm just one of the jury.

(The complete prepared statement of Mr. Kean follows:)

STATEMENT OF ROBERT W. Kean, Jr., FIRST VICE PRESIDENT, NATIONAL WATER COMPANY CONFERENCE

Mr. Chairman and distinguished members of this committee, my name is Robert W. Kean, Jr. I am president of Elizabethtown Water Co. in Elizabeth, N.J., an investor-owned utility which serves water to more than 700,000 people in the northern New Jersey metropolitan complex. I am also priviliged to serve as first vice president of the National Water Company Conference, a national association of investor-owned, regulated water utilities. Some 3,500 of these utilities serve water to more than 20 million Americans in 4,500 communities.

You gentlemen have before you S. 2977, a bill which offers amendments to the Housing and Urban Development Act of 1965. I wish to state our organization's opposition to section 204 (c)(3) of this bill on the grounds it clearly discriminates against investor-owned water utilities.

This subsection reads:

"(c) if it is necessary to develop a new system and the Secretary determines that public ownership of such a system is not feasible, an adequate privately or cooperatively owned new system (1) which he finds consistent with other existing or prospective systems within the area; (2) which will be regulated, during the period of such ownership, in a manner acceptable to him with respect to user rates and charges, capital structure, methods of operation, and rate of return; and (3) regarding which he receives assurances, satisfactory to him, with respect to eventual public ownership of the system and with respect to the conditions and terms of any sale or transfer."

As proposed, gentlemen, section 204 (c) (3) would legislate the exclusion of taxpaying, investor-owned water systems from any federally supported program authorized by this bill to develop water and sewerage facilities for "new communitites." In view of the fact that these systems have a long and excellent history of community service, including many FHA-financed housing developments, we find it difficult to believe that this apparent mandate is the intent or purpose of this committee, this Congress, or this administration.

Everyone in this room is fully aware of the drought which occurred this past year in several Northeastern States. Throughout the area, investor-owned water systems maintained an outstanding service record. A survey by the U.S. Public Health Service disclosed that in New York State, during the past 20 months, there were about 50 instances of water use restriction. Only five of these concerned investor-owned water companies. In Massachusetts, the only two towns in all of Norfolk County which were not restricted are served by investor-owned systems. Of Massachusetts' 317 water systems, 178 were subject to some restriction. Only four affected companies were investor-owned.

Gentlemen, the discriminatory language in section 204 (c) came before you last year, when you were considering the Housing and Urban Development Act of 1965. At that time, you quickly recognized this discrimination, and struck it from the bill (originally sec. 1009, which became sec. 1005 of the statute). The Senate-House conference committee agreed to your version.

The investor-owned water supply industry has not undertaken opposition of section 204 (c) without first seeking to learn why the Department of Housing and Urban Development included such discriminatory language in S. 2977. So far as we have been able to learn, the Department has only two fears which underlie its position, neither of which has any application to investor-owned water utilities.

First, the Department believes that some unscrupulous developers of "new communities" might install their own privately owned systems and thereafter sell them to the communities at inflated prices.

Second, the Department is concerned that private water companies serving "new communities" might go unregulated and charge inordinately high rates for water service.

Clearly, neither concern has validity for a new water system that might be owned by an investor-owned company. These companies have been steadily operating water systems throughout the Nation for over 100 years. They are not "speculators" who merely seek a quick profit; rather, their revenues derive from the operation of water systems on a long-term basis. As regards the Department's second concern: investor-owned water companies are regulated by public agencies within the State or locality of their operation, and are also prepared to responsibly accept reasonable regulation by the "new communities" that may be developed if S. 2977 becomes law.

Gentlemen, in closing, may I state our belief that it should not be the task of legislation to “weed out” unscrupulous developers by automatically discriminating against all of those legitimate businessmen engaged in supplying water to the American people. If such a "weeding out" process is necessary, it should be conducted by the Department which would administer the statute.

We urge that section 204 (c) of S. 2977 be amended to read exactly the same as section 1005 of the Housing and Urban Development Act of 1965. If this is done, it will reaffirm your position, stated so effectively last year, that Congress and the administration welcome the continuing cooperation of investor-owned water service companies in a mutual effort to promote our Nation's growth. Thank you, gentlemen.

Senator SPARK MAN. Fine. Thank you, gentlemen.

The next witness is Prof. Manuel Gottlieb, professor of economics, University of Wisconsin.

I was waiting for Senator Proxmire, but he had to leave to attend a meeting; but he is coming back from that meeting.

STATEMENT OF MANUEL GOTTLIEB, PROFESSOR OF ECONOMICS, UNIVERSITY OF WISCONSIN

Mr. GOTTLIEB. I should apologize for preparing testimony without a brief. I did not understand that a brief would be required. While my deliberations and studies have been extensive, I did not prepare a brief.

I prepared instead an outline of the testimony with a listing of exhibits. I will perhaps later supplement the testimony by preparation of a more extensive argument. I believe that an oral presentation will be more refreshing for you.

Senator SPARK MAN. Let me say this: It is perfectly satisfactory for you to make an oral presentation since you do not have it written. However, if you want to make a more extensive presentation or just want to prepare it in a different form, we will be very glad for you to submit it to us provided you submit it within time.

Of course, we will have to close the record about the 7th or 8th of May I would say. If you have it in by that time, it will be acceptable. Mr. GOTTLIEB. Very good.

Senator SPARKMAN. All right.

Mr. GOTTLIEB. I am testifying in a double capacity, one as economist and two as a member of the State Advisory Council for Small Business for the State of Wisconsin.

I should just briefly identify both capacities so you can more properly evaluate my testimony.

I have here for submission in the record an academic vita (on file in subcommittee office) which indicates and spells out my background, publications, and studies.

And I would like to specifically refer to items 22, 24, 25, 27, 29, 30, 33, 36, and 37 as items which indicate extensive concern with urban economics, real estate economics, building economics, and the like.

I have also been engaged for the last 4 years in a study of patterns of urban growth and fluctuations in urban growth and real estate values for the National Bureau of Economic Research, which has taken me into city growth and building patterns, real estate activity both in America and in Europe. And I would like for submission in the record to include an excerpt from the report of the national bureau which describes and indicates the character of that research.

(The excerpt is on file with the committee.)

Mr. GOTTLIEB. It is also fair to report that I have been active in a political party, the Democratic Party. I have for 3 years-1961-62, 1964-been chairman of my county platform committee, and in that capacity I have had occasion, as you can well imagine, frequently to concern myself with renewal and land development policies as they have come before us.

But, of course, I am not testifying in that capacity. I am no longer serving on the platform committee.

I am, however, testifying in the capacity as a member of the Wisconsin Small Business Advisory Council to which I was just reappointed on March 16, 1966.

Our council in two meetings, in January of 1965 and January of 1966, discussed this problem of the disposal of cleared land rather extensively and both times adopted resolutions. Our resolution, as you will see, requested the Congress and the Small Business Administration to put under extended study the process and procedures and policies that have governed disposal of cleared land, as we felt very deep concern that they were inadequate and not only for the smaller businessmen but for the purpose of realizing maximum use of this great public domain that is now becoming available and distributing this domain under the wisest and most prudent policies.

A copy of that resolution was passed on to Senator Proxmire, and it is as an outcome of correspondence with Senator Proxmire on that issue that I am testifying before you. (See exhibit 1.)

I think you will see that ordinary recourse to our administrative channels of the Small Business Administration has not afforded adequate ventilation of the issue.

The ramifications of land disposal under urban renewal are so extensive and the issues involved are so complex I think they can only be appreciated at the highest level of government where there is concern felt for both longrun and short-term effects, for patterns of property holdings, for patterns of ownership of land and for the