TUESDAY, APRIL 19, 1966 U.S. SENATE, COMMITTEE ON BANKING AND CURRENCY, SUBCOMMITTEE ON HOUSING, The subcommittee met at 10:05 a.m. in room 5302, New Senate Office Building, Senator John Sparkman (chairman of the subcommittee) presiding. Present: Senators Sparkman, Douglas, Proxmire, Williams, McIntyre, Tower, and Bennett. Senator SPARKMAN. Let the committee come to order, please. We have several Senators that will probably be coming in later, but we have a very heavy schedule and we should get started. Secretary Weaver has commitments and meetings and wishes to leave about noon, so I would like for us to move along as rapidly as we can. The hearings starting today and continuing through next week are for the purpose of taking testimony on all housing and urban development bills pending before this subcommittee. These include the administration bills, S. 2842, introduced by Senator Douglas, and S. 2977 and S. 2978 introduced by me; also several mass transportation bills introduced by Senator Harrison Williams and other Senators. In total, we have 26 bills covering a variety of subjects which are before the subcommittee for consideration during this session of Congress. Without objection, I shall place in the record a complete list of bills pending before the subcommittee at the conclusion of this statement. After last year's action by the Congress in approving one of the most comprehensive housing bills of all times, including the extension of expiring programs by a full 4 years up to 1969, I did not expect to have more than a few small amendments to be considered by the subcommittee this year. Frankly, I was quite surprised to receive the President's message on housing and urban development legislation. The President sent up not only one bill, but three bills, and at least one of these, the demonstration cities bill is proposing a Federal program of assistance to U.S. cities and counties on a scale far exceeding anything ever attempted by our Government. I have not had the opportunity to study all of these bills as thoroughly as I should have liked. I am looking forward to hearing testimony from Secretary Weaver and other witnesses in order to understand the details of what is being proposed. My first reaction to the demonstration cities bill was a favorable one in terms of the objectives of having all Federal programs of assistance to cities coordinated and made more efficient. Over the past several years we have added program upon program and agency upon agency providing financial assistance to the cities. It has become obvious that something needed to be done to coordinate these programs to insure a more orderly and equitable distribution of Federal assistance. The demonstration cities bill is intended to do this and, from this point of view, no one can argue against it. However, we shall examine the bill carefully with reference to its many implications, particularly those involving the Federal Government into the affairs of local governments, as I said a minute ago, beyond anything we have attempted heretofore. 1 The problem, as usual, is the extent to which the carrot and stick idea will work without doling out too much carrot or bearing down too hard on the stick. We have learned a lot about Federal-local relations through the urban renewal program and other programs that we have passed through this committee and through the Congress. The demonstration cities program is a most ambitious undertaking and I hope that the committee makes the maximum use of the hearings to raise questions with the witnesses about every detail of the proposal and all other new material that is contained in these various bills. Of equal significance in terms of obtaining a more efficient coordination of financial assistance programs in metropolitan areas is S. 2977, the Urban Development Act. This bill also brings into focus the coordination problem between the Federal and local governmental units and presents a real challenge to develop a technique for getting the maximum return for our money in the development of our cities and their environs. The bill leaves no question about the objective, but I believe it is short on the details of how the objectives are to be obtained. It is here that I believe our committee will want to ask many questions and get a better understanding on the procedure being recommended under the bill. There seems to be one major gap in the bills before us—that is, improved techniques for rehabilitation housing. Very little has been said in the press or in comments on the administration's bills on how the thousands of people involved in the demonstration cities program are to be rehoused. Rent supplements and public housing have been mentioned, but these programs could not begin to do the job that is contemplated. I have heard a great deal about public works programs, new schools, new streets and parks, but very little reference by the cities themselves on how they will tackle the most frustrating problem of all-providing decent housing for the low- and moderate-income families. I hope the Secretary will tell us today how he contemplates this is to be done on the scale envisioned under the demonstration cities program. (The list of bills pending before the Subcommittee on Housing is as follows:) BILLS PENDING BEFORE HOUSING SUBCOMMITTEE S. 1850 (Bayh): Authorizes disaster loans under title V of the Housing Act of 1949. S. 1915 (Bartlett): Authorizes a program of loans and grants to the State of Alaska to provide decent and suitable housing to persons unable to obtain decent housing otherwise. S. 2419 (Dominick): Makes Federal urban renewal assistance available to localities upon publication of names of owners of rental properties in such localities which are used for residential purposes. S. 2477 (Kuchel): Authorization renewal assistance for renewal of blighted areas of a locality containing war housing projects. S. 2520 (Williams of New Jersey): Provides loans for urgently needed nursing homes. S. 2599 (Tydings): Mass transportation. S. 2652 (Tydings): Makes 3-percent interest rate applicable to section 202 elderly housing projects on which loan had been made prior to enactment of 1965 Housing and Urban Development Act. S. 2782 (Bayh): Authorizes disaster loans under farm housing loan program and Consolidated Farmers Home Administration Act of 1961. S. 2804 (Williams of New Jersey): Mass transportation. S. 2842 (Douglas): Demonstration Cities Act of 1966. S. 2935 (Javits): Mass transportation. S. 2958 (Fulbright): Permits certain local expenditures as title I grants-in-aid for Little Rock, Ark. S. 2977 (Sparkman): Urban Development Act. S. 2978 (Sparkman): Housing and Urban Development Amendments of 1966. S. 3057 (Javits): Reduces insurance premium on management-type cooperatives from one-half of 1 percent to one-quarter of 1 percent. S. 3058 (Javits): Permits the more effective operation of the cooperative management housing insurance fund. S. 3061 (Magnuson): Mass transportation. S. 3097 (Muskie): Preservation of historic structures under urban renewal and related Federal programs. S. 3116 (Hart): Authorizes mortgage insurance for seasonal homes. S. 3118 (Eastland): Permits certain local expenditures as title I grants-in-aid for Senatobia, Miss. S. 3146 (Robertson): Permits certain local expenditures as title I grants-in-aid for Roanoke, Va. S. 3211 (Sparkman): Permits certain local expenditures as title I grants-in-aid for Huntsville, Ala. S. 3212 (Sparkman): Permits certain local expenditures as title I grants-in-aid for Birmingham, Ala. S. 3213 (Sparkman): Permits certain local expenditures as title I grants-in-aid for Mobile, Ala. S. 3214 (Sparkman): Permits certain local expenditures as title I grants-in-aid for the University of Alabama. S. 3215 (Sparkman): Authorizes mortgage insurance and direct loans to help finance construction and equipping facilities for the group practice of medicine or dentistry. S. 3227 (Tydings): Mass transportation. S. 3232 (Ribicoff): Permits certain local expenditures as title I grants-in-aid for New Haven, Conn. S. 3248 (Ribicoff): Amends definition of "educational institution" under college housing loan program. S. 3255 (Bartlett): Provides assistance to residents of communities and rural areas of Alaska for needed public services, public facilities, and housing. S. 3262 (Tydings): Amends urban renewal law with reference to cities receiving reimbursement under the three-fourths capital grant formula to recognize certain local expenditures as eligible for Federal assistance. S. 3270 (Sparksman): Permits certain local expenditures as title I grants-in-aid for Ozark, Ala. S. 3282 (Sparkman): Authorizes financial assistance for urban renewal projects involving the central business district of a community. S. 3290 (Tydings): Authorizes urban renewal relocation payments to displaced owners of small businesses for loss of goodwill. S. 3313 (Javits): Amends urban renewal law to authorize assistance for neighborhood conservation programs. S. 3314 (Javits): Increases urban renewal capital grant authorization. S. 3315 (Javits): Amends rent supplement program to include housing financed under certain State or local programs. S. 3347 (Lausche): Permits certain local expenditures as local grant-in-aid for Cincinnati, Ohio. S. 3367 (Robertson): Permits certain local expenditures as local grant-in-aid for Richmond, Va. S. 3399 (Carlson): Permits certain local expenditures as local grant-in-aid for Olathe, Kans. S. 3410 (Sparkman): Permits certain local expenditures as local grant-in-aid for Decatur, Ala. S. 3411 (Sparkman): Authorizes the Secretary of Defense to acquire properties of certain homeowners whose properties are located at or near military installations which have been ordered to be closed. S. 3417 (Dodd): Permits occupants of public housing to qualify for tenancy in housing assisted under the rent supplement program. S. 3444 (Case): Requires that medicine cabinets used in federally assisted housing be equipped with latches designed to prevent young children from gaining access to the contents. S. 3458 (Robertson): Permits certain local expenditures as local grant-in-aid for Hampton, Va. S. 3461 (Monroney): Permits certain local expenditures as local grant-in-aid for Oklahoma City, Okla. S. 3471 (McIntyre): Permits certain local expenditures as local grant-in-aid for Portsmouth, N.H. Senator SPARKMAN. Senator Tower, you have some remarks before we start? Senator TOWER. After your very excellent statement, I think that anything I would have to say would be like adding a few remarks after the Sermon on the Mount, Mr. Chairman. [Laughter.] Senator SPARKMAN. Our first witness this morning is Dr. Robert C. Weaver, Secretary of the Department of Housing and Urban Development. Mr. Robert C. Wood, Under Secretary; Mr. Charles M. Haar, Assistant Secretary for Metropolitan Development; Mr. Philip N. Brownstein, Assistant Secretary for Mortgage Credit and Commissioner of the Federal Housing Administration; Mr. J. Stanley Baughman, President of the Federal National Mortgage Association: Mr. Melvin Frasier, Acting Commissioner, Community Facilities Administration; Mrs. Marie McGuire, Commissioner, Public Housing Administration; Mr. Howard Wharton, Acting Commissioner of Urban Renewal Administration; and Mr. Ashley Foard, the Acting General Counsel also accompanying Dr. Weaver. We are glad to have all of you gentlemen and gentlewoman. We shall be pleased at this time to hear from you. Let me say, Mr. Secretary, you have quite a voluminous presentation here. I presume you want all of this placed in the record, or is one of them a full statement? Mr. WEAVER. One is a full statement, the other is a short statement, and I will read the short statement. Senator SPARKMAN. The full one is the long one. It will be printed in full in the record. You may proceed with your statement. STATEMENT OF ROBERT C. WEAVER, SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; ACCOMPANIED BY ROBERT C. WOOD, UNDER SECRETARY; CHARLES M. HAAR, ASSISTANT SECRETARY FOR METROPOLITAN DEVELOPMENT; PHILIP N. BROWNSTEIN, ASSISTANT SECRETARY FOR MORTGAGE CREDIT AND COMMISSIONER, FEDERAL HOUSING ADMINISTRATION; J. STANLEY BAUGHMAN, PRESIDENT, FEDERAL NATIONAL MORTGAGE ASSOCIATION; MELVIN FRASIER, ACTING COMMISSIONER, COMMUNITY FACILITIES ADMINISTRATION; MARIE MCGUIRE, COMMISSIONER, PUBLIC HOUSING ADMINISTRATION; HOWARD WHARTON, ACTING COMMISSIONER, URBAN RENEWAL ADMINISTRATION; AND ASHLEY FOARD, ACTING GENERAL COUNSEL Mr. WEAVER. Mr. Chairman, members of the committee, it is a pleasure to be here to present the views of the administration on housing and urban development legislation. The chairman has identified the people who are accompanying me. And he has identified the bills that are before us. I should like to submit for the record a detailed statement on these bills, and a statement that gives the committee current data on our existing programs. (See p. 71.) The Department has submitted written reports (see pp. III, IV) on a number of other housing and urban development bills being considered by the subcommittee, and I will be happy to answer any questions you may have on those bills or our written reports. DEMONSTRATION CITIES ACT OF 1966 The demonstration cities bill is the most important proposal in the President's program for rebuilding America's cities. In his January 26 message to the Congress recommending the demonstration cities bill, the President said: From the experience of three decades, it is clear to me that American cities require a program that will Concentrate our available resources-in planning tools, in housing construction, in job training, in health facilities, in recreation, in welfare programs, in education-to improve the conditions of life in urban areas. Join together all available talent and skills in a coordinated effort. Mobilize local leadership and private initiative, so that local citizens will determine the shape of their new city * The demonstration cities bill will make it possible for cities of all sizes to undertake such a program. This bill will help cities to plan, develop, and carry out comprehensive city demonstration programs. These are locally prepared programs for rebuilding or restoring entire sections and neighborhoods of slum and blighted areas. It will help cities provide the public facilities and services, including citywide aids, needed to enable the poor and disadvantaged people who live in these areas to become useful, productive citizens-citizens able to join in the general prosperity this Nation now enjoys. This bill will make it possible to improve and substantially increase the supply of adequate low- and moderate-cost housing in the cities. It will make it possible for cities to concentrate their educational, health, and social services on the problems of the large numbers of poor and disadvantaged people who live in slum and blighted sections and neighborhoods. It will make it possible to treat the human needs of people in the slums at the same time physical rehabilitation is being carried out. To qualify for assistance under this bill, a city must be prepared to plan and carry out a comprehensive city demonstration program. This will be a local program. It will be planned, developed, and carried out by local people. The character and content of the program will be based on local judgments as to the cities' needs. This bill will provide Federal funds to cover up to 90 percent of the cost of planning and developing the comprehensive city demonstration program. It will provide special Federal grants-supplementing assistance available under existing grant-in-aid programs-to help carry out all of the activities included as a part of the demonstration program. The amount of these special, supplemental grants, will be equal to 80 percent of the local or State share of the cost of all projects or activities which are a part of the demonstration program and financed under existing grant-in-aid programs. I will soon explain more fully the provisions of this bill relating to these supplemental grants. But first, let me emphasize that it will not be easy to qualify for this assistance. This bill is designed to help cities willing to face up to their responsibilities-willing and able to bring together the public and private bodies whose joint action is necessary to solve their problems, willing to commit fully their energies and resources, willing to undertake actions which will have widespread and profound effects on the physical and social structure of the city. |