Senator DOUGLAS. The next witness is Mr. Nat Keith, president, National Housing Conference.

Senator DOUGLAS. We are glad to welcome you, Mr. Keith.

Mr. KEITH. Thank you very much, Senator. I have a prepared statement and if it is agreeable with you, I will file it. I would like to read parts of it, or summarize it.

Senator DOUGLAS. That will be fine.

STATEMENT OF NATHANIEL S. KEITH, PRESIDENT, NATIONAL HOUSING CONFERENCE

Mr. Chairman and members of the committee, on behalf of the National Housing Conference, I wish to express our sincere appreciation for this opportunity to present the views of our organization on the important and crucial legislation on housing, urban renewal, and community development which is now before this committee.

We also welcome the opportunity to advance our comments and recommendations on the administration's principal Housing and Urban Development Act of 1965, which was introduced by Senator Sparkman, and certain related bills pending before this committee.

The absolute need for passage of housing and community development legislation by the inadequacy of present laws and programs to cope with the immense and multiplying national requirements which face this Nation in the decades immediately ahead.

The urgency of such action is further emphasized by the fact that the major existing programs would otherwise expire this year, either by statutory limitation or through the exhaustion of program funds. By the year 2000—only 35 years away-it is estimated that the Nation's population will have increased by 150 million persons to about 340 million. Of this increase, at least 80 percent will occur in urban and urbanizing areas surrounding present population centers.

For years, the national housing production has been frozen at a rate only about 60 percent of the level of 2.5 million dwellings needed to meet present and prospective needs. Yet, at least one-fifth of the population is living in substandard housing and another one-fifth are generally frozen out of the new housing market by prices and rents beyond their financial means.

The failure of housing production to break through the 1.6-million level, notwithstanding large unmet needs and unsatisfied market demand, is clear evidence that present tools are inadequate to do today's job, to say nothing of meeting the rapidly expanding requirements which lie immediately ahead. New programs, recommended by the President, are aimed to bring some relief to these areas of need, but any gains made could be more than offset by inadequate proposals for lowrent public housing and for urban renewal.

The lag in home construction is retarding employment and economic growth. It is a major contributor to the national poverty problem by relegating one-fifth of the population to slum life with all its impact on juvenile delinquency, discontent, racial strife, and social disintegration. Financially hard-pressed municipalities are unable to keep pace with current needs for utilities, streets, schools, parks, and playgrounds as part of a well-planned program for community development and clearly will be swamped by expanding future requirements

unless necessary additional assistance is forthcoming-assistance that is geared to realistic known needs.

The National Housing Conference was deeply impressed by the breadth, vision, and high purposes expressed by President Johnson in his recent message on the cities. Our organization is strongly in accord with the objectives set forth in that message and in the proposed Housing and Urban Development Act of 1965.

For the accomplishment of those objectives, however, the conference is convinced that much more is required than is contained in the administration's legislative proposals, and our recommendations are designed to put forward the additional proposals required to meet those objectives.

At the 34th Annual Convention of the National Housing Conference, which was held in Washington on March 14 and 15, the administration's proposals were considered in depth, along with additional proposals growing out of long-term studies by our organization and other national organizations.

The position of the National Housing Conference on these matters is expressed in resolutions adopted by our membership on March 15. With your permission, I would like to submit these resolutions for inclusion in the record of these hearings for consideration by members. of the committee.

(The resolutions follow :)

RESOLUTIONS ADOPTEL BY the MembeRSHIP OF THE NATIONAL HOUSING CONFERENCE AT THE ANNUAL BUSINESS MEETING, MARCH 15, 1965, WASHINGTON, D.C. The National Housing Conference welcomes President Johnson's recent message on the cities, as recognition of its long and unceasing fight to help establish a more effective Federal-local partnership to meet the mounting problems of urban living. Its members, assembled in Washington, D.C., on March 14, 1965, for the 34th annual meeting, applaud the high purposes expressed by the President. They also enthusiastically endorse the objectives of the administration's legislative recommendations contained in the proposed "Housing and Urban Development Act of 1965," and the bill to create a Department of Housing and Urban Affairs.

For the accomplishment of those objectives, however, the conference is convinced that much more is required than is contained in the administration's legislative proposals, and our recommendations are designed to put forward the additional proposals required to meet those objectives.

The absolute need for passage of housing and community development legislation in 1965 is underlined by the inadequacy of present laws and programs to cope with the immense and multiplying national requirements which face this Nation in the decades immediately ahead. The National Housing Conference, whose members represent all phases of the public interest in housing, regret the lack of consultation in depth by the administration with those outside of Government who support the basic programs administered by the Housing and Home Finance Agency, in drafting the administration's proposed legislation. While they are in general agreement with the administration's objectives, the National Housing Conference membership urges the Congress to expand the programs before them, in line with demonstrated housing and urban development needs. By the year 2000--only 35 years away-it is estimated that the Nation's population will have increased by 150 million persons to about 340 million. Of this increase, at least 80 percent will occur in urban and urbanizing areas surrounding present population centers.

For years, the national housing production has been frozen at a rate only about 60 percent of the level of 2.5 million dwellings needed to meet present and prospective needs. Yet, at least one-fifth of the population is living in substandard housing and another one-fifth are generally frozen out of the new housing market by prices and rents beyond their financial means. The failure of housing production to break through the 1.6 million level, notwithstanding large

unmet needs and unsatisfied market demand, is clear evidence that present tools are inadequate to do today's job, to say nothing of meeting the rapidly expanding requirements which lie immediately ahead. New programs, recommended by the President, are aimed to bring some relief to these areas of need, but any gains made could be more than offset by inadequate proposals for low-rent public housing and for urban renewal.

The lag in home construction is retarding employment and economic growth. It is a major contributor to the national poverty problem by relegating one-fifth of the population to slum life with all its impact on juvenile delinquency, discontent, racial strife, and social disintegration.

Financially hard-pressed municipalities are unable to keep pace with current needs for utilities, streets, schools, parks, and playgrounds as part of a well planned program for community development and clearly will be swamped by expanding future requirements unless necessary additional assistance is forthcoming-assistance that is geared to realistic known needs.

The membership of the National Housing Conference therefore approves the following recommendations as providing the ingredients for a meaningful legislative program to meet the Nation's housing and urban development needs. Some are longstanding proposals by the National Housing Conference and other national organizations. Others are new proposals or refinements adjusted to current needs.

In addition to its legislative proposals, the National Housing Conference urges that the Bureau of the Budget recommend and the Congress approve adequate administrative budgets for the Federal agencies in housing, urban renewal, and community development. NHC considers that the present arbitrary limitations imposed by the Bureau of the Budget on the administrative staffs of these agencies are seriously handicapping the effective administration of their programs and the services available to communities.

The National Housing Conference hereby recommends the following legislative programs for housing and community development for 1965:

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

As the first national organization to recommend the creation of a Department of Housing and Urban Development, the National Housing Conference welcomes and supports the recommendation of President Johnson for action by Congress to convert the Housing and Home Finance Agency into an executive department. Such action by the Congress is long overdue.

We commend the President for his forthright request to the Congress in which he said: "Our urban problems are of a scope and magnitude that demand representation at the highest level of government. The Housing and Home Finance Agency was created two decades ago. It has taken on many new programs. Others are proposed in this message. Much of our hopes for American progress will depend on the effectiveness with which these programs are carried forward. These problems are already in the front rank of national concern and interest. They deserve to be in the front rank of government as well."

HOUSING FOR FAMILIES OF LOW INCOME THROUGH PUBLIC HOUSING

The essential low-rent public housing program is at a standstill with regard to new projects; present program authorizations are fully committed and the plans of many communities throughout the country for urgently needed housing for displaced or otherwise eligible low-income families must be held in abeyance until additional contract authority is approved by the Congress.

Low-rent public housing provisions in the administration's proposed Housing and Urban Development Act of 1965 represent little more than a continuation of the existing program at its present rate of production for a period of 4 years; namely, 35.000 new homes a year. While the bill does provide new provisions aimed to achieve greater use of existing private housing through purchase or lease for public housing purposes, it contemplates an average of only 25.000 units to be so provided over each of the next 4 years. The National Housing Conference insists that the basic low-rent public housing program should provide for the construction of at least 125,000 new units for each of the next 4 years, if that program is to serve its purpose in helping to meet total housing needs.

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In developing a dynamic housing program for families of low income, new areas must be explored which will enable local housing authorities to provide an inventory of publicly supported housing opportunities to use in meeting a wide variety of local needs. The National Housing Conference applauds the administration for recognizing the need for such tools in its legislative program, and urges the authorization of adequate annual contribution funds to make the lease and purchase programs genuinely meaningful in helping to meet low-rent public housing needs. The annual contribution formula on properties purchased or leased for low-rent housing use, as provided in the administration's bill, follows closely the recommendations of the National Housing Conference that it be for a shorter period of utilization of such properties, which necessarily involve a lower capital cost. Therefore, as applied to such existing properties, the annual contribution is based on a maximum dollar amount per year, not to exceed the amount that would be established for new low-rent housing with comparable types of units, instead of being based on a percentage of project cost as it is with new construction.

In recasting the low-rent public housing effort, beyond the administration's recommendations, new standards of design, social services and financial flexibility must be incorporated. The traditional program represented by publicly owned housing developments financed over a 40-year period, has proved its value and must be expanded. The authorization of 37,500 new low-rent dwellings contained in the Housing Act of 1964 was sufficient to accommodate only about half of the backlog of eligible applications on hand when the Act was passed. This underlines the need for an expanded program.

The National Housing Conference therefore urges approval of the following financial authorizations and program amendments:

(a) An increase in the present program to authorize the construction of 125,000 new public housing units a year for a period of 4 years, with the provision for carryover of unused authorizations to subsequent years, and with the necessary increase in annual contributions authorizations to make this program possible. The demonstrated demand for low-rent public housing has substantially increased in recent years. Since 1961, 411 new local housing authorities, serving 618 communities, have been created under State enabling legislation and are strained to move ahead when additional funds are available.

(b) There is a need to recognize the desirability of employing housing facilities other than new construction to meet the housing requirements of low-income families. The National Housing Conference supports the administration's proposal which would permit local housing authorities to make use of suitable existing structures through purchase, rehabilitation, or lease, and advocates the provision of annual contributions for this purpose.

(c) Authorization to the Public Housing Administration to make capital grants for writing down land costs for low-rent projects not in renewal areas, to the same extent as is done for projects within renewal areas.

(d) The revision of the annual subsidy formula to permit annual contributions equal to full debt service as established by permanent financing, with residual receipts being used either for project rehabilitation and improvement, or accelerated amortization. At any time after completion of a project, provision should be made for reopening development cost, if necessary, and making additional loans for needed rehabilitation or improved with annual contributions correspondingly increased.

(e) Authorization for the sale of projects or parts thereof to tenant cooperatives or to tenants where they are prepared for homeownership responsibility, and where such sale would serve local housing needs and new units would replace those sold.

(f) Supplement the language of the U.S. Housing Act of 1937, as amended, to emphasize the importance of good public housing design to the lowincome family and to the local community; the elimination of the present statutory limits on construction costs per rental room; and the adoption of construction cost limitations which recognize prevailing costs and changes in local cost levels of well-designated public housing.

(g) Repeal the provision in the U.S. Housing Act of 1937, as amended, which requires a 20-percent gap between the lowest private and the upper rental limits for admission to public housing.

(h) In low-rent housing projects, there is a desperate need for and a great opportunity to provide social impetus and local vitality not only to those living in the developments, but also to the surrounding neighborhood. The need is both

for physical community facilities on a larger scale, and for skilled and dedicated personnel to operate them imaginatively. Where such work has been in operation even on a limited scale, the improvement in morale, in lessening delinquency rates, and in other social benefits is notable and encouraging. This recommendation is twofold. First, funds are needed for personnel skilled in evoking local interest, local leadership, local participation. Even with inadequate physical facilities, such personnel can and does accomplish much. Second, to overcome the handicap of inadequate physical facilities for community services, capital allowances for such purposes must be substantially increased.

(i) Additional methods of housing assistance to low-income families such as low-interest loans and grants for rehabilitation of private homes, participation in mutual help programs, and cooperation with nonprofit philanthropic organizations should be actively explored and definite recommendations formulated. (j) Authorization of $5 million to the Public Housing Administration for demonstration programs for low-income families. This authorization directly to PHA should be in addition to the similar authorization to the Housing and Home Finance Administrator.

(k) NHC recommends a technical amendment to the provision which, in 1961, repealed former section 10(j) of the Housing Act of 1937, as amended, in order to make it clear that this provision is repealed ab initio, and to direct the automatic elimination of all requirements in this connection from all existing contracts. NHC further proposes the amendment of section 10(h) in order to authorize the local authorities to make the 10-percent payment in lieu of taxes to local governments in all cases where there exists tax exemption to public housing projects. It is also recommended that the same section be amended to authorize the Public Housing Administration to enter into annual contribution contracts with local authorities where projects are not tax exempt when local governments contribute in cash, services or other credits an amount equal to 10 percent of annual shelter rent charged in such projects.

(1) The Public Housing Administration should be authorized to advance funds chargeable to development costs of projects for the provision of commercial facilities to serve new or existing housing projects. Sale of cleared land for such commercial facilities by the local housing authority should be at fair market value. The administrative overall total cost limitations should be modified to the extent such limitations are exceeded by the costs entailed in making the cleared land available for commercial facilities.

(m) NHC supports the Administration proposal for an amendment to modify the equivalent elimination requirement of the Housing Act of 1937 by providing for the acceptance of a certification by the local government that it has complied with this requirement.

(n) Eligible individuals, irrespective of age, should be eligible for admission and continued occupancy in low-rent public housing, provided they meet applicable income limits.

HOUSING FOR LOWER AND MIDDLE INCOME FAMILIES

For more than a decade there has been urgent need for broad programs of Federal assistance to provide satisfactory housing for families and individuals with incomes too low to be served by the private housing industry at market rates of financing, and too high to be eligible for low-rent public housing. The belowmarket interest rate program of FHA authorized by the Housing Act of 1961 represented an important first step in reaching this unserved area of housing need.

However, notwithstanding this promising beginning, experience has demonstrated that this financing formula is too limited to provide the broad solution that is essential to meeting the needs of lower middle-income families or individuals. The Administration has recognized this conclusion, and has proposed a new program under title I of the Housing and Urban Development Act of 1965, making "special provisions for disadvantaged persons" in the form of rent supplements that would be available with respect to housing to be built with the assistance of FHA-insured section 221(d)(3) market-interest rate mortgages and owned by private nonprofit corporations, limited dividend corporations, or cooperatives.

The National Housing Conference believes that the solution of the total problem of providing satisfactory housing for the mass market of families and individuals of moderate income demands a much broader based program than that