Most importantly the study found:

(1) operating costs varied widely nationally

(2) rents per unit varied widely nationally

(3) no single characteristic of the public housing stock or the tenants have a close relationship to the level of costs

(4) the median income of public housing tenants has been rising much less rapidly than operating costs

(5) operating costs are the most important factor in the present financial crisis.

On the basis of these findings it is clear that a uniform national rent to income ratio system is not the answer to the financial problem in public housing. Housing Authorities in Alabama may not need to increase rents, because they may not be in financial trouble, whereas in New York City, a rent increase related to income may not raise sufficient funds to cure its operating cost crisis. Nor will the creation of a mixed economic population within public housing as proposed in section 9 (a) cure the problem.

The Institute's report saw three alternatives to relieving the financial crisis: (1) Raise rents about 8% yearly to cover increases;

(2) Reduce the number of minors per unit (in effect increase the percentage of elderly units in stock);

(3) Increase the Federal subsidy.

It should be noted that the rent increase alternative proposed by the study unlike the Administration's proposal is not linked to income. The study concluded that such increases would "become an extremely heavy burden on tenants, rapidly reducing the margin between private market and public housing rentals." The clear effect of such a solution would be to totally undermine the purposes of public housing-providing housing within the financial reach of low-income families, and is therefore unacceptable. It is heartening that HUD did not seek to solve public housing's financial problems by adopting the Institute's second alternative.

The fact is that the only reasonable solution to public housing's financial problems is the third alternative proposed by the Institute-increased Federal statutory payments. This is the solution adopted by Congress last year via the Brooke-Sparkman Amendments which HUD chose not to implement. It is the only remedy which recognizes the fact that rising operating costs are largely outside Local Housing Authorities control. And, most importantly, avoids shifting the economic burden to tenants who can ill afford it, or drastically shifting the composition of tenants, either of which would fundamentally and negatively alter the 30 year purpose of public housing.

S. 4086 would continue and reaffirm the plan approved by Congress last year in sections 212 and 213 of the 1969 Housing Act. Unless this Committee chooses to repudiate the program adopted last year, it must reject the Administration's proposal and adopt S. 4086. We are confident it will do so.

Senator BROOKE. Now the next witness we have is Mrs. Cushing Dolbeare, executive director, Housing Association of Delaware Valley. Mrs. Dolbeare, you have been most patient. Obviously because I have to leave at 1:30, we will not be able to hear your entire statement. However, your entire statement will be placed in the record (see p. 1041).

Could you give us a briefer than brief summary of that statement, and what I have said to Mr. de Leeuw, I would like to say to you and ask you if you would be willing to submit answers to any questions that any member of the committee may have which would be submitted for the record?

STATEMENT OF MRS. CUSHING DOLBEARE, EXECUTIVE DIRECTOR, HOUSING ASSOCIATION OF DELAWARE VALLEY

Mrs. DOLBEARE. I would be delighted to do so, Senator Brooke. Rather than summarizing my prepared statement, I want to comnt on two of the bills which you have introduced.

The first one is on S. 4088 for housing allowances. The housing association has been convinced for over 5 years that the only meaningful solution to the housing problems of low income people-and by meaningful solutions we really mean something that would solve the problems of everybody, not just a tiny segment-is either a guaranteed annual income comparable to the level of adequacy set by the BLS, or a broad scale system of housing allowances.

So we are delighted that you have introduced this bill as a first step in this process. We would like to see it go much further. We would like to see it cover everyone who is in need and pay the difference between the 20 percent of income and the cost of housing of the size which is required.

I might point out that we computed the need for allowances on the basis of 1960 census figures, using the concept that housing costs should be a residual for low-income families, that is you determine what families can afford to pay, not by a percentage formula, but by how much they have left over after meeting needs for food and clothing and other essentials, and incidentals.

We found that more than half of the families in urban areas in the United States with incomes below the poverty line set by the Federal Government could afford to spend nothing for housing.

So we don't think that your proposed ceiling of 20 percent or 25 percent is high at all. We think that really we need to move much further than that.

Second I am concerned that your proposed legislation

Senator BROOKE. You would agree that this is a good beginning? Mrs. DOLBEARE. Oh, definitely, yes, indeed.

Senator BROOKE. It is a good first step?

Mrs. DOLBEARE. Yes and we would love to see it pass.

Senator BROOKE. I would like to see my colleagues go further but I am not convinced we could at this time.

But if we were able to get this through, it would be a great first step.

I quite agree, I know there are many cases where 25 percent of annual income is just not sufficient to pay rent.

Mrs. DOLBEARE. Well, also, Senator, we computed the cost of housing allowance which would benefit every family that needed it in the Philadelphia area in 1960. On the basis of those computations which were based on income, family size, and housing costs as shown by the 1960 census, we found that to provide the subsidy for everyone in need in the Philadelphia area would cost $50 million alone.

This housing allowance bill which you have introduced and I have described as a first step, I believe would provide twice that amount for the entire country.

I am concerned that the bill is limited to communities where there are vacancies in the standard stock of housing because I don't think there are any such communities today.

Also, the fewer the vacancies, the higher housing costs tend to rise. At least 80 percent of the families in Philadelphia with incomes below $2,000 a year are spending more than one-third of their income for shelter.

Some of that shelter is standard, but housing allowances-we think housing allowances are essential just to reduce the amount that very

low-income people spend on housing regardless of whether or not there are vacancies in the stock.

I would almost be prepared to propose that the fewer the vacancies the more important it would be to have housing allowances, because of the assistance needed to pay the higher rents that result.

We are interested that the Emergency Housing Act which has just cleared both Houses of Congress, I believe, uses an effective demand approach to stimulate the production of moderate income housing. We are not waiting to authorize Federal payments to reduce mortgage interest rates to 7 percent for moderate-income housing until the housing is produced. We are saying we will provide a subsidy to reduce the interest costs and we are anticipating that more than a half a million additional building units will be built as a result of that.

We think a housing allowance proposal for low-income families would have very much the same effect. It would encourage people to keep standard units on the market and rent them to low-income families.

I would like to turn now to your other bill, S. 4086, on the Brooke amendment. The housing association has analyzed the HUD regulations and their impact and we concur with your statement, with the legislation that you are introducing and with the thrust of the testimony that has been presented this morning.

There is one point here which I feel is very important to make, that I don't think has been made by anyone else all of the comments seem to have been directed to current crises in public housing.

There is a chart attached to my prepared statement which shows the rent ranges in public housing. The present public housing rent ratio in Philadelphia was introduced more than 10 years ago by the Philadelphia Housing Authority, at a time when the authority was regularly returning residual receipts to the Government.

Therefore, it was in no way related to the current financial crisis. Public housing has four rent scales. The one on the left is for housing projects. This is the scale that Mrs. Wylie referred to in her testimony as being where public housing tenants, if not on welfare, pay 20 percent of their income.

While 70 percent of Philadelphia's units are in projects, only half of them are occupied by people not on welfare and who are therefore actually paying that 20 percent. In other words, only about one-third of Philadelphia's housing tenants pay 20 percent of their incomes for rent. The rest pay more.

Everyone in leased housing, and that is 1,000 units, then everyone in used housing, and that is 5,000 units, and then everyone on welfareand that is more than half the families in Philadelphia in public housing they are paying substantially more than 25 percent of their incomes for rent.

So I think it is important that it be clearly understood that if your proposed legislation is adopted it is not just related to current operating costs.

I would say even more importantly, it should be directed toward enabling tenants at the bottom of the income scale to pay, and this is the income level which public housing has never adequately served from its inception.

Thank you very much.

Senator BROOKE. Thank you very much and if you would please supply your computation for those figures which you referred to earlier, we will be most grateful to you.

Mrs. DOLBEARE. I would be glad to. (See p. 1048.)

Senator BROOKE. Thank you for your understanding. (Complete statement of Mrs. Dolbeare follows:)

STATEMENT OF CUSHING N. DOLBEARE, MANAGING DIRECTOR, HOUSING ASSOCIATION OF DELAWARE VALLEY

HOUSING ASSOCIATION AN ADVOCATE OF HOUSING REFORM

I am pleased to accept this invitation to testify before the Housing Subcommittee. The Housing Associationn of Delaware Valley (formerly the Philadelphia Housing Association), with which I have been professionally associated for the past 14 years, is the oldest citizens housing organization in the nation.

The Housing Association has a long-standing interest in housing for low income families. We were among the first to oppose the construction of monster, high-rise public housing projects; we were the first to propose the use of existing housing for public housing; and we were early and eager advocates of housing allow ances. At present, the Housing Association is giving high priority to a program urging that suburban municipalities obtain public housing or similar subsidies for at least 1% of their housing stock.

ADEQUATE INCOME BASIC TO SOLVING HOUSING PROBLEMS

In the sixty-one years since our establishment, our major concerns have evolved from an emphasis on code enforcement and the elimination of substandard housing, to a concern with the need for consumer-oriented housing subsidy programs and the elimination of racism and exploitation from housing institutions, public or private. After stressing code enforcement, urban renewal, and housing supply programs for half a century, we finally acted on our realization that people live in substandard housing, not by choice but because they are forced to do so. The remedy therefore lies not so much in attacking the structures as in giving people the means to fix them or leave them. Hence, the conclusion that the basic housing problems of low income families cannot be solved without raising their incomes to an adequate level-through employment opportunities, through income maintenance or through housing allowances. For this reason, the Housing Association enthusiastically supports a guaranteed annual income at the BLS budget for a minimum level of adequacy: currently $6600 per year for a family of four.

Until we achieve this objective, some form of housing allowance program is essential. We believe it should serve all in need, and cover the difference between one-fifth of income and the average rent of housing of the size required. To promote broader housing opportunity, subsidies should be calculated on a metropolitan area basis. S. 4088, introduced on July 15 by Senators Brooke, Cranston, and Goodell, represents a cautious first step in this direction. We would prefer a more ambitious program, tied to need and not to vacancies. Tying housing allowances to the existence of vacancies strikes us as similar to tying medical assistance to the availability of health care: this might have kept down the costs of medicare, but it would have provided only a fraction of its benefits.

THE OVERRIDING GOAL: HOUSING WITHIN THE MEANS OF ALL, WITH FULL
FREEDOM OF CHOICE

In evaluating present housing programs and proposing new ones, the Housing Association works toward five major goals. We believe that housing programs and policies should:

1. Provide everyone with the opportunity to obtain a decent home within his means;

2. Provide everyone with the choice of owning or renting, or housing type, and location;

3. Maintain and increase the stock of housing, so that supply is adequate in quantity, quality, cost and location;

4. Remove or rehabilitate substandard housing as rapidly as possible; 5. End racial and economic discrimination in housing, and racism exploitation in housing institutions.

The first two goals are basic, consumer-oriented goals. The last three state the essential elements to achieving the first two.

HOUSING PROGRAMS: THE BASIC SOURCE OF POLARIZATION

The Housing Association is convinced that housing programs and policies, more than any other single factor, are physically responsible for the growing separation in our society between black and white, rich and poor, urban and suburban. In Philadelphia and elsewhere in the nation, our suburbs are open to middle income and affluent whites, and closed to all others. Only one new family in six in the Philadelphia region is or can be served by the present new housing market. This means that only one family in six will be directly served by the plans for regional growth on which our regional planning commission is concentrating. To serve an economic cross-section of our population adequately, we should provide new housing for all income levels in proportion to their relative share of the region's population.

Doing this would mean that the bulk of new construction should be moderatecost housing-town houses or the equivalent now widely prohibited by zoning regulations with subsidies available to those households desiring to live in newly developed areas but unable to afford the economic cost of new housing. Not only are subsidy programs totally inadequate to meet this need, but, even if they were available, present municipal zoning and building regulation would preclude development. In part, this is understandable: few municipalities think they have the resources to provide the services and facilities needed if low income families are to have the amenities provided for most suburban Americans. The pending HUD act, S. 3639, would strengthen this exclusionary tendency by providing in Section 502b that subsidies for nonprofit, limited dividend or cooperative rental housing may only be provided where the State or locality provides tax abatement, loans, or loan insurance.

Thus, while we wring our hands about polarization, we perpetuate and strengthen the institutions and programs which cause it. It would make far more sense if Congress provided additional subsidies to communities providing low income housing, than to require local contributions.

PUBLIC HOUSING AS AN EMBODIMENT OF INSTITUTIONAL RACISM

The Advisory Commission on Civil Disorders laid the blame for the polarization of our society squarely at the door of white racism. Since publication of its report, the Housing Association has begun to explore the extent of racism in housing institutions. We find public housing a prime example of institutional racism.

Public housing itself is a white, middle-class owned and operated institution which, in many American cities, controls the lives of hundreds of thousands of minority families in the course of providing them with shelter. Racism in public housing is embodied in such practices as "social requirements" for tenancy; segregated site selections; tenant assignment practices; inflated welfare rents which have the effect if not the intent of forcing welfare tenants to partially subsidize their less poverty-striken fellows; excessive and unlivable population densities often greater than those of the slums they replaced-required to meet room cost limitations; punitive fines and occupancy policies; restrictive residency requirements for admission.

We cite public housing as the example not because it is more racist than other housing programs, but simply because public housing is the subject of today's hearing. The litany of racism in housing is a long one: Overt and federally sanctioned housing discrimination which confined black families to core cities while federal mortgage programs helped millions of white families to buy suburban homes; inequities of the housing market which have made housing more expensive at every level for blacks to buy or rent; racially exclusive policies of banks and mortgage companies which make it more difficult for minority home owners to finance home improvements and force blacks to be more dependent on subsidized low rent programs; slum clearance which bulldozed under the homes of tens of thousands of minority families and forced them into more xpensive units, often still substandard, or onto endless relocation lists for rnate housing.