A considerable part of my consultative services are focused upon the problems of housing for moderate and low-income families and upon the development of community and social services for renewal and low-income housing programs.

In February of 1967 the National Association of Housing and Redevelopment Officials (NAHRO) published a report prepared by my firm entitled Public Housing is the Tenants. This study was based upon case histories covering management-tenant relations in public housing in six cities.

In 1968 the Potomac Institute published a report and handbook entitled Housing Guide to Equal Opportunity, prepared by my office, which reported the experience of over thirty racially inclusive housing developments and neighborhoods in the United States with guidelines for developers and managers who wish to assure racial inclusiveness.

In the fall of the same year I completed a study of the social environment in publicly assisted low and moderate-income housing developments for the National Commission on Urban Problems (NCUP) which was headed by former Senator Paul H. Douglas. That study was published under the title More Than Shelter. Twenty case studies were conducted for that study-12 of which are summarized in the publication.

Altogether, as a result of the studies conducted for NAHRO and NCUP and in the course of our consulting work, I and my associates have conducted surveys of conditions in public housing in over thirty cities in the United States. Our studies have focused upon the physical and social environment in public housing.

The thrust of my testimony today is that the federal program for low-income housing is a near failure from a quantitative point of view and that qualitatively the social environment in many conventional public housing projects is little better than in the slum neighborhoods which public housing was intended to replace.

However, I hasten to say that the latter statemen does no apply to all public housing. In our studies we visited a significant number of public housing developments where both the physical and social environment appeared to be of good qualiy, relationships among tenants and between tenants and management seemed cordial and the tenants we talked to were generally satisfied.

Our studies were not quantitative in character. We did not structure our surveys to achieve a statistically reliable sample of public housing generally. For this reason I cannot offer an estimate of how much or what proportion of public housing falls below standard. It may be a very large proportion or relatively small-I simply do not know. I can only tell you about the developments that we surveyed.

I will venture a few generalizations. All of the public housing specifically designed for the elderly appeared to be of good quality; the social environment appeared to be secure and wholesome, and the tenants seemed content. This included the elderly in those high-rise developments that were occupied exclusively by the elderly.

Elderly people living in low-income family developments, especially those in high-rise buildings in which they were subjected to jostling, boisterous activity and aggressive behavior on the part of the young, were generally unhappy and longed to be somewhere else.

We found no satisfaction among tenants in high-rise housing for families. (We did not include New York City in our surveys so I make no comment about conditions in high-rise public housing in that City).

The most desirable living conditions in low-rent family housing prevailed in low-rise, relatively small developments. However, conditions in some rather large, low-rise developments were quite good and small size alone was no guarantee of quality.

In our studies we made a distinction between the purely physical and the social environment. Some public housing developments have reached a critical state of physical deterioration. Several of those were built during World War II for defense housing and were later converted to low-income occupancy. Those developments were not of high physical standards to begin with and were not suited to the rigors of low-income family housing.

With some exceptions the outward appearance of most public housing is discouraging. Generally the design is deary to begin with and what little landscaping has been provided is critically abused by the heavy concentration of children.

Parking lots tend to be strewn with junk automobiles. Litter abounds. In even the best maintained projects, there is likely to be an excess of broken windows, pushed out window screens and sagging screen doors. The dwellings are too small and occupancy is usually at or above capacity with too little storage space. Tenants of low-rise buildings, therefore, resort to outdoor storage which adds to the general appearance of disorder, litter, and filth.

The abuse and vandalism that characterizes some high-rise developments beggars description. In most instances the structures are sound, but in many projects windows in the lower floors and in common spaces such as stairwells are broken, stairwell lighting and mail boxes are torn out, elevators are out of order, railings are broken, and the stench of urine pervades the air.

On the whole, the buildings, even the high-rise buildings, are structurally safe and sound except for the evidences of vandalism and the abuse that inevitably occurs when there are a large number of children with a minimum of adult supervision. Roofs are tight, the dwellings are warm in winter, hot and cold water is normally in adequate supply. The responsible and competent family does not have difficulty maintaining decency and livability in its own quarters.

The problems of public housing, then, are not particularly those of soundness of structure or quality of equipment. They lie in the social and economic fallacies which have become institutionalized in public housing and which neither HUD nor the local authorities seem able to overcome.

The relatively better public housing that came to our attention was not particularly superior in site location, design, or quality of construction, although the better social environment was generally associated with low-rise design. The difference lay in the policy and posture of management.

I make a distinction here between quality and competence on the one hand and philosophy and posture on the other. Admittedly there are some incompetent and inept housing authorities and administrators. Much needs to be done to make local authorities more fully accountable to the people they serve. However, that problem, in my opinion, is less germane to the interests of this committee than another that I want to present here.

The public housing developments that appear to the observer to be better maintained; that have less turnover and provide a more wholesome social environment are those under the management of authorities that are more concerned about assuring a good environment than for providing shelter without qualification for those in greatest need.

There is a paradox here that I want to emphasize. The facts run contrary to some of our more humane instincts. On the one hand, we have an authority that believes every needy family, regardless of how long its income or how poor its behavior standards, should be accepted if there are vacancies. There is little or no screening except for income eligibility. Where this policy is dominant the more able and mobile tenant families move away to be replaced by the least able and the non-mobile. The average level of income reaches a level so low that under the graded rent plan the revenues collected cannot cover the costs of operation. In addition, with more and more disorganized and problem-ridden families, there are increased tensions and conflicts among tenants, aggravated vandalism, increased delinquency and crime, accelerated turnover, extended lag in rerenting vacated dwellings which then invite more vandalism and destruction. The project is then caught in a downward spiral that has no bottom. On the other hand, we will see an authority that is either more property oriented or more realistic about its social philosophy. It may accept some very lowincome families or problem-ridden families, but it screens extensively and accepts no more than it believes can be absorbed without undermining the financial and social stability of the project neighborhood. An authority that operates in this manner is likely also to maintain stricter controls over tenant behavior and to bring pressure upon those families that are destructive of the peace, security and well-being of their neighbors.

This latter style of management is often severely criticized by civic leaders, social workers, and some tenants because it does smack of paternalism, bigbrotherism and landlord interference with the private lives of tenants. Also, such management is criticized for accommodating primarily those low-income families who are not the very poor and who conform more closely to middlle class standards of behavior.

My personal view is to credit such authorities with doing a relatively good job of administering what little resources they have. They are to be faulted not because of what they are doing with the small quantity of housing they have

under operation but because they have been doing so little to increase the supply or to find better ways of providing decent shelter and an appropriate living environment for the thousands of other families who either continue to live under deplorable conditions or are paying so much for shelter that there is little left for other needs.

I cite as an example one authority which does an absolutely superb job of managing 2,000 dwelling units, of which 1,500 are for families. The premises are neat and attractive, the buildings are well maintained, there is a minimum of vandalism, the tenants are cooperative and express considerable satisfaction management has worked out arrangements with social agencies and the nearby school of social work for intensive services to families.

However, that authority has not done anything about increasing the supply of housinig for low-income families in the city for fifteen years. It is totally preoccupied with managing the small estate over which it presides. In addition it accommodates only those families that will fit well into the community. These observations lead me to two points that I want to emphasize here. First. The development of projects exclusively for the poor is a gross error. By doing so we create artificial sinks or dumping grounds for people who are not wanted elsewhere. Such communities are predestined to become slums unless management is highly selective in excluding most of the families who are in greatest need

The alternative must be to very substantially increase the supply of moderately priced housing and to apply the subsidies so that low-income families can be interspersed in many neighborhoods with no neighborhoods being exclusively for the poor. Scattered site development is a partial answer. My own preferences favor the public housing leasing program, rent supplements and other methods by which the subsidy applies to the family rather than the dwellingaffording the family a wider range of choice and greater incentive for solving its own problems.

In this connection I strongly endorse S 4087, cited as the "Abandoned Properties and Neighborhoods Act". I am persuaded that low-income families will respond more favorably to neighborhood improvement programs in areas where they feel at home and are not subjected to the stigma that attaches to the colonization that occurs in public housing. Steps must be taken to preserve that part of the housing supply that can be rehabilitated and the proposed bill should be a highly useful tool.

I also endorse S 4088, cited as the "Low Income Housing Assistance Act." If enacted, this bill will make it possible for thousands of low-income families to obtain suitable housing in the private market. It will also encourage a great many property owners to improve their properties and to rent them to families who would not otherwise be able to pay economic rents.

Second. We must deal realistically with the problems we have with the existing public housing that is now in operation.

I cannot offer a simple solution to the problem. In a few instances where I have been serving as a consultant to local renewal and housing authorities, I have recommended that (a) the local public housing supply be substantially increased through leasing and scattered site development and (b) that the existing public housing be vacated, rehabilitated and converted to moderate-income operation under non-profit private management with lease-back of about one-third of the units to the housing authority. My assumption at the moment is that only some public housing will lend itself to this type of conversion and that most of it must continue to function as low-rent housing or low-income families.

There is considerable room for improvement in management, but there will be little incentive or prospect for such improvement until the financial constraints and administrative controls imposed by traditional federal regulations are liberalized with far greater responsibility and discretion delegated to the local authorities.

Until the adoption of the Sparkman and Brooke amendments in 1968 and 1969, the subsidy formula for public housing had become totally unrealistic in the face of rising costs and the trend toward concentrating more and more very lowincome, problem-ridden families in public housing. Because my consulting work has been directed to other projects in the past year. I do not have first hand knowledge of what has been occurring as a result of these amendments. One local authority administrator told me as recently as in May of this year, that he has still waiting for instructions on how to take advantage of the Brooke amendment. A major problem is that only a few local housing authorities really stand on

their own feet. Most of them have become so conditioned to functioning as agents of the federal government that they exercise no initiative of their own and assume the defeatist posture that "Washington" or the "regional office" will not permit them to do the things that would resolve their problems. The federal housing agencies were largely responsible for creating this state of affairs and it is incumbent upon HUD to introduce the administrative and fiscal changes that will generate incentive, creativity, and management responsibility at the local level. Even after the essential changes have been made at the federal level, progress is likely to be slow. Local authority personnel are so accustomed to hiding behind the federal bureaucracy as an excuse for their own failings that many will have to discover the hard way that the responsibility is theirs.

Finally, we must understand that if the larger society is to have the luxury of keeping the very poor and the least able concentrated in segregated colonies, it must pay the bill. It is utterly unrealistic to use any normal real estate cost experience as an index for operating and maintenance costs for public housing. Private landlords, non-profit housing operators and even more housing authorities screen their tenants and exclude those who do not or cannot conform. The people that are most often excluded are those with several children, those with only a female head, and those with critical emotional and behavioral problems. This is not to say that all poor people have problems. But a great many people with serious problems are poor-and they are the ones that responsible private landlords are least likely to accommodate.

If public housing is to accept large concentrations of very low-income, problemridden families, then all of the normal real estate criteria for budgeting operating costs are irrelevant. In middle class high-rise rental housing the ratio of children to adults is often as low as one to ten. In public housing for low-income families the ratio of children to adults is frequently as high as three to one. A responsible adult male presence is almost non-existent in many public housing projects. While many female-headed homes are well-maintained and disciplined-within the confines of the dwelling-that discipline usually ends at the doorway to the outside. In the hallways, stairwells, elevators, laundry rooms, and out of doors, adult controls do not prevail unless provided by management personnel. The normal operating revenues are so meager there is insufficient manpower to provide routine maintenance, much less prevent and repair damage caused by vandalism.

It has been asserted over and over again that the public housing authorities should limit their concerns to the provision of shelter while the health and welfare agencies should provide the services that low-income and problem-ridden families require. That sounds right in theory, but it is practical nonsense. The health and welfare services are fragmented and uncoordinated. They are not oriented or equipped or funded to deal effectively with the problems that management must deal with if it is to achieve a reasonably decent social environ ment in public housing.

This is not to say that a housing manager should not be trained and allowed the time to fully exploit every available health and welfare resource. Doing so is the essence of good management. But the manager must have a staff of suffi cient size and quality to keep ahead of the housing operation itself and to work effectively with the tenants, community leadership and agency resources.

It is imperative then that the operating revenues be substantially increased without increasing the burden upon the tenants. It was the intent, I believe, of the Sparkman and Brooke amendments to increase operating subsidies and it is most unfortunate that they are not being used to that end.

In summary, unless operating subsidies are significantly increased, many public housing authorities will have to choose between the following alternatives: (1) To permit the public housing developments to deteriorate to the point of abandonment.

(2) To increase rents and become much more selective of tenants-excluding those with the lowest income and the most serious family problems. Senator BROOKE. Thank you, Mr. Schermer. We will now recess the hearing until Monday, July 27, at 10 a.m.

(Whereupon at 1:40 p.m., the committee was adjourned.)

(The statement and document of Mr. de Leeuw, referred to earlier on p. 1036, follows:)

STATEMENT OF FRANK DE LEEUW, SENIOR RESEARCH STAFF, THE URBAN INSTITUTE

I would like to use the time before this committee to summarize briefly a study we at the Urban Institute have made of operating costs in public housing, and to discuss some of the implications of that study. The full study has been published by the Institute and is available on request. The problem which prompted the study was summarized succinctly by Secretary Romney before this committee last week when he stated:

"Over the last few years it has become clear than an increasingly larger percentage of tenants in public housing units cannot with any reasonable percentage of their income, contribute enough in rent to carry the operating costs on the unit they occupy... An increasing number of local housing authorities are in very serious financial trouble."

The question on which we focused our study is: Why have operating costs in public housing been rising so rapidly in recent years? To gain insight into the forces driving up costs, we analyzed data for 23 cities with large local housing authorities during the four years 1965 through 1968. The data we had available included, of course, financial data for each public housing authority as well as information on the number of units under management, their age, and such characteristics of public housing tenants as average number of minors per household, number of elderly, and the percentage of households with no wage earner present. We also gathered data on wage levels, price trends, typical utility bills, and other local economic conditions in each of the 23 cities.

The financial plight of public housing in these 23 cities is illustrated in the first of the three charts you have. In 1965, these cities on the average were covering almost all of their operating costs through rental receipts. With additional federal payments for the elderly, persons displaced by urban renewal, and certain other groups, total receipts were more than sufficient to meet operating costs (initial capital costs, of course, are met entirely through federal payments). By 1968, operating costs per housing unit had risen 22 percent above the 1965 level and rents plus supplementary payments were no longer sufficient to meet costs. For local housing authorities in the aggregate, the situation in 1968 was not so critical as it was for these 23 cities; but the trend from 1965 to 1968 was the same.

The main conclusion of our study was that inflation-the overall increase in prices and wages-is sufficient to account for the great bulk of the rise in operating costs in public housing over the last few years. Others of the factors we examined-for example, aging of the public housing stock, the number of minors per unit, and the percentage of households with no wage earner present-appeared to have significant cost effects and doubtless have been important for many individual authorities and projects. But in the aggregate these characteristics did not change enough over the four years to contribute much to the overall increase in costs.

The second of the charts illustrates in simple form the relation between cost increases and inflation. The chart compares an index of public housing operating costs per housing unit in the 23 cities of our sample with two general indicators of inflation. One is the most comprehensive indicator of local price trends, an average of the consumer price indexes in the 23 cities. The other is an indicator of wage trends in the labor market in which local housing authorities bid, an index of average earnings of municipal employees in the 23 cities. You can see in the chart that the index of operating costs falls in between these two general indexes, nearer the high one. Our detailed analysis, which took into account variations from city to city in prices, wages, and many other influences, suggests that about 80 percent of the rise in operating costs shown in the chart is attributable to general inflationary trends. The chart, and our study, end in 1968; but the same trends have continued since then and there is good reason to suppose that our findings continue to apply to the current situation in public housing.

Of course, inflationary cost increases have been affecting private housing and in fact the entire economy, not just public housing. In coming to grips with the special problems of public housing and drawing out some of the implications of our study, I find it useful to review some of the ways in which private businesses typically respond to cost increases and then ask what, if any, special characteristic of public housing makes these private responses inapplicable or undesirable.