Mr. KANE. It is a privilege, Mr. Chairman, to present this statement on behalf of the members of NAHRO who are, as you know, the administrators of local housing, urban renewal and housing codes agencies throughout the country. Currently, our membership includes over 1,800 local agencies and 8,000 individuals.

We are here today to present our views on the present status of the public housing program and to urgently request your help in surmounting the present financial difficulties so that the program can move forward to fulfill the promise which is so clearly possible.

NAHRO suports S. 4086 and S. 4079. In presenting this statement today, NAHRO would like at the outset to express its deep appreciation for the continuing concern for public housing that this subcommittee has maintained over the years. We would particularly like to express our appreciation to you, Mr. Chairman, and Senator Sparkman, who recognized the growing fiscal dilemma of public housing in 1969, and sponsored amendments to alleviate the situation. In 1970, you, Mr. Chairman, and Senator Sparkman, who recognized the growing fiscal dilemma of public housing in 1969, and sponsored amendments to alleviate the situation. In 1970, you, Mr. Chairnam, and Senators Goodell and Cranston, in a recently introduced bill-S. 4086, an amendment to the Housing and Urban Development Amendments of 1970-have recognized the need for further legislative action.

In addition, Senator Mondale, of this subcommittee in a bill introduced on July 13-S. 4079-has recognized the need to expand public housing authorizations to accommodate a rapidly expanding demand by local communities. We, as I have said, support both these bills.

Despite the serious fiscal crisis currently facing large housing authorities, mainly due to the impact of inflation and despite the difficult tasks of housing management, including the physical security of both tenants and property in today's turbulent urban centers, the overall state of the public housing program is not only sound, but vigorous and expanding.

In the last 10 years, the number of local housing authorities has grown from less than 1,000 to over 2,600. The number of units in management is rapidly approaching 900,000. Since 1968, the annual units completed for occupancy have expanded from 35,000 to 100,000 and the pipeline of demand indicates that this level can approach 200,000 if sufficient authorization is provided.

There is a current backlog of demand from local communities of 180,000 housing units in approved reservations and an additional backlog of 250,000 units in applications that have not yet been processed. The annual rate of applications, if you please, is over 200,000

units.

The most convincing testimony concerning the contribution of the public housing program cannot be presented by NAHRO, although we believe we have a convincing story to tell. But positive endorsements of public housing the contribution it has made and can make in the future come from Presidential study commissions, urban scholars and from tenants themselves. Recognizing all of its shortcomings, the public housing program is still the most versatile and viable housing program we have to meet the housing needs of low income families.

Former Senator Paul H. Douglas, chairman of the National Commission on Urban Problems summarized the results of the 2-year study which was presented in December of 1968 relative to public housing in testimony before the Congress in May 1969. Among Senator Douglas' statements are the following:

*** of the programs already on the books, the public housing method of subsidy is in many ways head and shoulders above all subsidy forms. It does get housing built.

*** Serious as some of the other criticisms of public housing have been, many of them have been blown up out of proportion *** by and large, public housing has met with greater success than its reputation might indicate. The National Commission researched three aspects of the public housing program-the average vacancy rate, the average turnover rate, and the number of applicants-and on all counts, the program looked surprisingly good *

And yet, again:

**

*** One of our Commission's major criticisms of public housing is that, while it provided tenants with far better shelter than they could obtain elsewhere, it has not realized its potential for improving the quality of personal life, family life, and community life. These may sound like overly optimistic goals. As a matter of fact, however, these potentials have already been demonstrated in the better public housing projects and programs * * *.

And the report continues:

*** Whatever new approaches are devised, I would urge that public housing be retained and stressed as the backbone of the federally-aided housing for low income families who need housing the most.

Anthony Downs, senior vice president of the Real Estate Research Corp. Chicago, a member of the President's Commission on Urban Problems, and a consultant to the National Advisory Commission on Civil Disorders, made these statements about public housing in his paper on "Moving Toward Realistic Housing Goals" (Agenda for the Nation, The Brookings Institution, 1968):

* * * almost all the programs in the Housing and Urban Development Act of 1968 and in HUD's existing arsenal use "shallow" subsidies that do not cover most of a poor household's housing costs. Hence these programs will not reach really poor households directly. But HUD does have two "deep" subsidy programs available: public housing and leased public housing. In order to serve the majority of persons now living in inadequate units, HUD would have to expand these programs tremendously and alter them drastically to make this expansion acceptable in most communities *

Mr. Downs advocates this expansion as well as these alterations for public housing as follows:

follows:

Alter and greatly expand public housing and public leasing program as

(a) Emphasize small-scale projects on scattered sites utilizing low-rise apartments, townhouses, and detached duplex or single family units. These characteristics should be promoted regarding both newly constructed and leased units. The key objective is not to overwhelm the local neighborhood or dominate the local public school with residents of public housing, but rather to have those residents form a relativley small part of both overall and school populations. This would help make public housing acceptable in many areas that now reject it.

(b) Sell units within existing projects to tenants whose incomes have risen above existing eligibility, as allowed in the 1968 act.

(c) Drastically reduce supervisory and administrative review requirements for "turn-key" construction of public housing.

(d) Develop new public housing units in "mixed" projects with other publicly assisted units serving higher income families. The public housing units should

be physically integrated with other units as closely as possible and kept to a minority of each mixed project. Their tenants should be screened to minimize overloading with families in the most difficult circumstances.

He continues:

(e) Eliminate existing unit-cost restrictions on public housing and build many more amenities and better design into new units, thereby making them easier to convert to ownership and more acceptable in better areas.

(f) Intensify social services in large projects inhabited mainly by "multiproblem" families; pay residents to run the services.

(g) Improve project administrative procedures; encourage greater tenant participation, with monetary incentives for better maintenance.

Mr. Chairman, the "agenda" for public housing as set forth by Senator Douglas and Mr. Downs is obviously and indeed a large one. However, the directions and program changes they advocate are already underway in many housing authorities with the cooperation and participation of the tenants.

Public housing is struggling to make the changes necessary to enable it to meet the needs of the 1970's, but it has inadequate resources for the task. There is an immediate need for a greatly expanded effort to recruit and train housing personnel.

Most serious of all, the inflation in costs over the past 5 years, at the same time as tenant incomes were remaining static or declining, has forced many housing authorities to raise tenant rents, or reduce maintenance service and repairs, or both. None of these measures can be further pursued without a crippling effect on the entire program. What to date has affected only the largest housing authorities in the high-cost urban centers can eventually affect all housing programs in all localities in the Nation. Constructive action should be taken now before such an impact occurs.

It has been suggested that the reason for the present public housing fiscal situation is "managerial," that all that needs to be done is to "reform” the management of local housing authorities. It has also been suggested that the answers lie in each housing authority immediately achieving a cross section of occupancy with more families at the higher end of the income range who are capable of paying more

rent.

In order to get documented local experience on these matters, NAHRO has just completed a survey of 17 large housing authorities representing 250,000 housing units in management. We asked the following questions:

1. What is the impact of inflation on the cost of operating your LHA over the last few years?

2. What is the demand and need for housing in your community on the part of very low-income families, particularly those displaced by public action of one kind or another?

3. What is the immediate possibility of having a cross section of income occupancy, to achieve higher rents, and solve financial problems?

4. To what degree have you had to postpone ordinary maintenance over the last few years due to lack of funds; how serious is this?

5. To what extent have economies and reforms in management been undertaken by your housing authority? What is your appraisal of management reform as an answer to financial needs?

6. What is the extent of vandalism and tenant destruction of property? What is the prospect for reduction if the LHA had a limited tenant services staff to help involve tenants in management responsibility?

We have assembled the answers to these questions, Mr. Chairman, from the 17 housing authorities and ask that they be filed for the record.

Senator BROOKE. They may be (see p. 983).

Mr. KANE. While the circumstances in each locality differ, all of the authorities agree, without exception:

that inflation has had by far the deepest impact on rising costs of operation;

that the demand and need for low income housing is almost overwhelming;

that it is completely impractical to anticipate a cross-section of income occupancy in the foreseeable future;

that maintenance and services have already been postponed, and are in a serious state in many places;

that many economies and management reforms have already been undertaken, and further management reform will be pursued; but such reforms have only a minimal impact in providing increased revenue at the scale required; and

that the degree of vandalism varies. In many cases, it is a serious problem, contributing to increased costs.

Where the LHA has had resources to work with tenants, the results have been gratifying and encouraging, both in tenant attitude and in cost reduction.

In 1969, the Congress enacted new provisions designed to bring additional Federal assistance to hard-pressed local authorities-your bills, particularly section 212 and section 213 of the HUD Act of 1969. All of the members of NAHRO were greatly encouraged. You will recall, sir, on December 23, 1969, as president of NAHRO, I directed a special letter to local housing authorities, calling attention to the importance of this action and the opportunity it presented. I request that a copy of this letter also be filed for the record for the committee. Senator BROOKE. It will be filed (see p. 996).

Mr. KANE. However, as you have already seen, sir, the promise of these amendments has not come to pass. Every observation you made, sir, in your statement is supported in toto by the experience of the housing authorities as far away as San Francisco is from Boston and in every other section of the country and in every kind and character of authority. It just has not happened.

Now, to go into detail would merely be to repeat almost every item that you have covered, with one exception, sir. And that has to do with the welfare rent provision. I would like to notify you that as of last week or a couple of weeks ago I have foregotten just when—~ we received instructions from HUD central after going through the unbelievable detail of trying to adjust to HUD's interpretation of 25 percent in the welfare rent provisions, we were told that if we were to ask the question of the local department of social service: How much, if you are going to reduce the grant to the tenant, if we reduced the rent at all, would you reduce it no matter how little or how much we reduce the rent?

And they said, "We will reduce it only to a certain degree within our interpretation of our social service department's regulations." This was proposed to HUD, and we were told, after going through all of the excruciating torture of trying to adapt to the previous regulation, that we would have to take another look at all of these rents. And if the local social service department agreed that they could without affecting the grant to the tenant reduce this rent by $4 rather than 25 percent which might be $25, we could do that, and HUD so instructed us.

So that here we have a situation of welfare tenants, the same sized family, living side by side, getting a reduction of $4 as opposed to our authorities to reduce the rent by $25, sir, of tenants not receiving public assistance in southern California to families with dependent children in particular. And one family gets a $4 reduction, and the other gets a $25 reduction.

Senator BROOKE. It is a great inequity. We have to correct that.

Mr. KANE. Further than that, sir, we have merely in summation to say that the bills introduced by you, Senators Goodell and Cranston contain the amendments which in our opinion nationwide are necessary to implement the intent of Congress of the 1969 amendments and to provide local housing authority with necessary assistance. We from NAHRO urgently request its passage in this 1970 session of the Congress.

If you have no questions, sir, Mr. Finn is here, of course.

Senator BROOKE. I do have, but I think we will have Mr. Finn's statement first.

Mr. FINN. Thank you very much, Mr. Senator.

Mr. Chairman, my name is Daniel J. Finn. I am the administrator of the Boston Housing Authority. I appreciate this opportunity to speak to you today.

My testimony is based on our experience in administering public housing in Boston. We have the fourth largest public housing program in the Nation with more than 30,000 tenants in our federally-aided developments. We also administer a sizable program of State-aided public housing.

Although I am limiting my remarks to Boston's Federal program experience, I think you can safely assume it is fairly typical of the experience of public housing administration in cities throughout the country for inflation and poverty have affected us all.

Let me deal first with the effect of inflation on our program which has now brought us to a point of financial crisis. In the past 5 years, our operating costs have risen by almost a third. I want to stress the point that about 85 percent of that increase is directly attributable to price and wage inflation which is well beyond our control.

On the other hand, our receipts have increased by only 17 percent. The result, of course, has been an increasingly deteriorating financial situation with costs rising twice as fast as income.

We have responded to this situation in a variety of ways. We have controlled our expenditures, particularly by major cutbacks in the past 5 years in nonroutine operating expenditures—that is, in major repairs to our plant.

These nonroutine operating expenditures shrank from 10 percent of our budget in 1964 to 1 percent in 1969. In other words, we post