poned anything beyond routine maintenance during that period. The result has been, of course, that public housing structures have been deteriorating at an accelerating pace. To put it in a more human context, the homes of many of our tenants are deteriorating seriously, and we find ourselves so financially bound that we cannot halt this deterioration.

Cutting nonroutine operating expenditures drastically has not been enough. Operating deficits have increased, and we have had to dip into our reserves to make ends meet. Our operating reserve dropped 25 percent between 1964 and 1969. The operating deficit in 1964 was $110,000. In 1970, it was $2.2 million.

The remedy for the private owner in a situation of rising costs is to raise rents to meet those costs. We have raised rents in our developments over the years, but our tenants cannot absorb further increases. Nor should they. What is actually needed is an increase in subsidy. Most of our tenant families-70 percent of them, in fact-have no working member. This means that only a small fraction-about 3 out of 10 of our families-have had only chance to share in the rising wages of an expanding economy.

The median income of our tenants in 1963 was $2,800 and that figure has remained relatively constant. Of course, in real dollar terms, given the inflation, incomes have dropped because those dollars can buy only about 84 percent of what they could buy in 1963.

Therefore, we cannot any longer turn to the poor we are housing to alleviate the financial condition forced on us by inflation. Our tenants need public housing. They cannot afford any increase in rent. Nor do they have any place to go, for the housing shortage which afflicts many American cities, afflicts our city also.

One-third of the renters in private housing in Boston are paying more than 30 percent of their incomes for shelter. Nine out of 10 families in Boston with incomes of less than $3,000 a year are paying more than 30 percent of their incomes for shelter. In sections of the city with the highest concentrations of these poor, more than 20 percent of the housing is dilapidated. This is the picture of the private housing market in Boston today, a picture much like that of other American cities.

Public housing is and should continue to be a major resource for these citizens and poor in our cities. In the face of the well-documented need, a need recognized by the Congress in the Housing and Urban Development Act of 1968, we should be responding more forcefully in our cities to the housing needs of the very poor.

One of the measures currently being suggested to alleviate our financial requirements so that we take in more tenants with higher incomes and fewer with very low incomes. This has more theoretical than practical appeal.

We could not do this and still regard ourselves as part of the city in which we must work. We could not continue to act as a housing resources for all low-income families displaced by renewal or highways who need our help. Many of our poorest families have come to us as displacees. We could not, in conscience, do this for where would the very poor go?

In the past 4 years, we have housed 1.649 families displaced by

public action. Of that number, 49 percent had incomes under $3,000 a year, 60 percent had $3,600 a year or less. A full 80 percent of those families, many of them large families, had incomes of $4,800 or less

a year.

Beyond public housing in Boston and other cities are the poor I spoke of earlier, the tenants of private owners. Very many of them are living in substandard housing. Very many are paying too much of their incomes for rent.

Another measure currently being suggested to improve our financial situation is to improve the tenant's sense of responsibility for his development and thus decrease our cost of repair and maintenance. I believe there is an implication here that the Authority will make available to families troubled by afflictions commonly associated with poverty the many services they need. We agree that much more should be expended for tenant services and that, in the long run, these expenditures would mean a saving in our maintenance expenditures. But, in the meantime, where are we to get the funds?

I will say that the vast majority of our tenants are deeply concerned about the condition of the developments. These developments, after all, are their homes.

Tenants in Boston have spent thousands of volunteer hours organizing and encouraging each other in their efforts to improve the developments. We now have tenant committees in each of our management areas elected by vote of the tenants, and we have a citywide corporate organization of tenant volunteers composed of delegates froin the local committees, an organization which helps to keep us on our ties and which is ready to cooperate in any task which might improve the homes of the tenants.

A continuing dialog with these tenant organizations across the entire spectrum of authority operations is well advanced. A preeviction hearing board with majority tenant membership has been established. Tenants have membership in a newly created transfer review board. The authority has recently adopted a revised lease prepared jointly by tenants and staff. We are expending our efforts to provide maximum employment opportunities to tenants in management and maintenance positions within the authority.

We look forward to increasing involvement and participation of tenants in the management process.

In one of our larger developments, Bromley-Heath, housing almost 1,200 households with a median income of about $2,500, a tenant organization is taking part in an experiment in tenant management. Recently, phase one of this experiment was completed, and it has been recommended that a tenant corporation be formed to contract with the authority for management of the development.

We are very hopeful about this experiment. Already, we believe we can sense an improvement with the organizing work of the committee, a certain enthusiasm starting to build among the tenants. We believe we can detect a rising feeling of community and a decrease in vandalism.

Decreasing vandalism is important to us and to our tenants. Our figures on the extent of vandalism in our developments are uncertain. It is often difficult to make a distinction between vandalism and the

48-279-70-pt. 2-3

extraordinary wear and tear caused by large numbers of children. It is difficult to know whether a window was broken by a baseball or a rock.

But we do know that vandalism is prevalent, that its costs are high and that it is associated with social problems. We believe that the remedy for vandalism lies in attacking the root causes of family disorganization and the lack of community feeling in our developmentsthat is, attacking the underlying social causes of vandalism. But this, again, costs money.

Another measure currently being suggested is to improve our management techniques. We have been doing this and we are making continual progress. Let me mention here a few of the measures we have introduced at the Boston Housing Authority just in the past year.

First, however, let me say that all of our efforts to reverse past trends, to turn the program around, so to speak, would not have been possible except for the three most recent appointments to the authority board of commissioners. This new majority which includes two tenants has brought to the authority a new confidence and hope among tenants. New policy goals and objectives are being set and the staff has a clear and firm charge to implement these policies.

The authority contracted with an engineering firm for a thorough study of its maintenance operations. The firm's report contains valuable suggestions for reorganization, and we are now at the stage of implementing those recommendations.

The staff of the authority has studied the information flow within the agency, and we have completely overhauled reporting systems, increasing the accuracy, speed and amounts of data available to us.

We are now developing a proposal for a greatly increased use of data processing. The reporting of vacancies has now been computerized, and we expect in the near future to include purchasing rent rolls, and other calculations.

All our purchases are now being coded for the computer. We are preparing for a comprehensive analysis of 1969 purchases. We are developing a purchasing catalog to consolidate purchases, to develop minimum and maximum inventories and the like.

Overtime expenditures in the past 8 months have been cut to about half the rate of previous years. This has been accomplished despite the introduction of emergency night and weekend service for our tenants.

In addition, we have established a quota system for management personnel to set minimum standards of performance. We have pulled back painting crews from our developments and sent them out from our central office in teams. The result has been a 20-percent increase in productivity.

We have instituted training programs for all levels of our employees, ranging from management seminars to Spanish classes. We have become more strict. The number of disciplinary actions has increased about eight times over previous years.

We have found, however, that the net immediate result of our efforts to become more efficient is increased cost.

It takes money to hire skilled staff, to train personnel, to reorganize management structures, to introduce computerization. Our efforts now to increase efficiency will pay off in the future. For the present, we must pay the cost-often a heavy cost-of improving.

So we return again to the beginning of this statement, our financial difficulty, and to the question which underlies this whole discussion and the debate in the Nation today. What are we to do about the poor in our society? More specifically, what are we to do about their undisputed need for housing and for the tenant services that should be associated with housing? For housing is more than buildings. It is an integral part of the social environment in which people live and it both affects and is affected by that environment. There is a relation between the money we neglect to spend for tenant services and the money we have to spend because of vandalism. Given that premise, how can we administer a public housing program adequately without adequate resources for tenant services?

To summarize, we have done our best to solve our financial problems. We have gone about as far as we can go without undermining the essential reasons for the existence of public housing. But, Mr. Chairman, we are treading water. Where are we to turn?

I submit that we must turn now to the Congress. Congress must make clear to the Department of Housing and Urban Development that it meant to supply adequate resources to local housing authorities with the passage of the Brooke and Sparkman amendments of 1969. It must make clear that these resources must be adequate enough to allow us to operate programs that can provide decent, safe, and sanitary housing for the very poorest in our cities. For all these reasons, we strongly support the 1970 bill, S. 4086, introduced by Senators Brooke, Cranston, and Goodell that would make the intent of the Congress clear in support of adequate Federal assistance in these

matters.

In view of the repeated declarations of concern by the Congress and in view of the 1969 housing legislation, I feel confident that the Congress will respond, that it will stand with us in keeping with the promise of public housing in our cities.

Thank you.

Senator BROOKE. I wish to thank both Mr. Kane and Mr. Finn for the very fine statements. And I want to take this opportunity, too. Mr. Kane, to express my appreciation to NAHRO for the wonderful assistance that it gave us last year in seeking to pass the important Sparkman amendments and especially to Miss Nenno of your staff who was such a help in working with the members of our staff in the drafting of that legislation and generally in helping to get it passed.

I just want to say that. I am sure that Chairman Sparkman would also want to join with me in stating our appreciation to NAHRO. Mr. KANE. Thank you, sir.

Senator BROOKE. I do have some questions to ask both of you. And I think it is important to note that both of you have mentioned that inflation has had the deepest impact of the various rising costs of operation. And we will be hearing from Mr. Frank de Leeuw of the Irban Institute later today who will discuss this problem in greater detail based on his most recent study. And, therefore, I will not dwell on the subject.

But I did note in your testimony that the number of local housing authorities in financial difficulty had risen from six authorities in 1968 to 20 in 1969, with 200 authorities not meeting operating expenses within the rental income. That is correct; is it not?

Mr. KANE. Yes, Mr. Chairman, the facts are accurate. Over 200 are today in financial difficulty.

Senator BROOKE. Then, would you say, Mr. Kane, this is not just a matter of bad managers at all? I cannot believe that 200 housing authorities have come up with 200 bad managers.

Mr. KANE. Obviously, Mr. Chairman, it would both be an admission against interest if I were to say that overnight 200 housing authority executive directors became bad managers. The fact is that the study of the Urban Institute, as you will probably be told, the study already completed and published, indicates that four-fifths of the increase in operating costs in public housing is due to one thing-inflation.

Now, if one-fifth is due to bad management, that might be understandable, but the fact is that four-fifths of the cost is due to inflation. And this is not my opinion, sir. The Urban Institute's figures are supported by the statements of the 17 housing authorities which I filed accompanying my testimony. They show that housing authorities have, in fact, undertaken many, many management reforms all over the country.

Mr. Finn has indicated what they have done in Boston or what we are trying to do in San Francisco, I know. And at NAHRO's meetings constantly and all NAHRO's activity, we are trying to upgrade the capacity of our management operations and to involve the tenants in same.

Senator BROOKE. I appreciate your statement. I think we should document that because there have been so many charges and allegations that the whole problem is bad management and that, obviously, cannot be the truth. I think it is important to bring out what is being done in training the managers and personnel in housing authorities and to pinpoint the real problem-namely, inflation in the country today, which is constantly causing increases in your operating and

maintenance cost.

Mr. KANE. For example, just one tiny little instance to get down to real practical figures, copper tubing. In 1961, a length of copper tubing cost the San Francisco Housing Authority $3.80. In 1967, it cost $11.20. And in 1970, it cost $14.10, or an increase of over 200 percent just in that one item.

Faucets, 68 percent. Asphalt floor tile, 117 percent increase in cost alone.

Senator BROOKE. You indicate the median income of your tenants in 1963 was $2,800 and that figure has remained relatively constant. What percentage of income are most tenants in your projects paying for rent?

Mr. FINN. I think 23 percent is the average.

Senator BROOKE. That would be the average? I think the national average, Mr. Kane, is what-about 16.4 percent?

Mr. KANE. That is the latest figure we have for four-person fam

ilies, in the Bureau of Labor Statistics lower living budget.

Senator BROOKE. That is the latest national figure you have?
Mr. KANE. Yes, sir.

Senator BROOKE. And you would say about 23 percent?

Mr. FINN. Yes, about 23 percent.

Senator BROOKE. You indicate that one-third of the rentals in private housing in Boston are paying more than 30 percent of their