land is extremely high. This, of course, can be counteracted by the use of high-rise building, but we then face the problem that the per square foot cost of living space in a high-rise building is far in excess of that of low-rise, frame buildings. I would estimate that the construction cost of a thousand square feet of living area in a high-rise building in the San Francisco area is nearly 50 percent more than in a low-rise building. Eichler Homes and many successful homebuilders have experienced little or no increase in the per square foot cost of the house itself in the past decade. This is obviously not true of high-rise buildings.

In most metropolitan areas the availability of suburban land reasonably close in has been greatly reduced. The raw land costs have risen geometrically and zoning laws preclude sufficient density to bring the per unit cost of land into line. Beyond this we are developing these areas in a haphazard manner unrelated to the economic, social, and esthetic considerations.

In the light of the situation which I have described, Congress should immediately authorize HHFA to study and propose methods to induce metropolitan planning and the implementation of such planning. Further, the various specialized aids of the Federal Government should be programed on a metropolitan or regional basis. This could mean offering relatively more Federal aid, and relatively greater local freedom where such programing has been done.

As a step in the right direction, we support the administration's request for a Department of Housing and Urban Affairs which has been proposed under separate legislation.

Since we must provide new housing in the suburbs for middleand low-income groups, there is no reason why the provision for lowinterest-rate, FHA-insured loans for rental and cooperative housing or any of the subsidized programs should be restricted to the central city through stringent requirements of a workable program. We therefore request that this legislation be amended to permit the regional administrator to approve projects utilizing these low-interestrate loans in suburban communities.

I have cited the problems of high construction cost for multistory buildings and the zoning problems that exist in most suburban communities which tend to make land very expensive. Speculation, however, is another vital factor in the cost of this suburban land. Recently, I had occasion to investigate the possibility of our company purchasing a specific piece of land in San Fernando Valley in southern California. The real estate broker who was showing me the property explained, with some pride, how many times it had changed hands in the last 10 years. It was obvious that not one of the purchasers of this land had any intention of developing it and constructing housing. Each purchase was speculative.

I would estimate that there is little or no possibility under the present market conditions and the present zoning ordinances for a homebuilder in northern California to buy land and develop it so that he would have a finished-lot cost of less than $5,000 in any area within reasonable commuting distance to San Francisco. In most areas in which we operate, our finished-lot cost is over $6,000.

Local and State governments have been unwilling or unable to cope with this situation. I submit, therefore, that it is imperative for the Federal Government to take action which will reduce this speculation.

In this regard, we support legislation submitted to aid public agencies to purchase land for open space and development.

The need for more flexible alternatives to the present public housing formula is so strongly evident that there should be a much larger appropriation for demonstration programs in this field than the mere $10 million proposed.

The provisions for research in H.R. 6028 are inadequate in regard to technology and completely absent in regard to economic, financial, and social matters. The provision for FHA to insure loans for experimental houses is of no real consequence. Rightly or wrongly, the homebuilding industry has done very little technologic research. We therefore urge that a direct and comprehensive technologic research program be undertaken by the Federal Government.

We know little or nothing about the quality of the present or future market or about a great many other perplexing questions in regard to housing. For instance, Federal statutes do not clearly give any encouragement to attempt to resolve the housing needs for casual and transient labor. Yet it was discovered in planning the second stage of the western addition project in San Francisco that there were 3,500 families and 3,300 single people. In San Francisco's south-of-market area there are 228 families and 1,822 single people.

Also, the bill makes no reference to experimentation in the field of financing housing for private ownership to meet the needs that are not now met by private industry. In this regard, I refer you to the testimony of Mr. Charles Abrams, visiting professor of housing at the Massachusetts Institute of Technology, who appeared before your committee on Monday, May 23, 1960, in behalf of ADA. Mr. Abrams suggested a program supplemental to public housing which would substitute homeownership for rental as part of the low-income program and provide an interest subsidy in place of a fixed annual subsidy. I am sure that there are other worthwhile ideas, but HHFA should be authorized to do substantial research in this field and to make proposals to Congres as soon as possible.

While we have cited the need to coordinate the various specialized programs of the Federal Government, this does not mean that they are unnecessary or unimportant. Thus, we feel that the provision for an additional $50 million for housing for the elderly should be increased to $100 million. In fact, the whole FNMA appropriation of $750 million is wholly inadequate. I have already discussed the need for a generally increased effort in terms of the effect on the economy, but the needs for housing also prove this to be insufficient. I would like also to point out that strong and imaginative administration of the housing programs by HHFA under the direction of Dr. Weaver, FHA under the direction of Neal Hardy, and URA under the direction of William Slayton is bound to result in a need for more money.

H.R. 6028 permits local public agencies to carry out rehabilitation demonstrations in urban renewal projects. Dr. Weaver, referring to this section, used such words as "laboratories" and "how to do it." We recommend that the concept of this program be changed and expanded so that local agencies be given the authority not only to do this as a sort of model home program but actually to carry out this function on a large scale to show private industry what can be done.

Most of the programs for low- or middle-income families cannot be initiated by private industry. For instance, special assistance money from FNMA for a management cooperative under section 213 is available to projects initiated by private industry only in urban renewal areas. Private industry also is completely excluded from the housing program and now the new low-interest-rate program for middle income families requires that loans be made to cooperative nonprofit organizations, local public agencies and limited-dividend corporations. It is my opinion that cooperatives and limited-dividend corporations have not become a major factor in the United States. If we want to get these programs moving, we are going to have to find different vehicles and different methods of administration.

For instance, under the present law a builder can initiate a so-called investor-sponsor program under section 213. Our company has been in the process of trying to set one of these up for some time, specifically since last August.

We cannot use standard financing since we have designed a planned community with townhouses, scattered through an area, in buildings of from two to eight units. It is the kind of imaginative scheme which we must have in high-land-cost areas.

In this program there are two basic problems:

One is that we are forced to set up two new separate corporations, which supposedly deal at arm's length, and which cause a whole multitude of complicated legal problems. The other is that we are not eligible for special assistance unless the program is organized by a cooperative.

I would point out at this time that condominiums on a 40-year, 514-percent basis with special assistance might be one of the answers to this problem. There may be others. I do not believe that private industry should be the recipient of windfall profits resulting from subsidies, grants, or low-interest-rate programs. I do feel, however, that useful legislation could be drafted and that legislation could be properly administered so private enterprise could initiate programs for low- and middle-income families within and without urban renewal areas.

Thus, the bill does not go far enough in certain important respects: (1) Measures to tackle the basic problems of metropolitan growth and outlying new development in terms of housing and land policies, and inducements for effective local planning and programing;

(2) The basic need for comprehensive research and systematic experimentation on a large scale;

(3) The scale of the proposed program; and

(4) The full stimulation of private initiative to provide housing for moderate- and low-income families.

The following are some miscellaneous recommendations for changes in the bill or in present law:

(1) Raise the maximum loan under section 203 from $22,500 to $25,000.

(2) Make it clear, under section 506 on Public Housing Administration demonstration programs, that the word "families" includes single persons.

(3) Section 603 on relocation payments authorizes a relocation payment where warranted by actual expenses or hardship situations for

displaced businesses from urban renewal areas that make such extra expenditures a part of gross project cost.

There does not appear to be any particular justification for this method of meeting the extra cost, and it is believed that in the interest of a more certain equity the present ceiling should be retained, but exceptions should be authorized out of Federal funds where it is demonstrated actual moving expenses are greater than $3,000.

Likewise, it should be clear in this legislation that the relocation payments should be administered on the basis of equity rather than technicality. There are many instances where relocation payments are refused because a bona fide move was made prior to the actual ownership of the structure by a redevelopment agency and the residences or business quarters were not reoccupied.

If it is clear that the actual language of the proposed bill would permit this, I have no suggestion for legislative changes of this feature.

I have been involved in the homebuilding field for 10 years, but it is only recently that I began to delve deeply into the various housing programs of the U.S. Government. I have been very impressedor rather, depressed-by what I might call the spirit of much of this legislation. My feelings center on the use of three words: "decent," "safe," and "sanitary." Obviously, I support efforts to provide housing for all Americans which will have these qualities. However, it seems to me that this is a rather narrow and insensitive goal. People of all incomes are also entitled to good design.

When we create housing projects, whether they be groups of singlefamily dwellings, groups of townhouses, garden apartments, high-rise buildings, or combinations of these, we are really adding to the national wealth. I submit that we should set standards, not only for the amenities and the characteristics of each individual dwelling unit, but for the social and esthetic results of a project, a community, a city, or a metropolitan area.

It may be that proper and imaginative administration of the programs of the Federal Government can do a great deal to improve our environment. I have every reason to believe that the present administration will make such an attempt. But I think that Congress, too, and specifically this subcommittee, could consider not only the enormity of the problem but the tremendous opportunity to reshape the urban scene.

(The documents referred to in Mr. Eichler's statement are as follows:)

TESTIMONY OF LEON H. KEYSERLING' ON S. 1478 BEFORE SUBCOMMITTEE ON

HOUSING

Mr. Chairman and members of the subcommittee, I appreciate this opportunity to testify with respect to S. 1478, the very comprehensive housing bill now before your committee. I am here as a representative of Americans for Democratic Action, on whose national board I serve. The views I express today, while in accord with the policies and views of the ADA, are based upon my study and work in the housing field, which have been quite extensive from 1933 until now.

1 Former Chairman, President's Council of Economic Advisers; consulting economist and attorney, and President of the Conference on Economic Progress.

HOUSING IN ITS ECONOMIC PERSPECTIVE

The measure before you is very broad in its coverage, and in general I favor its detail provisions. But, instead of examining these provisions in detail, and thus covering the same ground as many other competent witnesses, I shall limit myself to the relationship of our housing efforts to the great economic tasks confronting us. This, I fear, is a much-neglected subject, and the current measure, in my opinion, is not attuned adequately to these tasks.

The unemployment of plant and manpower from which we now suffer is not a short-term problem. It represents a long-term retreat from maximum employment and production since the end of the Korean war. This long-term retreat threatens to continue in the years ahead, possibly with even more serious manifestations, unless we forge programs of sufficient magnitude to reverse this longterm trend.

In this perspective, the absolute need for improved housing conditions, and the need for an improved urban environment, which are almost limitless, should be examined in these terms: In view of technological and other economic trends, what should the size of our total housing and urban renewal efforts be, to assume their necessary share of the responsibility for re-creating and maintaining maximum prosperity and adequate economic growth?

THE BASIC ECONOMIC FACTS

The facts bearing upon this question may be summarized as follows: (1) The true level of unemployment of manpower, taking into account both full-time unemployment and the full-time equivalent of part-time unemployment, has risen from 2.8 million or 4.3 percent of the labor force in 1953 to an estimated 6.3 million or 8.8 percent of the labor force in the first quarter of 1961, seasonally adjusted;

(2) Toward the end of 1960, about 12 percent of our industrial production capacity and about 23 percent of our manufacturing capacity was idle, and the situation is somewhat worse in the first quarter of 1961;

(3) The deficiency in our total national production, measured in uniform 1959 dollars, rose from a nominal amount in 1953 to more than $70 billion in the fourth quarter of 1960, or almost 13 percent of our capacity at maximum production, and rose still further in the first quarter of 1961;

(4) From 1953 through the year 1960, these deviations from maximum employment and production cost us about 181⁄2 million man-years of job opportunity, and more than $260 billion in total national production;

(5) If the record in the years ahead averages no better than since 1953, and there is grave danger that it may not, we could, during the 5-year period 1961-65, inclusive, forfeit about 20 million man-years of employment opportunity, and about $390 billion of total national production.

(6) If these unfavorable trends should materialize, total civilian unemployment by 1965 could well be more than 75 percent higher than it is now, or reach a true level of close to 9 million, and our total national production deficit could be about $120 billion in 1965 alone.

THE SIZE OF THE TASKS AHEAD

The size of the lift which we must give to our economy, to avoid these evils or others of lesser magnitude, by restoring and maintaining maximum employment and production at an adequate rate of economic growth, is enormous. Compared with fourth-quarter 1960, we need to lift employment 2.4 million in 1961, and 4.3 million in 1962, as the first steps toward lifting it almost 9 million by 1965. We need to lift total national production, measured from fourth-quarter 1960, about $44 billion in 1961, and about $86 billion in 1962, as first steps toward lifting it by about $188 billion by 1965.

To accomplish these results, we must take account of projections of various technological trends, and also of projected changes in the pattern of private consumer demand and the demand exerted by public programs. Compared with 1960, we need to lift total civilian employment about 13 percent by 1965, and total nonfarm employment almost 15 percent. But it is doubtful whether employment in manufacturing can be lifted as much as 10 percent, or in mining more than about 3 percent, or in transportation and public utilities combined more than about 2% percent. In contrast, the greatest opportunity in the private sector for lifting employment is in contract construction, mainly housing, which could be lifed to a 1965 level about 30 percent above the 1960 level, if we develop