Since that time the Congress has authorized loans and grants for urban renewal alone which total more than $2 billion. Hundreds of millions additional have been authorized for public housing and for other aspects of the housing program.

In spite of these tremendous expenditures, progress toward the goals of national housing policy has been disappointingly slow. Obsolescence and deterioration persists. Overcrowding of living quarters continues to be common in many cities.

Not only has this Nation failed to make gains commensurate with expenditures but it has also permitted flaws to develop which must be corrected before continuation of the program is justified.

Let me give you a single example. It has to do with urban renewal land acquisition policies which have created windfall profits to the owners of slum properties in many parts of the United States. The situation has become so bad and such a matter of general knowledge that the magazine House and Home was able to say in its August 1960 issue, "The hundreds of millions these writedowns cost were supposed to be subsidies to give slum dwellers better homes, but they have been used as subsidies to make slum owners richer."

Take New York City as an example. In the first 10 urban renewal projects for which figures were available the cost of the writedowns to the Federal Government was more than $56 million. For those parcels in project areas acquired by condemnation the cost was 55 percent in excess of fair market value. However, in spite of such exorbitant expenditures on such a large scale the shortage of both low- and middle-income housing in the city shows no signs of abatement.

Defenders of the present Federal program may properly point out that the windfalls and other abuses in the program occur in spite of Federal rules and regulation. This may place the responsibility for failures on the localities rather than the Federal Government. But it also concedes that the responsibility does rest with the Federal Government. Otherwise there would be no need for Federal rules and regulations.

This is a point on which I cannot put too much emphasis. Housing and urban renewal programs are local programs. They must be carried out under State and local law. And local bodies must be encouraged to act with responsibility, not relieved of responsibility by the generosity of the Federal purse.

When this Congress introduces bill after bill which would inject Federal spending into areas where it has not existed and into the expansion of spending in areas where it is already tending to lessen local responsibility, it is not helping private enterprise to serve more of the total need or to attain the other objectives of the national housing policy.

The amounts of money which can be spent on these programs is fantastic. But there is no evidence that such expenditures can bring about improvements commensurate with the money spent. There is no proof that these programs will achieve the goals toward which they are aimed.

Gentlemen, we have no desire to stress the shortcomings of the Federal housing and urban renewal program beyond the point where all interested persons can agree that improvements must be made and can examine with an open mind alternate courses of action which may be suggested.

The chamber of commerce of the United States has some alternate proposals which we believe worthy of consideration. They have been developed and tested to the point where we have great confidence in their validity. They apply to each of the following subject areas:

1. Urban renewal.

2. Public and private housing.

3. Savings and investment in housing.

4. Community facilities.

The citizens of Erie have demonstrated that principles and procedures exist by which any community can make great progress toward balanced community development in less time and with less money than has ever been possible before. No pattern of action developed as part of the Federal program is even competitive.

As a result of this and other experience accumulated by the national chamber we are in position to elaborate on the recommendations set forth in our outline of positive recommendations. For purposes of this elaboration I shall refer to certain items in the recommendations.

1. THE WORKABLE PROGRAM CONCEPT (REQUIREMENTS) BE EXPANDED

The first workable program requirement was established in the Housing Act of 1954. An exploratory program was initiated. It has not been expanded or improved extensively although great strides have been made in our knowledge of what is required for the general improvement of communities.

Our own efforts have made clear that no local government is discharging its full responsibility to its citizens unless it is giving attention to all the elements required for balanced community development. This means that the elements of existing Federal workable program should be improved and that other elements should be added.

The existing Federal workable program requires:

1. Codes and ordinances.

2. Comprehensive community plan.

3. Neighborhood analyses.

4. Administrative organization.

5. Financing.

6. Housing for displaced families.

7. Citizen participation.

Elements of great importance in any program of balanced community development but which are not included in the workable program involve:

Adjustment of location and natural resources.

Industrial development.

Commercial development.

Modernization of local government.

These elements are very significant. Many communities are not taking full advantage of the natural resources with which they are endowed. More than 6,000 committees, organizations and institutions have been established in the United States to work on industrial development. Many communities now have special committees working on the downtown business district. The problems of overlapping political jurisdiction and the necessity for improving the governmental mechanism in many urban areas is widely recognized.

No comprehensive program for the improvement of a community is complete without consideration of these elements. If the workable program is to be truly workable, it should be expanded to include them. Ways in which the workable program can be expanded have been suggested in the Erie Workbook.

The applicable principles and prcedures have been set forth in the seven pamphlets of the Community Development Series. Proof that they can be dealt with effectively is contained in the Erie Workbook for Community Development Action.

The inclusion of these elements is an expanded workable program could be accomplished by administrative action and does not require new legislation.

2. THE FOLLOWING IMPROVEMENTS SHOULD BE MADE IN THE STANDARDS OF PERFORMANCE REQUIRED BY THE WORKABLE PROGRAM

A. Codes and ordinances

The importance of this element is being recognized in every part of the Nation. Experts are available who know how to bring together the technical information available on the subject and to formulate a program for a community. But the community which wants to help itself cannot find available in any convenient form the information which it needs to develop a housing code, get it adopted, and provide for its enforcement, including the building of public understanding and support.

Failure to have available in a single pamphlet or set of pamphlets the kinds of help most communities need in connection with their code development and enforcement is no longer justified, particularly when the information is available and needs only to be organized.

B. Comprehensive planning

In spite of the millions of dollars spent on comprehensive planning in the last 10 years, little progress has been made in improving planning techniques. Most community planning agencies are using techniques developed 30 and 40 years ago. Planning activities in many cities are being approached as if they were a new field to be pioneered.

Mass production methods can be introduced into planning. They could both shorten the time required for planning and reduce the costs. Studies by the national chamber show how this can be done.

For example, an adequate economic base study which is fundamental to comprehensive planning, may cost as much as $100,000. Our investigations indicate that by proper local adaptation of national data, and after an initial installation has been made, a fine economic base study can be made available on a mass production basis at a cost of no more than $15,000 per city.

C. Neighborhood analyses

Countless studies show the futility of trying to improve neighborhoods through leadership from the top down, yet the Federal Government continues to accept and to encourage analyses in which various types of planners attempt to determine what the people should do to improve their neighborhoods.

An example of the wrong approach and a means of correcting it will be cited in a subsequent discussion of rehabilitation.

D. Administrative organization

The Federal Government encourages creation at the local level of special authorities and agencies to administer parts of the total housing program and then, in this element in the workable program, ask the localities to establish essential machinery for the coordination of all these diversified and disjointed efforts. A much better administrative practice is to set up the right kind of local administrative organization in the first place.

We shall propose legislation designed to assure the administrative improvement toward which this element is aimed but on which it frequently falls far short.

E. Financing

The analysis called for as part of the financing element results in a completely inadequate indication of the contribution financing can make to community development. Workable programs are being approved for cities in which certain public financing devices are actually working against the program.

One striking example has been brought to light by one of the national chamber's investigations. It involves a southern State. In that State, the constitution provides a homestead exemption of $5,000 for a family living in its own home. Because many localities assess properties at no more than 50 percent of market value, many houses worth $10,000 pay no real estate taxes. In one city, 70 percent of the families pay no real estate taxes. This does not lessen the cost of government. It makes necessary a change in the tax sources from which income is derived. Actually, the substitute taxes used to produce local revenues in Florida cities probably fall harder on the exempt families than would real estate taxes.

So far as the workable program is concerned, this tax situation has far graver implications. It discourages the maintenance and improvement of properties. As soon as a person improves his property, his assessment is increased. This creates a positive motivation against rehabilitation and conservation. It encourages a positive drift toward blight and obsolescence.

The financial element of the workable program should serve to make every community face up to problems such as that which exists in this State. Certainly, no community should continue to receive recertification of its workable program if there continue to be local financial practices which promote blight and obsolescence and works directly against the objectives which the balance of the workable program is designed to achieve.

F. Housing for displaced persons

Many of the presentations designed to qualify communities with respect to the housing-for-displaced-persons element of the workable program are exercises in statistics. The object of the presentation has been to win approval from HHFA rather than to improve the quality of housing for people.

In many cities, the housing supply, particularly for minority groups, has not been adequately increased. We are not suggesting that new housing units must be made available to those families. We are suggesting that positive programs to increase the supply of decent, safe, and sanitary housing available to minorities must be developed. We will suggest one method of accomplishing this goal through local rehabilitation programs.

G. Citizen participation

The existing workable program requirements for citizen participation place this activity in an advisory relationship to the local government. This means that an absence of both authority and responsibility for citizen participation

has been created. It may result in rubberstamp operations or in complete frustration.

The national chamber recommends a completely different citizen participation process which is now being demonstrated in five cities. This process establishes functions of participation in which large numbers of persons in a community can work to provide decisions and action. With such a process available, the Federal Government is scarcely justified in continuing a pattern of participation which has generally proven to be inadequate.

You may have the impression that the changes and improvements which I have been suggesting will complicate the present program or interfere with the ability of cities to qualify under it.

Exactly the opposite is true. Our procedures will enable cities to take action faster and at less cost. The actual work of analysis on the comprehensive program described in the "Erie Workbook for Community Development Action," took only 45 days. Making the policy decisions involved in the formulation of the community work program was completed in an additional 45 days. The entire process took a total time of about 3 months and involved a cash outlay of less than $1,000.

This pattern could be used with comparable time and cost economies in almost any other community. It would provide a foundation for constructive action which is needed in every community and particularly in depressed areas.

3. IMPROVE ADMINISTRATION OF THE WORKABLE PROGRAM

At this point, let us consider the administration of the workable program. At least three weaknesses should be corrected.

One weakness has to do with the initial certification of cities.

At present every city gets practically the same certification. So far as the treatment by the Housing and Home Finance Agency is concerned, the poorest city which qualifies is as good as the best. This does not encourage cities to put forth their best efforts for improvements.

This inequality can be corrected easily. The Administrator could issue a certification with reservations. A city would be told that on balance it qualifies for the certification but that it has certain shortcomings on which special effort should be focused.

Another weakness has to do with the fieldwork being done on the workable program. Generally speaking, representatives of the Housing and Home Finance Agency help localities to put together programs which will qualify for Federal approval rather than to formulate programs of work which will make for continuous improvement of the community.

There should be an orderly schedule for checking cities to test their performance and to help determine realistic goals which can be included in future applications for recertification.

A third weakness in administration grows out of the existing practice of recertifying the workable programs of many cities without requiring improvement in performance. City after city is failing to carry out the promises officially made in order to receive its initial certification. While recertification should not be denied without advance notice, representatives of HHFA should visit each city, and make clear the kinds of improvement essential for recertification. Failure to make the improvements or to give any adequate explanation of failure should be grounds for denying recertification.

4. REQUIRE THE STREAMLINING OF THE ORGANIZATIONAL STRUCTURE OF THE LOCAL GOVERNMENT FOR THE PURPOSE OF INCREASING THE EFFECTIVENESS OF URBAN RENEWAL ACTIVITIES IN REHABILITATION AND REDEVELOPMENT

Turning from the workable program, which is citywide in its application, to projects which are specific undertakings within a project area, we have certain suggestions which we believe can be helpful.

Projects are the activities on which most of the central government subsidy funds are spent. We have three proposals designed to reduce the costs, speed performance, and produce better results for communities.

Our first and second proposals have to do with the formulation of the urban renewal plan which is required before any project can be approved.

The following bills, together with suitable explanatory statement, have been drafted at the request of the national chamber to give effect on these proposals. We offer the bills and the accompanying explanations for consideration by the ommittee.

AMENDMENT TO FEDERAL URBAN RENEWAL STATUTE TO REQUIRE THAT PROJECTS BE UNDERTAKEN BY CITY OR ITS AGENT

"SEC. . (a) Paragraph (h) in Section 110 of the Housing Act of 1949 is hereby amended by striking out the first sentence thereof and inserting in lieu thereof the following:

“‘Local public body' means a county, municipality, or other local government, or a State, or any public body exercising all of its functions relating to a project as agent for such local government or State, or two or more such local governments, States or bodies authorized to undertake the project for which assistance is sought.

"(b) This section shall not apply to any urban renewal project with respect to which a contract has been entered into under this title prior to July 1, 1963 for advances of funds for surveys and plans for such project or for loans or grants for its execution."

EXPLANATION OF PROPOSED AMENDMENT TO FEDERAL URBAN RENEWAL STATUTE TO REQUIRE THAT PROJECTS BE UNDERTAKEN BY CITY OR ITS AGENT

This amendment would change the Federal urban renewal statute so that funds could be made available for new urban renewal projects only if they are undertaken by cities or other local governments or their agents.

The purpose of this proposal is to put the future urban renewal program of each community under the effective control of the city or other local government, as distinguished from a separate corporate body having autonomous powers under State law. At the present time, most of the urban renewal projects are being undertaken by housing authorities of urban renewal agencies which have separate corporate status and varying degrees of autonomy in carrying out the projects. Their powers are derived directly from the State legislature. Although the members of these separate agencies are generally appointed by the mayor or other city officials, such members hold office for prescribed terms and are not under the effective control of the city or other local government.

To make the urban renewal projects truly local and representative of the wishes of selected officials and the people electing them, it is essential that the officials undertaking the projects be completely responsible to the city or other local government. This would be true under the proposed amendment. However, the amendment would not prevent a public corporate body such as a redevelopment agency or a housing authority from undertaking an urban renewal project for the city, if the city actually has full legal and practical control over the operations involved.

As State legislation would be required in a number of States to permit operations in accordance with this amendment, it would not be made effective until July 1, 1963. This would allow ample time for the enactment of such State legislation and the avoidance of any disruption of urban renewal operations. The amendment would not apply to any projects which, at the time of amendment becomes effective, are covered by a contract for advances for planning the specific project or by any loan or grant contract for its execution. The second bill together with an explanation follows:

AMENDMENT TO FEDERAL URBAN RENEWAL STATUE TO REQUIRE INVITATION FROM PROSPECTIVE DEVELOPERS AND INVESTORS PRIOR TO APPLICATION FOR URBAN RENEWAL FUNDS

"SEC.

The third sentence of Section 102 (d) of the Housing Act of 1949 is hereby amended to read as follows:

"No contract for any such advances of funds for surveys and plans for urban renewal projects which may be assisted under this title shall be made unless (i) the governing body of the locality involved has by resolution or ordinance approved the undertaking of such surveys and plans and the submission by the local public agency of an application for such advance of funds, and (ii) the local public agency has, by publication in a newspaper having general circulation in the community, invited recommendations for the development of all or any part of the proposed urban renewal area from any prospective developers or investors having an interest therein, and (iii) the local public agency represents that, in preparing and submitting such application, it has taken into consideration all recommendations made to it within a reasonable time under clause (ii).'"