be at a similar state of public housing programing, to reactivate its public housing project and to have a realization of what has been so seriously and thoroughly planned and what is so necessary and important for healthy community life and growth." Mayor HILEMAN. That's right. I would like to ask Mr. Donnelly if he has anything to add here. The CHAIRMAN. Yes. Mr. DONNELLY. Mr. Chairman, Senator Burke, the city of Michigan City, and its local housing authority has been primarily concerned, as the mayor mentioned, with the elimination of this very serious blighted area, blighted residential area, in the community. We feel that if in the urban renewal program, which is part of this bill, capital grants-in-aid are made available to public-housing authorities at the local level, local public-housing authorities, for use in aiding slum clearance, and without having to set up another local agency at the local level to handle it, it would be highly desirable. In Indiana, for instance, under 1953 legislation, we can set up an urban redevelopment commission, which is a separate taxing unit. We would like to get away from that, in communities which are in our situation. Where they have gone so far, with the plans all worked out for slum clearance, and then they are not able to proceed under the publichousing program, because of the lack of appropriations for that program. The CHAIRMAN. You want continuity? Mr. DONNELLY. That's right. The CHAIRMAN. You don't want any vacuum, and you don't want changing of the rules in the middle of the stream? Mr. DONNELLY. That's right. The CHAIRMAN. You entered into a program out there in good faith, and you want the Government to continue its aid in good faith and have continuity? That is really your big complaint and that is really your recommendation. Mayor HILEMAN. That's right. The CHAIRMAN. Thank you very, very much, unless you have something further to state. Do you have any exhibits you want to place in the record? Mr. HALL. I think it should be stated, Mr. Chairman, that we have been consistent all through this time. That we have been absorbed in the development of a plan to provide slum clearance programs as such The CHAIRMAN. I know you have done a great job up there. Mr. HALL. The rehabilitation of a bad area has been our primary premise. The CHAIRMAN. That's right. It was to eliminate the slums, and you deserve congratulations. You are doing a good job, and your position is that you want to continue to do it? Mayor HILEMAN. That's right. The CHAIRMAN. You don't want the Congress to do something that will stop you from doing a good job for the people of Michigan City? Mr. DONNELLY. Mr. Chairman, we do have one exhibit we would like to put in the record. The CHAIRMAN. Oh, yes; this is that "patch" section. The CHAIRMAN. We can't make this a part of the record, because the record cannot take photographs, but we will keep this here to be shown to the other members. Let me ask you this question. This section 220, where we are going to rehabilitate old areas, will that work well in your town? Mayor HILEMAN. I don't understand the section clearly enough. The CHAIRMAN. It permits FHA to loan money for remodeling old houses and bring them up to date, providing you, as the city, will adopt a plan of rehabilitating blighted areas. Mayor HILEMAN. Not in this particular area, I would say it wouldn't. The CHAIRMAN. Isn't that about what you did in this area? The CHAIRMAN. Did you tear this down completely? Mayor HILEMAN. It hasn't been demolished." The CHAIRMAN. But, you plan to tear it completely down? Mayor HILEMAN. Section 220 does not require that it be torn down. It requires them to go in and rehabilitate-rehabilitate and clean up the old houses. Mr. HALL. The "patch" area, as such-the word, itself, describes the area. It looks like a bunch of houses that have been takenThe CHAIRMAN. Don't you have house in Michigan City where this section 220 might well work? Mayor HILEMAN. Yes, we do have. But, if you do take a slum area which is bad enough, one as bad as this particular one, we believe that the only way to eliminate it is to tear it down. The CHAIRMAN. Well, there are many, many areas where you would have to tear it completely down. You just couldn't rehabilitate it. Likewise, I think there are many, many areas which, by rehabilitation, and certain legislation on the part of the city requiring certain things, cleaning them up, cleaning up the streets and sidewalks, that you could really make nice sections out of them. Mayor HILEMAN. That's right. The CHAIRMAN. For example, the areas bordering on the so-called "patch" area of yours have no doubt become blighted. Mayor HILEMAN. That's right. The CHAIRMAN. That is the area we are talking about in section 220. Well, thank you, gentlemen, it is nice to have you. (Mayor Hileman's prepared statement follows:) A STATEMENT AND RECOMMENDATIONS BY THE CITY OF MICHIGAN CITY, IND., AND ITS LOCAL HOUSING AUTHORITY WITH REFERENCE TO PUBLIC HOUSING, AND A REQUEST FOR REACTIVATION OF THAT CITY'S PUBLIC HOUSING PROJECT Appearing for the city of Michigan City, Ind., and its local housing authority: Russell G. Hileman, mayor, city of Michigan City, Ind.; John P. Donnelly, executive director, Michigan City Housing Authority; George N. Hall, of Beine, Hall & Curran, Inc., architects and engineers for Michigan City Housing Authority. The history of low-rent public housing in the city of Michigan City, Ind., a town of 30,000 population, begins in 1942. In that year an unofficial committee composed of six private citizens, motivated solely out of concern for the welfare of the community began preparing plans for a housing project primarily for members of the Negro race to be financed through private capital. The main object of the plan was to remove Negro families of low income from a slum area commonly known as the Patch, which for a long time had been a pesthole of crime, disease, and juvenile delinquency. This unofficial program had to be abandoned, however, because of difficulty in raising necessary funds, inability to overcome neighborhood resistance at available vacant sites for the project, and inability to obtain building materials which were in wartime short supply. In 1950 the idea of low-rent public housing in the community was revived with the establishment of the Michigan City Housing Authority under the Federal Housing and Rent Acts and the Housing Authorities Act of the Indiana General Assembly. The public support for the creation of this local authority was won principally on the premise that the inauguration of a low-rent public housing program in the city would result ultimately in the elimination of the Patch, and its replacement by decent, sanitary, standard dwellings for families of low income. For decades, the Patch, an area of approximately five square blocks, has been the well-recognized slum district in the community. Located in one of the oldest parts of the city, it is in the middle of built-up territory, with no sizable vacant tracts of land within small distance. On the northerly and northwesterly sides the Patch is bordered by commercial and industrial enterprises; on the easterly side it is edged by commercial establishments and a harbor which is used for pleasure craft and fishing-boat traffic; on the southerly side it is adjoined by mixed commercial, industrial, and residential neighborhoods; and on the westerly side there is a residential neighborhood. The Patch is almost completely occupied with dwelling houses, virtually all of which are 30 or more years old. There are 64 dwelling structures on the site, containing a total of 114 dwelling units, with most of the structures in a greatly dilapidated condition. Of the 114 dwelling units, 100 of them-or approximately 87 percent-are substandard. The vast majority of the dwellings on the site are either very much dilapidated, overcrowded, or lack sanitation facilities. Although the cancerous condition of this slum has been recognized and admitted by everyone in the community, private enterprise has found it too costly and impracticable to clean up through its own resources, and the people in the community realized that if the slum was to be wiped out it must be through the means of a public-housing program. The families living in the Patch are predominantly Negro working people. The families living in the areas surrounding the Patch are predominantly white families of the laboring class. The residential neighborhoods adjoining the site are not too rundown, at present, and have fairly decent, if modest, standard dwellings. Slowly and not imperceptibly, however, the character of the adjoining residential areas has been retrogressing toward blight. With the rehabilitation of the Patch, as contemplated by the local authority's program, and assuming that program may be continued, this retrogression will at least be halted, and it is hoped may even be reversed. In March of 1951 the local authority obtained a program reservation from the Public Housing Administration for a total of 170 low-rent public housing units; by November of that year an analysis of a survey of necessity was completed, which showed a need for a total of 152 units, with an estimated racial occupance of 102 white and 50 nonwhite families. The local authority, after many months' inspection and study of various locations and the overall aspects of a publichousing program in the city, and always conscious of the acute need for cleaning up the patch, and acting with the advice and concurrence of PHA, selected the Patch, as the site for 50 low-rent units. In addition to the element of slum clearance, the following factors also contributed to the selection of that site: the use of that site would not necessitate the uprooting and moving of families to a new and strange area in the city, which action would be contrary to the expressed wishes of the people who were living on the site, and which move might also lead to unpleasant neighborhod reaction in the new area; all utility services are already located in the Patch site and are entirely adequate for proposed project use; the use of the Patch site also would permit the use of the same schools which now serve the families who would live in the project, which school facilities are the most adequate, new, and modern of any school facilities in the city; churches attended by the people who would be served by the project are located within easy walking distance; the principal shopping district of the city is very close; and the Patch site is near the industries where most of the workers who would live in the project are employed. As the site for the other 102 units, the local authority selected a vacant tract of land situated in another part of town. Thus the local authority's program consisted of two projects: Project IND-19-1, which was the 50-unit development on the Patch site; and project IND-19-2, which was the 102-unit developinent on the vacant site. After the preparation and the reworking of many preliminary site plans to obtain PHA site approval, land appraisals were gathered on the sites. These appraisals showed that site-acquisition costs in the Patch would exceed the permissible maximum ratio of such costs to the total development costs of project IND-19-1, but that site-acquisition costs of the vacant site would be substantially less than the ratio of such costs to the total development costs of project IND-19-2. PHA then advised the local authority that if both projects were begun and prosecuted concurrently the below-ratio land-acquisition costs for project IND-19-2 could be set off against the over-ratio land-acquisition costs for project IND-19-1. By using this formula the ratio of total land-acquisition costs for both projects to the consolidated total development costs of both projects came within the permissible limit, and the local authority proceeded with its plans. Subsequently, however, PHA informed the local authority that the averaging of land-acquisition costs of both projects or the setoff of such costs of one project against such costs of the other project could not be done, but that each project had to stand on its own feet with reference to such cost items. The local authority's problem, therefore, became one of increasing the unit density on the IND-19-1 site by transferring thereto units from the IND-19-2 site so as to increase the total development costs on the Patch site and thereby reduce the ratio of land-acquisition costs of the latter site. Originally the local authority had planned 2-story row-house construction on each of the 2 sites, which type of construction would be in general conformity with the prevalent 2-story residence construction throughout the city. When the procedure of increasing the unit density of the IND-19-1 site was followed, however, it was found that in order to meet PHA spacing requirements the local authority would have to abandon its 2-story row-house planning scheme and go into high-rise construction on the Patch site. At that point the local authority also decided that in view of the small number of units which would remain for construction on the IND-19-2 site all of the 152 units should be built on the Patch site. Accordingly, after all of the architectural, engineering, and relocation details were worked out, the local authority's development program as submitted to and approved by the PHA regional office called for two 6-story high-rise buildings, each containing 47 units, and eleven 2-story row-house buildings containing a total of 58 units. After submission of the development program in the spring of 1953, the project had to be suspended because of the lack of appropriation of funds by the Congress for use during the current Government fiscal year for the construction of new projects which were not already under annual contributions contracts. It may be seen from the foregoing that, in the city of Michigan City, Ind., a long hoped for and desperately needed public improvement had been brought right up to the point of fruition, and then had to be indefinitely suspended and perhaps completely abandoned because of curtailment of appropriations therefor by the Congress. This situation was bitterly disappointing, not only to the members of the local authority who had worked long and conscientiously in planning and replanning the housing projects, but also to all of the townspeople who had finally had in sight the eradication of the town slum. After considerable time and funds had been expended in designing the greatest public and humanitarian benefit in the history of the community, the project had to be stopped on the very eve of its taking physical shape and substance. The plans were, and are, all ready and have been approved by PHA; the community was, and still is, enthusiastically in support of the project; all that was, and is, still needed is the money to actually begin the construction of the buildings. With this history and background, it is the earnest plea of the city of Michigan City, Ind., that this Senate Banking and Currency Committee give favorable consideration to an amendment of existing legislation, which amendment would have the effect of repealing earlier amendments to appropriation measures, so as to permit the city of Michigan City, and other small cities and towns which may be at a similar stage of public-housing programing, to reactivate its public-housing project and to have a realization of what has been so seriously and thoroughly planned and what is so necessary and important for healthy community life and growth. It is respectfully submitted for the consideration of this committee that slum conditions can be just as acute and just as debilitating in small cities and towns as in large metropolitan areas, but that the small city's problem in clearing up a slum area is far more difficult because of the inadequacy of private capital to accomplish even relatively small scale slum clearance with its accompanying long-term and questionable return on the capital investment involved. The only firm hope for slum clearance in the small town is by means of the public-housing program, made more adaptable to and flexible for the town's requirements. It may be pointed out here that, if the Michigan City housing program is permitted to proceed as planned, the two most important and desirable results will be accomplished: the most unwholesome district in the city will be eliminated; and decent, sanitary, standard dwellings will be provided for low-income families who have been living in substandard accommodations. It may also be pointed out, however, that the accomplishment of these results will have a discordant aspect: The type of construction which will have to be utilized, viz., the two 6-story apartment buildings rising into the air above their surroundings and above practically the entire town, for that matter, will stick out like the proverbial sore thumbs and will be completely out of harmony with other residential construction style in the community. It is respectfully submitted for this committee's consideration: (1) That in small communities, where a public-housing project is combined with slum clearance, a grant-in-aid be made available for use by the local housing authority to cover those costs of slum-site acquisition which are in excess of the permissible ratio of site acquisition costs to total development costs. It is suggested that such grant-in-aid to the local housing authority for such use will obviate the creation of another municipal-government agency or taxing-unit for urban redevelopment as is contemplated in proposed legislation, and it will accomplish the same fundamental purpose. Such provision would also do much toward eliminating a nonconforming pattern of high-rise construction which otherwise would have to be utilized in order to balance PHA cost requirements. (2) That the limitation on cost related to room count alone be liberalized or be made more flexible. Under existing cost limitations, most small cities cannot build public-housing units in even close approximation to the general architecture of small, modest homes in the community. The liberalization of these cost limitations would allow the design and consrtuction of public-housing units for single persons, many of whom are as deserving of public-housing benefits as well as "families." It is respectfully suggested to this committee that the adjustment of the publichousing program to permit the implementation of the above proposals would, to a great extent, soften the hard "institutionalized" structural form of public housing and would make the program more acceptable and palatable, as a whole, to the smaller communities and community planning throughout the United States. In conclusion the city of Michigan City, Ind., and its local housing authority expresses its sincere thanks to this committee for the opportunity to appear before it and present its ideas concerning low-rent public-housing projects and problems in small cities and towns. It is, of course, sincerely hoped by the city and by its local authority that it will be possible to have the Michigan City housing project reinstated during the coming fiscal year. It is further hoped that the foregoing presentation may be of some value to this committee and its important work. The CHAIRMAN. Our next witness will be Mr. DuLaurence of the National Apartment Owners Association. STATEMENT OF HENRY DuLAURENCE, CHAIRMAN, LEGISLATIVE COMMITTEE, NATIONAL APARTMENT OWNERS ASSOCIATION, INC. Mr. DULAURENCE. Mr. Chairman, I think you have finally found somebody that thinks this bill is exceedingly liberal. The CHAIRMAN. Thank you. We are not looking for a compliment, but it helps once in awhile. Mr. DULAURENCE. Chairman Capehart, and members of the Senate Banking and Currency Committee, my name is Henry DuLaurence, and I am chairman of the legislative committee of the National Apartment Owners Association. My home is Cleveland, Ohio. The National Apartment Owners Association appreciates the privilege of |