ADDITIONAL STATEMENTS AND DATA American Bankers Association, statement and news release on home Boston Housing Authority, statement of John P. Connolly, commissioner Housing and Urban Development Department, answers to written ques- Page 306 376 31 Reprint from Housing Starts Bulletin... 273 National Association of Real Estate Brokers, Inc., statement from John- 343 National Governors' Conference: Letter to HUD from Daniel J. Evans, chairman.. 214 215 National League of Insured Savings Associations, statement of William L. 368 New Brunswick, N.J., letter from Mayor Patricia Q. Sheehan 83 U.S. Conference of Mayors, answers to written questions of Senator Taft_ The committee met at 10:10 a.m. in room 5302, Dirksen Senate Office Building, Senator John Sparkman [chairman of the committee] presiding. Present: Senators Sparkman, Proxmire, Williams, Stevenson, Biden, Tower, Taft, Packwood, Brooke, and Weicker. The CHAIRMAN. Let the committee come to order, please. The Committee on Banking, Housing and Urban Affairs, starting today, is conducting 3 days of hearings on the administration's proposed housing legislation for 1973 which was received by the Congress only yesterday. This legislation is long overdue. We had hoped to have it last spring. In fact, when this new session of Congress opened, the leadership wanted early work on a comprehensive housing bill and I had announced that we might get it out in April, but we had a new Secretary and he said he would have to have time to work up legislation. We tried to push him to a June date but he said the best he could do was September. We would have made it in September if the last day had not been on Sunday, I guess, but, Mr. Secretary, we are glad to have you here this morning. Now that we have the administration's proposals, we intend to move forward as rapidly as possible toward marking up a comprehensive bill for passage in the Senate, hopefully by the end of this month. We have not had a comprehensive housing bill approved by the Congress since 1970. This is unfortunate, because there are many provisions in existing law which are outdated and unworkable. Now, new approaches which would consolidate the community development categorical programs and simplify outdated housing laws were considered in the Congress for 2 years before being approved in a bill which passed the Senate last year. Unfortunately, the bill did not clear the House before adjournment and so another year has gone by without corrective legislation. The committee was prepared to press forward with legislation early this year but, as we all know, the President's moratorium on housing programs announced on January 5 called a halt to developing a new bill. I have expressed myself many times before on the subject of the moratorium. To me it is an unjustifiable use of executive power which has seriously slowed down our effort to reach the national goal of a decent, safe, and sanitary house for every American family. (1) While the administration was studying the programs, this conmittee ran nearly 3 weeks of oversight hearings. These hearings were intended to get at the facts and learn from the public the serious impact the moratorium has had on the housing and urban development efforts. Two weeks of oversight hearings were held in Washington and several days each in Chicago and in Toledo, Ohio. Later, in July, we had 2 more weeks of legislative hearings. The subsidy programs received overwhelming support from our witnesses and urged that everything be done to free the funds and reinstate them. They frankly told us about weaknesses of the programs and made recommendations for changes but insisted that they were basically sound and should be continued. The year of 1973 has been a frustrating experience for all of us in housing. Ever since the January 5 freeze of funds we have done very little in a productive way to advance toward our housing goals. Our constituency has pleaded with us to intervene with the President and we have done our best with less than complete success. The FHA extension bill which should have been an easy legislative effort to keep the existing programs in business turned out to be a most time-consuming, frustrating experience. We finally passed the bill last night and sent it to the President for signature after agreeing to delete several important provisions on which the executive branch refused to negotiate any reasonable compromise. We are facing another challenge with the bill sent to us yesterday by the administration. I am afraid we are far apart in our thinking from that of the administration. The committee starts working next week to mark up a comprehensive bill. We believe we have the makings for developing a new approach, wrapping together community development with housing. Prerequisite with this, however, is housing for low- and moderateincome families. We must, therefore, have subsidy programs for this purpose. Thus, I see an immediate conflict with the administration which is calling for a cash payment program possibly several years away. I hope that we can work together with the administration to arrive at a reasonable compromise of our different positions. I believe it can be done if we work at it. We have before us today Secretary of Housing and Urban Development, Mr. James Lynn, who I know has been working hard to try to get a program that we could satisfactorily work on. We want to hear from him but, more than ever, I hope Mr. Secretary that you can tell us today how you see us working out a program that will be mutually satisfactory to both the executive and legislative branches of our Government, both on the short run, through fiscal year 1974 and on the long run for fiscal year 1975 and the years that will come thereafter. Senator Tower, you stated you had a statement you wanted to make. Senator TOWER. Thank you, Mr. Chairman. I am delighted that we are finally initiating hearings on the administration's proposed housing programs and taking the opportunity to review the results of 6 years of study by HUD as to why the programs presently on the books are defective. From what I can gather, some have been found to be defective in fact and others not. Whatever these findings might be, it is difficult for us in the Senate to truly evaluate the Secretary's proposals without first looking at the data on which these proposals are based. Now, you have, Mr. Secretary, up to this time, submitted no factual evidence to the committee in a formal way which would substantiate your claims and proposals. It is hoped that you will be able to submit your housing study report to us in the very near future. I think that would be tremendously helpful to us. Now, while it is hard to evaluate your proposals without certain data before us, it is my belief that many of the concepts that you suggest are new and exciting and hopefully will lead to an increased supply of decent housing for all Americans and especially lower income families. Speedier foreclosure proceedings and reinsurance proposals are just a few of the new proposals that we have to examine. While you propose experimentation with a direct cash-payment program, I think we all eagerly await the findings that will result in the housing program that is presently being tried in a few cities. I think what is important to consider now is that we have to do something. Whatever the reasons for the moratorium and the need for housing for lower income housing, that need is still with us and it is becoming increasingly important. So I look forward very much to hearing your testimony, and hope that you can provide the answers to our present problems and I am sure, knowing your resourcefulness and your ingenuity, that you will come up with some answers. May I say that while I might appear to be mildly critical and, from time to time I am and will be, I do not know of any time when we have had more communication and cooperation with the Secretary of an executive department than we have had from you, Mr. Secretary, and I do not know of any time when we have had more preconsultation on an administration proposal than we have had with this current housing proposals. So we will be listening with interest and I think with a degree of openmindedness and certainly with no air of hostility, because we feel that you have been very cooperative indeed. The CHAIRMAN. Senator Proxmire. Senator PROXMIRE. Mr. Secretary and Mr. Chairman, this is a sad and historic day. For the first time since the creation of HUD and its predecessors, the head of the housing program in this country has appeared before us to ask us to abandon our historic housing policy and our housing goals. In 1949 we pledged to provide a decent home and a suitable environment for every American family. In 1968 we wrote into the law a very specific housing goal, at least 600,000 units a year for 10 years of lowand moderate-income housing. These goals have been adandoned by HUD. Starting with a moratorium last January, the sights were lowered to 250,000 units and this year with a new housing message, that is reduced to 150,000 units, or one-quarter of the annual goal. Now, I am told the bill repeals the housing goals altogether. This is a cruel and brutal policy. It abandons many millions of Americans to years more of living in substandard, overcrowded, and dilapidated housing in blighted neighborhoods. We had high hopes that after the big HUD study, a firm, intelligent program to complete our housing goals would be proposed. Instead, they have been abandoned. What we got was, first, a series of pallatives some good, some not so good-aimed at the present, immediate high-interest rate problem, forward commitments, tandem plans, extending mortgage limits, and the like. Some are good and some are bad, but they are not a housing program. Second, the present construction programs are to be abandoned or greatly reduced. At best there is to be some construction, not clearly spelled out under section 23 which even if successful, will be a drop in the bucket with respect to our housing needs. Third, there is a vague and feeble proposal involving housing allowances. There is no program; there is no proposal. There is no policy. Instead, we are told "Right now, our principal effort should be directed toward determining whether a policy of direct cash assistance *** can be put into practical operation." I call that the "no-policy" policy. And when it is put into effect fully, we are told it will cost $8 to $11 billion. Now, as the chairman of the subcommittee of the Appropriations Committee in charge of HUD funds, I think that is wholly impractical. There is no chance we are going to appropriate money in that amount. So, what are we left with? With the present high interest rates, 60 to 70 percent of Americans cannot afford to buy their own housing. It costs too much for their income. New public housing is, for all practical purposes, being abandoned. So, there is nothing new for the poor. The moderate-income homeownership interest rate section 235 program is terminated, to use a familiar HUD term. It is done on the specious grounds that the program is a failure. But some of us know that where we had good management, it succeeded and where there was HUD mismanagement and corruption, it failed. It is not the fault of the program. Where there was counseling for poor people and good management-that enabled that program to work. That is abandoned. So there is no program for the moderate- and middle-income family who, in the past, was not poor enough to qualify for public housing but was without enough income to buy his own home. That's not all. Now, because of high-interest rates, the middle income American family is abandoned, too. They cannot afford to buy their homes, and there is no program for them. What we have left is the FHA program to guarantee mortgages, and in addition the conventional programs, wholly private, in which people living in $50,000 or $60,000 or $100,000 houses can deduct their interest payments and property tax payments from their income-tax returns. I am not against that, but that is a very valuable tax advantage and it increases in value as income increases. It is a big subsidy, and should be faced as a subsidy. One study indicated that the upper 20 percent of the income groups in the United States got 312 times in subsidies through this device than the lower 20 percent got from all public housing plus counting 25 percent of welfare payments as housing payments. |