The CHAIRMAN. Are you familiar with the court decision just recently, in the district Federal court which said that HUD was liable for the warranty, just as a private seller would be?

I don't recall what district court that was. I read the article in the

newspaper.

Secretary LYNN. I am afraid we are not familiar with that, my General Counsel tells me.

The CHAIRMAN. Let me ask Senator Stevenson. I gave you that article.

Senator STEVENSON. I don't have the article, Mr. Chairman. It was a case in your State, I believe, and from the news report it was a case involving the sale by HUD of housing.

Secretary LYNN. Oh, this is a case where we have title.

Senator STEVENSON. Where HUD has acquired title and is actually the seller. It is somewhat different.

Secretary LYNN. That isn't the issue you raised, was it, Senator Tower?

Senator TOWER. No. I don't want to preempt Senator Stevenson on this, because he has a particular concern about it, but how do you deal with the problem that surfaces in the hearings that Senator Stevenson has held recently, the solution to which he tried to incorporate into some recent legislation? Is there some realistic way you can deal with that?

Secretary LYNN. The legislation has undergone some change over the period that it was under consideration, as I understand it. It was initially legislation that would apply retroactively as well as prosspectively, but in its last form was a more or less what I would call a claims bill. In other words, it covered costs where the Government had been negligent and therefore should pay for its negligence for past acts.

One of the things that concerns me as to this approach is, first of all, it represents an entirely different philosophy than has been the general conception of HUD, that HUD does its inspections to protect the mortgage, because it is the insuror of the mortgage.

It seems to me that what we ought to look at is the totality of the problem, not a claims approach, but whether or not there is a need for assistance, particularly in the inner city, to have the kind of tools whereby they can on a favorable basis fix up their properties if they are not what they thought they were going to be. Additionally, it seems to me that you have to examine what are the duties of the seller in this regard. What are his certification requirements? What are his warranty requirements?

Are our tools adequate to meet the need? If not, let us consider an approach to make those tools adequate. As a person who has his work cut out for him in HUD, Mr. Lubar, is moving toward streamlined processing and so on, with respect to that particular function, to determine whether that defect existed 3 years ago or did not, on a case-bycase basis. And that is giving me concern from a management standpoint.

Senator TOWER. Is there any provision in your proposal that would tie low-income housing to cities and community development programs?

Secretary LYNN. Certainly there is a connection between the two. For example, we refer to our neighborhood preservation strategy, as the message states, as a partnership between the Federal Government, the local community, the neighborhood itself, and the local financial institutions.

As you know, for example, we propose melding in section 312 loan authority into the funding of communities under the Better Communities Act.

One thing that is often overlooked in that regard is that we have changed what was essentially a loan program in 312 to an outright grant program.

If we are going to go into the inner city and do a good job on home improvement loans, on insuring properties and so on, then most certainly decent code enforcement, adequate police protection, planning of neighborhood facilities, facilities for the elderly, and so on, in existing areas become very important. The use of Better Communities Act money, high loan and high risk loan funds, or possibly grants will be needed to supplement what we are doing. I think that is all very useful.

Senator TOWER. Is there any provision in your proposal which HUD would set aside a certain number of low-income housing units to be used in new communities?

Secretary LYNN. Of course, we as part of our commitments, and when you mention commitments that we're going to honor in the course of the period ahead, we have in mind some new community commitments, I believe, as part of that. That is No. 1.

No. 2, Mr. Trevino, who is the new general manager of the new communities program, and it is the first time in the history of that program that we have had a separate manager of it, is working with me as to how we are going to satisfy those requirements in the future. It does seem to us that one of the mandates of the new communities program is to achieve an economically mixed community, and if we are going to have that kind of a community, someplace, somewhere, there has got to be assistance in the housing on the low-income side. In one way or the other it is going to have to be provided.

Senator TOWER. Now, would you explain to me why in 102(g) you give priority to the elderly poor rather than the poor with families and children?

Secretary LYNN. There were a number of reasons, Senator. Among them was the following:

First of all, if you do not help the elderly first, they are not there to be helped later. In other words, their time to be helped is more restricted.

Secondly, we have already federalized welfare assistance generally to the elderly. Social security and now what is it called, SSI, for the elderly which goes into effect, I believe, January 1.

We have already federalized the system of assistance to those people. It seems to me these are good reasons to start with them. We have experience with them, we have vehicles in place to help them, and not only that, but they are a group of a size that would appear to us not to impact strongly on the existing housing market-the thing that bothers Senator Proxmire and, frankly, bothers me, and it is something we have to avoid.

Senator TOWER. There is an editorial in this morning's Wall Street Journal which mentions your name favorably, and they note that the supply of substandard housing has been reduced from a 37-percent level of 1950 to 6.9 percent now.

In so doing, this increased the number of building units for the poor, or it was units for the unpoor, but in the process it creates units for the poor, because the lower income families who live in substandard housing move up into the more standard housing as the others move out or up the income ladder.

Do you have any comment on that?
Is there any real evidence of that?

Secretary LYNN. Yes, there is, indeed. The progress made toward the reduction of substandard housing in the last 20 years, indeed in the last 10 years, is remarkable. It is a good record. Of course, we have further work to do, but it has been very, very strong. I believe that, using the general approach of housing lacking full plumbing, the amount of substandard housing has been cut in half, I believe, in the last 10 years.

Mr. Moskow. Much more than that. Do you want me to give that? From 1950 to 1970, Senator, the percentage of our housing stock that is dilapidated dropped from 35.4 percent to 6.9 percent. The percentage that was overcrowded in the same period dropped from 15.8 percent to 8.2 percent.

Secretary LYNN. Those are crude indicators. Those are not the best indicators that we should have. But I certainly believe they show a trend unmistakably of reducing substandard housing.

Now, if you compare those units with the subsidized units we built, it is obvious that that reduction has come through market forces. It has come by better real incomes of our people generally across the board, even those with the lower incomes, moving up to some extent in what their purchasing power is, and it comes from the response of the building industry and the credit institutions to that demand.

Senator TOWER. Thank you, Mr. Secretary. I apologize, Mr. Chairman. I overran my 10 minutes.

The CHAIRMAN. Senator Williams.

Senator WILLIAMS. Thank you, Mr. Chairman.

Following those last figures, Mr. Secretary, how does that translate into the number of families that are living in substandard housing now?

Mr. Moskow. The numbers that I gave, Senator, were not for substandard. They were for dilapidated, but this would indicate that that would be the same percentage for families, for households. In other words, in the dilapidated, 4.5 percent of the households would be living in dilapidated units. That was in 1970.

Senator WILLIAMS. Are the elderly separately stated? Do you know the number of elderly individuals living in substandard housing? Secretary LYNN. Mike, why don't you give him what happened on the elderly.

Mr. Moskow. I don't have that chart.

Secretary LYNN. We do have that data, though, and there too it has reduced markedly over the same period of time. That is accurate, isn't it?

Mr. Moskow. Yes. This is 1950 to 1970, Senator, the census figures. Senator WILLIAMS. During most of that period we didn't have a moratorium on new construction.

Secretary LYNN. What I am saying, Senator, if you look to our new construction and took 450,000 units a year and look at it, you cannot account for the changes that occurred, you can't account for them by the use of these programs, particularly when you consider that a good part of this drop occurred before the programs were ever put into effect.

We are talking about 1950 to 1970, and there wasn't any 235 or 236 before 1969. In other words, it is a phenomenon of our country being healthy, and growing, and doing things for our older folks through social security, but mainly a market force phenomenon of better real incomes for American families generally.

Senator WILLIAMS. During that period public housing was prominent in the area of new construction, wasn't it?

Secretary LYNN. Yes. There again, however, the total number of families you are talking about housed even today in public housing is a little over a million families, and that has been a gradual buildup over a period of years.

The CHAIRMAN. We might include slum clearance and rehabilitation. We inaugurated different rehabilitation programs during that time.

Senator WILLIAMS. Yes, and that is reflected in the percentage figure, but we are still left with the hard fact that millions of people are still living in substandard housing.

Secretary LYNN. According to the 1970 census there are 4.7 million households living in substandard housing.

Senator WILLIAMS. That figure certainly should relate to the housing goals that Senator Proxmire addressed himself to earlier. There is a fuzziness about stating housing goals, as I understand it. All of these experiments that are not in place, and also being planned have no specific housing goals attached to them, do they?

Secretary LYNN. They have the goal of helping all of the people that need help and the design is to be able to determine who needs the help. The approach we are following for direct cash assistance is to put in place in each part of the country a mechanism to determine how much it costs in that area to obtain safe and sanitary housing on a rental basis, and then to find a fair percentage of income, of any family, that should be allocated to housing and if there is a shortage between what it takes to get decent housing and that percentage of that family's income, the Government would provide the difference. In other words, it is a self-executing goal.

Senator WILLIAMS. It seems to me that there are certain areas that you could realistically leave less to chance and could very clearly define and find precise ways to meet the problem than through housing allowances which sometime later might go into effect.

What is the earliest date given all favorable decisions throughout the legislative process that your housing allowance could go into effect?

Secretary LYNN. We are talking about a program that would probably have its first phase-in stage of paying benefits in late 1975 or the first of calendar year 1976.

Senator WILLIAMS. How many people are on line now who would be eligible for assistance?

Secretary LYNN. If we did the first phase-in of the elderly poor on welfare, for example?

Mr. Moskow. About 2 to 3 million households, Senator.

Senator WILLIAMS. I wanted to zero in on one clearly defined area of humanity elderly citizens living in substandard housing.

Secretary LYNN. Or paying too much of their income for decent housing, because it is a two-pronged goal.

Senator WILLIAMS. Do you have figures on those who are elderly who are applicants for housing in elderly public housing projects and who have not been able to be placed yet?

Secretary LYNN. The LHA's, the local housing authorities.
Senator WILLIAMS. Do they send those on to you?

It is not hard to find out those figures on New Jersey, there are 16,000 elderly individuals who are applicants for elderly public housing.

That is one State. It didn't take me long to find out, either. You just go to each housing authority and ask them how many applications they have.

Secretary LYNN. There isn't any doubt that there are large numbers of our elderly who need assistance. The only issue in my judgment, Senator, is what your basic, your fundamental emphasis should be in giving that assistance. Should it be primarily on new construction, or should it be on cash assistance to make maximum use of existing housing?

Senator WILLIAMS. Let's narrow it down to housing that is exclusively for elderly.

Secretary LYNN. All right.

Senator WILLIAMS. Has your study given you enough data to evaluate that program in terms of its success or failure? I would use that in the subjective sense. Are the people in that housing safe? Are they living in sanitary and adequate housing?

Secretary LYNN. In existing public housing?

Senator WILLIAMS. Those that are strictly elderly.
Secretary LYNN. On the whole, yes.

Senator WILLIAMS. Do you know of any failures?

Secretary LYNN. There are some, undoubtedly, but I like to call it the way I see it and know it. In the main, the great proportion of them are living in safe, decent housing, but that is not the issue, Senator. Senator WILLIAMS. It is for individuals. That is exactly what the issue is for them.

Secretary LYNN. No, it isn't to me, because for every one of those individuals that is in one of those projects, as you yourself just mentioned, there is a huge waiting line of people who are getting no assistance.

So the question is whether you provide the assistance to that huge waiting line in New Jersey by further new construction, or whether, where there is available safe and sanitary housing, you help those people by giving them cash. It certainly will cost far less than it will to build buildings for them.