Comments by NAHB on S. 2507

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c)

d)

e)

In the first place, under this provision, there would be no
requirement that the supply of existing housing meet any
standards as to habitability, location, public facilities, etc.
In other words, as long as there were, or would be expected
to be, empty dwellings of any condition, it would be imposs-
ible for a locality to get any public housing funds. Secondly,
this provision is one more indication of the Administration's
erroneous belief that the housing needs of the low and moderate
income can be met through sole reliance on existing housing.

Section 5(f) purports to give the Secretary of HUD the power
to abrogate, through amendment or supersession, any
contract previously entered into under the 1937 Act. The only
limitation on this power would be where the rights of the
holders of any outstanding obligations of a LHA, for which
annual contributions have been pledged, would be impaired.
Theoretically, HUD could thereby negate contracts with
local housing authorities which would make it impossible
for them to carry out their own contracts with turnkey
developers. Such a provision is of doubtful constitutionality
and it should be eliminated.

Section 6(b) would make a significant change in the application
of prototype costs to the development of public housing
projects. Under present law, a prototype determination
only applies to the actual costs of constructing and equipping
a new project. This proposal would include land in the
determination of prototype cost. We believe it would be
very difficult to include land in the prototype cost of public
housing in view of the many special problems inherent in
siting public housing projects. The present provisions have
worked quite well and we urge that they be retained.

There are many problems with section 8, which would rewrite and, to a significant extent, completely redirect the emphasis and purposes of the public housing leasing program under section 23 of the present law. Under this rewrite HUD would be required, "to the maximum extent feasible", to provide assistance directly from the Federal Government to the project owner rather than operate through local housing authorities.

The present program would also be revised so as to make it amenable to being used as a housing allowance program. Among the changes that would move it in this direction are

Comments by NAHB on S. 2507

provisions authorizing HUD to set a fair market monthly rental for various types of units for a housing area; limiting the number of units in any single structure that may be leased to 20 percent; and permitting leases for periods as short as one month.

The local housing authority would be bound by the fair market rental determinations of HUD, which would be based on HUD's determination of the cost in an area of renting modest existing and newly constructed rental housing, without regard to whether units were available at that rent level. Using rents in existing housing as part of the base for determining the fair market rental would militate against new construction.

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The limitation to 20 percent of the number of units in any
single structure which may be leased will also effectively
bar the use of new construction under the leasing program.
It probably would also bar the leasing of a unit in any
structure of less than five units, unless a specific procedure
is followed with respect to each case to obtain a waiver from
HUD. The present statutory provision allowing the LHA to
exceed a 10 percent limit for any reason it deems appro-
priate is a much better approach.

The new leasing program, proposed to be established under
section 8(g), has numerous deficiencies. First and foremost
is the proposal to limit to 20 percent the number of assisted
units in any one structure. This, coupled with the require-
ment that housing be conventionally financed and built under
Davis-Bacon prevailing wage requirements, will make the
proposal almost completely unworkable and unacceptable
to private builders or mortgage lenders, especially in view
of the limitation to a maximum 20-year assistance contract.

The definition of income, which would be based on a gross
annual income not more than four times HUD's determined
fair-market rental for existing housing in the community,
would establish a different eligibility requirement for
those assisted under this subsection than for those assisted
under the other provisions of the 1937 Act. This is calculated
to cause nothing but confusion, especially since there would
be a further eligibility requirement that an assisted family's

Comments by NAHB on S. 2507

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income could not exceed four times the rent of its unit when it first moves in. Thus, a family would be eligible for assistance in general, but not eligible for a particular unit, regardless of rent rises or income decreases in the future.

Furthermore, requiring those assisted to pay 25 percent
of their gross family income without any deductions for
minors, and apparently including the income of minors,
represents a significant step backwards to the discredited
policies of the past. Again, there would be a different set
of criteria used under this subsection as opposed to the
rest of the 1937 Act.

Imposing Davis-Bacon prevailing wage requirements on
these projects is totally uncalled for. Housing built for
leasing to a LHA under section 23 of the present law is not
subject to Davis-Bacon and yet 100 percent of the units can
be leased to the LHA. Now it is proposed that such housing
built for lease to a LHA, or under the new scheme set out
in subsection (g), will be subject, even though only 20 percent
of the units can be occupied by assisted families. This
will only unnecessarily drive up the cost of this housing.

The present public housing leasing program is a workable
It should be retained, not replaced by a complicated,
unworkable substitute.

one.

October, 1973

The CHAIRMAN. Our next witness is Mr. Robert Maffin.

I apologize for the late hour and I would ask you, if you could, to abbreviate your statement as much as possible, and we will put the entire statement in the record in full.

STATEMENT OF ROBERT W. MAFFIN, THE NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS, ACCOMPANIED BY MARY NENNO AND JOHN MAGUIRE

Mr. MAFFIN. Senator, I am Robert Maffin. I have with me Mary Nenno and John Maguire of the NAHRO staff.

I will submit my statement for the record at this time (see page 297). I want to talk briefly about a couple of items.

You have a copy of our prepared statement, Senator. We have not had an opportunity to fully examine the legislative language proposed by the administration and we would like, as the Homebuilders indicated, to submit supplementary information at a later date.

Senator PROXMIRE. Without objection, we will be delighted to have it.

Mr. MAFFIN. As has been cited before, we feel that the President's message, and the accompanying legislation essentially abandons the goals of this country to provide adequate housing for its citizens.

A part of that abandonment apparently rests on a sustained rhetoric of failures; citing selective examples of failure, in what have been monumental programs in our opinion developed over 40 years of legislative and operating experience.

We do not see in that statement any effective alternatives to the programs that have been developed over the years since housing legislation was first initiated at the national level.

Mention was made a moment ago about the operation of the trickledown theory. It is our judgment that, by and large, America operates on the "trickle-up" practices in housing. People in a mobile and aggressive society as ours have, as an aim, the improvement of their housing quality.

The unfortunate part about the trickle-up practice is that what is left over, is supposed to be the housing for the low and the moderate income people. Generally, it is located in the abandoned and sometimes depressed rural areas of America and in the slums, ghettos, and deteriorating areas of the inner city, where the alternatives for housing are totally inadequate. This is precisely where we desperately need to focus some attention on the actual production of housing. An allowance check will not suffice.

Policies of the kind articulated in the President's statement are policies that can do little more than exacerbate the very urgent urban problems that we have in this country. The message provides no solution to the immediate problem of seeing that people of low and moderate income are adequately housed.

Let me talk specifically about two or three points in the President's message. First of all, the housing assistance allowance in our judgment is an imperfect vehicle when operating in a housing market, where the availability of housing is so enormously constrained by all of the environmental questions, the public service questions, the public improvement needs in many of these areas.

The section 23 program, we believe, should not be altered, as proposed by the administration. This program has provided another step in the long link of steps that have been taken by our legislative history to bring the public and private sectors together.

The public housing section 23 program has served to increase the use of the existing housing stock, as well as to encourage the development of new housing for low- and moderate-income people, particularly the lowest income people.

We are encouraged by those portions of the President's message which relate to the modernization of the existing inventory of public housing. I testified before this committee before that we think it is very important to protect a $20 billion asset that we have in public housing through an effective program of modernization and that program needs to be enlarged.

The 312 program, as you, yourself, pointed out a moment ago, has demonstrated, a capacity to at least start the job of rehabilitation of the existing housing stock.

Rehabilitation and the fuller utilization of the existing housing stock, in our opinion, may be more than serving a housing goal. It may go to the goal of serving the economic and physical viability of the cities themselves. That housing stock, treated in absence of related public service improvement programs, does little to assure the long-term utilization of our inventory. To undertake rehabilitation without those companion efforts may do nothing more than to continue to downgrade many of the key areas in our central cities some of the smaller towns.

In short, Mr. Chairman, our position is as follows:

We are now in a long debate over housing policy in this country. That debate is likely to continue. We have found no hard evidence presented to demonstrate that 40 years of legislative history has produced nothing but failure, and it would be our position that the tools we now have both in the housing and urban development and rehabilitation fields be continued at levels approximating the 1972 levels authorized by this Congress until such time as this debate continues.

Senator PROXMIRE. Thank you very much.

Mr. Maffin, what do you think would be the reaction of the country if the President should close down cancer research, and heart research for 3 years or 2 years, while we look for another possible solution, a possible better way, which they may or may not adopt?

Don't you think there would be such outrage, such a tremendous adverse reaction that the Congress and the country just would not stand for it?

Mr. MAFFIN. That is so.

Senator PROXMIRE. Isn't that just about what is being done in the housing construction field?

Mr. MAFFIN. That is correct, sir.

Senator PROXMIRE. Do you think housing allowances could work without a major construction program?

Mr. MAFFIN. No, sir.

Senator PROXMIRE. Why not?

Mr. MAFFIN. As I tried to indicate a moment ago, if you operate on the trickle-down theory, which the housing allowance system does,