Direct Cash Assistance NAHRO has major questions and concerns about adopting a "direct cash allowance" approach as the basis for our national policy of providing shelter to lower-income families. We do support further testing of housing allowances as a possible supplement to our housing assistance techniques; however, we do not share the President's optimism regarding the benefits and workability of a large-scale housing allowance program. Our forty years of housing experience leads us to be cautious about the potential of this approach. The Senate bill, S.2182, proposes an additional authorization to expand the housing allowance experiments and we support this provision. We do not, however, support the Administration's proposal to permit the transfer of public housing contract authority to test the direct cash assistance approach. The Congress should set an authorization level for these demonstrations; public housing should remain a separate program with its own authorization. Interim Housing Production Mr. Chairman, NAHRO cannot endorse or accept the minimal level of assisted housing activity for low- and moderate-income families which is proposed by the Administration, pending this determination of future housing approaches whether they be housing allowances or some alternative methods. We particularly cannot endorse the proposed level of activity since it includes as a major proportion of this effort a redoubled Section 23 leasing program which could make Section 23 a duplication of the extensive demonstrations already underway in housing allowances. We believe that the Section 23 program, as it is now constituted, is a workable, effective, and useful housing program and recommend that it be continued and expanded without changing its structure. Our experience leads us to conclude that the Section 23 program, as presently constituted, has the right combination of public monitoring of private management. Also, NAHRO sees no reason not to authorize new activity under the two-year program we have recommended for all facets of public housing, including new housing for the elderly, turnkey developments, and homeownership programs. As of June 30, 1972, applications for at least 275,000 units of public housing were pending. Most of these were returned when the program was suspended January 5th of this year. We believe that they should be reactivated, processed, and approved. Finally, NAHRO supports the reactivation of the FHA-insured and federallyassisted homeownership and rental assistance programs. They have demonstrated the willingness of the private sector to participate in programs for lowand moderate-income families. The perfecting amendments to these programs contained in S.2182 should be adopted and the programs reauthorized for 2 years at the Fiscal Year 1972 levels. We do, however, suggest one additional amendment to the rental assistance program, to require that between fifteen and thirty percent of the units in each assisted project be earmarked for lower-income families. This would provide a cross-section of income within each of these projects and avoid segmenting families by income. Public Housing Fiscal Crisis NAHRO is gratified, Mr. Chairman, that the President's The Message comments that (1) "rent Housing Message of September 19 appears to recognize the critical nature of the fiscal crisis facing local housing authorities. income rates are subject to a ceiling and not a floor" and "some tenants pay nothing at all"; (2) that "income is unrealistically defined"; (3) "that the current level of federal operating subsidy may need to be adjusted to cover those expenses which are necessary for continued operation and maintenance of the projects"; and (4) "that the relationship between housing programs and welfare payments is particularly critical. We must carefully consider the ways in which our housing programs will relate to other programs which also assist low-income persons." In its testimony of July 27 before this Subcommittee, NAHRO supported the provisions for minimum rent, re-definition of income, and welfare rent payments as contained in S.2182, and as related to the proposed annual ceiling of $350 million in federal operating subsidy. We pointed out the need to develop a "balance of resources" 22-877 - 73 - 20 between tenant contributions and federal operating subsidy in order to maintain the adequate operation and maintenance of public housing. We are in the process of studying the Administration's specific proposals on minimum rents, definition of income, welfare rent payments and federal operating subsidies; our written comments will be forwarded to you within the next few days. NAHRO is fully aware of the statement in the President's Message to provide "incentives for effective housing management." We are pleased to note that NAHRO, with the cooperation of the Department of HUD, will conduct a series of four housing management workshops for all sizes of local housing authorities from November 1973 through February 1974, aimed at stimulating the maximum effectiveness in public housing management. Rehabilitation Loans Mr. Chairman, NAHRO is encouraged by the Administration's release of 60 million dollars to continue activity under the Section 312 rehabilitation loan program. But this level of activity only represents the release of a portion of the previously appropriated money which has been withheld in the past. NAHRO recommends the funding of the Section 312 program at the full authorization level of 150 million dollars annually for Fiscal Years 1974 and 1975. The survey of local communities, completed by NAHRO in the spring of 1973, demonstrated an annual demand for 312 funds in excess of $200 million dollars. An annual level of 150 million dollars is the lowest level of action that can be taken to at least maintain efforts to preserve our existing housing stock and existing neighborhoods over the next two years. The President, in his message of September 19, indicated that he had directed the Secretary of HUD to use his research and demonstration funds to pursue promising approaches to neighborhood conservation. NAHRO, in its testimony before the Subcommittee on July 27, also advocated "large scale demonstration" in this area. Provisions of S.2182 Mr. Chairman, in our testimony before the Subcommittee on July 27, we said that we would comment at a later date on two provisions in S.2182 (1) the shift to taxable bonds for public housing and (2) the proposed block grants for housing. After deliberation, it is our judgement that any shift at the present time from taxable bonds to finance housing would cause further disruption and uncertainty in an already disrupted program. The whole issue of all tax-exempt bonds should be studied and reviewed. It would be wrong to single out cne segment of the tax-exempt bond market, ie, public housing bonds, and change it to taxable bonds without a thorough study of the effect of this change within the context of the whole tax-exempt and taxable bond market. We also recommend against the full-scale adoption of housing block grants at this time because they would, in our judgement, complicate the already difficult transition to potential community development block grants. Most localities would find it difficult to absorb and manage both housing and community development block grants. We do, however, favor an extensive testing of the reservation and commitment of housing program funds in conjunction with community development programs as provided in S.2182, or demonstrations on the potential utilization of block grants related to community development. Mr. Chairman, we appreciate the opportunity to present our views to you and the Subcommittee. PREAMBLE TO NAHRO PROGRAM POLICY RESOLUTION FOR 1973-1974 327 Attachment #1 An End to Drift and Delay: Getting Housing and Community Development - In the preamble to its Program Policy Resolution for 1971-73, NAHRO set forth the proposition that a second American Revolution - political, technological, economic and cultural was shaking the foundations of the nation. It called for a massive and sustained commitment and effort to identify problems, to develop new approaches and to assign resources sufficient to respond to this upheaval. In October 1973, NAHRO reasserts its conviction that only such a commitment and effort is sufficient to respond to the nation's housing and community development requirements over the next decade. The body of the 1973-1974 resolution sets forth in detail NAHRO's recommendations toward such an effort in six basic areas of housing and community development concern. We believe these directions for the future should be urgently pressed. In October 1973, the 40-year old efforts of the United States to provide decent housing for lower income families and a sound living environment in American communities is adrift on a tide of uncertainty, with no clear direction or national commitment. The last few years have witnessed administrative organization and reorganization, "new directions" and "new re-directions" of our federal housing and community development programs, culminating in a total termination or suspension of activity under these programs in early 1973. The 1970 legislative initiatives of the Administration in special revenue sharing for community development and consolidation and simplification of existing housing programs and the alternative initiatives proposed by the Congress have been discussed and debated for almost three years. In the meantime, the strong commitment of the 1968 Housing and Urban Development Act to national housing goals and to a progressive urban renewal effort have gradually eroded not because of basic shortcomings in the programs themselves, but because they have not been pursued with determination or with a flexibility to make adjustments in administration as experience unfolded. The constant recitations of the "myths" of program "failure" have camouflaged the "reality" of solid "achievement" made through these programs despite a constantly shifting urban environment. |