As was suggested earlier, the question that came to our mind was: If these allowances are being made, would that not force the cost of rental units up? You have assumed that there will be plenty of units built. We don't feel that that is true. Senator PACKWOOD. I don't assume it. The Secretary did. I think if Congress could design sufficient tax incentives to produce private enterprise houses, more than we now produce, and if that theory would be right, people would move, out of 15- or 20-year-old adequate housing, and leave those units available to people with housing allowances. That is a big premise, but it is the one Secretary Lynn is operating under. If that is the situation, I am assuming the housing allowance is one like social security that will go to the recipient to be used for housing. If the available housing were there, would it be an adequate system? Mayor MARTIN. From my point of view, I would like to see HUD's experiments carried out for the next year to work out some of these problems. I would not want to say at this time that I think it is anywhere near the answer; no, sir. Senator PACKWOOD. I have no further questions. The CHAIRMAN. Senator Taft. Senator TAFT. Thank you, Mr. Chairman. First of all, I want to thank the panel for appearing here this morning. I think they have brought matters to our attention that are going to be very helpful and worthwhile as we try to work out some type of a bill within the next few weeks. I share many of the feelings that have been expressed here as to the inadequacy of our present plans for the short-term point of view, particularly of declarations that have come from the Secretary. From the beginning of the 18-month freeze, I had a feeling that we were bound to lose momentum, and from what has been said here, that appears to be true. Against that background, I would appreciate some answers to a very few questions. I note particularly that Mayor Stanley Cmich from Canton, Ohio, my own State, is here, and I might ask him to comment first on these particular questions and I would welcome comments from the others. There were a number of financial recommendations of the administration in the message that came down this week, the 31⁄2-tax benefit for mortgage investors, the freeing of FHA interest, rates, the maximum increase in the FHA mortgage amount, and the provisions of advance for savings and loans. All of these and one or two others were financial recommendations. Do you believe, mayor, that these financial recommendations, if put into effect immediately, would have an impact? Mayor СMICH. Yes; they would. To give you an example, we have been 50-percent completed in our city's Washington rehabilitation project. It is about 3 years old, and the hangup was that we didn't have loans and grants available. Therefore, the project is virtually stopped and is not functioning. With the President's message that he is going to release all these necessary 312 funds, we are now able to pursue the balance of this project to great advantage. In fact, it is a must if we are going to go into a rehab project or any other program that would need financial aid from the private institutions. Senator TAFT. Perhaps we ought to make sure that we provide the authority to act in these areas posthaste. Mayor СMICH. That is correct. Senator TAFT. Do you believe the section 235 and 236 programs should be substantially revised if we continue them, and continue to provide funds for them, and what type of revisions would you recommend, if so? Mayor ALIOTO. Mayor Lindsay, do you want to talk about 235 and 236? Mayor LINDSAY. We have virtually no 236 in New York. Section 236 has been a very, very effective housing tool. It is really a moderateincome housing arrangement, is what it is. This is very valuable, because there is no way in these large urban areas, whether they are urban or suburban, that you can continue a program that builds only for the poor. The best that we can bring in 236 now, using whatever other housing tools that we have locally, is $45 per room per month under 236. That is really moderate income; $50 per room per month is really the figure at the moment. It has been the fastest housing tool that has been discovered. Now, where the inflexibility has come in general has been-and this goes to the question of Senator Packwood-that the biggest problem we have had with 236 or anything else is the timing of construction. We have urban renewal, clearance, relocation, 236 and you may have to throw in various mortgaging devices of your own. Our problem has been that we can start urban renewal here and we never know how much is available in the area of 236. It may not be available at all. What we would like to see is maximum flexibility so that you can shift your resources between capital uses and income uses, for example, so you can create shelter and housing. Senator TAFT. The block-grant approach would do that better. Mayor LINDSAY. Yes; it would, provided you have 236 thinking built into it. We are very, very much for the block-grant approach. For example, you have a project where you may want to put some of the money into the capital uses for design and shape of the building, for airspace and all the rest of it. You may also want to shift some of your funds into various community development aspects. You know, at the same time, you have to have some percentage left over to develop that housing so that it can come in at rentals or purchase prices that the average family can afford. We are not talking about high income. We are talking about low and moderate income. The only trouble that we have with_236 is that you are not furnishing enough of it. We could use all the Federal Government can give us. Second, that there is not enough "shiftability." Senator TAFT. How about 235? Mayor CмICH. The block grant would definitely give the local government more flexibility, and it would also give them more responsibility and authority in providing the necessary type of housing that is needed by making out their own plans to fit the needs of that community. Basically, we all have a housing problem and a great need for assistance. However, the degree of it differs, and therefore, a block grant would give cities the flexibility that is needed to adjust each local program to meet the needs of their people. Senator TAFT. My time is up. I have a number of other questions. I am not sure I am going to be able to get to them this morning. I would, therefore, like to submit them to the panel of mayors for replies, particularly questions with regard to community development aspects of the legislation which will have to be (acted on and) considered and I will submit the questions. QUESTIONS FOR THE MAYORS' PANEL SUBMITTED BY SENATOR TAFT 1. The Senate community development legislation as of now requires communities to address housing needs, particularly for low or moderate income citizens; elimination of slums and blight and upgrading of neighborhoods; and community services in the areas affected by community development. Should the legislation require that community development programs concentrate substantially upon these objectives? Would it be wise for our Committee, either in the legislation or the Committee report, to state more specifically than that the extent to which the programs should concentrate on these ends? 2. Do you believe that some kind of incentive in the community development program which singles out communities that are doing a particularly good job of improving the lot of their lower income citizens for attention and provides them with some supplemental funding would be desirable? 3. With respect to the housing allowance proposal, do you believe that a widespread housing allowance would result in substantial inflation in most cities? Do you believe that either HUD or the cities should require that any housing allowances be spent on housing in "standard" condition? Would such a requirement in itself, pursuant to a housing allowance program, be a significant incentive for private maintenance and preservation efforts by landlords? 4. Do you believe that a program to provide specific funds for housing rehabilitation and preservation is desirable even if the community development program and a housing allowance program are put into effect? 5. In your cities, what do you feel should be the proper role of new construction in our efforts to house low and moderate income citizens? 6. Do you believe that the Federal Government should provide incentives to help communities who wish to undertake low-income housing distribution plans, such as Dayton's fair share plan? 7. Do you believe that the Federal Government should provide any specific assistance for communities who wish to try the "urban homesteading" approach of allowing citizens who will live in and rehabilitate abandoned housing to become its owners? 8. To what extent is public housing (other than Sec. 23) a necessity if we are to help truly low-income citizens? ANSWERS TO SENATOR TAFT'S QUESTIONS BY THE LEGISLATIVE ACTION COMMITTEE OF THE U.S. CONFERENCE OF MAYORS Answer No. 1. Our understanding of the intent of last year's Senate community development block grant legislation is that communities would be expected, as part of their comprehensive plans, to concentrate their efforts upon their needs for housing and for blight elimination. It might be appropriate, in the Committee report, to state this intent. We would hope, however, that the bill itself not be worded in such a way that communities needing balanced programs dealing both with low and middle income persons would not be restricted in their use of block grant funds. Answer No. 2. We would support giving the Secretary the authority to reward communities which develop particularly praise-worthy programs. We would not support a specific ear-marking of funds off the top of the program for this purpose, primarily because there are already too many demands upon the block grant funds to allow for additional fixed commitments. Answer No. 3. We think there is little question that the introduction of a housing allowance mechanism into certain metropolitan housing markets today woud result in substantial upward pressure on rental costs for all persons, not just the low income. There are, of course, other areas with high enough vacancy rates where this would not be the case. The key is the availability of a balanced and flexible assortment of instruments so that the proper mix for each area can be determined. This balanced package would include new construction, rehabilitation, leasing, mortgage subsidies, capital write-downs, and housing allowances, to name a few. We would agree that, so far as the housing allowance approach is concerned, some workable procedure would have to be developed to insure that the funds were spent on housing in standard condition. Such a process would be complicated to administer but it would still be necessary. However, without some other tools, such as rehabilitation grants and loans, such a process in and of itself would not be sufficient to stimulate the desired behavior by the private real estate market. Answer No. 4. At this point, given this Administration's strong distaste for operating separate, new categoricals in this area, we would prefer to put all our funds in one basket-namely, the block grant. We recognize the increased emphasis that we, as a nation, should be placing on rehabilitation and conservation. We expect that given the option, many of the mayors will make this shift in emphasis locally. The key thing at the moment is to get the block grant in place with sufficient funding and with maximum flexibility, given our national objectives. Answer No. 5. The role for new construction in cities differs from place to place. Generally, new construction is necessary to convert cleared land to residential use. It also provides one method for dispersing the concentration of lower income families. New construction can provide specialized units for very large families or for the elderly which would otherwise not be made available by the private market. There are many other purposes new construction can serve with the proper mix, as we say, depending on the local situation. Answer No. 6. Yes. The only effective way of stimulating areawide agreements on housing that we've seen demonstrated so far has been the promise of extra funding where such plans are adopted. We would support such an incentive approach. Answer No. 7. We no doubt share the Senator's interest in the possibilities presented by the "homesteading" programs which have been worked out in a few of our cities already, such as Philadelphia and Wilmington. It will of course take a few years at a minimum to learn whether this procedure has long term positive effects upon urban neighborhoods. However, we do see enough promise in the approach to warrant federal encouragement and support. We would hope such a process of "urban homesteading" would be possible under a fully flexible housing block grant package. Answer No. 8. To date, the federal public housing program has been the only major method available for housing the poorest of the poor. It is certainly true that the federal government, along with a number of independent local housing authorities, have sometimes erred in the kinds of building designs and locational decisions that have been made. It is now clear that in most, although not all situations, high-rise public housing buildings are not the best approach. Scattered sites and the leasing of existing units can, instead, be quite successful. However, because of the lack of appropriate physical structures to house the many poorer families which Section 23 approaches cannot handle, there will continue to be a need for a well funded conventional public housing program. Mayor ALIOTO. We would be glad to answer those questions. I might point out that last year we supported the Senate bill with respect to 235 and 236. We would do so again with the addition suggested by Senator Sparkman, which is that these things should be allocated in advance so we can measure our various programs. The CHAIRMAN. Thank you very much, all of you mayors. It has been a wonderful panel, and we appreciate it. Mayor ALIOTO. May I submit for the record some personal experience that we have had with novel approaches? The CHAIRMAN. Yes, that will be received. [Various documents received from the panel are reprinted as follows:] 22-877 0-73-7 |