To support its conclusion, NAREB carefully selected a single slum-clearance project to give the appearance of an overall study. In this, it says only 16.9 percent of the families to be displaced are reported as being eligible for public housing. This one small project chosen by NAREB is completely unrepresentative of the conditions in slum-clearance projects as a whole, as NAREB could easily have learned from the Urban Renewal Administration. That agency's most recent printed report (Urban Renewal Project Characteristics, December 31, 1954, table 3), available to the public, shows that of all families living on project sites, 52.8 percent (44,091 out of 83,546) were reported as being eligible for public housing. This is clear indication that a majority of the families living in the slums do so because their incomes are too low to permit them to pay what private enterprise must charge for decent housing, either new or existing. 4. The financing of public housing by 40-year tax-exempt Government-guaranteed bonds 25 is unsound, deceptive, and finally repudiated even by some past proponents of public housing.-The Joint Committee on the Economic Report recently considered the problem of this type of financing and while endorsing the expansion of public housing unanimously recommended as follows: 26 "10. *** Construction of schools, highways, hospitals, and other community facilities, including, as the President has recommended, slum clearance and public housing, must move forward more rapidly during the immediate years ahead. Insofar as the Federal Government finances these public works and we believe it should make important contributions, the financing should be direct from the Treasury, rather than from indirect authorities which circumvent the public debt limit or are nurtured by special earmarked revenues." [Italics supplied.] Recently, the Senate Public Works Committee, considering the President's highway program, rejected a plan to finance highways through the issuance of bonds (similar to public housing bonds) for the reason, among others, that the liability of the Federal Government would not be reflected in the public debt. Every public housing unit which goes under contract is on the receiving end of a pipeline from the United States Treasury for a period of 40 years. The liability is not a contingent one and the annual subsidies to support these bonds is an increasing annual certainty. In fiscal 1953, the subsidy appropriation was $29,880,000; in 1954, $32,500,000; in 1955, $68,950,000; and requested for fiscal 1956, $87 million. The present liability of the Federal taxpayers on existing projects is approximately $118.4 million which, multiplied over a 40-year period, comes to $4.7 billion," yet nowhere in the public debt is this vast committed liability reflected. The $1.7 billion in public housing bonds issued since 1951 28 have resulted in increased costs of local governments through forcing up the yields on State and municipal bonds. This ad appeared in the Washington Post of September 30, 1953 (Appendix K): "HAVING INCOME TAX PROBLEMS" "Recent large flotations of United States housing and other tax-free bonds have glutted the market to the extent that many sound State and municipal bonds are selling to afford a higher tax-free yield than has been available in years. Public Housing Administration in rebuttal of the above allegations has submitted the following facts: To support its charge that the sales of public housing bonds have increased the cost of financing by local governments, NAREB relies on a single advertisement by a Washington investment broker. At the time this advertisement appeared in September 1953, tax-exempt securities were being sold to yield onehalf of 1 percent more than they were yielding at the beginning of that year or have yielded since the end of that year. The high yield in the middle of 1953 was due not to a glut of offerings, including those of local housing authorities, but rather to monetary conditions and a shortage of funds which resulted in increased yields not only for tax-exempt bonds, but also for long-term Federal bonds and corporation bonds during this same period. 25 Opinion of the Attorney General dated May 15, 1953, holds that bonds are for all practical purposes guaranteed as to principal and interest by the United States. 26 P. 3. S. Rept. 60, 84th Cong., Report of the Joint Committee on the Economic Report, March 14, 1955. 27 Letter of PHA to NARER Department of Research and Surveys, February 25, 1955. 28 Wall Street Journal, April 14, 1955. As a matter of fact, the volume of low-rent housing bonds is so small as to have an almost negligible effect on the cost of tax-exempt money to other State and local governments. From July 1951, when the first sale of housing bonds was held, through December 1954, a total of $18,644 million in all types of tax exempts were sold. This included $1,503 million of housing bonds, or only 8 percent of the total. It is no small wonder that investors' syndicates compete enthusiastically to obtain these tax-exempt bonds, because a 2-percent rate on such bonds will yield as much as a 12.5 percent taxable investment if held by an individual in the $80,000 to $90,000 income-tax bracket. The latest issue of $111,980,000 of these tax-exempt bonds, on April 13, 1955, sold at an average interest rate of 2.4183 percent.29 We are not the only ones deeply concerned over these tax-exempt public housing bonds. Here is what Federal Reserve Board Chairman Martin said in testimony before this committee: 30 "One important new factor in the market which is very disturbing to us at the Federal Reserve is the tax-exempt bonds which are being issued to finance public housing. *** Not only do such issues absorb some of the funds that would otherwise supply a market for Government bonds or for mortgages generated by new private construction, but they afford an opportunity for wealthy individuals and corporations to reduce legally their income taxpayments in a period when it is essential that tax revenues be as large as possible." In this connection, the committee's attention is respectfully invited to section II of the existing public housing law (United States Housing Act of 1937, as amended) which provides a formula for capital grants, alternative to annual subsidies, not to exceed 25 percent of the development or acquisition cost of the project. Had this method of financing public housing been used, untold millions would have been spared the taxpayers in addition to a decrease in the size of the Federal bureaucracy administering public housing, and an increase in the responsibility of local governments. The capital-grant provision would require some local cash contribution similar to assistance under the urban renewal provisions of title I. In 1937 the public-housing law provided for a local cash equity of 10 percent of the development cost of public housing. In 1938 Public Housing Administrator Straus was asked by the House Banking and Currency Committee why he was apparently circumventing this 10 percent local equity requirement. He cited as the reason that the President wanted to get Federal money spent quickly so that he could put more people to work in the shortest possible time, and that local governments couldn't raise the money without some delay because of local bond referendums, need for increasing debt limits, etc." That was the only reason offered for not requiring some cash contribution from local government. Now the Federal Government is tied to 40-year subsidy contracts; local responsibility and contribution have become a nullity. The 1953 Annual Report of the Omaha (Nebr.) Housing Authority (p. 11) to the mayor and city council puts it this way: "It should be pointed out that there is absolutely no cost to the city of Omaha in connection with either the construction or operation of the projects, and the faith and credit of the city is not pledged for the payment of bonds." 5. Whom does public housing serve?—It does not serve those in the greatest need. Far more of the poor people in our local communities are assisted in the payment of shelter costs through private and public welfare agencies than are provided for in public housing. This is no surmise, for even the proponents of public housing have admitted that only the low-income groups who can afford it should live in public housing.32 On pages 8 and 9 of the 1954 Annual Report of the Seattle (Wash.) Housing Authority we find a Government postal employee and a hospital intern enjoying the subsidy of public housing. Public Housing Administration in rebuttal of the above allegations has submitted the following facts: Again NAREB has used isolated facts to give an erroneous overall impression. 29 Ibid. 30 Statement of William McChesney Martin, Jr., before the Mortgage Financing Conference of the Senate Banking and Currency Committee, February 6, 1952. 1 P. 116, hearings, House Banking and Currency Committee, April 28, May 2, 3, 4, and 5, 1938. 33 The late Senator Robert A. Taft, Congressional Record, April 14, 1948, p. 4530: April 20, 1948, p. 4714; HHFA memorandum inserted in Congressional Record by Senator Sparkman, April 20, 1949, p. 4896. In the Seattle case the Government postal employee described is a veteran with a wife and five children. When he moved into the project, in December 1948, he was employed by the Veterans' Administration at $1,954 a year. The project then was a veterans' reuse housing project-not low-rent public housing. When it was subsequently transferred to low-rent use, in June 1953, he was working as a mail carrier with an income of $3,670. His present income is $3,870. Since he supports a family of 7, he is well within the proper income limits for continued occupancy. The intern referred to was a veteran with a wife and two children. When he entered the project, in June 1953, he was a hospital intern with $2,100 a year income and eligible for public housing. Upon completing his internship, he moved from the project in August 1954. The appendixes cited below present other interesting information on whose shelter is being subsidized by the Government. Appendix L is a reproduction of table S, page 74 of the 1952 Columbus Public Housing Study by Citizens Research, Inc. (50 East Broad Street, Columbus, Ohio). Note that a report is made quarterly of those tenants who are ineligible for continued occupancy. It is significant that from one-third to one-half of the tenants so declared as ineligible were reestablished on the eligibility list, according to the footnote, because of an income change. The Columbus Metropolitan Housing Authority is cited at the bottom of this table as the source for these statistics. During each of seven quarters one-third to one-half of the ineligible tenants sustained a decrease in income which permitted them to be restored to the eligible list. This is more than coincidence because the facts cover a period of high level of employment during the Korean emergency (1951-52). The facts reveal nothing less than the manifestation of a basic fault in the whole concept of public housing. When a family is told that it must leave its home because those working are making too much money, one does not have to be a sociologist or a psychologist to appreciate the instinctive reaction. Public Housing Administration in rebuttal of the above allegations has submitted the following facts: NAREB charges fraud is involved because a small number of tenants found to be ineligible became eligible before eviction. In the Columbus projects mentioned, income limits were raised 10 percent by Ohio law. Obviously, this had a considerable effect on all tenants. In addition the fluctuations of income, always more severe in low-income families than elsewhere, enabled a number of others to reestablish legally their eligibility for public housing. In the preparation of this statement, we attempted to obtain reports of approximately half of the estimated 811 housing authorities. We were successful in obtaining approximately 40 of such reports. We examined these in an effort to detect further evidence of this shift from the ineligible list to the eligible list for continued occupancy. Unfortunately, no annual report we examined cast any light on this strange phenomenon which we cannot accept as being peculiar only to public housing in Columbus, Ohio. It is certainly a fitting subject for an exhaustive investigation of what public housing has done to the moral fibre of the families drawn into its web. An investigative committee could probably start with the 147 public housing projects all of which, according to the PHA Public Housing Management Directory of August, 1954, had a zero movement rate. Public Housing Administration in rebuttal of the above allegations has submitted the following facts: NAREB implies that fraud or deception is involved in the fact that, out of 2,000 public-housing projects, 147 reported that they had no move-outs during a 3-month period. That turnover does occur in these 147 projects is shown by the fact that in the succeeding quarter more than 60 percent reported families moving out. Further, NAREB could and must have noticed from the directory it cites that these were almost without exception small projects averaging less than 30 units each. It is perfectly natural that no moveouts would occur in many of these small projects during a given quarter. NAREB seems to assume that all projects must have ineligible families who ought to be moved out, and suspects a lack of good faith. It pounces on the projects without moveouts in a partieular 3-month period. As a matter of fact, at the time the PHA directory was published, only 2 percent of all tenants in the entire low-rent program were ineligible, and many of the projects had no ineligibles at all. But families found to be ineligible are required to move. Appendix M is a reproduction of page 17 of the report of the Housing Authority of Portland, Oreg., Occupancy Statistics, for the quarter ending March 31, 1955. You will note that the table reveals 38 doctors living in subsidized permanent public housing, 6 more than the number of laborers. If these are proper recipients of this shelter subsidy, then the nationalization or socialization of housing is no longer a threat-it has arrived. Public Housing Administration in rebuttal of the above allegations has submitted the following facts: This is hardly nationalization of housing as charged by NAREB, but is simply another instance of low-income veterans and their families helped by public housing when they most needed it. NAREB is talking about "doctors." These are interns, traditionally low paid during this period of service. For a succinct account of the facts, the following telegram from the Portland Housing Authority is quoted: "Confirming telephone conversation, following is requested information regarding 38 doctors living in permanent low-rent housing in Portland: 33 veterans consisting of 15 interns and externs, 18 resident physicians; 4 nonveteran interns and externs; 1 ineligible doctor who has been given notice to vacate because of high income. Annual net incomes for the 37 eligible families range from $1,200 to $2,640, median net annual income $1,650. Thirty-six families have minor children as follows: 15 with 1 child, 13 with 2 children, 6 with 3 children, and 2 with 4 children. "F. S. RATCHFORD, "Executive Director, Housing Authority of Portland, Oreg." Appendix N is a reproduction of a clipping from the New York Times of April 11, 1955, relating the story of an Army veteran who for 10 years was unable, to find housing for his family until a public housing unit became available. Part of his shelter is now subsidized by the already hard-pressed taxpayer. Yet, this individual is a postal employee of the Federal Government. As a veteran, he had ample opportunity for no downpayment financing for a new home where the monthly payments would approximate his present rent in a public housing project. Yet this use to which public housing is being put-and New York City has been earmarked for an additional 8,000 units for the current fiscal year on top of the 39,218 existing federally subsidized units-is hailed as a great achievement by the Housing Authority of New York. We wonder if it would impress the many of your constituents of low income who work hard, pay taxes, and provide for their families, in the old-fashioned way-without subsidy. Public Housing Administration in rebuttal of the above allegations has submitted the following facts: The family in question consists of a veteran, his wife, and five children. For his 10 percent disability he receives a Government allowance of $204 a year. After a long search for decent housing for his large family, he finaly obtained a 3-bedroom dwelling in public housing. When admitted, he was employed in the post office as an extra, but shortly thereafter he obtained a permanent position with the post office as a transportation clerk. His annual salary is now $3,570 which, with his disability payment, gives him a total income of $3,774. On this, he supports a family of seven in one of the most expensive cities in the world. Based on his income, his gross rent is $52.75, hardly adequate to buy, carry a house, and pay for utilities in the New York area. Anyone familiar with housing conditions in New York will agree with the New York Times that providing decent housing for this veteran's family is a noteworthy public service. 6. Whom does public housing not serve?-Another appropriate subject of an investigative committee would be the approach of local public housing authorities to families receiving public assistance as a source for public housing tenancy. We have already referred to the fact that public housing according to the 1949 act model was not intended to take care of those in greatest need. Public Housing Authority in rebuttal of the above allegations has submitted the following facts: Despite NAREB's opinion, local authorities are complying with the congressional mandate to house families in greatest need. In 1953 (the last year for which complete figures are available) eligible families living in public housing, with an average of 3.98 persons per family, had a median income of only $2,062 a year. Twenty-four and five-tenths percent of the families living in public housing in 1953 had no gainfully employed workers, and were living on public assistance or benefits or, in some cases, on contributions from relatives. Another 9.4 percent of all families, with some earned income, also received public assistance or benefits to supplement their earnings. 34 There are 8 public housing projects in Louisville, Ky., consisting of 4,509 units.33 We have been advised that there are 1,025 families receiving public assistance in Louisville and only 113 of these are living in public housing. This latter figure of 113 does not include recipients of social security, industrial and other pensions which housing authorities sometimes classify as "welfare" tenants. One of two conclusions may be drawn from this. Either 912 poor families are finding their housing needs adequately taken care of in privately owned housing by means of local public assistance, or the Louisville Housing Authority systematically keeps its so-called welfare tenants in public housing to a prescribed minimum. We believe the latter to be the case. Public Housing Administration in rebuttal of the above allegations has submitted the following facts: Attached are copies of letters just received from the Louisville (Ky.) director of welfare and from the social service supervisor of the State department of economic security. The first shows that a Louisville realtor obtained incomplete and unofficial figures from the city department of welfare, drew unwarranted and misleading conclusions. The city welfare department administers only general assistance or emergency relief to persons not eligible for public assistance. Not many of such cases would be accommodated in public housing, since most of them require only temporary relief. Nearly 60 percent of the total are single persons, ineligible for low-rent housing. Accordingto the local housing authority, 80 of its tenant families are receiving relief from the city welfare department. The regular categories of relief such as old-age assistance and aid for dependent children, are not administered by this department, but by the State department of economic security. This State department (see attached letter) reports that 817 of the families in the Louisville projects are now active recipients of its relief and 29 more families are applicants for relief. The complete Louisville picture should be based on that authority's report published in the Louisville Times on February 21, 1955. This showed that in 1954, there were 1,177 families in the projects with no employed member and which were entirely dependent on pensions, assistance, public benefits, and contributions from relatives, etc. In addition, there were 461 families whose earned income was supplemented by assistance or public benefits. The complete total of 1,638 families is almost 15 times the 113 families reported by NAREB. CITY OF LOUISVILLE, KY., OFFICE OF DIRECTOR OF PUBLIC WELFARE, May 18, 1955. Mr. NICHOLAS DOSKER, Louisville 2, Ky. DEAR MR. DOSKER: In reply to your inquiry from Washington that testimony had been offered by the National Real Estate Board that the Louisville Department of Public Welfare issued a statement that there were 1,025 families receiving public assistance in May 1955 and that of these 1,025 families only 113 were living in public-housing projects, I should like to advise you that this statement is incorrect and was not issued officially by this department. In the first place, this department does not administer public assistance but a general assistance or emergency relief program to persons not eligible for public assistance. In the second place, the May 1955 caseload has not been tabulated and cannot be until the end of the month. We have not had 1,025 cases or any monthly caseload similar to that figure since June 1954. The most current month for which we have the caseload count is April 1955 when we assisted a total of 1,117 cases. You will note that I have used the word "cases" not "families." Of those cases, 632 are 1-person cases who are not eligible for public housing. Of those 632 cases, at least 150 are nursing-home cases. Deducting the 632 cases, a balance of 485 are family cases. I am unable to verify the figure of 113. I assume it was an estimated figure given to a Mrs. Stephens of the Louisville Real Estate Board, who came to 83 P. 48, Housing Operations Directory, PHA, December 31, 1954. 84 Louisville Welfare Department, May 1955. |