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I would be the first one to concede the need for a thorough-going evaluation of all of the Federal Government's housing programs-including, in addition to the low-income programs, such middle and upper income subsidy mechanisms as FHA's conventional mortgage insurance, Ginnie Mae's tandem plan, and the $6 or $7 billion a year subsidy to homeowners through income tax deductions. I would also strongly support needed reforms and improvements in these Federal housing efforts.

Notwithstanding recent actions by the Senate and the House Housing Subcommittee to continue the low-income subsidy programs, the administration continues ahead with its plans to shift the Nation's entire low-income housing production effort into the confines of a single, brandnew program-the revised section 23--under which not a single house has been built or rehabilitated to date. Just as cities need the vital stimuli of Federal community development funds, they also need just as importantly a range of effective, flexible housing assistance tools. Today, with rare exception, local government's development plans need both community development and housing assistance in order to be successful. We will not be able to adequately carry forward with our responsibility to establish viable urban communities under the pending block grant legislation unless Federal housing assistance is also present. Moreover, cities cannot afford to struggle along for another year or so while the administration is permitted to tinker with one new approach, now already clearly bound to fall short of its advance billing by HUD.

While we do not fully share your conclusions, we understand the subcommittee's reluctance to proceed ahead with subsidy programs which it feels may be inherently faulty in design. However, we submit that until such time as new methods toward the same goal are found, it is incumbent upon the Federal Government to move forward at leas with modest levels of assistance under the existing subsidy programs. We urge the subcommittee to support both the revised section 23 housing program as well as each of the present FHA interest subsidy and HUD public housing conventional housing mecha

nisms.

RESEARCH AND TECHNOLOGY

We believe a few general comments are in order regarding the proposed program and budget of the Office of Policy Development and Research.

The proposed research program addresses a fairly broad range of concerns to local government. But the rationale for selecting subjects and the basis for relative priorities for work are not clear to city officials. We believe that a great deal more can and should be done to consult with city officials regarding the content, emphasis, and relative priorities of the HUD research program. This should include setting up reasonably formalized mechanisms and procedures for consulting with city officials regarding their perception of need.

Second, we believe a considerable improvement needs to be made in disseminating the results of HUD-supported research and assist

ing cities in applying the results of research and the development of prototype products. There are indications of attempts to improve this process, but a great deal more needs to be done.

Further, in a number of program areas, substantial additional work needs to be done to assist cities in utilizing the results of HUD-sponsored research and development projects beyond "dissemination" of information. As an example, the National League of Cities and U.S. Conference of Mayors have supported programs that show promise of major benefits to cities such as those in the area of information systems undertaken by the Urban Information System Interagency Committee (UISIC), chaired by HUD, and the organizational development and applied research work of the urban observatories. Yet, the ways to provide administrative, technical, and financial assistance to cities generally who can benefit from the results of these programs remain to be arranged for.

In another related area of fundamental concern, we have identified a number of applied research efforts that we believe are important to enhancing cities' policymaking, planning, and management capabilities. We believe HUD and the cities have mutual interests and responsibilities in developing an effective process for consultation regarding the need for such work, developing programs and projects to accomplish it, disseminating information about the results, and assisting in utilizing the results.

Mr. BOLAND. Thank you very much, Mayor Mineta, for your statement.

Mr. TALCOTT. Mayor Mineta, what is your position with the National League of Cities?

Mayor MINETA. I am on the board of directors of the National League of Cities and cochairman of the Community Development Committee for the U.S. Conference of Mayors.

Mr. TALCOTT. Ordinarily the President appears.

Mayor MINETA. No, not necessarily.

I am a member of the Legislative Action Committee of the U.S. Conference of Mayors and on a number of occasions have been asked to testify. Two years ago I testified before this subcommittee as representative for the National League of Cities and the U.S. Conference of Mayors, and I have had a number of other assignments given to me by the National League of Cities president for presentation of material on behalf of the National League of Cities and the U.S. Conference of Mayors.

Mr. TALCOTT. Where is the president today?

Mayor MINETA. I would imagine he is in Los Angeles. The president of the National League of Cities is Mayor Thomas Bradley, of Los Angeles, and the U.S. Conference of Mayors President is Mayor Roy Martin, of Norfolk, Va.

Mr. TALCOTT. I ask unanimous consent to insert a GAO report on the Model Cities program in San Jose, and some relevant newspaper articles concerning it.

Mr. BOLAND. Without objection, that will be done. [The material follows:]

B-171500

COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON, D.C. 20540

To The Honorable Burt L. Talcott

and The Honorable Charles S. Gubser

In accordance with your requests of April 5 and April 10, 1973, respectively, we have reviewed the Model Cities Program in San Jose, California.

As requested by your offices, we did not obtain written comments from the Department of Housing and Urban Development, the city of San Jose, or other affected agencies on the matters discussed in this report. However, during our review we discussed these matters with officials of these agencies and incorporated their views where appropriate.

We will release this report only if you agree or publicly announce its contents. We want to direct your attention to the fact that this report contains recommendations to the Secretary of Housing and Urban Development. (See p. 14.) As you know, section 236 of the Legislative Reorganization Act of 1970 requires the head of a Federal agency to submit a written statement on actions he has taken on our recommendations to the House and Senate Committees on Government Operations not later than 60 days after the date of the report, and to the House and Senate Committees on Appropriations with the agency's first request for appropriations made more than 60 days after the date of the report. Your release of this report will enable us to send the report to the Secretary and the four committees for the purpose of setting in motion the requirements of section 236.

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COMPTROLLER GENERAL'S REPORT

TO THE HONORABLE BURT L. TALCOTT AND THE HONORABLE CHARLES S. GUBSER HOUSE OF REPRESENTATIVES

REVIEW OF THE SAN JOSE, CALIFORNIA,
MODEL CITIES PROGRAM
Department of Housing and
Urban Development B-171500

DIGEST

WHY THE REVIEW WAS MADE

Congressmen Burt L. Talcott and
Charles S. Gubser asked GAO to
review the operations of the Model
Cities Program in San Jose,
California.

GAO was asked to review how well
the city monitored the activities
of three Model Cities agencies:
--Model Cities of San Jose, Inc.;

--Economic Progress for All, Inc.; and --Santa Clara Plan, Inc.

GAO also was asked to examine these agencies' activities and, where practicable, to develop information on (1) the propriety of their expenditures, (2) their relative success in reaching stated goals, (3) their high cost of administrative support, and (4) their adherence to contract and Department of Housing and Urban Development (HUD) requirements. (See p. 5.)

FINDINGS AND CONCLUSIONS

HUD administers the Model Cities Program at the Federal level. The San Jose City Demonstration Agency (CDA)--a department of the city's government--develops and administers the program in San Jose.

CDA's objective is to carry out a comprehensive demonstration program

designed to improve the living environment and general welfare of people living in a designated model neighborhood area. To do this, CDA contracts with various agencies to provide specific services to the model neighborhood.

Improvements needed in monitoring the San Jose Model Cities Program The city needs to improve its monitoring of the operating agencies' activities to insure that financial and program requirements are being met and to adequately identify and correct problems in a timely

manner.

CDA administers the San Jose Model Cities Program through fiscal monitoring and the use of management information systems which accumulate data on the operating agencies' activities. Also, according to city regulations the City Auditor is to conduct postaudits, and the program evaluation component of thity manager's office is to make annual evaluations of the Model Cities projects.

GAO's evaluation of the monitoring activities showed weaknesses in (1) fiscal controls over operating agencies, (2) CDA's Management Information Systems, (3) postaudits by the City Auditor, and (4) evaluations of Model Cities projects. (See p. 9.)

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