is a substitution effect here, where a contractor or developer would have built for the market if he had not built for our subsidized programs.

Senator PROXMIRE. But the people of low and moderate incomes wouldn't get it. I have some documentations by the Library of Congress which indicate that the housing allowing program will probably cost four to five times as much as the present programs. I would like to explore this with you. The "Fifth Annual Report on Housing Goals" shows that we constructed 1.8 million units of low- and moderateincome housing over the last 5 years.

Allowing for another 200,000 starts during fiscal year 1974 as carryover from prior commitments, this would leave 4 million units to go against a goal of 6 million. What do you estimate the cost to be over the next 40 years if these additional 4 million units are subsidized under the existing programs?

Secretary LYNN. An additional 4 million units? I am not a very good mathematician, but I am told for every 100,000 units our building costs over the 30 to 40 years is between $2 and $4 billion, depending on the program.

Senator PROXMIRE. Well, that is right. As I understand it, HUD has estimated the annual cost of the housing allowance program to be between $8 and $11 billion, and over 40 years it would be from $320 billion to $440 billion. The Library of Congress estimates that the 40-year undiscounted per unit cost is $6,500 for 235 programs; $19,200 for 236 programs; and $32,800 for public housing.

The average 40-year cost per unit, comes to $20,000. Thus the cost of completing the remaining units is $8 billion, and the cost of the housing allowance program is four to five times the cost of completing the present program.

Secretary LYNN. I think what we have to do on this, Senator Proxmire, is to take our figures and our work and Mr. Shecter's work and put it side by side and see where the differences are. I would ask such immediate questions as:

Does it take into account the tax losses on the shelter provided by the programs?

Does it take into account the administrative expenses?

Does it take into account the losses on the tax-free bonds that we frequently have?

Does it take into account the losses to municipalities on the PILOT approach to low-income housing, you know, payment in lieu of taxes, and things of that kind, more closure costs, what it costs to us to have to repair and resell on the 20 percent of the foreclosures and so forth.

There is no way of arriving at a correct answer without putting the figures together side by side.

Senator PROXMIRE. My time is up, but I would like to ask you to provide for the record what you could in the way of your best estimates of the cost of completing the 4 million units as compared to the housing programs.

Secretary LYNN. We certainly will (see p. 60).

The CHAIRMAN. Senator Tower?

Senator TOWER. Can you give us a date when the housing information will be in our hands?

Secretary LYNN. After having a 6-percent overrun on my timing to get the President's proposals before you, and I guess that isn't bad considering overruns generally in the Government, but it was somewhat beyond what I expected. It was 12 days that we were over. I don't want to be pinned with a figure, but I will stick with what the President said in his message.

We would expect to back to the Congress in late 1974. That is what I would like to shoot at, or early 1975 at the latest, with the reports of our tests, and we think we will have good data from the tests at that point, and with a specific operation.

Senator TOWER. I am talking about your current study.
Secretary LYNN. I am sorry.

This is where Mr. Moskow plan. Let me tell you-
Senator TOWER. He really was going on that one.

Secretary LYNN. My goal is to get it to you by the end of this week.
The CHAIRMAN. By when?

Secretary LYNN. The end of this week. I wanted you to have it so you can have it in connection with your markup, Mr. Chairman, and it is important that you have it. The problem in this connection has been this: The study was substantially completed 5, or 6, or 7 weeks ago, something like that. We prepared synopses of that for the President's use and the other people within the administration, but now we have got the job of editing it.

Senator TOWER. I hope you can have it here by the end of this week, because we start markup next Monday and it would be extremely useful.

Secretary LYNN. I know. I agree with you, sir.

Senator TOWER. You have told the committee of your dissatisfaction with the 236 program. Yet your program provides for funding 275,000 units of 236. You are saying sometimes the program works and sometimes it doesn't?

Secretary LYNN. Not at all, Senator Tower. What we are saying is that a commitment is a commitment, and where we have found commitments for section 236 that we still have not yet honored that we intend those commitments be kept no matter what we think of those programs.

Senator TOWER. There has been a lot of debate recently over the role of FHA and its appraisal. Is the road to inspection guaranteeing against defects or appraising the present house as it exists? The VA does not, I believe, guarantee the quality of the house and I would like to know what your view is on this.

Secretary LYNN. Guarantee the quality to the buyer?

Senator ToWER. Yes.

Secretary LYNN. I frankly do not believe that HUD should be in the business of guaranteeing the product to the buyer, either. It seems to me this is a highly complex question that gets you into what the obligations are of the seller, what kind of warranty or certification should be given both for new housing and existing housing. But I do not believe as a personal matter that HUD should have that kind of responsibility.

The CHAIRMAN. Senator, let me interject something there.
Senator ToWER. Yes.

The CHAIRMAN. Are you familiar with the court decision just recently, in the district Federal court which said that HUD was liable for the warranty, just as a private seller would be?

I don't recall what district court that was. I read the article in the

newspaper.

Secretary LYNN. I am afraid we are not familiar with that, my General Counsel tells me.

The CHAIRMAN. Let me ask Senator Stevenson. I gave you that article.

Senator STEVENSON. I don't have the article, Mr. Chairman. It was a case in your State, I believe, and from the news report it was a case involving the sale by HUD of housing.

Secretary LYNN. Oh, this is a case where we have title.

Senator STEVENSON. Where HUD has acquired title and is actually the seller. It is somewhat different.

Secretary LYNN. That isn't the issue you raised, was it, Senator Tower?

Senator TOWER. No. I don't want to preempt Senator Stevenson on this, because he has a particular concern about it, but how do you deal with the problem that surfaces in the hearings that Senator Stevenson has held recently, the solution to which he tried to incorporate into some recent legislation? Is there some realistic way you can deal with that?

Secretary LYNN. The legislation has undergone some change over the period that it was under consideration, as I understand it. It was initially legislation that would apply retroactively as well as prosspectively, but in its last form was a more or less what I would call a claims bill. In other words, it covered costs where the Government had been negligent and therefore should pay for its negligence for past acts.

One of the things that concerns me as to this approach is, first of all, it represents an entirely different philosophy than has been the general conception of HUD, that HUD does its inspections to protect the mortgage, because it is the insuror of the mortgage.

It seems to me that what we ought to look at is the totality of the problem, not a claims approach, but whether or not there is a need for assistance, particularly in the inner city, to have the kind of tools whereby they can on a favorable basis fix up their properties if they are not what they thought they were going to be. Additionally, it seems to me that you have to examine what are the duties of the seller in this regard. What are his certification requirements? What are his warranty requirements?

Are our tools adequate to meet the need? If not, let us consider an approach to make those tools adequate. As a person who has his work cut out for him in HUD, Mr. Lubar. is moving toward streamlined processing and so on, with respect to that particular function, to determine whether that defect existed 3 years ago or did not, on a case-bycase basis. And that is giving me concern from a management standpoint.

Senator TOWER. Is there any provision in your proposal that would tie low-income housing to cities and community development programs?

Secretary LYNN. Certainly there is a connection between the two. For example, we refer to our neighborhood preservation strategy, as the message states, as a partnership between the Federal Government, the local community, the neighborhood itself, and the local financial institutions.

As you know, for example, we propose melding in section 312 loan authority into the funding of communities under the Better Communities Act.

One thing that is often overlooked in that regard is that we have changed what was essentially a loan program in 312 to an outright grant program.

If we are going to go into the inner city and do a good job on home improvement loans, on insuring properties and so on, then most certainly decent code enforcement, adequate police protection, planning of neighborhood facilities, facilities for the elderly, and so on, in existing areas become very important. The use of Better Communities Act money, high loan and high risk loan funds, or possibly grants will be needed to supplement what we are doing. I think that is all very useful.

Senator TOWER. Is there any provision in your proposal which HUD would set aside a certain number of low-income housing units to be used in new communities?

Secretary LYNN. Of course, we as part of our commitments, and when you mention commitments that we're going to honor in the course of the period ahead, we have in mind some new community commitments, I believe, as part of that. That is No. 1.

No. 2, Mr. Trevino, who is the new general manager of the new communities program, and it is the first time in the history of that program that we have had a separate manager of it, is working with me as to how we are going to satisfy those requirements in the future. It does seem to us that one of the mandates of the new communities program is to achieve an economically mixed community, and if we are going to have that kind of a community, someplace, somewhere, there has got to be assistance in the housing on the low-income side. In one way or the other it is going to have to be provided.

Senator TOWER. Now, would you explain to me why in 102(g) you give priority to the elderly poor rather than the poor with families and children?

Secretary LYNN. There were a number of reasons, Senator. Among them was the following:

First of all, if you do not help the elderly first, they are not there to be helped later. In other words, their time to be helped is more restricted.

Secondly, we have already federalized welfare assistance generally to the elderly. Social security and now what is it called, SSI, for the elderly which goes into effect, I believe, January 1.

We have already federalized the system of assistance to those people. It seems to me these are good reasons to start with them. We have experience with them, we have vehicles in place to help them, and not only that, but they are a group of a size that would appear to us not to impact strongly on the existing housing market-the thing that bothers Senator Proxmire and, frankly, bothers me, and it is something we have to avoid.

Senator TOWER. There is an editorial in this morning's Wall Street Journal which mentions your name favorably, and they note that the supply of substandard housing has been reduced from a 37-percent level of 1950 to 6.9 percent now.

In so doing, this increased the number of building units for the poor, or it was units for the unpoor, but in the process it creates units for the poor, because the lower income families who live in substandard housing move up into the more standard housing as the others move out or up the income ladder.

Do you have any comment on that?
Is there any real evidence of that?

Secretary LYNN. Yes, there is, indeed. The progress made toward the reduction of substandard housing in the last 20 years, indeed in the last 10 years, is remarkable. It is a good record. Of course, we have further work to do, but it has been very, very strong. I believe that, using the general approach of housing lacking full plumbing, the amount of substandard housing has been cut in half, I believe, in the last 10 years.

Mr. Moskow. Much more than that. Do you want me to give that? From 1950 to 1970, Senator, the percentage of our housing stock that is dilapidated dropped from 35.4 percent to 6.9 percent. The percentage that was overcrowded in the same period dropped from 15.8 percent to 8.2 percent.

Secretary LYNN. Those are crude indicators. Those are not the best indicators that we should have. But I certainly believe they show a trend unmistakably of reducing substandard housing.

Now, if you compare those units with the subsidized units we built, it is obvious that that reduction has come through market forces. It has come by better real incomes of our people generally across the board, even those with the lower incomes, moving up to some extent in what their purchasing power is, and it comes from the response of the building industry and the credit institutions to that demand.

Senator TOWER. Thank you, Mr. Secretary. I apologize, Mr. Chairman. I overran my 10 minutes.

The CHAIRMAN. Senator Williams.

Senator WILLIAMS. Thank you, Mr. Chairman.

Following those last figures, Mr. Secretary, how does that translate into the number of families that are living in substandard housing now?

Mr. Moskow. The numbers that I gave, Senator, were not for substandard. They were for dilapidated, but this would indicate that that would be the same percentage for families, for households. In other words, in the dilapidated, 4.5 percent of the households would be living in dilapidated units. That was in 1970.

Senator WILLIAMS. Are the elderly separately stated? Do you know the number of elderly individuals living in substandard housing? Secretary LYNN. Mike, why don't you give him what happened on the elderly.

Mr. Moskow. I don't have that chart.

Secretary LYNN. We do have that data, though, and there too it has reduced markedly over the same period of time. That is accurate, isn't it?