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The CHAIRMAN. Our next witness is Mrs. Cushing Dolbeare of the Rural Housing Alliance. I certainly apologize. You are the next to the last witness. I understand you can present your testimony briefly.

The entire statement will be printed in full in the record (see p. 317). STATEMENT OF MRS. CUSHING N. DOLBEARE, RURAL HOUSING ALLIANCE

Mrs. DOLBEARE. Thank you very much. My name is Cushing Dolbeare. I am appearing on behalf of the Rural Housing Alliance, which greatly appreciates this invitation to testify on the administration's nonhousing program.

I think it is important to emphasize that, while most of attention. on housing has been directed at urban problems, rural housing needs are even more critical than the housing needs of urban areas.

According to the 1970 census, rural America has roughly one-quarter of the population, more than one-third of the people in poverty, 61 percent of all housing units with no hot water, 80 percent of the units with no baths or showers, 89 percent of the units with no flush toilet, and 92 percent of them with no piped water.

In all, close to 3 million units lacked plumbing facilities, and we estimate that 85 percent of the households living in them had incomes below $7,000. One million rural American families can afford to pay an average of no more than $14 a month for rent or shelter.

Obviously, in a situation like this, public intervention is needed. More important, in rural areas I think that public intervention can be more effective.

Comparing the vastness of some of our urban slums and the puny nature of our present programs, is, to say the least, rather discouraging. You can see the difference that 100, 500, or 1,000 units can make in rural areas. You can really see that there is some possibility of making a major difference, not only to the people who will occupy the housing, but the area itself.

The basic premise of the Nixon housing message seems to be that we have no housing problem except in a few scattered areas, and that the private market can be relied upon to meet our housing needs withperhaps beginning in 1976-again perhaps-housing allowances to assist those priced out of the market.

It did not, in our view, take 8 months of study to reach this conclusion. No amount of serious study could possibly reach such a conclusion. Rather, the conclusion was dictated prior to the suspension of housing programs, and the intervening months have clearly been spent in attempts to justify it and to package a total lack of program substance in acceptable rhetoric.

But saying something does not make it so. Saying that "The housing record of recent decades should be a source of price for all Americans,' overlooks the fact that in 1949 this Congress set the objective of a decent home and a suitable living environment for every American family and we are today but little closer to this goal.

Saying that we cannot measure housing needs precisely, and therefore need no housing goals, ignores the fact that the major issue surrounding housing goals is not whether they were adequate to meet our low- and moderate-income housing needs, but over how inadequate they were.

Saying that the housing problem is related to income, and therefore incomes must be raised, does not mean we no longer have a housing problem. Saying that "Housing production in America has reached unprecedented levels" does not mean that this housing is available to those who need it most.

Indeed, in 1972, 64 percent of new housing production was effectively available only to families with incomes over $10,000. Finally, saying there is "a special need to address in a special way the rural housing challenge" and then proposing further study is to announce a policy of intensified neglect.

The weight which the Nixon administration gives to rural housing is indicated by the fact that only two paragraphs of the President's 15page message deal with rural housing, the time has come to recognize that we cannot deal with our housing problems by explaining them

away.

We cannot use the waste and high expense of some programs as an excuse for jettisoning all of them. We cannot use inflation and expense as an excuse for depriving millions of Americans of a basic need. We cannot shrink from Federal responsibilities when the net effect of local policies is all too often deprivation of constitutional rights.

At this committee's request, the Rural Housing Alliance has already suggested the broad outlines of an adequate rural housing program.

In July, we carefully laid out before this committee the problems of the existing rural housing programs, and indicated the steps necessary to meet the rural housing need. We reiterate our support of the delivery and subsidy mechanisms proposed in S. 2190, the Emergency Rural Housing Act, and we urge this committee to include that act, or something comparable, as part of whatever comprehensive housing legislation is reported.

Simultaneously, we urge immediate expansion of the Farmer's Home direct lending and interest reduction programs, which have effectively helped many moderate income rural families. [In July, RHA submitted a series of amendments to do this.]

To meet the critical needs of low-income families, we urge continuation and expansion of public housing in rural areas.

We think it would cost less than $5 billion a year to meet the entire rural housing problem, using the approach proposed in the Emergency Rural Housing Act.

In light of the administration's estimates of their housing program costs, I suggest that our proposal is worthy on the basis of cost considerations alone.

The basic housing needs of rural American will not be met until we have housing production at the level of 1 million units annually outside of the metropolitan areas. At least half of this should be subsidized. A need at this level cannot be met by the presently haphazard operation of housing credit institutions, or by adding to the already outrageous tax loopholes for housing investment.

A need of this magnitude can best be met by the Federal Government itself taking direct responsibility, through the creation of a rural housing investment fund, to provide direct access, at reasonable interest rates, to funds needed for rural housing construction.

Given the present unfortunately high interest rates, some interest subsidies may be needed, but these are far better handled through direct lending programs than through intermediary institutions.

Forward commitments to savings and loan associations, reinstatement of the tandem plan, or increasing FHA mortgage limits may relieve a current crisis, but they are no substitutes for long-range programs aimed at reducing interest rates and providing, directly through the Federal Government, for the flow of capital into housing. There has been a drift away from serving the poor. Five years of 235 and 236 and 502 interest credit housing has produced 1 million units, and the 2 million units combined are less than the private market produces in any given year of good housing construction.

We need to focus our attention where the need is greatest, on the problems of low-income families, and in order to do this, unless we have some acceptable substitute, public housing with the Brooke amendment intact is a vitally needed program.

The President's message cites one housing project in St. Louis as an example of why public housing doesn't work. This is one project in one city. There have been similar problems in other large cities, but this is being used unfairly to tarnish the entire program.

Obviously, high rise monster public housing projects are the very antithesis of what housing should be. But they have been built only in center cities. To reject an entire program because of the peculiar problems of large center cities is shortsighted, indeed.

Roughly one-quarter of all public housing is in rural areas. The proportion has been increasing in recent years. We urge that at least one-half of all public housing construction be in rural areas, that this committee report mandates legislation which continues use of public housing in a volume sufficient to meet our urgent housing needs.

The President calls for making it easier for people to purchase mobile homes. We want to point out that mobile homes or trailers are not housing. They are a substitute for housing, and it does not contribute to the solution of our housing problems to make it easier for people to purchase mobile homes.

When the President imposed the moratorium, he neglected the most important housing subsidy program we have, and those are the subsidies which operate through the tax system. Eighty-five percent of all housing subsidies are tax subsidies; 93 percent of those subsidies go to families with incomes above $10,000.

We don't think that tax subsidies are necessarily wrong, although they are clearly inefficient and costly. But we would like to point out that what tax subsidies mean is that the vast majority of American families cannot afford to own their own homes without substantial subsidies, and it is erroneous to regard the housing problems of Americans solely as the result of low income, or shiftlessness.

Most Americans receiving housing subsidies have steady jobs and work hard at them. We can clearly afford a subsidy level of $6 million, or a $10 billion, for homeownership, but if we can do this, we certainly ought not to shrink from making the money available to subsidize people who cannot enter the housing market now for lack of income, lack of choice, or lack of housing units available.

Let me say a few words now about housing allowances.

President Nixon's message recommends primary reliance on housing allowances to meet low income housing needs. In our view, housing allowances are of limited value as a housing program. It should be clear that the housing problem is, in part, an income problem. Insofar as this is so, the solution is to raise incomes, preferably through pro

viding adequate and well paid employment opportunities or through income maintenance.

But it should be clear, from the need of families well above the poverty level for housing subsidies, that income alone is not the answer.

We can foresee a number of viable roles for housing allowances. For example, they might be useful in easing the burdens of families already in standard housing, but paying a disproportionate share of their incomes for such housing.

They might be useful in areas with an adequate stock of modestly priced existing housing, where the problem is not one of lack of supply, but lack of effective demand. They might be useful as a partial solution to the problems of housing abandonment. They might be useful to provide moderate income families with access to new housing.

But they are not in themselves a housing program and we urge that they be studied carefully before being carried out on a major scale. Furthermore, if allowances are of dubious value in urban areas, they are even more dubious in rural areas because of the inadequate supply and availability of housing. Special study should therefore be given to the implications and consequences of a housing allowance program in rural areas.

We don't think studies are any substitute for action and they shouldn't be allowed to impede action. We need housing, we need it urgently and quickly, and the solution to the housing problem lies first in a genuine commitment to deal with it and to provide the resources from the Federal budget on the scale necessary.

This is a decision which has not been made, and a need for which has been masked by debates over which kinds of programs might be most effective. We urge this committee to proceed with expanding housing programs.

Thank you very much.

Senator PROXMIRE. Thank you very, very much.

That was a most helpful statement. I might tell you that all of us on the committee are very interested in rural housing. Chairman Sparkman has over the years done a marvelous job in this area, and of course he has a deep and abiding interest in rural housing.

Your recommendations will be very helpful to us, and we will certainly give them consideration.

I have just one question. Do we really need new legislation or do we need a new commitment and the ending of the moratorium?

Mrs. DOLBEARE. In rural areas, we need a new program, unless the rural housing program is going to be expanded at least five times what it has been before. I think the programs we have can be useful in urban areas, and could be improved, perhaps. But in rural areas, where the only active program is the Farmer's Home program serving an average income level of $6,500 a year, and where you have a million households that can afford to pay only $14 a month for rent, a new program is needed.

Senator PROXMIRE. Thank you very much.

Our final witness is Mr. Maurice Paprin.

He is not here. We will be happy to take his statement for the record, and I will call it to the attention of the members.

[Complete statements of Mrs. Dolbeare and Mr. Paprin and additional statements received for the record follow:]

STATEMENT OF

CUSHING N. DOLBEARE
RURAL HOUSING ALLIANCE

BEFORE THE

SUBCOMMITTEE ON HOUSING OF THE
COMITTEE ON BANKING. HOUSING
AND URBAN AFFAIRS'

UNITED STATES SENATE

THURSDAY, OCTOBER 4, 1973

MY NAME IS CUSHING N. DOLBEARE AND I APPEAR TODAY ON BEHALF OF THE RURAL HOUSING ALLIANCE. RHA GREATLY APPRECIATES THIS INVITATION TO TESTIFY ON PRESIDENT NIXON'S HOUSING MESSAGE, AND TO EXPRESS OUR KEEN DISAPPOINTMENT AT ITS TOTAL FAILURE TO ADDRESS, LET ALONE MEET, OUR MOST CRITICAL HOUSING PROBLEMS.

RURAL HOUSING NEEDS ARE CRITICAL

TRADITIONALLY, HOUSING PROGRAMS HAVE FOCUSSED ON BIG CITY AND METROPOLITAN NEEDS AND HAVE MET ONLY A FRACTION OF THEM. NO ONE WHO HAS WALKED THROUGH THE STREETS OF A CENTER CITY SLUM CAN FAIL TO RECOGNIZE THE NEED FOR MASSIVE PUBLIC ACTION. BUT WHAT WE TOO OFTEN FAIL TO RECOGNIZE IS THAT ONLY A RELATIVELY SMALL PORTION OF OUR TOTAL HOUSING PROBLEM IS AN URBAN PROBLEM. RURAL SLUMS ARE SCATTERED. RURAL PEOPLE HAVE TOO LONG LACKED AN EFFECTIVE VOICE TO PRESS FOR POLICIES AND PROGRAMS WHICH THEY NEED. THE LACK OF ADEQUATE RURAL PROGRAMS HAS HAD THE EFFECT OF FORCING PEOPLE INTO URBAN AREAS TO MEET THEIR NEEDS FOR HOUSING, EMPLOYMENT, EDUCATION, HEALTH SERVICES, AND THE LIKE.

22-877 O 73 - 21

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