Also, our colleges are located in rather small communiti fore, the communities cannot absorb large numbers of st private housing. Also, we do not have universities situated throughout We have 4-year colleges situated in the various areas of but they are not universities and do not offer many of which are sought after by students who ordinarily attend u Senator PROXMIRE. Now, I am not sure that we have an u ing with each other on your last point. Your notion that we could relend part of the money th by selling participations in the college housing loans, it is standing that the Congress would have to change the la to permit that. There is a $300-million-a-year limitation relending would require higher authorization. Dr. MULLINS. It would require additional legislation. Senator PROXMIRE. Did you have a point, sir? Mr. THACKREY. Senator, as I recall, the repayments do a revolving fund. And there is something like $225 mil would be available this year or any time for relending. Senator PROXMIRE. There is no question the program a revolving fund. Mr. THACKREY. In excess of the $300 million. The $ is not an absolute limitation; it is a limitation on new Tr rowing. So that the previous repayments over the years run around $225 million are available in addition to the $3 Senator PROXMIRE. So you have $300 million plus $2 $525 million, and you propose we use that full amount housing loans? If we do that, of course, the administration is up agai problem. And the President is very anxious, and for ver son, to try to keep the budget down. When you lend i spending it. The budget bookkeeping system should not b but it is, even though the amounts are repayable with inter Under the circumstances, we have to expect the Presi have as other Presidents, Eisenhower and Kennedy, and tant to exceed the budget but to keep within the existing posal. He also must be aware and give proper recognitio flationary effect. Mr. THACKREY. There is also the proposal to sell $800 bonds. And this in itself would create a deflationary effed feel that if those funds were used, there would be no ne borrowing. Senator PROXMIRE. Perhaps. Except we know there wo construction and within the construction area enormous plant and equipment expansion. And this is an area in labor and material is in short supply. co But I think you have made a very strong case, a very case. And I hope I can call this to the attention of my cause I think so many people miss the consequences of economy on the part of the administration. And they ge HOUSING LEGISLATION OF 1966 285 the administration is trying to expand its spending on these programs. And obviously it is not. Dr. MULLINS. Mr. Chairman, I would be glad to comment on this point. There are many fields of study which students cannot pursue at community colleges or in many cases at 4-year colleges. For example, in the field of engineering in our State, there is only one college of engineering that one can attend-at the university Therefore, students who wish to pursue courses in any engineering fields must of necessity attend the university. And I think that is perhaps repeated in a good many other fields and a good many other States. Senator PROXMIRE. Furthermore, we are trying to provide that the gifted but financially strapped student has an opportunity to get a scholarship so he gets some assistance. Dr. MULLINS. That is right. Senator PROXMIRE. Of course, work-study opportunities and there is a greater abundance of jobs now perhaps than before. So there is some opportunity if a student can work his way through, although more and more, it is requiring the full time of the student, specialists, the graduate level and these technical levels, to be a competent, acceptable student. Dr. MULLINS. That is right. We have another factor that is operating to increase enrollment quite rapidly in our State, in our general area. That is, we are shifting rapidly from primarily an agricultural economy to a mechanized agricultural economy and an increasing industrial economy. Therefore, whereas the percentage of students attending college in our State and in our region has been much less than the national average, we are rapidly moving toward the national average. And that is causing increases in enrollment which are much greater than would be expected in terms of the number of youth of college age within the State. Senator PROXMIRE. I am sure that is true in Arkansas, but I think it is also a national trend. It is true even in my State. And I think it is true generally throughout the country, with a few exceptions, that we are becoming, as you say, a mechanized agricultural society requiring more education and an industrialized, automated society, requiring a great deal more skill and professional training. Dr. MULLINS. We feel this college loan program has enabled us to take care of students during this period of rising enrollment which otherwise would not have been possible. We believe that if it is severely restricted, we will not be able to take care of the students who will be seeking admission in the next several years. Senator PROXMIRE. Thank you very much, gentlemen. I appreciate it. A fine statement. Dr. MULLINS. Thank you. Senator PROXMIRE. Our next witness is Mr. John H. Haas, General Improvement Contractors Association. I apologize for the late hour. Proceed in your own manner. STATEMENT OF JOHN H. HAAS, EXECUTIVE VICE P GENERAL IMPROVEMENT CONTRACTORS ASSOCIA Mr. HAAS. I will be brief and to the point. Senator PROXMIRE. That statement will be printed in f Mr. HAAS (continuing). In which we have given our v the urban housing problems which are, of course, our ma We are mainly interested in the existing inventory, and the of it. According to latest statistics, there are at least 5 mil be 10 million, according to some guesses dilapidated or s homes in this country. These homes have to be attended body has got to do it. As a rule, we do it. Now, we cannot do it alone. We need help. We need other trades, from the cities, from other professions. A help from Congress. Congress has given us this help in many cases for ma the form of housing programs. But now we are runni some disturbing observations. They are the subject of statement and of the few explanations I would like to p this time. We find out that the housing programs that have been and passed by Congress and enacted over the last years d so well. We find defects, some of them very substantial. we know the causes. I am not going into that in detail, but I would like t three instances which seem to demonstrate that these pro these defects are not only existing, but they are threatenin this is very important when you have to consider new and housing programs. An old example which we all know is the workable pr Senator PROXMIRE. All know what, sir? Mr. HAAS. The workable programs. Since they were e 2,600 cities were approved and have initiated, at one time. such a workable program. As of January 1 of this year, only 946 of these 2,600 st active program; 343 have recertification pending which m not be approved. But-and this is the most disturbing figure-over 1,300 given up the ghost. Something must be wrong. No. 2, you have initiated and enacted certain loan prog the best intentions, particularly for the purpose of restori serving the existing inventory. Take title I loans. A very good program, used to hav of about 1 million cases a year. In 1965, the volume w It has shrunk. Not necessarily because it was neglected. I think it was not neglected. It was taken up by man many of which developed their own parallel programs. B quite up to the point today because the loan limits of thi are still the same that they were many, many years ago and living standards, et cetera, were much, much lower. So this is one item that you might keep in mind. HOUSING LEGISLATION OF 1966 287 Then, later on came 203-k which was announced with great enthusiasm, as you know. Since it was initiated, the Federal Housing Administration has insured a grand total of 2,000 loans-2,000 loans, that is all. At the same time, roughly, came section 220-h which you know is the rehabilitation loan in urban renewal project areas. Well, that situation is ridiculous because the sum total of insured loans under this program is exactly five. The latest example are the $10,000 3-percent loans enacted under section 312-a of the 1964 Housing Act. It is true they were delayed 1 year by lack of appropriations, but appropriations came through last year. As of today, we still have not got one loan, although I recall that there has been some writing in the papers that one was finally approved in March somewhere in the Midwest. And finally, as another illustration, the multiple-unit mortgages under section 220; add to them all the multiple-unit mortgages under section 221-d-3, and you get a total of insured mortgages of exactly 624. If you take only the below-market-rate-interest mortgages under section 221-d-3, you find a total of 283 projects insured. Now, each one of these figures is substantially below the number of workable programs still in existence, which means this: Two-thirds of these cities with active workable programs have not even used a d-3 mortgage as yet. And only two out of three have used one of the various multiple-family-unit programs that are now active. This is a disturbing picture because these mortgages were created by Congress with the intention to be used. And this, of course, includes new construction as well as rehabilitation. Well, if our statement goes on at this rate, you will probably consider me a hostile witness. And I think I am. I am hostile to optimism, to overoptimism, and to dreams. And it seems that due to these facts that are, incidentally, taken from official statistics, somebody is rocking the boat. And we ought to find out who is doing it. Because on top of these deficient or partly deficient programs, we are now expected to accept and be enthusiastic about a new program such as, for instance, the Demonstration Cities Act. Now, as contractors, we have a principle: When you build an addition you want to build on safe ground. If the ground is not safe, you do not build-or, you make it safe first. And this is the reason I am bringing these facts out to you because I think we ought to look back and see what has gone wrong. Now, in connection with this desire, you will also, of course, know that more recently rehabilitation has become the big word, the big headline, for programs in urban improvement. We are very sensitive about this. We like it. We love it. It is our livelihood; but we think you also ought to know that there are some problems that are important and that cannot be solved by the trade alone or by the city alone. They must be solved by Congress. Öne, for instance, is lack of tools such as mortgage programs or loan programs that would function properly. We have a 221-d-2 mortgage program since 1954 which can be used and has been used for rehabilitation. Well, if you figure it all up in 62-551-66-pt. 1- -20 these 12 years, there have been more than 300 mortgages year per State. Maybe this is an awkward comparison, but it shows 180,000 mortgages of this particular, important program 12 years. And that is pitiful. We think we know the this poor percentage, and we have pointed it out in our st Then, there is 221-d-3 which was called the program tury when it was inaugurated. Well, it has had a very effect on urban improvements, primarily due to one f founding of this program on the basis of a nonprofit spor has had disastrous effects in hundreds, if not thousands, of ties because when the program came out-and d-3 is a won gram except for this particular item-everybody and his going to improve, rehabilitate, build new ones at wonderf low cost, and at great help from FHA and local agencies. started looking into the matter, they found out they could n cause they had to be a nonprofit or cooperative sponsor. That was not enough. In order to be eligible as a sp had to go through a large number of requirements, of visions that had to be built in. There was a question o responsibility. It came to the point where some of these organizations had to go to foundations or to the Office of Opportunity for money to get started. And, of course, funds of that type should not be used as foundation for a commercial or economic enterprise. I do that the Congress intended this type of funding to be source of eligibility. The low-market-interest-rate mortgages insured total 283 1st of January. That is a very poor figure, considering th tent that went into making this program. But in the fie operative level, it just does not work. These 283 mortgag ceptions from the rule, and they are certainly pitifully few. Then, on top of all this, came the rent subsidy program. ful program, a marvelous idea that would help tremendousl city. It cannot work because that, too, is tied into the sp by a nonprofit or cooperative organization. If you knew what goes into the making of such an organ become eligible, you would agree with me that it is a prett situation. That means, of course, at the same time that our sidy program is on the rocks regardless of whether the mon ing forth or not. Another problem is skills. We do not have the skills. have the manpower to rehabilitate on a scale that is necessar mensurate with the needs. There are in the entire United day not more than perhaps 50 people who can act know knowledgeably as rehabilitators because rehabilitation is thing that you can do with a computer or with automated (notwithstanding the latest New York example where they with automated equipment). But the typical rehabilitatio is tedious, it is diversified, it is individual. It must be done with skill, not only manual skill but many other skills. I need not go into details; you will find them in our We do not have these people. We have maybe 50. We n |