We do not feel that the public housing projects will meet the needs of all the people. Some old folks just do not want to go into public housing projects. They are excellent facilities for those old folks who can live completely independently-e.g., for those who can shop, cook, et cetera, for themselves.

Senator CLARK. Monsignor, do you have any view as to whether it would be desirable to give a priority to elderly families in public housing projects at least to the extent of some subsidy to the projects which would make it possible for the projects to admit more elderly families and still meet its debt charges and obligations? I ask that because I have a bill which would permit that to be done.

Monsignor SUEDKAMP. I believe so. That would help ease the situation.

What about the person who does not need to be in an institution and at the same time is not able to live independently and alone? This kind of person needs and wants to live in a semi-protected environment. These people under the present setup are going into nursing homes and are being supported through welfare programs. This, gentlemen, is costing lots of money.

Nursing home care, according to our welfare report, is $5 to $7 per day, depending on the care needed, or $150 or $210 per month per person. Those cases at $5 per day are mostly ambulatory and could very well live in a semiprotected environment, as I am going to describe here.

Many of these folks are able to live out in the community, but it must be in a semiprotected environment. And, Senator Clark, in going through the John Kane Hospital, Dr. Kraft pointed out that one of his biggest difficulties is after they rehabilitate an older person who has had a stroke, he and this whole, I will call it, backlog of residents occupying bed space which they really do not need could be graduated back into the community if they had a place to absorb them.

Senator CLARK. Yes, I remember that. So the record will be clear, you have reference to the John Kane Allegheny County Hospital, which is specializing in geriatrics and doing a first-class job.

Monsignor SUEDKAMP. Right. He said that is their biggest difficulty right now. We explained the program that I have in mind, and he felt that we would be a good agency to work for, if we were near Pittsburgh, a place where he could graduate these people after they are rehabilitated back into the community. They do not belong in an institution any longer where the cost is high, nor are they able to live by themselves independently in the community. There has to be sort of a halfway house.

Senator CLARK. You may remember I conducted a hearing in Pittsburgh on behalf of Senator McNamara's committee on the aging and aged, and we went out to John Kane Hospital and went all through it. I can substantiate the veracity of everything you just said. I think Dr. Kraft is one of the really fine men in the country who is working very hard at this serious problem.

Monsignor SUEDKAMP. These people we are talking about now who really do not belong in the hospital, nor can they live independently, but could live in the community, could support themselves by their own pensions if there were low-cost housing available, which could

be produced through the low-interest rate mortgage money, with auxiliary social services.

In the Kundig program I am going to describe to you, we have about 80 residents. I would say out of those 80, having been through the John Kane Hospital, 40 should be in a nursing home or in a hospital. Yet, we have them outside.

At this time we would like to relate some facts on a pilot project in the Archdiocese of Detroit, and it is only a pilot project. We call it the Kundig campus residency program. We have distributed some literature on it. We utilize existing housing in the neighborhood and use existing parish facilities for a centralized living room and dining room. Other private, nonprofit, volunteer agencies, such as a Protestant congregation or a synagogue, et cetera, could do the same thing. Here about 80 people live comfortably and have their diet, social, and medical needs met through the administration of our private voluntary agency.

These old folks are still able to be in the stream of life. They live in the community, paying their own way at a low cost. Our maximum charge is $75 a month for their room and board. This program exists in an old neighborhood in Detroit. Where old houses can no longer be rehabilitated through a neighborhood conservation program, they can be razed and moderate-cost new facilities could replace them on the same inner-city land, close to stores, shows, hospitals, and parks.

Such projects could very well be a part of any city urban renewal program. Incidentally, in Detroit we are facing a situation which we are sure exists in other cities, and that is that urban renewal programs are displacing many elderly people who do not care to go into public housing, and who cannot buy a home of their own.

Senator CLARK. I will go further than that and say: Who cannot get into public housing.

Monsignor SUEDKAMP. That is right. In fact, if our skid row area in Detroit goes ahead with the urban renewal program, I would venture to say that about 60 percent of those people who will be displaced are in the category of elderly people. They are not skid row alcoholics. They are just there because of their low incomes.

Our pilot project is a possible way to help a city with its relocation problem.

We are anxious to further our program immediately, but it is impossible because of the present high rate of interest on loans. In other words, if we get into another deal as we have with regard to Carmel Hall, we will be taking care of the upper-bracket people rather than the low-income group.

Senator CLARK. I am glad you mentioned that, Monsignor, because this is one of the real social results of our high interest policy, is it not? Monsignor SUEDKAMP. We want to work toward good housing for the low-income elderly, but at a cost which will allow us to continue to help these people live within their incomes, so they do not have to depend on charity, and at the same time amortize any debt we may incur.

As an example, for a unit costing $8,000, if the interest rate and FHA insurance were 334 percent instead of 534 percent, this 2 percent differential in interest would mean $160 less interest per year per unit, which would mean we could rent this unit for $14 per month less.

This is the difference between not coming up with an answer to a very serious problem or providing some good low-income housing.

Senator CLARK. You mean that interest differential makes a rent difference of $14 per unit per month? That is a shattering figure. Monsignor SUEDKAMP. That is right.

We think that the Federal Government should make funds available to the nonprofit private voluntary agency at a low rate of interest in order that we may ease the housing crisis for the elderly by providing decent housing and the necessary auxiliary services. Of course, we are in the vantage point of being able to start tomorrow if this were made possible; and this throughout the country. Because of the critical situation in our particular area, we feel that it is very timely that we have been invited in to talk on this.

As a somewhat parallel situation, presently the Community Facilities Administration makes direct loans to institutions of higher learning for building student and faculty housing and related facilities and

services.

I am going to read directly from a pamphlet entitled "Programs of the Community Facilities Administration." It is published by the Housing and Home Finance Agency, Community Facilities Administration, here in Washington. It was published in May 1956 and it is from page 11 that I am going to quote. I have some of these extra pamphlets available because the possible solution I am presenting as a parallel was stated here on page 11.

Senator CLARK. You are also utilizing CFA.

Monsignor SUEDKAMP (reading):

Under the college housing program, the Community Facilities Administration makes loans to educational institutions of higher learning and nonprofit corporations established by them for the construction of student and faculty housing and related facilities and services. Such loans are made where private financing is not available at equally favorable terms.

I skip a paragraph and go on quoting:

With present costs of construction, it has been extremely difficult to provide student housing without charging rentals and fees beyond the reach of the average college student.

An exact parallel with the aged.

In addition, lack of adequate housing makes recruitment of teaching staff a serious problem.

I continue quoting:

To assist those institutions which have difficulty in borrowing private construction funds at low rates, Congress, in the Housing Act of 1950, as amended, has authorized a program whereby such colleges and universities might obtain loans from the Federal Government at an interest rate not higher than 2.75 percent per year, or the interest rate paid by the HHFA Administrator on funds obtained from the Treasury plus one-fourth of 1 percent. It also established a maximum amortization period of 50 years.

Congress has authorized $500 million in loans for the college housing program. Senator CLARK. You think, Monsignor, Congress ought to be as generous with the elderly people as it is with the young; is that your point?

Monsignor SUEDKAMP. That is my conclusion.

This is my Patrick Henry statement:

Gentlemen, Congress recognized the elderlies' problem in the Housing Act of 1959 in which the Congress authorized $50 million. However, this money has

not been appropriated as yet. Recognizing the extreme need for housing of the low-income elderly, we recommend that this authorization be raised to $100 million and measures taken to see that the $100 million is actually appropriated.

Senator CLARK. I do not know whether you appreciate, Monsignor, that the House Appropriations Committee only recommended $5 million of the $50 million. So, apparently, the elderly are getting 1 percent of what the college students are getting.

Could you give us any idea about how much money in this direct housing for the elderly you could usefully use in the Detroit area? Monsignor SUEDKAMP. I have not given enough study to your particular question, but, presently, in Detroit we have what we call a Metropolitan Detroit Building Fund as a counterpart to United Giving. Presently, we are developing a new Metropolitan Detroit Building Fund, and I guess they are up to $100 million in requests at the city level alone. We personally have put in a bid for immediate help of $250,000. That is 60 percent of the money which they will give us, if we can get the other 40 percent, which hopefully could come through this program. Then, we would have the problem licked.

Senator CLARK. I would like to reiterate, since our good friend, Senator Bush, has recently come in, your statement that the present FHA program for the elderly is inadequate. Would you just, in about two sentences, tell Senator Bush why?

Monsignor SUEDKAMP. I think, from our Carmel Hall experience, where we were the first in the country to take advantage of FHA's program, we have come a long way under FHA in covering such a program as ours. I can remember 7 years ago, and only 7 years ago, when I went in to Mr. Edwards-I think that was his name at the time, in Detroit, he looked across the desk when I asked for FHA help and laughed. He said, "Father, we are not in the hotel business."

Since then, in a 7-year period, this has completely changed. They know that, in effect, they are asking us, really, to get into the housing picture as private, nonprofit, voluntary agencies to ease this critical situation.

Incidentally, we raised our own money. After we purchased the Detroiter for about $12 million, then about 3 years ago, I guess it was, it went under the FHA program. But the rate of interest is so high that the Sisters in this case, the same ones that run Mary Manning Walsh in New York, have to clear roughly around $23,000 after they pay the milkman, the breadman, and so forth, to just take care of the amortization of their debts per month.

So, you can see that when, in our program, an aged person comes to us who has no more than $80 to $100 a month to spend on his room and board, we cannot turn to the Sisters and say, "Take this resident," because the sisters have to fill that room with somebody from the silkstocking group who can pay a higher rate so that the Sisters, in turn, can pay off their mortgage debt.

I think this type of housing is wonderful. I feel we have the best institution in the country. We have 525 residents there, but it is not meeting the need of the low-income person at all. We still have them with us in the community.

In conclusion, we appreciate that you have taken time to hold a hearing on housing for the elderly. Because of the acute need for lowcost housing for the old folks, we wish to thank you for giving us

an opportunity of presenting to this committee one plan which, if put into effect, will assist immediately in helping solve this critical problem.

We do not say it is the only plan, but one plan, if put into effect, that will assist immediately in helping solve a very, very critical national problem.

Senator CLARK. Thank you very much, Monsignor.

Senator Bush?

Senator BUSH. I have no questions.

Senator CLARK. Thank you very much. We appreciate your very useful and helpful testimony.

I would like to offer for the record at this point a letter dated May 4 from the Federal National Mortgage Association, directed to Senator Sparkman, and commenting on the authority of FNMA to purchase FHA insured loans secured by proprietary nursing homes. (The letter referred to follows:)

Hon. JOHN SPARKMAN,

FEDERAL NATIONAL MORTGAGE ASSOCIATION,

May 4, 1960.

Chairman, Subcommittee on Housing, Committee on Banking and Currency, U.S. Senate, Washington, D.C.

DEAR SENATOR Sparkman: I am replying to your letter of April 27 regarding the authority of the Federal National Mortgage Association to purchase FHAinsured loans secured by proprietary nursing homes (sec. 232 of the National Housing Act).

As indicated in my March 30 letter, it is not our view that there is any need to amend title III of the National Housing Act to permit the purchase of FHA section 232 mortgages; you are correct in assuming that our position in this respect is applicable alike to purchases made under the special assistance functions and the secondary market operations.

Under the special assistance functions of the FNMA Charter Act, the Association may provide special assistance (when and to the extent that the President of the United States has determined that it is in the public interest) for the financing of selected types of mortgages originated under special housing programs. The establishment of such a program has not thus far been approved by the President. Up to now, the Federal Housing Administration has had very limited experience in regard to section 232 housing and hence concrete evidence supporting the need for FNMA special assistance for this type of housing is lacking. In view of the favorable investment characteristics of these mortgages (loan value limitation of not more than 75 percent of the Commissioner's estimate of value and maximum 20-year term), we believe they will be attractive to private investors. As a matter of information, FHA Commissioner Zimmerman reports that the first nursing homes projects in respect to which application has been made for mortgage insurance will be privately financed upon issuance of FHA's certification and approval for insurance. It is felt that before any allocation of special assistance funds is made to FNMA to aid in financing nursing homes, sponsors should first make aggressive efforts to obtain permanent financing from private sources; pending the establishment of sufficient need for such assistance, it is our considered view that the expenditure of Government funds by FNMA for financing proprietary nursing homes under a special assistance program would not be warranted.

For the reasons stated in the preceding paragraph in respect to the special assistance functions, it is also our view that up to now sufficient need has not been established to warrant the furnishing of liquidity by FNMA under its secondary market operations. We are observing the progress of the program carefully and close liaison with FHA is being maintained to ascertain whether or when the need for FNMA assistance under either of the two functions will arise.

Sincerely yours,

J. S. BAUGHMAN, President.