NAIRO INFORMATION CENTER FOR COMMUNITY DEVELOPMENT, MAY 1972 APPENDIX D-PROTOTYPE COSTS IN PUBLIC HOUSING STATEMENT OF THOMAS R. BODINE, CHAIRMAN, BOARD OF COMMISSIONERS, HARTFORD HOUSING AUTHORITY When public housing is mentioned on Capitol Hill, too many people think of it in terms of the Pruitt-Igoe project in St. Louis and the projects along South State Street in Chicago. Closer to home, we think of old-fashioned high-density projects such as Bellevue Square in Hartford, Elm Haven in New Haven, and Father Panik Village in Bridgeport. No housing authority is building that kind of public housing anymore. For family living, the Connecticut authorities are building small-scale developments which blend into existing neighborhoods and which are in fact an asset to those neighborhoods. Most of this housing is being built by private developers on land they own, and then sold to the housing authority upon its completion under the turnkey program. To maintain developers' interest in turnkey public housing, and thereby maintain and increase current levels of housing production, we must have realistic cost limitations-limits which permit the developer to recoup his expenses and make a reasonable profit besides. The prototype housing cost formula adopted in 1970, if wisely administered by HUD, achieves that objective. S. 3248, the housing bill passed by the Senate in March, retains the present formula. We strongly oppose inclusion in the prototype formula of cost elements presently excluded, and we fear that the housing subcommittee of the House Banking and Currency Committee will recommend just such changes in the prototype provisions. An explanation of the background will put this problem into perspective. Until 1970, housing legislation specified actual dollar construction cost limits, which were uniform for public housing across the country. Although the law allowed the Secretary to tack on an increment for high-cost areas, the statutory ceilings were invariably too low for Connecticut, even with that increment. The result was a substantial volume of production in low-cost areas, such as the South and the Southwest, while Regions I and II, the New England and Middle Atlantic states, consistently fell short of their production goals. The 1970 Housing Act did away with statutory construction cost limits. Instead, it called for the setting of prototype construction cost limits for each housing market area, by type of construction and bedroom size. HUD selects a prototype housing development for each type of construction in each market area; the cost of building comparable housing in that market area may not exceed the prototype cost by more than ten percent. The prototype limits only cover dwelling construction and equipment; the other components of the builder's price to the authoritynondwelling construction, land, demolition, site improvements, fees and other costs are not controlled by the prototype limits under present law. The prototype limits originally adopted by HUD were too low. For high-rise construction in New Haven, for example, the limits were $11,450 for an efficiency and $13,300 for one bedroom. This was almost 30% lower than this type of construction actually cost at the time. In December 1971, in response to pressure from Connecticut housing authorities, HUD increased the prototype limits for Connecticut towns by up to 30%. The new limits are realistic; we can build within these limits, and we trust that HUD will annually review its prototypes to keep pace with the upward trend in construction costs. The proposed changes in the prototype formula would include within the cost ceilings not only dwelling construction and equipment, but all other elements of the package too, except nondwelling construction and relocation payments. That is to say, land, site improvements, architectural and engineering fees, financing costs and all other expenses not specifically excluded would be brought within the statutory formula. You might ask: Why worry, as long as the prototype limits are raised to a level high enough to embrace these additional elements? Our concern stems from our belief that the nonconstruction elements in the package can't be measured, and the differences from one housing market to another can't be quantified, as construction costs can be. Let's look at land, for example. Its cost can vary considerably depending on how it's zoned, the allowable density, whether it's urban renewal land or privately owned, whether it's close to downtown or in an outlying area. Of the seven lowrent projects built in New Haven in the last two years, land cost has varied from 2% of total cost, on an urban renewal site, to 10% of total cost on privately owned land. We fear that if land is included in the prototype limits, local authorities will be under unhealthy pressure to permit higher densities on available sites, so that the cost of land per unit is within the limits. The cost of site improvements, too, can vary. A flat site with good subsoil will require proportionately lower expense, while a site with unusual features or one with poor subsoil will require greater expense. The site improvement element for the seven New Haven projects already referred to ranged from 2% of total cost to 14%. Many Connecticut cities have exhausted their supply of prime buildable land. We fear that inclusion of site improvement costs within the prototype limits will prevent construction of low-rent housing on sites which are buildable if terrain problems can be overcome. Generally they can be overcome, but only at an expense which may be unacceptable to HUD. The last category-fees and other costs-is subject to the same variations as the other two. While turnkey housing is under construction and before its sale to the housing authority, one town may assess it at the full rate; another might be more lenient. Interest on construction financing will vary, sometimes from month to month, as prevailing rates change. The range among the seven New Haven projects for this category runs from 5% of total cost to 18.5%. The point is this: Construction costs can be measured, and are being measured, by standards that reasonable men can agree upon. The elements now to be included in the prototype limits are subject to considerably greater variation, and cannot be measured with the same degree of certainty. If these changes are adopted, we foresee a slackening of builder interest in the turnkey program and a substantial cutback in the production of low-rent housing. Our new housing is proving that the image of public housing as a dreary monotonous red brick prison is obsolete. To expand the present prototype formula would stifle this encouraging trend. We urge that you take a strong position in committee and, if necessary, on the floor of the House against these changes. The CHAIRMAN. Thank you very much, Mr. Walsh. Your recommendations will be given serious consideration. Next we will have the National Tenants Organization, Mrs. Rose Wylie. STATEMENT OF ROSE WYLIE, NATIONAL CHAIRWOMAN, Mrs. WYLIE. Thank you, Mr. Chairman. My name is Rose Wylie. I am chairwoman of the National Tenants Organization. I want to thank the committee for holding these hearings. The tenants in this room today, and those who were here last week, are only a small fraction of the hundreds of thousands of public housing tenants throughout this country whose right to decent housing will be jeopardized if the bill is approved in the form now before you. Our chief concern is with title III of the proposed bill, which repeals the present Housing Act of 1937 and substitutes a new oneone whose provisions would undermine and destroy many of the hardwon rights for which we have struggled so hard. During the past few years, tenants in public housing in this country have begun to organize. We have begun the long hard process of bringing about change in public housing. For the first time, tenants have been appointed as commissioners of local housing authorities. For the first time, HUD has recognized tenant interests and tenant concerns in formulating housing policies and procedures. For the first time, housing authorities have begun to recognize the legitimate rights and needs of tenants and have begun to guarantee tenants that housing will meet minimum standards, and the right to a hearing before eviction. These changes have brought about a new mood in public housing. For the first time we have begun to look at public housing as home, not as a place to escape from. Housing authorities which have been responsive to the tenant movement have begun to move to meet tenant needs beyond those of shelter alone. In Philadelphia, for example, since our memorandum of understanding for carrying out the modernization program in three public housing projects, 350 tenants have been employed by the Philadelphia Housing Authority, and they are receiving training in trades which will enable them to become selfsupporting. It is almost a quarter of a century since Congress set the goal of a decent home for every American family. But Congress has moved toward this goal primarily with programs designed for builders, for bankers, and real estate brokers, even for nonprofit organizations. But we have not seen many programs designed for people-for the tenants who cannot pay for decent housing and who are regarded as secondclass citizens in public housing. We recognize that there are problems in public housing. We have been trying to deal with those problems. We need your help. But the way to deal with the problems of providing decent housing for poor people is not to pretend that we are the cause of those problems. If we cannot get decent education, if we cannot get decent jobs; if we are discriminated against at every turn-then don't expect us to be able to pay for decent housing. If you find that it costs money to provide decent housing for poor people, don't pretend the problem doesn't exist by telling poor people, they can't live in public housing any more and don't make the tenant the scapegoat for the financial problem of public housing. Provide the money and the programs we need. Philadelphia is an example of the problems faced by public housing-and by poor people trying to find decent homes. You are all familiar with the way FHA in Philadelphia looked on as literally thousands of poor people were defrauded as they tried to purchase homes. You may have heard that public housing in Philadelphia has problems too-but again their problems do not stem from the lowincome citizens who live there. For the past 3 years the Philadelphia Housing Authority has tried to serve poor people, but the public programs available have not been adequate to do this. I lived in public housing in Philadelphia for almost 20 years. For most of that time, the proudest boast of the Philadelphia Housing Authority was that rent delinquency rates were less than 1 percent. This was done simply by excluding from public housing anyone who could not produce a prior paid-up rent book, or anyone included in a vague list of 14 "social problems." Only one tenant family in 20 was on welfare. The relocation priority for public housing was a farce: less than one eligible family in five actually moved to public housing, despite the unavailability of alternative, suitable housing for these eligible families. Private landlords complained that tenants they could have been housing were in public housing. The resultant flooding of the market with the low-income tenants led landlords to a course of action which now is responsible in part for the problem of housing abandonment in our major cities. All this has changed in the past 3 years. The Philadelphia Housing Authority now admits eligible displaced families as a matter of right, in part because of the recognition that Federal housing and renewal programs have been the principle cause of displacement of such 79-555-7237 families. Because many of those displaced were welfare recipients living in housing unfit for human habitation (and paying much more than their welfare shelter allowance for rent), almost two-thirds of public housing tenants are now on welfare. As a result of the Brooke amendment, which reduced rents from 35 or 50 percent of welfare incomes to 25 percent, the housing authority is requiring millions of dollars in operating subsidies to avoid bankruptcy. Last year, the Philadelphia Housing Authority needed $7.7 million. This year, the estimated deficit is $15 million. Other housing authorities are in similar situations. The House subcommittee's answer to this is not to meet the housing needs of the very poor. Instead, the bill would require local authorities to return to the days when the very poor-those most in need of help and whom the private market is least able to serve-cannot be admitted to public housing. For those already in public housing, the bill would do three things: it would raise the rents, by gutting the Brooke amendment and returning to the days when local housing authorities set minimum rents that took one-third, one-half or more of people's money for rent. (Sec. 3(1), p. 112, 11.15-17). The lower your incoine, the more of it you had to spend for rent; and the hungrier you were. Then, to make matters worse, it enables housing authorities without any hearing to assert defenses to evict people with all their "possessions and belongings" who fall behind on their rent. (Sec. 6(h), p. 132, 11.9– 15.) Or, if you pay your rent, you may be evicted for disobeying arbitrary or vague housing rules. But there are no sanctions to the bill against housing authority staff who do not comply with laws and regulations: the authorities which still do not comply with the Brooke amendments, now 2 years old, the officials who have evicted tenant organizers as troublemakers: the authorities providing housing that violates minimum code standards; the authorities violating the provisions of civil rights legislation. Where are the sanctions against these acts? Why does the proposed bill single out low-income tenants, especially welfare recipients? We believe that by holding these hearings, this committee is demonstrating that you are concerned about our needs. We cannot believe that you will recommend legislation which will have such devastating effects on our shelter and on our lives. We urge you to strike out the provisions of the bill which visit these hardships on us. Specifically, we have the following recommendations and comments: 1. The House subcommittee's bill in section 3(1), p. 112, 11.15-17, approved minimum rent. This provision modifies the provision in the Brooke amendment (Sec. 3(1), p. 112, 11.13-14) which sets a ceiling on rent for public housing tenants of 25 percent of the tenant's adjusted family income. It means that the very poorest tenants-for example, the elderly and the tenants in rural areas of the South-will be required to pay more than 25 percent of adjusted income if the housing authority minimum exceeds that amount. Since the present housing act has no provision for minimum rent, there are a few tenants whose incomes are so low that they pay little or no rent for public housing at all. We would strongly urge that the housing act be left as it presently is in this regard since, families who cannot afford to buy food certainly cannot afford to pay rent. Therefore, 11.15-17 of section 3 (1) should be deleted. 2. The subcommittee bill requires in section 9(e) (1), p. 140, 11.7-9 that every local housing authority must have management practices, including admitting families with a broad range of income and tenant selection to avoid concentration of very low-income and socially deprived problem families. This is a vehicle for reducing the number of poor people in public housing thus avoiding the Federal Government's duty as a houser of the last resort for the poor. The section should be deleted since there is not adequate housing available for the very poor except public housing. Therefore, if you reduce the number of units available to the very poor, you also drastically intensify the housing crisis for people in that income range. Paragraph (2) of section 9 (c) provides for the establishment of effective tenant management relationships to assure that satisfactory behavior is required of "tenants" only. In the interest of successful operation of projects, the requirement of satisfactory behavior should not be limited to tenants but should also include all public housing authority staff. The section additionally fails to even require the establishment of tenant councils in all authorities elected by tenants, much less participation in developing standards as a key aspect of effective tenantsmanagement relationships. It delegates to councils "where they exist" the role of enforcers of standards which they had no say in making. We urge that it be deleted. 3. The subcommittee bill in section 6(g), p. 131, permits the local housing authority to agree with the local welfare agency for direct payment of the rent of welfare recipients to local housing authority. Such a provision would void a current Federal welfare law which specifically prohibits direct payment of rent to the local housing authority. The reason for this prohibition is the fact that such payment is degrading to the family and denies it the opportunity of being responsible for the handling of its own income. This provision would foster dependency, denying the poor the experience of handling their own finances, and responding to legitimate family emergencies such as illness, a death in the family, and so forth. This provision also clearly discriminates against welfare recipients as a class and sets no standards by which a local housing agency may determine at the time of "initial occupancy" what payments should be made directly to the local housing agency. This subsection should also be deleted in its entirety. 4. This bill enables in section 6(h), pp. 131-132, that every housing authority remove any family falling two payments behind in rent or violating vague local housing rules nowhere defined in the act. It also provides at paragraph (2) of the same section, that the tenant's lease in every public housing project shall give the local housing authority the right to remove all the tenant's goods and possessions if he has fallen two payments behind in rent. These requirements are unnecessary and connote a flagrant and unjustified disregard for States rights. Every State in the Union already has eviction procedures for persons behind in their rents or violating these leases and public housing authorities already use them. Likewise every State has seen fit to modify the common law "self-help" pro |