Mr. PACKARD. As a matter of fact, if you are referring to the Deschler-Hilton in Columbus, I think they have spent vast sums redecorating that property in the past 2 years.

Mr. VANIK. I have this question: How many new hotel accommodations have been built or provided within the last year or so? Mr. PACKARD. Not too many.

Mr. VANIK. Have you any estimate, outside of the new hotel going down at Houston and a few others we have read about? I don't know of any new hotel construction that has really taken place in the country.

Mr. BETTS. The Statler in Washington.

Mr. PACKARD. You have the Statler in Hartford, a new Hilton going up in Dallas and one in Los Angeles.

Mr. VANIK. Nationwide, that is absolutely nothing, isn't it?

Mr. PACKARD. With the declining occupancy in the hotel business, certainly under normal circumstances, I am sure the witness who sat here ahead of me, the mortgage banker, isn't going to want to finance hotels in a declining market. Most of the construction that has been witnessed has occurred because of unusual circumstances in a particular community.

Mr. VANIK. Thank you very much.

Mr. MULTER. Thank you very much, Mr. Packard.

The committee will stand in recess until 2: 30.

(Whereupon, at 12:40 p. m., the committee recessed to 2:30 p. m.)

AFTER RECESS

The committee reconvened at 2:30 p. m., the Honorable Abraham J. Multer, presiding.

Present: Messrs. Multer, Brown, Patman, Rains, Mrs. Buchanan, Mrs. Sullivan, Mrs. Griffiths, Messrs. Vanik, Davidson, Wolcott, Talle, Kilburn, McDonough, and Hiestand.

Mr. MULTER. The hearing will please come to order.

Mr. Fink, who is our first witness this afternoon?

Mr. FINK. Mr. Robert E. Scott, United States Chamber of Com

merce.

Mr. MULTER. Mr. Scott, will you come forward, please?

STATEMENT OF ROBERT E. SCOTT, ON BEHALF OF THE CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. MULTER. Will you identify yourself for the record and then you may proceed.

Mr. SCOTT. Mr. Chairman and ladies and gentlemen of the committee, I am Robert E. Scott, an Elizabeth, N. J., realtor, builder, mortgage banker, and appraiser, appearing today for the Chamber of Commerce of the United States.

The national chamber urges you to reject the public housing provisions of H. R. 5827.

The 3,100 chambers of commerce and trade associations in our federation have opposed subsidized Government housing, or public housing, as it is frequently called, ever since the program was inaugu

rated by the Federal Government. These members have said, among other things:

The shelter requirements of needy families in housing of acceptable minimum standards should be taken care of by the State and local governments.

Since World War II, more than 912 million privately financed dwelling units have been built and occupied. This means that 1 out of 5 families have moved into a new home. This means, also, that families have been moving into new homes at a rate of almost two families per minute. This new housing has been started at a rate of 114 units per hour. It has been built in all price ranges, and construction continues at a high level. In no other place in the world has such a record been made.

Advocates of a federally subsidized housing program, in the early years during a depression, argued for it as a means of halting a decline in employment. Later the program was advanced as a supplement to slum clearance and later, still, as a means of meeting housing shortges engenered by war activity. Arguments more recently used have reverted to an alleged need for public housing in connection with slum clearance activities.

The problem of slum clearance, however, is only a part of the much larger problem of the renewal of our cities. We need programs initiated by the cities themselves, for the conservation and rehabilitation of the existing supply of housing as well as the continuance of a high level of new building. Through programs of conservation, houses now in good condition are prevented from becoming dilapidated; through programs of rehabilitation, the great bulk of substandard houses can be restored to reasonable standards of livability.

The elimination of slums is a matter of: (1) Education in good housekeeping; (2) encouragement of civic pride; (3) vigorous enforcement of housing and sanitary codes that will take the profit out of slum housing; and (4) encouragement of production of additional private housing through standardization of building codes, more redevelopment aids, liberal financing and equitable Federal and local-tax treatment.

Some 237 cities have already embarked on a rehabilitation program that will restore thousands of substandard dwellings to fitness and full usefulness without cost to the taxpayers. This rebirth of our cities is a vibrant, positive answer to the slum problem. Public housing is not the answer to slum clearance; by segregating and institutionalizing a portion of our citizens we are creating the slums of tomorrow.

The serious housing shortages, which heretofore have stood in the way of relocation of families living in houses not susceptible of rehabilitation to minimum standards, have largely disappeared. The increasing flexibility in the housing supply permits going forward vigorously with local rehabilitation programs and of programs for clearing and rebuilding blighted areas.

Rehabilitation can be accomplished through rigorous enforcement of local sanitary and housing ordinances to insure that existing housing will meet acceptable minimum standards of health and decency. Many cities over this country, as previously stated, are actively going forward with such programs, notable examples being Milwaukee and Baltimore.

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The problem of hoplessly blighted areas should be dealt with under urban redevelopment laws enacted by States to empower cities to assemble and clear blighted areas and to encourage their rebuilding by private initiative and private investment.

Such programs of rebuilding and rehabilitation are necessarily timeconsuming and are inherently a continuing community responsibility in our dynamic society.

H. R. 5827, besides extending existing contractual authorization, would provide for 35,000 public (tax financed) housing units in each of the next 2 years. How was the figure derived? Why not one-half that number, or twice as many, or 10 times as many?

The number of public housing units which will be built is not the only issue. Any precise figure does not answer the fundamental question: In what sense is it the responsibility of the National Government (the taxpayer) to provide housing for certain citizens? Every million dollars of tax money taken from the people for public housing must make it a little harder for some lower, or moderate income people to build their own homes.

If the concept of public housing grows and grows, it may become an accepted way of life. It could induce more and more people to look to the Federal Government for all or part of the cost of their housing. It inevitably will reduce the incentive for some of our citizens to try to build their own homes. Throughout history, the effort to better one's position has been the great incentive which has helped raise our production and our income.

Why taxpayers generally should subsidize the building of new homes for certain families, when often such taxpayers cannot afford to build new homes of similar quality for themselves, should be questioned.

Public housing projects are not permitted to pay the local community, in lieu of taxes, any more than 10 percent of the shelter rent. Shelter rent is gross rent less utility costs-usually about $32 per month or roughly $370 per year. So that the most a project can pay, in lieu of taxes, is $37 a year. Privately owned apartments are forced to pay anywhere from $200 to $400 per year in local taxes; the difference, an average of better than $250 per unit per year is what the local taxpayers must make up for 40 long years. That means that it would cost the local taxpayers $10,000 for every PHA unit in a city if the local housing authority paid 10 percent in lieu of taxes. But lots of the projects do not pay 10 percent in lieu of taxes. The irony of the situation is that so many of the taxpayers saddled with the burden of meeting this obligation earn far less than the housing authority tenants they are subsidizing.

When Government enters a relief field, it has generally been assumed that all persons within the relief category should be equally eligible. But in the very nature of public housing, one public housing installation will be located here, another one there, while vast numbers of other families in a similar financial category will receive no such subsidy, just because they happen to live in a village, town, city, or county where no public housing project happens to be launched. This is discrimination.

In the interest of nondiscrimination and equality before the law, no Government relief program should be launched unless all individuals or families in that relief category have equal access to the subsidy.

Furthermore, these public housing projects are creating social problems. Children in the same general neighborhood are made to fall into two classes. One group comes from self-supporting families, and the other group gets taxpayer subsidized housing. This establishes community conflicts, class distinction and can lead to endless friction.

Every dollar of tax money taken from the nonsubsidized tenant and property owner in support of subsidized housing is a deterrent to homeownership, the bulwark of our Nation's economy.

It is also a further step in the direction of destruction of the property rights which constitute one of the foundations of our freedoms. Throughout history the effort to better on's position has been the great incentive which has raised our production, our income, and our standard of living-the envy of the entire world. The philosophy of forcing taxpayers who live in $7,000 units to pay for the cost of building and operating $15,000 units for tenants who make, in many cases, more money than the taxpayers, is un-American and confiscatory.

and

The Chamber of Commerce of the United States believes that the private ownership of housing is a basic principle in our economy that there should be no further Federal appropriations or participation in the financing of public subsidized housing. Shelter requirements of needy families in housing of acceptable minimum standards should be the responsibility of the State and local governments.

Urban renewal laws should be enacted by States to empower cities to take measures to stop the spread of blight and to encourage rehabilitation, and where necessary to assemble and clear areas for rebuilding by private initiative and private investment. Cities should prepare comprehensive plans as a basis for these activities, and should vigorously enforce local sanitary and housing ordinances.

On behalf of the United States Chamber of Commerce, I desire to thank you for the opportunity of presenting our views, on the public housing aspects of this bill, and I sincerely hope that you will recommend the immediate liquidation of this program. Thank you. Mr. MULTER. Mrs. Griffiths?

Mrs. GRIFFITHS. I would like to ask you if you know how much money the public housing pays into the treasury of the city or that goes back to the city in which it is located?

Mr. SCOTT. Of course, it varies in the local communities. As I said in my testimony, there are only permitted by law to pay 10 percent of the shelter rent, and since the shelter rent runs around $32 a month, the average rental in New Jersey is $40, less the utility costs, which are about $8, brings it down to about $32.

They can only pay about $3.20 per month per unit. Now, the taxes on privately

Mr. MULTER. Will you stop there a moment? In your statement you said $37 per year per project. You didn't mean per project. You meant per unit.

Mr. SCOTT. Per unit. I am sorry, sir.

Privately owned apartment houses have to pay somewhere between $200 and $400. It depends on the assessments and rates in the various municipalities, so the difference is roughly $250 per month that must be made up by the taxpayers.

Mrs. GRIFFITHS. Do the taxpayers in the local city pay actually a sum of money into the local treasury that is made up?

Mr. SCOTT. It is not specifically earmarked. The taxes a taxpayer pays are derived by determining the total cost of government and dividing that by the amount of rentables, and that gives you your tax

rate.

Mrs. GRIFFITHS. Your statement isn't really what it appears to be on the surface at all; is that right? Nobody is paying out any sum of money because you have public housing, are they?

Mr. SCOTT. They very definitely are.

Mrs. GRIFFITHS. What are they paying?

Mr. SCOTT. They are paying the difference between what the project would pay if privately owned and assessed as a privately owned project.

Mrs. GRIFFITHS. That is a difference between what the project pays and what the slum housing that it replaced pays. Do you know what that difference is?

Mr. SCOTT. I would like to correct a misunderstanding about public housing in at least New Jersey and from my experience with projects in the other States. It is not a slum clearance program. They haven't replaced units that were paying taxes. The projects have been built principally on vacant land in New Jersey; more than 80 percent of all projects.

Mrs. GRIFFITHS. What is the difference between what it did pay and what it pays now?

Mr. SCOTT. The taxes paid before were taxes simply on vacant land, so obviously the taxes or the payment in lieu of taxes today in some cases is higher than what was paid before in taxes on vacant land. Mrs. GRIFFITHS. How much higher?

Mr. SCOTT. They might be 5 or 10 or 20 percent higher, but it is not comparable.

Mrs. GRIFFITHS. Have you ever seen the study made of all public housing which shows that the land, with the housing, pays five times the amount into the treasury of the city that the land, either without housing or with slum housing, paid before?

Mr. Scort. I haven't seen those figures. They certainly wouldn't be true in New Jersey, because in New Jersey, more than 80 percent of the projects were built on vacant land and it is obvious that the payment in lieu of taxes now would be greater in many cases than what was paid in taxes on purely vacant land. Vacant land is traditionally assessed at a low figure. Normally assessed at a lower ratio than the assessment against improved property so that the taxes coming from vacant land are usually very low.

Mrs. GRIFFITHS. You are simply assuming for your purposes that the land would have been built up by private housing, although it had existed there from time immemorial and never had been built up by private housing.

Mr. SCOTT. That is not quite true.

Mrs. GRIFFITHS. Had it had housing on it before?

Mr. SCOTT. As a matter of fact

Mrs. GRIFFITHS. Will you please answer? Had it had housing on it before?

Mr. SCOTT. I don't quite understand your question. Eighty percent of the projects in New Jersey that were built on vacant landMrs. GRIFFITHS. Had it always been vacant?