such a program might best be administered.

Recommendation (f)

Adaptation of the public housing formula by the general counsel's of fice of PHA for use in developing self-help housing for Indians represents one of the most imaginative applications of this formula that we have seen. Experience gained in the mutual-help housing plan for Indians should be fully explored for extension into other potential areas where such a concept might be helpful. Two particular areas for further exploration are among migrant workers and in areas of high unemployment, where unusual labor resources are available.

Recommendation (b)

There are areas, of course, other than through the financial formula, where the public housing program needs to be given new room to

breathe in order to establish meaningful relationships with the private housing market and with urban renewal and community planning.

Recommendation (b) proposes that changes be made in the public housing act to permit tenants to purchase public housing apartments on an individual, cooperative, or condominium basis, under appropriate circumstances, as their incomes rise. Thought might also be given to methods by which low-income families whose income is rising could be assisted to purchase homes available on the pri vate market. In both of these cases, due caution should be exercised concerning the true ability of a family to assume home ownership. Explorations need to be made of the ways in which low-income families can be prepared for such ownership. Nevertheless, despite the cautions, the opportunity for home ownership among low-income tenants would be a powerful incentive for advancement.

Recommendation (c)

In

NAHRO proposes that the present requirement of the 1949 housing act, establishing a "gap" between the public housing program and the private market, be eliminated. its place, it is hoped that the several recommendations being made here will provide the necessary "bridge" between the two operations, to the benefit of both. Efforts to implement recommendations (a), (b), (d), and (e) should not be restricted by an arbitrary or unrelated restriction, such as the 20 per cent gap.

St. Paul, Minnesota's Mount Airy Homes public housing project, completed in 1958, is due to be extended by the provision of 38 additional units. Only 25 units of the extension, however, will be in newly-constructed buildings; the remainder will be provided by the purchase and rehabilitation of 11 houses in the project areafour of which are pictured above-which will provide the other 13 units.

The existing houses-all of them in sound condition-will be acquired for an average of just over $9500, not including land cost. The St. Paul authority estimates that rehab costs will average out at about $2500 per unit and that, when all expenditures are added in, the average per-unit cost will be in the neighborhood of $13,700.

In conjunction with the new units to be built as part of the same project extension-and with the inclusion of 54 new units that will expand the authority's McDonough Homes project, approved under the same contract-St. Paul will have made something of a dent in its demand for larger public housing units. Of the total of 92 units -79 new and 13 rehabilitated existing houses-17 will provide five bedrooms; 34, four bedrooms; 19, three bedrooms; 21, two bedrooms; and only one will be of one-bedroom size.

Recommendation (9)

The rationale behind this recom. mendation is that low-income housing should have the same advantages in write-down of slum clearance costs as other proposed new uses under the urban renewal plan. As presently provided, the write-down for public housing is determined in a different way than for moderate-income housing and the provision for moderateincome housing is more workable and equitable. Every effort should be made to encourage the development of low-income housing as a part of urban renewal development..

Recommendation (h)

Public housing developed outside of officially designated urban renewal areas must absorb the heavy cost of slum clearance in total development and amortize this cost over a long period of time. To encourage the development of more low-income housing, it is recommended that the costs of preparing the site for development (including property acquisition, demolition, relocation, and site improvement) be written off by a capital grant from the Public Housing Administration at the time of development. This would continue, in meaningful way, the role of public housing as a slum clearance program and, at the same time, reduce substantially the development cost for long-term amortization.

Recommendation (1)

The relocation payments and relocation assistance now available for families and businesses displaced by urban renewal activity should be extended to those displaced by public housing. Costs of this activity should be written off at the time of develop ment, as indicated in recommendation (h). Such action would be a further step in making low-income housing a full partner in the renewal operation.

Financial Dilemmas Two difficult financial situations are facing public housing.

One is the trend for tenant income (and thus rental receipts) to remain at a relatively static level, at the same time that operating costs are going up.

The second financial dilemma faced by public housing is that no adequate provision has been established to combat obsolescence, which affects any physical property held over a long period of time.

Income Down; Costs Up: Something of the financial impact of the

shift in public housing occupancy to the elderly and to other households at the bottom of the low-income range can be seen in the fact that over the 10 years between 1952 and 1961, the median income of tenant families rose only from $2124 to $2406. Monthly income from public housing units rose in the same period by only $9.36 per unit, from $31.72 to $41.08. At the same time, there was a rise in the cost of labor, supplies, equipment, utilities accompanied by growing demands for non-routine maintenance. on older developments. The monthly per unit cost of operating public housing rose from $25.76 in 1962 to $37.89 in 1961-a gain of $12.13 per month. The end result of this trend has been that residual receipts are growing smaller, annually, as shown in Table 7.

Under the present statutory requirement, the federal contribution for public housing can only be applied to debt service and it varies from year to year. Residual receipts from a local authority operation are used to reduce the federal contribution necessary in any year to meet total debt service costs. There is no question that public housing adminis trators, both federal and local, are

faced with an important decision, as annual contributions requirements move closer to the total maximum contribution authorized in the housing act. Table 8 shows that the proportion of the total fixed contribution required moved from 47.9 to 87.4 per cent in the period between 1952 and 1961. The ratio for 1962 was 88.3 per cent.

Some help in relaxing this financial squeeze was made in the Housing Act of 1961, where an additional $10 per month was made available to compensate for the increasing number of elderly tenants with low incomes who now live in public housing. However, this additional subsidy must come out of the total contributions already authorized for new construction and can only be received by housing authorities that can demonstrate financial insolvency.

The real issue at stake, made crucial by the hard facts of income and expense, is one of philosophy with respect to the type and income range of families to be served under the public housing program. A prime operating technique in the public housing program of the past was to achieve financial solvency by serving a cross-section of families in the low

income range: some of these were families from the lowest income sector of the community, paying minimum rents, while others were at the top of the low-income range, paying higher rents. Low-income families at the top helped to pay the costs for those at the bottom. Shifts in occupancy of public housing over the past decade have made this technique increasingly inoperative; thus, the financial problem.

Several approaches have been suggested to meet this situation. One approach is to adopt a program of cost-cutting and austerity, which will reduce expenditures to the point where they will fit the existing pattern of low-income occupancy and use the least possible federal contribution. Those opposing this approach point out that cutting expenses to the point where the reduction would have any substantial effect on subsidy is unrealistic and, at best, could have only a limited and short-range effect. They also stress that cost-cutting that may result in below-standard salaries and low-grade equipment or materials, is not efficiency but ultimately reaps even higher costs, both financially and in terms of over-all program quality. At the same time, local housing authorities are faced with new demands in the areas of community planning and coordina tion of social services, which require additional resources and which cannot be ignored much longer.

It is the considered judgment of many persons, as reflected in the total NAHRO recommendations for a lowincome housing program, that the only effective long-term approach to the financial dilemma now faced in the public housing program is to reestablish a cross-section occupancy pattern. To do so requires adjustments in assistance techniques, in structure type, in rent schedules, and in the provision of opportunity for tenant family advancement, all of which will bring back to public housing the family with income at the top of the low-income range. NAHRO believes that this kind of operation makes good sense, both economically and socially-and that opportunities to move the public housing program in this direction are already inherent in the new uses that local authorities are making of the public housing formula.

The only sound alternative to such an effort is to accept families in the very lowest income range as the total universe of low-income families to be

served by public housing-and to request the Congress for the additional subsidy funds necessary to keep rents within the income reach of these families.

Modernization: The second serious

financial dilemma facing the public housing program is the aging of some of the early public housing developments erected under the PWA program, the United States Housing Act of 1937, and the various war housing programs. Table 9 shows that as of April 30, 1963, there were a total of 3191 housing developments and 532,807 apartments under manage ment in the federally-aided public housing program. Some 21 per cent of these developments, with 38 per cent of the apartments, were con. structed under housing programs prior to and during World War IIthus, they are 20 years of age and over. While programs of sound rou. tine maintenance and replacement have been an integral part of the public housing program operation over this period, many developments have facilities which, in 1963 terms, could be termed obsolete inadequate laundry facilities and play spaces for children; outmoded electric installations and utility systems. Some public housing, especially that developed during the war period, was constructed with less than quality materials, because they were the only materials available.

In addition, there was a period in the federal administration of the public housing program, in the decade of the 1950's, when local housing authorities were requested to delay important major maintenance

and replacement while returning residual receipts to reduce the federal annual contribution. All of these factors place a heavy responsibility on public housing officials in 1963 to do something about public housing developments that are aging.

Present reserve funds set aside by each local housing authority for routine maintenance and replacement are based on a proportion of oper ating receipts and are not intended, nor are they adequate, to handle major renovation or up-dating of obsolete facilities. There is clearly a need to devise some financial mechanism for a modernization program.

Recommendation (1)

NAHRO's recommendation (j) has both short-range and long-range objectives and is aimed at providing a solution for the financial situations just explored. The recommendation provides that the present annual contributions formula be amended to provide for the payment to local housing authorities of the full annual contributions permitted under the

statute.

Amendment of the housing act to implement this recommendation might be accomplished under two different alternatives:

1-with residual receipts (after oper ating costs and debt service) used either for needed modernization programs or to make prepayments on existing bonded debt.

2-with residual receipts (after oper ating costs and debt service) used only to make prepayments on exist ing bonded debt.

Adoption of the second alternative would mean that another method would be required to undertake needed modernization programs. The Finance and Accounts Committee of NAHRO's Housing Division has given some concentrated thought to this problem over the past year and sug gests that the housing act be amended to provide an established amount of additional subsidy to finance needed modernization of existing public housing developments. At the same time, such an amendment would make provision for extending the present 40-year amortization period for any development an additional 10 years to provide a sufficient time period to pay off the capital cost of modernization.

It is believed that the recommendation for paying local authorities the full subsidy annually would have the following advantages:

1-It would provide needed financial flexibility over the next few years, while efforts are being made to estab lish a more realistic cross-section of low-income occupancy.

2-It might well reduce the federal subsidy, in the long run, by reducing the amortization period and, thus, the interest costs on bonded debt.

3-It would provide the local housing authority with an incentive for economy by making it possible to reach full local ownership in advance of the present 40-year contract termination.

4-It would enable local housing authorities to prepare budgets on a more long-range basis by anticipating a fixed annual contribution.

5-It would recognize the factor of obsolescence inherent in all physical property and protect the housing investment over the long amortization period.

6-It would provide a method of financing needed modernization without the long-term funding of large reserve funds for this purpose.

In presenting recommendation (j), every effort has been made to arrive at a sound and workable solution to our present financial dilemmas. It is believed that the combination of this recommendation, plus the effort to re-establish a more effective crosssection of low-income families in public housing occupancy, would go long way toward establishing the financial structure needed in the public housing program.

Some hand-in-hand work by local housing authorities and renewal agencies to their mutual advantage-is evidenced by the growing number of cities that now have, or will have, in the future, public housing projects on sites provided by renewal programs. The call to action on this front was reiterated in the February 1962 JOURNAL (page 79) when Herman Hillman, director of the New York regional office of the Public Housing Administration, spoke out on the development of such a cooperative venture and on the mutual advantages to be gained by both renewal and housing programs.

That the idea is getting a stronger hold is evidenced by the fact that, as of June 30, the number of public housing projects under contract for construction on Title I land had climbed to 86 and involved 12,384 units. As of the same date, according to PHA, an additional 16 projects, with 1593 units were already under con

struction.

Here's a sampling of some places where renewal and housing programs are working together:

Sylacauga, Alabama. Pictured is a duplex public housing structure that is a part of Sylacauga's Drew Court Extension project. The site is in the city's Pine Hill renewal area (see No. 9 1962 JOURNAL, page 513) and when the public housing construction is completed, a total of 76 units of public housing will have been built on Title I land. Initial occupancy of the first of the units took place in April. Bristol, Tennessee. Scheduled to be built in Bristol's Woodlawn Avenue renewal project are 34 units of public housing for the elderly. Forest Park, Georgia. Both private and public housing will make up the re-use of Forest Park's first urban renewal project, Rosetown. Priority on both the private housing and the new public housing units will be given to families to be relocated from the area. Johnson City, Tennessee. A total of 30 units of public housing are set to be constructed on Title I land in Johnson City's Fall Street renewal area; private housing will make up the remainder of the re-use of the 117-acre project.

Mount Airy, North Carolina. Almost half-nine acres out of a total of 20 of the Title I land made available through Mount Airy's East-West project will be devoted to public housing construction. In addition to some private housing, that will bring residential re-use up to the 70 per cent mark, plans for commercial and industrial re-use have been made.

The urban world of the 1960's is one of the broad dimensions and complexities. In most urban centers, the traditional political and social structure has been shaken; economic patterns are being reformed; physical decay and obsolescence are facts of life that demand attention.

The forces and resources of most local communities are in sensitive

contact with these new urban phenomena at many points and from many angles. What is happening

-and what the end result will behas deep meaning for a wide range of individuals and special interest groups. Mitchell Sviridoff, the executive director of Community Prog. ress, Inc. in New Haven, has cataloged some of these interests and their poignant concerns:

"The educator points to overcrowded schools, the harassed teacher, and the skimpy school budget.

"The social worker to the shortage of qualified professionals, the evergrowing caseload, the unsympathetic community.

"The city planner to the deteriorating slums, blight, the choking city traffic, the competition of suburbia.

"The vocational specialists to the increase in hard core chronic unemployment, automation, the shortage of unskilled jobs, the lack of adequate preparation for the world of work.

"The economists to the decline in our rate of economic growth, the squeeze in the cities between increasing public responsibilities and a declining tax base.

"The youth workers to school dropouts and delinquency.

"The social reformers to discrimination in employment and housing. "The religionists to the decline in family responsibility and spiritual and moral values."

From whichever of the above points of view the new urban complex is seen, the implications for the future are dynamic. Moreover, while each of the individual areas of concern is difficult in itself, it is also enmeshed with other problems and concerns. To approach a solution requires what Mr. Sviridoff calls "a unique effort" -an effort "which treats social problems as being so tightly interrelated in their causative characteristics that anything short of a comprehensive preventive attack on the totality of the city's social problems and their causes is unrealistic

we must

work in the fields of education, housing, employment, retraining, recreation, neighborhood organization, equal rights and social services within a framework in which specific programs in these various critical areas are not isolated efforts, but instead integral parts of a carefully developed total social plan."

The low-income housing program is, of course, a part of this complex new urban world. It has close relationships with the economic, social, and physical forces at work on the urban scene. It also has impressive responsibilities and strategic contributions to make-in the total community effort to overcome the problems of today's cities.

The first article in this series on NAHRO's low-income housing pro

gram (JOURNAL No. 5) pinpointed specific pressures on the urban scene that are forcing consideration of a more effective low-income housing program. Three of these pressures for action are also the sensitive points at which the low-income housing ef fort is related to the total community effort to solve its multiple problems. Briefly stated, these three pressure points are:

-the need for physical re-
newal, particularly in the core
areas of urban communities.
-the social unrest in local com-
munities, evidenced in a va-
riety of ways.

-the demand for social and
economic opportunity on the
part of families living in pov
erty and deprivation.

The immediate and strategic task, then, for the public housing program is to adjust its structure and resources so that it can make its full contribution in the critical areas of urban concern. Program adjustments in terms of economics were discussed in the first two articles in this series. The second article on the importance of flexibility in lowincome housing assistance methods demonstrated the ways in which the public housing program can be related to a variety of urban situations.

This final article will touch on three other areas where adjustments of the public housing program are needed if it is to do its share in the new "wide world" of which it is a part: (1) in the quality of building design and site planning (2) in the provision of more social services; (3) in administrative restructuring of both federal and local agencies.