share of the job. We shall do so in the knowledge that we are working in a joint enterprise that combines the strengths of an imaginative and forceful presidential leadership; a Congress that, with the aid of this able subcommittee, gave us a great piece of legislation in 1965 and can be expected to do so again in 1966; and an enthusiastic and able new Department of Housing and Urban Development. We appreciate the opportunity to appear before this subcommittee. (The supplement to Mr. Fay's statement, the 1965-67 policy resolution of NÄHRO, and the report on "New Towns" follow:) SUPPLEMENT TO THE TESTIMONY OF NAHRO PRESIDENT FREDERIC A. FAY NAHRO'S POSITIONS ON PROVISIONS NOT INCLUDED IN PROPOSED 1966 HOUSING AND URBAN DEVELOPMENT LEGISLATION Low- and moderate-income housing NAHRO's policy resolution for 1965-67 (which we request permission to file) calls attention to a number of important considerations for future planning and/ or operation of any housing programs for low- and moderate-income families. *** complete concentration of low-income families in center city areas or in separate housing developments is under serious question. While there will be a continuing need to utilize housing developments for low-income families only, as one strong tool to meet housing needs, there will be increasing emphasis on ways to provide diversified housing, involving more than the low-income group. "Providing incentives for low-income families to move toward eventual independence is recognized as essential in all assistance efforts. "Providing opportunities for low-income families to particpate in decisionmak ing affecting their own welfare is now recognized as a realistic goal. "Coordnation of all types of low-income assistance in a comprehensive attack on the total cycle of deprivation is viewed as the only possibility for long-term success in lifting a family from deep poverty." Whatever the sponsorship of housing for disadvantage families, the task faced is a difficult one. Over the past 25 years, the public housing program has provided important insights on housing of disadvantaged families which should be recognized as a source of valuable experience for the future. The complexities and frustrations of achieving good housing for disadvantaged families can be recognized in such key issues as site location, construction and design quality, management orientation to social needs and incentives for family improvement. The long-term tests of effective low- and moderate-income housing seem to revolve around the following concepts: Site locations suited to the needs and aspirations of low- and moderateincome families and closely bound to the community social structure; Sound and attractive, yet economical construction that may have to weather long-term use with minimum maintenance costs while, at the same time, serving as an encouraging environment for the occupants: Effective housing management that can work within a minimum operating budget, yet be sensitive to the special characteristics and needs of depirved families; and Opportunities for initiative and independence by low-income tenants, including that of eventually being able to purchase their own homes. If the above considerations and tests are to be carried forward, as well as effectively related to the new demonstration cities program, then a concerted effort must be made to strengthen current housing programs with some additional strategic amendments. Proposed amendments to the Housing Act of 1937 Almost 3 years ago, in the summer of 1963, NAHRO published its "Low Income Housing Program for the 1960's." A number of the recommendations of this program have now been written into law, principally through the Housing and Urban Development Acts of 1964 and 1965. However, there still remain some recommendations which we feel are urgently essential to future success. NAHRO specifically cites six basic amendments and proposes them for priority congressional action in 1966. 1. Amendments to permit modernization and updating of older public housing developments. While programs of sound maintenance and replacement have working ative and e aid of in 19 stic and mmittee Cy reso FAT HOUSING to f ng and milies as of i asic been integral parts of public housing operation since early days of the program, many developments have facilities which today are obsolete. Many contain outmoded electrical and utility systems, inadequate laundry facilities, lack of indoor and outdoor play spaces for children, to mention only a few examples. Some public housing, especially that developed during and after World War II, was constructed with substitute materials, because they were the only materials available. In addition, there was a period in the decade of the 1950's when local housing authorities were requested by the Public Housing Administration to postpone important major maintenance and replacement while returning residual receipts to reduce the Federal contribution. All of these factors place a heavy responsibility on public housing officials in 1966 to do something about housing developments that are aging. An aggressive program of modernization undertaken now could pay large dividends in the future by extending the useful life of many housing developments well beyond the 40-year amortization period. This would provide a continuing source of good housing for low-income families at a cost far less than replacing outmoded developments with new construction. We make the following specific recommendations: (a) Amendment of the present annual contributions provision (sec. 10(b) of the United States Housing Act of 1937) to permit the payment to local housing authorities of the full annual contributions authorized under the statute on condition that any residual receipts after payment of the operating costs (including reserves) and required debt service, be utilized either for necessary modernization of older housing developments or prepayments on existing bonded debt. (b) Amendment of United States Housing Act of 1937 to provide that, where modernization of a housing development is essential to its continuing usefulness for low-income families, the amortization period can be extended beyond the 40-year term, up to an additional 10 years, with annual contributions continuing in this period to assist in meeitng the modernization cost. An important advantage of this method of meeting modernization cost is that it avoids the accumulation of large reserve funds over long periods of time. We believe that these two provisions should be of substantial assistance in meeting the financial demands facing the public housing program over the next few years. 2. Revision of the provision on the special subsidy for the elderly.—In 1961, the Congress enacted an amendment to the Housing Act that made it possible for a local housing authority to receive up to $10 in additional contribution for every dwelling unit occupied by an elderly family, where such amount, in the determination of the Public Housing Administration, was necessary to enable the public housing agency to lease the unit to the elderly family at a rent it could afford and to operate the project on a solvent basis. Experience over the past 4 years has demonstrated that many additional elderly families have been able to be housed in public housing because of this amendment. However, experience has also shown that the $10 per unit per month figure does not nearly meet the gap between what most elderly can afford to pay and the operating costs of public housing. Also, it should be pointed out, that to receive such a subsidy for elderly families, a local housing authority must show that, at the end of a fiscal year, it would not be able to maintain a solvent position, without such subsidy. NAHRO recommends two actions. First that the provision in the law relative to elderly subsidy be amended to provide that the additional contribution be equivalent to the gap between the ability to pay of elderly households and the operating cost of the public housing operation (including provision for reserve but excluding debt services). Further, we would recommend that the language of this section of the law be amended to make such additional contribution available without the restrictive and administratively difficult tie to project solvency. Such amendments would make it possible for many more elderly to be housed in public housing, and particularly in housing developments especially designed for and occupied by elderly households. 3. Amendment of the language of the Housing Act to encourage good as well as economical design. The only reference in the Housing Act to design in public housing is a provision requiring that projects be undertaken in such a manner that they will not be of elaborate or expensive design or materials. In order to reflect both local and national concern with good design, particularly for public housing, NAHRO strongly supports an amendment to the Housing Act which would encourage "good" as well as "economical" design. 4. Write-down of land for public housing outside urban renewal areas.— -Slum clearance has been an integral part of the public housing program since its inception in 1937. With the passage of the Housing Act of 1949, Congress accepted the principle that slum clearance is a one-time operation. However, this principle has never been applied to the public housing program, except in cases where a public housing site is part of an official urban renewal area. Thus, total slum clearance costs are still made a part of the total development cost and amortized over a 40-year period. This not only distorts public housing costs, but does not provide incentive for local housing authorities to acquire slum sites, with the attendant costs of relocation and demolition. With the many opportunities for a local housing authority to contribute to the clearance of poor housing, every step should be taken to encourage and move forward such action, without waiting for the designation of such housing as part of an official urban renewal area. It is recommended that the same procedure be authorized for public housing sites outside urban renewal areas as for inside such areas. This would provide that a determination be made of the equivalent price for which such site would be made available if it were part of an urban renewal area, under the formula established under section 107(b) of the Housing Act. Under this procedure, the Public Housing Administration would remit to the local housing authority at the time of permanent financing, an amount chargeable to the annual contributions contract, or a direct grant, equal to the net difference between total costs of site preparation and price which has been determined as the amount to be included in the total development cost for permanent financing. This would be a clearance cost, as distinct from construction and development. 5. Tenants to remain in public housing occupancy and pay economic rents.The Housing Act of 1961 included a provision whereby under "special circumstances" a tenant family in public housing, with income in excess of the maximum income limits could remain in occupancy, provided it is demonstrated that private housing is not available in the community at a rent it can afford to pay. Such a family, thus certified, can remain in occupancy for the "duration of such situation." This provision is helpful as a temporary measure in response to the hardship situation of an individual family. However, it does not affect a basic policy of public housing where a family whose income is rising is under constant pressure of possible eviction. Nor does such a procedure lend itself to a positive program aimed at promoting residential stability and personal neighbor relationships. NAHRO proposes that a public housing family reaching the point of the income limit maximum be allowed to remain in occupancy and pay economic rent, thus contributing to family and neighborhood stability. At the same time, we recommend that the local housing authority be required to substitute an additional housing unit within its total program, for occupancy by a family within the income limit eligibility, for every unit occupied by a family paying economic rent. 6. Sale of portions of public housing developments to nonprofit housing sponsors. In order to encourage a wide diversification of low and moderate income groups and household types in public housing, NAHRO proposes an amendment which would make it possible, where feasible, for local housing authorities to sell a portion of a public housing development to a nonprofit housing sponsor. In the event such a sponsor is serving families with incomes higher than those eligible for public housing, the local housing authority would be required to provide additional, substitute low-income housing units as part of its total program. Other recommendations.-Listed below are additional recommendations taken from the "NAHRO program for low income housing" presented to the Congress in 1964 and 1965. We believe that they are still needed and are ready to discuss the details of these recommendations at any time. 1. Assistance in the development of commercial facilities in relation to public housing. 2. Establishment of eligibility of local housing authorities as sponsors of FHA 221(d) (3) and CFA 202 programs. 3. Elimination of the 20-percent gap requirement. 4. Change in name of low-rent public housing assistance to more accurately reflect its current functions and program. 5. Study of the public housing mutual-help program now used on Indian reservations to determine its application in an urban setting. + 2 of th reas.-S m since is 9, Congres Homere 1. except i rea. Th nt cost and costs. slum sites bute to the and mor ousing Moderate income and elderly housing The nonprofit housing sponsor is increasingly recognized as an important means of attaining a more adequate supply of housing for low- and moderateincome families. The chief sources of Federal assistance for these groups are: Section 221 (d) (3) (moderate income housing); section 202 (direct loan program for the elderly); rent supplements in connection with the foregoing programs; and assistance under moderate-income housing programs used in combination with the public housing program. Nonprofit groups associated with NAHRO have indicated that there are a number of things which would be desirable in assisting nonprofit groups to assume their new responsibilities. Some of the recommendations require changes in the law, while others are matters of administration. They include in general, needs for more uniformity between the requirements and provisions of section 221(d)(3) and section 202 and more technical assistance geared to the needs of the nonprofit sponsor to enable him to qualify for assistance and carry through with long-term management responsibilities. We would like to cite the following: (1) Organizational and planning fee: Section 221(d) (3) provides for such a fee while section 202 does not. On the other hand, section 202 will authorize a loan consultant fee but will not permit such fee to be given to the staff of the nonprofit agency performing such work. (2) Payment for equipment: Offices and community space: Section 221(d) (3) permits such equipment to be included as cost items under the mortgage; under section 202, the nonprofit sponsor must purchase such equipment. (3) Working capital: Under section 202, a nonprofit sponsor must put in escrow one-quarter of the first year's operating costs, unless he can show 75 percent occupancy at project opening. Under section 221(d)(3) such working capital can be a mortgage item. (4) Adaptability to elderly occupancy: Under section 202, requirements permit occupancy of an efficiency unit by two persons. Under section 221(d) (3) no more than 10 percent of all units can be efficiency, thus making it less useful as housing for elderly. This last requirement makes rehabilitation difficult in many instances since many structures available for rehabilitation contain small units. (5) Section 221 (d)(3) requires certification of the city's workable program; section 202 does not. (6) It is not clear whether costs for training management employees is an eligible cost under either or both programs. In general, NAHRO would recommend that administrators of the agencies of the Department of HUD responsible for the administration of section 202 and 221(d)(3) be encouraged by the Congress to work together and with nonprofit sponsors to make sponsor requirements as uniform as possible, as well as provide additional technical assistance to enable nonprofit groups more effectively to meet their responsibilities. After careful examination by these groups, we sug gest that a listing of any technical amendments necessary be submitted for the consideration of the Congress. 1965-67 POLICY RESOLUTION OF THE NATIONAL ASSOCIATION OF HOUSING AND (Adopted at 30th National Conference, Sheraton Hotel, Philadelphia, Pa., October PREAMBLE The United States is staggering under the burdens of the urban age. immense job lies ahead in adjusting institutions, attitudes, and living patterns to a new, overwhelming, rapidly changing America. Nowhere is the magnitude of the job more evident than in the field of housing and urban development. An NAHRO believes it is fortunate that, at this critical juncture in the evolution of urbanism in the United States, a Cabinet-rank Department of Housing and Urban Development is now a reality. This Department can provide the framework and focus to bring together all the diverse, complex facets of urban life in a meaningful alliance. It is fortunate, also, that many of the basic legislative authorizations necessary to move housing and urban development programs more effectively are now part of national law: the Housing Act of 1964 and the Hous ing and Community Development Act of 1965 reflect a broadened vision of urban development and give new life to many older programs. But the association views these developments as only a beginning. True, there is a new Department of Housing and Urban Development *** but there is no consensus of what a modern city should be. True, there is impressive new legislation that includes extension of urban renewal and housing programs, Federal assistance for local codes administration, and new financing aids for such programs as open space and suburban development *** but there is no comprehensive process that encompasses all of these programs and covers both regeneration of older areas and guidance of growth in newly developing areas. As a measure of the inadequacy of our consensus of what urban life should be, we have as our only objective the declaration of purpose in the 1949 Housing Act: "a decent home and a suitable living environment for every American family." This declaration is useful as a goal but it is no substitute for an embracing philosophy of a new urban social structure in which the values associated with home and children, community life and friends, living and cooperating with nature, will have a chance to develop. In the area of national housing policy, we have a loose alinement of national economic policy and housing production, in which Federal housing programs have been reduced or expanded largely in response to pressures of a changing economic climate. In 1965, we need a coordinated housing and economic policy that will permit progress toward long-range housing goals under all kinds of economic conditions. In terms of an evolution of urban development planning, we are struggling under a "project" concept at a time when dynamic physical, economic, and social forces are sweeping aside community and even metropolitan boundaries into larger concentrations of urban form. NAHRO believes the next few years will continue to witness a revolution on the urban scene. We know only that much of the urban structure and practice of the past is dead that that we are in motion toward a new society. The trying test for all institutions and programs caught in this cycle of urban change will be the maturity and sensitivity with which we sift their past, in order to retain or discard-and the way we adapt them to the new look of the future. To assist this transition into a new urban age, NAHRO sees the following as necessary areas for action in 1965-67. We have not numbered these areas under a priority sequence, because we believe all of these actions must proceed immedi ately and simultaneously. Action area A.-We must work to develop a declaration of goals to guide urban development in order to give a unity of purpose to the many elements that are a part of the process. Given this sense of a unified whole, it is our hope that the followthrough from legislative authorization-to appropriation of funds-to the initiation of local action will come without friction and delay. Action area B.-We must help to evolve new organizational structures and interrelationships for all of the governmental agencies, industries, institutions, and citizen organizations that function to reach urban development goals. Action area C.-We must reshape the specific programs with which NAHRO members are concerned (housing, renewal, and codes administration) to fit both the purposes and the structures that come out of action areas A and B. Action area D.-—We must take the initiative in launching an immediate, largescale training and manpower development program for the urban development professions, encouraging teaching institutions at all levels to educate young people in the philosophy and the technique of urban development and then recruiting them as workers in the field. Action area A We must work to develop a declaration of goals to guide urban development in order to give a unity of purpose to the many elements that are a part of the process. Given this sense of a unified whole, it is our hope that the followthrough from legislative authorization-to appropriation of funds-to the initiation of local action will come without friction and delay. The total process of urban development must be identified and areas of public responsibility must be defined for coping with each stage in the cycle of urbanization growth, maturity, decline, decay. To undertake this task, we must mobilize the same type of group that this association brought together in 1933 to develop a housing program for the United States. The combined wisdom of legislators, administrators, scholars, planners, architects, and civic leaders must be focused on the potentials and problems of urbanization. From this mobilization should come a national philosophy of urban life expressing a consensus that can be unhesitatingly translated into ac tion programs. |