program in behalf of very low-income tenants of public housing projects.

This section would authorize rental assistance payments with respect to units in low-rent housing projects, including low-rent housing in private accommodations, to enable families of very low income to afford rentals with no more than 25 percent of their incomes. Assistance would be in the form of annual payments by the Secretary to public housing agencies pursuant to contracts entered into with the local agencies. Existing as well as new units would qualify for assistance and assistance could be continued for the life of the project so long as it served low-income tenants.

At the present time, annual contribution payments by the Federal Government to local agencies cover the debt service on private borrowings financing the development or acquisition cost of the projects. Operating and maintenance expenses are payable out of rentals paid by the low-income tenants. The nationwide average operating cost per unit is now about $50 a month, or $600 a year. In some geographical areas operating costs are substantially higher. These costs are too high for the very poor to bear. Section 206 of the bill, which would authorize annual contributions in excess of debt service, would not materially reduce the burden on the tenants. Local housing agencies have attempted to meet this problem by charging minimum rents for some units below the operating costs attributable to the units, with the higher income tenants making up the difference. This has helped somewhat but not enough. For the most part, the neediest families have been excluded from the public housing program.

This section would enable families, regardless of how low their incomes are, to afford the rentals necessary to support project operating costs with no more than 25 percent of their income. This is the rent-to-income ratio used in HUD's other subsidized rental programs (rent supplement and section 236 rental assistance). Standards for tenant incomes would be established by the Secretary on a uniform nationwide basis. Since many low-income families are receiving welfare housing allowances, the Secretary would be expected to take steps to assure that the rental assistance payments are not relied on as substitutes for welfare payments.

Although the subsidy was authorized primarily to help families of very low income, the committee intends that it apply to all families who otherwise would be required to pay more than 25 percent of income for rent or who would be barred from public housing because their income was inadequate to pay this rent required; for example, a large family needing a four or five bedroom unit.

For purposes of determining the maximum amount of assistance. payments with respect to any unit, the "rental" for such unit would be the proportionate share of the total shelter costs to be borne by the low-income tenants of a project attributable to that unit. The actual rental for any unit charged could be higher than the proportionate share of total shelter costs attributable to that unit, but assistance payments would be calculated on the basis of this proportionate share or, if lower, the actual rental charged.

One of the purposes of this section is to permit improved operating and maintenance services in public housing projects while still permitting occupancy by very low-income tenants. The Secretary would be

expected, however, with respect to assistance contracts entered into with local housing agencies, to insure that excessive operating costs, and consequently higher rentals, are not incurred.

This section would provide authority for the Secretary to enter into assistance payment contracts, as approved in appropriation acts, in the amount of $75 million annually. This amount should be adequate to get the program initiated with respect to all existing projects and any new projects over the next 3 years.

Study of Federal Subsidy Requirements for Low-rent Public Housing

The committee requests that the Secretary of HUD, in consultation with the Banking and Currency Committees of the Senate and the House of Representatives, undertake a study of Federal subsidy requirements for low-rent public housing projects assisted under the U.S. Housing Act of 1937. Such study will evaluate the subsidy requirements of local public housing agencies in terms of the incomes and rent-paying ability of the low-income market to be served, the programs and services to be provided for public housing tenants, and the financial requirements of public housing agencies for operation and maintenance of their projects.

It is requested that the Secretary submit a report on the results of his study to the Senate and House of Representatives on or before October 1, 1970.

In requesting the study, the committee is aware of the financial plight of many local housing authorities and the difficulties they are encountering in maintaining a proper balance between financial solvency and the proper performance of housing the poor and needy. The Congress has responded to this problem on a stopgap basis over the past several years by providing additional subsidies for the benefit of specific types of needy families, amounting to $120 a year per family. Additional assistance was also authorized for renovation and modernization. Despite these increases, many local housing authorities are still suffering serious financial difficulties, and it is questionable whether the new authority provided for in this act will provide a permanent solution to the public housing financial problem.

A fresh look needs to be taken to evaluate the continued workability of the annual contribution formula and the effectiveness of the existing and proposed supplemental aids to place the projects on an economically sound footing. The financial element also needs to be related to the relative social benefits of housing a cross-section of needy lowincome families versus housing the poorest of low-income families. Also to what extent directing more resources toward improved management and tenant participation may bring about a significant reduction in operational costs.

These and many other factors need to be studied on as broad a scale as possible. Consultation on the Federal level should include representation from the Department of Health, Education, and Welfare, and the Office of Economic Opportunity, as well as the Banking and Currency Committees of the Senate and the House of Representatives. On the local level, in addition to local housing authorities, city officials and private organizations interested in the problems of the poor and the ill-housed should also be included.

AUTHORIZATION FOR HOUSING FOR THE ELDERLY OR HANDICAPPED

Section 212 of the bill would amend section 202 (a) of the Housing Act of 1959 to increase the total amount authorized to be appropriated for direct loans for housing for the elderly or handicapped by $80 million on July 1 of each of the years 1969, 1970, and 1971. The committee received a favorable report on the experience of the section 202 program-that it has been an effective and efficient one in providing housing for the elderly and the handicapped. The loans made directly from the Federal Government at a low-interest rate to the nonprofit sponsor is a simple, straightforward transaction involving a minimum of paperwork, costly fees, and delays. The nonprofit sponsors had learned the procedures and had begun to develop a sizable volume of projects until last year when the program was sharply interrupted by a HUD policy which in effect required conversion of all section 202 projects to section 236 financing upon completion. This abrupt termination of the program was the result of a misunderstanding of the 1968 legislation which authorized the section 202 sponsors to convert to section 236 on a voluntary basis, not on a mandatory basis.

In view of the great success of the program and the widespread popular demand for its continuation, the committee agreed to continue the program for 3 more years and recommended new authority of $80 million a year for each of the next 3 years-fiscal years 1970, 1971, and 1972.

The committee also wants it clearly understood that the same interpretation should be given to the 1968 Housing Act authority for a section 221 (d) (3) BMIR to convert to a section 236 project. This is clearly permissive authority and there is no basis in law for HUD to force sponsors of such projects to convert to section 236 projects. To back up further its support of the 221(d) (3) BMIR projects, the committee denied the administration request to rescind the $500 million in special assistance authority which became available July 1, 1969. The committee believes that many of these projects are very worthwhile and, although an immediate drain on the budget, they are, in fact, substantially cheaper to the Government over the life of the mortgage.

AUTHORIZATION FOR COLLEGE HOUSING DEBT SERVICE GRANTS

Section 213 of the bill would amend section 401 (f) (2) of the Housing Act of 1950 to increase, by $1,500,000 on July 1, 1970 and by $9 million on July 1, 1971, the aggregate amount of contracts which may be entered into to make annual debt service grants to help finance college housing facilities.

This increase in the aggregate amount of contracts which may be entered into to make college housing interest subsidy payments is intended to continue the expansion of this program through fiscal years 1971 and 1972 at the projected 1970 rate of $7.5 million in new annual grant payments.

37-010-69

ASSISTANCE FOR HOUSING IN ALASKA

Section 214 of the bill amends section 1004 (a) of the Demonstration Cities and Metropolitan Development Act of 1966, which authorizes a program of loans and grants for the provision of housing for Alaskan natives and others residing in remote areas of that State, so as to increase the $7,500 average per dwelling unit limitation by 45 percent, to a maximum limit of $10,875. This change is required to permit a vitally important housing program for Alaska remote villages to continue its implementation with a realistic per dwelling cost ceiling which reflects current costs. The Alaska remote housing program is based on the principle of maximum owner participation in construction of the homes and maximum use of local materials so as to keep costs at a minimum level. Recipients are provided a combination of grants and loans based on their ability to pay under a State-administered program. Increasing the limitation on average per dwelling cost to $10,875 will enable the program to provide housing of the quality which was contemplated under the 1966 legislation.

Title III-Model Cities and Metropolitan Development Program

AUTHORIZATION FOR MODEL CITIES PROGRAM

Section 301 of the bill would authorize appropriations of $287.5 million for fiscal year 1971 and $1.5 billion for fiscal year 1972 for supplementary grants and other purposes under the model cities pro

gram.

These authorizations will permit timely appropriations for the model cities program over the next 2 fiscal years. They would provide funds for the 150 cities now being assisted under the program. As of August 1, 1969, 35 cities had entered into the implementation stage of their programs. During fiscal year 1970, it is expected that all 150 cities will require funding for their first year action program, and in some cases second year action programs will need to be funded. In 1971 all cities should be entering at least their second year of program activity. The additional $287.5 million authorized in the bill, plus an estimated carryover in used authorization of $712.5 million, will provide a $1 billion program level in 1971. By the start of fiscal year 1972 all cities will have achieved a high level of coordination and concentration of resources directed toward the major physical and social problems of the model neighborhoods. The bill, accordingly, provides authorization for an increase in program level to $1.5 billion for that fiscal year.

AUTHORIZATION FOR COMPREHENSIVE PLANNING GRANTS

Section 302 of the bill would amend section 701(b) of the Housing Act of 1954 to increase the total amount authorized to be appropriated for comprehensive planning assistance by $40 million on July 1, 1971. The purpose of this increase is to provide, after taking into account rising costs, sufficient authorization for the Department of Housing and Urban Development to continue, through fiscal years 1971 and 1972, with a level of program activity approximately equivalent to

that currently being maintained. The unused authority expected at the start of fiscal year 1971 is estimated at $95 million which, if used at a program level of $60 million for fiscal year 1971 and $75 million in 1972, would require additional authorization of $40 million for fiscal year 1972.

UTILIZATION OF PRIVATE ENTERPRISE IN COMPREHENSIVE PLANNING AND

PUBLIC WORKS PLANNING

Section 303 of the bill would amend sections 701 (comprehensive planning) and 702 (advances for public works planning) of the Housing Act of 1954 to prohibit the use of funds under these sections by areawide comprehensive planning agencies or (in the case of public works planning advances) by public agencies to provide planning assistance to any local government in a manner which is determined under regulations prescribed by the Secretary, to be inconsistent with the Government's policy of relying on the private enterprise system to provide those services which are reasonably and expeditiously available through ordinary business channels.

This amendment is being added to make it clear that in the administration of these programs HUD is to assure that economic development districts and State, metropolitan, regional or other areawide comprehensive planning agencies do not provide planning assistance to local communities in a manner which in anyway unduly restricts the use of private planning consultants by such communities if they so choose.

AUTHORIZATION FOR OPEN SPACE, URBAN BEAUTIFICATION, AND HISTORIC PRESERVATION GRANTS

Section 304 of the bill would amend section 702(b) of the Housing Act of 1961 to increase the total amount authorized to be appropriated for open space, urban beautification, and historic preservation programs by $88 million on July 1, 1971. This increase in authorization would permit the Department of Housing and Urban Development to continue these programs at their current level through fiscal year 1972. In addition to the $88 million increase in authorization in fiscal year 1972, this section would provide for a carryover of approximately $84 million in unused authorization which would also be available for these programs.

AUTHORIZATION FOR NEW COMMUNITY SUPPLEMENTARY

ASSISTANCE GRANTS

Section 305 of the bill would amend section 412(d) of the Housing and Urban Development Act of 1968 to authorize appropriations for new community assistance grants through fiscal year 1972. At present, appropriations for these grants are only authorized through fiscal year

1970.

Title IV of the Housing and Urban Development Act of 1968 makes available new forms of financial assistance to private investors and entrepreneurs and local governments in order to facilitate their involvement in the planning and development of new communities. The title