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Mr. STANTON. My time has expired.
Mr. BARRETT. Mr. Stephens.

Mr. STEPHENS. Thank you, Mr. Chairman.

Mr. Secretary, I appreciate your being here, and your testimony. I am glad also to see from what you have said here that it looks as if next year we might approach the objective in our goals of 2,600,000 unit starts. And I compliment you on that stimulation of our housing program.

Secretary ROMNEY. Thank you.

Mr. STEPHENS. I believe in one of the early speeches that you made I recall that you said, in order to meet that objective, we would have about 600,000 starts that would be by Federal subsidy, and that we were going to have to depend upon private enterprise for the 2 million. I assume that you still feel that that is the right way to do, because I feel that way also. We must use Federal funds to stimulate housing but not take it over.

Secretary ROMNEY. That is right. I am concerned with the constant increase in housing costs that is increasing the subsidization. I think we ought to be moving in the other direction if possible.

Mr. STEPHENS. I have had a plan proposed to me which I am going into in more detail with the committee later which will help private enterprise. Do you see any objection with stimulating private enterprise by changing some of the national banking laws that would allow by removing some of the restrictions-commercial banks to get more fully involved in and to participate more deeply in home financing. Secretary ROMNEY. I think the Treasury made a very constructive suggestion in 1969, which was that financial institutions--and this would have included commercial banks as well as others-have interest income from socially desirable investments exempt from income taxes up to a certain percent. I think they said 7 percent of the investments. Well, that would have encouraged commercial banks and others to invest in mortgages to a greater extent than they are doing. I think that was a constructive suggestion. In England they have building societies, and they give certain advantages to investments in these building societies in relationship to income-tax payments. And I think some things of this character may well be necessary.

Now, the President has this Financial Structures Commission that has been studying this whole question of equitable distribution of available money and credit. And I assume they are going to make a report at a reasonable date here. And presumably they will make some recommendations in this area.

Mr. STEPHENS. We would have to change some of the national banking laws in order to give the banks a fuller opportunity to participate, because we do limit them in some respects to what they can do so far as direct loans are concerned.

Do you feel that we ought to encourage the banks to more fully finance or to get into the financing of housing?

Secretary ROMNEY. The General Counsel has a comment with respect to the Federal Reserve.

Mr. MAXWELL. There is one Federal Reserve regulation under the Bank Holding Company Act that was passed last year which seems to inhibit the activities of banks in participating in the construction of housing, particularly subsidized housing, which our Department is hoping that maybe we can get

Mr. STEPHENS. Liberalized.
Mr. MAXWELL. Yes, sir.

Mr. STEPHENS. In other words, in general you would favor changes in bank laws and regulations?

Secretary ROMNEY. Not enough of the available credit is going into housing.

Mr. STEPHENS. Yes.

Let me ask you this. Last year in your open communities proposal you advocated that we ought to put through some low-income housing units in suburban areas regardless of the local zoning lawsSecretary ROMNEY. No, Mr. Congressman, I have never recommended that.

Mr. STEPHENS. Maybe I am misstating it.

Secretary ROMNEY. You are very clearly misstating it, because I have never advocated at any time that we put low-income housing into a local community if the zoning laws didn't permit it.

Mr. STEPHENS. Well, anyway, we did turn that down in the committee.

Secretary ROMNEY. I have indicated that we need to get a better distribution of housing.

Mr. STEPHENS. Let me ask you this. I know that it was proposed directly to this committee, and we turned it down-I say we, the majority didn't pass it.

Secretary ROMNEY. We submitted an amendment, Mr. Congressman, that would have prevented a community from changing its zoning after it learned that low- and moderate-income housing was going to be located in the community. That is the Black Jack case. And the administration is proceeding against Black Jack because we concluded that we didn't need that amendment that we submitted because we believe the law prohibited it anyway, the Constitution. Mr. STEPHENS. My question involving this is: Is the point system accomplishing that now? When one comes to ask for funds, are they told by HUD that they have got to have zoning regulations changes or something of that nature? Is the point system being used to advocate putting low-income housing units in suburban areas?

Secretary ROMNEY. What the point system would do is to implement the President's equal opportunity policies in housing by encouraging the location of housing on a wider basis, encouraging the location of low- and moderate-income housing. And what we have proposed, we haven't finalized this yet, what we have proposed is that we would give preferential treatment to those who submit housing proposals that would be outside of areas of present minority concentration.

Mr. STEPHENS. Thank you.

Mr. BARRETT. The time of the gentleman has expired.

Mr. Secretary, I would like you to turn around and see John Culver, one of our distinguished Members from Iowa.

Mr. Culver, come up and make yourself heard. Sit up here with Mr. Gonzalez.

Mr. Culver also has a bill pending before the subcommittee.

Mr. Blackburn.

Mr. BLACKBURN. Mr. Chairman, before I begin my time I would like to make a parliamentary inquiry.

Inasmuch as we are scheduled for further meetings this afternoon, are we just to continue the 5-minute rule as our time arises?

Mr. BARRETT. I am glad you asked that question, because other members have come in after the statement was made.

After we finish the 5-minute rule this morning we are going to recess until 1:30, and go up to about 3:30 to give the Secretary a half hour to go to another appointment. Would that be adequate time? Secretary ROMNEY. Thank you very much. That is plenty.

Mr. BARRETT. And on our return we will go into the 10-minute rule. Mr. BLACKBURN. Thank you, Mr. Chairman. This will allow me to develop separate lines of questioning.

Mr. Secretary, of course it is always a pleasure to have you before us. I remember the great honor that I had in accompanying you on a visit to St. Louis once, which I found most informative.

I must say for my own part, though, I share Mrs. Sullivan's view that when we concentrate our effort on real estate; that is, in improving the quality of real estate and the environment that real estate affords people to live in, we are not really getting into the heart of problem, until we start dealing with the problem of crime that is so rampant in some areas of our cities. Now, I don't want the Department of HUD to become a national police force, and I don't think anybody on this committee or in the Government does. But still the problem of crime in the highly dense concentrated areas exists, whether they are newly constructed public housing or whether they are old housing that is being heavily utilized. Until we do come to grips with this problem of crime, we are really not going to solve our problems.

Secretary ROMNEY. May I make an additional comment beyond what I have said in response to Mrs. Sullivan.

We were in St. Louis. And you will recall that the Pruitt-Igoe public housing project was not only a tremendous concentration itself; but also in the city of St. Louis, the central city, all the public housing and subsidized housing was located pretty much in two great big areas. And Pruitt-Igoe is a tremendous problem by itself, because you have low-income problem families concentrated in tremendous numbers, and the average age of the occupants when it was occupied was 13, so that the size of the families was very considerable on the average. But you not only had that vast concentration, without recreation facilities or other things, but around that public housing project were other public housing projects, and urban renewal areas, and so on. And one of the things we are undertaking to do and have been undertaking to do is to get a broader distribution of this and to prevent its being concentrated so that you have got all the problem families concentrated in particular areas in these central cities. Because that aggravates the whole problem of law enforcement and preventing crime and so on. Mr. BLACKBURN. Let me say, Mr. Secretary, that I understand the logic behind your thinking, which is that, if you have this highly dense concentration of problem families, crime is a predictable adjunct.

Secretary ROMNEY. That is right.

Mr. BLACKBURN. At the same time I am not sure that dispersing the problem families is going to resolve the problem. And I don't think that just concentrating ourselves on the real estate or the

environmental aspects of the problem family is itself going to solve the problem.

Secretary ROMNEY. I agree with you that the real estate aspect is only one aspect. And as I have said, the human aspects are the most difficult and the most important.

Mr. BLACKBURN. I am afraid, frankly, that until we do come up with some very hard decisions in dealing with the problem families, which may be an uncharitable term, but nonetheless it is a very true term, we are not going to resolve one of the most critical problems that our country is facing

I notice with some interest that we are developing a national schizophrenia on local government; we are saying two different things. Incidentally I proposed, I introduced the revenue-sharing plan for your agency.

Secretary ROMNEY. Thank you.

Mr. BLACKBURN. I support it because I think, to the extent that it will simplify existing programs for local officials, it is justified. At the same time we are finding from the dialog such as that of my colleague, Mr. Ashley, that we have to have national leadership, that local officials need guidance from Washington or they aren't going to be able to do the job. I recall the debate on the welfare reform proposal in which the argument was that welfare is a mess, because we left it up to local officials. At the same time local officials have been saying it is a mess, "because we are trying to meet the regulations that they are handing us down from Washington." I wish that we could develop some consistency, that things were a mess because we can't run things from Washington, or they are a mess because the local people can't run the programs we are handing them. I don't know that there is a simple answer.

I have additional questions relating to building codes and local building codes and the degree to which the national agency, HUD, has seen fit to insist on changes in local building codes, which I think perhaps were detrimental.

My time has expired.

Mr. BARRETT. The time of the gentleman has expired.

Mr. St Germain.

Mr. ST GERMAIN. Thank you, Mr. Chairman.

Welcome, Mr. Secretary.

Secretary ROMNEY. Thank you.

Mr. ST GERMAIN. I will be able to ask you more questions later. S. 1, which is the legislation providing for improved and much needed relocation procedures and payments, also affected HUD programs. And I understand-at least I personally have been contacted that there is a fear on the part of many communities, cities, that these increased payments are going to have to come from their moneys that they have already been granted for this particular fiscal year. And I noted last week that was it 20 or 26 new Model Cities were granted additional funding? That was a White House announcement.

Secretary ROMNEY. Twenty.

Mr. ST GERMAIN. Twelve on performance and eight on geographical area. And frankly, I was disappointed, because I thought I had a couple performing pretty well, but they didn't come in in the

running. But this was $50 million involved there. And I could see that some of these communities really and truly needed the additional funding, there is no doubt. But then others do also.

Secretary ROMNEY. They refer to demonstration programs going beyond the present model cities program to test certain new approaches.

Mr. ST GERMAIN. Be that as it may, the fact still remains that the communities which have been funded for this fiscal year are fearful of the fact that they are not going to get additional funding from HUD to take care of or for the purpose of implementing S. 1. Now, has HUD at this point reached a decision on this matter, Mr. Secretary? Secretary ROMNEY. Our budget, of course, was submitted and passed without reference to this relocation act. And this relocation act involves an increased cost that is perhaps not taken into account in connection with the budget.

Now, where cities face problems that arise as a result of such expenditures, they of course can file amendatories with respect to urban renewal projects.

Mr. ST GERMAIN. NDP's and urban renewal projects?

Secretary ROMNEY. Yes. Because the amendatory policy of the Department is, if their costs are increased by statutory action, why then the Department will undertake to make the additional funds available to cover that increased cost.

Mr. ST GERMAIN. So that the fears that have been expressed are unfounded?

Secretary ROMNEY. With respect to urban renewal and neighborhood development. Now, with respect to model cities that is a different thing. And different programs might be differently affected. But as far as urban renewal and neighborhood development are concerned, they can file amendatories, if their costs are increased by it. Mr. ST GERMAIN. You say Model Cities is a different situation. Mr. HYDE. Let me elaborate on that. The Model Cities activity carried on for the most part with supplemental funds does not involve, with very few exceptions, any relocation activity within a model city area except as carried on by urban renewal activity. So when you solve the renewal activity you literally have solved the Model Cities problem where relocation activities might occur.

Mr. ST GERMAIN. In other words, the problem does not exist in Model Cities; is that what you are saying?

Mr. HYDE. At present time. What we will see in future years we don't know.

Mr. ST GERMAIN.I am concerned about this fiscal year primarily as most of the communities are.

In your statement you mentioned what we are doing in meeting the housing goal, and you mentioned the shipment of mobile homes. Do you have the figures as to how many mobile homes are being considered as meeting the housing goal?

Secretary ROMNEY. We think most of them do at the present time.

Mr. ST GERMAIN. How many are you using?

Secretary ROMNEY. In those figures the mobile home production was included.

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