HOUSING AND URBAN DEVELOPMENT THURSDAY, AUGUST 5, 1971 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The subcommittee met, pursuant to call at 10:15 a.m. in room 2128 Rayburn House Office Building, Hon. William A. Barrett (chairman of the subcommittee) presiding. Present: Representatives Barrett, Sullivan, Ashley, Moorhead, Gonzalez, Reuss, Minish, Widnall, and Heckler. Mr. BARRETT. The meeting will come to order. This morning we have a very special set of witnesses before us to outline and discuss the recommendations of the three housing subcommittee panels. First, we are privileged to have with us our good friend, the former Secretary of Housing and Urban Development, Dr. Robert C. Weaver. Dr. Weaver, it is a pleasure to have you with us and we look forward to hearing your views on our subcommittee bill. Second, we have with us six distinguished gentlemen who will discuss in detail the subcommittee bill. They are as follows: Prof. George Sternlieb of Rutgers University on housing abandon ment. Former FHA Commissioner Philip Brownstein on counseling and management. Donald Kummerfield, director, Center for Political Research, on housing block grants to State and metropolitan housing agencies. Prof. Morton J. Schussheim on community development block grants. Prof. Warren Smith on an urban development bank. P. E. H. Brady, of Toronto, Canada, former deputy managing director of the Province of Ontario Housing Corp., on State and metropolitan development agencies and housing block grants. Professors Sternlieb and Schussheim and Mr. Kummerfeld all took part in the subcommittee's panel activities and wrote outstanding papers for the panels. Mr. Brownstein, as our members know, has taken a great part in the formation of our housing programs and his experience as the FHA Commissioner makes him an excellent spokesman for the counseling and management provisions of the subcommittee bill. Professor Smith was a member of the Council of Economic Advisers and participated on the task force which proposed the urban development bank legislation. Mr. Brady is an outstanding specialist in housing in Toronto, Canada, who can give us the benefit of his long experience in the provision of housing for low- and moderate-income families. I would like to ask Dr. Weaver to testify first, and then we will call our six panel witnesses to the table. Each will give a brief prepared statement, and then our members will have an opportunity to question them as a group. Dr. Weaver, we again welcome you and would you proceed in your own fashion, please? STATEMENT OF DR. ROBERT C. WEAVER, FORMER SECRETARY OF HOUSING AND URBAN DEVELOPMENT Dr. WEAVER. Thank you, Mr. Chairman. Members of the committee, it is a pleasure to come back again and testify before you. And to me it is a distinct personal privilege to do so. I am here largely because I was deeply impressed by the quality of the papers submitted to the panels, the report and the resulting proposed legislation. It seems to me that the relevance of the report and the resulting proposed legislation, H.R. 9688, deserve a great deal of attention and careful consideration. The basic thrust of facilitating areawide balanced housing programs and tieing in eligibility for community development block grants with such housing programs is to be commended, and I wholeheartedly support it. The recognition of the importance of upgrading the management of low- and moderate-income housing developments, and the need to arrest abandonment of structures which are sound are also of great significance. The proposals to deal with these issues, while worthy of detailed analysis, seem to me to have decided merit. And I must note with real satisfaction the proposal for neighborhood preservation assistance. It is soundly conceived, and represents an indispensable element in effecting the full utilization of the existing housing supply. As the housing market changes new approaches are called for. Thus I endorse and support the housing allowance program experimentally initiated last year. I would also strongly urge enactment of provisions for its expansion as proposed in H.R. 9688. We need to experiment widely to observe the potential inflationary impact of such approaches under the varying conditions in the markets, and to determine which, if any, of the proposals are effective, and among those that may be effective which ones are most effective. The concept of community development bloc grants is, in my opinion, sound. And the recommendation of a higher percentage for the grant, and a local cash contribution, is equally valid. I submit that the experience of urban renewal, with noncash grant-in-aid credits, is eloquent documentation of the case for local cash contributions. From my observation of the Urban Development Corp. in New York State, I am convinced that such State agencies are, and can be, most effective in urban development. I therefore support the proposal to provide assistance for the initial administration and operation of such agencies, and to guarantee their obligations issued for capital funds. The concept of an urban development bank has been discussed for some years. It is responsive to the difficulties small communities continually face, and all communities periodically experience in raising funds. The proposed urban development bank would ease the situation. No one conversant with urban development can fail to appreciate the need for improving planning and related management capabilities of States and local governments. It is entirely consistent with the general thrust, and one which I approve, of H.R. 9688 to propose, as the bill does, that there be a single planning and management grant program. And because I believe in priorities, and I strongly believe in the responsibility of the Federal Government to provide national policies in housing and urban development, I support the proposed emphases upon the activities delineated in section 901 of the bill. Finally, as vice chairman of the New York State Temporary Commission on the Powers of Local Government, I urge favorable action on sections 903, 904, 905, 906, 907, 908, 909, and 910 of H.R. 9688. Unless and until the States assume a more positive role in urban matters, little can be done to deal with the areawide problems addressed by your report, and by the proposed legislation. Equally important is the modernization of local government. Here the role of the Federal Government, it seems to me, should be one of encouragement, financial assistance, and technical aid. The sections of the bill identified above prove this. Clearly, mine has been no more than a capsule analysis of what I consider the main thrust of H.R. 9688. Others I understand will deal in greater detail with specific proposals. What I have tried to do is to express my general support of the bill, and identify myself with its philosophy and objectives. Accepting this philosophy and these objectives, there are a few areas where I believe the bill could and should be strengthened. First, both the report and the bill set forth as a condition for participating in the community development block grant program "formulation of a program which included activities designed to provide an adequate supply of standard housing, particularly for low and moderate income families and individuals, within reasonable proximity to their places of employment." That is from the report. The proposed statute, it seems to me, somewhat dilutes this, by speaking of "those who are employed in the community," a somewhat ambiguous statement, since community is not defined in the pertinent title. Under this language, it seems to me, a unit of general local government might qualify for a community development grant if it developed but failed to carry out the prescribed housing program. Such a result, I believe, would be inconsistent with what I deem to be the basic thrust of H.R. 9688. Second, there is scant reference to land costs or a national urban land policy, either in the report or the bill. Yet of all the principal elements in the cost of shelter, land has and does increase most rapidly. And land of course is basic to the orderly development of urbanization. In the proposed statute it is stated that one of the purposes of title 9 is "to further the achievement of the national housing goal and a national urban growth policy by encouraging the States to take a larger role in land use and development planning," and later land use is listed as an activity which can be supported under title 9. I believe that State programs for more orderly land use are basic to the objectives implicit in H.R. 9688, and more is involved than planning. European experience demonstrates the efficacy of an urban land policy and of machinery for advanced optioning and/or purchasing of land for future housing. The 1965 Housing and Urban Development Act provided for grants to cover reasonable interest charges on loans to finance advanced acquisition land planned to be utilized in future for public purposes. I suggest that consideration be given to similar grants incident to land for future housing purposes. Regardless of the substance, it is high time that we have an urban land policy and effective machinery to facilitate its realization. Third, equally scant reference is made to citizen participation. I submit that, especially in the core areas, the question of whether or not there will be such participation has been settled in the affirmative. The issue is its nature. In setting forth the general criteria for community development block grants the report says: "These criteria are already to be found as statutory conditions for eligiblity in the model cities legislation of 1966, and in the new Community and Development Act of 1970." It then lists five criteria, but makes no reference to citizen participation. Subsequently the report says: "There should be provisions for advisory participation prior to submission of the application by the citizens to be affected by the proposed activities." Nowhere in title 6 of the proposed law do I find reference to this matter. Its omission is not only inconsistent with the language of the report and the requirement for model cities but in my opinion constitutes a serious substantive defect. I urge, therefore, that statutory language be included to parallel that in the Demonstration Cities and Metropolitan Development Act of 1966. I strongly support H.R. 9688. It has the virtue of building upon what exists, experimenting in areas that merit experimentation, consolidating categorical grant-in-aid into block grants responsive to general criteria, providing more effective machinery for areawide approaches to areawide problems, and tieing in metropolitan area approaches to low- and moderate-income housing with community development block grants. It is gratifying to note also that the proposed legislation is responsive to the national concern for upgrading the housing and environment of our low- and moderate-income households. In this connection it is reassuring that the report recognizes the need to involve management considerations early in the design and throughout the construction phase of housing production. The three revisions I have proposed would, I believe, strengthen H.R. 9688. Thank you. Mr. BARRETT. Thank you, Dr. Weaver. Now we would like to have these other six gentlemen come to the table, please. We are hopeful that each could take about 10 minutes. Dr. Weaver, we are grateful for your statement. You always center on the most essential elements. In order to give the panelists an opportunity to question everybody here I am going to forgo my questions and let the panelists now ask Dr. Weaver some questions. |