Page Stanley, Walt, facility consultant, Flair House, Santa Maria, Calif., letters dated February 26, 1977, with attached "Memorandum to Secretary Harris Regarding Budget Housing" 2659 Sturgell, P. Stephen, city manager, Paris, Tenn., statement. 2614 Tate, Hon. William D., mayor, Grapevine, Tex., letter dated February 2, 1977. 2592 2590 Trimble, Hon. Richard W., mayor, Lake Worth, Tex., letter dated Febru- United Cerebral Palsy Associations, Inc., Washington, D.C., suggested Van Deerlin, Hon. Lionel, a Representative in Congress from the State of Wright, Hon. Jim, a Representative in Congress from the State of Texas, 2580 2572 2588 2675 2589 HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1977 WEDNESDAY, MARCH 2, 1977 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HOUSING AND COMMUNITY FINANCE AND URBAN AFFAIRS, Washington, D.C. The subcommittee met at 10:15 a.m. in room 2128 of the Rayburn House Office Building; Hon. Thomas L. Ashley [chairman of the subcommittee], presiding. Present: Representatives Ashley, Moorhead, St Germain, Fauntroy, Blanchard, Lundine, Brown, Wylie, Kelly, Grassley, and Evans. Also present: Representative Mary Rose Oakar of Ohio. Mr. ST GERMAIN [presiding]. The subcommittee will come to order. Our witnesses this morning-and we apologize for the tardy beginning are representing the National Governors Conference, Governor Milliken of Michigan; and the Council of State Legislatures, Representative Sweeney of Ohio; and the National Urban Coalition, tion, Sarah Austin, vice president, introducing Floyd Hyde, a board member. At this point I would call on the gentlelady from the great city of Cleveland, which is a suburb of Oberlin, to introduce Representative Sweeney. However, we shall naturally have Governor Milliken testify first, but in deference to her heavy schedule, I would at this point ask the gentlelady to make the introduction of our second witness. Ms. OAKAR. Thank you, Mr. Chairman and members of the committee. I feel it a special privilege to introduce a longtime friend and also a native Clevelander who has had much experience in the field of housing and community development. He is Representative Patrick Sweeney of the Ohio State House of Representatives, sixth district. And he has had much experience. He is in his sixth term, although he looks a lot younger, and I think you will find his experience and his knowledge of this important issue, the block grant, to be of value to this committee. So I thank you for letting me introduce my good friend and fellow Clevelander. Thank you, Mr. Chairman. Mr. ST GERMAIN. Thank you, Ms. Oakar. Now I would ask Governor Milliken to come to the table. Governor, we will put your entire statement in the record, as presented, without objection. And if you in any way would like to comment or depart from that or supplement it or whatever, feel free to do so. The entire statement, as submitted, at this point is part of the record. Governor MILLIKEN. Thank you very much, Mr. Chairman. Mr. BROWN. Governor, before you begin, let me just say it is a great pleasure for me to be able to welcome you to the subcommittee this morning. Whether you be Democrat or Republican, I am sure that throughout this Nation you are recognized as one of the outstanding, if not the outstanding, Governor of all of the States. So it is a real privilege and pleasure for me to be able to welcome you here this morning. Governor MILLIKEN. Thank you very much, Congressman Brown. I appreciate those warm remarks. Mr. ST GERMAIN. Governor, I think you have more laudatory remarks coming, and I will call on the gentleman from Detroit, Mr. Blanchard. Mr. BLANCHARD. Thank you, Mr. Chairman. I simply want to welcome our distinguished Governor from Michigan here, and merely add a footnote to the history. The Governor is a Republican. I have a feeling that had he succeeded Richard Nixon and become President of the United States by appointment, he would have been reelected, unlike the other distinguished gentleman from Michigan. And the reason is the bipartisan nature with which he has conducted the affairs of his office, which I think has allowed him to enjoy very warm relations with our entire Michigan delegation. And I appreciate the way you have handled your Governor's office and the way your staff has dealt with the Michigan congressional delegation. I wanted my colleages to hear that. Governor MILLIKEN. Congressman Blanchard, thank you very much for those warm comments. Mr. ST GERMAIN. Governor, you are off and running. STATEMENT OF HON. WILLIAM G. MILLIKEN, GOVERNOR, STATE OF MICHIGAN, ON BEHALF OF THE NATIONAL GOVERNORS CONFERENCE, ACCOMPANIED BY ROBERT HORN, STATE OF MICHIGAN OFFICE IN WASHINGTON, D.C.; JOANNE DODDY FORT, NATIONAL GOVERNORS CONFERENCE; AND JOSEPH ANASTASI, SECRETARY, MARYLAND DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT, AND PRESIDENT, COUNCIL OF STATE COMMUNITY AFFAIRS AGENCIES Governor MILLIKEN. Thank you. Let me say first of all that I am very pleased and very proud to be here, and I am particularly proud of the two Michigan Congressmen who serve, Mr. Chairman, on your subcommittee, I know with great distinction. I am here this morning representing, first of all, the National Governors Conference, and I am here also as Governor of the State of Michigan. With me this morning from the State of Michigan office here in the city of Washington is Robert Horn; Joanne Doddy Fort with the staff of the National Governors Conference, who is likewise with me; and Mr. Joseph Anastasi, the Secretary of the Maryland Department of Economic and Community Development, and President of the Council of State Community Affairs Agencies. I am very pleased to have them with me at the table this morning. Since 1971, as I think, Mr. Chairman and members of the subcommittee, you know, the National Governors Conference has supported the use of block grants for State and local community development programs. Consequently, the Governors welcomed the advent of the community development block grant program in 1974. We had high hopes that the program would indeed return decisionmaking power to the people in State and local government while simultaneously providing assistance to jurisdictions to improve the conditions of their communities. From the States' perspectives, these hopes have not yet been entirely fulfilled. The States were given a limited role in the total program and were eliminated from the block grant portions of the program. No special recognition was given to State projects, either in the form of a set-aside of funds for State community development projects or an entitlement for a funding. To date, only 10 States have received 13 grants for a total of about $12 million of the $7 billion which has been disbursed in the form of direct grants. States can only apply for community development block grant discretionary funds from two funds. In order to acquire funds from the general purpose discretionary funds, States are forced to compete with their own localities for limited funds. Most States, I might add, have declined to put themselves in this untenable position. To date, only four States have received general purpose discretionary funds. The second source of funds for States is the Secretary's discretionary fund. To date, only six States have received grants under this funding source. Their funds are awarded for specific classes of projects at the discretion of the Secretary on a project-by-project basis. In this sense, the awards more closely resemble categorical grants than block grants. We in the State capitals realize and I want you to know that we realize full well the reasons why States have historically been excluded from many of HUD's programs for community developments. A decade ago, relatively few States had active community development programs or departments of community affairs, but neither did most urban counties or many entitlement cities prior to the passage of the community development block grant program. But today, I want to emhasize that the State picture is changing. State governments can no longer ignore the troubles of their cities. There has been an increased interest in involvement in States in community development, and I have attached, Mr. Chairman, to this testimony some examples of the various State programs in the community development and neighborhood preservation areas. These examples which I have attached illustrate that the States provide a variety of special grant funds, demonstration and innova 86-085 - 77 pt. 2 2 tion programs, significant financing for the construction and rehabilitation of housing, and extensive technical and advisory assistance to local officials. [The examples referred to follow Governor Milliken's prepared statement.] We understand the administration's desire to focus limited HUD resources toward those areas with the greatest housing and urban development needs. We endorse the administration's proposal for a higher funding level and a dual formula for this program. The dual formula approach accommodates the diversity in the Nation's communities. The new formula aids in remedying the steady decline of our older urban areas. As you are aware, these communities face enormous problems, including decaying housing stocks, increased abandonment, diminishing population, and erosion of their tax base. Although the size of the city is often an indication of how extensive the blight becomes, smaller cities often represent microcosms of the decay affecting their larger counterparts. The new funding formula takes these factors into consideration without penalizing cities for their diminished economic standing. It is a move toward greater equity in the Federal formula. We support this resolution of the very difficult issue posed by the use of a funding formula. But the National Governors Conference remains concerned that States are omitted from the administration's program. We strongly feel that the inclusion of the States in the program as recipients of block grant funds and as participants in the decisionmaking process for the distribution of discretionary funds can further the administration's goals. As recipients of block grant funds, States could implement statewide or multicommunity programs which would more efficiently utilize the limited resources for smaller cities in metropolitan and nonmetropolitan areas. Federal funds would allow States to augment their own State funds to continue and expand successful State programs. The participation of the States in the Federal program will also provide an incentive for States to develop new programs in cooperation Again, the examples cited earlier illustrate the range of State activities that Federal funds could support. Consistent with the administration's proposal for a small city initiative, the State could assist in packaging Federal and State grants and providing comprehensive community development needs for smaller jursidictions. State participation with small cities is especially important. We are concerned about some of our nonentitlement, holdharmless jurisdictions which are involved in community development efforts and which will lose funding under the proposed program. If States have entitlement funds and if States are involved in the decisionmaking process for the allocation of funds to these communities, we would have the flexibility to accommodate these situations. But we need specific congressional recognition of this role for the States. State participation could also increase the effectiveness of the urban economic development thrust of the administration's new proposal. Most States have strengthened the coordination between community and economic development. In 18 States these functions are in a singleState agency. Wherever possible State-local cooperation should be |