We understand that federal resources are limited and that the administration has indicated its desire to focus HUD resources towards those areas with the We endorse the Administration's greatest housing and urban development needs. 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 a plethora of problems including: decaying housing stocks, increased abandonment, diminishing populations 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. It identifies new variables such as the age of housing, poverty and a third element called growth lag. These measures appear to take cognizance of current conditions without penalizing cities for their diminished economic standing. It is a move towards greater equity in federal formulae. 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 States in the program as recipients of CDBG funds and as participants in the decision-making process for the distribution of discretionary funds can further the Administration's goals. As recipients of CDBG funds, States could implement statewide or multi-community programs which would more efficiently utilize the limited resources for smaller cities in metropolitan and non-metropolitan 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 with local governments. 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 jurisdictions. We are State participation with small cities is especially important. concerned about some of our non-entitlement hold-harmless 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 decision-making 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. functions are in a single state agency. In 18 States, these The Michigan experience with its Renaissance Center Project has demonstrated that there is a definite role which the State can play both in community development and economic development in a major urban area. This type of State-local cooperation should be encouraged.. A good way to do this is to give priority to Urban Action Grant projects which include State participation. The National Governors' Conference has just adopted the position that the funding pattern for community development funds should allow a set-aside of funds for tribal governments. The Indian tribes residing in our several States have critical community development needs which can be addressed through the discretionary fund. However, in the interest of consistency and the special relationship of the federal government to the tribes, we should not have competition between the tribes and general purpose local government for the same funds. This competition adds a great measure of strain to the problems which now exist between tribal governments and their nearby municipalities. A means for tribes to compete against tribes, and general purpose local governments against each other, would be the most equitable method of competition. In summary, Mr. Chairman, we view this new CDBG Program as an improvement over the previous program in many respects. It provides increased funding for those cities which are most in need while at the same time continuing its commitment to other needy cities. It provides for a comprehensive approach to community development and recognizes the importance of an economic development component in And it provides for more comprehensive coverage of smaller cities. this process. But the proposal still fails to provide a satisfactory role for the States. It fails to recognize and constructively tap the experience, resource and talents of state governments which are moving to assist their localities with comprehensive community development programs. With this failure, Mr. Chairman, we feel that the CDBG Program is still missing an important link to its most efficient and effective operation. It is our hope that your Committee will reexamine this ommission from the Administration's overall proposal. The National Governors' Conference stands ready to provide your Committee with any additional information it might require about what States have been doing or could be doing in the community development area. Before closing, Mr. Chairman, I would just like to briefly note our specific approval of a few of the Administration's recommendations in other housing and community development programs. We are pleased to see a $10 million expansion of the Urban Homesteading Program. This program offers many new possibilities for the revitalization of our dying cities. Similarly, the retention of the Section 312 Rehabilitation Loan Program will help to promote this objective. The increased funding level for Comprehensive Planning Management grants under the 701 Program from $25 million to $62 million is also a critical move in the right direction. It restores much needed funding to States, counties and cities. The experience in many jurisdictions has been that the need for 701 money has increased not decreased with the advent of the CDBG Program. - Finally, we are pleased that HUD has included a set-aside of 20,000 units of Section 8 housing for state housing agencies. This is a good start. However, we do feel that the resources of the States are being under-utilized by this low number of reservations for state housing agencies. We hope this number could be reviewed and revised upward. States should be allocated at least 33,000 units for FY 78 just to keep the same level as FY 77. Thank you, Mr. Chairman, for letting me give you our views on HUD's proposed programs. We think that you will see a substantial increase in interest and involvement on the part of the Governors on housing and community development matters in the coming year. I would be happy to answer any questions which the Committee might have, or to call on, with your permission, those staff people who are accompanying me. STATE HOUSING AND COMMUNITY DEVELOPMENT ACTIVITIES The following are brief descriptions of some state programs in housing and community development that contribute to the goals of the federal programs; the list is far from complete. This compilation was prepared by the Council of State Community Affairs PENNSYLVANIA The State of Pennsylvania has established a Neighborhood Preservation Another Pennsylvania effort is the precedent-setting Neighborhood Preservation Program which credits state corporate taxes to businesses which contribute money or other resources to neighborhood needs. The Pennsylvania Housing Finance Agency has also contributed to the The state also provides several other forms of assistance, including extensive technical assistance, urban renewal funding, and weatherization funding. |