BALANCED PROGRAM OF PRODUCTION AND PRESERVATION Heretofore, national housing efforts have focused almost entirely on prouction of new units. This emphasis should be continued, but it must be oupled with new initiatives to preserve and upgrade existing housing stock. Otherwise, this country will never reach its stated goal of a decent home for very American, and, more specificially, a number of our older cities soon may well be decimated. It is essential, I believe, that Congress and the Administration begin now to hink in terms of a balanced housing program between new production and reservation. My extensive investigations in New York indicate that the singular roduction emphasis on new housing simply has not worked in urban areas. n essence, what has happened is that energies and resources have poured into ew housing for depressed communities while housing in "grey" or "transiional" areas-the key to the Citys health and stability-has deteriorated at an larming rate. Neighborhoods such as Washington Heights in Manhattan, Crown Heights, East Flatbush and Bushwick in Brooklyn, and Tremont in the Bronx, an be the devastated Brownsvilles of tomorrow. The unhappy result of present olicy is that conceivably we may be able to turn around one or two depressed eighborhoods in any given city with maximum effort and massive expendiures, but, while doing so, inadvertently create a cycle of even more slums. A ar more logical strategy would be to stabilize what we have at modest expense while continuing production efforts. I believe that S. 2049, the Administration's bill, will be instrumental in removng obstacles to production of new housing for low and moderate-income families. It will streamline and improve existing programs. Of particular concern to my State is the provision extending the "prototype cost" approach adopted last year for public housing, to section 235 and 236 housing. This is crucial for high-cost areas such as New York, and I would urge the Committee to act on this proposal is part of any housing legislation reported to the Senate. None of these improvements will mean anything, however, without adequate funding for the section 235 and section 236 subsidy programs. The projected shortfall this year for my State is in excess of $50-million; for the nation as a whole $300-million. The fact is that we can never approach desired production goals in high-cost areas without vastly increased amounts of 236 subsidies. Until This is recognized by Congress and the Administration, all of our intricate programs and refinements will be of little avail. PRESERVATION The first step in promoting a preservation strategy would be to expand and mprove those programs which now exist, such as code enforcement and Section 312 rehabilitation (which in my view, needs a complete overhaul). I would also irge the Committee to consider how Secretary Romney's initiatives through 'Project Rehab" can be assisted through legislation. This program of "gut rehablitation" with expedited processing and 236 interest subsidies has been a great success in New York, and, I believe, warrants your attention and future support. As the program expands, a means should be found to ensure that 236 subsidy requirements will not be subordinated to new construction subsidy demands. Perhaps a 236 set-aside for rehabilitation should be mandated by legislation, or at least, a policy statement that a certain percentage of 236 subsidies should be lirected towards rehabilitation programs. If transitional working-class neighborhoods go the slum route, all of New York City may not be far behind. We are already experiencing this phenomenon in one of New York's largest communities, the Bronx, where creeping blight accompanied y financial disinvestment and declining services jeopardizes the entire borough. To combat the problem of neighborhood decay and mass abandonment, I would urge the Committee to consider a massive neighborhood preservation plan, perhaps modeled along the lines of H.R. 9688 pending in the House Banking Committee. In essence, such a program would have the following features: Five year plans of improvement would be devised for key transitional areas. Designated neighborhoods would them qualify for a new FHA imortgage insurance program to enable refinancing of existing property and modest rehabilitation. I believe this program should contain a provision for a shallow subsidy where necessary, which is not in the House bill, to help defray interest costs to a limited extent. Non-profit community groups and tenant cooperatives would be eligible for housing relief. I believe this should also include limited dividend sponsors. The second major tool available to designated neighborhoods (under the overall plan) would be 90 percent grants for improvement of essential neighborhood services such as police, sanitation, lighting, etc. I have only touched on the outlines of a neighborhood preservation programs but I believe it is essential that legislation be enacted along these lines. MANAGEMENT AND MAINTENANCE We are paying the price today for almost total neglect of management/mainte nance initiatives in connection with both new and existing housing for low and moderate-income families. Inadequate management/maintenance has caused untold grief and expense to many thousands of tenants in my State and has been a major stumbling block to housing revitalization in depressed communities. Production without adequate maintenance is tantamount to pouring money down a hole. Recent studies conducted by NCHP and the Center for Community Chang have highlighted this void. It is time, in my opinion, for the Federal govera ment to launch a multi-faceted program that will (1) train poor people, ret erans, and other underemployed citizens to manage low and moderate-income housing; (2) create a new private industry of management/maintenance enterprises able to handle low and moderate-income projects efficiently on a large scale (3) build into the development production process a greater concern for management/maintenance considerations: (4) support through technical as sistance and seed money loans, minority management/maintenance programs and enterprises; and (5) provide tenant counseling during pre-occupancy and Occupancy periods. H.R. 9688 contains many of the above concepts and I believe the Commit tee should consider adding them to any bill reported to the Senate. REVISIONS OF INTEREST SUBSIDY PROGRAMS Essential to any comprehensive, balanced program of production and preser vation must be reform of subsidy mechanisms. Inherent in the existing pro grams is a basic injustice in the way that public monies are now distributed for housing purposes. We must face up to the fact that low and moderate-income families will not be able to live in these privately-generated units without some form of subsidy. Unfortunately, the present subsidy system is tied to debt service. Yet, other costs-particularly operating expenses-are increasing at a faster rate than co struction costs. The result is that subsidies do not reflect the true cost of many thousands of needy persons who are ineligible under the prevailing artificial standards suffer the consequences. What is needed, in my view, is a simplified subsidy formula computed of the difference between a percentage of income and total housing cost. In other words, the 236 subsidy program or its substitute should be altered-along the lines of the leased public housing or rent supplement programs to reflect th difference between an economic rent and a percentage of tenant's income. Ulti mately this could lead to the housing allowance which was passed last year on an experimental basis and which should be expanded on an experimental Such an approach will not only eliminate arbitrary and discriminatory in equities in the present system but also will have the salutory effect of stimu lating production efforts by free enterprise and making publicly-assisted hous basis. ing more attractive in suburban communities. COMMUNITY DEVELOPMENT I support the concept embodied in H.R. 9688 of housing block grants to states and metropolitan housing agencies which would be created to determine housing needs in their respective areas. One part of the proposal in H.R. 968 which I particularly favor is the allocation of funds to any jurisdiction in which subsidized units are to be located to provide a payment of up to $3,000 per unit to cover part of the cost of providing public utilities and services needed to serve the additional housing units. This concept is very similar to my own bill, S. 609, which is pending in this Committee and which would provide or supplementary Federal grants to localities which make an effort to develop rograms to increase low-cost housing. My bill would also deny Federal assistnce under HUD programs to those localities which exclude publicly-assisted ousing for low and moderate-income persons through restrictive land use ractices. I also support the block grant concept embodied in Senator Sparkman's bill, 2333. This bill is admirable in that it provides $8.8-billion over a three-year eriod and still requires a prior statement from a locality asking for funds etailing its program over such three-year period. The Sparkman bill also contains equirements that communities have programs to meet housing needs of low and oderate-income families and carry out systematic code enforcement. I believe hat both of these prerequisites are important in any housing program. BUILDING SCIENCES Lastly, I would like to call the attention of the Committee to S. 1859, my bill o create a National Institute of Building Sciences. The absence of an auhoritative national source to advise the housing industry nd local authorities as to the latest technological developments in building naterials and construction techniques and to propose nationally acceptable tandards for local building codes has proven to be a great obstacle to efforts o meet the national housing goals set forth in the Housing and Urban Developnent Act of 1968. Moreover, the lack of a system of uniform building code tandards increases the cost of construction and inhibits innovation in building echniques. The resulting fragmentation in the housing industry is clearly not in he public interest. My bill seeks to meet these problems by establishing a nongovernmental, on-profit corporation which would develop and publish standards affecting building materials and local building codes; would promote and coordinate tests and studies of new building products and construction techniques; would provide research and technical services with respect to such materials and techniques; and would assemble and coordinate all present activities in this area. I believe that my bill has the support of all the organizations concerned with construction techniques and building materials and standards who have reviewed he bill. I hope that the Committee will include this concept in any legislation finally approved. This Committee has always taken an enlightened approach to solving the massive housing problems confronting the country. This year many new and innovative proposals are before the Committee and I would hope that many of these proposals will be embodied in any final legislation approved by the Senate. We desperately need an improved Federal housing program to supply the needed housing-so vital to the health of the American society-to our people. The CHAIRMAN. Well, I thank you very much. You have given us some very helpful statements and discussion as you always do. Senator JAVITS. I thank the Chair. The Chair is most gracious to have indulged me. The CHAIRMAN. Thank you very much. We appreciate that. This concludes the hearing for today. The committee will stand in recess until 10 o'clock in the morning. (Thereupon, at 12:15 p.m., the subcommittee was recessed to reconvene at 10 a.m. on Friday, September 17, 1971.) 1971 HOUSING AND URBAN DEVELOPMENT LEGISLATION FRIDAY, SEPTEMBER 17, 1971 U.S. SENATE, COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS, The subcommittee met, pursuant to recess, at 10:05 a.m., in room 5302, New Senate Office Building, John Sparkman (chairman of the committee), presiding. Present: Senators Sparkman, Mondale, and Stevenson. The CHAIRMAN. Let the committee come to order, please. We are going to have to move fast this morning. The Senate is already in session. There will be a motion to table, most likely, the draft conference board at 11 that may break us up, so I'd like to get going. Our first witness this morning is Mr. Carter Burgess, chairman of the board of the National Corporation for Housing Partnerships. Mr. Burgess, we are very glad to have you with us, again. Mr. BURGESS. Good morning, Mr. Chairman. The CHAIRMAN. We have your statement and, as you know, it will be printed in the record in full. You may present it just as you see fit. STATEMENT OF CARTER BURGESS, CHAIRMAN OF THE BOARD, NATIONAL CORPORATION FOR HOUSING PARTNERSHIPS Mr. BURGESS. Mr. Chairman, I have heard your comment about speed this morning, so I'll try to mesh with that desire. I have appeared before you last year on this bill. We continue to support it vigorously at the National Corporation for Housing Partnerships. In my statement I emphasized some things that we would like to see attended to in this bill. We would like to see the profit and risk allowance specified rather than kept on an unspecified basis. We would like to see the mortgage limits and the other limits be prescribed more on a sectional basis in this country so that housing can be provided in those areas that have different cost indications than others. We would like to see the same principle applied to the various rent limits so that we can have better mixes of families ranging from lower income to somewhat higher income, but those high-income occupancies not impeded by the economic conditions that vary over our country. Importantly, we'd like to see a better standard of amenities placed in many of these homes. I am particularly interested in air conditioning in many parts of our country. I happen to think that these amen |