copy of that letter. I really wrote it to him on the occasion of his being designated by the President as chief economic spokesman for the administration. I thought it would be well to get our hat in the ring right quick after he was named.

I wrote it on June 30. By the way, I haven't had a reply yet. This reminds me of a story that Tom Heflin gave voice to. He was a great storyteller. Of course, he fell out with the Democratic Party back in 1930, and a new Democratic administration came in in 1932. Tom Heflin was bitterly anti-Catholic, and the Postmaster General, who handled the patronage, was Jim Farley, a highly decorated Catholic layman. But that didn't deter Tom Heflin from applying to Jim for a job, and he wrote him a letter, and it didn't get any answer, and he wrote him again, and he didn't get any letter, so Tom wrote him a third time and he said, "Dear Jim: I have often wondered if Paul ever received an answer to his letter written to the Ephesians." Whereupon, Jim Farley immediately gave him a job.

But anyhow, I shall be glad to supply you with a copy of this letter, and anything you can do to solve the situation, I shall greatly appreciate it.

Secretary ROMNEY. Senator, there is one comment. The bill would permit a test of the free market interest rate, as long as there were no discounts involved, that is negotiated interest rate. I think a testing of what would happen if you didn't have an interest rate ceiling might be a very useful thing, along with the ceiling and the discount point problem.

The CHAIRMAN. That is all in the future. We need immediate relief. Secretary ROMNEY. I realize that.

The CHAIRMAN. When the committee recesses, we will recess until 10 o'clock tomorrow morning. At that time we will have Mayor Alioto of San Francisco, and Mr. Robert Maffin, executive director of NAHRO, as our witnesses.

Thank you very much, gentlemen. The committee stands in recess until 10 o'clock tomorrow morning.

(Whereupon, at 12 noon, the committee was adjourned, to reconvene at 10 a.m., August 3, 1971.)

1971 HOUSING AND URBAN DEVELOPMENT

LEGISLATION

TUESDAY, AUGUST 3, 1971

U.S. SENATE,

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS,
SUBCOMMITTEE ON HOUSING AND URBAN AFFAIRS,

Washington, D.C.

The subcommittee met, pursuant to recess, at 10 a.m. in room 5302, New Senate Office Building, Senator John Sparkman, chairman of the committee and chairman of the subcommittee, presiding.

Present: Senators Sparkman, Stevension, Tower, Packwood, and Taft.

The CHAIRMAN. Let the committee come to order, please.

Our first witness this morning is the Honorable Joseph L. Alioto, mayor of San Francisco, Calif., representing the U.S. Conference of Mayors and the National League of Cities. We are glad to welcome you back to the committee. You have quite an asignment representing both of those great organizations.

STATEMENT OF JOSEPH L. ALIOTO, MAYOR, SAN FRANCISCO, CALIF.; ACCOMPANIED BY JOHN H. TOLAN, JR., DEPUTY FOR DEVELOPMENT; ENEAS J. KANE, PRESIDENT, NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS; AND DAVID F. GARRISON, LEGISLATIVE COUNSEL, NATIONAL LEAGUE OF CITIES AND U.S. CONFERENCE OF MAYORS

Mayor ALIOTO. That is quite a crowd, no doubt about it, and I am very, very happy to be back before this very powerful committee. After I saw the great performance that was put on by you two gentlemen yesterday, and the result you achieved

The CHAIRMAN. We are still trembling.

Mayor ALIOTO (continuing). I can only hope that the fate of S. 2333 will be as successful, but not quite so close. We don't want to get nervous right up to that very last moment.

We are very, very pleased to be before this committee this morning. The CHAIRMAN. You have seen these cartoons where some fellow had fallen and was caught hanging over the cliff by his bands. My hands still feel that way this morning.

Senator TOWER. I don't have any fingernails left.

Mayor ALIOTO. We are hoping this one, S. 2333, will not be quite the same kind of cliff hanger, and we are rather hopeful that it won't be. I do want to say that I am here, as you pointed out, representing

the U.S. Conference of Mayors and the League of Cities, two very, very fine organizations, headed by Mayor Henry Maier of Milwaukee and Mayor Richard Lugar of Indianapolis, and operated by two great and very sensitive executives, Mr. John Gunther and Mr. Pat Healy. I am pleased to represent them.

I have with me this morning, Mr. John H. Tolan, who has been known to you, Senator Sparkman, for many years. He is our deputy for development in San Francisco. Mr. Eneas Kane is director of cur housing authority, and Mr. David Garrison is legislative counsel for the League of Cities and for the Conference of Mayors.

We want to talk to you about S. 2333, and before doing that, I want to submit for the record a formal statement, dated August 3, 1971. We would ask leave to insert this in the record in its entirety.

The CHAIRMAN. It will be printed in full in the record. I will be glad for you to present it as you see fit.

(The statement, with attachments, follows:)

STATEMENT OF JOSEPH L. ALIOTO, MAYOR OF SAN FRANCISCO

Mr. Chairman, I am Joseph Alioto, Mayor of San Francisco, California. I am honored to appear before your Housing and Urban Affairs Subcommittee this morning on behalf of the National League of Cities and the United States Conference of Mayors. At present, I am serving as Co-Chairman of the Community Development Committee for the Conference of Mayors and I am a member of the Community Development Steering Committee for the League of Cities as well.

I am particularly pleased to have this opportunity to testify before this distinguished Committee today in strong support of S. 2333, the "Community Development Assistance Act of 1971", introduced by yourself, Mr. Chairman, on July July 22, 1971. Speaking not only for the League and the Conference but as the Mayor of San Francisco as well, I want to underscore the importance that this legislation has for mayors and other city officials all around the country.

As the members of this Committee know, both the League and the Conference have frequently called for a simplification and a streamlining of the many Federal categorical programs. More recently, in the area of physical development, we have urged that serious consideration be given to a comprehensive consolidation of HUD's basic "hardware" programs into a single community development block grant. Already during this first session of the 92nd Congress, three major proposals aimed at accomplishing this goal have been introduced. Of these three approaches, we vastly prefer that suggested by S. 2333. In fact, the policy positions of both the League and the Conference are essentially identical in their support for the basic elements of S. 2333. With your permission, Mr. Chairman, I would like to have those statements of position—both of which were agreed to in June of this year-inserted in the record at this point. In addition, Mr. Chairman, I would like at this time, to insert in the record an analysis of the Administration's proposal prepared by the NLC and USCM staff.

The first of these three proposals in time-Title I of S. 1618-was submitted by President Nixon under the rubric of "sperial revenue sharing". His bill. the Urban Community Development Act of 1971, would consolidate four major HUD programs-urban renewal, model cities, basic water and sewer facilities, and rehabilitation loans. It is our understanding that since the introduction of S. 1618, the Administration has officially amended the list of categorical programs to strike out the water and sewer facilities and to add in its place neighborhood facilities. H.R. 8853, introduced in the House by Congressman Widnall, reflects these changes.

As you can see from our policy statements, both the League and the Conference have several serious objections to provisions of the Administration's bill. First, we oppose an automatic distribution of these funds by formula. Our experience has been that we will always have a limited amount of funds nationwide for community development activities. An additional reality which we recognize is that the Congress will continue to insist on knowing about the manner in which these scarce funds are to be spent. Thus, we feel that each community

seeking community development funds should be prepared to file an application and to submit to some form of regularized review by the Federal government. At the same time, we continue to take issue with the unnecessarily complex approval process which is now required by HUD. Instead, we feel that S. 2333 strikes a more reasonable balance between these competing questions of national versus local control over the expenditure of categorical funds.

I hasten to point out that we mayors have historically supported the need for the various categorical programs, many of which we now seek to consolidate. Moreover, we continue to support the need for such categorical aid to urban areas, notwithstanding our plea for unencumbered funds through general revenue sharing or through any other similar mechanism. Such unrestricted money is drastically needed in addition to the continuation and strengthening of existing categorical programs such as the ones within the purview of this Committee. Our second objection to the Administration's proposal is-to quote from both the League and the Conference policy statements "That it would seriously jeopardize current expectations of future program growth in the many communities now participating in the various categoricals by confusing a community's need for sustained annual program levels with the liquidation of previous Federal commitments." Under his proposal, the President has assured all communities that they will be "held harmless"-that is, they will receive at least as many Federal community development dollars as they are now receiving through the separate categoricals. However, the Office of Management and Budget has made it clear that, from each community's maximum annual entitlement under the new program, will be subtracted any payments which the community receives during the year as a result of the liquidation of previous Federal commitments.

We have studied the actual effect of this procedure, Mr. Chairman, and we have found to our profound dismay that it would have the result during the early years of the new program, of reducing the amount of new, uncommitted funds flowing into some cities to a fraction of previous levels. Suffice is to say without going into further detail here that such a procedure-which we have ruefully come to call the "outlay problem"-would have disastrous effects upon the progress of community development in the bulk of our nation's major cities. The third, and equally important major concern with the Administration's bill is that, under the new program, communities under 50,000 population outside Standard Metropolitan Statistical Areas (SMSA's) would be relegated to dealing with the States and the Department of Agriculture for their future community development program needs under S. 1612, the President's rural community development special revenue sharing program. We mayors feel quite strongly that, to a large extent, the community development problems facing big cities differ only in degree from those facing smaller communities particularly those in the 20,000 to 50,000 population range. We would urge instead, that the continuing Federal response to the national problems of slums, blight and inadequate housing be centered in a single Federal line agency. As we indicated in our testimony before this Committee on July 13, we think that the agency should be the President's proposed new Department of Community Development. We recognize that if both the new Department were created and special revenue sharing for urban and rural community development were approved simultaneously, then our objections would become moot since the rural community development functions would be transferable to the new Department. However, we are as sanguine as the Administration seems to be about the prospects for early action on its special revenue sharing proposals in this vital area.

The fourth major objection to Title I of S. 1618 is that Model Cities is included as one of the programs to be consolidated. In later hearings before this Committee on omnibus legislation, we hope we will be permitted to describe the important achievements realized by Model Cities legislation to insure that each of the 148 Model Cities will be able to complete its full five "action" years. We insist, however, that Model Cities should not be considered for consolidation with the basic physical development programs administered by HUD. Not only is Model Cities primarily an experiment in improving the process of government within a sector of a city, but to the extent that Model Cities supplemental grants can be considered a "program", about 80 percent of these funds have been used for social service activities. Model Cities is not a physical development program and should not be merged with other programs which are.

All four of these objections to Title I of S. 1618 go to the very heart of the Administration's proposal. The second legislative approach in this area has been introduced in the House by Chairman Patman (H.R. 9688) but has yet to come officially before this Senate Committee. Title 6 of this bill would take the basic parameters of the Administration's proposal and improve upon it. The "outlay problem" which I mentioned earlier would be cured. Communities under 50,000 population would not be excluded from the new program. And while Model Cities would remain within the consolidation, it would be held apart for the purposes of funding within the block grant.

However, Chairman Patman's bill retains the basic components of the Administration's automatic formula distribution, a fatal flaw in our estimation. We recognize that certain details of the formula mechanism have been significantly improved. Nevertheless, we remain highly skeptical about automatic formulas which, by their inherent nature, fail to have the necessary flexibility to get the limited community development dollars to where the problems and the commitment to solve them are.

Thus, we come to S. 2333, the Community Development Assistance Act of 1971. As you can see, Mr. Chairman, from a careful reading of the policy statements of both the League and the Conference, our organizations are strongly in support of most of the basic components of your bill. I would like to spend the balance of my time outlining the reasons for our support for S. 2333.

To begin with, we feel that the Sparkman bill makes important recognition of the necessity to not only maintain but to strengthen the viability of our nation's many cities. And an important step in this process is to streamline the delivery system of the vital Federal categorical dollars that should be flowing to the cities. It is our best judgment that our Federal delivery system would be vastly improved by a movement toward more broadly defined and less narrowly administered categorical programs. S. 2333 would create a single, comprehensive community development block grant. All of the major physical development programs now administered by HUD would be consolidated-urban renewal, basic water and sewer facilities, neighborhood facilities and open space. Using this block grant approach, a mayor would be able to generate a more controlled, coordinated decision-making process regarding a wide range of alternative physical development choices. This kind of block grant approach would permit a mayor to exercise a greater degree of control over the setting of development priorities within his city.

While I support the trend toward local decision-making in this area and others, I am the first one to admit that it is simply not enough to transfer this power to a mayor and then expect miracles. Mayors just aren't able to make these kinds of priority decisions now, in large measure because of the deeply intrenched, fragmented institutional structure which greets each mayor when he takes his oath of office. Thus, to finally say that mayors must begin to make these policy decisions and to approve legislation such as S. 2333 to give them the framework for so doing is not sufficient. If we mean what we say, then we must be prepared to assist mayors further in taking control of the complicated structure that faces them.

As we indicated in our testimony before this Committee on July 13, we feel strongly that we must create a Federally funded executive management program. Such a program must be separate and distinct from such activities as functional (in this case, physical development oriented) planning programs, yet it should be retained within the confines of the new Department of Community Development. Under this executive management program, a mayor could receive funds to help him assemble the kind of personnel necessary to enable him to effectively exercise the basic policy-making power I have been trying to describe.

To continue, S. 2333 is significant because it recognizes the need for continuing to expand the size of the current authorization levels for community development programs. No matter how we design such a program or programs nationally, the final and inevitable arbiter of success is money. Under this bill, not only would we begin at a level above that authorized by the Congress last year but we would be assured of some further annual growth in the few years ahead. The bill authorizes a total of $8.8 billion to be raised over the first three years of the new program, with $2.5 billion in the first year, $2.9 billion in the second, and $3.4 billion in the third. While these figures may seem quite large, don't forget that we currently have over $3 billion in backlogged urban renewal applications alone. One of the most important features of the Sparkman bill is that it would establish the principle of continuity of funding for the community development activities of cities. Under the bill, a community must submit a three-year development plan and a one-year work program for approval by HUD. HUD would