HOUSING AND URBAN DEVELOPMENT LEGISLATION-1971 WEDNESDAY, SEPTEMBER 8, 1971 HOUSE OF REPRESENTATIVES, Washington, D.C. The subcommittee met, pursuant to recess, at 10:05 a.m. in room 2128, Rayburn House Office Building, Hon. William A. Barrett (chairman) presiding. President: Representatives Barrett, Ashley, Gonzalez, Reuss, and Widnall. Mr. BARRETT. The meeting will come to order, please. We have other meetings this morning and a number of the members are attending them. There is also a hearing on a very important piece of legislation in the Ways and Means Committee. and that m However, we will proceed now; our members will come in very shortly. Today we resume our hearings on the 1970 housing legislation. These hearings will be concluded on Friday, the 17th. Mr. Charkoudian, will you please come forward, and all other witnesses who desire to testify, we would like them to come forward, also. Mr. Charkoudian you may proceed anytime you are ready, but we do want you to feel at home here; and whatever way you desire to offer your testimony you may do so, and we will be glad to receive it. STATEMENT OF LEON CHARKOUDIAN, COMMISSIONER, DEPARTMENT OF COMMUNITY AFFAIRS, STATE OF MASSACHUSETTS, REPRESENTING GOV. FRANCIS W. SARGENT AND THE NATIONAL GOVERNORS' CONFERENCE Mr. CHARKOUDIAN. Thank you, Mr. Chairman. Mr. BARRETT. Would you pull the mike closer to you so that everyone can hear you. Mr. CHARKOUDIAN. I head the Massachusetts Department of Community Affairs and I am here for Francis W. Sargent, Governor of the Commonwealth of Massachusetts on behalf of the National Governors' Conference. Before going into the formal testimony, Mr. Chairman, I should like to commend your Housing Subcommittee for producing its bill this year. Your extensive research, culminating in this bill, has shown that the Congress has developed an expertise in this area centered in the past in the administrative branch. The work leading to this particular bill has produced reports which are extremely valuable to all of us, both on the national and local level. Today I will not be discussing all aspects of H.R. 9688 but rather some of the titles which are of particular concern to the National Governors' Conference. I would like to begin by discussing title V, the housing block grants to States and metropolitan housing agencies. Essentially this aspect of the bill would make up for glaring deficiencies in previous Federal and local housing programs. In our analysis of title V, we recognize there are three primary goals which we enthusiastically endorse: First, the reform of the present housing subsidy delivery system in order that the public policy-type decisions which are now made between private sponsors and FHA will once again be, as they should be, located in the public sector. Second, the unit production goals should not be the only criteria in the housing program of this Nation. Rather, as all of us have always expected and known, the location of units and their proximity to employment and adequate public facilities are essential considerations. Third, title V places a heavy responsibility on elected State and local officials. Today the Federal subsidy programs tend to be operated by either private, nonprofit, limited-dividend corporations or the quasiautonomous housing authorities. While certainly they have done good work over the past 30 years, the fact is that the locally elected officials do have a responsibility in the housing area and this particular bill finally makes this very clear and places the responsibility with them. While we support and applaud the goals of title V, we do have reservations regarding the mechanisms established to achieve these goals. Title V requires that the plans developed by the State and metropolitan area be reviewed by the Secretary of HUD to determine whether or not each plan substantially complies with the requirements of title V. There is a very real danger that the Federal Government, Federal Department of Housing and Urban Development, will second guess those plans which have been developed by local and State officials. We have seen in the past how the heavy hand of the Federal bureaucracy tends to second guess or to review in too fine detail the work of the local officials, to the detriment of Federal programs. Local officials, for their part, sometimes use Federal review to let the Feds decide a tricky or difficult issue and duck a problem which really should be theirs. We feel that this responsibility belongs properly with the public officials. Title V also provides for insensitive payments of some $3,000 over a 10-year period for each unit of housing built. We have reservations on this because there is no easily determined method for deciding whether the central city or suburban areas get the incentive payments. Second, there is the problem of existing housing that is subsidized by Federal and local governments; should these units not also get an incentive payment? How can we reward only those who build from now on and thereby penalize the ones who have already borne a disproportionate share of the responsibility? Moreover, incentive moneys in themselves might not overcome the crucial issue in the acceptance of and the willingness to develop subsidized housing on the local level. The most important determinant of acceptance of publicly assisted housing seems to be the existence of well managed units or a history of well managed units either within a town or neighboring towns. This is acknowledged by an earlier title, title III of proposed legislation, counseling in improved management activities. However, we might suggest that the requirements for training of management officials on the local level and for counseling of tenants be made mandatory before the Secretary of Housing and Urban Development approves any units of housing for a particular region or State. Finally, in title V, the proposal earmarks 80 percent of the available housing subsidies to metropolitan areas and 20 percent to State agencies. We would recommend that this requirement of earmarking be deleted from the bill because, if for no other reason, there are States where the housing need may occur in larger proportion outside of the metropolitan areas. Going on to title VIII, the urban development bank, the National Governors' Conference will be meeting next week and discussing the whole issue of the municipal bond market. We do not believe that it is possible for the National Governors' Conference to support the urban development bank proposed in title VIII of H.R. 9688. There is a growing sentiment in Congress to restructure the municipal bond market. For this reason, the National Governors' Conference Committee on Executive Management and Fiscal Affairs will be recommending to the total conference the following criteria which I would like to read at this time regarding the municipal bond area: These criteria are: (1) The use of any Federal credit assistance programs for State and local governments should be entirely voluntary. (2) Such assistance should be free of Federal interference and intervention in matters of State and local concern, (3) such assistance should be simple, dependable and free of delay; and (4) such assistance should not be viewed as an alternative to Federal grant assistance where the latter is appropriate and necessary. Now, the urban development bank proposed by title VIII does not meet these criteria. However, the proposals in title VII, the action of a Federal subsidy making up the difference between a market rate of a taxable bond and the rate of a nontaxable bond, is and does meet the criteria of the National Governors' Conference and, therefore, we would recommend that section. Turning lastly now to title IX, planning and management section of he bill, the goals of this title, improvement of the decisionmaking capabilities of State and local elected officials and provison of funds for modernization of these governments, cannot be opposed by anyone before this subcommittee. These goals were clearly discussed and recommended and passed in last year's work done in regard to the Ash Council. The National Governors' Conference, in a policy adopted in August 1970, stated that assistance should be provided to plan comprehensively at the interstate, regional, metropolitan, and local levels, to encourage local government to cooperate in solving areawide problems through comprehensive planning, review and coordination, to foster their intergovernmental attacks on problems of national, rural and urban development, and to etablish a method for exchange of development forces among local, State, and Federal Governments. We wish to go on record in support of the objectives of title IX, planning and management, but we do not feel that certain amounts of the funds should be earmarked for modernization of local government and other amounts are for housing purposes. In addition, we do not feel that the moneys for this generalized purpose of comprehensive planning and modernization of local government should necessarily come through the Department of Housing and Urban Development. The Department of Housing and Urban Development is very functionally very much oriented toward housing and community development, and should, in fact, carry out that mission; but that is different from an effort at generalized governmental reform on the local level and from comprehensive planning considerations beyond just the physical aspects of community development. It is for that reason that I have appended to my prepared statement, which I shall submit, a two-part legislative proposal as an alternative to title IX or H.R. 9688. The first part would establish within the Executive Office of the President a $100 million planning and management program. Funds would be allocated to the States and through them to the localities. by means of a statutory formula. The second part of this proposal would create within the Department of Housing and Urban Development a functional community development and housing planning program which would be tied to 1.5 percent of the funds appropriated for community development purposes under title VI of H.R. 9688. In conclusion, Mr. Chairman, I would like to again commend the Subcommittee on Housing for its work. I would like to add that we in Massachusetts have a State program for housing which, in many respects, over the past 20 years has paralleled the Federal Government's programs, including a program of State subsidy for public. housing and more recent programs of rental assistance paralleling the Federal program of leased housing. Most recently this year, and it is for this reason that I find the work of the subcommittee so helpful, this year my department has spent considerable effort in developing statewide housing targets for the Commonwealth as well as allocating these targets among the particular regions. This type of legislation would be very welcome to those of us who are working in this particular area. Finally, in Massachusetts, this year we are working on a program of establishing a housing management institute. Your committee has shown the need for developing a capability to manage the many units which we are now finally producing in this country. The private sector management capabilities is presently inadequate to meet increasing needs, especially in the areas of subsidized units for people of moderate and low income. So for all these reasons, Mr. Chairman, I am very happy to be here to be able to testify before your subcommittee on behalf of Gov. Francis W. Sargent and the National Governors' Conference. (Mr. Charkoudian's prepared statement with attachments follows:) PREPARED SPATEMENT OF LEON CHARKOUDIAN, COMMISSIONER, DEPARTMENT OF COMMUNITY AFFAIRS, MASSACHUSETTS, REPRESENTING GOVERNOR FRANCIS W. SARGENT AND THE NATIONAL GOVERNORS' CONFERENCE The purpose of this testimony is to respond to the legislative initiatives of the Subcommittee on Housing which are contained in the proposed "Housing and Urban Development Act of 1971" (H.R. 9688). Before commenting on specific provisions of H.R. 9688, we wish to commend the Members of this Housing Subcommittee for developing a Congressional alternative to housing and community development legislation submitted by the Executive Branch. The investigative research which culminated in the introduction of this bill will strengthen the arm of the Congress in dealing comprehensively with the problems of housing and community development. Although the bill contains many parts, our comments will be limited to a few sections most important to State Governments. HOUSING BLOCK GRANTS TO STATE AND METROPOLITAN HOUSING AGENCIES (TITLE V) This proposal would authorize state legislatures to create state- and metropolitan-wide housing planning agencies representative of local elected officials which would be charged with the responsibility of developing a three-year housing program. The program would spell out the number of subsidized units to be built each year for three years, the types of units to be built (single-family, multi-family, or public housing); the general income groups to be served; and the general location of the units. These state and metropolitan planning agencies would be eligible to receive housing subsidy block grants, discretionary funds and incentive payments if their three-year program were approved by the Department of Housing and Urban Development. In our analysis of Title V we recognize three primary goals which we enthusiastically endorse: First, the reform of the present housing subsidy delivery system in order that the essentially public policy decisions which are now made in private between FHA and the sponsor will be in the public domain. Second, a recognition that unit production goals should not be the only criteria by which subsidized housing programs are evaluated. Equally important is where those units are located, who lives in them, whether they are close to sources of employment, and whether adequate public services are made available. And third, Title V places a heavy responsibility upon state and local elected public officials for the development and maintenance of low- and moderate-income housing units. The goals of Title V are laudable and should be supported. We are not as certain, however, that the exact mechanism which would be established by Title V is the most appropriate for the achievement of these goals. |