Mr. KLUTZNICK. We can call them that. I think it is old rose and something else.

The CHAIRMAN. Well, whatever they are, what do they represent? That is the point.

Mr. KLUTZNICK. This part of the bar-$2,084,000,000-represents the war-housing units, and this part-$761,000,000-represents the low-rental units.

Senator BUCK. Can your war-housing units be used for some good purpose?

Mr. KLUTZNICK. Yes, some of them are presently being used to good advantage for veterans' housing. I will discuss that later in my

statement.

The importance of presenting this introduction is that quite frequently people are found to confuse the two programs since they are under the jurisdiction of the same agency.

The basic long-term responsibility of the FPHA stems from the powers and duties vested in the United States Housing Authority under the United States Housing Act. The objectives and the character of that program are entirely different in concept and execution from the war-housing responsibility to which I have alluded.

For example, the war-housing program was a federally created, directed, and supervised program in the main, and as a result we have a large area of misunderstanding as to the low-rent program, which is really a program in which Federal assistance is made available and which is in every sense a local program.

Our job under the United States Housing Act has been to provide assistance to make possible decent housing for low-income families not adequately served by private enterprise. As a corollary, it has been our function to encourage and provide for the elimination of slums and blighted areas and to move people from such depressing accommodations to the new housing which has been created.

In order to further illustrate what the low-rent program is we have selected what we think are rather good examples of what was done under the United States Housing Act, with which S. 5192 concerns itself primarily. Here [indicating] you see "before" and "after" pictures in New Orleans, La. The site to the left was a slum site, selected and acquired by the local housing authority and cleared by the local housing authority. This housing on the right was provided for families of low income which came from housing circumstances comparable to those illustrated in the "before" picture. This was done by the housing authority of the city of New Orleans with Federal aid and assistance provided under the terms of the United States Housing Act.

(See illustrations which follow Mr. Klutznick's statement.) Senator HICKENLOOPER. May I ask a question?

Are those two pictures taken from the same place or are they only intended to show the general area?

Mr. KLUTZNICK. They were taken from the identical site. This is the same place.

Senator HICKENLOOPER. Well, one of them has a large tree there and in the other it isn't shown at all.

Senator BUTLER. That is a very fast growing tree.

Mr. KLUTZNICK. In Louisiana they grow faster than they do in Nebraska or Iowa, but aside from that, this is not exactly the same place, but it is part of the same site.

Senator BUTLER. You have it a little farther away from the watertank in the other one.

Mr. KLUTZNICK. It is the same area, the same site. Some part of this will be found in the same place. We are not representing them as being the same block, not at all. We would not expect to select them quite that close.

Senator HICKENLOOPER. Well, I didn't mean to be technical. I just wanted to be sure you were giving us the same area.

Mr. KLUTZNICK. I am sure that is the same area. The people were moved out, these houses were torn down on this site, and the new housing erected. The area is much larger than is indicated by these photographs.

Senator TAFT. Are those the same children in the picture?

Mr. KLUTZNICK. I don't think I will venture a guess on that. They may well be. This housing was provided on that site.

Senator TAYLOR. Do the same people live in these houses?

Mr. KLUTZNICK. Generally speaking, we are not claiming that the same people that lived in those particular houses befcre are living in the "after" houses, but they are people who came from a similar environment, as we will illustrate later.

Senator TAYLOR. In other words, they were removed out of the slums and given decent places to live?

Mr. KLUTZNICK. That is right.

Senator TAYLOR. These people that were originally in the slums, were they moved to other housing projects?

Mr. KLUTZNICK. They were entitled to a preference to come into this new housing. Many of them moved to other housing projects. Some of them may have moved to other substandard houses, but they had a preference to come into this housing upon its completion. Some of them may have moved to reasonably good private houses. This next illustration [indicating] is Yonkers, N. Y., illustrating a different type of architecture and a different area of the country. (See illustration which follows Mr. Klutznick's statement.) Senator HICKENLOOPER. That still is the same immediate area? Mr. KLUTZNICK. That is right. This one shows a "before" and "after" picture in Austin, Tex., a different type of house; different type of development. The same general site. This is housing built on the same site as the slum that was cleared. These children are not the same.

(See illustration which follows Mr. Klutznick's statement.) Senator BUTLER. The trees grow rapidly in Texas, too.

Mr. KLUTZNICK. There may have been some on the other side of those houses.

Senator HICKENLOOPER. The thing that I am concerned with is what happens to the people that occupied those houses in the slums. Now the question was asked by, I think, Senator Taylor, a moment ago, Do those people get the benefit of these houses, or are these just nice houses for anybody that wants to move into and occupy? What happens to the people who lived in these slums before?

80525-46-pt. 1- -13

Mr. KLUTZNICK. Senator, later in my testimony I will develop the character of housing that the families came from that are presently in the houses. The only reason I cannot categorically say that the families that lived in this housing before are in this housing now is because we have so much more of this substandard type than we have of this good type.

Senator HICKENLOOPER. I mean when you go into an area and clean out these slums, do you give the people who had lived in all the squalor and filth there, an opportunity to go into these new houses?

Mr. KLUTZNICK. They are entitled to a preference, provided their income is at the proper low level.

Senator HICKENLOOPER. Well, if it is not at the proper level?

Mr. KLUTZNICK. If it is above a certain level, they are not entitled to live in these houses.

Senator HICKENLOOPER. Well, suppose their income is below the proper level; suppose that is one of the reasons that they lived in this condition; what happens?

Mr. KLUTZNICK. Then they are entitled to a preference to come into this housing, and they do in many instances.

Senator HICKENLOOPER. At the same rate they paid for the other? Mr. KLUTZNICK. At substantially the same rental. That is the purpose of the subsidy program.

The next photograph shows a rather famous southern slum, the Yamacraw at Savannah, Ga., and this is the new Yamacraw Village development in Savannah, Ga.

(See illustration which follows Mr. Klutznick's statement.)

I gave you these examples of "before" and "after" pictures to indicate generally the background of the program under the United States Housing Act, as distinguished from the program under the Lanham Act or the war-housing program.

This low-rent-housing program definitely concerns itself with local authority, local supervision, and local direction. The Federal Government merely renders assistance to local housing authorities to clear slums, and to rehouse families of low income that come from substandard housing conditions in decent housing, as illustrated here. Senator TAFT. In the entire United States there are only 160,000 of those units?

Mr. KLUTZNICK. There are 194,000 that will be provided when 23,000 that are presently deferred are completed, and when the warhousing units that were created under Public Act 671 are converted back to low-rent use.

Senator BUCK. You are speaking of individual family dwelling units now?

Mr. KLUTZNICK. Individual family dwelling units. Not 194,000 projects, but 194,000 houses. It may mean apartments or housesmultiple houses.

This chart 3 brings us exactly to the question Senator Taft propounded. The total United States Housing Act program up to now completed or scheduled for completion is 194,000 units; 129,000 of them are presently devoted to low-rent use and 65,000 to war use. Of the 129,000 units devoted to low-rent use, 106,000 represent lowrent housing completed without the aid of war priorities or recourse. to the provisions of Public Law 671; and 23,000 are deferred and not yet in final completion. The deferred units are in various stages of

development, such as preliminary study, actual sites acquired, slums eliminated, and so forth. They were deferred because of the war and the unavailability of materials for their completion. Some of those are now in the process of reactivation, but we are finding it difficult to complete some of them under the terms of the existing legislation. (See chart 3 which follows Mr. Klutznick's statement.)

Senator BUTLER. Mr. Klutznick, speaking of the 194,000, total over-all units, do you have any way of telling us what percent that is of all such substandard housing in the United States?

Mr. KLUTZNICK. Well, sir, it is a very small percentage. The Administrator of the National Housing Agency yesterday presented testimony on that. I had hoped to avoid going into that because it would be merely a duplication. As far as urban substandard units are concerned, there are various estimates. One can say there are seven to eight million such units in the country. That doesn't mean there are seven to eight millions units occupied by people whose income would make it necessary for them to live in substandard houses, if houses could be provided for them. That is about the best estimate I can give for the urban centers.

The CHAIRMAN. What happens to the 65,000 war units?

Mr. KLUTZNICK. These dwelling units were developed with United States Housing Act funds but for war use; 12,000 were developed under the United States Housing Act, with a preference to warworker occupancy as a condition of securing priority assistance; the balance of 53,000 was provided under an act which Congress adopted during the defense period-Public Law 671-which permitted use of the United States Housing Act fund temporarily for war purposes. They were built in war centers, in areas where the President found an acute need for defense or war worker accommodations which could be met during the emergency with these developments, subject to the express condition that when the emergency ends they will be converted, upon Presidential finding in each case, to typical low-rent use. Now that the war is over, we are undertaking to convert those 65,000 units to low-rent use.

Senator TAFT. That can be done under the provisions of the Lanham Act?

Mr. KLUTZNICK. They were not built under the Lanham Act.
The CHAIRMAN. You will need money, won't you?

Mr. KLUTZNICK. No, we need no money for those, because those are virtually, with one or two exceptions, completed, and the funds were made available under the present $800,000,000.

Senator HICKENLOOPER. What opportunity do these people have to buy these units?

Mr. KLUTZNICK. These are rental units for urban centers. They have no opportunity to buy them. They are intended to house families in such a low-income bracket that they are financially not able to qualify for home ownership. They can only rent these because of the low rents made possible by the subsidy, you see. This has not been accomplished by any magical wand. There have been subsidy dollars placed into it to supplement their rent paying ability in order to give them decent housing.

Senator HICKENLOOPER. You are talking now about housing devoted exclusively to the substandard incomes that are not in situations where they can reasonably look forward to owning their own homes?

Mr. KLUTZNICK. That is right.

Senator HICKENLOOPER. What we are interested in is giving them an opportunity to raise their standard of income and eventually acquire a home for themselves.

Mr. KLUTZNICK. I agree with you entirely about that, but this housing is not intended for that class. It is only intended to reach the very low income group.

Senator TAFT. What is the average rental per room on that 194,000 units?

Mr. KLUTZNICK. Senator, I have a complete chart on rentals that I would like to discuss, if it is agreeable with you, when we go into that matter. I can refer to it now, if you wish. Roughly, it is $5 or $6 a month, including utilities.

Senator TAFT. That is near enough. That is what I was wondering. Mr. KLUTZNICK. $5 or $6 per room, including utilities.

Senator TAFT. So a four-room unit would be about $20 a month or $240 a year. Multiply it by about four-around a thousand dollarsfor a man with an income of about $960.

Mr. KLUTZNICK. Of course, if you take national averages-there is considerable variation-I would say $5 or $6 a room. We must bear in mind that there are areas where the dwellings rent for as low as $3 a room, and in Puerto Rico land and utility projects rent for $1.50 a month.

Senator TAFT. You mean no house at all?

Mr. KLUTZNICK. No house at all. I think we have a better breakdown on that by areas which will illustrate what happened during the war as well, but generally speaking, your conclusiou is correct. Senator BUTLER. These units are all built by private funds?

Mr. KLUTZNICK. They were built under the United States Housing Act, and under the terms of that act 90 percent of the financing was authorized to be direct Federal loans. But by developing a market for local authority bonds we have succeeded in reaching a point now where 36 percent of the permanent financing of the housing comes from private sources. We hope, if the financing amendments in this bill are adopted, that 100 percent financing will be done with private funds.

Senator TAFT. But this is done with private funds based on the security of the Federal subsidy which is going to be paid.

Mr. KLUTZNICK. Oh, yes; there is no question about that.
Senator BUTLER. That is what I had in mind.

Mr. KLUTZNICK. The annual contributions provide a security for housing authority bonds rather than a guaranty.

Senator HICKENLOOPER. A rose by any other name

Mr. KLUTZNICK. It is a different name and it is a different rose. Does that answer the questions with respect to those charts?

Now, the total cost of the program under the United States Housing Act is estimated at $895,000,000, as shown by chart 4. There you see the break-down related to the different types of units provided. That portion which was developed originally and mainly prior to the defense and war program absorbed $576,000,000 of this total, while those projects developed primarily under war conditions absorbed $319,000,000 of the total. In later portions of this statement when we refer to specific provisions of the bill, the unit costs will be detailed so the committee may have an understanding of the variations in different geographical centers.