Senator PROXMIRE. Just a quick calculation in my mind suggests to me that 60 percent of the cost of this is in your rents and about 40 percent is in a Federal subsidy. Is that roughly right?

Mr. STEWART. As far as the annual operations are concerned, the operating expense per year is $114,000 to pay operating and maintenance expense. The annual curtail and interest is $160,000 per year. Of the $160,000, at the beginning, of course, the interest part is higher. You begin at the level of about $100,000 in interest payments at the 3-percent rate. It drops down, and the payment of principal increases over the 40-year period.

So that the Federal subsidy is indeed quite substantial, and I want to make it quite clear, Mr. Chairman, and it is part of my purpose to express the appreciation of this community through me to you, your committee and the Congress, that without these combined programs the creation of this community for these people would have been impossible.

Most housing that has been created thus far, either under public housing or under the 221(d) (3) program, is either for small families, or for people at the moderate-income level. This is a project to demonstrate that under existing programs you can create truly worthwhile housing for large families at the low-income level.

Senator PROXMIRE. Are you suggesting that we don't need some of the more substantial provisions in the new legislation, for instance, that provide subsidy down to 1 percent in order to get more low-income housing?

Mr. STEWART. No, Mr. Chairman, I don't mean to suggest that. My purpose is limited here to saying that the programs that are now on the books, which programs are extended in the pending legislation and indeed further modified, the 221 (d) (3) program, the rent supplement program, and the public housing leasing programs, are sound programs that can be combined by people with a will to create worthwhile housing for low income large families.

Senator PROXMIRE. Let me just ask you: This was a five and a halfacre area that had formerly been a blighted area?

Mr. STEWART. Yes indeed, sir. It was.

Senator PROXMIRE. Formerly a blighted residential area?

Mr. STEWART. Blighted residential area.

Senator PROXMIRE. How many families lived in that area before? Mr. STEWART. Well

Senator PROXMIRE. How many families? Do you have any figures on that?

Mr. STEWART. We have.

Senator PROX MIRE. More than 199?

Mr. STEWART. We have had some estimates. There were fewer families who lived in that area than will occupy it when this project is completed.

Senator PROXMIRE. But at the same time only half of your units will be made available to people with the lowest incomes-is that correct?-who lived in the area?

Mr. STEWART. The way it works out, Mr. Chairman, is we accord first priority to those families, regardless of their income, who formerly lived in the area.

Senator PROXMIRE. I see.

Mr. STEWART. We take them as we find them, whatever their income

might be. And those whose income falls below the ceiling for the 221(d) (3) program are accepted.

Now, it happens that, of that group of 199 families, 99 require either rent supplement or public housing leasing, and the balance in our judgment will be able to occupy these houses and pay the full rent, though in some instances it will take somewhat more of a percent of their income than the average experience shows to be prudent.

Senator PROXMIRE. So here you have a case where you have had urban renewal and you have had the removal of a very substantial number of families, and yet with present programs you are able to relocate these families in new, attractive homes that are greatly improved.

Mr. STEWART. Indeed, Mr. Chairman.

Senator PROXMIRE. That is a remarkably impressive story.
Mr. STEWART. The second-

Senator PROXMIRE. Sursum Corda. What group is this?

Mr. STEWART. Sursum Corda is a nonprofit corporation which was formed by three principal components: Gonzaga High School, which is a private high school conducted in the inner city by the Jesuit Fathers, St. Aloysius Catholic Church, which is the parish church located very near to this location and which is under the jurisdiction of Cardinal O'Boyle, the Archbishop of Washington; and the Academy of the Notre Dame, which is a convent of the Sisters of the Notre Dame, who teach in the St. Aloysius School.

In addition, in the sponsoring group, there are elements of Georgetown University.

The project got started because students from Georgetown, in a program called a community action program, were tutoring young people in the neighborhood. They would come down from the college to help the young people in high school with their lessons. They were invited into the homes of these young people so with their own eyes they saw the wretched conditions that existed in those homes, the housing itself, which was dilapidated and substandard and not well heated in the wintertime and for which very high rents were being paid.

They came to the adult communities of Georgetown, including the Alumni Association, and said, "You should do something about this. We cannot as students because we are transients, but you people who are here permanently, this is something you must go to work on." This got us started.

And the second part of my presentation is and it will relate to what I have just said-is to say to you, Mr. Chairman, in meaningful terms, something about the quality of the administration of these programs by the FÍA.

Our group consists of volunteers-none of us is receiving a salary or anything of that sort-who knew nothing about housing or this kind of a problem or how to go about it. We had an idea and a conviction of something that we wanted to do. So we went to the local FHA office, the District of Columbia insuring office of FHA beginning in the spring of 1965.

And I wonder if your committee is aware of the great amount of time that the local FHA offices actually consume in giving guidance to groups like ours. They educated us and guided us first in the forming of a sound nonprofit corporation with the right type of sponsors in order to qualify under these programs.

Senator PROXMIRE. So you had brilliant people involved. You had a real elite group at work. Mr. Fitzpatrick, formely general counsel to HHFA, I understand, and one of the architects of the 1949 act, has contributed greatly here.

Mr. STEWART. Indeed our professional team is superb, and I am not minimizing their contribution.

Senator PROXMIRE. I am going to have to go, unfortunately, and I do apologize, because this is one of the most interesting and intriguing expositions I have seen.

Senator Mansfield has called me to the floor, because I have to manage the gold cover bill. Senator Sparkman isn't there. I don't have any alternative except to ask you to put what you can in the record, and I will certainly read it very carefully and call it to the attention of the other members of the committee.

The gold cover bill is being debated right now, and the floor manager is here instead. So I have to run to the floor.

Mr. STEWART. May I conclude then in a sentence?
Senator PROXMIRE. Yes.

Mr. STEWART. At every level of the FHA, in the District insuring office, in the regional office in Philadelphia, and in the Commissioner's office and his assistants' here in the national headquarters, we have received superb assistance every step of the way. We have not been delayed by red tape or lack of imagination or obstructionism. The very contrary has been the case.

In each of the key decisions that had to be made we received prompt, straightforward decisions. We have received throughout this very imaginative guidance. And if the other groups in the country trying to do this kind of thing take up as much of the time of the FHA at every level as we have, they are spending an enormous amount of time just helping the citizens' groups learn how to do this kind of job.

And I wanted to stress that.

When we filed for our mortgage insurance, the final step, the FHA cleared that and approved it in 6 weeks' time.

Now, one reads in the paper criticism of the FHA and which I in my experience have found to be so unfair, so unrealistic in connection with what we have experienced that I wanted this opportunity to tell you of the excellent job they have done in our case. On the basis of our actual experience, such criticism seems most unfair. More emphasis and public recognition should be given to the constructive work and cooperation which FHA gives to nonprofit housing sponsors and which makes it possible for such sponsors to develop projects like Sursum Corda; projects which meet the need in the most difficult area-large families of very low income who need dwelling units containing four, five, and six bedrooms.

Senator PROXMIRE. Thank you very, very much. I most appreciate your presentation, as I have said.

The committee will stand in recess until tomorrow morning at 10 o'clock. Mr. Andrew Heiskell, chairman of Time, Inc., and president of Urban America, will be our first witness. We will have other witnesses.

(Whereupon, at 12:18 p.m., the subcommittee recessed, to reconvene at 10 a.m., Friday, March 15, 1968.)

(The material submitted for the record by Mr. Stewart follows:)