HOUSING AND URBAN DEVELOPMENT LEGISLATION OF 1968 THURSDAY, MARCH 21, 1968 U.S. SENATE, COMMITTEE ON BANKING AND CURRENCY, SUBCOMMITTEE ON HOUSING AND URBAN AFFAIRS, Washington, D.C. The subcommittee met, pursuant to recess, at 10:03 a.m., in room 5302, New Senate Office Building, Senator William Proxmire presiding. Present: Senators Proxmire, Mondale, and Tower. Senator PROXMIRE. The Subcommittee on Housing and Urban Affairs of the Banking Committee will come to order. Our first witness this morning is the distinguished Senator from New Jersey, a member of this committee, Senator Harrison A. Williams, Jr. STATEMENT OF HARRISON A. WILLIAMS, JR., U.S. SENATOR FROM THE STATE OF NEW JERSEY Senator WILLIAMS. Mr. Chairman, in my capacity as chairman of the Senate Special Committee on Aging, I have seen first hand, not only the need that exists for housing for older persons, but for the creation of additional tools designed to meet that need. There is one section of the pending bill-S. 3029-that has special meaning for sponsors of elderly housing, section 106, assistance to nonprofit sponsors of low- and moderate-income housing. It was the intent of the Congress in creating the nonprofit sponsor program for elderly housing to encourage the active participation of churches, unions, fraternal organizations, and others, in underwriting such housing. Participation would, it was hoped, achieve two major goals: (1) it would bring about a strong private commitment to stand behind housing for the elderly; (2) it would provide additional hous ing units for the growing number of elderly persons. Recent Senate hearings have convinced me that we are in the midst of a housing crisis for the elderly. New and imaginative programs of housing construction have to be undertaken. Private, nonprofit groups stand ready to make a substantial contribution to the needs of the moment, but up to now, they have been unable to afford the necessary preliminary costs for housing construction. Regrettably, Mr. Chairman, no provision was made in the statutes making technical assistance available to nonprofit sponsors to the job Federal programs intended that they should do. As the sponsors will verify, a large amount of detail goes into the planning, design, and financing of housing projects. It is not surprising that often the available resources of the sponsoring group are not equal to the task. They become discouraged and drop out of the program. Professional advice and assistance is needed here, so that more private organizations involve themselves in housing construction. The ultimate goal is more quality housing for older Americans, and anything we can do to reach that goal is worth doing, and doing quickly. This section of the bill effectively answers that need. It provides for information and technical assistance to nonprofit sponsors. Loans would be made to nonprofit organizations for necessary expenses, before construction, and before financing was obtained, covering 80 percent of the reasonable costs of the following: Preliminary surveys and analyses of market needs, Preliminary site engineering and architectural fees, Site acquisition and mortgage commitment fees, and I have received many requests for action on these proposals, from church groups and private housing projects all across the country. They agree that preliminary planning is vital to the success of nonprofit housing for the aging. The well-to-do sponsor has all the advantages, and therefore gets most of the loans. But for a group of earnest citizens who are starting from scratch, the task is not quite so easy. In too many cases, it proves to be impossible, and a major purpose of the law is thwarted. I request permission to place in the record letters from certain nonprofit sponsors of elderly housing, and others, interested in this proposal. Section 201 of the bill, providing for interest-reduction payments for rental and cooperative housing for low- and moderate-income families, will allow for reduced rentals. I do feel, Mr. Chairman, that the new approach, changing the 202 senior citizens housing, and 221(d) (3) low- and moderate-income rental housing from direct loans to mortgage insurance financing, if enacted, should be watched very carefully to make certain it would have no detrimental effect on housing, which has been a highly successful program, notwithstanding some of the difficulties that have been encountered in planning by nonprofit sponsors. Secretary Weaver, in his resume of the bill, states: The new (section) 236 program is intended to replace the 221(d) (3) program, as well as the program of direct 3 percent loans for the elderly and the handicapped authorized under section 202 of the Housing Act of 1959, after the new program is adequately funded. It will be better able to serve low and moderate income tenants because the rents attainable under it will be lower than those possible under the other two programs. This is possible because the mortgagor could make monthly payments for principal and interest under the mortgage as if it bore an interest rate of 1 percent. The difference between this amount and the monthly payment due under the mortgage, which will bear a market interest rate, for principal, interest, and mortgage insurance premium will be paid to the mortgagee on behalf of the mortgagor by the Federal Government. The question arises, How long will it take to provide adequate funding for 202 and 221 (d) (3) housing under the new section 236 program? I hope that this new direction in obtaining financing for these programs will not run the risk of slowing down the construction of this urgently needed housing. Section 202 of the bill, increasing the authorization for the rent supplement program, is certainly a welcome addition. In 1961 and 1962, I served as chairman of the Subcommittee on Relocation of the Elderly of the Committee on Aging. In the course of several hearings, it was shown that many older Americans are being uprooted from their inner city dwellings by urban renewal projects, freeway construction, and other disruptive forces. The rent supplement program provides assistance to persons dislocated from such redevelopment programs. The eligibility criteria for rent supplements includes persons who are 62 years of age, or over; and those displaced by Government programs. I am pleased to note the proposed increases in the authorizations for rent supplements. The current applications for the program now exceed the available contract authority. The increased authorization will make a difference in the quality and quantity of housing for America's senior citizens. Mr. Chairman, section 106 and section 202 of the pending bill should help to alleviate the slow, unpleasant squeeze that we are witnessing in housing for older Americans. Section 203 of the bill recognizes the continued importance of lowrent public housing, and recommends an increase in the authorization for this vital program. This is still one of the great housing programs in which the low-income elderly share. It is aimed at remedying unsafe and unsanitary housing conditions and acute housing shortages by bringing decent, safe, and sanitary dwellings to families of low income in rural and urban communities. In 1967, there was a net increase of over 35,000 units for the elderly in public housing compared to 21,500 in 1966. Federally aided public housing with all or some units designed specifically for the elderly reached 154,967 units-covering the period 1956-67, with most of this activity coming after 1961. I believe that the continuing need for low-rent public housing should be met, and I support the request for increasing the authorization in the bill. Finally, Mr. Chairman, I am interested in section 204 of the bill, which provides for upgrading management and services in public housing projects. I believe this section fulfills unmet needs. Up to this time, there have not been sufficient funds available to public housing to deal with many of the social and economic problems that beset many tenants. That such services are necessary has been demonstrated over and over again in project after project. This proposal for grants for increasing the efficiency of management, and of making services available to those who need assistance, is a realistic step forward in the program. (At the request of Senator Williams the following two letters are inserted in the record at this point:) CHLOETHIEL WOODWARD SMITH & ASSOCIATED ARCHITECTS, Hon. HARRISON A. WILLIAMS, Jr., Special Committee on Aging, Washington, D.C. DEAR SENATOR WILLIAMS: I have read with great interest Sec. 106 of S. 3029. I believe that it contains provisions that could be most effective in developing low and moderate income housing carried out by non-profit sponsors. Because most non-profit sponsors have insufficient funds to pay for competent advice, during the crucial early stages of a project, they try to find specialists who will work with little or no compensation prior to construction. All too often they obtain poor advice, spend years trying to put together a feasi ble project and more often than not, obtain inferior projects. As an architect, I am confronted by this problem with profit as well as nonprofit sponsors who want us to do the 75% of our work which is required prior to construction with little or no payment. Responsible professionals cannot pay salaries and overhead under this system. Many of those who will do this type of "financing" do a hurried and incompetent job and the results are all too familiar. The proposal "to make loans to non-profit organizations for the necessary expenses prior to construction" is a splendid answer to this very real problem. With such loans available, non-profit sponsors could pay for competent specialists from the beginning and would succeed in getting the best projects possible to develop within the financial limitations. Sincerely yours, CHLOETHIEL WOODWARD SMITH. ST. MARY'S EPISCOPAL CHURCH, Hon. HARRISON A. WILLIAMS, Jr., DEAR SENATOR: It has come to my attention that your committee is considering Bill S-3029 and I wish to go on record as favoring this legislation and especially section 106. Working with a number of groups interested in better housing for our less privileged makes me aware of the great need for this type of help. Many of the non-profit and church related groups do not have the know-how on ability to make proper surveys etc when planning a project. In addition many groups need assistance in the form of 'seed' money as a loan in order to get started. For example at present I am working with a group trying to do something for the needy in the Kent Narrows section of the State of Maryland. The group has no ready funds available to tie up the necessary land and only through the good offices of a local land owner has this project proceeded. This after nearly two years delay. If the kind of help under this bill had been available this project could have been built by now and the people moved out of shacks into proper homes. In addition such would be of help to me personally as I have been called upon to make numerous trips to various parts of the country on behalf of the 202 program-and this would eliminate this need and give me more time to spend on my own projects at home. I trust that your committee will look favorably on this bill. GEORGE F. PACKARD, President, Roland View Towers, Inc. President, St. Stephen Court, Inc. President, Episcopal Homes, Inc. Senator PROXMIRE. Our next witness is the distinguished Senator from Pennsylvania, former member of this committee. Senator Joe Clark. STATEMENT OF JOSEPH S. CLARK, U.S. SENATOR FROM THE STATE OF PENNSYLVANIA Senator CLARK. Thank you very much, Mr. Chairman and members of the committee, for the opportunity to appear before you. I have a statement here which with your approval I would like to have placed in the record. Senator PROXMIRE. Without objection, the statement will be printed. It is a concise statement. Senator CLARK. I will just summarize-ad lib. |