(4) Advise applicants of their responsibilities with respect to discrimination based upon race, color, creed, or national origin in the use or occupancy of the property rehabilitated with the assistance of individual grants and obtain written agreements not to practice such discrimination.

(5) Verify income and monthly housing expense of applicants.

It is expected that five additional positions will be needed to handle the additional work generated by this new activity.

Grants for demolition of unsafe structures

Section 311 of the Housing Act of 1965, by the addition of section 116 to the Housing Act of 1949, as amended, authorizes Federal grants to cities, other municipalities, and counties to assist in financing the cost of demolishing structures which, under State or local law, have been determined to be structurally unsound or unfit for human habitation. Two-thirds grants, from the total authorization provided under title I, are available for this purpose. This aspect of grant assistance is applicable to urban renewal project areas, areas where Federal assistance has been approved for code enforcement activities, and is also available for structures not within such areas which meet eligibility requirements specified in the law.

Federal assistance for demolition of structures in this latter category-those outside urban renewal and code enforcement areas-has special significance. This new tool will enable the cities to clear unsound or otherwise unfit structures in those neighborhoods where deterioration is being arrested by locally financed code enforcement as well as in neighborhoods which have not deteriorated to the point where general concentration of code enforcement is necessary. In both instances, clearing of such structures will provide to property owners and residents of such neighborhoods an incentive to maintain or rehabilitate their properties voluntarily and, thus, to restore the livability and value of the remaining properties. The program description which follows is related to this aspect of the authorization.

Eligible applicants for demolition grants include counties as well as cities or other political subdivisions normally designated as municipalities. Eligibility requirements.-An eligible applicant for a demolition grant will meet all of the following requirements:

(1) The applicant has authority, under State or local law, to demolish structures covered by the application.

(2) The applicant has a workable program for community improvement currently certified by the Housing and Home Finance Agency Administrator. (3) The demolition to be assisted will be on a planned neighborhood basis and will further the overall renewal objectives of the municipality. (4) There is, in the jurisdiction, a program of enforcement of existing local housing and related codes.

(5) The structures to be demolished constitute a public nuisance and a serious hazard to the public health or welfare.

(6) The governing body has determined that other available legal procedures to secure remedial action by the owner of the structures involved have been exhausted; and that demolition by governmental action is required. Operation of program.-When demolition occurs as a result of locally financed code enforcement activities, the final legal steps, precedent to demolition by local governmental action, usually include the establishment of a lien on the title to the cleared property amounting to the estimated cost of demolition, fencing, and sodding. Where this authority exists, contracts with applicants would provide that such liens must be established and enforced by the municipality if the cleared land is sold by the owner. The amounts collected must be pledged to similar demolition in other areas otherwise eligible for Federal assistance.

A municipality having sufficient volume of eligible structures requiring demolition outside urban renewal areas may submit an application covering an annual program of demolition. The program shall designate a specific area or areas in which the applicant proposes to demolish all of the buildings that it has determined to be structurally unsound or unfit for human habitation, and for which remedial action by the owner has not been taken, despite the use of available legal procedures to obtain remedial action. A grant shall be limited to the number of areas, and the scope of individual areas, for which there is a reasonable expectation that the proposed demolition can be completed in 1 year or less, although additional areas may be covered under subsequent applications for federally assisted annual programs.

The Federal grant payment will normally be made at the completion of all demolition contemplated in the application. However, a municipality requiring interim financing may requisition grant funds prior to completion of its annual demolition program, based on demolition actually completed.

Program volume.-It is known that many cities contain sizable backlogs of structures which could and should be demolished by public action, but that resources available to them for these purposes have been inadequate to keep up with the increasing numbers. In several of the largest cities, information available indicates that they have backlogs in the range of two to three thousand, not all of which are presently eligible for public demolition since all legal procedures to secure remedial action by the owners have not been exhausted. Annual programs are expected to be started in 120 cities in the balance of the current fiscal year and approximately 3,500 buildings will be included in the approved programs. This estimate is based on a range of 50 to 300 buildings per year in the larger cities, averaging 100 in each of 20 cities and a range of 10 to 50 in all other cities, averaging 15 buildings each for 100 cities. Experience and preliminary studies indicate that net demolition expenses vary widely depending on the size and condition of the structure, the value of salvable components, and whether or not the structure stands independently or is connected with other buildings by party walls which would have to be restored or repaired as part of the demolition process. A range from $100 to $90,000 per structure is assumed. However, very few are expected to require the higher costs in the range and an average of $2,500 to $3,000 is expected to prevail. The table below summarizes the factors described herein. Applications:

Received in year..

In process, year end..

Reviewed in year-

Returned or withdrawn__.

Approved--

Total

270

-100

170

-50

120

[Dollars in thousands]

Staff increases. While the program will not be large in terms of grant funds used, it is expected that interest and demand will be widespread. The mechanics of operation in this program will be complex and sufficiently different from those followed in reviewing and processing applications for urban renewal projects that a staff increase of 25 will be required to handle the work.

Code enforcement in urban renewal areas

In the Housing Act of 1964, the additional local costs of concentrated code enforcement activities in urban renewal areas was first authorized for inclusion in shared project costs. The Housing and Urban Development Act of 1965 broadened this authorization as it applies to urban renewal areas. Shared cost in urban renewal projects involving rehabilitation may now include the expense to the local governments of conducting concentrated code enforcement activities in the urban renewal areas, and it is no longer required that localities increase local code expenditures outside of project areas in proportion to the amount of Federal assistance provided for code enforcement within the areas. These more workable provisions are expected to result in advancing the role of code enforcement where it can be usefully applied to accomplishing renewal objectives.

Code enforcement grants

In another part of the Housing and Urban Development Act of 1965, a new section 117 was added to the Housing Act of 1949, as amended. This section is in lieu of the provision in the 1964 act which established a new kind of urban renewal project comprised wholly or substantially of code enforcement. Grants to local governments are now authorized to assist "localities in carrying out programs of concentrated code enforcement in deteriorated or deteriorating areas." Grants may include two-thirds of the cost of planning and carrying out such programs, including the cost of public improvements, where such a program may be expected to arrest the decline of the area.

Federal grants for code enforcement programs will be made to cities, other municipalities, and counties that have statutory authority to enforce housing, building and related codes and that otherwise meet the eligibility requirements. While funded from the overall title I authorization, code enforcement programs are not urban renewal projects. Grants do not involve local grants-in-aid, pooling of project costs or interim financing through loans. The amount of a grant will be based on a code enforcement program budget, submitted by the municipality and subject to HHFA approval, and on a final audit of program costs. Grant payments will be made periodically, based on requisitions submitted by the municipality backed by reports of progress of code enforcement activities and the provision of needed public improvements in the designated

area.

Generally, a single application for grant will cover one area in the municipality but, in any case it must be feasible to complete the code enforcement program for all areas covered by the application within 2 to 3 years.

Policies and eligibility requirements.-The following general policies and requirements apply to a federally assisted code enforcement program:

(1) Prior to applying for a code enforcement grant, the municipality must have a workable program for community improvement for which a certification by the HHFA Administrator is in effect, have adopted a comprehensive system of codes that meets the minimum requirements established by HHFA, and be carrying out an effective program of code enforcement.

(2) The municipality must agree that it will maintain, during the period it is under contract for code enforcement grant, a level of code enforcement activities representing at least its normal expenditures for code enforcement activities. The "normal" experience level will not include any expenditures for areas assisted by code enforcement grants.

(3) There must be a systematic program for intensive code compliance that provides a definite plan and schedule for bringing all properties into code compliance; an adequate number of trained inspectors; an effective notice, permit, and records system; close coordination among all local governmental units and officials responsible for inspections and other compliance actions; and administrative and legal procedures for the prompt and equitable handling of noncompliance and appeal cases.

(4) To obtain understanding and support for the program, it will be necessary to interest citizens and neighborhood organizations in the program and to encourage them to work closely with the participating municipal agencies.

(5) The municipality must have a satisfactory program and other resources for providing all necessary public improvements within the area assisted by a code enforcement grant. This requirement of the legislation recognizes the importance of adequate public facilities and services to the stability of neighborhoods and the prevention of blight, both directly and through the provision of an incentive to owners and tenants for maintaining properties in the area.

(6) The proposed areas, in which code violations are distributed throughout the area in at least 20 percent of the buildings, must be built up and predominantly residential in character. Eligible areas must be deteriorated, due principally to noncompliance with existing codes, so that it is reasonable to expect that the concentrated code enforcement and public improvement program will restore the stability of the area and that continuing stability can be maintained locally through normal code enforcement activities and an adequate level of public services.

(7) The municipality must accept its obligation to assure that any individuals or families displaced as a result of code enforcement are relocated

into decent, safe, and sanitary housing within their means, and to provide related relocation assistance.

Federal financial assistance.-The following Federal financial aids are available to assist a municipality in carrying out a code enforcement program and to assist property owners in the designated areas in making the required property improvements:

(1) Federal grant to the municipality of two-thirds of the cost of planning and carrying out a concentrated code enforcement program, including the provision of eligible public improvements.

(2) Federal relocation grant to the municipality to cover the entire cost of making all types of relocation payments to eligible families, individuals, businesses, and nonprofit organizations that are displaced because of code enforcement.

(3) Direct Federal rehabilitation grants (not to exceed $1,500) to assist eligible low-income owner-occupants to pay for repairs or improvements required to make properties conform to applicable code requirements (“sec. 115 rehabilitation grants").

(4) Loans to eligible property owners for financing the rehabilitation required to make the property conform to applicable code requirements: (a) Direct Federal loans at 3 percent interest as authorized by section 312 of the Housing Act of 1964, as amended; and (b) Federal Housing Administration mortgage insurance for properties eligible under section 220 of the National Housing Act, including home improvement loans under section 220 (h). Staff increases.-There is widespread interest in the assistance that grants for code enforcement programs will provide. Preliminary indications are that a great many cities, already active in urban renewal and in locally financed code enforcement, are ready and eager to develop programs meeting our requirements and that we will start receiving applications very soon after they receive procedures covering the form and content. It will be necessary for Federal staff to assist cities which request it in developing their programs, to review and otherwise process applications, and to provide guidance and surveillance as the programs are put into effect. Most of this work will be done by staff in the regional offices which will supplement existing staffs since it is not intended to create a separate organization to administer these provisions. Some skills not now existing in the regional offices may be needed but, for the most part, the code enforcement programs will require more of the types already working.

The program authorization for this activity is part of the overall title I authorization, which is not being increased from the level originally planned for this activity. This may pose a question as to why staff which, otherwise, would have been working on urban renewal projects could not be diverted to this activity without increasing the total number needed. There are three reasons why additional staff is needed: (1) In most cases, the local governmental body which develops and administers these programs will not be the local public agency, but the government of the municipality. This means establishing new or closer working relationships with the local staff responsible for the program and they will probably require as much guidance as an inexperienced LPA. (2) The average Federal grant for code enforcement programs will be in the range of onequarter to one-third of an average grant for an urban renewal project. This means that the same number of grant dollars will generate three to four times as many applications in three to four times as many localities. (3) An important factor in the need for additional staff is that physical activity in these programs will begin very soon after approval of the application, making it necessary for urban renewal field staff to remain in close contact over the entire period. It is expected that 200 cities will apply for this type of grant in this first year and that grants will average about $750,000 each.

Of the 40 new positions needed for code enforcement programs, 28 will be at professional grade levels of GS-9 and above and 12 will be clerical (GS-7 and below). At least 35 of these positions will be in the regional offices.

Workable program and relocation provisions of the Housing and Urban Development Act of 1965.-Two new subsections added to title I are expected to result in substantial additional work on the part of Federal staff, as well as local public agencies, in connection with workable programs and the provision of housing for relocatees. The new provisions are quoted below:

"SEC. 101 (e) No loan or grant contract may be entered into by the Administrator for an urban renewal project unless he determines that (1) the workable program for community improvement presented by the locality pursuant to sub

section (c) is of sufficient scope and content to furnish a basis for evaluation of need for the urban renewal project; and (2) such project is in accordance with the program.

"SEC. 105 (c) (2) As a condition to further assistance after the enactment of this paragraph with respect to each urban renewal project involving the displacement of individuals and families, the Administrator shall require, within a reasonable time prior to actual displacement, satisfactory assurance by the local public agency that decent, safe, and sanitary dwellings as required by the first sentence of this subsection are available for the relocation of each such individual or family."

Workable program requirements.-Both in the Housing Act of 1964 and the recent housing legislation, extensive emphasis has been given to strengthening and broadening the coverage of local planning and programing requirements as a condition to obtaining Federal aid for local undertakings. It is expected that these requirements and incentives will soon begin to show results in terms of better informed and equipped local governments and more effective management of local planning and development activities. At the same time, each of these new requirements adds to the necessity for Federal staff, particularly in the regional offices, to provide technical assistance and guidance to localities in meeting the new standards and to review the local plans and proposals more extensively to assure that they meet the conditions for the particular activity for which Federal assistance is sought.

For the workable progam to "furnish a basis for evaluation of the need for the urban renewal project," a great many localities will have to extend the coverage and depth of their workable programs. It is the responsibility of HHFA regional staff to make this understood in the localities; to provide technical assistance as it is requested. They must be assured, as the work progresses, that it conforms to the new standards. A detailed review and examination: of the workable program submission-particularly, the general plan and neighborhood analysis elements-will be necessary in connection with project applications at the planning stage to identify for the community any additional work which will be required before the loan and grant application can be approved. Another review for conformance will take place when the loan and grant application is submitted. Where the review processes reveal deficiencies, regional staff wil be expected to work with the community to correct them.

Relocation requirements.-In view of the fact that subsection 105(c) (2) conditions further Federal assistance on compliance with its provisions, it will be necessary for the LPA to prepare additional specific documentation after approval of the loan and grant contract and not more than 60 days before substantial displacement from the project area is to take place. It will take the form of an assurance and certification that sufficient and suitable relocation resources exist, or will exist when displacement occurs, for each family and individual to be relocated from the project area. This is in addition to the detailed relocation plan which accompanies the application for loan and grant and which is reviewed in detail by regional staff for adequacy of resources before contract approval is recommended. The additional documentation required will receive careful attention in the regional office, including a firsthand inspection of the resources alluded to wherever it is deemed necessary. The LPA must await HHFA notification of acceptability before proceeding with activities which would cause substantial displacement of families and individuals.

In the normal course of supervision, guidance and inspection of project activities, regional staffs would ordinarily assure themselves that relocation resources are available as needed and the certification required by the new provision cannot replace this continuous surveillance. The documentation and review process at the time required will create additional workload in the field which must be handled as soon as the certification is submitted if project operations are to continue without delay.

Staff increases. It will be necessary to strengthen the community programs staff in the regional offices as well as planning, relocation, and operations staffs in the urban renewal divisions for the additional work which these two provisions will generate. The budget estimate provides yearend employment of 27 for this purpose.

Summary of staff increases for urban renewal program

The additional staff needed for title I activities resulting from the Housing and Urban Development Act of 1965 and not covered in the regular request for

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