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These are the costs which prevent slum clearance from being 8 profitable venture for private enterprise. These are the costs which, together with the large capital outlays required, have prevented the local communities, with very few and limited exceptions, from moving ahead with this task within their own limited resources.
The objective of the programs contained in title I of this bill is to provide necessary financial assistance that will enable local communities to make an effective start toward eradicating the slums. The overwhelming evidence presented to this and other congressional committees is that only through such Federal assistance can substantial progress be made in dealing with this problem.
It is in the national interest that no further delays in starting an effective attack on the slum problem should be countenanced. Slum clearance is a time-consuming process and any further postponement of the already long-delayed start in meeting this problem would merely set back for a further indefinite period any hope for progress toward its ultimate solution.
FEDERAL ASSISTANCE AUTHORIZED IN H. R. 4009
H. R. 4009 would authorize the Housing and Home Finance Administrator to assist localities in carrying out slum-clearance projects. The appropriate local public body in each city would select the project areas, prepare the redevelopment plans, acquire the project sites, and prepare them for disposition for redevelopment. The role of the Federal Government would be restricted to the making of loans and capital grants, furnishing technical assistance, and assuring compliance with statutory requirements.
Federal loans would be utilized to finance the capital cost of acquiring, clearing, and preparing the sites for appropriate reuse. The grants would help the local communities absorb the losses which represent the difference between the costs of the slum-clearance operation and the reuse value for which the land is sold or leased for redevelopment.
The loan authorization aggregating $1,000,000,000 would become available over a 5-year period, with $25,000,000 becoming available on July 1, 1949, $225,000,000 on July 1, 1950, and further amounts of $250,000,000 on July 1 of each of the three succeeding years. The bill permits the initial loan authorization, and any of the authorized increases therein becoming available in any year, to be increased (subject to the total loan authorization of $1,000,000,000), at any time or times, by not to exceed additional amounts aggregating not more than $250,000,000 upon a determination by the President, after receiving advice from the Council of Economic Advisers as to the general effect of such increase upon the conditions in the building industry and upon the national economy, that such action is in the public interest.
The capital-grant authorization totals $500,000,000 and would become available in five annual installments of $100,000,000 beginning July 1, 1949. The bill permits the initial capital-grant authorization, and any of the authorized increases therein becoming available in any year to be increased (subject to the total capital-grant authorization of $500,000,000), at any time or times, by not to exceed additional amounts aggregating not more than $100,000,000 upon a determins
tion by the President, after receiving advice from the Council of Economic Advisers as to the general effect of such increase upon the conditions in the building industry and upon the national economy, that such action is in the public interest.
HOW THE FEDERAL ASSISTANCE WOULD BE USED
Under H. R. 4009, Federal assistance would be available only to finance the costs of acquiring and clearing slum sites and preparing them for redevelopment; none of the funds would be available to finance the construction of buildings on the cleared sites (except that temporary loans may be used to finance certain public facilities for open sites as indicated below).
Temporary Federal loans would be available to finance the costs of planning of local projects, land acquisition, and the clearance and preparation of the sites for reuse. On disposition of the land for redevelopment, the temporary loans would be repaid out of the proceeds of sale of the land (or, in the case of lease, from the proceeds of longterm loans), the Federal grants, and the local cash contributions.
Long-term Federal loans would be available to refinance, on the basis of the reuse value, portions of the sites which are leased and would be secured by the rentals from the leased land.
The net loss involved in this slum-clearance operation would be shared by the Federal Government and the local community on a 2-to-1 basis. Thus, the Federal grants may not exceed two-thirds of the losses on all clearance projects undertaken in any one locality. The balance of the losses must be borne by the local public agencies either in cash or through contributions other than cash, such as the provision of parks or schools necessary to support the new uses of the land, the construction or relocation of streets and utilities or the use of municipal labor and equipment for the clearance operation.
Evidence before your committee indicates that a substantial writeoff of excessive costs will be necessary if redevelopment of the slum areas is to be in accordance with the appropriate uses. In the light of the best informed judgment as to the ability of the cities to contribute to slum-clearance programs, therefore, your committee is convinced that the 2-to-1 sharing formula is necessary if the purposes of the program are to be achieved. It is obvious that the aid extended must be sufficient if the program is not to be self-defeating. If it is inadequate, it would either prevent the initiation of local slumclearance projects or, by forcing the overbuilding of the redeveloped areas, make them susceptible to deterioration into slums again in the future.
The evidence presented to your committee on behalf of the United States Conference of Mayors and by other city officials, as well as the findings of previous congressional investigations of this matter, afford convincing evidence that any change in this sharing formula to require larger contributions by the cities would severely restrict or defeat the basic objective of this program.
The clearance of land in residential slums in central city areas and its redevelopment in accord with a plan for the most appropriate use of the land, such as for housing of less density, for industry or for public purposes, will necessitate a dispersion of a considerable portion of the families now living in such areas. Your committee is convinced
that Federal assistance for the acquisition and preparation of open and predominantly open land to be developed for predominantly residential use is essential so that adequate provision can be made for the necessary dispersion of some portion of the central city population. In the case of predominantly open land, both loans and capital grants are authorized, but in the case of open land no capital grants may be made. As already noted, the bill authorizes temporary loans also to finance schools or other public facilities necessary to serve or support the new uses of open or predominantly open land. Such loans are to be repaid with interest as soon as the development of the area and its tax base permits the appropriate local body to refinance the loan from the proceeds of a regular bond issue, and in any event within 10 years.
SLUM CLEARANCE AND HOUSING While the slum-clearance program provided in this title is separate from those provisions dealing directly with housing, your committee wishes to emphasize that the primary justification for Federal assistance for this purpose is the improvement of housing conditions for urban families. This program must be conducted in such a manner that it will contribute to, rather than detract from, this essential objective. H. R. 4009 would assure the adherence to the primary housing purpose in two principal respects.
In the first place, the bill clearly recognizes that the clearance of slums and the provision of decent housing for families who live in them are inseparable. Any slum clearance which fails to assure adequate housing for the families who presently live in slums would be merely forcing them into worse conditions. This applies with particular force to families of minority races for whom the problems of relocation are particularly difficult.
The slum-clearance program, therefore, is set in the context of a bill which has as one of its major purposes the provision of adequate housing for such families. There are, in addition, three specific safeguards. First, the extension of Federal financial aid to a local public agency for slum clearance is prohibited unless a feasible method is provided for the temporary relocation of families displaced from proj. ect areas and unless permanent housing has been or is being provided for them either in the project areas or elsewhere. The permanent housing must consist of decent, safe, and sanitary dwellings which are located in areas not generally less desirable in regard to public and commercial facilities and which are available at rents and prices within the financial means of displaced families. Second, the demolition of residential structures in slum-clearance projects is prohibited prior to July 1, 1951, if the local governing body determines that undue hardship would result. Third, first preference for occupancy of low-rent public housing projects assisted under this bill must be extended to families displaced from slum-clearance projects if they are otherwise eligible for admission.
The second basic principle relating the slum-clearance program to the major purposes of this legislation is through the restrictions on the nature of the projects for which Federal assistance may be provided. Federal aid to localities for slum clearance is restricted to those areas which are predominantly residential or which will be redeveloped for predominantly residential use. It is important to point out, however,
that this requirement will not interfere with but will rather assist the broad-scale redevelopment of our urban areas. Slums and blighted areas as they exist today are predominantly residential. It is also true that in residential slum-clearance projects, it will normally be necessary to include some adjacent nonresidential blighted areas in order to assure the proper kind of redevelopment.
The bill requires that the redevelopment plans for the locality afford maximum opportunity for private enterprise. Much of the construction required in connection with the development or redevelopment of these areas would be under private auspices, although there will necessarily be some public participation through the provision of schools, parks, and other public facilities, and of public housing where the localities determine that the sites are best suited for that use.
LOCAL RESPONSIBILITIES As indicated above, H. R. 4009 fully recognizes the importance of local initiative and local responsibility. Your committee believes that local slum-clearance programs should be locally executed in such manner as to promote the achievement of the objectives stated elsewhere in this bill. Thus, in addition to providing the limitations already described, H. R. 4009 requires the Administrator in extending financial assistance to give consideration to the extent to which localities have encouraged housing cost reductions through the adoption, improvement, and modernization and other local codes.
The bill also requires that, in extending financial assistance under this title, the Administrator shall give consideration to local codes and regulations with respect to land use, minimum standards of health, safety and sanitation, and other matters relating to the prevention of the recurrence or spread of slums and blighted areas.
Your committee feels that maximum benefits from the Federal aids provided for slum clearance can be obtained only if excessive prices are not paid for the areas to be cleared. The bill therefore authorizes the Administrator to include in any contracts or instruments for financial aid such covenants, conditions, and provisions as will prevent the payment of such excessive prices, and requires that the provisions of the title be administered so as not to permit speculation in land holding. Further, your committee calls attention to the fact that the carrying-out of a slum-clearance and redevelopment project will naturally be a relatively long-term job. Accordingly, your committee fully expects that the administering agency will require that there be used every practicable device to assure that the prices paid by the local public agency for the land in the project area will be held at the absolute minimum. For example, once an area has been selected locally, the administering agency should require that the local government exercise its police power to the fullest possible extent in such area so that prices paid for the land will not reflect any excess values which may arise from uses in violation of local regulations as to health, safety, and sanitation.
VI. Low-RENT PUBLIC HOUSING
Title II of the bill would extend the low-rent public housing program which was originally established by the United States Housing Act of 1937. That program would be augmented by the provision of an additional 1,050,000 homes for both city and rural nonfarm families who cannot afford to pay for adequate shelter-either in new or existing private housing.
HOW THE PUBLIC HOUSING PROGRAM OPERATES
The public housing program in the various localities is directly administered by local housing authorities which develop, own, and operate the low-rent projects. Local authorities are created pursuant to State law, and their members are usually appointed by the mayors of the respective localities. The basic responsibility for the provision of low-rent housing is thus reserved to the various localities. The role of the Federal Government is appropriately restricted to the provision of financial assistance to the local authorities, the furnishing of technical aid and advice, and assuring compliance with statutory requirements.
Two types of Federal financial assistance are provided under the United States Housing Act-loans and annual contributions. Loans may be made to assist local authorities in the capital financing of their projects, but under the proposed financing provisions of this bill it is expected that local authorities will be able to meet the great bulk of their capital requirements by the sale of bonds to private investors. The Federal loa ning power will be used primarily in connection with the temporary financing of projects during the construction period.
The annual contributions paid by the Federal Government, together with the contributions made by local governments, serve to make up the difference between the rents which families of low income can afford to pay and the annual operating costs and debt service of the projects. The Federal contributions are limited to maximum amounts fixed in relation to the costs of the projects, but the amounts actually paid each year are restricted to the amounts actually needed in such year. On the basis of past experience, it is expected that, over & period of years, not more than two-thirds or three-quarters of the maximum amount will be required.
The local governments contribute to the reduction of rents through the complete exemption of the low-rent projects from all real and personal property taxation, subject to the making of small payments in lieu of taxes. Local contributions for the present projects under & similar system have averaged well over half the amount of the Federal contributions.
The present low-rent housing program has worked well in practice. It has taken families from the slums and has provided them with simple but adequate homes. It has provided these homes at rents within the means of low-income families, without forcing them to deplete their meager budgets for food, clothing, and other necessities. This program has received the almost unanimous support of public officials and public-minded citizens in the municipalities where it has operated.
NEED FOR PUBLIC HOUSING The extension of the low-rent housing program as provided in title II of H. R. 4009 is a basic necessity if we are to move toward the goal of a decent home and suitable living environment for every American