and encouraging local initiative and autonomy. Alternative courses of action open to the local community would require the authorization of direct Federal assistance. Such a course is regarded as neither practicable nor desirable, since special legislation affecting a single community and requiring an extraordinary appropriation would be necessary. Although it has not been possible to determine completely the extent to which the urban renewal powers of the community and the Federal assistance program can meet the requirements of relocation, it has been the determined objective of the people of Arlington, expressed through the planning commission and the governing body, to seek a solution to local problems through the use of instruments and programs already authorized by the State Legislature and the Congress before resorting to requests for direct assistance of a special nature. In consonance with this attitude, the city sought and obtained an amendment to the State Urban Redevelopment Act to permit the use of urban renewal powers in assisting a community to carry on relocation and redevelopment activities in cases where such activities would be necessary because of the requirements of a Government project. Similarly, the city turned its attention to the Federal laws governing urban renewal, and determined that additional authorization would be needed from the Congress to permit Government assistance in financing a local program. The proposed measure now before your committee contains the authorization needed. While taking steps toward seeking the adoption of the necessary congressional legislation, the city of Arlington has been preparing to place itself in readiness to use the initiative given it by our State Legislature: The city council has appropriated funds to complete a comprehensive plan, consolidating work already done in this direction through the studies prepared for the corps, and adding plans for areas and features not included in previous studies. Other steps to be taken by the city will include the preparation of a zoning ordinance and subdivision regulations to control undesirable activities and development while relocation and urban renewal planning is going ahead. Also, in the meantime, other elements of a workable program will be given attention and a statement of this city's actions and intentions in connection with such a program will be formulated. The people of Arlington earnestly solicit the thoughful consideration of your committee in connection with S. 2865. METROPOLITAN HOUSING AND PLANNING COUNCIL OF CHICAGO, Hon. JOHN A. SPARKMAN, May 7, 1958. Chairman, Subcommittee on Housing, Senate Committee on Banking Washington, D. C. DEAR SENATOR SPARKMAN: As a nonprofit citizen organization, we are proud of our participation since 1934, both locally and nationally, in formulating the American urban renewal policy and program. Having aided the State of Illinois in its pioneering role, through the Blighted Areas Redevelopment Act of 1947, and the Urban Community Conservation Act of 1953, we have watched the first years of trial and error in the national effort to reverse the wasteful cycle of deterioration which besets American cities. Practice has strengthened the new administrative machinery and the laws, and it is clear that having learned to walk in this new field, we must now begin to run to win the race against urban decay. We are therefore urging that the entire concept of urban renewal be elevated to a magnitude conducive to the achievement within a foreseeable period of time, of the goal of a slum-free Nation. We have, however, respected the practical economic limitations on too rapid expansion of the program. We agree only partially with those current proposals which would accelerate urban renewal through larger Federal grants and reduced local contributions. On the contrary, while we share the conviction that the urban renewal program should no longer remain a minor item in the Nation's budget, and that continuity is essential, we believe that with heightened Federal action there must be increased local responsibility. We also suggest that the Federal Government can expect greater performance by the local municipality under the principles and formula of the "workable program” as a precondition to continuing Federal aid. In the following paragraphs we are recommending that urban renewal be programed on a 10- to 12-year basis, with the Federal Government setting the pace for a redoubled national effort; and that, as Federal outlays increase, local contributions through city and/or State also increase proportionately. OBJECTIVE The greatest single element in our national wealth has been defined as the investment in our towns and cities, which is estimated by the National Bureau of Economic Research to be more than $400 billion out of a total national wealth of $797 billion in 1948. The values of these structures and the land on which they stand are endangered by engulfing blight, which lowers the vitality of entire communities. The American Council To Improve Our Neighborhoods (ACTION) has estimated that it would cost about $100 billion, spread over a 10-year period, to wipe out blight. Fortune, in its December 1957 article on "The Enduring Slums," comments: "obviously we must settle for something considerably less. *** At present, the programs are so small that even if they were working perfectly they would not constitute a serious assault on the slum problem. Federal intervention on a larger scale than the present is indispensable if we are to make any headway at all." We are asking for such intervention on a larger and more practical scale. The gap between existing conditions and our stated goal of a "decent home and a suitable living environment for every American family" cannot be narnowed-much less closed-if we continue to chip away an inch at a time against forces of deterioration which consume communities a square mile at a time. The effort must be redoubled at every level. Experience has demonstrated that little headway is made in any major attack on a deep-seated problem of national concern and public need until the attack is equated with the magnitude of the problem. This has been true whether the target was an interstate highway system, flood control, or poliomyelitis. The Interstate Highway System, proposed in 1944, made little progress until 1956, when Congress authorized a $25 billion, 13-year accelerated operation, providing for the completion of a 41,000-mile system. In order to bring the urban renewal movement to effective strength, to conserve the investment in our communities, to retain the present high level of civic leadership engaged in this effort, and to advance the Nation toward the achievement of its established policy, we urge the Federal Government to set the pace for a significantly enlarged attack, shifting from a token approach to a total approach as the dimension of city renewal. A FOUR-POINT FORMULA While we do not presume to advise the Congress or the administration on the specifics of an adequate rate of expansion, it is vitally necessary to get away from the present hand-to-mouth basis, and make urban renewal a longterm process. The facts would warrant programing a minimum basis of 10 to 12 years. Point 1 Beginning with a minimum authorization of $350 million in fiscal 1959, we recommend annually increasing authorizations reaching a plateau of $1 billion in 1968. Point 2 With each year's expanded resources, the performance demands in the workable program should be increased, through positive factors such as demonstrated progress in planning, evidence of enforcement accomplishment, proof of the rehabilitation of a significant percentage of or reduction in the total percentage of substandard dwelling units, or comparable action contributing to the renewal of the community. We would hope that the Housing and Home Finance Agency, through an advisory committee such as the President's Advisory Committee on Housing of 1954, will make a study revealing how we can effectively upgrade the workable program requirements, particularly in respect to performance standards. Points 3 and 4 As the absolute amount of Federal aid increases, the percentage of public cost borne by the Federal Government should gradually decrease, thereby enlarging the total expenditure by an expanded participation of Federal, State, county and local government. This will call for broader and better defined policies as to noncash grants-in-aid, and deserves assignment for study by the advisory committee suggested under point 2 above. This may be carried out on some such computation as indicated in the following table, with the cities, counties, and States gradually picking up an increasing share of the responsibility. Four-point formula to enlarge the dimension of urban renewal The fact that as of January 31, 1958, applications on hand with the Urban Renewal Administration for new or increased urban renewal capital grant reservations exceeded available unutilized capital grant obligational authority by $183 million; that by December 1957, 489 projects had received such reservations, and 609 towns, cities and metropolitan areas had received planning assistance grants, indicates that the program has taken hold. The communities of the Nation are grasping the challenge to renovate, rejuvenate, and repel blight. If the momentum now buliding up is not to be lost through attrition, it is vitally necessary not only that the appropriation for fiscal 1959 be raised to a minimum of $350 million but also that urban renewal be made an all-out, start-to-finish operation. ADVANTAGES-NATIONAL AND LOCAL 1. Cities, anticipating an expanded program, and knowing where they stand, will develop their administrative organizations, build strong and able staffs, and improve the efficiency of their operations. 2. Once aware of the future plans and the goal of the Federal Government, the communities will begin to envision urban renewal as the major enterprise of local government, resulting in better planning and integration of all public expenditures. Counties and States will become better educated to the needs and benefits of urban renewal. 3. By telescoping urban renewal for the entire Nation into a fixed period of time, whether it be 10, 20, 25 years, the entire job can be done at considerably less cost by eliminating sources of future deterioration, and checking the forces of decay. 4. This is the only basis on which measurable progress can be made in raising the American standard of shelter-a problem affecting the national social, political, and economic welfare. 5. The "workable program" factor in the urban renewal formula has revolutionized local planning and administration in important respects. Chicago and other municipalities have enacted housing codes, undertaken metropolitan area planning, and initiated capital improvement budgeting. They have developed a proper foundation for a greatly magnified effort in urban renewal, and can undertake expanded local responsibilities with a resulting acceleration of blight elimination. 6. With a total renewal approach, providing continuity and expansion, the financial reins can be relaxed or tightened as economic needs dictate. Urban renewal can become one of the positive vehicles for maintaining stable employment, production, and prosperity. LOCAL 1. The mayor of Chicago has placed the production of additional housing, particularly for moderate rental needs, at the top of his agenda. The commissioner of buildings has called for a 10-year program of 1 million new dwelling units, to facilitate code enforcement, and accommodate incoming families without overcrowding. The mammoth waterway development, stimulating an estimated $15 billion in industrial growth within the next 10 years, is expected to require a population increase of more than 1 million persons in Chicago and its immediate periphery. An urban-renewal program proposed by the department of city planning for the central area and which will encompass nearly 13 square miles, liquidating blighted commercial, industrial, and residential structures, contemplates building 25,000 units of moderate rental housing within the next decade. Much land now used for commercial purposes will be converted to residential use, permitting a net gain in good housing facilities. It will provide a major aid to relocation for all public improvements, at the same time permitting the development of planned industrial districts where industries supporting the economic base of the city could operate efficiently. Ample funds are available for such construction on a larger scale. The entire program is dependent, however, on a vastly expanded Federal program under the urban-renewal formula. A 2. At present, the rate of relocation governs the rate of urban renewal. continuing supply of subsidized low-rent housing is essential for the rehousing of the low-income group. A problem centers around the higher, but not highest income families. Despite vigorous and valiant efforts to build for the middleincome market, it has up to this time been impossible to break the cost barrier. Urban renewal provides an opportunity to meet the shelter and environmental needs of middle-income families, and it offers the incentive and primary means of relieving the economic obstacles in this difficult situation. 3. At this time, after 10 years experimental progress in urban renewal, Chicago has cleared approximately one square mile of blight, at a public cost of about $90 million, and now has underway some 4 to 5 square miles of renewal work. The expanded program which we propose, increasing both the local and Federal participation, would enable this city within the next 10 years to clear approximately 10 times the area which has been cleared to date, taking care of the hard core of deep blight which is now destroying the vitality of the Chicago metropolitan area. 4. By working within a larger context, the community standard of living can be materially improved through intelligent planning for the creation of parks, expanded school grounds, mass transit, health, and other community facilities. 5. Under the proposed approach, more private investment will become interested in the long-range possibilities. The present inadequate Federal program does not permit either private enterprise or the city to develop plans of such scope as to make a dent in the problem. Private enterprise will be inhibited by the fear that without a firm, long-range Federal program of financial support giving assurance that the community environment will reinforce the redevelopment, a large expenditure of funds would be in jeopardy. We will appreciate your serious and immediate consideration of this recommendation. Sincerely yours, HOWARD E. GREEN, President. STATEMENT OF MORTON BODFISH, CHAIRMAN, FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF CHICAGO Senator Sparkman, members of the committee, this statement is made not in endorsement of or in opposition to the proposed Home Loan Guarantee Corporation to be created by S. 2791. The aims of this legislation are good as it offers a medium through which savings and loan associations are better able to serve prospective homeowners among moderate income groups. My purpose is to present to the committee consideration of a change in savings and loan lending powers which will accomplish the same objective as a new guaranty corporation, yet without the complexities and without additional costs to the borrower and to the financial institution. Basically and briefly, my proposal is to increase the lending powers of federally chartered savings and loan associations so that they may make loans to owner-occupants of single family houses in an amount up to 90 percent of the appraised valuation or sales price of these houses within certain limitations. This can be performed without an act of Congress; merely by amending section 145.6-1 of the Federal home loan bank regulations. Draft of such an amendment is here presented which provides for this type of financing up to a maximum loan of $14,500 which would permit 90 percent financing of homes in the $16,000 and under price or value category. This is the area in which the greatest housing need exists and would permit more low-income families to enjoy homeownership and at an earlier stage in their family life. The proposed amendment to the regulation contains provisions to insure that this type of financing would be available only to borrowers who have saved or accumulated a 10-percent downpayment or equity, would be available only for the owner-occupant and the funds disbursed would be used exclusively and entirely for the purchase of the home. It proposes also that this type of financing be limited in volume to not more than 10 percent of the association's assets and that the term of repayment be limited to 25 years for those loans secured by new homes and 20 years upon existing construction. The savings and loan associations have in recent years provided a major portion of the country's home financing and the overwhelming volume of this credit has and very probably will continue to be on a conventional loan basis. Through their conventional loan activities, they have provided a stability in providing for the needs of the mortgage money market and an adaptability to changing conditions that has not been possible to date through the Governmentinsured and guaranteed home-loan plan. It is our unqualified opinion that the savings and loan business is eminently qualified to know the housing and home financing needs of the people within the respective local areas served and that the management of these associations are expert in their abilities to choose qualified borrowers whether the loans be on a 50, 70, or 90 percent loan to value basis. We believe that regardless of what guaranteed or insured loan plan is used by an institution which picks and chooses its borrowers on their ability to repay, great economies can be affected both for the borrower and for the institution if such loans are written instead on a conventional basis. Since property values have reached present levels, associations' ability to reach the lower income purchaser on the conventional basis has been limited and with ability to make loans up to 90 percent of the value of the property being purchased, our effectiveness can be greatly increased. Actually, there are 13 States in which State chartered savings and loan associations are permitted to make 90 percent loans and as you may know, just this month the New York Legislature passed a bill permitting savings and loan associations and savings banks to make 90 percent loans on single family dwellings. This is indeed a forward step and one which should be taken for all Federal savings and loan associations. I think you will agree that the contribution that the savings and loan associations of the country have made to homeownership is one of our Nation's outstanding economic strengths. These institutions have demonstrated their ability in the main to approach and perform this function in a careful and effective manner and with real balance in their responsibilities to the borrower-purchaser and to the savers who entrust their savings to them. The future progress of these institutions, particularly during a period such as now when the potential home demand exists and yet home construction is below actual need, will depend upon the associations' ability to serve the moderate income market. A 90 percent lending power would give the Federal savings and loan associations a real tool to perform this need and in the most economical manner possible. May I suggest and recommend the committee's endorsement of this regulation which may be made effective through administrative action of the Federal Home Loan Bank Board. This regulation will accomplish for many Federal savings and loan associations, including the First Federal of Chicago, basic objectives set forth in the proposed home loan guaranty corporation. On behalf of the First Federal Savings and Loan Association of Chicago, I want to express our thanks to the entire committee for making the expression of our views possible. 25834-58-53 |