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that statement definite as to whether or not you contemplate in any way to refund that State for those expenditures, in order to level off what they have done with what practically all States in the Union have done in delaying and defeating legislation providing moneys for public housing, in contemplation of securing the aid that is provided in this bill right here—deliberately defeated legislation, the various States; I could name some of them-in waiting for just exactly what has happened here. I wonder whether or not you have in mind any provision for reimbursing or refunding my State or the city of Chicago or the city of Decatur for what they have already done in order to bring this equity about.
Mr. FOLEY. I will be glad to try to get that for you, and I am sure I can get it for you and will indicate what part of it will be affected by the provisions of this bill, particularly the conversion provision as contained herein. I do not know how quickly we can get it, but we will get it as quickly as possible.
(The information requested is as follows:)
STATE HOUSING LEGISLATION AND ACTION IN ILLINOIS
Low-rent housing and urban redevelopment
(1) In 1945, $10,000,000 of State funds were appropriated for grarts to municipalities for low-rent housing and urban redevelopment. Funds were to be allocated to counties and cities having a population of 25,000 or more, on the basis of population, to be spent by local housing authorities or land clearance commissions for urban redevelopment and low-rent housing. Communities were also permitted to use these funds to provide temporary veterans' housing (S. B. No. 339, Laws of 1945). (This act was repealed by S. B. 549, mentioned below.)
(2) In 1947, the Governor approved three laws (the Blighted Areas Redevelopment Act of 1947, an act to facilitate the development and construction of housing, and an act in relation to rehousing persons residing in the areas of redevelopment projects undertaken pursuant to be Blighted Areas Redevelopment Act of 1947).
(a) Senate bill 548 (Laws of 1947) authorizes $10,000,000 in grants to city-land clearance commissions for land assembly in blighted areas. The funds are not to be used for actual construction. The program is supervised by the State housing board. Cities are required to match the State contribution dollar for dollar. Under the law, land which is cleared may be sold to local housing authorities, redevelopment corporations, insurance companies, nonprofit corporations, or any private corporation or individual. The redevelopment plan must meet with the approval of the city council, the land-clearance commission, and the State housing board. Land may be sold as its reuse value.
In order to raise the matching funds, cities may issue bonds and may levy real-estate taxes to pay the principal and interest on the bonds.
(b) Senate bill 549 (Laws of 1947) authorizes $6,587,000 in grants to land-clearance commissions or local housing authorities to be used for the same purposes as Senate bill 548, or for providing temporary veterans housing, or for constructing housing for sale or rent to families displaced by urban redevelopment programs, or for the construction of low-rent housing. Funds may also be used as equity money for construction of veterans' housing, balance to be raised by loans. There is no requirement that the city match State funds under this act. Funds appropriated in 1945 (hy S. B. 339, repealed by this act), but not yet allocated, are recaptured to be used for the same purposes as are authorized by this act.
(c) Senate bill 550 (Laws of 1947) authorizes $3,333,000 for making grants to local housing authorities for construction of low-rent housing for families displaced by urban redevelopment projects (under Senate bill 548), but cities must give to their local housing authorities sumns which match the State funds.
(a) Senate bill 662 (Laws of 1947) approved July 21, 1947, appropriated $10,000,000, $6,567.000, and $3,333.000, respectively, for carrying out the purposes of the acts referred to in paragraphs (a), (b), and (c), and, also, $100,000 to the State housing board, which is authorized to make the grants, for administrative expenses. A total sum of $30,000,000 has thus been
appropriated for urban redevelopment and low-rent housing. (3) The status of the permanent State-aided housing program as of January 1948 with respect to housing for rent and for sale was as follows: "Dwelling units completed, 161; under construction, 330; approved for construction, 786; making a grand total of 1,277 dwelling units, of which 355 are scheduled for rent and 922 for sale.
(See also Laws of 1941 (pp. 431-460), as amended by H. B. 224, Laws of 1947, relating to urban redevelopment undertakings by private corporations.) Chicago
In 1945 the Chicago voters approved a $5,000,000 bond issue for land assembly and urban redevelopment. In 1947 they approved two bond issues of $15,000,000 each for matching State grants under Senate bills 548 and 550.
Excerpt from article by Neil R. Salemi, State housing board, entitled “HomesThrough State Aid,” published in Ilinois Public Works, autumn 1948:
the smallest allocation (of State funds) went to Putman County, who received $6,697, while the city of Chicago was granted 4.3 million dol
"A few of the larger cities asked to use State funds to help erect temporary army barracks and trailers, which they obtained from the Federal Government for veteran housing. The State housing board agreed to put this money to this use, providing it was spent to purchase and develop land improvements that could be used for permanent housing once the temporaries disappeared.
"Peoria was the first to function under this plan. Its success on a 17-acre site, providing 300 veteran families with quick shelter, set a pattern, which was adopted elsewhere in the State. While the full 17 Peoria acres were not put to use entirely for the temporary project, approximately one-quarter was left unoccupied until early this year, when the authority and a local nonprofit housing corporation readied plans to develop permanent housing on the original site.
“Other areas had different schemes to shelter veterans. Taking advantage of huge Army and Navy installations within their boundaries, were the Winnebago County, the Cook County, and Lake ('ounty Housing Authorities. At Rockford, the Winnebago people converted 205 apartments from raw Army barracks on the old Camp Grant grounds, while Lake County created 353 veteran units from barracks located at the Great Lakes Naval Training Station. Each of these conversions was undertaken jointly with Federal and State funds.
"The Cook County Housing Authority, using 100-percent State aid, converted 144 apartments and 36 trailer sites at the Glenview Naval Air Station in suburban Glenview. The $150,000 of State funds used on this job is scheduled to be returned to the original grant fund in less than 10 years, through a monthly collection of rents, at the rate of $52,000 a year.
"In 18 additional larger cities in the State, State money was used to erect and provide veterans with functional shelter, without the immediate cost of high rent or high purchase price. Soon after May 1946 the practice of temporary construction was curtailed in lieu of permanent housing. It was felt that the time, money, and workmanship put into part-time dwellings, often equaled the effort required by permanent construction--the emphasis turned to permanent new housing.
* * Joilet, through its housing authority and the Black Roads Estates, a private nonprofit housing corporation, submitted plans to erect 83 homes; Taylorville presented a draft for 51 homes; Hoopeston wanted a 30-unit apartment building; Steelville needed 10 rental units; Kewanee was ready for 72 private homes; and many more large development plans came to the State housing board for approval.
Each of the above-mentioned projects were built, * * It is not unusual to motor through a village of 400 persons and see a sign indicating that the two homes behind the sign are being built through State aid. Under this method the housing authority deals directly with the FHA and the ultimate buyer, omitting the private nonprofit corporation. This type program is called a 'rotation schedule. Once the homes are completed and sold in one community, the funds returned are placed into a building program elsewhere in the county. Forty-two percent of the construction in the State today, with State assistance, is being erected under the rotation schedule.'
"At the time this publication went to press, Governor Green, through a report from the State housing board, announced that plans for 1,800 new units of rental housing, estimated to cost $18,000,000, were under way to be built on Chicago's south side by private enterprise. The initial draft called for the clearance of 10 square city blocks,
“This venture, in which the New York Life Insurance Co. is expected to spend $18,000,000, was the first Chicago private-enterprise project under Governor Green's blighted area redevelopment law passed in 1947.
"In early calculations, the cost of acquiring and clearing this 10-block area will be about $3,000,000. The cleared property is expected to be resold to the insurance company for approximately $500,000. The net cost in public funds of $2,500,000 will be divided equally by the State and the city. Closely allied with this development is the rehousing program, for which the 1947 Illinois General Assembly appropriated 3.3 million dollars. Once the New York Life construction gets under way, some rehousing facilities will be available in the new 800unit public housing project now going forward in an adjacent south-side neighborhood. Again $2,117,000 of State money was used toward the completion of this project.
"As a State, Illinois has been a stand-out in the Nation in its housing legislation and administration. However, there seems to be more and more work ahead of us. Many of the tasks that lie before us are huge, and surfaces can only be scratched with State money alone. Federal aid is needed. Message of the Governor to the legislature
Following are excerpts from the message of the Governor to the legislature on January 12, 1949 :
“The outstanding paradox of our advanced age is the persistence of an acute shortage of one of the most elemental requirements of mankind-shelter-in the Nation which beyond all others is the wealthiest, most productive and most resourceful.
We know now that rural areas have their slums as well as do our larger urban centers
* * It is clear that the problem is inherently one for private enterprise. And it is also clear that it cannot do the job at rentals or costs within the reach of those most in need. The combined resources of National, State, and local governments are necessary for the solution of this problem. Presumably this Congress will enact legislation along the lines of the Wagner-Ellender-Taft bill
We must be receptive to new ideas and prepared to support the Federal program with such legislation as is necessary.
legislation permitting more rapid acquisition of land for slum clear: ance and housing purposes should accelerate solution of the problem. I urge you to consider legislation to this end.
Section 506 of H. R. 4009 provides as follows:
“Any low-rent or veterans' housing project undertaken or constructed under a program of a State or any political subdivision thereof shall be approved as a low-rent housing project under the terms of the United States Housing Act of 1937, as amended, if (a) a contract for State financial assistance for such proj. ect was entered into on or after January 1, 1948, and prior to January 1, 1970, (b) the project or can become eligible for assistance by the Public Housing Administration in the form of loans and annual contributions under the provisions of the United States Housing Act of 1937, as amended, and (c) the State or the public housing agency operating the project in the State makes application to the Public Housing Administration for Federal assistance for the project under the terms of the United States Housing Act of 1937, as amended: Provided, That loans made by the Public Housing Administration for the purpose of so converting the project to a project with Federal assistance shall be deemed, for the purposes of the provisions of section 9 and other sections of the United States Housing Act of 1937, to be loans to assist the development of the project. Section 503 of the Housing Act of 1948 is hereby repealed."
Mr. KUNKEL. Upon the passage of this bill, the United States Government then assumes a direct, unqualified obligation in the amount of $16,500,000,000, approximately; is that correct?
Mr. Egan. I do not think that is correct, Mr. Kunkel. I am talking now primarily about title II of the bill. What the Government has actually contracted to pay is the annual contribution that goes to service the debt which is the capital cost of the project. In other words, we sign a contract with the local housing authority for a maximum annual contribution, which is the subsidy. The amount actually paid is limited to what is needed, that amount is determined by what the difference is between the operating cost and what is derived from the rents. Although we obligate the Government to the full subsidy for each year, our experience has proven that we only need about 60 percent of that maximum. In other words, we get enough over-run from the rents to reduce that subsidy to about 60 percent of what the maximum would be.
Mr. KUNKEL. Would you assume an obligation of $16,500,000,000 ? The Government assumes that because it pledges its full faith and credit to pay that amount if needed.
Mr. FOLEY. If it were true that the maximum amount contemplated as possible did become payable each year from the beginning, the answer would be yes.
Mr. KUNKEL. If you add further units as time goes on, then the amount would increase correspondingly.
Mr. Egan. Do you mean if the program were expanded beyond this?
Mr. KUNKEL. If it were expanded beyond this, on a similar basis the Government's obligation would increase correspondingly. In other words, is this necessarily the end of the obligation undertaken by the United States Government?
Mr. FOLEY. I think it follows, Congressman, that if the Congress at this or any other subsequent time should authorize a further obligation, those obligations in total would increase, yes.
Mr. KUNKEL. That would be almost exactly the sum that they testitied on over in the Veterans' Committee that would be required to pay the pensions to the World War I veterans?
Mr. FOLEY. I do not think the two things are comparable, if I understand the reference you are making.
Mr. KUNKEL. Both would cost $17,000,000,000. The veterans' pension would be over a 50-year period, and this would be over a 40-year period; so the veterans pension would be actually less for the same amount of time.
Mr. COLE. Mr. Egan, may I ask one question again with reference to your statement on page 7. You have given the percentage of annual income for new admissions. I would like to know the number of new admissions for 1948.
Mr. Egan. In the total program?
(The information requested is as follows:) A total of 35,017 families were admitted to occupancy in all low-rent projects in 1948. The number of dwellings in these projects totals 190,882. The new ad. missions were relatively high because of thie families taken in to replace overincome families removed during the year.
Mr. DOLLINGER. Can you tell me whether public housing costs more to operate than private housing?
Mr. FOLEY. I think Mr. Egan can handle that.
Mr. Egan. Mr. Vinton, our economist has made a definite study of that, and I would like for him to answer that, if you do not mind.
STATEMENT OF WARREN J. VINTON, CHIEF ECONOMIST, PUBLIC
Mr. Vintox. We submitted some material last year to the joint committee. I think I can find that in half a moment. The study was based on the comparative operating costs of Public Housing projects and projects insured by the Federal Housing Administration. Of course, these are not entirely comparable in the services that they render their tenants. The level of the services of the Federal Housing Administration projects is higher and somewhat more elaborate than in the Public Housing projects, and also in the Public Housing projects we ask our tenants to do as much of the maintenance as possible and thus reduce the cost in that respect. The comparison was based purely on operating costs, excluding debt service which is different because of the different financing patterns and excluding taxes because the Federal Housing Administration projects pay full taxes and the Public Housing projects pay only payments in lieu of taxes.
The operating expenses per room per year, which is the fairest basis, on eastern projects amounted to $19.65 for the Public Housing projects, and $70.03 per room per year for the Federal Housing Administration projects.
For Midwest projects, the respective figures were $36.36 per room per year for Public Housing, and $65.95 for Federal Housing Administration. In the South, Public Housing was $28.61 against $63.89 for F. H. A. In other words, by and large, the costs of operation for the Public Housing projects were 30 to 50 percent less than for privately operated projects built in the same period and in the same areas.
Mr. DOLLINGER. Mr. Egan, can you tell me how the Public Housing program will seek to take care of large families with children?
Mr. Egan. At the present time we are limited under our statute to a unit cost per dwelling. In cities under 500,000 population, the cost limit is $1,000; and, for cities over 500,000 population, it is $5,000. This bill proposes to eliminate unit-cost limits, but to continue roomcost limits. The present limits impede us in building larger bedroom units. This bill gives us leeway to build 3- and 4-bedroom apartments, In the second place, there is a provision in here that the income used in setting rents—that is applying the 5-to-1 ratio—will be adjusted by $100 a year for each dependent that that family has. In other words, if a family moves into the project, an allowance on the income in determining the rent will be deducted by $100. That means the larger families will get greater credit. It follows somewhat the principle of the internal-revenue tax. Mr. Vinton can supplement that.