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These included such important materials as wire nails, cast-iron soil pipe, gypsum lath, and hardwood flooring. While we continue to receive some reports of temporary shortages in certain localities, by the end of 1948 they had become less widespread and of lesser duration, and we know that the pipe lines of certain materials are so well filled that production is being curtailed.
On the labor side, locality reports of shortages likewise became much less widespread and less frequent by the end of 1948. The construction labor force is being augmented constantly by the enlarged apprenticeship programs being conducted by the building trades in cooperation with the Federal Government. From the testimony presented by labor spokesmen before the Senate Banking and Currency Committee, I am confident that organized labor recognized its responsibilities under the proposed program and that it will make every effort to assure an adequate supply of construction workers once the go-ahead signal is given.
I firmly believe, therefore, that our Nation has the material and human resources to undertake the kind of a housing program we need.
BACKGROUND AND PURPOSES OF THIS LEGISLATION
This frank appraisal of housing conditions should not be construed as deprecating, in any way, the progress that has been achieved under the legislation enacted by the Congress over a period of 17 years. As we reflect on the conditions under which they were established, I think that we can be proud of the accomplishments under programs like those of the Home Loan Bank Board and the Federal Housing Administration in stabilizing finance and encouraging housing construction and home ownership. We can be proud also of the results achieved under the modest low-rent public housing program started before the war and of the emergency programs which were undertaken under great stress to meet war housing requirements and which continue to serve housing needs.
The results of these efforts, rather, are all the more convincing evidence that the Government, in cooperation with all elements concerned with housing production and finance, can achieve success in a broad attack on our total housing problems. The legislation which has been before the Congress for the last 4 years was designed to provide such an approach.
A few of these legislative proposals have already been put into effect. One is the establishment of a permanent, over-all housing agency in the Federal Government. Our experience under the Housing and Home Finance Agency has demonstrated the value of coordination in the Federal Government's housing policies and administration. In addition, legislation passed by the Congress last August contained extensions of financing aids to private home building and finance which had been a part of the previous comprehensive bills and also authorized a limited program of technical research on certain of the problems confronting the housing industry.
However, these steps represent only fragments of the broad approach required for effective action on housing. We still lack the comprehensive machinery needed to mobilize the resources of the Federal Government, of communities and of industry, finance and labor in a concerted action to overcome the intolerable housing conditions we have.
We need today, first of all, a statement of our national housing policy and objectives which would set the pattern for our long-range housing action and define our housing goals.
We need today effective means for providing good homes for families with incomes too low to purchase or to pay an economic rent for adequate privately owned housing, either now or in the foreseeable future. The lack of these means bears equally heavily on low-income families in cities, in rural areas, and on Tarms.
We need today a program to aid communities in the clearance of slums which have become through the decades an increasingly critical burden on family and community life.
We need adequate machinery for an effective attack on the basic problem of housing costs through research and the application of its results.
The broad purpose of the bill which I am supporting in this testimony is to fill those gaps to the extent possible within our present resources and knowledge. I am not, of course, contending that any single bill or current set of bills can provide the final answer to the housing problem. Clearly, we must continuously perfect our approach on the basis of experience and legislation. For example, onr limited experience with the improved financing aids provided by the Congress last year has already convinced me that we need further refinement and
expansion of these tools if we are to serve adequately the broad range of middleincome and lower-middle-income families of veterans and nonveterans-families who have been increasingly priced out of the market for privately built housing at the prices and rents generally prevailing.
I wish to emphasize my conviction that this bill, together with legislation already enacted, would, for the first time, establish a sound foundation for a housing program meeting the Nation's over-all needs. The basic principles of this bill have been consistently recommended by the President; they are in accord with the recommendations of three special congressional studies of housing undertaken within the past 4 years, and they were approved by this committee last year.
I should like to discuss next the provisions of the pending bill and how they will apply to the problems I have outlined.
DECLARATION OF NATIONAL HOUSING POLICY
The Congress has enacted separately many important measures dealing with one aspect or another of the housing problem. However, there has not as yet been a declaration by the Congress of a national housing objective and a comprehensive national housing policy. Such a declaration would furnish an essential frame of reference for evaluating our methods and progress in relation to a clearly defined national housing goal.
This bill would establish as the ultimate housing objective the realization, as soon as feasible, of the goal of a decent home and a suitable living environment for every American family. In view of what we know about the evil effects of bad housing and undesirable surroundings on the lives of people, I do not see how anyone can seriously challenge the desirability of that objective. I think that a positive statement by Congress that every American family should have the opportunity for a decent home in a suitable environment will, in itself, give a big lift to the millions of families who because of their income, race, or other circumstances beyond their control are forced to live under undesirable circumstances,
The policy to be followed in seeking the attainment of that desirable obpective is based on the premise that the provision of housing in the United States has been and will continue to be primarily and predominantly the function of private investment, private construction, and private ownership and management, and that governmental aids shall be designed to stimulate and supplement-not to impede or supplant-private-enterprise operations.
The bill, therefore, declares it to be the policy of the Federal Government to encourage and assist, by all reasonable means, the expansion of private housing enterprise so that it can more broadly serve the housing needs of our families. It declares further as a matter of national policy that Federal assistance shall be extended for slum clearance and for the provision of decent housing for low-income families in cities and rural areas, to the extent that these problems cannot otherwise be overcome and the needs cannot be met through the use of existing housing or new private construction.
The policy statement directs the Housing and Home Finance Agency and other agencies having responsibilities concerned with housing to exercise those responsibilities in such manner as to facilitate progress in achieving the housing goals outlined in the policy declaration and as to encourage and assist specifically the attainment of certain specific objectives, as follows:
1. The production of housing of sound standards of design, construction, livability and size for adequate family life;
2. The reduction of the costs of housing without sacrifice of such sound standards.
3. The use of new designs, materials, techniques, and methods in residential construction, the use of standardized dimensions and methods of assembly of home building materials and equipment, and the increase of efficiency in residential construction ;
4. The development of well-planned, integrated residential neighborhoods and the development and redevelopment of communities; and
5. The stabilization of the housing industry at a high annual volume of residential construction. This statement of housing objectives and the methods by which they shall be achieved will establish the basic guide lines for the concerted and sustained efforts by industry, labor, communities, and the Federal Government which are required to help overcome the national housing problem. This guidance
will apply not only to the execution of the housing programs proposed in this bill but also to existing programs and to the further programs which the Congress may consider in the future.
TITLE I--SLUM CLEARANCE AND COMMUNITY DEVELOPMENT AND REDEVELOPMENT
Title I of the bill deals with slum clearance, and the related subjects of community development and urban redevelopment.
I have already described to you the deplorable condition of a large part of our urban housing. Most of the 6,100,000 substandard nonfarm dwelling units are located in the slums and blighted areas. I have referred also to the severe social costs which are associated with these areas.
In city after city, the rates of infant mortality, disease, juvenile delinquency, crime, and fires are at least twice as great in slum and blighted areas as in the city at large. These are social liabilities of the first magnitude, which also cause greatly increased outlays on the part of the communities. In one eastern city, for example, it was found that in 1946 per capita revenues from an area of good housing exceeded public expenditures in that area by $108, whereas for a slun area, expenditures exceed revenues by $88.
The Senate Banking and Cu ency Committee summarized the situation succinctly in its report accompanying S. 1070 when it said: “States and cities are increasingly aware of the social costs of slums, of the threat to municipal solvency arising from the spread of slums and from the increasing spread of new building to the outskirts of cities, and of the heavy municipal outlays for city services in slum areas which greatly exceed the tax revenues derived from those areas."
If slum and blighted areas can be cleared and rebuilt for their highest and best use, the savings and improvement in social and economic values will contribute substantially to better living conditions and improved economic stability in our cities.
The slum problem has persisted and continues to grow because its solution has been beyond the capacities of private developers and of State and local governments. With very rare exceptions private developers are not able to overcome the obstacles of the excessively high cost of land in slum and blighted areas. Because of this high cost of land in the central areas of cities, even when these areas are blighted or deteriorated, private enterprise has been able to engage in only piecemeal and sporadic redevelopment operations. In comparison with the prices and availability of open land, they have found, too, that the assembly of a tract in close-in areas large enough to permit an economical scale of operations is time consuming and very expensive. In fact, because of "hold-outs" or clouded titles such assembly is generally impossible. Public participation at this point is necessary so that the power of eminent domain may be used to assemble such tracts.
Even the combination of private and municipal efforts is insufficient to do the job. Most cities lack the resources to finance the cost of assembling land in slums and blighted areas and of making it available at prices which will permit economic and well-balanced redevelopment by private enterprise. This is evidenced by the fact that to date very few cities have actually commenced to clear any slums, and even these cities are unable to finance more than a small portion of their total needed slum clearance. The lack of substantial results under the enabling legislation for urban redevelopment which is available in half of the States of the Union leads to the inescapable conclusion that the resources of our States and cities are inadequate to finance the clearance and redevelopment of slum areas at a rate that can keep pace with, let alone surpass, the spread of slums and urban blight.
A question is frequently raised about the possibility of clearing slums and rehabilitating blighted areas by strict enforcement of local health and safety regulations. I would be the first to say that such enforcement is highly desirable but I say also that it is not a substitute for an effective slum-clearance program. Rehabilitation of many of the structures in these areas is not economically feasible. Furthermore, in cases where enforcement of local regulations result in demolition of residential structures, the basic problem of reusing the sites still remains because of the high cost of the land itself to which I have already referred.
For the bulk of the substandard housing that we are concerned with here-that concentrated in sizable slum and blighted areas—nothing short of outright (learance of the area and its rebuilding to its best use in terms of local needs will rid us of this drain on our social and economic resources. That this is so
would seem to be conclusively illustrated in the case of Baltimore. This city has a widely publicized local enforcement program but it also has a redevelopment program financed by an initial bond issue of $5,000,000 approved by the voters at the last election. The mayor has already testified before the Senate Banking and Currency Committee as to the urgency of the Federal assistance provided in this bill.
He is one of the long list of qualified witnesses appearing before congressional committees over the past 5 years who have been in substantial agreement as to the urgency for prompt action on slum clearance, as well as on the necessity for Federal assistance if the slum clearance and urban redevelopment job is to be done. A start on a broad-gage program is long overdue, for the longer action is postponed, the bigger the job becomes. I strongly urge the adoption of the slum-clearance title now, before the slum problem gets any bigger than it already is.
The program of Federal aid for local slum clearance provided in the bill is generally similar to the provisions in the housing bill considered and reported favorably last year by this committee.
The slum clearance and urban redevelopment operation is basically just this: A local public agency--which can be a city, State or a special redevelopment agency-acquires, throuh purchase or condemnation, a slum or blighted area, selected in accordance with a general local plan of developinent, and which, after redevelopment, will create its own environment and not be subject again to the encroachment of blight. The area is then cleared and made available, by sale or lease, for private or public redevelopment in accordance with a locally adopted plan for the redevelopment of the area.
The combination of new uses called for under the local redevelopment plan will generally produce average land values which amount to less than the cost of acquiring and clearing the slums and blighted areas and preparing them for
Therefore, the operation will involve a loss, generally of substantial proportions. This loss is defined in this bill as the “net project cost." It is this loss, together with the need for funds to finance initial costs of assembly, clearance, and preparation for resale, which makes it impossible for private enterprise or for the localities alone, to do the job and which makes Federal financial assistance to local public agencies necessary.
The bill provides two types of financial assistance to local public agencies: temporary and long-term loans, and capital grants. The temporary and longterm loans are in no sense subsidies, are fully repayable and must bear interest at not less than the rate on long-term United States Government bonds. They are needed to supply funds because the economic and legal limitations on municipal credit frequently preclude sufficient local borrowing on favorable terms for slum-clearance projects.
Temporary loans will be used principally by local public agencies to plan projects, to acquire and clear land, and to prepare it for reuse. These temporary loans are repayable when the land is sold or leased for redevelopment. Temporary loans may be used also to assist municipalities or local redevelopment agencies to finance public buildings or other public facilities serving open land areas brought within the scope of local programs, as described later in this statement.
The long-term loans will be used by local public agencies to refinance the portions of slum-clearance sites which are leased. They will be secured by a lien on land rents. I have no reliable estimate of how much land in redevelopment projects will be leased rather than sold. There appears to be, however, a growing interest in the leased-land arrangement.
Capital grants are needed to help local public agencies finance the loss or “net project cost.” Capital grants may amount to not more than two-thirds of the total net project costs of all projects undertaken in any one locality and never more than the net project cost in the case of any one project.
The balance of the net project costs must be borne by the local public agency. This local contribution to a project will frequently be in a form other than cash, such as the provision of parks or schools, the construction or relocation of streets and utilities, or the use of municipal labor and equipment to clear a project area. The 2-to-1 grant formula recognizes, as closely as can be determined, the full extent of what cities can generally contribute to a well-designed local slum-clearance program. It also recognizes that adequate provision must be made for meeting the write-off required to assure that the area is redeveloped for the wisest possible future use.
Under this title Federal assistance is limited to project areas which were either predominantly residential at the beginning or are to be redeveloped primarily for residential use. This principle grew from the extensive study of the Subcommittee on Housing and Urban Redevelopment of the Senate Committee on Postwar Economic Policy and Planning, completed in 1945, and has been embodied in the slum-clearance proposals in the previous comprehensive bills. I believe that it is sound. I think that the national interest fully justifies financial assistance to cities to eradicate the intolerable conditions of our residential slums and to inake presently blighted areas available for sound redevelopment. Studies of a number of cities indicate that housing use covers a range of from 60 to 90 percent of all residential, commercial or industrial land. This is true of slum and blighted areas as well as good areas. The majority of potential projects for clearance and redevelopment, therefore, will be predominantly residential.
Under the provisions of title I, Federal assistance for the assembly and clearance of blighted areas which are not predominantly residential in character may be made available only if such areas are to be redeveloped for predominantly residential uses. This limitation recognizes our great national need for housing and for sites within our cities upon which this housing can be built.
These limitations on the types of slum clearance projects which can be assisted under the bill do not mean that blighted business and commercial districts cannot be redeveloped for an appropriate combination of uses. On the contrary, so long as the new development is predominantly housing, the bill anticipates that such projects will include shopping centers, schools, parks, parking areas, and other uses which the localitly determines are appropriate and which result in well-planned, integrated neighborhoods and communities.
Residential slum areas which, with the aids provided in the bill, may be assembled and prepared for redevelopment for any use, residential or nonresidential, may include within their boundaries blighted business, industrial and commercial districts. The criterion in such cases is whether the project areas as a whole originally were predominantly residential in character.
It apparent that the elimination of residential slums in central city areas and their redevelopment in accordance with a plan for the most appropriate use of the land therein (i. e., for housing at more appropriate density, for public use, or for business and industry) make necessary a dispersion of the families now living in such slums. Federal assistance for the acquisition and preparation of open unplatted urban or suburban land to be developed for housing use is, therefore, essential and entirely appropriate.
The reuse value of the land would ordinarily be such that no subsidy would be necessary. Accordingly, the bill provides that only Federal loans, but not grants, may be made for projects on open unplatted land. This limitation does not apply to open platted land, namely abandoned subdivisions, since the acquisition and preparation of such sites for appropriate development may involve some loss to the local public agencies.
I have already noted that temporary loans provided in this title may be used to finance public buildings and other public facilities serving open land projects. Without this assistance such projects may be severely handicapped by the lack of schools or other public facilities which cannot be financed until the development is completed and the new residents can produce sufficient taxes to support local bond issues for these purposes. Loans for this purpose are limited to 10 years, which should give ample time for permanent local financing.
All projects assisted under the slum clearance title are limited to the acquisition of land in the project area, the clearance of old structures, the improvement of the site by installation or reconstruction of streets and utilities, and making the site available for appropriate reuse. The Federal aid provided does not cover any building construction, except, as already noted, in the case of temporary loans for public facilities serving open land projects. The bill provides there must be the maximum opportunity for private enterprise in redevelopment plans of the locality. Although there will be some participation by localities in the rebuilding of these areas, through the provision of schools, parks, and other public facilities, and public housing on sites which the localities determine are best suited for that use, the rebuilding of slum sites will be largely done by private enterprise. The program will undoubtedly stimulate a large volume of private construction. Desirable central city sites will be made available not only for housing, but also for related commercial facilities. Large-scale residential builders who have been forced to use land far out from the center of town will thus have the opportunity to transfer their activities to more central locations.