HOUSING ACT OF 1949

FRIDAY, MAY 6, 1949

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met, pursuant to adjournment, at 10 a. m., Hon. Brent Spence, chairman, presiding.

Present: Messrs. Spence, Brown, Patman, Monroney, Hays, Buchanan, Multer, Mitchell, O'Hara, Kunkel, Talle, McMillen, and Cole. The CHAIRMAN. The committee will be in order.

We will resume the hearings on H. R. 4009.

General Farrell, chairman of the New York Housing Authority and representing Mayor O'Dwyer, will be our first witness this morning.

We will be very glad to hear you, General Farrell.

General FARRELL. Thank you. I would like to present the statement of Mayor O'Dwyer of New York.

STATEMENT OF HON. WILLIAM O’DWYER, MAYOR OF THE CITY OF NEW YORK, PRESENTED BY GEN. THOMAS F. FARRELL, CHAIRMAN OF THE NEW YORK HOUSING AUTHORITY

General FARRELL. Mr. Chairman and members of the committee, New York City urges favorable action on the housing bill before this committee.

The bill provides a substantial program, to be carried out in a reasonable length of time. It offers real hope to cities with severe housing shortages that they will be able to meet some of their worst housing problems.

Although New York City has been more fortunate than most in being able to build a large amount of public housing since the war, because of city- and State-financed programs, it desperately needs the Federal aid which your bill would provide if it is to make any real headway in solving its housing problems. Despite a postwar public housing program of 43,000 apartments, most of it already built or in construction, New York City still has many thousands of families, most of them young veterans, who are raising families in rooming houses, hotels, cellars, or other crowded, shabby, and squalid quarters. The exact shortage will not be known until the 1950 Federal census, but it is the largest in New York's history. The city has exhausted all of its resources in committing its entire housing debt limit of $328,000,000. The State has just authorized another $300,000,000 for housing. The Federal Government should also do its share.

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The normal laws of supply and demand do not work in the field of housing for our low-income families. They cannot afford to build or buy a home, and private builders cannot afford to build rental apartments for them. The only hope that they will be able to raise their children in decent homes is in Government-aided housing. The extent of their hope was dramatically illustrated several weeks ago when applications were opened for one of New York City's housing projects. Hundreds of people were lined up at 9 a. m., when the office opened, and during the day more than 30,000 people came to get an application. Thousands more came on following days.

The effect public housing has on lowering the costs of police protection, health service, fire prevention, and sanitation is well known to this committee. A well-planned public housing program offers other beneficial effects to a community in addition to the individual families who are provided with its homes. A construction program such as this would stimulate business because public housing is designed by private architects, built by private construction firms, and private investors purchase most of the bonds.

Building costs are slightly lower now than during the peak period of 1948. During the life of this program, it is reasonable to expect variations in costs. The limitations now in the bill will permit such variations without tying up the work as happened at the end of the The bill prohibits elaborate or extravagant design, which is the best safeguard against excessive costs.

war.

The provisions for slum clearance and redevelopment are satisfactory. They provide an excellent opportunity for extensive redevelopment, largely by private enterprise, of worn-out sections of our city.

Without the Federal aid provided by the housing bill, there is little hope of clearing the slums and providing homes for low-income veterans in any of our major cities. The costly job cannot be done by private builders at present costs.

The provisions of the bill which would permit commercial banks to underwrite and deal in the local housing agency bonds should be retained because broadening the field of competition would lower interest costs.

In New York City's program both investment houses and banks have participated, resulting in cheaper money. A recent issue of $48,375,000 New York City Housing Authority bonds was sold in competitive bidding to a group headed by New York commercial banks and including both banks and investment houses. The low bid saved $740,000 in interest cost, which will be reflected in lower rentals. If the bill is passed, the Eighty-first Congress will have made a great contribution to the national welfare by providing a comprehensive national housing policy and the means of carrying out the long-overdue housing and slum-clearance program. The Nation will continue to depend on private builders for most of its homes, and at the same time provide Government help for low-income groups who need that help so badly.

That concludes my statement. Mr. Chairman.

Mr. MULTER. Mr. Chairman, if no one else has any questions, I have a few questions.

The CHAIRMAN. You may proceed, Mr. Multer.

Mr. MULTER. General Farrell, the question has been raised here as to whether or not the cities and States can carry on the slum-clearance and public-housing program on their own. Am I right in saying that Governor Dewey, who is recognized in our State as the outstanding Republican of the State, and Mayor O'Dwyer, who is certainly a leading Democrat of the State, are both in agreement that neither our city nor our State can carry on this job without Federal aid?

General FARRELL. I think that is right, Mr. Multer. New York State has contributed largely to the program. We are now in New York City carrying out programs either under way or which will be under way, which will total some $360,000,000, with State aid.

The State legislature this year has passed an additional $300,000,000 authorization which will be voted on this fall. New York City will get out of that some $250,000,000, making a total of about $600,000,000 of State funds, largely after the war, in New York City for housing. New York City itself has gone to the full amount of its debt limit in its own programs and in supporting the State programs, to a total of $328,000,000. That is the ultimate of its constitutional authority to aid housing.

Still, with those programs, there remains a vast amount of old housing, and there is a great shortage of housing for people in the low-income bracket. So I think the answer is that without Federal help the program will be insoluble for a long time.

Mr. MULTER. General, the charge has been made here by at least one opponent of this proposed legislation that public housing authorities are being used, and can be used, for political purposes, and the intimation is that the tenants will follow the political affiliations of those who are in charge of the public housing authorities. Can you tell us something about that, so far as the city of New York is concerned?

General FARRELL. I do not think that charge can be sustained in New York City. We have, as you know, tremendous numbers of applications. In the last month, from March 15 to April 15, we received over 105,000 applications. The number is so large that we have to have some sort of a screening system.

We have a very rigid set of priorities, and when the priorities are finally established, they go into automatic machines, as numbers, and when they come out of the IBM machines, a set of numbers produces a list of people who are highest in priority and those are the ones going in first. So while we do get requests from every person in public life and people in private life, be they Republicans, Democrats, National, State, or local, urging that their friends get in, the actual selection is made by a scientific method.

Mr. MULTER. So far as you know, neither in the State authority, which is Republican controlled or dominated, nor in the city authority, which may be said to be in the opposite political camp, has any applicant for either State or city housing projects ever been asked his political affiliation?

General FARRELL. We forbid our investigators to ask that question. The CHAIRMAN. General Farrell, is New York City, under its charter, limited in its expenditures for a year, and limited in its indebtedness?

General FARRELL. Yes, sir.

The CHAIRMAN. That is the general rule throughout the country, is it not?

General FARRELL. Yes, but we do have in New York State this special authorization of 2 percent of the assessed valuation, which can be applied especially to housing and under that provision New York City has obligated its entire $328,000,000 for public housing

purposes.

The CHAIRMAN. How near are you to your constitutional limitation on the indebtedness?

General FARRELL. It is a little bit beyond my ken, Mr. Chairman, but I think we are fairly close to it. We have a small margin, but I do not know what it is, sir.

Mr. MULTER. The legislative picture of that is just this: not only does the city charter impose a debt limitation, but also there is a tax limitation under the State constitution. And in order to get his money from the State to help the city of New York, we had to amend our constitution, and then in order to comply with that, we had to go to the people of the entire State with a proposition authorizing a bond issue to make this additional money available to the State and city for housing.

General FARRELL. That is correct.

The CHAIRMAN. After being passed by a two-thirds majority. I suppose.

Mr. MULTER. No; the people had to vote on it. It had to be passed by a majority at the general election.

The CHAIRMAN. Are there further questions?

Mr. KUNKEL. Mr. Chairman.

The CHAIRMAN. Mr. Kunkel.

Mr. KUNKEL. I note that on page 2 of your statement (transcript p. 991), General Farrell, you say:

The effect public housing has on lowering the cost of police protection, health service, fire protection, and sanitation is well known to this committee.

Well, I have seen very few definite figures on that, and I wonder if you could put in the record the amount of the drop in the cost of police protection, and so forth, in New York, which has occurred since this public housing program, which you have put into effect, has been in existence. Could you obtain those figures?

General FARRELL. I think there are some studies, and I will be very glad to check them and send them to the Committee. I am very certain that a study was made some time ago reflecting those figures, and I will be glad to submit them to the committee.

Mr. KUNKEL. It is a very hard thing to trace, and if you have any studies on that point, I would like to have them, and I would like to ask permission that they be inserted in the record when submitted. The CHAIRMAN. Without objection, they will be inserted.

(The information referred to was not submitted in time to be included in the record of the hearings.)

Mr. KUNKEL. What is the scientific method used in selecting tenants?

General FARRELL. We have a set of ratings which take into consideration the man's income, the size of his family, his present living conditions, and certain other factors-8 or 10 factors-which are given a scoring, and then put into the machines and those with the lowest

scoring under a certain set of conditions come out the highest. Those are the conditions. Veteran status is mandatory. Then, primarily, it is the income, the size of family, and the living conditions. There are a series of ratings as to living conditions.

Mr. KUNKEL. You mean as to where he was living before?

General FARRELL. Yes; before he goes into public housing. That is correct.

Mr. KUNKEL. What do you do about the ones who might be called welfare cases? Do you take those?

General FARRELL. We take them in. We have now, I think, about 12 percent of our total population in public housing receiving welfare assistance in whole or in part. There is no discrimination of any kind, in fact, they, of course, would get a higher rating than those with higher income, other conditions being equal.

Mr. KUNKEL. You would give a higher rating to the ones with the higher income?

General FARRELL. No, sir; a higher rating to the ones with lower income. A higher rating, for getting in, to those with the lower income.

Mr. KUNKEL. And do the people on welfare who get into the projects pay their rent from the money they receive from the welfare department?

General FARRELL. They do. They pay it in whole or in part from welfare, that is correct.

Mr. KUNKEL. Do you absorb any of the rent which they are unable to pay?

General FARRELL. The authority does not, the welfare agencies do that. The welfare people put up the same rent as other tenants in the project, and the welfare agencies absorb that.

Mr. KUNKEL. And do they pay you directly?

General FARRELL. They do not. We would like to have them do it so we would not lose some rent, but they pay the tenant and we get it from him.

Mr. KUNKEL. Do you have much trouble collecting from them? General FARRELL. No, because the penalties are so severe. It is an eviction, and that is a pretty severe penalty.

Mr. KUNKEL. So there really is no financial reason that you can see why people on welfare should be excluded, or to put it more mildly, discriminated against, as tenants in public-housing projects?

General FARRELL. On the contrary, we think they should get priority. Mr. KUNKLE. Thank you very much.

Mr. HAYS. Mr. Chairman.

The CHAIRMAN. Mr. Hays.

Mr. HAYS. General Farrell, I note what you have to say about excessive costs. Have any studies been made indicating the cost of public housing in your area as related to equivalent housing in the private housing field?

General FARRELL. I feel certain that equal facilities cost equal dollars, because we employ the same contractors, we have the same competitive bidding, and we have to compare equals. But I am sure that we are in a straight competitive market, our plans are designed by private architects, our buildings are built by private contractors, and I am sure we do not operate any excessive costs on the housing.