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Mayor D'ALESANDRO. We have very little financial capacity, Mr. Chairman.
The CHAIRMAX. All the American cities are limited in their indebtedness, limited in their tax rates, and expenditures; are they not?
Mayor D'ALESANDRO. That is right. In Baltimore, the budget for schools was $11,000,000; today it is $23,000,000. Over 100 percent increase.
The CHAIRMAN. And you have a limitation on your indebtedness under the constitution?
Mayor D'ALESANDRO. Yes, sir.
Mr. Cole. One pleasant thing about the Federal Government is that we have no limitation, and our expenditures now have arrived at about $50,000,000,000 for the next fiscal year. So, it is delightful that we can come down here and not worry about our limitations.
Mayor D'ALESANDRO. Congressman, if we do not come to the National Capital, where would we go?
Mr. Cole. I think you could go home and do it.
Mayor D'ALESANDRO. If we went back to the mayor of your town and told him to fix the slums and make all these improvements, what would the tax rate be in your town, and would the people stand for it? After all, it is taxpayers' money, whether you get it from the peonie in your town or from the National Government. The people pay for it in the end.
Mr. KUXKEL. Mr. Chairman.
Vr. KUNKEL. If you do not have a pretty good standard of enforcement of health and sanitation provisions, such as you do in Baltimore, can you possibly avoid the continuing creation of additional slums?
Mayor D'ALESANDRO. You could not.
Mr. KUNKEL. The point I am trying to make is that the key to the final solution of this whole problem is the enforcement of proper standards on existing residential property, because otherwise you keep on building new houses to eradicate existing slums, but in the meantime new slums are creeping in and getting worse as time passes on.
Mayor D'ALESANDRO. Congressman, everybody tries to better himself. They try to move into new homes. They rehabilitate themselves and try to get into new sections. Nobody likes to live in the slums. I was born and raised in the slums, and I still live in the slums of Baltimore. And I did the best job of redevelopment in my section, by doing it with my own home, with my example, I tried to get people to fix their homes up and keep the old section alive.
Mr. KUNKEL. I mean you have to have the standards enforced in order to keep the property from deteriorating.
Mayor D’ALESANDRO. We do, yes. That is the Baltimore plan.
Mr: KUNKEL. Yes, and that is essential everywhere if you are going to go toward the eventual elimination of slums.
Mayor D’ALESANDRO. That is the point I am making; that that is your starting point, no matter what you do from there.
Mayor D'ALESANDRO. That is right. It costs us $14,000,000 a year.
The CHAIRMAN. If there are no further questions, you may stand aside, Mr. Mayor. We are very glad to have your views.
Mayor D'ALESANDRO. Thank you.
Mr. PATMAN. Mr. Chairman, may I have a minute to suggest the presence here of Mr. Richard C. Nongard of Dallas, Tex., an investment banker, and Mr. H. H. Russell of New Boston, a commercial banker, and I would like permission for each of them to file a statement in the record in support of the provision in the bill providing for commercial banks to take part in the purchase of bonds.
The CHAIRMAX. Permission is granted.
Mr. BUCHANAN. Mr. Chairman, before these statements go in and at the close of the mayor of Baltimore's testimony, I would like again to call attention of the committee to the statement of John Taylor Egan on April 7, which was read into the record, and which had some very interesting data on the income limits under the present program, and I think again this should be emphasized.
The CHAIRMAX. That has been inserted in the record.
Mr. BUCHANAN. Yes. It is a very excellent break-down and will probably answer a number of questions for members of the committee.
The CHAIRMAN. Very well.
Congressman Javits will not be able to be here Monday, and he would like to make his statement today.
STATEMENT OF HON. JACOB K. JAVITS, A REPRESENTATIVE IN
CONGRESS FROM THE TWENTY-FIRST CONGRESSIONAL DISTRICT OF NEW YORK
Mr. Javits. Mr. Chairman, I appreciate this opportunity to appear before the committee out of turn, because I have to be in New York on Monday. I would not have sought this privilege except for the fact that I testify in support of a bill which I hope the committee will consider in comection with marking up H. R. 2009. The title of the bill is H. R. 1973 and was introduced by 10 Republican Members of the House and supported in a statement of endorsement by 9 additional Republican Members, making a total of 19. I think it is probably the most eloquent illustration we have had so far that public housing, as well as the effort to do something for the middleincome groups, is bipartisan, and I would like to submit for the record, if I may, as part of my statement, a list of the Members who have introduced that legislation and who supported it by a statement of endorsement.
The CHAIRMAX. That may be done.
Mr. Javits. Mr. Chairman, I would like to make just one or two very brief observations on public housing and then proceed to the main point that I would like to concentrate on, which is housing for the lower of the middle-income groups.
The bill, H. R. 1973, proposes that there shall be 800,000 publichousing units authorized for construction over a period of 6 years, and is very much like the Senate bill. As a matter of fact, I rather feel that the Senate profited a good deal from similar legislation introduced by our Republican Congressmen. It contains this acceleration and deceleration clause, which we recommended in the Senate bill, and I would like to call the attention of the committee to this point. The acceleration or deceleration contained in the Senate bill is not premised on the situation in the general economy. In other
words, this is not a public-works program but is premised only on the situation in the housing industry. In other words, are there materials, is there labor available, and so forth, and the President has given authority, with the advice of his Council of Economic Advisers to accelerate or decelerate the program.
One other point in our bill which these 19 Members are backing is this: It contains no fixed cost limit such as is contained in the Senate bill and in H. R. 4009, which is before this committee.
We suggest that because of the difficulties of bringing costs within the exact limitations in many cities, and instead our bill contains an injunction against any elaborate construction, there is a catechism in the bill which will protect against any wastage in construction, but will leave flexibility with regard to the cost limits, depending upon the situation in particular communities.
One last point. I could not help but hear today the views of the mayor of New York and the mayor of Baltimore, and it may be of interest to the committee to have a little grass-roots information. I have in my district an area called Manhattanville, in which some sixty to seventy thousand people live in slums among warehouses and other manufacturing buildings. It so happens that Manhattanville borders upon a great iniversity district. Those of you who know New York will remember that from Columbia University a sharp hill descends, as one moves north on Manhattan Island, and we call that the valley and that is Manhattanville. It lies at the foot of Columbia University, the Union Theological Seminary, Barnard College, the Jewish Theological Seminary, the Riverside Church, some of the most distinguished cultural institutions in America.
These institutions got pretty tired of this view of the slums right below them and got together to do something about it. The rate of juvenile delinquency in Manhattanville is very high. It approaches any area in the United States in intensity, and two-thirds of the population are either Puerto Rican or Negro. The other third of the population is very heterogeneous in national and racial origin.
They made a very thorough investigation. They did what is Baltimore, insisted on sanitary laws being observed, and making landlords really comply with the health regulations, and so on. When they had gotten all through with that, these great institutions, which had devoted their resources to this purpose, came to the solemn conclusion that nothing, nothing other than the construction of the type of structure which is public housing in that area would bring about a fundamental cure of the situation.
There is an effort probably by brains as good as you will find in the United States to correct a słum situation, breeding a very inordinate rate of juvenile delinquency, and they came up with the conclusion that the key to its solution was housing and the kind of public housing which is being contemplated under this bill.
Some of the Members will go to New York, and I hope they will take occasion, because it is very evident, to just get the physical impact of these public housing structures on the West Side of New York, in the Sixties, or on the East Side, in lower Manhattan around Fourth, Fifth, Tenth, or Twelfth Streets, and the slum areas right immediately adjoining them. The physical impact is something that I think you will never forget.
Now, the particular title of this bill which is supported, as I say, by 19 Republican members, on which I would like to spend a few minutes here, is title V, which endeavors to reach the families in the gap, that is, families who have incomes of $2,500 to $4,000 a year. I think we could all agree, Republicans and Democrats alike, that although there are abuses in public housing—we all know that there are abuses in any great public program-by and large, people who earn more than $2,500 a year do not get into public housing units. And yet the private construction market is so high in price, even with the use of title VI of the National Housing Act, which is probably the most economical way in which units for rent can be constructed, that an average rental for a two-bedroom suite, which the normal family needs, is $90 a month. That is just beyond the reach of people in that $2,500 to $1,000 gap, and both for sale and rental, they have been priced out of the market.
Now, they represent a very large segment of American life, and the yeomanry of America, to use an ancient term; they are the backbone of our country, those famiiles constitute 151,2 million, 41.7 percent of all American families are in that bracket. In addition, that hits very hard the veteran because I think we all recognize that veterans of World War II, by far the most numerous, fall in the age bracket of the twenties, or very little over 30, and, regardless of the competence of a particular man, he is not earning any more than the $1,000 a year which prices him out of the rental or sale market. So we have designed this title V in our bill for the purpose
of meeting that particular situation, without the expenditure of Federal funds, but with the use of Federal credit. Now, I would like to emphasize this: we have fixed the figure of $3,000,000,000 in direct Federal loaus, at the rate of $500,000,000 a year for 6 years, with again an acceleration clause permitting that to be set up to $750,000,000 a year if the President believes the housing situation warrants it.
I would like to emphasize, however, that there is no magic in the figure. The figure of $3,000,000,000 will produce, we estimate, 360,000 housing units. About 60,000 units a year. I understand Representative Mitchell has put in a bill for $6,000,000,000 along pretty much the same lines, after our bill came in, and that would permit of twice the number of units, 120,000 units a year.
I would like to respect fully submit that there is no magic in the figure. The question is the principle. If the principle be accepted even on an experimental basis and it works out, then, as happened with Federal Housing Administration insurance, I am sure the (ongress, faced with a program that is working, will certainly not be loath to increase the amount which is available for a working program. So I would like to emphasize that we are not married to the figure, though the figure in our bill, we think, is a fair middle shot at it.
Now, to describe the proposition a little more in detail, this direct loan title is to be made available to redevelopment companies, that is under State redevelopment laws, such as we have in New York, which limit income and at the same time give certain tax exemption to nonprofit corporations, mutual housing associations, and to cooperatives. The idea is that almost any mit, a church, an American Legion post, any imit, which has a housing need, can make itself eligible for and under title V. The whole key to it is that the interest rate which is then afforded to the people who borrow the money is not the present mortgage rate which runs around 11 to 5 percent even under the Federal Housing Administration, but the going Federal rate of interest, 212 percent, plus 1 percent for servicing, and we set up a Federal Loan Commissioner in the office of the National Housing Administration for the purpose of concentrating on and looking after this program.
Now, the saving in rents occurs because of the low-interest rate, which accounts for somewhere between $15 and $20 a month in saving on this normal unit, this two-bedroom unit.
Through greater tenant maintenance, because these are largely cooperative, through the fact that there is no profit in the land which is dedicated to the use for property, and in the operation of the property from year to year, and to very much lower vacancy reserves, we have estimated, and there is testimony in the record before the Senate, and I would like very much if I may to introduce an analysis of that in the record of this committee—we have estimated that the saving on an average $90 rental project, which you would have under title VI, would reduce rentals to the area of $35 to $65 a month. The saving would be somewhere between $25 and $35 a month in connection with these items which I have described. And I would like to introduce for the record, if I may, Mr. Chairman, as part of my statement, an analysis of just how that saving is effected.
The CHAIRMAN. Mr. Javits, we are considering H. R. 4009. How do you stand on that bill?
Mr. Javits. I think I have made that clear, Mr. Chairman, that the bill which we have submitted and which we are behind, is substantially in accord with the Senate version of the Public Housing title and H. R. 4009 has some differences as it stands today. The major differences are the 1,050,000 units as against 810,000 units, and the fact that H. R. 4009 does not contain the acceleration and deceleration clause.
I think it would be fair to say as follows: for myself, I favor the 1,050,000 units. I think, for my colleagues, however, who have introduced 1973, it is fair to say that they would favor the Senate bill as against the House bills to number of units,
I think also that we all favor, including myself, very much, the acceleration and cleceleration clause and I hope it will be written into H. R. 4009. But I believe, sir, that our submission of this bill, with its public housing title, clearly indicates support by these Members who have sponsored the bill, for the principle and, indeed, the practice of public housing as far as the Federal Government is concerned, the differences being in details.
Our bill contains other provisions with respect to the changes in the Federal Housing Administration mortgage system, but I do not believe that it is necessary to take the time of the committee on that point.
I would like to make just one minor point, and that is that we suggest, in our bill, as an item in creating eligibility for the Federal Hlousing Administration insurance, that contractors must provide a warranty good for a year against structural defects, faulty materials or workmanship, or other defects in construction.
We suggest that rather strongly because we have had very bad experiences in New York with jerry-building, people who have sold houses to veterans, where veterans have then found their cellars full of