Add: Estimated additions to supply in 1947 and 1948 through new construction and conversion___. Estimated effect nonfarm supply, beginning of 1949– U. S. Bureau of the Census, current population reports, Series P-70 No. 1. Characteristics of the United States, April 1947, table 1. 2,100 34, 829 Housing TABLE 2.-Nonfarm dwelling units needing replacement or rehabilitation (1947-60) (in thousands) Urban and rural nonfarm units which were in need of major repairs Total replacement and rehabilitation need__. 15, 600 1,500 500 520 350 8,470 1 U. S. Bureau of the Census, current population reports, Series P-70 No. 1. Housing Characteristics of the United States, April 1947, table 4. TABLE 3.-Housing needs of the United States in 1960 (in thousands) Number of nonfarm families which will require housing in 1960__ Add: Allowance for 4-percent effective vacancy rate for rent or sale_. 39, 506 1,600 41,100 34, 829 Total effective supply of dwelling units needed in 1960---Subtract Estimated effective supply, beginning of 1949 (from table 1) -- Net additional number of units which need to be added to the supply by 1960 to keep up with rate of family formation Add: Total replacement and rehabilitation need (from table 2). Total nonfarm new construction conversion and rehabilita- Add: Total farm new construction and rehabilitation need---- Total United States housing needs to 1960. 6,271 8,470 14, 741 2,000-3, 000 16, 741-17, 741 The CHAIRMAN. Mr. Egan, I believe you wanted to make a statement? Mr. EGAN. Mr. Chairman, I have a statement here which I can file. I do not know whether you want me to take the time to read it. The CHAIRMAN. You may file your statement if you prefer to do it that way. Mr. EGAN. Very well. (The statement of Mr. Egan referred to is as follows:) STATEMENT OF JOHN TAYLOR EGAN, PUBLIC HOUSING COMMISSIONER, BEFORE THE HOUSE COMMITTEE ON BANKING AND CURRENCY ON TITLE II OF H. R. 4009, EIGHTYFIRST CONGRESS, APRIL 7, 1949 Title II of H. R. 4009 provides for an extension of the low-rent housing program to serve the needs of low-income families now living in the slums. Mr. Foley's statement has dealt with the urgency of the need for an expansion of this program. This statement will therefore deal primarily with an explanation of the technical features of title II of H. R. 4009 and the changes which it makes in the existing United States Housing Act. The attention of the committee should first be called to the meaning of the terms "Authority" and "Administrator" as used in title II. Wherever the term "Authority" is used, it refers to the Public Housing Administration, and wherever the term "Administrator" occurs it refers not to the Adminitsrator of the Housing and Home Finance Agency, but the Commissioner of the Public Housing Administration. The explanation of this apparent anomaly lies in the fact that title II consists of amendments to the United States Housing Act of 1937, which act set up an Authoriy under an Adminisrator, all of the powers and functions of which were, by Reorganization Plan No. 3, transferred to the Public Housing Administration and its Commissioner. LOCAL RESPONSIBILITIES AND DETERMINATIONS; TENANCY ONLY BY LOW-INCOME FAMILIES Section 201 of H. R. 4009 clarifies the local responsibility for making determinations in respect to such matters as the need for low-rent public housing, the maximum rents to be charged, and the maximum income limits. It also coptains provisions designed to restrict occupancy in low-rent projects to families of low income who are actually in need of such housing. Before the first step in the development of a low-rent project is taken through the making of a preliminary loan by the PHA for surveys and planning, the local housing authority must demonstrate to the satisfaction of PHA that there is a need for such low-rent housing which is not being met by private enterprise. The governing body of the locality must also, by resolution, have approved the application of the local authority for the preliminary loan. Before a contract can be made for any further loan or for annual contributions, the local governing body must enter into an agreement with the local housing authority providing for the local cooperation required by the PHA pursuant to statute. The local housing authority must also show that a gap of at least 20 percent has been left between the upper rental limits for admission to the proposed project and the lowest rents at which private enterprise unaided by public subsidy is providing (through new construction and available existing structures) a substantial supply of decent, safe, and sanitary housing toward meeting the need of an adequate volume thereof. This provision is in accordance with the basic national policy of encouraging private enterprise to move downward in the income scale as far as possible and provide housing for families which it is not now serving. It serves to make doubly sure that there will be no competition between public housing and decent housing provided by private enterprise. The bill contains explicit provisions requiring the local housing authorities to set maximum income limits for admission to the projects and also to set limits for continued occupancy therein. If conditions change, the local housing authorities must set new income limits. All of the maximum income limits will be subject to approval by PHA. Also, as indicated by actual investigation, every family admitted must actually be a family of low income and must have come from an unsafe, insanitary, or overcrowded dwelling, or have been displaced by slum clearance or a land assembly and clearance project, or (without fault of its own) be without housing or be about to be without housing pursuant to a court order of eviction. This last qualifying condition of being without housing will serve to meet the urgent necessity which has confronted local housing authorities in recent years of providing shelter for low-income families who have been evicted without fault of their own, including eviction for nonpayment of rents which are clearly beyond their means. The requirements as to previous substandard living conditions do not apply in the case of veterans applying for admission within the next 5 years. In the selection of tenants in public housing projects, the local authorities will be required not to discriminate against families whose incomes are derived in whole or in part from public assistance, but who are otherwise eligible for admission. In this connection, the position of our agency in respect to relief families should be made clear. We recognize the responsibility of public housing to provide decent homes for families who are being assisted by welfare agencies. We do not, however, attempt to obtain rents so low that indigent families without even the means for bare subsistence can be accommodated. Established welfare agencies should provide such families with a minimum subsistence income, and public housing will then accommodate rents in proper relation to their actual income, regardless of its source. H. R. 4009 clarifies existing policies under which the housing needs of applicant families are taken into account in the selection of tenants. Specifically, the bill requires that when a project is initially tenanted, preference, in the selection of eligible tenants for dwellings of given rents and sizes, shall be given to families, having the most urgent housing needs. In determining the urgency of housing needs, the local authority will, of course, consider a number of factors, among others, the substandard condition of the applicant's dwelling, its overcrowding, and the length of time the applicant has been on the local authority's waiting list for admission to low-rent housing. After initial tenancy, whenever a family is selected to fill an available vacancy, due consideration must be given to the urgency of the family's housing needs. Consideration as to urgency of need would be subject to the overriding preferences provided in section 202. Finally, the local authorities will be required to make periodic reexaminations of the incomes of all families living in low-rent projects. If the incomes of any families exceed the limits set for continued occupancy, they will be required to move from the project. It is, of course, a corollary to this provision that income limits for continued occupancy must not be set so low that families required to vacate will be unable to find minimum decent private housing after a careful and diligent search, for to evict families of such incomes would be to force them back into substandard housing and undo the good which had originally been done by their removal from the slums. INCOME LIMITS UNDER THE PRESENT PROGRAM The various requirements in H. R. 4009 designed to limit occupancy to families of low income are similar to those under which the present low-rent program has been operating. The committee may therefore be interested in a brief statement as to income limits and actual family incomes under this program. The income limits which have been set by local authorities, subject to PHA approval, have been based on a careful study of the needs of low-income fami lies in their respective localities. The following table shows the percentage distribution of the maximum income limits for admission of families of average size. Somewhat lower income limits are generally set for families of less than average size, and somewhat higher income limits are set for larger families with three or more minor dependents. Income limits for admission of families of average size: The wide diversity in these income limits which have been set by the various local authorities is responsive to the wide diversity of economic conditions in a country as large as ours. This diversity of appropriate income limits illustrates how impossible it would be to set any dollar income limit on a Nation-wide basis which would be both effective and at the same time in keeping with local needs. The median of the income limits set by the various localities for families of average size amounted to $1,947 per year. This is an extremely low figure in view of present-day economic conditions. To appreciate how low it actually is, it should be compared with the cost (as recently determined by the Bureau of Labor Statistics) of a minimum adequate budget covering the essentials of life for an average city worker's family of four. These minimum average budgets in June 1947 ranged from a low of $3,004 in Houston, Tex., to a high of $3,458 per year in Washington, D. C. The average of these minimum budgets was $3,244 per year; in comparison with this, the maximum income limits for admission to public housing in the same list of cities averaged $2,062. In other words, the maximum income limits set by the local housing authorities averaged 36 percent less than the minimum adequate budget covering the essentials of life in the same cities for families of the same size. In view of these figures, there can be no doubt that the income limits set by the local housing authorities (with the approval of PHA) effectively restrict the admission of tenants to public housing to families who are in very low income brackets and who cannot possibly afford to pay the rents which are necessary to secure decent private housing. ACTUAL FAMILY INCOMES UNDER THE PRESENT PROGRAM The actual annual incomes of families in the original low-rent housing projects for the first 6 months of 1948 are shown in the following table. Annual incomes of families in low-rent housing projects, percent distribution and median-Public Law 412 and PWA projects, first 6 months of 1948 The incomes of the families admitted to the projects during the first half of 1948 are shown in the first column of this table. Over 52 percent of the families admitted had incomes of less than $1,500, while only 9.3 percent had incomes in excess of $2,000. The income of the families actually admitted averaged $1,481, a figure which naturally fell far below the average of the maximum income limits ($1,947) set for admission to low-rent projects. The incomes of all the families living in the projects in the first half of 1948 (as shown by reexaminations of inome) averaged $1,834 per year. This average covers a substantial number of ineligible families then living in the projects whom it had been impossible to remove because of acute housing shortages, and because of a congressional prohibition against eviction. The incomes of the families who were eligible for continued occupancy averaged $1,594, while those of the ineligible tenants averaged $3,047. These ineligible families include families of higher income who had been admitted as war workers, and other families whose incomes since admission had increased beyond the maximum income limits for continued occupancy. All ineligible tenants are being required to move from low-rent housing projects under a plan for gradual removal, pursuant to which they will all have received notice to vacate by the end of the current year. In order to realize how far down in the income scale public housing is actually reaching, the average incomes of tenants should be compared with figures as to the incomes of all urban families recently released by the Bureau of the Census. In 1947, a figure of $2,630 per year marked the top of the lowest income third of city families, while the average income of these families in the lowest third was $1,789. The average income of $1,481 of families admitted to low-rent projects at about the same time was 17 percent below the average income of all families in the lowest income third, while the income of eligible families living in the projects averaged 11 percent below the same figure. In other words, it is clearly apparent that, as a result of the income limits established by the local housing authorities, the families admitted to, and the families living in, public housing not only come from the lowest income third, but from the lower segments of that income group. VETERANS' PREFERENCES Section 202 entitles veterans of World War II to preference in admission to new projects during a 5-year period, subject only to a preference for families displaced by slum clearance. The preference to families displaced by slum clearance is necessary to enable the rehousing of such families and permit the redevelopment projects authorized by title I of H. R. 4009 to go forward. This preference would be available only to families about to be displaced by a low-rent housing project or public slum clearance or redevelopment project, or to families which had been so displaced within 3 years prior to applying for admission to low-rent housing. As among families displaced by slum clearance, veterans and servicemen of World War II would be entitled to preference during 5 years, with first preference being given to disabled veterans. Veterans would have similar preferences as among families not displaced by slum clearance. All of the preferences in H. R. 4009, of course, apply only if the family seeking admission is otherwise eligible, and if a dwelling of suitable size and rent is available. COST LIMITS ON DWELLING CONSTRUCTION The cost limits on dwelling construction in the United States Housing Act have not been revised since its original passage in 1937. The level of construction costs has more than doubled since that date, and the original cost limits are utterly unrealistic today. In lieu of the original cost limits on dwelling facilities of $1,000 or $1,250 per room (depending on city size), H. R. 4009 provides a uniform cost limitation on dwelling construction and equipment of $1,750 per room, In order to meet expected higher costs in some areas and to permit a reasonable degree of latitude in the event of any future rise in prices, PHA would be authorized, if necessary, to increase the cost limit per room by not more than $750. This increase in the authorized cost limit would be available only if the PHA Commissioner finds that in a given geographical area it is not otherwise feasible to construct a proposed project without sacrifice of sound standards of design, construction, and livability, and only if there is an acute need for such housing in the locality. The cost limits proposed in H. R. 4009 have been the subject of careful scrutiny both by the PHA and by a number of local housing authorities. In our considered opinion they are as low as it is feasible to set them without defeating the purposes of the program, at least in some localities. This does not mean that actual project costs are expected to equal or even to approach these limits in the great majority of cases. Under the original program, the average cost per room of projects in larger cities was only 66 percent of the applicable cost limit, while in smaller cities it was only 71 percent of the limit. We believe that in a new program similar experience would be had in respect to the cost limits proposed in H. R. 4009. In this connection, a study has been made of the costs which might be expected if a number of typical existing low-rent projects were being built under present condition. The local housing authorities asked their contractors to reestimate these projects on the basis of the cost levels prevailing at the end of 1948. The expected average costs per room of dwelling construction and equipment were as follows: Number of 1,750 to 1,999_ 2,000 to 2,249. These figures indicate the great diversity in the costs which are to be expected in different parts of the country, ranging from northern States where extensive heating equipment is required to southern areas where little or no heating is necessary. The projects represented in these estimates range from very simple projects in small communities to the great multifamily projects which are necessary in New York and other metropolitan centers. On the basis of these figures, we would need to go over the proposed normal limit of $1,750 in only about one-third of the cases, and even then would not need to make full use of the additional authorized amount. The authorization to exceed the normal limit by $750 per room is, however, in our opinion, necessary unless we are to risk depriving great metropolitan areas, such as New York, Newark, Chicago, Detroit, Philadelphia, and Boston, of their rightful chance to participate in the program. Price levels in these areas are high, not only for housing but for all the necessities of life, and the income taxes paid in such municipalities to the Federal Government are also high. Slum conditions in these cities are fully as bad as elsewhere, and low-income families living in these cities should not be deprived, because of higher price levels, of the same rights to look forward to decent homes as are accorded citizens in smaller communties. |