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The legal aspects of such a program may be classified under two headings:

1. Direct remedial methods aimed at the eradication of slum areas, under which heading fall slum clearance and low-rent housing; and

II. Indirect methods aimed at the prevention of the recurrence of such slum areas, under which heading fall building requirements, zoning, and planning.

Both remedial and preventive methods used to effectuate such a program may involve the use of: (1) The police power, usually exercised to regulate the use and enjoyment of the property by the owner, or, if he is deprived of his property outright, it is destroyed to promote the general welfare of the public, and, in such a case the owner is not entitled to any compensation and (2) the power of eminent domain, through the exercise of which property is taken for a public use and the owner is entitled to just compensation.

Slum CLEARANCE AND Low-RENT HOUSING

DIRECT METHODS OF ERADICATING SLUM AREAS

Municipal demolition ordinances First efforts at slum clearance in the United States took form of municipal demolition ordinances. The first efforts at slum clearance in the United States were confined to municipal ordinances aimed at eliminating fire hazards and the removal of buildings which had been damaged by fire or which required repair to an extent of 50 percent or more.

A recent study of the demolition ordinances of twenty representative cities, undertaken by the research and information branch of the Housing Division of the Federal Emergency Administration of Public Works, reveals: (1) That 18 of these ordinances permit demolition of buildings when found by the municipal authorities to be so unsafe structurally because of fire or deterioration that they cannot be repaired, and (2) that only two of such ordinances provide for the demolition of unsanitary buildings.

Legal validity of municipal demolition ordinances.—The constitutionality of such State statutes or municipal ordinances, authorizing the destruction buildings deemed to be fire hazards or which have been partially destroyed by fire is now well established. In addition, statutes and ordinances providing for the condemnation, under the police power, and without compensation, of structures that are faulty, dangerous and unsanitary are also well established constitutionally (York v. Hargadine, 171 N. W. (Minn.) 773, (1919); Runge v. Glerum, 37 N. D. 618, (1919); and Jackson v. Bell, 143 Tenn. 452 (1920)).

However, the use of the police power on the part of municipalities along these lines is limited. The full use of such a power would result in the elimination of few buildings.

The courts have generally held that the police power is community power and is constantly developing to cover new needs. When a community regards slums as sufficiently detrimental to the health, safety, morals, and general welfare of that particular community, there is no doubt that condemnation in such cases, without compensation, would be upheld.

Excess condemnation 1 Excess condemnation as a method whereby slums may be cleared.—Municipalities, in an endeavor to rid themselves of objectionable areas, at times have resorted also to the use of the power of excess condemnation in connection with street widening, the opening of new streets, and the establishment of parks, playgrounds, recreational centers, and public buildings.

Under excess condemnation the municipality may acquire more property than is needed for a specific public improvement, such as those just mentioned. It may lease or sell the property not needed for that specific purpose, and have it developed with a new housing scheme by private enterprise under control and restrictions.

As early as 1812 and 1817 municipalities in the State of New York and South Carolina were authorized by their respective State legislatures to exercise this power of excess condemnation. Since that time, the following States have also authorized municipalities within their jurisdiction to exercise this power: Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Ohio, Oregon, Pennsylvania, Philippine Islands, Rhode Island, South Carolina, Virginia, and Wisconsin.

1 The use of the power of excess condemnation is also discussed in an article on the legal aspects of slumclearance and low-costhousing, which appears in Slums, Large Scale Housing and Decentralization, a publication of the President's Conference on Home Building and Home Ownership (1932), beginning at p. 18.

The following States have also amended their constitutions to permit the exercise of this power by municipal corporations: California, Massachusetts, Michigan, New York, Ohio, Rhode Island, Virginia, and Wisconsin.

New York City leases excess condemned property to low-rent housing bodies for housing sites.-In 1927, the Legislature of New York State added to the charter of the city of New York, section 970 (c), which permits the city to lease for housing purposes additional real property acquired in excess-condemnation proceedings under the provisions of section 970 (a) of the charter. Section 970 (a) authorizes the city to acquire additional real property in a proceeding to acquire land for streets, parks, etc. That section provides, however, that such additional real property shall not be more than sufficient to form suitable building sites abutting on the improvement.

Legal validity of municipal excess condemnation ordinances.-The legal validity of excess condemnation laws in the United States is still somewhat uncertain. In 1930, the important case of Cincinnati v. Vester (281 U. S. 439 (1930)) raised squarely the issue as to whether a State might grant this power to municipalities and as to whether the municipalities might validity use the power. The case involved the validity of the following provision of the constitution of the State of Ohio:

“In furtherance of such public use (the city may) appropriate or acquire an excess over that actually to be occupied by the improvement, and may sell such excess with such restrictions as shall be appropriate to preserve the improvement made” (10, art. 18, constitution of Ohio).

The Supreme Court, instead of passing upon the constitutional question, ruled that the city council, upon the city's excess condemnation of land under the Ohio constitution, should have specified definitely in its resolution the purpose of the excess appropriation. The statutes requiring such statements as to the use for which the land is to be taken, the opinion states, applied to the excess as well as to the principal appropriation.

In the absence of decisions by the courts of last resort upon cases where excess condemnations have been made under carefully drawn authorization, it is impossible to definitely state the extent to which the power of excess condemnation may be utilized, and the limitations, if any, which must be observed in its exercise.

Efforts of the States in slum-clearance and low-rent housing ? In recent years States have awakened to the realization that slum areas and submarginal housing are a menace to the health, safety, morals, and general welfare of their people. In an effort to meet the situation, they have enacted laws providing for the creation of limited dividend corporations or State or local housing authorities for the purpose of clearing slum areas and erecting on such sites low-rent housing units.

One of the first of such laws to be enacted was the New York housing law (L. 1926, ch. 823, amended by L. 1927, ch. 35; L. 1928, ch. 722; L. 1930, ch. 872; L. 131, chs. 557, 558; L. 1932, ch. 507; L. 1934, ch. 4; L. 1935, ch. 311), which set up a State housing board to supervise private or public limited dividend housing corporations, the creation of which was also provided for by the act.

The original housing law provided for the exemption of limited dividend corporations from taxation for a period of 20 years and restricted profits to a 6 percent return on the investment. However, the legislature amended the law by providing that no exemption should be granted to such a corporation without the consent of the cities. The city of New York has not granted tax exemption to limited dividend corporation, recently formed, but assesses their property to the same extent as it assesses property of other corporations. Because of this amendment, at the present time, there is no practical reason or inducement for the formation of such a corporation under the housing law.

No public corporations were created under this law, but several large projects were built by private limited dividend corporations. (See Annual Reports, State Board of Housing, New York.) The real purpose behind this legislation was to interest philanthropically inclined persons to invest their funds in this type of enterprise. However, the amount of such funds available on this basis was not sufficient for the purpose, and the inducements to private capital were not sufficiently great to attract a great amount of capital into such undertakings.

The facts and conclusions presented in this section of the report were checked by the office of the Chief Counsel of the Housing Division of the Federal Emergency Administration of Public Works.

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In 1934, the New York State housing law was amended to provide for the creation of municipal housing authorities (L. 1934, ch. 4). Under this law, authorities have been established in New York City, Schenectady, Buffalo, and Lackawanna.

This amendment gives an authority broad powers for the execution of the functions with which it is charged and among them the right to exercise the power of eminent domain.

Legal validiiy of exercise of power of eminent domain by public housing authorities for slum-clearance or housing-site acquisition.--Not until March 17, 1936, had the highest court of a State passed on the question of whether a State, municipality, or public housing body or a limited dividend corporation had the right to exercise the power of eminent domain, given it by State legislation, in carrying into effect a slum-clearance and low-rent housing project. On that date, however, the New York Court of Appeals, the highest appellate tribunal of that State, in the case of New York City Housing Authority, etc. v. Muller (3 U. S. Law Week 669–70, New York Times of Mar. 18) held that the Municipal Housing Authorities Act of the State of New York (Laws 1934, ch. 4), was not unconstitutional insofar as it empowered an authority created under the act to exercise the power of eminent domain for the purpose of acquiring land needed for a low-rent housing project.

In the opinion of the court, written by Judge Leonard C. Crouch (concurred in by the other judges except Judge Edward R. Finch, who, while joining in the final decision, did not concur in the prevailing opinion, and Judge John F. O'Brien, who dissented from the majority opinion), it was held that the condemnation did not constitute, as the tenement-owners contended, a taking of private property for a private use in violation of the State constitution and the due process clause of the fourteenth amendment of the Federal Constitution.

The court said that, “Nothing is better settled than that the property of one individual cannot, without his consent, be devoted to the private use of another, even when there is an incidental or colorable benefit to the public. However, the court pointed out that this rule did not apply to the taking of land for “the clearance, replanning and reconstruction of part of an area

wherein there exist,

unsanitary and substandard housing conditions”, which “cause an increase and spread of disease and crime and constitute a menace to the health, safety, morals, and welfare of the citizens of the State and impair economic values."

The opinion of the court then pointed out that the right to exercise the power of taxation and the police power in dealing with such conditions had been upheld by the courts, and then continued: “Now, in continuation of a battle, which, if not entirely lost, is far from won, the legislature has resorted to the last of the trinity of sovereign powers by giving a city agency the power of eminent domain.” Since the menace to the public welfare from slums and insufficient low-rent housing was such as to warrant the State in the use of the police power and the power of taxation in an effort to cope with the evil, the court said there was no reason why the power of eminent domain, “the most effective of all”, was not available for the same purpose.

In conclusion, the court said: "In a matter of far-reaching public concern the public is seeking to take the defendant's property and to administer it as part of a project conceived and to be carried out in its own interest and for its own benefit. That is a public benefit and therefore, at least as far as this case is concerned, a public use.'

The trend of State-court decisions at present seems to be toward a broad or liberal interpretation of what constitutes a "public use”, for which private property may be condemned under the power of eminent domain, as evidenced by the following view adopted by the Minnesota Supreme Court in the case of the Twin City Building and Loan Association v. Houghton (144 Minn. 16): “The notion of what is public use changes from time to time. Public use expands with the new need created by the advance of civilization and the modern tendency of the people to crowd into large cities.

The term 'public use’ is flexible and cannot be limited to the public use known at the time of the forming of the Constitution.'

And Nichols, in his work on Eminent Domain (2d edition, vol 1, par. 40), makes this statement: “The courts that are inclined to go furthest in sustaining public rights at the expense of property rights contend that “public use' means public advantage' and that anything which tends to enlarge the resources, increase the industrial energies, and promote the productive power of any considerable number of the inhabitants of a section of the State, or which leads to the growth of towns and the creation of new resources for the ernployment of

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capital and labor, manifestly contributes to the general welfare and the prosperity of the whole community, and, giving the Constitution a broad and comprehensive interpretation, constitutes a public use.

If such interpretations of "public use” as these were followed by all State courts, there is little doubt that the use of the power of eminent domain by States and public-housing authorities in carrying out a slum-clearance and low-rent housing program would be upheld, as it was in the Muller case, supra.

Up to the present time, no decision has been rendered by the United States Supreme Court in which that court has passed upon the question of whether a State, or a public body created by it, has the right to take private property through the use of the power of eminent domain in carrying out a housing program. However, in the case of Green v. Frazier (253 U. s. 233 (1940)) the United States Supreme Court, in passing upon the constitutionality of a North Dakota act which provided for the construction, out of public funds, of homes for people in the State, said, pages 241-242:

“As we have said, the question for us to consider and determine is whether this system of legislation is violative of the Federal Constitution because it amounts to a taking of property without due process of law. The precise question herein involved so far as we have been able to discover has never been presented to this court. The nearest approach to it is found in Jones v. City of Portland (235 U. S. 217), in which we held that an act of the State of Maine authorizing cities or towns to establish and maintain wood, coal, and fuel yards for the purpose of selling those necessaries to the inhabitants of cities and towns did not deprive taxpayers of due process of law within the meaning ofthe fourteenth amendment. In that case we reiterated the attitude of this court toward State legislation, and repeated what had been said before, that what was or was not a public use was a question concerning which local authority, legislative and judicial, has especial means of securing information to enable them to form a judgment; and particularly, that the judgment of the highest court of the State declaring a given use to be public in its nature, would be accepted by this court unless clearly unfounded.”

Although the point involved in this case was the use by the States of public moneys, and not the use by the States, municipalities, public-housing authorities, or limited dividend corporations of the power of eminent domain, it may be said with a fair degree of certainty that: (1) The United States Supreme Court, if it were called upon to determine whether the condemnation of private property by States or public bodies created by it for purposes of slum clearance and lowrent housing constituted a "public use”, would give great weight to the local opinion of State legislatures and State courts in their determination of what is a “public use”; ana (2) there is good ground for believing a reasonable use of the power of eminent domain by the States or housing authorities created by it would not conflict with the fourteenth amendment of the Federal Constitution which prohibits States from passing laws which deprive individuals of their property without due process of law.

However, a decision by the United States Supreme Court upholding the power of eminent domain on the part of a State or municipal housing authority would not necessarily lead to the recognition of its validity by all States, since some State courts of last resort might take the position that slum clearance and lowcost housing were not “public uses” within the meaning of the constitutions of their States.

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Efforts of the Federal Government in 'slum clearance and low-rent housing ? Federal loans, through Reconstruction Finance Corporation, to limited-dividend corporations.—Some impetus was given the enactment by States of laws creating limited-dividend companies and public-housing authorities with the power of eminent domain, for the purpose of slum clearance and low-rent housing, by the Emergency Relief and Construction Act of 1932, which authorized the Reconstruction Finance Corporation to make loans to corporations formed wholly for the purpose of providing housing for families of low income, or for reconstruction of slum areas, which are regulated by State or municipal law as to rents, charges, capital structure, rate of return, and areas and methods of operation, to aid in financing projects undertaken by such corporation which are self-liquidating in character."

2 The facts and statistics in this section of the report were furnished by the office of the Chief Counsel of the Housing Division of the Federal Emergency Administration of Public Works.

During the brief period the Reconstruction Finance Corporation operated under this act it made a loan in the amount of $8,075,000 to the Knickerbocker Village project (Fred F. French), New York City. When on June 16, 1933, its authority to act under this statute was terminated, it transferred to the Federal Emergency Administration of Public Works other pending applications.

Federal loans and grants, through Public Works Administration, to limited-dividend companies and public housing authorities.- The National Industrial Recovery Act of 1933 gave the Federal Emergency Administration of Public Works power to make loans to limited-dividend companies and loans and grants to publichousing authorities created under laws of the several States for purpose of slum clearance and low-rent housing. This act also authorized the Administration of Public Works to engage directly in such housing activities and to perform the actual construction work.

To take advantage of this act the following States have enacted legislation authorizing public-housing authorities, including municipalities, to clear slums and undertake housing developments, including the exercise of eminent domain: Alabama, Colorado, District of Columbia, Delaware, Illinois, Kentucky, Maryland, Massachusetts, Michigan, Montana, Nebraska, New Jersey, New York, North Carolina, Ohio, Rhode Island, South Carolina, Tennesee, West Virginia, Wisconsin.

Under the power to make loans to limited-dividend companies, the following projects were approved by the Federal Emergency Administrator of Public Works, allotments made and construction done. All of these projects are substantially completed and are now being occupied.

Location

Name

Amount

Alta Vista, Va.
Philadelphia, Pa.
Euclid, Ohio.
New York, N. Y

Do..
St. Louis, Mo
Raleigh, N. C

Alta Vista Housing Corporation..
Juniata Park Housing Corporation.
Euclid Housing Corporation.
Hillside Housing Corporation.
Boulevard Gardens, Inc. (Queens).
Neighborhood Gardens...
Boylan Housing Corporation.

$84, 000 1, 039, 000

500,000 5, 060, 000 3, 450,000

640.000 198, 600

Federal Government's individual efforts at slum-clearance and low-rent housing.– The administration of public works aiso proceeded to demolish slums and to build low-rent houses under its authority to engage directly in slum-clearance. And on April 6, 1936, the following housing projects were in various stages of construction by the Federal Government:

Location

Name

Amount of allocation

!!!

Atlanta, Ga.

Do...
Atlantic City, N. J.
Boston, Mass.
Buffalo, N. Y
Cambridge, Mass.
Camden, N.J.
Chicago, ni..

Do..
Do..

Do...
Cincinnati, Ohio.
Cleveland, Ohio.

Do...

Do Columbia, S. C. Dallas, Tex. Detroit, Mich. Enid, Okla. Evansville, Ind. Indianapolis, Ind. Jacksonville, Fla.. Lexington, Ky. Louisville, Ky.

Do.
Memphis, Tenn.
Miami, Fla.
Milwaukee, Wis.

Techwood Homes.
University.
Stanley S. Holmes Village.
Old Harbor Village.
Kenfield.
Main Street.
Wakefield Acres
Jane Addams Houses
Jane Addams Addition.
Diversey
Trumbull Park
Laurel Homes.
Cedar Central.
Outhwaite
West Side.
Columbia Terrace.
Lucas Drive.
Brewster.
Enid Springs Park.
Lincoln Garden.
Community Housing -
Durkeeville.

$2, 875.000
2, 500,000
1,700,000
6,000,000
4,500,000
2, 500,000
3,000,000
1,500,000
5,000,000
6,000,000
3, 250.000
6,500,000
3, 279,000
3, 650,000
3, 800,000

500,000

900,000 5,500,000

435, 100 1,000,000 3, 025,000 1,000,000 1,500,000 1, 200,000

700,000 3, 200,000 1,000,000 2, 800,000

LaSalle Place.
College Court.
Dixie Homes
Sixty-second Street...
Parklawn..

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