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A public housing program must develop sufficient safeguards so that it will not interfere with the expansion of private home building. Private industry and private finance have made recommendations that by their very nature render public housing well-nigh impossible. On the other hand, those who believe in public housing are inclined to regard the social gain of public housing of such great importance that their recommendations would, if accepted in full measure, discourage private enterprise from going forward.
A careful study of the latest English program, which has proven successful for private and public enterprise, leads the committee to believe that it is entirely possible to find the happy medium between these important correlated undertakings.
Public housing should always supplement private enterprise by providing only for those groups who cannot be served by an efficient private industry. Unfortunately, America has no adequate private-home building industry nor a satisfactory home-mortgage finance structure.
Basic PRINCIPLES OF COMMITTEE'S PROGRAM
(1) REASONS FOR PUBLIC HOUSING
The committee believes that public housing is desirable. We have carefully studied the latest English program and find the results are most satisfactory and many of their methods worthy of emulation.
The principal reasons for public housing are
(a) Unfortunaiely, approximately 20 percent of the American families do not enjoy sufficient incomes to provide for decent living accommodations.
(6) The housing usually available to these unfortunate people in the commercial rent market is not only of the obsolete "hand-me-down” type, but in many urban communities these underprivileged groups must live in an environment that is detrimental to health, morals, and social well-being.
(c) Their limited incomes permit these people to have virtually no freedom of choice as to the physical and social environment in which they may live and rear their children. Under such conditions it is impossible for these victims of social and economic maladjustment to guard against the destructive influences of their surroundings.
(2) DIFFERENTIATION BETWEEN
These two problems are often confused. A public housing program must provide for the destruction of slum areas and thereafter the most practical use of the land. The removed slum dweller should find his new life with as much independence as though he had never lived in the slum location. These results can be obtained by providing adequate accommodations in other areas.
It is unfair to expect those who have lived part of their lives in a slum area to remain there forever. Rebuilt blums or blighted areas are often improper locations for their present occupants. In many cases the claim of these areas for residential occupancy lies wholly in the fact that they were well located a century The problem divides itself into two phases:
(a) Low-rent housing is required to offset the social disabilities of families who cannot pay economic rent for proper shelter under decent surroundings.
(6) Slum clearance is required to rescue depreciated real estate from the unfortunate results of haphazard urban growth, suburban competition, unscientific land valuation, and tax assessment.
It is impossible, in many communities, to rehouse the slum dweller on the site of the present slum, and at the same time
(a) Uphold the present inflated land values and assessments through reoccupancy by the present slum dwellers.
(b) Reduce the density of occupancy:
We disagree with the argument that these people insist upon living where the now struggle for an existence. They, or their fathers before them, left their native land and endured all kinds of hardships. Surely, they can now easily appreciate the advantages of other locations for their new life. If we provide more efficient transportation facilities, the somewhat greater time spent in travel to and from their occupation will be no great burden. With constantly decreasing work periods, such travel entails no serious hardship.
Much of the land reclaimed through destruction of slums can and should be put to use for parks, parking places, industrial, and many other purposes for which there would be justification. This is a local problem which should be solved by local authorities.
(3) SEPARATION OF PUBLIC HOUSING PROGRAM FROM EMERGENCY EMPLOYMENT
Though a Nation-wide program of coordinated private and public housing would go very far toward relieving unemployment, it must be recognized that the housing problem is mainly independent of the present depression and will require a long-range program for solution.
The essence of a housing program must be housing, not work relief.
(4) DEFINITION OF RESPONSIBILITIES OF FEDERAL, STATE, AND LOCAL GOVERN
The jurisdiction over tenure valuations, and taxation of real property and rules governing transfer of titles are under State and local governments. We should therefore place the responsibility for legislation and programs for property rehabilitation and slum clearance upon these agencies and not on the Federal Government. The public welfare program, which should deal with the human and social problem, should be the joint responsibility of all agencies.
(5) ELIMINATION OF COMPETITION BETWEEN PUBLIC HOUSING AND PRIVATE ENTER
Public housing should provide accommodations only for those families who cannot pay sufficient rent to obtain decent shelter from private enterprise. Under no circumstances should public subsidy be permitted to create housing for rent or sale for any income group which can be served by private enterprise. Public housing must supplement and not complete with private enterprise.
The committee has already submitted a program for the development of a home building program by private enterprise. Under our recommendations private enterprise will ultimately provide, at a profit, adequate housing for families with incomes as low as $1,000 a year. This figure is based upon the most unfavorable areas and should be adjusted downward in many sections of the country. Therefore, we believe that public housing should be limited to families with incomes below this amount.
The committee admits that the objective set for private enterprise has not yet been achieved and that it will not be attained immediately. But we contend that public housing should at least temporarily be limited to the above income group. The potential market represented by families with incomes ranging between $1,000 and $1,500 should be reserved to private enterprise until such time as it has been proven that private enterprise, under improved conditions, can or cannot attain the objective we set for it.
Private enterprise should work as rapidly as possible toward reaching the above income group. Neither public housing nor private enterprise should, for the time being, attempt to serve this quarter. Surely these people would rather wait a little longer than accept, as inevitable, the necessity for public charity. This area should remain a sort of "no man's land”, until we have a completely integrated private home building industry as recommended by the committee in previous reports. Only then can we ascertain what income group private enterprise really can reach.
(6) IMPORTANCE OF FAMILY INCOME LIMITATIONS A public housing program that provides for any income groups, except the lowest, is based on fallacy and subterfuge. We must face the problem squarely. The committee's public housing program provides only for the lowest income groups, though they require a greater per capita subsidy than their more fortunate neighbors.
Some public housing exponents have criticized the home building program of the committee. They disagree with our limitation of public housing to families among those with annual incomes below $1,000. They would instead have us include families with incomes up to $1,500. Evidently, they do not consider the following important facts:
(h) Even in 1929, 21 percent of our families were in this disputed income area, while another 21 percent received less than $1,000 annum.
(6) In 1933, although available figures are incomplete, approximately 70 percent of the American families had incomes of less than $1,500.
(c) We cannot preserve democracy if a large proportion of our people must receive their home accommodations through charity.
(d) England faced a similar situation, but dealt with the problem most efficiently. English private enterprise provides for income groups as low as $850. This was not true in 1930. Nor would it now be true if they had not adopted a plan similar in its broad principles to the committee's 12-point home building program.
(e) The lowest income groups have the greatest need for public housing. Of course, it is much easier to aid those with incomes from $1,000 to $1,500 than it is to aid the lower income group. But the committee considers the problem too vital and important to adopt the easiest way instead of a real solution.
Obviously, the lowest 20 percent are the most needy income group. Our responsibility dictates that careful selection be made from among these families for the use of public housing.
(7) REASONS FOR RENT SUBSIDY AS THE ONLY FORM OF PUBLIC-HOUSING SUBSIDY
The committee recognizing the necessity for the use of public funds in providing public housing, advocates a rent subsidy in preference to any other form.
Under a practical rental subsidy plan based on the English Act of 1935, the rehoused family pays toward the "economic rent” determined by the local housing authority, the amount which the local welfare agency certifies that the family can afford to pay. To this amount is added the Federal and State rent subsidies, each fixed in the original respective legislation. To the total of these three, the local community, whose welfare agency selected the family, adds the amount necessary to complete the economic rent determined by the local housing authority. The economic rent should be the amount sufficient to meet the capital charges and operating expenses of the particular project.
(a) Places upon the local community the responsibility for economical operation and the financial burden or reward for inefficient or efficient management.
(6) Applies all benefits directly to the most needy families.
(c) Permits administrative authorities to taper off or discontinue subsidies to particular families as the need for rent assistance decreases.
(d) Guarantees to low-rent housing projects sufficient income to meet its capital charges and operating expenses.
(e) Requires only moderate outlays on the part of the Federal Government. Furthermore, it does not burden a short-term or annual Government budget with an expenditure for a long-term objective.
(1) Precludes the use of Federal subsidy for needless facilities.
No other form of subsidy provides the advantages indicated above in connection with the rent subsidy plan. Furthermore, the other forms of subsidy embrace the disadvantages which the rent subsidy plan avoids. This fact has been recognized in England, where the most recent legislation adopts the rental subsidy plan,
PUBLIC HOUSING EFFORTS OF FEDERAL GOVERNMENT The following is a brief analysis of the Federal Government's public housing experiments to date:
(1) URBAN PUBLIC HOUSING-(PUBLIC WORKS ADMINISTRATION) We wish to congratulate the administration on the prompt manner in which is has improved its technique by taking advantage of earlier mistakes. The limited dividend type of project has been abandoned as an instrumentality for public housing. The 45-percent capital subsidy and 55-percent loan type of project under Federal control has been limited to the 48 Public Works Administration projects now under construction. From these experimental projects many lessons should be learned to the advantage of our future pattern of public housing.
Unfortunately, many of the cities in which public housing projects have been undertaken were not educated as to its importance to the community. An atmos. phere of clash and strife has therefore accompanied these efforts on the part of the Federal Government.
The technique of the initiation of public housing projects by central governments has proven unwise in England, as well as in America.
A great part of any future program should be based upon our own, as well as the English, experience.
HOMESTEADS AND RURAL COMMUNITIES (RESETTLEMENT
The Federal administrative policies toward subsistence homestead and rural resettlement projects must still be clarified on the basis of long-range planning. The committee has carefully studied these types of developments and believes there is a sound basis for future programs.
Removal of stranded workers and rural inhabitants from areas that will never be rehabilitated, are enterprises worthy of national effort.
The committee recommends that every cooperation be given to the subsistence homestead and rural community projects now under way. Unfortunately, these projects were started without seeking cooperation from industry. The problem of finding work opportunities has therefore been added to the problem of providing decent housing. The committee recommends the following:
(a) An advisory committee should be appointed, composed mainly of business men to aid in the projects now under way.
(b) If any more of these projects are attempted they should be started in cooperation with industry.
(3) GARDEN CITIES—(GREENBELT TOWNS)-(RESETTLEMENT ADMINISTRATION)
The committee believes that a grave error will be committed if in the near term future garden city experiments are attempted as public housing projects. We have carefully studied the English garden city developments and believe that, in modified form, this type of project has excellent long term possibilities if undertaken by American private enterprise.
As strong advocates of both public housing and of garden cities, the committee believes that these important movements will suffer irreparable harm by being combined at the present stage of our housing program..
We therefore recommend:
(a) That a public statement be made at the earliest moment, to the effect that no more of these projects are contemplated as public housing.
(b) If all or part of these four projects now under way are to be continued, every effort should be made to make some arrangement whereby they can be turned over to private enterprise.
(c) That the Resettlement Administration be instructed to formulate a program for Federal cooperation with State planning boards or other State and local agencies in a joint attack on the problems of rural housing betterment and rural resettlement.
(4) APPRAISAL OF PUBLIC HOUSING EFFORTS OF FEDERAL GOVERNMENT
A fair appraisal of the efforts of the Federal Government in public housing shows that in view of the many obstacles accompanying such a program, reasonably satisfactory results have been attained. The moneys that were appropriated were a part of relief and recovery appropriations. Pressures from all sides to make haste, to employ inefficient relief workers, and to develop an entirely new technique without sufficient time for planning, have all proven major deterrents.
There are two distinct lessons that stand out as a result of our public housing efforts. They are
(a) Public housing must be a permanent, and not a temporary procedure.
(b) The central government must aid and not initiate local projects. The major responsibility for public housing must be with the community, and not with the Federal Government.
SEVEN Point PUBLIC HOUSING PROGRAM OF THE COMMITTEE After careful consideration, based upon the principles we have stated, the committee offers the following 7-point recommendations for a national public housing program to supplement the much larger responsibility of private enterprise:
(1) DIVISION OF RESPONSIBILITY Municipal and local housing authorities should(1) Be organized under State legislation.
(2) Be responsible for the initiation, financing, construction, and management of public housing projects.
State housing authorities should-
(3) With appropriate Federal aid, assume responsibility for rural housing and rural resettlement problems.
Federal Public Housing Authority should
(1) Aid and stimulate local initiative but never attempt to force public housing on unwilling communities.
(2) Make its sole financial contribution in the form of cash allowances toward paying rent for rehoused low-income families.
(3) Assist local authorities toward creating a market for their securities, until they have been able to establish their own credit.
(2) MUNICIPAL AND LOCAL HOUSING AUTHORITIES Since we believe that all public-housing projects should be initiated by municipal or other local agencies, we recommend that State and local legislation be enacted in conformity with the proposed Federal legislation.
It is recognized that local conditions might call for organization of local authorities on a county or even on a regional basis, rather than a strictly municipal basis. Such legislation should provide for a municipal, or local, housing authority which should
(a) Coordinate its activities with those of the local planning commission. (6) Prepare a long-term program for meeting public housing needs. (c) Adopt housing standards in accordance with local needs and conditions.
(d) Develop facilities for the building of projects at the lowest possible cost consistent with proper standards.
(e) Establish rent scales for dwelling units sufficient to cover costs of construction, financing, and operation.
(1) Issue and find market for the securities required for financing projects.
(g) Enter into rent subsidy contracts with Federal and State housing authorities and with local governmental agencies.
(h) Have powers of condemnation under proper safeguards. (i) Make every proper effort to secure substantial popular approval and support.
(1) Be exclusively a planning and operating agency, and not a welfare organization.
(k) Leave to local welfare departments or similar public agencies, the duties of: (1) Selection of public housing tenants. (2) Determination of rent-paying capacities of selected tenants.
We do not favor tax exemption for public housing projects, nor any other form of hidden subsidies. Methods of computing capital and operating costs of public projects should conform with those of private enterprise.
(3) STATE HOUSING AUTHORITIES Each State should, in addition to the enactment of legislation permitting the creation of local authorities, create a State authority, which would
(a) Cooperate in the development of the type of projects initiated by municipal and local authorities.
(b) Supplement the Federal rent subsidy, in accordance with a definite schedule, and make contracts for payment of same.
(c) Initiate and cause to be built projects in communities too small or too weak financially to proceed on their own initiative, or where it may not be feasible to set up a municipal, county, or regional authority.
(d) Aid in the betterment of rural housing, in cooperation with the State planning board, and the appropriate agency of the Federal Government.
(e) Accert proper responsibility for assisting local governments without throwing the entire burden over to the Federal Government.
(4) FEDERAL PUBLIC HOUSING AUTHORITY
Federal legislation, clearly stating the principles outlined above, should be adopted. It should define the relationships of the several authorities involved, and should include the subsidy schedule suggested below. The Federal Public Housing Authority created by such legislation, should
(a) Be placed in the Department of the Interior and be the successor to the present Housing Division of the Public Works Administration,