Demonstration Relief Act, if enacted as proposed, will restore adequate housing to the housing market. The proposed financial arrangements are good, seemingly sound and within the reach of those who need housing most and who have the least amount of money with which to purchase such housing.

In summary, special attention is drawn to paragraphs 2, 4, and 6. We feel confident that the bodies that must approve S. 1988 will find no reason to delay or disapprove S. 1988.

Thank you.

Senator CRANSTON. Thank you very, very much, and that explanation of the length of time between abandonment and crime is particularly helpful to us. I'm grateful to you for that.

I will ask these questions of whomever chooses to answer; and if somebody wants to supplement or contradict the answer of whomever speaks first, please don't hesitate to do so.

What do you think of the "as-is sales program"? How does that work out when homes are turned over to people without any repairs being done?

Mr. DOTSON. What do we think of it?

Senator CRANSTON. Yes. What do you think of the HUD "as-is sale program" where a home is not renovated at all but disposed of and somebody takes it over in the vandalized condition?

Mr. Dorsox. I think this only has merit in that the person it is turned over to is financially able to bring it up to code. It doesn't mean much just to turn over an abandoned house to someone who may not be able to bring it up to code, nor is interested in living there, other than to enjoy the benefits of maybe what loans might be acquired from it.

Senator CRANSTON. Isn't that just a way of reducing inventory without really exercising any responsibility?

Mr. Dorsox. That is one way of reducing inventory, yes.

Mr. SALZMAN. Mr. Dotson is accurate, because if you turned over a home, you'll find in many abandoned areas that the people that may move in do not have the financial capacity to bring it up to codes; and, therefore, they might be residing in housing that was neither decent, safe, nor sanitary.

Senator CRANSTON. Do you think that the "as-is program" ought to be abolished, or should it be revised, or what should we do about it?

Mr. SALZMAN. I think it depends on the location. In some areas the "as-is program" could work because you find people with higher incomes that might buy it and live where they are living and not move right in until it has been fixed up.

Mr. DOTSON. I would like to respond to that, also.

The "as-is program" is attractive only to those who wish to renovate property, but those who wish to just occupy for a short length of time, then the "as-is program" has very little value from my point

of view.

Senator CRANSTON. Have you found any programs that work in terms of finding out about a home that is abandoned and taking care of it until it's reoccupied?

Mr. DOTSON. We have in Compton recently begun what we call the "block club" situation, which is a part of NEA's protection, and it's just new in its efforts.

One of the things that the block club has taken into consideration is the fact that aside from reporting crime, it is to do something about the abandoned houses that suddenly turn up in certain neighborhoods.

Senator CRANSTON. Do they report the moment a house is empty? Mr. DOTSON. In most cases, yes.

Senator CRANSTON. Then what happens when you find out that is the case?

Mr. DOTSON. Well, one of the things so that the house will not be vandalized, it is required that the owner board the house up, and this all the time does not make it attractive to the neighborhood, but it's required so that they are not a place for vandalism so the house is required to be boarded up.

Senator CRANSTON. Wouldn't it be possible to get somebody in there immediately as a caretaker instead of boarding it up?

Mr. DOTSON. Yes.

Mr. SALZMAN. Actually, we have been experimenting with kind of a screen and lexan that would prevent entry into the building and still would not reduce the appearance of the building to where people knew it was empty and could try to break in some other way, and it would not detract from the appearance of the neighborhood.

Senator CRANSTON. What kind of preventive measure is this? Mr. SALZMAN. It's a screening device with an unbreakable kind of glass behind it known as lexan. This, of course, is much more attractive so it doesn't deter from the expense of the neighborhood. Senator CRANSTON. How expensive are those?

Mr. SALZMAN. It's less expensive than board-up, because the boarding up has the labor problem involved in that.

Senator CRANSTON. What is the problem in its implementation? Mr. SALZMAN. We are experimenting with it now in terms of using it in some of the public housing projects.

Senator CRANSTON. What is the cost of installing one?

Mr. SALZMAN. We don't know yet. We are going out to bid now; and the way it shapes up, it looks like it's a lot cheaper than having a carpenter go out and put together a boarding-up system.

Senator CRANSTON. Could you find out the cost to use this system on a house and submit it for the record within 3 weeks?

Mr. SALZMAN. Yes, definitely.

Senator CRANSTON. Could you tell me the average cost to board up a home?

Mr. SALZMAN. No, because we know in our own experience that it's the labor and time you take. When you get a carpenter, his wages are fairly high, and they have got to go out there. Unless it's a standard window, then, it's easier because you have everything prepared, and you can have screens made up in advance, also, for a standard window.

Senator CRANSTON. Well, could you also submit for the record your estimate of the cost of actually boarding up a home?

Mr. SALZMAN. Yes.

71-509-76-11

Senator CRANSTON. Mr. Fertig, please join us.

Mr. FERTIG. Thank you, Senator. I apologize for being late; I was tied up elsewhere.

I do have some testimony that I don't want to dwell on because I can submit that for the record.

Senator CRANSTON. If you could summarize, it would be greatly appreciated.

Mr. FERTIG. I can summarize quickly.

Senator CRANSTON. You can then submit for the record your formal statement.

STATEMENT OF RALPH D. FERTIG, EXECUTIVE DIRECTOR, LOS ANGLES COMMUNITY ACTION AGENCY

Mr. FERTIG. In quick summary, our major thrust, as the Greater Los Angeles Community Action Agency, would draw upon the fact that the abandoned housing about which you're concerned, really draws upon a heritage of government policies and private real estate policies that have left the poor and particularly those in the structures to which you refer-in situations without the infrastructure, without the services or the support of the community entities that make for a good neighborhood living and a good life; but for the most part, if people had any choices at all, they would not live in the housing that was encouraged through some of these programs.

To a very large extent, again summarizing from this testimony, the private real estate market has not responded to the needs of the poor. The poor have no effective market demand on housing, as of course you well know, neither in the development of it nor in the maintenance of it, and government programs and subsidies have been the only thing that put any kind of capital investment into the private sector into the housing for the poor.

Other programs have discouraged the maintenance of those properties-accelerated depreciation, renewal efforts, the fact that most of this housing is constructed in the center of the city and to a very large extent the land value quickly increased over the value of the properties themselves, leading to a discouragement to the maintenance of some of these properties; that and the private real estate ventures-you know full well, Senator, the ripoff of buying up houses, making cosmetic improvements, and selling them at profits to the poor have led much to the current nightmare.

We felt in your legislation, sir, some ray of hope and some opportunity to begin to deal with some of those concerns, but we wanted to suggest a couple of amendments for your consideration.

One of these draws from the fact that because neither the government nor the private real estate industry have been in the position to do more than the government's part has been really to focus on determining eligibility, staying in the black, housing managers have to weed out those among the residents who are in fact most able to take care of themselves and are most mobile-I mean, in favor of those who are most mobile, and we now know are least able to pay; those who are most poor; those who are most in need of help.

The private real estate, as I have stated, could only respond in terms of profit incentives. There is no profit to be made from the housing of the poor.

We would argue very strongly that there is a need, rather than turning to either government or the private real estate market, to intergrate more fully the agencies of the community action fabric that would work together in the residents that would relate them to the larger community, social and economic needs, that would try to build some of that infrastructure that would take more and fuller responsibility.

We would urge that three of the additional directors of the board of the National Protection Corp. be nominated for appointment by the President of the United States by the community action agencies, which have the largest blocks of properties that would be affected by this legislation.

We would also urge that you establish a community-based body to oversee the operations of the field offices to protect the interest of the poor; that body could encourage the development of community firms. It would be giving investments to the communities themselves to manage the properties, and we would urge that actual ownership of the land be maintained by the government entities to guarantee the maintenance of the properties be consistent with the appropriate standards and to discourage speculators who have in the past victimized both the government and the poor. We would think that such a body could thwart abuses by realtors, developers, and investment firms that have resulted in the 5,871 units reverting from private ownership to HUD, and the 2,588 to the Veterans' Administration. A third suggestion, Senator, would be that the community action agencies in the target areas should review local plans submitted for the rehabilitation and disposition of housing units to see how they could be intergrated into this larger fabric of day care services, manpower services, development services, senior citizen services-the whole gamut of what goes into making an area a viable community. We would especially stress that extra weight should be given to plans which have been developed by groups whose working members and constituents include those who would be affected by the program, whether you'd draw upon a community action agency or local government. It is less important, I think, than the concept of the participation of those who are to be affected by the programs.

Having said that-that's part of the written testimony or a summary of it-Senator, I wanted to add another very, very urgent note. You know of almost 9,000 abandoned units here in Los Angeles, and we would urge that you would use your influence, sir, to provide some immediate shelter in those units.

I listened with some real horror at the notion that we can board up these units, when I know that there are thousands and thousands and thousands of people being held in institutions and in camps and in detention centers because they have no other place to go.

[The statement of Mr. Fertig follows:]

STATEMENT OF RALPH D. FERTIG, EXECUTIVE DIRECTOR, GREATER LOS ANGELES COMMUNITY ACTION AGENCY

One needs the basics for sheer survival-food, clothing, shelter-but it is housing above all which determines one's choices and changes. And it is hous

ing patterns in Los Angeles which have contained and controlled the poor in this City.

Where one lives predisposes what schools his children will attend, what options he has for jobs, the air he breathes, the kinds of community services that he receives. Further, it strongly influences the quality of police protection and the type of human servicese available to him. This is largely so because of the tax base approach to the allocation of most human services through local governments.

Los Angeles is a foremost example of the way in which entire communities can exist near one another but without effective interaction. The hard-core poor in Los Angeles are isolated and exist apart from all mainstream opportunities. For them it is quite a different matter to be part of a majority poor as was characteristic of the great depression. It is also different to be part of the temporary poor who are casualties of the current recession; receiving unemployment and food stamp benefits, most temporary poor can stay in their same homes and secure the services available to their middle-income neighbors. Current housing patterns tend to control and contain populations, particularly when they are not only continuously low income, but when they are more visible by virtue of race or language barriers. It is in this context that most of the housing for low-income people and, much of the housing that receives the special government guarantees, was built. Housing was constructed in neighborhoods that were isolated and devoid of necessary support services. And as soon as residents had other choices, they moved out of that community. There was a built-in situation which meant that those most able or mobile left while those least able to manage or, who had no alternatives, were left behind in housing that had been constructed by the government for the poor.

Compounding the housing nightmare was the fact that it was constructed with little infra structures or support services. There were insufficient commercial facilities, social services, healtn back-up, access to transportation, or relevance to employment centers that make for a successful and thriving community. The social and economic forces that make a place a viable community in which to live simply were not there.

Without an infra structure, isolation of the poor was further compounded, criminal acts and vandalism escalated, the poor preyed on one another and residents were forced to travel long distances to reach the nearest stores which more than not were the small markets that overcharged for essential foods and medicines.

Even less capable of managing housing for the poor, than the government itself, (witness the abysmal record of public housing management) is the private real estate industry.

The government does not adequately fund management for public housing and those trained for managerial roles are frequently consumed with assuring eligibility and weed out those MOST in need in favor of those not able to pay.

Managers are consttantly caught up in the need to justify themselves and to come out in the "black" on their accounts while the government never really gives them adequate funds for the maintenance of properties. Properties, with large concentrations of children and dependent sectors of the population, are in greater, not less, need of support services.

It has been demonstrated that the private real estate industry is absolutely unable to relate to the needs of the poor. The reason is simple enough. The poor have no effective economic demand capacity with respect to tne private real estate market. There is not a private builder in America who will put up housing for the poor without heavy government subsidy and there are few owners of real estate who will MAINTAIN housing of the poor.

The latter is true because, for the most part, in American cities, the poor are concentrated in the central core and the buildings which they occupy are less valuable than the land on which those buildings sit. Accordingly, there is no incentive for private owners to maintain the property any more than that which is essential for the sheer collection of rents since they plan ultimately to allow the building to be acquired by public authorities or private investors and demolished for renewal or commercial development. The private real estate market has never responded to the needs of the poor and has no economic interest basis for doing so.