The Office of Management and Budget has advised that there is

no objection to the presentation of this report from the

standpoint of the Administration's program.

Sincerely,

/s/ Robert R. Elliott

Robert R. Elliott

Senator CRANSTON. I am grateful to each of you for being here; now we will start with a panel of local government officials consisting of the following persons: Hon. John Reading, mayor, city of Oakland; Bob Chastain, Oakland Redevelopment Agency; Hon. John Sutter, city councilman, Oakland; and Hon. Fred Cooper, chairman, board of supervisors, Alameda County.

If you would each come forward to the front table I would be very grateful.

Fred and John have not yet arrived but they were out in the neighborhood, and I expect them very shortly.

Mayor READING. Fred is back there.

Senator CRANSTON. Fred, would you come up to the table. We are starting off with the first panel.

Mr. Mayor, if you would lead off.

STATEMENT OF JOHN READING, MAYOR,
CITY OF OAKLAND

Mayor READING. Thank you, Senator Cranston.

Senator CRANSTON. I appreciate your presence very much.

Mayor READING. Let me say I appreciate your presence here also and your holding a hearing here in the city of Oakland. I think it is encouraging to all of us that you recognize the problem and are willing to address yourself to it.

In the three decades since World War II, Oakland has seen dramatic changes. Population growth has remained modest compared to the growth of the metropolitan area. An exchange of population has taken place that has left the city with a disproportionate share of low-income and unemployed people, while at the same time, industry and trade have moved to the suburbs, eroding both the job opportunities available and the tax base that supports basic city services. The city, in short, has increased problems and has less fiscal capacity to deal with them.

I don't need to belabor the plight of central cities. Oakland's experience is a familiar story to us all, Oakland has been a leader in making use of available programs, Federal, State, and local, to deal with its problems. Our urban renewal program, public housing program, past activities supported in part by EDA and other programs, give testimony to our ability to utilize the programs available.

We have by no means, however, placed our total reliance on Federal or State programs. We have always been active in our own behalf. We have faith in the future of Oakland and are prepared to invest our own funds and efforts in that future. A notable example is Oakland's sports complex, which, combined with winning baseball, football, and basketball teams, has focused national attention on Oakland. Local taxes made possible the bay area rapid transit system. Port facilities developed by the Port of Oakland have made Oakland a leading center for port activities on the west coast. Oakland has made a significant commitment to many improvement projects through the use of tax increment funds, including a project to house 300 displacees from our city center project.

I emphasize the local effort we have made because we see the solution of urban problems as a partnership between local, State, and Federal levels, and I want to make it clear that we have demonstrated in the past our willingness to carry our share of the burden so we feel quite free to point out those areas where we think the Federal effort has not always kept pace.

We are not pleased with the freeze on subsidized programs such as 235 and 236, or with the manner in which public housing, subsidized housing and FHA housing programs have been administered by the Federal Government in the last few years. We are pleased to have a greater concern on the part of the Federal Government for local input in the programs, but alarmed at what appears to be a withdrawal of support for the programs both in money and in people.

The bill S. 1988 appears to us to be a move in the right direction. I support the purposes of the bill, that is, to prevent "the loss of existing housing units through the phenomenon of housing abandonment" and "redevelopment of well-planned, integrated, residential neighborhoods.”

I have two particular concerns with the present draft: One, the experimental nature of the program; and, two, I want to make sure that where counties are able and willing to participate in the program, that there is a maximum degree of local participation. I am not going to go into the details of Oakland's problems. John B. Williams, executive director of the Oakland Redevelopment Agency, will be testifying and supplying that kind of input. I simply want to emphasize that we need Federal intervention in Oakland with the abandoned housing problem, not on an experimental basis, but on a basis of commitment that is commensurate with Federal responsibility for the problem and that gives evidence of a willingness to work with us until the problem is solved. We understand that new programs need a startup phase that may involve a modest beginning and changes as experience dictates, but we need something beyond an experiment.

I have emphasized the willingness and ability of the city of Oakland to be active on its own behalf. I believe a maximum degree of local operation of the programs should be included.

Thank you.

That concludes the statement as far as the city is concerned.

I am wearing two hats here today. One, of course, is the mayor of the city of Oakland, but the second one as a member of the board of directors of the League of California Cities, and they also have a short statement which they would like to enter into the record and which I will read now at this time.

STATEMENT OF JOHN READING, MEMBER OF THE BOARD

OF DIRECTORS OF THE LEAGUE OF CALIFORNIA CITIES

Mr. READING. This statement summarizes the League of California Cities' recently adopted policy on housing abandonment, and I might say that this was an item of extensive discussion at the last board of directors' meeting.

The Department of Housing and Urban Development's as-is sales program, while providing more immediate occupancy of foreclosed and/or abandoned FHA-insured housing units, allows deteriorated housing to be occupied without repair, and in so doing, increases the levels of substandard housing and the blighting influence of deteriorated units in marginal neighborhoods. The league, therefore, urges HUD to modify the as-is program to require that acquired units be repaired to local housing code standards. Member cities are urged to examine the local impact of as-is sales and, if adverse effects are determined, to enter into discussions with HUD to develop alternative disposition programs.

Other possible action programs for the cities include a mandatory presale inspection of any unit unoccupied for over 2 months; presale on prerental code enforcement.

I want to interject here a personal observation on that point. The question of either presale or prerental code enforcement, I have some concerns about that. The concerns lie chiefly about the economic impact of requiring the owner of a rental unit, which is already marginal in terms of the economic return to him based on the rent. The economic feasibility of him putting into that a substantial amount of money to bring it up to code in some cases, in many cases, my observation is that this is going to result in a further abandonment of the homes because the landlord, the owner, simply can't get back enough on rents to pay for those improvements. So if we are entertaining that type of legislation, I think there has to be some subsidy involved.

I think there should be serious consideration of this because we do need those housing units. To have them continue to be abandoned and subsequently torn down just means that many more housing units are off the market. However we do need them badly and obviously they should be brought up to adequate standards.

Other items that are suggested as possible actions for the cities include an early warning system for monitoring neighborhoods for housing abandonment so we can get started on it early enough before it gets out of hand.

Second, the league supports foreclosure aversion bills submitted in this session of Congress [A. 1457, H.R. 5398] which would provide mortgagor, rather than mortgagee, insurance. In addition, there is a proven need for educational and legal counseling to homebuyers and those caught in the foreclosure process.

The league urges its member cities to reexamine their allocation of public investments throughout the city and, if warranted, increase the level of public services and improvements in certain target neighborhoods where foreclosure and abandonment is prevalent.

By and large S. 1988 is consistent with the league's policy on housing abandonment. It is also consistent with the league's housing policy which stresses housing conservation as the major housing issue to be addressed by local governments. The bill, however, has not been presented to either the board of directors or the Community Development Committee of the league. An area of obvious concern to the league is the extent of cooperation and consultation between the corporation and local officials and residents [section 5(a)]. Housing

abandonment is primarily a local concern and local input at every step of the program is essential if the problem is to be adequately addressed.

Thank you very much.

Senator CRANSTON. Thank you very very much, Mayor Reading. That was a very helpful statement and I appreciate it a great deal. Pete, do you have any remarks to make?

Congressman STARK. Not at this time, Senator. Thank you.

Senator CRANSTON. If each of the others of you have preliminary statements before we go to some questions and give and take, we'd be delighted to hear them at this time.

Mr. Chastain.

Mr. CHASTAIN. Thank you. I would like to read from John Williams' statement. He sends his regrets that he was unable to join you here today. He asked that I bring the statement to you.

STATEMENT OF JOHN B. WILLIAMS, EXECUTIVE DIRECTOR, OAKLAND REDEVELOPMENT AGENCY

Mr. WILLIAMS. A survey by a consultant to HUD, Linton, Mields and Coston, Inc., entitled "A Study of the Problems of Abandoned Housing," dated November, 1971, found no significant abandoned housing problems in Oakland. The situation has changed dramatically since that time. A major housing abandonment problem is visible to anyone who drives through East Oakland.

Community organizations have banded together to help themselves and to urge private and public entities involved to take more decisive and effective actions in dealing with the problem. With our 20/20 hindsight, we can surmise that the 1971 survey did not probe to a depth that would have revealed the early symptoms of housing abandonment. Housing abandonment, rather obviously, is an eye-catching symptom of older and deeper inner-city social ills, including:

1. A stable or declining inner-city population growth contrasted with rapid surburban growth.

2. An exchange of population that finds the affluent ex-city dwellers in the suburbs being replaced with low income residents in the inner city.

3. A flight of industry and commerce to the suburbs with a resultant declining tax base in the city.

4. Declining property values relative to inflation in the less affluent residential neighborhoods of the city accompanied by housing deterioration and red-lining practices by lenders.

The dimensions of the problems as they relate to housing are outlined in the attached ORA staff reports, entitled "East Oakland Housing," dated November 6, 1974, and "HUD As-Is Sales Program," dated February 7, 1975. Oakland's response to the problem is evidenced by the following actions that have taken place over the past year.

1. The city has adopted a transition plan for reorganizing city functions to make maximum use of the community development block grant program, utilizing the experience that exists in city