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 structed 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.

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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 the 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.

Because of the historical housing neglect delineated in this paper and the potential employment opportunities offered in this proposed legislation, we fully support S 1988 as a means of providing for the housing needs of lowincome people and alleviating the problem of blight created by abandoned structures.

Development of a corporation, such as that projected in this legislation, ought not to be directed toward the involvement of the private sector nor should it be controlled by forces of government in the traditional sense.

To provide maximum benefit to the poor and the business community through this legislation, we recommend the following amendments:

1. Three of the four additional directors on the Board of the Neighborhood Protection Corporation be nominated for appointment by the President of the United States by the Community Action Agencies which have the largest blocks of properties affected by this legislation.

2. Establish a community-based body to oversee the operations of the field offices to protect the interests of the poor.

This body could encourage the development of community firms to manage the properties, with the actual ownership to be retained by governmental entities. This would guarantee the maintenance of properties consistent with appropriate standards and discourage speculators who victimize both the government and the poor.

Such a body could thwart the abuses by realtors, developers and investment firms which have occurred here in Los Angeles, resulting in 5,871 units reverting from private ownership to the Department of Housing and Urban Development (HUD) and 2,588 to the Veterans Administration (VA).

3. Community Action Agencies, in the target areas, should review all local plans submitted for the rehabilitation and disposition of housing units.

In determining which plans to adopt, extra weight should be given to those developed by groups whose working members and constituents include persons affected by the program.

Inherent in these amendments is a recognition for the need to integrate into this housing proposal the social and economic concerns of the poor and unemployed, using the Community Action Agencies as a vehicle for this interlocking process.

Senator CRANSTON. What people are you referring to?

Mr. FERTIG. Well, the most immediate and obvious groups are the Southeast Asian refugees who are now in Camp Pendleton by the thousands, and that camp is not winterized, and it's by all means not a good place in which to live, where they are to be relocated far from relatives and friends in the heartland of America. They would like to be able to stay here. The only thing that is keeping them from being located here is that they have no housing.

There are also hospitals, detention centers that have people who are cured, who are ready to return to society, but they have no place in which to go. I would urge that you would also contact some of them

and ask them for referral lists.

I think these houses could be occupied by people who are capable of maintaining them and dealing with them."

I think the immediate crisis is with Camp Pendleton, Senator. There is talk now of closing the camp in early October because it's on a flood plane. People are living in tents. They are uncomfortable and ill at ease in the evenings, already. They are going to have to get out of there before the rains come and certainly before winter

comes.

It would be tremendous if you could use your office, sir, to at least make these immediately available on a tentative basis as an alternative to those tents.

Senator CRANSTON. Do any of you have any suggestions on how we deal with the problem that we were discussing at the end of Doris' testimony?

How do we legally get people in to take care of these homes while technically they are still owned by somebody you may have abandoned it but who may return, but it has not yet been foreclosed? How you feel about that?

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This is a legal problem that prevents a community from immediately moving somebody in to take over this property.

Mr. KORPSAK. It is a legal question, and I think it takes cooperation by the lenders. We have an early warning system; we do get notices from the lenders, HUD, and VA.

Senator CRANSTON. But have you worked out a way?

Mr. KORPSAK. Not yet.

Senator CRANSTON. We recognize Mr. Mays from the audience. Mr. MAYS. My name is Sheldon C. Mays. My name is known as a long-time real estate broker in the professional field.

In 1949, the Congress of the United States adopted as a natural goal a decent home for every American family.

Now, we find we are talking this morning about abandoned homes in Los Angeles alone owned by VA and HUD.

As a licensed real estate broker, I receive daily a listing of properties for sale in the Los Angeles office in the "As-Is Condition."

The present procedure leaves to speculative investment or the poorer people with money and with very little equity or people who need that housing are precluded from it because they have low income and no financial ability because what it says there is a minimal down payment for the property will be $5,000. What ordinary little human being-whether he be Chicano, Oriental, black, white, green, or purple can afford or has 5,000 cash dollars to buy a home in an "as-is condition" and close an escrow in 30 days? Then before you can get ahold of a dime to bring that property up to code standards, that may take another $3,000 or $4,000, so even if he has $9,000 or $10,000 into the property, it may be worth $20,000 of putting $10,000 in. The little people just don't have the $10,000, and they have no way of getting it.

I would suggest that in your efforts to promote the taking care of the blight conditions in the cities of America that you also make it possible for families of low income-I mean, the cream of the poorto be able to avail themselves of these homes.

As a former housing project manager, I know that there are literally thousands of families throughout America who lack only one thing in terms of decent housing. They lack the ability to pay for that house without going broke. In everything else they are just as good a family and as good a citizen as the Rockefeller family. Now, you must work out some kind of a way by which these people will be able to get these houses at a fair rate. Maybe there could be some kind of program whereby they can go in there on nights, weekends that sort of thing-and actually put "" number of hours in their helping to bring that property up to code standards, for which you would receive a credit for, say, $2 an hour. Then he has something involved there of his own blood and sweat, and he'll have the

incentive to keep working and bring that unit up to code standards; and when he moves in, he's going to try to keep that property.

On the other hand, under sections 235 and 236-where for $200 he could get in there-when things get a little rough, he's going to take his racetrack money out, and then he's going to pay the house bill.

What I'm saying is to make the property available for the little people who want to own a home and who are good citizens to own a home by putting their sweat, blood, and tears equity into that in the way of labor and get credit for it. Then he starts off with something there. I think if you did that, instead of these other remedies, you would do a lot more good for the people.

As a long-term housing man and real estate broker, I'm just a little bit leary of legislation without implementation from the practical point of view. I've seen various and sundry methods developed by scientists, engineers, and other technicians that really know nothing about what the little person needs or wants. When these programs were actually carried out on the local scene, you found fiscal responsibility lacking.

I'm saying, let's conduct the peoples' business in the same sound financial way we conduct the private business; because if you had a whole lot of this stuff in the private sector, they would have gone bankrupt a long time ago, and a whole lot of heads would have. rolled. Let us bring the same responsibility to take care of the taxpayers' business; and if we do that, we will reach our 1949 goal, and we will find out cities a better place to live in terms of quality life. Senator CRANSTON. Thank you, Sheldon. Those are very good points, and we will do our best to take them into account.

Let me ask you now one other question on this abandonment business and the costs involved.

Do you have any estimates of the typical average cost involved in rehabilitating a home due to the vandalism that occurs during the time that it's unoccupied?

Mr. DOTSON. Having been in that business to some extent, the typical costs for the average two-bedroom house, to bring it up to code and to take care of all the factors of abandonment, is around $3,500. It could be more or less, depending upon the floor space in the home; that could be updated by adding other immunities to the home that wasn't there, but this is the basic.

Now, as to today's higher prices, this escalates.

Senator CRANSTON. Do you know how much of that cost is attributable to bringing the property up to code standards, and how much is attributable to the vandalism that occurs during lack of occupancy? Mr. DOTSON. Approximately the same thing.

Senator CRANSTON. We got a figure of $8,000 in San Francisco.

Mr. SALZMAN. I would say in our experience it would put it at about $7,500. It isn't all attributable to vandalism, though. Some of it is, and some of the times vandalism occurs in the process of bringing the building into good condition.

We had an instance when in the middle of the night two men were in there and took out an old bathtub. It took them several hours. What could they get for an old bathtub? They were caught at it to

boot. It does add, but I think most of the cost was not due to vandalism.

It's the fact that many of the homes we took were pretty old-the electricity had to be redone; the roofs needed to be redone; and the plumbing had to be redone. It depends on the condition of the house to begin with. We know a lot of the HUD-repossessed or FHArepossessed homes in the valley and some parts of the San Fernando Valley are in pretty good shape. You could probably get by pretty easily with a $1,000 or $2,000 or $3,000 down payment.

Mr. FERTIG. Senator, could I urge you to add to your cost computations the costs that are the results of the maldistribution, the fact that there are indicated many, many people in institutional settings or many people who are overcrowded, many people who are in situations that induce them toward activities which then lead to incarceration because of their own ill-housing situations or their tentative housing situations.

The care of an individual in some of these camps is a thousand dollars or more per month. When you're talking about a family of such individuals, you're talking about many thousands of dollars per month that the Government is spending to keep these people locked up or away and involved somewhere else, and also having to spend thousands of dollars to rehabilitate properties. So that part of the cost is also the fact that we can't match these two, and there is logically no reason why the two could not be matched and that you could not draw upon existing community institutions to help orchestrate some of these different programs.

There are voluntary institutions. There are public institutions that are desperately trying to find housing on the one hand and then there are abandoned houses that have to be boarded up and protected against possible vandalism on the other.

Senator CRANSTON. Jerry Buckley has a couple of questions.

Mr. BUCKLEY. I want to address my question to Mr. Salzman.

You mentioned a program that you've used the section 23 leasing program to lease units to low-income families who qualified for public housing.

How did that work? Could you amplify on that, because the program seemed to hold a lot of promise the way you described it, and yet you say it's not possible to continue the program under section 8 of the Revised US Housing Act of 1937?

Mr. SALZMAN. That's correct.

Well, as the program's being administered, it's actually in the Housing Community Development of 1974.

The section 23 program did lend itself to it, because the housing authority would periodically receive units and allocation of units and the subsidies that run with it. There may be several thousand at a time; and, therefore, it had the freedom in how they would pick up the units. As I say, we worked this out jointly with the HUD area office where we wrote up the specifications, put out a request for proposals, and we actually received bids on what they would pay HUD for the buildings and also bids on what they would lease it to the Housing Authority for.

Mr. BUCKLEY. Let me see if I understand it.