in about three pages where we list all the things that need to be done to provide housing in the inner city. We compare that with solutions to these problems, and then we relate that to the various Federal problems that will give you an idea of the gaps.

Let me just say something that I hope can be brief, and I won't offend too many people-I don't mean to be offensive, but I suggest, Senator, that I've watched these kinds of hearings. Normally, I refuse to come to them.

My experience in the city says that what's occurring here is that you have identified a white elephant, and what you're getting is a bunch of blind men telling you what the white elephant looks like from their perspective; in other words, when you get an expert in here, if you listen, each one says it's a rope or it's a pillar or it's something else.

I would suggest that maybe at this point you might want to turn the hearings around. There is no need to talk to any more experts. HUD, FHA, the National Science Foundation, and other agencies have examined this problem of experts for years. There are hundreds of studies available so that if you want help on what can be done, we'd be very happy in our research program to give you an annotative bibliography. You don't need any more expert testimony. The thing that I find in looking at this is that no one talks to people who are going to have something done to them. I would suggest that if you could create a pragmatic agency which you or people sponsoring the agency would say, "We are going to take a personal interest in this, and you're going to be personally responsible for reporting to us on doing what we want done." Then if you would say very specifically what you want done-"We want 10,000 abandoned houses rehabilitated, and we want 10,000 times"-in other words, set your objectives very specifically.

Then talk to the people to whom you want to provide this housing. Talk to the people who are living in the rehabilitated housing. Come down in to Watts and walk around and talk to the man on the street and find out what the problem is; let them tell you what the problem is, and then turn to the agency and say, "Here's the problem. You go solve it."

I think what you're trying to do is necessary, but I'm very concerned that if you let HUD or FHA get near it, you can document it, and they are going to ruin it. It's going to turn into profiteering. I think you're doing the wrong thing. I think you're listening to the wrong people. I'm very much in favor of citizen's participation. In our planning commission we approve citizens' participation, and we find if we allow the people who have the problem to tell us what the problem is, then we turn to them and say, "Here, solve it." Don't solve the problem that you're defining, don't solve what you can solve, but here's the problem.

Now, I want you to use whatever is available, and I would suggest that this is what your agency really ought to be defined as: One that will use any agency in the Government, any study, any program, any private group that it can to get done what has to be done, that is all.

Senator CRANSTON. Have you or people working with you talked to the people that you are referring to, those living in these communities?

Professor CASE. Yes, sir.

Senator CRANSTON. What do they say needs to be done?

Professor CASE. Well, a lot of things, and I hate to speak for them and I apologize for the people who are in the audience.

(1) The problem of crime and police harrassment; (2) Schools that are inadequate; (3) Lenders that give them the runaround; (4) City bureaucrats that push them around from one agency to another until they get discouraged and can't do anything: for example, having hearings and things that are going to affect them at times when they can't come to those hearings; (5) Making everything center downtown where there ought to be somebody out here; and (6) Going to the FHA and finding total indifference. People can't answer questions or won't help them, saying this is not our problem. For example, next week I'm going to talk about an area called "Village Green." One-third of that area is in a constant state of eviction, and the other two-thirds are thinking of leaving. What can you do for a property area like that? Well, we are going down in there, and we have talked to them. We think probably the best thing is to just clear out the whole area and put in light manufacturing and provide employment because the basic problem of evictions is that people lose their jobs, and then they can't afford to pay the balances. We've looked at the Pacoima area and the boarded-up houses there and talked to the people there asking them, "Why did you leave?” And the answer is, "Well, gee, you give me a nice house and Pacoima is a great place to live, but I have to have a car to get work, and I can't afford a car." The family now has to have two cars. Well, you go on down through the whole area.

Senator CRANSTON. Well, if you clean up housing in Pacoima, what effect would that have?

Professor CASE. Well, it's not housing. The problem in Los Angeles is that there isn't a lack of good housing. There is a sufficient supply of good housing. It's the price of the housing and the ability to buy the housing so that in Los Angeles if you aren't earning at least $20,000 a year, you're not going to be able to afford a house.

In the Village Green area there is a lot of good housing around there. What we would be taking out is so insignificant in terms of what is still available and what it would do for the capacity of the people to pay for the housing and stay there and to buy more housing, will be so great that the net cost benefit is all in favor of doing this. The neighborhood is constantly changing because it's a source of crime and vandalism, which have our gangs living in there that every once in awhile swoop out of the area and go over Baldwin Hills and raid Baldwin Hills and rip it off, or they get out into the Village Green area, if you know where I mean. If you clean up the area, at least you stop that sort of vandalism and crime.

It's the same way in the south Los Angeles area. There are some very fine neighborhoods in here, and the neighbors have to band together to protect themselves. If you can take 5 minutes, drive around some of these streets and ask yourself, "Why should a modest low-cost housing have all this iron grilling over everything in the 'house?" That is one of your answers.

Senator CRANSTON. Well, thank you very much. I appreciate your frankness. I accept your criticisms, and I agree with virtually all of them.

Professor CASE. Thank you, I'm sure. I think I've known you quite awhile.

Senator CRANSTON. Thank you.

[Complete statement follows:]

STATEMENT OF FRED E. CASE, PROFESSOR, REAL ESTATE AND URBAN LAND ECONOMICS, GRADUATE SCHOOL OF MANAGEMENT, UNIVERSITY OF CALIFORNIA

I am speaking as a private person although I was on the Los Angeles City Building and Safety Commission for 6 years, working on code enforcement and neighborhood rehabilitation. I have been a member of the Planning Commission for two years, one year as its President. Four more years are remaining in my present term. My emphasis has been on providing low-cost housing through effective landuse planning. I have been involved in research on housing for more than 20 years. I am submitting a research report with these comments representing more than three years of research in nine American cities for the purpose of determining what programs succeeded and what programs failed in providing better, lower-cost housing for inner-city families. (InnerCity Housing and Private Enterprise, Frederick E. Case, (ed.) Praeger Press, New York, 1972.) My testimony will reflect these experiences and studies.

1. THERE IS A NEED FOR HOUSING CONSERVATION, REHABILITATION AND IMPROVEMENT The intent of the bill is very much in tune with future directions in which the housing industry must move for the next decade at least. The prcie of new housing places it beyond the reach of all but about 30-40 percent of all American families. Each year, we 'lose from the market place through abandonment and other means about two percent of the existing inventory, or approximately 1,400,000 housing units. The resources needed to save even one-half of this number are considerably less than those needed to build an equivalent number. If modestly priced homes and rental units are to be made available, more attention must be paid to saving the existing units.

2. THERE IS A NEED FOR AN INDEPENDENT AGENCY

HUD, and particularly the FHA, is burdened with such a broad array of housing programs, some conflicting in purpose, that it should not be asked to supervise this program. More importantly, neither agency has demonstrated a capacity to deal with programs or concepts which are somewhat foreign to the basic purposes of either providing new subsidized housing to low-income families or insured home loans to middle- and upper-income families. Further. the manager and administrators of these agencies should not be asked to participate in the operation of the new agency, although they could undoubtedly give some useful advice on its operational policies.

The Neighborhood Protection Corporation (NPC) should be given goals and objectives which are precise, measurable and related to definite time periods. Annualy, the agency should be required to spell out its goals in terms of accomplishments, cost and manpower and, at the end of the year, report on the differences between what it planned to accomplish, what it failed to accomplish, and what it intents to do about it. One of the major weaknesses in the 1949 Statement of National Housing Policy is that the goals are so generalized and the programs supporting policy so indeterminate, that there is no way of getting a useful cost-effectiveness measure of the programs. This is not to say that the program should pay for themselves or necessarily be measured against some type of economic yardstick, but NPC should be held responsible for productivity according to the goals Congress has in mind when it creates the agency.

3. A POTENTIAL OF CONFLICTING OBJECTIVES COULD CREATE PROBLEMS

Rehabilitating abandoned housing now does not mean that this housing would be suitable for low-income families. Improving abandoned housing and the adjacent neighborhood can create a complex of expenses that would make the cost of the improved housing too high for any but middle-or upper-income

families. There is no reason why dealing with abandonment and providing low-cost housing could not be handled in one agency, but the two should not be tied together. Both needs exist- save the abandoned housing and provide centrally located housing for low-income families.

If providing housing for low-income families is the objective then subsidies, family counseling, flexible loan arrangements and a host of other things are needed which have little to do with recovering abandoned housing. One of the reasons for much abandoned housing is the failure to deal with the peopleproblems associated with providing the housing to low-income families.

On the other hand, saving abandoned housing when coupled with neighborhood rehabilitation and improvement of existing public facilities and programs can halt deterioration. Some subsidy is involved in this program but the housing should be made available to those who can afford it, particularly if the effort results in a better class neighborhood for the minority families earning $10,000 to $20,000 annually. Some would say this is gilding the lily, but the realities are that many neighborhoods with predominantly middleincome families, particularly minority families, could be saved with great benefit to the families involved. There are simply not enough older neighborhoods or housing at modest prices available to minority families. If NPC has to repay its Treasury debt, it cannot accept FHA-VA values. FHA-VA should be required to accept losses arising from inflated appraisal values. Perhaps FHA-VA should be asked to use their "insurance" resources to absorb their losses on abandoned property. In some ways the legislation has the aspects or urban removal.

4. WE SHOULD USE WHAT WE ALREADY KNOW ABOUT HOUSING ABANDONMENT, REHABILITATION, ETC.

Over the years, HUD has contracted for hundreds of studies about all kinds of housing problems. Some evidence of this is found in tne materials provided by Mr. Schechter for inclusion in the Congressional Records. There is no need for additional research or studies on the subjects of this legislation. Before the NPC begins operations it should be required to submit a full detailed analysis of all studies undertaken by HUD which relate to the subject. Further, it should list and evaluate all suggestions that have been made about rehabilitating housing and use them as a basis of developing their own operational policies, programs and goals. One of the persistent inabilities of federal housing agencies is to learn from all of the studies that they commission. Too frequently they use selective learning to hasten the failures of the programs they administer. Clear differentiation between individual abandoned units and areas of abandoned properties.

5. WHAT IS THE MARKET FOR THE HOUSING TO BE SAVED?

One of the sad facts about providing low-cost housing is that those for whom it is being provided are seldom asked what they want or need in housing. Any private corporation planning to undertake the kinds of activities envisioned for the new agency would first do an extensive market study to determine who would want the housing, what physical characteristics would they want in the housing-i.e., bedrooms, baths, privacy, neighborhoods, etc., how much can the families afford in price of rents, what kinds of financing terms would be needed, what kinds of other help would the families need to move into the housing.

Another market factor about the abandoned housing is that there is a lack of real understanding of why the housing was abandoned. Circumstances vary widely from community to community, so that the reasons for abandoned housing in Newark or New York, Memphis or Indianapolis or Atlanta or Los Angeles are not the same. In Los Angeles, for example, housing has been abandoned in Pacoima not because the families did not want the housing nor could not afford the payments, but because the housing was so remote from employment sources that the breadwinners could not afford the time and expenses of getting to their work. On the other hand, in south-central Los Angeles, experiments with rehabilitated housing indicated no one would buy the homes even at bargain prices because of the high crime rate in the surrounding area. Recently the Bank of America agreed to cooperate in helping

rehabilitate housing near the downtown area, but before this could be done, the Planning Commission had to declare the area a special planning area, so that more restrictive aspects of building and zoning code enforcement could be mitigated. Lenders sometimes foreclose on property and create abandonment because numerous types of regulatory controls make foreclosure the more economic way of handling a housing problem, rather than making a serious effort to work with the family in trying to save the housing.

FHA-VA values are too distorted for the NPC to be able to pay those values and accomplish its objective.

6. CLOSE COORDINATION WITH LOCAL AND STATE GOVERNMENT IS A MUST

As the NPC operates it will find that help is needed in the form of legislation, services, or programs from the city, county, and state governments. Some form of continuing coordination should be integral to the agency's operations. More importantly, agency operations should be carefully related to local planning and zoning programs. In Los Angeles, we have 35 separate community plans, with each community requiring a slightly different approach to its housing and neighborhood conservation problems. Too frequently actions by federal agencies are at cross purposes with the local community needs and objectives. In fact, the actions of FHA have been a major factor in encouraging the flight to the suburbs and the abandonment of the inner-city.

7. PRIVATE INDUSTRY AND THE LABOR UNIONS SHOULD BE ASKED TO HELP

Federal housing agencies do not make effective use of the services, the expertise which exists in the private sector. Serious thought should be given to ways in which builders, contractors, Realtors, mortgage lenders, labor unions can be used to advise and assist NPC in implementing its programs. Lenders, for example, could suggest ways of solving mortgage-lending regulations. Labor unions could counsel in improving labor productivity. In other words an advisory counsil, with some powers and responsibilities, might provide an effective advisory service to the board of directors of NPC. Basically NPC will have to face the tradeoffs between social objectives needing subsidies and financial goals related to Treasury financing and neighborhood and property rehabilitation to market standards.

Senator CRANSTON. Professor Mittelbach, please be as brief as possible.

STATEMENT OF FRANK MITTELBACH, PROFESSOR AND JOHN CLAPP, ASSISTANT PROFESSOR, UNIVERSITY OF CALIFORNIA Professor MITTELBACH. My name is Frank Mittelbach. I'm on the faculty of the grad school of management at UCLA. As part of my professional work I specialize in housing, eliciting urban studies, and I have been research coordinator for a Governor's Housing Commission on Housing here in California and also a consultant to President Johnson's Committee on Urban Housing, as well as HUD and other agencies.

I'm accompanied by Prof. John Clapp this morning, and he asks to join me in the statement, and he will quickly present a summary of our full paper which we have submitted for the record in advance. Senator CRANSTON. Thank you very much.

Professor CLAPP. Thank you. Thank you, Frank.

I might say that my expertise in this area stems from a year-long study which I have recently completed on housing abandonment in New York City.

Research on housing abandonment has succeeded in compiling a list of factors which are causally interrelated with each other and with