Furthermore, it is apparent for several reasons that the Department is not obligated to use this contract authority. Congress expressly limited the recent extension of the section 235 program. Commitments to insure may not be made after June 30, 1976 (Housing and Community Development Act of 1974, Section 211(a) (7)). The House of Representatives expressed its intent to this matter in the House Report on the 1974 Act which stated that the extension of section 235 was to enable outstanding commitments to be met and to provide an alternative to the section 23 (h) (now Section 8) and the public housing programs should those programs prove to be inadequate to meet the housing needs of lower income families. (House of Representatives, Report No. 93-1114, 93d Cong., 2d Session, P. 25.) There was no Congressional intent to require that additional section 235 commitments be made until such time as those alternative programs are shown to be inadequate. The Department will continue to evaluate the effectiveness of the new Section 8 program and other public housing programs as alternatives to section 235. In addition, the United States Court of Appeals for the District of Columbia Circuit has upheld the Secretary's right not to use section 235 contract authority. (Commonwealth of Pennsylvania, et al., v. Lynn, et al., No. 73-1835, July 19, 1974.) The Court cited the problems which have occurred with respect to the section 235 program, such as the high default rate, the poor quality of the housing provided, and the higher dollar amount of subsidy per family for families of higher incomes, and found that it was unable to conclude that the Secretary had acted unreasonably in suspending the program. The changes in the Section 235 program made by. the Housing and Community Development Act of 1974 will not correct these very basic problems. STATUS OF PROGRAM Since the inception of the program, a total of $402 million of contract authority has been used. By the end of fiscal year 1975, an estimated 439,000 families will be receiving assistance payments. The deferral of the remaining unencumbered contract authority for homeownership assistance will not impair the ability of the Federal government to continue to make home payments to those mortgagors which have already been approved for such payments. Appropriations for the necessary amounts each year can be made available based on the contract authority which has been encumbered.. The estimated $3.6 million use of contract authority in fiscal year 1975, reflects required interest rate adjustments for units which had been approved in prior years but which had not reached the mortgage insurance stage in processing when the new 9 1/2% FHA ceiling was announced. a/ Additional authorization of $38 million expired on June 30, 1974. -0- a/ EXPLANATION OF CONTINUING DEFERRAL Title VII of the Housing Act of 1961, as amended, authorized grants to local public bodies for acquiring land for open space use, and for improvement costs for developing the land. The Housing and Community Development Act of 1974 terminates this program on January 1, 1975, and specifies that no commitments for new grants be made after that date. The program was terminated administratively on January 5, 1973. No new grant reservations were made in 1974 or will be made in 1975. However, funds would continue available under the law for cost increases or other eligible expenses on previously approved projects. These funds are being deferred through January 1, 1975, based on the scheduled replacement of the Open Space Land program by the new Community Development Block Grant program authorized by the 1974 Act. Activities previously supported will be eligible for assistance under the new program. In addition, this deferral action will result in future outlay savings of over $60 million. The Department is examining several long range alternatives relative to --Transfer into the Disaster Assistance Fund--$27 million is projected for FY 1975--pursuant to Section 406 of the HUD Appropriations Act of --Transfer to the Community Development Grant program for liquidation --Transfer to the Revolving Fund for Liquidating Programs pursuant --Rescission of the remaining balance based on a determination, at STATUS OF PROGRAM Since the inception of the program a total of 4,582 grant reservations for After the statutory termination date for the program, the Department will continue to have certain responsibilities with regard to previously approved projects for which construction has not been completed. An estimated $140 million of obligated funds will remain available for disbursement at the end of 1975. Even where the final grant disbursements have been made, the Department is required to assure that all HUD-assisted open space projects continue to be used for the purposes specified in the grant agreement. The following table shows the status of obligated balances in this program: Authorization: Section 703, Housing and Urban Development Authorization available. a/ Additional authorization of $40 million expired on June 30, 1974. $47,743 2,022,268 2,070,011 2,070,011 $2,070,011 -0- a/ EXPLANATION OF CONTINUING DEFERRAL Section 703 of the Housing and Urban Development Act of 1965, as amended, authorized grants to local public bodies for multipurpose neighborhood centers. The Housing and Community Development Act of 1974 terminates this program on January 1, 1975, and specifies that no commitments for new grants may be made after that date. The program was terminated administratively on June 30, 1973, and no new commitments were made in 1974 or will be made in 1975. However, funds would continue available under the law for cost increases or other eligible expenses on previously approved projects. These funds are being deferred through January 1, 1975, based on the scheduled replacement of the Neighborhood Facilities program by the new Community Development Block Grant program authorized by the 1974 Act. Activities previously supported will be eligible for assistance under the new program. The Department is examining several long range alternatives relative to the ultimate disposition of the available balance. These alternatives include utilization of all or some portion of these funds as follows: --Transfer into the Disaster Assistance Fund pursuant to Section --Transfer to the Community Development Grant program for liquidation --Transfer to the Revolving Fund for Liquidating Programs pursuant --Rescission of the remaining balance based on a determination, at STATUS OF PROGRAM Since the inception of the program a total of 801 grant reservations for $251.9 million were approved. By the end of fiscal year 1975, an estimated 601 neighborhood centers will be in operation as a result of these grants. After the statutory termination date for the program, the Department will continue to have certain responsibilities with regard to previously approved projects for which construction has not been completed. An estimated $65 million of obligated funds will remain available for disbursement at the end of 1975. Even where the final grant disbursements have been made, the Department is required to assure that all HUD-assisted neighborhood facilities continue to be used for the purposes specified in the grant agreement. The following table shows the status of obligated balances in this program. |