1. PRESIDENT'S IMPOUNDMENTS, SUSPENSIONS AND TERMINATIONS OF HUD PROGRAMS In the Budget submitted to the Congress by the President, the following housing and community development programs were suspended or terminated by the President as of the following dates: Programs suspended: Effective suspension date 1. Assisted housing including rent supplements, Sec. 235 and 236 and public housing‒‒‒‒‒ 2. Nonprofit sponsor assistance_. Programs terminated: 1. College housing---. 2. Community development programs: (a) Open space land.. (b) Water and sewer facilities. (c) Public facilities loans_- (e) Neighborhood facilities___ (f) Urban renewal programs_. (g) Rehabilitation loans__ 3. Community planning and management programs: Jan. 5, 1973. Effective termination date (a) Community developmtnt training and fellowship programs-- (b) Supplementary grants for new communities______ Do. Do. Do. June 30, 1973. Do. Do. Do. Do. Do. Over $860 Million of funds and contract authority were impounded for the foregoing HUD programs which consist of $529 Million of appropriated funds and $331.1 Million of contract authority for Rent Supplements and Sections 235 and 236. In addition, there has been $712.882 Million of impoundments in the programs of the Farmers' Home Administration and the Rural Electrification Administration. These Presidential impoundments were part of a larger pattern of similar actions totalling $8.723 Billion in impoundments of appropriations for the Federal Government which does not include the additional amount (we do not have that total, except the housing figures stated above) covering suspensions or terminations of contract authority. A substantial part of these impoundments relate to social, housing, health and welfare programs, with particular deprivations among the underprivileged who most need help. 2. REDUCTION IN PRODUCTION OF HOUSING FOR LOW- AND MODERATE-INCOME GROUPS As a result of the foregoing actions, during the fiscal years 1973 and 1974, there will be the following reductions in the program levels of housing for low- and moderate-income groups who cannot obtain decent housing without HUD assistance: The total reduction in HUD-assisted housing production will be more than 50% in fiscal 1973 as a result of the Presidential suspension of these programs on January 5, 1973 and his impoundment of funds and contract authority. With the projected cuts in the President's Budget for fiscal 1974, the reduction in HUD-assisted housing production in that year will be 93%-in fact, the remaining 7% is a carry-over to fulfill commitments in the preceding year. 3. HUMAN IMPACT OF REDUCTIONS IN HUD-ASSISTED HOUSING PRODUCTION The human impact of these reductions is to deny fulfillment of the unmet needs for decent housing among people of low and moderate incomes. These are the groups who cannot afford decent housing without HUD assistance to reduce the housing charges to their financial reach. The budget cuts and impoundments were made without compassion for the poor or underprivileged who should have a priority in the allocation of Federal funds and resources. By the end of fiscal 1974, only 1,680,000 units of assisted housing will have been built or started to meet the goal in the Housing and Urban Development Act of 1968. The ten year goal was to produce 6,000,000 units of housing for low and moderate income families. With four years remaining, it will be impossible to build the balance of 4,320,000 units. The stoppage of HUD-assisted housing has seriously jeopardized meeting that goal and fulfilling the commitment in the 1968 Act of a decent home and a suitable living environment for every American family. With the reduction in the building of additional HUD-assisted housing, there will be a grossly inadequate supply of housing for those of low and moderate incomes. Since rent controls have been removed, the resulting scarcity will result in rent increases for existing unsubsidized housing. This will create serious hardships. It will contribute to inflation and an increase in the cost of living. 4. ECONOMIC IMPACT OF REDUCTIONS IN HUD-ASSISTED HOUSING The economic impact of the housing reductions is disastrous. On the cut in HUD-assisted housing commitments in fiscal 1974, they will result in total reductions in expenditures of over $18 Billion-as a result of the housing commitment cut of 422,000 units. This is the total of the following: (a) direct expenditures for housing construction, land, and community facilities; (b) indirect expenditures through the multiplier effect; and (c) expenditures for related services such as taxes, interest, utilities, and operating expenses. There will be an estimated loss of over 2 million man years of employment. As to the cut in housing commitments during fiscal 1973-which occurred with program suspensions in the middle of fiscal 1973-the economic impact will be $9 Billion in expenditures and 1 million man years in employment due to the housing commitment cut of 237,000 units. As to the cut of 659,000 units in HUDassisted housing commitments made during the 18-month period until June 30, 1974, the total economic impact will be $27 Billion in expenditures and 3 million man years in employment. These figures do not include the impact relating to the impoundments and budget cuts in the community development programs listed above. The Administration claims that the economy is strong enough to withstand any adverse impact on it during the next 18 months. The Administration cites the figures on estimated starts on HUD-assisted housing and states that the level will be approximately the same for the fiscal years 1973 and 1974. The President's Budget contains the following comparison of HUD-assisted starts for fiscal years 1971 through 1974: Fiscal year 1971 (July 1, 1970 to June 30, 1971) actual. 388,526 338, 491 275, 900 239,955 Housing starts in any fiscal year are different from the housing commitments made in that year. Thus, the housing commitments made in fiscal 1972 covered 452.922 units, but the starts were 338,526 units. The housing starts for fiscal 1973 will be 62,000 units less than in fiscal 1972 and 102.000 units less than in fiscal 1971. For fiscal 1974, the housing starts will be 98,000 less than fiscal 1972 and 148.000 less than fiscal 1971. This reduction in housing starts reflects the cut off in commitments due to the suspension of programs on January 7, 1973. This will have an adverse impact on the economy in fiscal 1973 and a more serious impact in fiscal 1974. In addition to the reductions in expenditures and employment due to the lower level of housing starts, there will be large reductions due to the stoppage of any project initiation, with all of the work and investments that would otherwise occur. The most disastrous effects will occur in fiscal 1975 starting the middle of next year. There is a substantial time lag between the issuance of a commitment and the start of construction. There is a much greater time lag between the initiation of a project-which starts long before the filing of an application with HUD and the start of construction. In a typical project, the lead time may be as much as 18 months from initiation to the start of construction. The housing starts for fiscal years 1973 and 1974 will use up the pipeline of projects previously initiated and committed. So by fiscal 1975 there will be virtually no pipeline of previously committed projects. It would then typically take about 18 months to get projects initiated and processed to start of construction, even with the present productive capacity to initiate and develop projects. However, if all HUD-assisted programs are suspended, there will be a destruction of that productive capacity which is now initiating and developing HUD-assisted housing. Builders, workers, lenders, sponsors, and others will seek other work. So, we will be unable to achieve housing starts for a long period following the lifting of a moratorium. In order to keep faith with the people who relied upon existing laws and to avoid the serious adverse impact on the economy by discontinuing the initiation of any projects, it is necessary that existing HUD-assisted housing and other programs be continued during any period of their reevaluation or any transition period to block grants for community development programs. 5. HARDSHIPS CAUSED BY IMPOUNDMENTS The precipitous action of the President in impounding appropriated funds and contract authority and suspending or terminating programs should in no event be retroactive with respect to pending applications and projects of intended participants in programs. They acted in reliance upon legislative authorizations and appropriations under the HUD-assisted housing programs or the categorical grant programs which were suspended or terminated on the dates listed above. It would be most unjust and inequitable to deny further participation in these programs which have long been a part of Federal legislation and which have been relied upon by public agencies or private citizens who acted in good faith, often with assurances or encouragement from the Federal officials administering the programs. This is another reason why these programs should be continued during any transition or reevaluation period until modified or new programs are made effective. By way of illustration-and not as a complete list-we cite a few examples of cases that demonstrate the kinds of hardships and difficulties that will result unless relief is granted by lifting the moratorium: (a) On 236 projects which were planned to be developed in sections, HUD offices have provided funding or assurances that the remaining sections of the housing developments would be assisted. Acting in reliance, the developers acquired all of the land and installed over-size utilities to serve the entire developments. Community buildings and facilities were constructed in the earlier sections which require the later sections of the developments to contribute their share to support the community buildings and their operations. Consumers are awaiting occupancy of the housing and have changed their housing plans accordingly. Serious difficulties would result with large losses to the parties involvedand hardships to the consumers—if commitments for assistance were not allowed to be issued for such subsequent sections of the planned developments. (b) On HUD assisted housing projects which were planned as part of approved urban renewal programs, the urban renewal agencies held public hearings and selected developers. They entered into land disposition contracts which specifically require public housing or other HUD-assisted housing. This assisted housing is included in program requirements approved by HUD. Moreover, the Federal urban renewal legislation requires that at least one-half of the housing to be built in the urban renewal areas shall be for those of low and moderate incomes; also, it requires an equal replacement of housing destroyed. In order to carry out the urban renewal program requirements and comply with all applicable laws, HUD must be able to issue commitments for the housing assistance which is needed to reach those of low and moderate incomes. (c) Many such new communities are being built with private financing involving a Federal guaranty for which a charge is made. The law and the HUD contracts require that some of the housing in these new communities must be provided for those of low and moderate incomes. These new communities were undertaken with the understanding that there would be HUD assistance to enable this housing to be built. New industries, hospitals and community facilities are being located in the new communities, which employ some people who will be unable to afford the housing to be built unless they get HUD assistance. In order to carry out the new community program and comply with all applicable Federal laws and contracts, HUD must be able to issue commitments for the housing assistance which is needed to reach those of low and moderate incomes. (d) In local urban renewal programs, plans have often been made and approved for the development of a larger area in which smaller neighborhood development programs are located from time to time. The owners of properties in the area, as well as the residents, have all acted in anticipation of, and reliance upon, the completion of the total urban renewal program approved by the city and other public agencies. The failure to complete the urban renewal plan will create serious problems. To avoid these problems and hardships, HUD must be able to issue commitments to carry out the urban renewal program as initially planned. (e) The President's Budget does not contemplate that any funds would be made available under the proposed special revenue sharing for community development until fiscal 1975. The needs of local communities for the funding of these programs during fiscal 1974 is urgent. It is imperative that all of the categorical grant programs be continued until the enactment of the requested legislation for block grants for community development programs. 6. SECTION 235 AND 236 PROGRAMS HAVE GENERALLY BEEN EFFECTIVE Studies show that the Section 235 and 236 programs have generally been effective in meeting their objectives and that their continuance is imperative to provide housing which is urgently needed by those of moderate incomes. Most of the complaints and criticisms about these programs did not involve new construction or rehabilitation of housing under Sections 235 and 236. They primarily involved existing housing-much of it under unsubsidized programswhere there were instances of overcharging and failure to meet proper standards. The adoption of the consumer amendments in H.R. 16704-as reported last year by the House Banking & Currency Committee-will assure that past abuses and difficulties in these HUD programs will be avoided. We support those amendments which provide that all housing receiving HUD assistance or mortgage insurance must be of good quality and at reasonable prices and rents. We also support the other amendments which were in the Housing and Urban Development Bill of 1972 that passed the Senate last year, but did not reach the House Floor for action last year. The proper procedure for the reevaluation of HUD-assisted programs is through the legislative process, including Committee hearings and Congressional debates, with Presidential action on the Bill as it passes the Congress. It is hoped that the Administration will present its proposals to Congress and that other witnesses will have an opportunity to respond to them. We believe that the HUD-assisted programs will be continued by the Congress with modifying amendments which will improve them. Pending such Congressional modifications, these programs should be continued in force to avoid the disastrous results which would result from their present suspension or termination by the President. 7. THE WIDESPREAD PRESIDENTIAL IMPOUNDMENTS AND SUSPENSIONS AND TERMINATIONS OF PROGRAMS ARE CONTRARY TO THE CONSTITUTION AND LAWS OF THE UNITED STATES (a) The widespread actions taken by the President in impounding appropriated funds and contract authority and suspending and terminating programs are contrary to the Constitution and the laws of the United States. They infringe upon the legislative powers vested in the Congress. They violate the Constitutional provision that the President "shall take care that the laws be faithfully executed." For the reasons set forth below, we agree with the following statement in the 1969 memorandum of William H. Rehnquist when he was an Assistant Attorney General: "With respect to the suggestion that the President has a Constitutional power to decline to spend appropriated funds, we must conclude that existence of such a broad power is supported neither by reason nor precedent." (b) The housing and community development programs which the President has suspended or terminated were enacted by laws which passed the Congress after customary committee hearings and congressional votes and were either signed by the President or enacted into law by overriding a veto of the President. After enactment of the substantive legislation, a separate appropriation law was likewise enacted by the Congress and signed by the President which included the appropriation of funds or contract authority to implement the legislative authorizations. (c) Following the passage of the legislative and appropriation acts, the Executive Branch took action to implement the programs and promulgate the necessary regulations, directives, and procedures. Those intended to participate in the programs then acted in reliance upon the laws so enacted and implemented by the Execution action. Often this entailed large investments by public or private developers or changes of plans by consumers who properly expected, and relied upon, the assistance being made available as provided by law. (d) Without any action being taken to repeal or modify the laws in a manner prescribed by the Constitution, the President unilaterally took action to stop any further commitments or actions to carry out all of the HUD-assisted housing and community development programs listed above, each of which was authorized by a Federal law and appropriation. (e) This action did not involve merely a cut in the level of each of these programs by some portion of the funds or contract authority available for commitment. Instead, the President completely suspended or terminated these programs from and after designated dates. The net effect of the Presidential action was equivalent to the repeal of the Federal laws relating to each of these programs. Clearly, the President does not have the power unilaterally to repeal all these laws, because the repeal of a law requires the same type of action as its initial enactment. It is equally clear that the President cannot, by indirection, accomplish the same purpose through a unilateral suspension or termination of all further commitments under the programs established by these Federal laws. (f) The Administration has cited some historical precedents for impoundings by Presidents. However, these generally related to delaying or curtailing expenditures. Instead of a partial reduction in the level of commitments and expenditures, there is a complete stoppage of further activity in a large number of programs through their suspension or termination. There have been some isolated historical instances where an individual authorization of funds was wholly impounded. However, we know of no historical precedent for such a complete stoppage by Presidential action of so many programs covered by so many laws enacted by the Congress. These Presidential impoundings are part of a broad pattern covering the stoppage of most of the social, housing, health and welfare programs of the Federal Government, with particular deprivation among the underprivileged who most need help. (g) It happens that all of the stoppages are occurring in programs involving housing programs intended to benefit people of lower income, along with other social, health and welfare programs. Such actions represent major decisions of national policy concerning the priorities which should be followed in allocating Federal funds and resources for commitment and expenditure within the Budget. Surely this is a matter which has so great an impact upon the Nation that it must be determined not by the Executive Branch alone, but by action through legislation. CONCLUSION To better enable Congress to exercise its proper constitutional powers and responsibilities concerning legislation and appropriations, we urge the enactment of Senate Bill 373. This should make it possible to continue operations under existing Federal laws relating to the HUD-assisted housing and community development programs listed above unless and until the Congress concurs in program impoundings after 60 days notice from the President. For all of the reasons set forth in our testimony, it is necessary that these HUD programs be continued in operation during the period until modified or new programs become effective pursuant to legislative enactments. |