[1977 Annual Report of the U.S. Department of Housing and Urban Development]
[From the U.S. Government Publishing Office, www.gpo.gov]

U.S. Department of Housing and Urban Development
1977 Annual Report
Revitalization...
Restoration...
Rehabilitation...
a Renewal of the American Dream
u S. GOVERNMENT DEPOSITORY ITEM
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 2O4IO
THE SECRETARY
Dear Mr. President:
I have the honor to transmit herewith for submission to Congress The Thirteenth Annual Report of the Department of Housing and Urban Development.
This report is a narrative record of major activities under all of the programs administered by this Department for the calendar year 1977. A supplemental statistical analysis will be published separately.
Respectfully,
Enclosure
The President The White House Washington, D.C.
'Patricia Roberts Harris

For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402
Stock No. 023-000-00438-1
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Contents
1	Highlights of 1977	iii
4	Office of the Secretary
5	Assistant to the Secretary for Public Affairs
5	Assistant to the Secretary for Labor Relations
5	Counselor to the Secretary
6	Urban Policy Advisor to the Secretary
8	Office of International Affairs
10 Office of the Under Secretary
12 Deputy Under Secretary for Field Coordination
13 Office of the General Counsel
23 Assistant Secretary for Community Planning and Development
32 Assistant Secretary for Housing-Federal Housing Commissioner
38 Government National Mortgage Association
39 Assistant Secretary for Policy Development and Research
51 Assistant Secretary for Neighborhoods, Voluntary Associations and Consumer Affairs
58 Assistant Secretary for Fair Housing and Equal Opportunity
61 Assistant Secretary for Legislation and Intergovernmental Relations
61	Assistant Secretary for Administration
67	New Community Development Corporation
68	Federal Insurance Administration
70	Office of Inspector General
72	Federal Disaster Assistance Administration
74	Advisory Bodies to the Department
Quotations accompanying photos taken from Secretarial speeches of 1977.
"If we don't secure the future for our children, who will?"
Highlights of 1977
The Department of Housing and Urban Development established these goals for 1977. At the outset, Secretary Patricia Roberts Harris pledged HUD to rededicate itself to "a new beginning" in meeting the Nation's needs to provide decent housing for Americans, wherever they may choose to live.
The year that followed was one of intensive inquiry, of fresh approaches and new perspectives on existing HUD programs and administration. HUD's new management had two objectives: to link its housing and community development programs with national goals and policies, and improve the delivery of services to those in need.
This Report puts the results of 1977's effort on record. During this transitional year:
The Housing and Community Development Act of 1977 and other significant legislation became law, providing for—
•	Increased funding for HUD's community development block grant program amounting to $12.5 billion over three additional years.
•	A new block grant formula which will target greater allocations of community development funds to areas of greatest need.
•	A new action grant program providing $400 million for each of the next three years to stimulate greater private sector involvement in urban revitalization. The grants, to be made on a one-time basis to cities with particular economic problems, are intended to attract new private and public investment.
•	Additional funding to increase from 235,000 to 370,000 units the subsidized rental housing stock for FY 1977. Nearly half of the additional Section 8 program funds would be for new construction or substantial rehabilitation.
•	Reactivation of the traditional public housing program with a production target of 56,000 new units for FY 1978, up from 12,000 units the previous year.
•	Access to homeownership for additional thousands of middle-income families by increasing the mortgage limit on FHA-insured single-family homes from $45,000 to $60,000, and lowering the required downpayment (from 5 percent to 3 percent on the first $25,000).
•	Making the Graduated Payment Mortgage program permanent, thus enabling many young families to own homes earlier than they otherwise could by permitting them to make lower payments in the early years of the mortgage and increase them as income rises.
•	Assuring decent shelter for	1
all Americans
•	Revitalizing our urban areas
•	Providing a choice of living places
•	Enhancing the capability of local governments to rejuvenate their communities
The re-emergence of HUD as a strong, energetic, and determined Federal force in the Nation's housing and community development field also brought—
•	New administrative procedures, such as the review process that requires all block grant recipients to demonstrate how their projects benefit low- and moderate-income residents. This process compelled nearly 175 communities to reprogram more than $45 million.
•	Leadership by HUD of the intergovernmental Urban and Regional Policy Group mandated to chart the President's new urban strategy for the Nation.
•	Reorganization of HUD's field structure to eliminate an unnecessary middle management layer and provide efficiencies that will save HUD's clients time and money.
•	The targeting of $84 million in FY 1977 rehabilitation loans as part of a concentrated Federal effort in behalf of neighborhood revitalization.
•	Improved processing and supplemental funding for the subsidized rental assistance program (Section 8), which provided housing to 175,000 low-income families—by far the highest in the history of such programs.
•	Mortgage insurance for 333,000 American families to underwrite their purchase of single-family homes during 1977. Additional families will be able to choose housing from among 101,000 dwellings insured under the Federal Housing Administration's multifamily programs.
•	Support for the construction of 75,000 multifamily units through the Government National Mortgage Association's mortgage-backed securities program. In addition to providing needed shelter, the GNMA program meant .100,000 more jobs in the construction industry.
•	Improvement of services to community leaders through establishment of permanent c HUD offices for Intergovernmental Relations and for Neighborhood and Voluntary Associations. Other measures, such as creation of a task force of mayors, helpled improve communications between HUD and its constituencies.
These milestones were not achieved in a climate of easy acceptance, for Americans are the most individualistic of the world's peoples, and the choice of housing is a supremely individual statement. Moreover, since our first loyalties are to our families, Americans regard the opportunity to own and develop their property as nothing less than a sacred right.
Thus it came as a shock when Franklin Roosevelt during the Great Depression awakened Americans to the reality that
one-third of those families were ill-housed. Since that time, the Federal Government has undertaken the difficult task of preserving the individual rights associated with property, enterprise and privacy while making certain that decent, safe and sanitary housing is within the reach of all income groups.
The goal of decent housing is today intertwined with the twin objective of rehabilitating the American City. As the Secretary has observed, our neighborhoods are but "the building blocks of cities." Yet our recognition of America as a Nation of cities came late. Not until after World War II did the Government officially recognize that single-family homeowners and apartment dwellers make up communities, and that there must be a concern for the health of the total living environment. Many of our great urban complexes were already in serious trouble because of the interrelated forces of urban sprawl and central city decay.
It is now two generations since the Federal Government responded with efforts to help save the great cities of America, the capstone of which was the creation in 1965 of a new Cabinet Department to lead the task. Through it all, the mechanisms which HUD has chosen to meet national urban needs fall within a pattern consistent with our heritage. There are no monolithic federally-owned blocks of housing. Instead there is rental assistance and public housing, as well as the financial incentives from the FHA and Ginny Mae which form the basis for HUD's partnership with the private housing industry. The plethora of old categorical programs for community development are gone because they have been improved upon by block grants and Action Grants. The Federal role is always one of probing and testing, of discarding programs that have outlived their time and creating new ones more responsive to today's needs.
Millions of Americans live in better housing because of the programs of the past, and there is new vitality in the national effort to house low-income families. As we make more extensive use of substantially sound housing and as we get into the Action Grant program, we will be restoring the stability of neighborhoods, the solid base upon which our cities must rise or fall. Tempered with a realism leavened by a knowledge of the past, the achievements of 1977 have laid the basis for the "coordinated, comprehensive attack" on urban problems for the years ahead. There is still a big job to do, but we may take comfort from the fact that the magnitude of a job has not deterred Americans in the past, nor will it in the future.
“I predict that we will all join together, Sunbelt and Frostbelt, city, suburb and countryside, to implement an urban policy that will cure the cancer of urban decay and blight and prevent its occurrence in new places."
Office of the Secretary
The Secretary of the Department of Housing and Urban Development is responsible for the administration of all programs, functions and authorities of the Department and for advising the President on Federal policy, programs and activities relating to housing and urban development. The Secretary develops and recommends policies regarding the orderly growth and development of the Nation's urban areas, and exercises leadership at the direction of the President in coordinating Federal activities that have a major effect upon urban, suburban or metropolitan housing and community development.
The Secretary is also responsible for general overview of activities of the Federal National Mortgage Association and serves as Chairman of the Board of Directors of the New Community Development Corporation.
The Department's principal staff includes the Secretary, Under Secretary, General Counsel, seven Assistant Secretaries, the president of the Government National Mortgage Association, a Federal Insurance Administrator, the General Manager of the New Community Development Corporation, an Inspector General and a Federal Disaster Assistance Administrator.
The immediate Office of the Secretary includes the Under Secretary, a Deputy Under Secretary for Field Coordination, the Counselor to the Secretary, an Urban Policy Advisor, the Assistant to the Secretary for Public Affairs, and the Offices of International Affairs and Labor Relations.
ASSISTANT TO
THE SECRETARY
FOR PUBLIC AFFAIRS
The Office of Public Affairs advises the Secretary and other principal departmental staff on matters involving the Department's dealing with the general public and the media. The Office is responsible for matters relating to public information, public opinion and participation in public events, and provides the following services:
•	liaison with and response to requests for information from national, regional, and local news media;
•	issuance of news releases and other publications explaining or describing departmental activities;
•	liaison with and guidance of field public affairs offices;
•	communications support for the program activities of the Department;
•	public affairs evaluation and training;
•	community liaison relating to speeches and visits of HUD personnel;
•	preparation of speeches for use by the Secretary and the Under Secretary, as well as other top staff, as capabilities permit;
•	liaison with national organizations having an interest in housing and community development and related fields;
•	development and execution of an overall public affairs program for the Department;
•	response to Freedom of Information requests from the media;
•	review of all departmental issuances and publications;
•	maintenance of quickly retrievable information on departmental programs and activities.
ASSISTANT TO THE SECRETARY FOR LABOR RELATIONS
The Office of Labor Relations serves as the Secretary's principal source of advice on Labor Relations and Labor Standards, particularly in the construction industry, and acts as liaison with organized labor.
The Department's Labor Standards Enforcement Program, directed by the Office of Labor Relations, uncovered over $2 million in unpaid wages to construction workers employed in HUD-assisted or HUD-insured construction. The Secretary, in order to more effectively protect the labor standards of workers, announced a substantial increase in labor standards enforcement personnel and related organizational improvements.
Labor Relations, in conjunction with the Offices of Policy Development and Research and Housing, selected a contractor to research and design a wage rate determination system for use by HUD Labor Relations personnel in establishing prevailing wage rates for the maintenance workers of all low rent housing authorities. It is hoped that this project will result in a uniform and equitable means of setting prevailing wage rates for an overall maintenance payroll amounting to $.5 billion annually. At the same time, the new system should prove to be more efficient and less costly to administer.
COUNSELOR TO THE	5
SECRETARY
The Office of the Counselor to the Secretary was established in February 1977, in order to meet the Secretary's needs for advice and counsel on issues of a sensitive policy nature which may cut across programs and organizational lines. The Counselor provides the Secretary with independent, in-depth analysis and review of a broad range of issues, and carries out specific programmatic assignments until their completion. Some specific assignments in 1977 included:
Indian Housing
During FY 1977, there were 4,400 Indian housing construction starts and an additional 7,067 units were placed under program reservation. Reflecting the Native Americans' preference for homeownership, the majority of these dwellings fell under the mutual help homeownership program. Because the rate of production continued to fall substantially below program goals, and owing to reports of inade-
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quate coordination between the Bureau of Indian Affairs and the Indian Health Service, spiraling costs, monthly payment delinquencies and inadequate maintenance, the Secretary asked the Counselor to undertake an in-depth study of the Indian housing program and the program for Alaskan Natives and to recommend improvements. The studies were completed in November 1977, and are expected to serve as the basis for legislative and administrative proposals of an interdepartmental nature.
Tax-Exempt Bond Financing for Section 8 Projects
The Department substantially revised the Regulations establishing the conditions for the issuance of tax-exempt obligations by Public Housing Agencies pursuant to Section 11(b) of the United States Housing Act of 1937 for the purpose of financing new construction or substantial rehabilitation under Section 8 projects. Serious abuses had arisen in the past in connection with the use of tax-exempt financing for Section 23 projects because this area of activity had been largely unregulated. Proposed amendments to overcome this deficiency were published for comment on March 18, 1977, and final amendments reflecting the results of the many comments became effective on August 3. These regulatory changes now provide a
practical vehicle for financing Section 8 housing with the type of security that will achieve the lowest possible interest cost, prevent the abuses of the past and promote the integrity of the Section 8 program.
Taino Towers Project
The East Harlem Pilot Block project, known as Taino Towers, is a multifamily housing project consisting of over 600 dwelling units' and a significant amount of non-residential space for community service needs. The project ran into serious financial trouble when construction was halted early in 1976. Following the intercession of this office, HUD and the local community sponsors signed a contract to complete the project. Construction has been resumed and occupancy is scheduled to begin in the spring of 1978, with full occupancy planned for the summer of 1979.
District of Columbia
Special Projects
The Counselor established special liaison with the White House to create initiatives in the District of Columbia which will provide the Congress and the Nation with concrete examples of how the Department's programs can be used to generate exciting new departures for revitalizing our urban areas. One example is the disposal of the HUD-owned, 250-bed, J.B. Johnson nursing home and health care facility in downtown Washington. This institution can now serve the needs of the surrounding neighborhood and as a resource for the deinstitutionalization of mental health patients from St. Elizabeth's Hospital.
URBAN POLICY ADVISOR TO THE SECRETARY
The Office of the Urban Policy Advisor was established in February 1977, to provide a professional social scientific and urbanist perspective for the Secretary. From this perspective, policy initiatives are examined within HUD and in relation to other agencies.
The Urban Policy Advisor and his staff work both as an independent office serving the Secretary directly and as members of the Secretary's personal staff. This assures social scientific input in the day-to-day work of the Office of the Secretary.
The Office of the Urban Policy Advisor initiates special innovative and "people oriented” projects and policy options for the Secretary, which might not otherwise receive sufficient attention. These might include a comprehensive crime prevention program for HUD or a way to minimize the displacement of the urban poor. These initiatives are for the Secretary's consideration and generally have nationwide impact on HUD programs, procedures and policy.
The Urban Policy Advisor and his staff also respond to Secretarial directives by providing social scientific recommendations on departmental business, writing relevant speeches and articles for the Secretary, and addressing policy questions as they arise.
The Office also is designed to be closely involved with other Federal agencies and the White House in the development of national urban policy. In this regard the Urban Policy Advisor has taken part in the deliberation of the President's Urban and Regional Policy Group, which is chaired by the Secretary.
. the urban problem is a multitude of problems, suffered by different cities at different times and at varying degrees of intensity. . .
The Advisor is charged with establishing and maintaining effective working relationships with the academic community, foundations, and kindred institutions concerned with neighborhood and .community development, social and urban problems, and housing as they pertain to people issues. Over 500 experts were contacted in 1977, producing a large number of programmatic initiatives on urban policy. Two major foundations— Ford and Kettering—have used their own resources to generate important analyses of the optimal course for urban policy. The Urban Policy Advisor has channeled this advice to the Secretary.
The Office also is charged with establishing and maintaining effective liaison on relevant issues with community and civil rights groups, the Secretarial staffs of other Federal agencies, the Congress, and a wide range of organizations in the private sector. For example, the Office of the Urban Policy Advisor is developing conferences and roundtables with the National Urban Coalition and the Academy for Contemporary Problems to articulate policies for the most deteriorated of neighborhoods, combating structural unemployment, an expanded role for community development corporations, and facilitation of minority enterprise.
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OFFICE OF
INTERNATIONAL AFFAIRS
The Assistant to the Secretary for International Affairs advises and assists the Secretary in all matters concerning the Department's relationships with other nations. These activities include:
•	exchange of information on housing, urban development and related subjects, under both formal and informal arrangements, and the dissemination of information on foreign experience to the Department's operational areas and the American public;
•	provision of advisory services to the Department of State on American representation at international meetings germane to the HUD's domestic interests; and • supervision of visits by foreign government officials and other high ranking visitors to Headquarters and other sites in the United States.
During 1977, HUD took part in two events of special importance for international cooperation in housing and urban affairs.
On June 28, 1977, in Ottawa, the HUD Secretary and the Canadian Minister of State for Urban Affairs signed a Memorandum of Understanding on Cooperation in the Field of Housing and Urban Affairs.
Both sides agreed to establish a four-member Joint Steering Com
mittee to facilitate the exchange of information, with each side designating one member as Co-Chairperson and a second as alternate. The Co-Chairpersons then established procedures to carry out the work of the Joint Steering Committee, including setting the times, places, and agendas for meetings.
Five program topics were suggested in the Memorandum as areas for information exchange or other cooperative effort: (1) national urban strategies and policies, (2) central city revitalization and neighborhood preservation, (3) housing finance mechanisms, (4) impact of energy coordination in urban planning and development, and (5) Native housing.
The projects may be carried out by any of the following means: exchange of documents, team visits, joint meetings and seminars, joint research and study projects, and other methods as agreed.
The first meeting of the Joint Steering Committee was held in Boston on November 3-4, 1977. At this meeting the participants identified neighborhood revitalization and multifamily assisted rental housing as two areas for joint research and agreed upon the administrative details relating to these exchange activities.
The Second Joint Committee Meeting under the U.S.-U.S.S.R. Agreement on Cooperation in the Field of Housing and Other Construction was held September 19-21, 1977, in Moscow. The Secretary headed the U.S. Delegation, which included representatives from the General Services Administration, the National Science Foundation, and the Army Corps of Engineers. The sessions ended with the signing of documents which set forth the topics in six subject areas targeted for joint research and information exchange during 1978. During the year, meetings and other exchanges took place in the following areas of cooperation stipulated under the terms of the 1975 Agreement: building design and construction management, industrialized building systems and utilities, construction in seismic areas, building materials and components, building for extreme climates and unusual geological conditions, and new towns. The meetings were attended by 118 officials, including an equal number of Soviets and Americans. The Department also participated in activities under the U.S.-U.S.S.R. Agreement for Environmental Protection.
Other achievements by International Affairs during 1977 included:
UN Activities
The Office assisted with preparations for the UN World Conference on Water held in Mar del Plata, Argentina, in March, and for
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the UN World Conference on Desertification in Nairobi, Kenya, in August.
UN Economic Commission for Europe (ECE)
HUD continued to participate on the ECE's Committee on Housing, Building and Planning. A U.S. delegation led by a senior HUD official attended the Committee's annual plenary session in September, reviewed the work program, and took part in a study tour of East Germany arranged by the Committee. Departmental representatives attended other ECE meetings dealing with housing policy, building research policy and organization, and the impact of energy policies on human settlements planning and development.
The Organization for Economic Cooperation and Development (OECD)
In 1977 International Affairs also coordinated HUD presentations before the Urban Environment Group of the Organization for Economic Cooperation and Development. This OECD study group drafted recommendations for its 24-member nations on urban environmental indicators, management of public land in urban areas, and implementation of environmental input procedures. The Urban Environment Group also conducted projects in public service management and the application of environmental criteria to land-use planning.
In June, in a separate but related development, the Secretary of State led a U.S. delegation to a ministerial-level meeting of the OECD Council in Paris. Speaking at the conference, he cited the
severe problems facing cities in the OECD member countries, and proposed "the establishment of an ad hoc working group on urban concerns to prepare a draft action program" for consideration early in 1978. The Department is providing substantive assistance in the development of this proposal.
Research Services
The OIA research service continued to furnish data on the foreign experience in housing and urban development to the Department, the Congress, researchers, professionals, and other persons outside of government. The Office's automated foreign information retrieval system processed 458 requests for information on specific subjects, an increase of almost 200 percent over 1976. Responses to individual requests for other types of information totaled 2,546. International Affairs continued to publish the HUD International Information Series, Special Reports, and the bibliographical In forma tion Sources Series; however, its business support activity, including the Country Profiles Series, was discontinued because of budgetary limitations.
Foreign Visits
Statesmen, government program officials, and housing professionals from abroad are among HUD's and this Nation's visitors each year. OIA arranges programs and itineraries for individuals or groups of foreign visitors. In 1977, 121 such programs were arranged for 395 visitors from a total of 35 coun
tries. Programs of particular interest comprised land use and urban growth, flood insurance, tax systems, housing programs and rent supplements, energy and energy conservation in housing, industrialized housing production, data systems, and housing finance. Senior officials who visited the Secretary and the Department included: the Minister for Women's Affairs of France, the Minister of Housing and Physical Planning of the Netherlands, the Chairman of the Federal Capital Development Authority of Nigeria, the Under Secretary (Ministry of Housing and Urban Development) of Chile, the Deputy Minister of Housing and Public Utilities of Syria, the Executive Director of the UN Environment Program, and the Executive Secretary of the UN Economic Commission for Europe.
"There is no more important task before this Administration, and no higher priority on the domestic policy agenda than the task of revitalizing America's cities."
Office of the
Under Secretary
The Under Secretary assists the Secretary in the discharge of her duties and responsibilities and serves as Acting Secretary in the absence of the Secretary.
As the chief operating officer, the Under Secretary is responsible for ensuring that the Department has strong management and accountability systems; that specific priorities are established and accomplished; and that goals and objectives of the Department's programs are met.
Beginning with his appointment early in 1977, the Under Secretary directed a strengthening of the key management structures and processes of the Department. This resulted in several critical management improvements:
Departmental Reorganization
An organization assessment group, led by the Under Secretary, identified and analyzed structural deficiencies in the ability of the Department to achieve its mission and recommended organizational improvements to the Secretary. Advice and recommendations were . sought from within and outside the Department, including many consumer, industry and public interest groups. These recommendations, as adopted by the Secre- I tary, were announced on October 13, 1977, and will be implemented during Fiscal Year 1978. Their purpose is to streamline and con- I solidate HUD's Field structure for I economy and efficiency, clarify I lines of authority and accounta- I bility, reduce overhead, eliminate I processing delay, better integrate J
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housing and community planning and development programs, and tighten internal controls. All of this is designed to occur with a minimum of disruption to HUD's program and staff.
Management Budget and Review Process
To implement the new Zero Base Budget process, as directed by the President, and to integrate budget with management planning and evaluation functions, the Under Secretary led the key Department staff in a review of the Fiscal Year 1979 Budget proposals. A newly created Management, Budget and Review Committee evaluated the budget proposals and presented them to the Secretary for her consideration. This management innovation involved all top program officials of the Department in a full week of intensive review and evaluation of all ongoing programs and new initiatives in order to select the ones which best implement the Department's goals and objectives as determined by the Secretary. This same key management body reviewed Fiscal Year 1979 legislative proposals prior to their approval by the Secretary.
Executive Resources Board
During 1977, a new management body chaired by the Under Secretary was established to recommend Department policy and procedures for all executive-level positions. Functioning as an advisory body to the Secretary, the Executive Resources Board periodically surveys the Department's utilization of its limited executive-level positions, and recommends to the Secretary how current executivelevel positions should be utilized
and how future positions should be allocated. In addition, the Executive Resources Board advises the Secretary concerning proposed organizational changes having impact on executive-level positions and on the evaluation of effectiveness in executive personnel policies. The product of these endeavors is a more effective and efficient management of executive resources. In addition, the Executive Resources Board reviews recruitment plans, monitors all merit staffing actions, and selects participants for the Department's Executive Identification Development Plan and for development and training opportunities which exist at executive-level positions.
Departmental Operating Plan Executive Management Reporting System
During 1977, the Under Secretary intitiated a new system for the review and evaluation of Headquarters and Regional programs and performance. Streamlining an unwieldly inherited system which tracked more than 200 goals, the Department designed a new Executive Management Reporting System to track a set of critical performance indicators on a monthly basis. These indicators are selected from the Department's
newly designed Operating Plan, which establishes quarterly, and ofen monthly, performance targets for Headquarters and Field elements. The Under Secretary oversees a set of monthly status reviews which allow the HUD Secretary to hold Assistant Secretaries, Regional Administrators, and other Principal Staff accountable for their performance. In addition to monthly performance data, the Executive Management Report assembles in one place the essential management information highlighting the current status of Department activities. Furthermore, the Executive Management Report provides a convenient process for integrating management planning, budgeting and evaluation activity in a single place convenient to the Secretary, the Under Secretary and other HUD managers.
Audits Management System
In December, the Secretary announced a new system for eliminating the current backlog in audits and for the earliest possible detection and solution of any future management and operations problems which may arise. The new Audits Management System establishes a top management audits resolution committee chaired by the Under Secretary and comprised of key program managers from Headquarters and
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the Field. After an initial clean-up phase which will eradicate the backlog of outstanding audits, the new system is designed to assure that all internal audits are resolved by 105 days after the initial finding and all project audits are resolved within 180 days of the initial report. The Under Secretary will monitor departmental performance under this new system and will assure, through the Executive Management Reporting System, that each of the Department's elements meets the goals established under Audits Management.
Policy Options Process
In the fall of 1977, the Department implemented an innovative system for the development and consideration of major policy initiatives. Designated the Policy Options Process, this new system was designed by the Under Secretary and the Assistant Secretary for Policy Development and Research to present to the Secretary the recommendations of the Under Secretary and staff on the merits of policy alternatives. The system illustrates the "cabinet-style" of management at HUD and assures that major program initiatives are carefully evaluated prior to implementation, thus guaranteeing an integrated departmental program.
DEPUTY UNDER SECRETARY FOR FIELD COORDINATION
The Deputy Under Secretary for Field Coordination is responsible for overseeing relationships between Headquarters and the field, coordinating the Department's field activities and improving field office operations. He is also responsible for coordinating the assessment of field managers and chairing the selection panels for vacant field manager positions. He serves as the principal action arm of the Secretary and the Under Secretary in assuring that Regional Administrators and Area Office Managers pursue the correction of deficiencies in field operations identified as a result of periodic performance evaluation reviews, Inspector General Audits, GAO findings, and other assessments coming to the attention of the Secretary.
Field Direction and Management.
During the nine month transitional period in Regional leadership, the staff assisted the Acting Regional Administrators in maintaining the continuity of programmatic and administrative relationships with Headquarters. The Deputy Under Secretary for Field Coordination and staff also participated in the planning and implementation of the comprehensive training program for new Regional Administrators conducted in August 1977, at the National Training Center in Columbia, Maryland.
Weather Crisis Response.
During February and March, a daily reporting system was developed, relying on the teletype network maintained throughout the HUD field system, to identify local crisis conditions resulting
from the severe winter weather. This reporting system enabled the Department to respond rapidly so as to provide for the safety and well-being of low-income families dependent on Federal assistance, and the general public as well.
Federal Regional Councils.
In conjunction with assessing the adequacy of Federal Government program delivery mechanisms, this office conducted a comprehensive review of Regional interdepartmental relationships, which resulted in recommendations for strengthening the Federal Regional Council system.
Housing Costs.
At the direction of the Under Secretary, 75 Area and Insuring Offices were surveyed to ascertain the extent of sharp price rises and shortages of lumber and insulation which occurred during the summer months. The findings of the survey prompted the HUD Secretary to request the Council on Wage and Price Stability for a determination of the causes and implications of the sudden and dramatic rise in lumber prices, and the establishment of a joint private-public sector task force to develop recommendations for dealing with this problem.
Disaster Assistance Response.
At the direction of the Secretary, the Deputy Under Secretary directed a coordinated evaluation of the Department's Disaster Assistance Operation. The Evaluation study was designed to develop alternatives for improving the delivery of temporary housing services to disaster victims, and for streamlining the management and organizational structure of the program.
The General Counsel
The Office of General Counsel (OGC) acts as the attorney for the Department, providing legal advice and services essential for the proper formulation, development and operation of all HUD programs.
The office underwent a reorganization in 1977, designed to facilitate management responsibilities and improve the provision of legal services. The reorganization increased the number of divisions from five to six. These divisions are: Housing, Urban Development, Regulatory Programs, Litigation, Finance and Administrative Law, and Legislation. Additionally, under a 1977 departmental reorganization the Office of Regulations was moved from the Under Secretary's Office to OGC.
The transfer of this office to OGC signified the commencement of a major departmental undertaking, led by the General Counsel: the clarification and simplification of the Department's regulations. Moreover, it is expected that this office will endeavor to nake all issuances, policies and determinations of the Department more easily accessible to the public.
Housing Division
Under the 1977 reorganization, the Housing Division was structured so as to consist of two branches: the Home Mortgage Branch and the Multifamily Branch. These branches handle a
multiplicity of complex problems arising under the Department's housing programs.
Home Mortgage Branch
In addition to providing general legal services to programmatic officials, this branch continued to respond to the large number of questions from Congress and the public, among others. The numerous subjects of inquiry included the eligibility of mortgagors, properties, security instruments, mortgage insurance procedures and servicing, claims for insurance benefits, and disposition of acquired properties. Particular programs, such as the insurance of mortgages on cooperative units, graduated payment mortgages, the Real Estate Settlement Procedures Act, and the Equal Credit Opportunity Act, have generated additional inquiries because of their relative newness.
The branch focused upon the preparation of regulations to implement the home mortgage aspects of the Housing and Community Development Act of 1977, including: imposing late charges on mortgagees; permitting second liens in certain cases; and restricting the amount of initial interest payable by mortgagors. Final regulations were published to implement the insurance of mortgages on cooperative units pursuant to Section 203(n).
Legal clearances were provided for 135 handbooks and issuances, and guidance was provided for 51 mortgagee approval applications. Legal clearances were also furnished for the reprint of 81 mortgages, notes, and deeds, including corrections or amendments where appropriate. The branch is prepar
ing a proposed uniform security instrument to replace the various existing instruments; has made possible the recovery and deposit to HUD's credit of over $158,000 in civil frauds, HUD overpayments and Section 518(b) recoveries; and has negotiated and reached an agreement for the payment of $2,760,000 in claims against mortgagees.
Litigation reports were prepared in 125 new cases and 237 cases were closed, leaving a balance of 121 cases in litigation; 1,131 foreclosures were completed with 501 still pending; and over $67,000 was collected in delinquent mortgage payments.
The branch reviewed and approved title for 27,150 properties, resulting in the payment by the Insurance Benefits Division of $483,667,172 in claims; corrective action was required in 1,633 cases. The review of home mortgage claims resulted in a significant reduction in attorneys fees.
In the Title I field, assistance was provided in the implementation of leveraged municipal and State rehabilitation programs for low- and moderate-income families utilizing HUD-insured bank loans where the interest rate is subsidized by block grant funds; regulations implementing credit insurance programs for fire safety provisions in nursing homes and loans for the preservation of historic residences were drafted; and regulations implementing the use of the actuarial method in calculating prepayment on mobile homes were also drafted, resulting in significant savings to consumers who prepay mobile home loans.
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Multi fam Uy Branch
Implementation of the Housing and Community Development Act of 1977 constituted a high priority of this branch during 1977. Regulations were drafted to implement Section 238(c), which permits the Secretary to insure mortgages relating to multifamily properties located near Armed Forces installations, and to implement the 1977 changes in Sections 232 and 242 governing mortgage insurance for nursing homes and hospitals.
The most significant change made by the 1977 Act with respect to mortgage insurance for multifamily projects was the amendment to the tax and utility subsidy payments program for Section 236 projects. This branch played a significant role in the development of regulations, a handbook, and a notice designed to implement this amendment. This program authorizes the Secretary, to the extent of available funds, to make additional monthly assistance payments to a project owner.
The branch assisted in the development of policies and procedures governing the disposition and demolition of HUD-owned multifamily projects, including provision for a 30-day notice and comment period prior to demolition; contributed to the formulation of changes designed to streamline processing requirements governing the insurance of loans to nursing homes and intermediate care facilities for the purchase and installation of fire safety equipment; and collaborated with the Office of Housing on a handbook to be used
by State Housing Agencies for the multifamily coinsurance program and the proposed regulations which would permit private mortgage lenders to participate in this program.
Housing Division attorneys assisted in the development of HUD policy on condominiums, representing HUD on the Legal Committee of the Interagency Condominium Task Force; participated in the development of a proposed Condominium Consumer Protection Act; and were involved in providing legal services of a diversified nature in connection with the growing role of State agencies. Branch attorneys reviewed a $243 million advance bond refunding by the Urban Development Corporation on projects in New York, these bonds being secured by assignment of project mortgages on which HUD is obligated to make Section 236 interest reduction payments; participated in the development of State agency forms to be used in Delaware, Illinois, Maryland, Virginia and Tennessee in connection with State agency financing of HUD-insured multifamily project mortgages; and rendered legal services relating to workout and foreclosure arrangements which permit a continuation of interest reduction payments under Section 236 to an eligible mortgagor of non-insured projects.
The review of mortgage insurance claims and the legal work in connection with foreclosures continued to constitute a major workload item. During the first 11 months of the year, 251 mortgage insurance claims were filed, 93 proposed judicial foreclosures were sent to the Department of Justice,
and HUD field offices were instructed to commence power of sale foreclosures on 61 projects. The branch issued and implemented formal guidelines pursuant to the 1970 District of Columbia Court of Appeals decision in Trans Bay Engineers and Builders, Inc. v. Hills. In this landmark decision the Court held that a contractor who had completed construction under his contract with a nonprofit mortgagor, but who did not receive the withheld retainage because the project was never finally endorsed for mortgage insurance, could recover his retainage from HUD out of the undisbursed mortgage proceeds.
Urban Development Division
The reorganization of OGC resulted in the formulation of this Division, consisting of the Low-Rent Housing and Block Grants Branches. The establishment of this Division melds the provision of legal services under the Department's major activities of benefit to lower-income persons: the Section 8 and conventional public housing programs, and the Community Development Block Grant Program.
Block Grants Branch
The attorneys in this branch provide legal services with respect to the block grant program; the categorical grant programs; the Section 312 property rehabilitation program; the Section 701 comprehensive planning program, and
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relocation, as well as certain litigation matters pertaining to those programs.
During 1977, such services have supported departmental policy to assure that block grant activities meet primary statutory objectives, particularly in providing benefits to lower-income recipients. The branch participated in the development of the legislative policies for improved formula funding, promotion of economic development, and the Urban Development Action (UDAG) program—all enacted in the 1977 legislation.
In addition, this branch contributed to the development of policy issuances, regulations and program forms, many of which reflect the statutory changes. These include, for example, the allocation and distribution of grants under the revised formula funding, new eligible activities by nonprofit and other subgrantees, comprehensive neighborhood revitalization, grants to small cities and to Indians, maximum feasible priority program requirements relative to slum and blight or lower-income beneficiaries, Housing Assistance Plan (HAP) allocation and local review and comment procedures, and revised application and timing requirements.
This year the branch continued to provide legal services in connection with application and performance of the block grant program and the imposition of sanctions for nonperformance and non-compliance. Such actions were generally related to deficiencies in the HAP, or failure to assure compliance with other statutory requirements.
Assistance was also furnished in connection with ongoing categorical grant project financing and closeout problems, an expansion and diversification of Section 312 rehabilitation loan procedures, and the development of new regulations implementing the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as well as several significant appellate decisions regarding coverage under that Act.
Low-Rent Housing Branch
During 1977, branch attorneys continued to address a large number of legal questions concerning the Section 8 Housing Assistance Payments Program for lower-income families. Amendatory regulations were drafted to implement statutory changes relating to construction, rehabilitation and existing housing and to make procedural improvements.
Branch attorneys also drafted regulations and assisted in the development of handbook and contract documents for the new program concerning the tax exemption of obligations issued by public housing agencies to finance Section 8 projects.
During 1977, branch attorneys addressed a variety of issues concerning both traditional public housing development and the Public Housing Management Regulations, including questions of operating subsidy, modernization, admission and occupancy, income limits, and rents. Assistance was provided in the preparation of new and revised handbooks for public
housing management. Because of the increased emphasis on utility savings, and the impact of the unusually severe 1976-77 winter, important questions arose involving utility costs and allowances. Moreover, branch attorneys helped establish the Task Force on Tenant Participation in the Management of Low-Income Housing, and served as official observers and advisors of the Task Force.
Low-rent Housing attorneys worked closely with program staff in the development of procedures for the implementation of the statutory authority to sell low-income housing projects to their tenants while continuing to subsidize debt service on project bonds and notes. In addition, legal assistance was provided in connection with specific proposals under the existing homeownership programs for public housing, including Turnkey III and the Mutual Help Program for Indian Housing.
Legal assistance was provided in the development of handbooks and forms for the reopened College Housing Program. Questions requiring legal advice have arisen in connection with rehabilitation loans for energy-saving modifications for which the normal first mortgage security is not available, and with respect to the note-mortgage form of financing.
Attorneys assisted the Department in providing housing for the handicapped in several ways. In the first instance, they helped to adapt the Section 8 program to better serve the needs of the handicapped particularly with respect to the deinstitutionalization of handicapped individuals. In this regard, the branch was called upon to review, for legal eligi
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bility, several proposals to allow State mental health agencies to function as public housing agencies for purposes of the Section 8 Existing Housing Program. Second, the Branch provided legal assistance for the development of HUD's implementing regulations to prohibit discrimination against the handicapped, as required by Section 504 of the Rehabilitation Act of 1973. Finally, legal assistance was provided to HUD's Office of Independent Living in connection with the exercise of the Department's responsibilities under the Architectural Barriers Act of 1968.
Regulatory Programs Division
This Division was created in 1977 as a result of the reorganization of the Office of General Counsel. It is comprised of a Consumer Protection Branch and an Equal Opportunity Branch.
Consumer Protection Branch During 1977, attorneys in the Consumer Protection Branch participated extensively in carrying out interstate land sales registration functions, including the assignment of attorneys to act as HUD counsel and the preparation of pertinent legal documents for the growing caseload of administrative hearings and lawsuits necessary to assure developer compliance with the Interstate Land Sales Full Disclosure Act. Extensive use of the Secretary's subpoena authority necessitated hundreds of subpoena return hearings.
Consumer Protection attorneys helped to develop, promulgate, and, finally, enforce regulations implementing the National Mobile Home Construction and Safety
Standards Act of 1974, and handled the program's first administrative hearing, which involved 23 respondents. Members of this branch also cooperated with the Federal Trade Commission and the Consumer Product Safety Commission to assure that unnecessary agency overlaps did not result in undue burdens on the mobile home industry or excessive costs to the consumer.
Members of the branch played significant roles in extensive negotiations with the National Flood Insurers Association in an effort to reach agreement regarding the Association's role in operating the flood insurance program. When negotiations failed, branch attorneys were important participants in the transition to an all-Federal program operation.
Another consumer protection activity occurred in the area of disaster assistance. Branch attorneys prepared regulations pursuant to the Disaster Relief Act of 1974 and provided counsel in defining the scope of authority of the Federal Disaster Assistance Administration (FDAA). Additionally, they assisted the Department of Justice with several lawsuits arising out of the activities of the FDAA. Similar labors were forthcoming with respect to the Federal programs in flood insurance, crime insurance, and riot reinsurance.
Branch attorneys also undertook the provision of services to a new client, the Office of Independent Living for the Disabled. Among
other things, they drafted regulations regarding discrimination against handicapped persons participating in HUD programs.
Consumer Protection conducted several administrative hearings, among other legal services, for the Mortgagee Review Board, which saw its workload grow significantly in 1977. Before the debarment function was moved in mid-1977, this branch handled many administrative hearings across the country concerning persons debarred or suspended from further dealings with the Department as a result of suspected illegal or fraudulent activity.
Equal Opportunity Branch
In its role of providing legal services to the Office of Fair Housing and Equal Opportunity (FH&EO), this branch undertook an assortment of activities.
For example, it assisted in developing an affirmative action program for the American Institute of Real Estate Appraisers (AIREA). This program was incorporated into a settlement order with respect to AIREA in a suit filed by the Attorney General under Title VIII of the Civil Rights Act of 1968. Under the new program substantial changes will be made in approved residential appraisal practices and educational materials published by AIREA. The AIREA code of ethics will establish that considerations of race, color, religion, sex or national origin are improper indications of value of property.
The branch also prepared comments on several proposed regula-
"\Ne see our cities, and their people, all of them, as great national resources. We see our future in our cities."
tions to be issued by the Department with respect to fair housing and equal opportunity, including changes to affirmative fair housing marketing regulations and compliance procedures, standards for the recognition of substantially equivalent State and local fair housing laws, equal housing opportunity regulations under EO 11063, and equal opportunity performance standard regulations for applicants in the Community Development Block Grant Program.
Staff attorneys additionally provided legal advice with respect to the Department's authority to issue interpretative regulations under Title VIII of the Civil Rights Act of 1968. The Office of FH&EO was counseled concerning its authority to enter into voluntary affirmative marketing programs with national organizations, as well as concerning its investigative powers.
On a Department-wide basis EO attorneys provided advice concerning actions which can be taken by the Department under EO 11063 and Title VIII of the Civil Rights Act of 1968 to combat racial steering in the sale or rental of residential property purchased with loans insured by the Federal Government. The branch also advised the Secretary with respect to proposed legislation which would amend Title VIII of the Civil Rights Act of 1968 by authorizing strong enforcement by HUD.
Moreover, the branch advised headquarters and regional staff as to the relation of the Equal Credit Opportunity Act to Department programs.
Further, it assisted the Department in identifying and revising
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existing authority to provide for impartial consideration of complaints of discrimination within the Department and Secretarial review of such complaints.
Outside of the Department, the branch undertook several significant activities. For example it prepared departmental comments supporting a petition submitted by a minority trucking corporation which sought to ease ICC entry requirements for economically disadvantaged truckers desiring to provide service for the Federal Government. It also prepared comments on two General Accounting Office audits concerning tenant selection and assignment policies of public housing authorities.
Branch attorneys also assisted the Department of Justice in its preparation of the Government's position with respect to the Bakke case. In an effort to make fair housing problems a concern across the Government, staff attorneys assisted in the establishment of the inter-agency Federal Equal Housing Opportunity Council.
Finally, in coordination with the Office of Federal Programs and Contract Compliance, the branch assisted in the preparation of agreements affecting the transfer of EO 11246 compliance and enforcement functions from the Veterans Administration and the Departments of Commerce and Health, Education, and Welfare to HUD pursuant to the Department
of Labor's reorganization plan.
In the area of litigation, attorneys in the branch also served as departmental representatives in Administrative EEO cases under Title VII of the Civil Rights Act, as amended (42 U.S. Code 2000e et seq.}, represented the Department in appeals before the various offices of the Civil Service Commission, and prepared and assisted the Department of Justice in litigation matters. Since trials de novo are now a matter of right to Title VII plaintiffs and since legislation authorizes the award of costs and attorney fees to successful plaintiffs, the number of Title VII cases litigated during 1977 rose markedly.
Litigation Division
Litigation attorneys continued to represent the interests of the Department in a significant number of cases on widely varied issues.
This year the Office of General Counsel was successful in defeating a significant challenge to the National Flood Insurance Program. A voluntary association comprised of private insurers that had been operating the program under contract with HUD attempted to enjoin the Secretary from terminating its contract and converting to a program that would be conducted by the Department, itself, with the assistance of an insurance company performing more limited functions on behalf of the Department. In another suit challenging the constitutionality of the statutory provisions which bar Federal financial assistance to flood prone areas in communities not participating in the flood insurance program and which deny flood insurance coverage where the local
governing body has failed to adopt adequate land use measures, the Department has been successful thus far in defeating plaintiffs' application for interlocutory relief.
The Department's interpretations of its obligations under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 were generally upheld during the past year at the appellate court level. The Supreme Court declined to grant certiorari to review a decision denying relocation benefits under the Act to tenants displaced by the demolition of a public housing project owned and operated by a local Authority. The appellate courts upheld the Department's determinations that tenants displaced by a private developer with a commitment for mortgage insurance under a rehabilitation program encouraged by HUD do not come within the framework of the Act. On the other hand, an appellate court affirmed a district court decision extending coverage under the Act to tenants displaced by a proposal to demolish a Secretary-owned project acquired following foreclosure of an FHA insured mortgage. There is presently pending a suit which seeks to obtain relocation assistance for persons displaced by the private owner of a Section 8 new construction project, and it is expected that litigation to extend the classes of beneficiaries under the Relocation Act will continue.
OGC continues to seek a satisfactory resolution of the Gautreaux litigation, and to assist the court by providing a remedy for unconstitutional discrimination
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in the selection and approval of low-rent public housing sites in Chicago. HUD agreed to extend for 18 months the Section 8 Demonstration Program to house approximately 400 plaintiff class families throughout the Chicago SMSA, and to add other programs to require that units of subsidized housing constructed in the suburbs be made available to residents of the City of Chicago.
While the Supreme Court has granted the Government's Petition for Certiorari to review an order granting summary judgment to a national class of tenants in Section 236 projects seeking to require the Secretary to implement the Operating Subsidy Program, the Government is attempting to settle this suit. More than 50 suits have been filed in various jurisdictions which are likely to be resolved by the decision in the national class action. More recently, tenants have filed actions seeking to enjoin collection of HUD-approved rent increases in their projects on the theory that those increases would not have been necessary if the operating subsidies had been paid.
HUD approval of applications under the Community Development Block Grant Program continues to be challenged as the nature of the community's performance under the approvals of prior years comes under scrutiny. Dissatisfaction with HUD approvals centers on the adequacy of citizen participation, eligibility of activities, and provisions for low-and moderate-income families.
Residents of the Marquette Park area of Chicago consented to dismiss their complaint alleging that HUD mortgage insurance and loan guarantee activities threatened ra
cial transition and resegregation of their neighborhoods in violation of the Fair Housing Act. HUD has implemented a special program in the Marquette Park area involving mandatory counseling for prospective purchasers, elimination of fee appraisals, and closer scrutiny of the eligibility of prospective purchasers.
The Litigation Division obtained favorable rulings in cases where plaintiffs had sought to enjoin the disposition of HUD-owned properties. Several courts have held that HUD's Property Disposition Regulations provided the tenants of those projects with adequate procedural due process to advise HUD of the impact on minorities and low-income persons, and on the environment.
The Litigation Division has also gained judicial approval „of HUD's authority to preempt by regulation local rent control of FHA insured projects. Additionally, the Secretary has agreed to require tenant input in the preemption finding pertaining to unsubsidized projects, in response to judicial determinations that tenants should be afforded procedural due process in the case of unsubsidized projects as they are where the projects are subsidized.
Finance and Administrative Law Division
This office was reorganized in mid-1977, and now includes
branches for New Communities, Finance, and Administrative Law. As part of that reorganization, the Research and Opinions function was accorded separate Staff status and the Equal Opportunity Branch was transferred to the Regulatory Programs Division.
Administrative Law Branch
The Administrative Law Branch continued to provide legal services necessary to the operation of the Department in numerous areas. Branch attorneys represented HUD management in agency adverse action and grievance hearings, as well as in appeals before the Civil Service Commission concerning decisions rendered in such hearings, and assisted the Department of Justice in its representing of HUD in personnel actions.
On a continuing basis, branch attorneys handled a variety of legal questions arising under both the Privacy Act of 1974, as well as the Freedom of Information Act. This office furnished legal guidance concerning several hundred oral and written requests for the release of HUD information under FOIA and prepared the annual report to the Congress on the Department's administration of the Act. Despite an increase in requests, the 1977 report will reflect a decrease in the number of FOIA denials over the preceding year.
The branch also reviewed 3000 statements of ''outside employment and financial interests” pursuant to departmental Standards of Conduct regulations. Moreover, new White House requirements applicable to certain non-career ap-
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pointees at the GS-16 level and above also came within the scope of the branch's standards of conduct work.
The branch continued to provide wide-ranging legal services for the Department's contracts and procurement activities, including: reviews of all major solicitation and contract documents; provision of legal advice to source selection boards and contracting officers; participation in the development of bid protest procedures; and representation of the Department in a number of bid protests filed with the Comptroller General. This branch was responsible for representing the Department before the HUD Board of Contract Appeals in the more than 60 appeals.
The responsibility for representing the Department in cases involving the debarment, suspension, or temporary denial of participation was transferred to this branch in the recent reorganization. There is an extensive docket of cases in these areas, and approximately 150 debarment and suspension cases have been brought in the past year alone. Branch attorneys also provided legal counsel and services to the Multifamily Participation Review Committee, which, in 1977, reviewed about 200 requests by program participants for involvement in National Housing Act Programs.
Branch attorneys also provided the advice and legal services for departmental research programs, including the Department's solar energy system demonstrations; participated in special teams to analyze problems involving demolition of FHA multifamily projects; and consulted on the initiation of
a Day Care Center at HUD headquarters for the children of HUD employees.
Research and Opinions Staff
This staff provides legal opinions, as requested by the General Counsel, on a wide variety of subjects. Additionally, it handles on a regular basis the environmental, labor, budget and appropriation, and international law questions arising in the programs of the Department.
One important issue considered by the staff related to potentially important questions under the National Environmental Policy Act of 1969 and the Block Grant Statute of 1974 involving amendments to grant projects, the processing of subdivision applications, and areawide clearances.
The staff has also supplied formal opinions on the budget and appropriation implications of the transfer of moneys to HUD from the Defense Department for the funding of military base curtailments, and on the authority to increase funds to public housing authorities for the payment of utility bills inflated by severe weather conditions. This office also opined on the technical aspects of the permissible uses of appropriated funds, particularly in HUD programs for Housing and GNMA, as well as with regard to proper bookkeeping requirements and the time limits on the uses of funds. The staff prepared an opinion which reversed HUD's position concerning the availability of con
tract authority for reuse in the Rent Supplement Program. Under the new analysis, the contract authority would be available for reuse even though previously terminated.
Of significant concern to the staff this year has been provision of the necessary legal services in support of the Secretary's determination to move to a Government operated (''Part B") National Flood Insurance Program. Staff attorneys were called upon to make important determinations as to the scope of the Secretary's regulatory authority under the program, to prepare a request for proposals following termination by the previous contractor, and to assist in the negotiation of an agreement with the new contractor. The Research and Opinions Staff also prepared the report to Congress required prior to a Part B implementation and participated with other OGC attorneys in the preparation of draft pleadings in the suit to enjoin the Secretary's move to Part B.
Staff attorneys also performed substantial research in other areas. They drafted opinions or rendered less formal advice in such diverse matters as sales of HUD-acquired properties to former mortgagors, affirmative action in employment for PD&R grantees, direct HUD payment of debts owed by absconding private contractors in the Teton Dam disaster, the financial limits and scope of actions for which the Department may indemnify the directors of a nonprofit contractor carrying out the Experimental Housing Allowance supply
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experiment, and the applicability of OMB Circular A-102 requirements to the new Urban Development Action Grants program.
New Communities Branch
Branch attorneys continued to provide legal counsel and service for the assistance programs administered by HUD's New Community Development Corporation. The branch carried out a nonjudicial foreclosure to acquire all of the assets of one 3600-acre new community, and a deed-in-lieu-of-foreclosure acquisition of a second project with 6000 residents and 2200 acres. The legal work involved in the interim administration of these projects is performed by this office. At the end of the year, four more legal or negotiated acquisitions were in progress. New Communities Branch is supplying advice on the legal aspects of the financial restructuring or liquidation alternatives of these and other projects.
This branch assisted in the preparation of briefs and pleadings in project-related litigation, including the appeal of an adverse decision in the Court of Claims regarding HUD's compliance with NEPA, Freedom of Information suits, and claims for relief.
An expedited review system for grants in support of the New Communities Program was also devised and implemented this year.
Finance Branch
The Finance Branch provides legal counsel with respect to four areas: The programs and functions of the Government National Mortgage Association (GNMA), including the Mortgage Backed Securities Program, the Mortgage Purchase Pro
grams and the Portfolio Management and Liquidation Program; oversight and regulatory functions in connection with the Federal National Mortgage Association (FNMA); the financing of departmental programs in private capital markets; and analyses of the effect of Federal and State tax laws on the conduct and operations of HUD programs. This branch has prepared or reviewed program manuals and responses to Congressional inquiries, assisted in the coordination of mortgage sales and borrowings with the Treasury Department, and supplied advice to GNMA relating to purchases of mortgages and the guarantee of mortgage-backed securities. During 1977, the dramatic increase in this work is reflected by the rise in the mortgage-backed securities program alone to an aggregate volume of $50 billion, compared with $34.5 billion of the previous year.
Examples of some of the day-to-day issues resolved by this branch include: the effect upon individual condominium units insured by FHA of Federal statutory restrictions governing the maximum principal obligation of mortgages which may be purchased by GNMA; the extent to which GNMA is required to comply with State laws mandating the payment of interest on escrow accounts; the legal restrictions upon investments of surplus funds within custodial accounts of mortgage-backed securities pools; and the legal problems associated with the possible inclusion of graduated payment mortgages within GNMA mortgage-backed securities pools.
In addition to providing legal counsel for GNMA's regular activities, during the past year this
branch played a key role in the defense of several lawsuits profoundly affecting the viability of GNMA's programs. For example, in GNMA v. Tyre Lee Terry, et al., GNMA is appealing a U.S. District Court decision which holds that for jurisdictional purposes GNMA is not an agency of the United States Government. In Mississippi, the Finance Branch is working directly with the Department of Justice in a bankruptcy action involving approximately $60 million in mortgages backing GNMA securities (In re: Fidelity Mortgage Co.: GNMA v. Pat Scanlon, Trustee). In General Trust Corporation iz. New England Merchants National Bank, et al., branch attorneys are working directly with the Boston U.S. Attorney's office to defend against a lawsuit instituted by holders of over $23 million in GNMA-guaranteed mortgage-backed securities who seek a foreclosure or assignment of the mortgage.
As part of its FNMA oversight activities, the branch assembled an in-depth study detailing the various public purposes which FNMA must fulfill and prepared the HUD Secretary's testimony before the Congress in connection with the introduction of S. 1397, a bill to increase the number of Presidentially appointed directors on the FNMA board.
Finally, the Finance Branch assisted in the implementation of the newly restructured loan guarantee program in the Community Development Block Grant area and
257-151 0 - 78 -4
"/\ major effort must be made to increase the involvement of neighborhood residents and their organizations in the urban revitalization process. . . "
participated in the Department's consideration of various tax proposals.
L eg is I a tion Di vision
The legislative services provided by the General Counsel's Office include the drafting of bills and supporting statements and material, and the furnishing of technical advice on pending legislation proposed by or of interest to the Department. In addition, the Legislative Division coordinates the preparation, review and clearance of testimony presented by the Secretary and other HUD officials before the Congress. The Division also helps to prepare the Department's position on legislation pending in or enacted by Congress and awaiting Presidential action.
During 1977 the Division was involved with the preparation of far-reaching legislation affecting HUD, including:
•	The Supplemental Housing Authorization Act of 1977 (Public Law 95-24).
•	The Housing and Community Development Act of 1977 (Public Law 95-128).
•	The Department of Energy Organization Act (Public Law 95-91) which created a Department of Energy and transferred to it, in part, the functions of the HUD Secretary to develop and promulgate energy conservation standards for new buildings.
•	The Social Security Act, Amendments (Public Law 95-171, Section 4) which provided for a one-year extension of the rapid depreciation provisions of Section 167(j) of the Internal Revenue Code, permitting a five-year write-off for low-income housing rehabilitation.
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Assistant Secretary for
Community Planning and Development
The Office of the Assistant Secretary for Community Planning and Development (CPD) advises the Secretary on and administers the Community Development Block Grants and Urban Development Action Grants made by HUD to local governments to fund a wide range of community, neighborhood and economic development activities. These include the undertakings previously eligible under the separate categorical grant programs—urban renewal, neighborhood development, model cities, water and sewer lines, neighborhood facilities, public facilities loans, rehabilitation loans, open space, urban beautification and historic preservation. The Office remains responsible for administering these former categorical programs until projects within them are completed.
The Assistant Secretary formulates the Department's contribution to the national urban policy. He is HUD liaison to the Water Resources Council and the Advisory Council on Historic Preservation, and represents the Secretary on the Pennsylvania Avenue Commission.
This Office is a primary source for continuing policy analysis and development in intergovernmental relations for techniques in public management and community planning.
The Assistant Secretary serves in the statutory role of Director of Urban Program Coordination, and helps the Secretary to coordinate programs with other Federal Departments and agencies having a major impact on community development.
The Assistant Secretary advises the Secretary on HUD's assistance
to State and local governments seeking to build management capability and improve institutions. He also administers a broad range of financial and technical aids to improve planning and management by State and local governments.
The Assistant Secretary also implements the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. CPD develops the Department's relocation activities and coordinates them with the interagency Relocation Assistance Implementation Committee.
The Office is the focal point for departmental compliance with the National Environmental Policy Act of 1969 (including section 104(h) of the Housing and Community Development Act of 1974) and its related statutes and executive orders, and the National Historic Preservation Act of 1966. CPD also develops and coordinates environmental activities shared by HUD, other Federal departments and agencies, and the Council on Environmental Quality.
Urban and Regional Policy
On March 22, 1977, President Carter asked the HUD Secretary to convene an interdepartmental committee, subsequently known as the Urban and Regional Policy Group (URPG), to draw up a national urban and regional policy for his administration. At the highest working level, membership
on the URPG consists of the Secretaries of the Departments of HUD, HEW, Labor, Commerce, Transportation, and Treasury. Each of the Secretaries has appointed one or more Deputies, who have met on a regular basis to oversee URPG activities. The Assistant Secretary for Community Planning and Development, as well as the Assistant Secretary for Policy Development and Research, has represented HUD and chaired the Deputies' meetings. The Secretary's Urban Policy Advisor and the Deputy Assistant Secretary for CPD has each served as URPG Executive Director and shared in the direction of its staff work.
URPG set up several task forces to prepare recommendations on a number of subjects, and a lead agency was identified for each: Employment (Labor), Economic Development (Commerce), Transportation (DOT), Municipal Finance (Treasury), States and Regions (Commerce), Neighborhoods (HUD), and Redlining (HUD and Comptroller of the Currency). Some of the initiatives considered by the task forces were submitted by the participating agencies while others were developed in negotiations among the URPG members. Numerous meetings were held, many of them in the White House, with representatives of mayors, governors, civil rights organizations, and other urban interest groups to gather recommendations and to review specific proposals. Four citizens' forums and several sessions with
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corporate leaders were arranged. URPG also employed many consultants and convened panels of experts in an effort to identify urban problems and possible solutions.
After drawing upon all of these resources, each task force submitted a set of policy recommendations to the URPG Deputies for incorporation into a draft National Urban Policy Statement. In mid-November this statement was submitted to the White House, which, not long afterwards, solicited the reactions of hundreds of interested parties. URPG is presently assessing these opinions and negotiating over the final draft.
In its overall thrust, the national urban policy recommended to the President by URPG emphasizes urban revitalization; that is, it is oriented to the needs of "people and cities in distress." It proposes to assist them by creating jobs and expanding social services in the short-run and by improving the urban physical environment and promoting economic development in the long-run. URPG accepted the analyses which placed part of the blame for today's urban ills upon past Federal policies for cities. In its effort to create a coherent national urban policy, URPG favored a reduction in federally-created incentives which promote urban sprawl and an increase in Federal assistance to those areas of greatest need. At the same time, URPG understands
the limitations of unilateral Federal actions and recognizes that many of its recommendations depend for their success upon renewing the private sector's investment in central cities, stimulating more State and regional participation to alleviate urban ills, and supporting the efforts of local governments and citizens groups that are engaged in the day-to-day process of finding practical solutions to urban problems.
In keeping with this analysis, the national urban policy statement is divided into five policy clusters. The first aims "to create ample jobs for the urban poor, blacks and other minorities and to strengthen local urban economies," and recommends programs which will meet the needs of the structurally unemployed, respond to cyclical changes in the economy, and address secular economic decline. The second policy cluster supports reducing "urban fiscal and social disparities" by expanding local fiscal capability and improving urban social services. The third seeks to "revitalize the physical environment of urban areasand their neighborhoods" by expanding financial assistance for housing and community development activities, and improving urban environmental quality, including urban art and design. The fourth calls for a strengthened "capacity among all levels of government and neighborhoods groups for meeting
the needs of people and cities in distress" by encouraging the involvement of neighborhood groups in urban revitalization activities, bolstering local government capability, encouraging comprehensive metropolitan and State strategies to address urban problems, and assessing the urban impact of Federal actions. The final policy cluster endorses expanded "freedom of choice and equity in urban areas" by reinforcing affirmative action and equal opportunity provisions and practices, equalizing housing, employment, and business opportunities; and increasing minority involvement in public policy formation.
Community Development Block Grants
Program Activity
In 1977, 1,359 units of government were entitled to apply for $2,674 million in block grant funds, or 82 percent of the total $3,248 million CDBG appropriation. These units included 537 metropolitan cities, and 78 urban counties, which were entitled to $2,245 million or 69 percent of the funds; and 305 small metropolitan, and 443 small nonmetropolitan, hold harmless communities eligible for the remainder. Since only 37 of these communities chose not to apply and nine others were disapproved, CPD awarded all but $15 million in its entitlement grants. The remainder was reallocated to meet urgent needs and for small cities lacking entitlement amounts. CPD also expected to award metropolitan
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areas approximately 600 discretionary grants worth $100 million (3 percent of total funds). An additional 1400 cities in nonmetropolitan areas were expected to receive discretionary block grants totaling $324 million (10 percent of total funds).
The Secretarial discretionary fund of $51 million and the urgent needs fund of $100 million, accounting for 2 percent and 3 percent of the CDBG appropriation, respectively, were available to aid between 75 and 100 localities for authorized special purposes. En toto, the $3,248 million in 1977 CDBG funds is expected to benefit some 3,000 units of government within the various categories of eligibility.
As part of its responsibility to review program compliance by the 1,345 entitlement communities receiving funds since 1975 and some 5,300 small communities which are carrying out CDBG activities with discretionary funds, during 1977, CPD conducted nearly 7,000 monitoring visits of the block grant program.
Urban Renewal and Neighborhood Development Closeouts
Thirty-six percent (358) of all urban renewal and neighborhood development projects still active in January were closed out, exceeding the targeted number of projects by 143 percent. To expedite the conclusion of some remaining projects, $19.5 million was transferred from 63 approved CD grants either by decision of the Secretary or through voluntary diversions requested by localities. Another 202 block grant communities budgeted $166.8 million to complete urban renewal activities.
These funds were supplemented by the entire $100 million urgent needs appropriation for the purpose of closing out the categorical programs.
New CDBG Management Initiatives On April 15, 1977, the Department notified field offices of the criteria for reviewing applications under the CDBG Program. This Notice was a direct result of the Secretarial initiative to tie the program more closely to the needs of low- and moderate-income persons. Field offices were requested to report on all FY 1977 applications acted upon as of September 30, 1977, in part, as a measure of the effectiveness of the Notice. We have highlighted that Section of the report which most closely relates to the new Secretarial initiatives.
For the first time, the April 15th Notice defined in detail how section 104(b)(2) of the Housing and Community Development Act of 1974, generally known as the “maximum feasible priority” test (MFP) would be interpreted. Under this test, every activity approved under the block grant program must: (1) benefit low- or moderate-income persons; (2) aid in the prevention or elimination of slums or blight; or (3) meet other urgent community development needs. Field staff were instructed to conduct much more thorough reviews prior to approving CDBG applications. They were specifically directed to scrutinize all information bearing on the "maximum feasible priority” certification and to assure that the proposed activities claimed to be of benefit for low- and moderate-income persons were actually serving such
a purpose, and that activities directed toward the elimination and prevention of slums and blight were related to a shorter run “possibility” of blight.
Prior to April 15th, HUD had approved 175 communities under MFP, representing a total dollar amount of approximately $345 million in grants. During that period five cities (3 percent) reprogrammed approximately $1 million affecting nine projects, and an additional $289,000 covering twelve projects in two cities were conditionally approved on the basis of MFP requirements.
The dollar amount and the percentage of applications affected by the MGP criteria rose substantially immediately after issuance of the April 15th Notice. By June 30, 1977, CDP had approved 791 applications worth approximately $1.6 billion dollars. Of the applicants certified during this period 112, (14 percent) had reprogrammed $20.5 million affecting 247 projects on the basis of MFP criteria. Simultaneously, over $60 million dollars affecting 532 activities were conditionally approved for 93 grantees.
During the fourth quarter, an even higher percentage of applicants were affected by the April 15th Notice. Out of 308 applicants approved for approximately $600 million in entitlement funds between July 1 and September 30, 1977, 60 applicants (19 percent) reprogrammed $23.8 million affecting 192 projects because of
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the MFP requirements. Another forty-eight applicants (16 percent) were conditioned on MFP, affecting 201 projects valued at $13.8 million.
Of the 1,313 CDBG applicants approved for approximately $2.6 billion in FY 1977, 177 were compelled to reprogram $45.3 million in grant monies targeted for 448 projects. An additional 143 applicants were conditioned on MFP who must either submit additional funding justification or reprogram their CDBG allotments.
Urban Development Action Grants The Urban Development Action Grant Program (UDAG), authorized by the Housing and Community Development Act of 1977, was appropriated $400 million for FY 1978. The CPD-administered action grants will make it possible for severely distressed cities to alleviate physical and economic deterioration through (1) specific coordinated community and economic development activities in areas of population outmigration and stagnation, or declining tax base and, (2) reclamation projects in neighborhoods that exhibit excessive housing abandonment or deterioration. Twenty-five percent will be set aside for small cities with populations of 50,000 and under. On October 25, HUD published proposed Action Grant regulations for public comment, and published regulations for effect on January 10, 1978.
The Department has compiled preliminary quantative data which indicate the physical and economic distress of metropolitan cities only. Quantitative data on urban counties and minimum levels of physical and economic distress for nonmetropolitan cities were established prior to the effective date of the regulations.
The Department will accept Action Grant applications on or after the effective date of the regulations for the first quarter of their adoption. Thereafter, applications will be accepted during the first month of each quarter, and awards will be announced during the last month of each quarter.
Many communities have submitted concept papers or preliminary proposals for informal discussion, which delineate a range of residential, commercial, industrial, or mixed-purpose projects.
A proposed operating handbook outlining the application processing procedures for Action Grants was placed in departmental clearance. HUD conducted UDAG training sessions for its Area Office personnel in November and December, and plans more courses for late in January 1978.
In a related development the Department has begun discussions with the Economic Development Administration of the Department of Commerce and the Small Business Administration for the purpose of establishing interagency agreements governing the coordination of compatible urban development.
In an effort to inform local officials of this new program initiative and other major aspects of the 1977 Housing and Community Development Act, the Department
conducted regional Community Development Legislative Briefings, which reached over 16,000 local officials.
Impact of the CDBG Dual Formula
The 1977 legislation includes a dual formula funding criterion that significantly shifts the targeting of community development funds to America's neediest cities. Formula I provides fund allocations based on the following factors and weights: Population (.25), Poverty (.50), and Overcrowded Housing (.25). Formula II specifies Growth Lag (.20), Poverty (.30), and Age of Housing (.50). A jurisdiction's entitlement is now based on the amount of the larger result of the two formulas. The second formula recognizes not only the special problems of cities that lost population between 1960 and 1975, but also the plight of cities whose population levels have stagnated or even declined relative to the average urban growth rate over that time period. Although major cities such as New York, Philadelphia, Baltimore, Washington, Denver, Atlanta, and San Francisco will receive more money owing to the second formula method, the largest number of gainers in absolute and percentage terms are "suburban cities", such as Malden, Yonkers, Bayonne, Pontiac, Pasadena, and Berkeley. Over the past decade these cities underwent the drastic problems of large central cities and are now, in fact, needier than a majority of "central cities" under the present SMSA classification system.
Among the positive impacts of
"America is a young country, and it has a bright future ahead. . . the American people are doers, we are builders, \A/n oko	I i r>\iryrc'
the second formula is that it makes the funding process more responsive to the "non-poverty" dimension of community development needs. It helps most of the larger cities characterized by an older housing stock and decaying public facilities, particularly those experiencing fiscal strain related to the loss of the more affluent segments of their population. While primarily benefiting the Northeast and North Central Regions, the second formula provides needed assistance to many older cities in the South and West, as well. The dual formula approach combines the advantage of meeting the needs of growing metro cities and States, which benefit from the first formula, while assuring that the needs of those declining areas which are experiencing severe physical and fiscal distress are addressed separately.
Housing Assistance Plans
The 1977 Housing and Community Development Act strengthened the requirements for coordinating the implementation of the Federal program in Community Development Block Grants with the Housing Assistance Programs. The primary mechanism to accomplish this objective is the Housing Assistance Plan (HAP), which is a precondition for approval of an entitlement or a discretionary Community Development Block Grant. HAP requires each locality to record its own perceptions of its housing conditions, the needs for housing assistance among its lower-income households, its goals for obtaining housing assistance to meet these needs from Federal,
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State and local resources, as well as the future location for such housing. HUD is directed to deliver its housing assistance resources to communities according to the preferences and strategies expressed in their HAP. This includes providing the assistance in proportion to the local needs for elderly, small family, and large family housing and in accordance with HAP-method preferences for new, rehabilitated or existing units.
The 1977 summaries of the HAP's for CDBG entitled recipients covered a total available housing stock of 37.5 million units. These communities reported 7.8 million lower-income families and elderly persons in need of housing assistance, roughly equivalent to 21 percent of all their households. The jurisdictions in question set forth plans to assist 1.6 million of these families over a three-year period, or 21 percent of the total need. CDBG recipients are expected to rely on rehabilitation as a significant strategy for achieving their goals. Out of 4.9 million units reported as suitable for rehabilitation, CDBG communities planned to rehabilitate nearly 500,000. The 1977 HAP's also showed efforts by communities to achieve spatial deconcentration of low-income families. In particular, urban counties, indicated that 16 percent of their low-income needs reflect families that are expected to reside in these communities as a result of current or projected employment opportunities.
The Assistant Secretary for Housing has established procedures for allocating funds to communities on the basis of approved HAP's. If HUD proposes funding which is inconsistent with the community's
HAP, the community may veto such proposals. Conversely, if a community refuses to accept assisted housing consistent with the HAP it submitted to HUD, or makes no progress toward meeting its housing goals, the HUD Secretary can take Community Development Block Grant sanctions, including grant disapproval where appropriate.
Rehabilitation, Conservation, and Neighborhood Preservation Activities in support of efforts by localities to preserve and improve neighborhoods fall into three main categories: (1) rehabilitation under the Community Development Block Grant (CDBG) program, (2) activities under the rehabilitation loan program authorized by Section 312 of the Housing Act of 1964, and (3) endeavors under the Urban Homesteading program authorized by Section 810 of the Housing and Community Development Act of 1974.
Community Development Block Grant Program
During 1977, an intradepartmental task force on property rehabilitation and neighborhood preservation was formed. This Rehabilitation Working Group is headed by the Assistant Secretary for CPD. Its purpose is to coordinate, improve, and promote the use of departmental rehabilitation programs. The Task Force's specific objectives include the development of a departmental rehabilitation strategy, identification of the nationwide need for rehabilitation, coordination of Title I property improvement loan insurance with
CDBG rehabilitation programs, simplification of Section 312 rehabilitation loan processing, and development of rehabilitation training courses.
Toward these ends, CPD published the results of a survey on CDBG property rehabilitation financing activities. Over 1,100 localities responded to the questionnaire, which listed local program officials and program characteristics, such as dollar amounts budgeted, financing techniques, program status, number of applications and units approved, funds disbursed, and code standards used. Over 1424 localities budgeted for some measure of rehabilitation in fiscal years 1975 and 1976 Approximately $550 million in CDBG funds were allocated for such activities. By the end of 1976 these localities had disbursed over $71 million in direct grants, $45 million in direct loans, and $16 million as subsidies, deposits or guarantees in leveraging programs with private financial institutions. Over 53,000 units were approved for rehabilitation under these various arrangements.
In 1977, 13.5 percent of the CDBG funds were budgeted for rehabilitation loans and grants ($386.5 million out of $2.9 billion approved through October, 1977). Sixty percent of the approved localities included rehabilitation activity in their block grant budgets.
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The Housing and Community Development Act of 1977 provided broader authorization for local governments to undertake comprehensive property rehabilitation. The 1977 amendments to the HCD Act of 1974 and the regulations issued under those amendments removed locational structures on rehabilitation financing. The new rules also authorize acquisition for rehabilitation by nonprofit organizations, provision of building materials to owners and tenants, and financing energy conservation measures.
Section 312 Rehabilitation Loans The Office of Management and Budget apportioned $134 million for new Section 312 loans during Fiscal Year 1977. This brought the total dollar amount of Section 312 loans approved since this program was begun to approximately $425 million or enough to rehabilitate 82,100 dwelling units. During the fiscal year HUD committed $85 million in loans, representing the highest amount committed in any one fiscal year since the beginning of the program. Six thousand Section 312 loans were reported approved during the year, exceeding the number estimated by 800. These loans continued to be approved in CDBG areas and in traditional categorical grant areas (urban renewal and concentrated code enforcement). Nearly 500 HUD staff visits were made to local public agencies to monitor this program.
Congress extended the authorization for the Section 312 rehabilitation loan program through FY 1978 and appropriated an additional $50 million. The Housing and Community Development Act of 1977 increased the maximum residential loan from $17,400 per dwelling unit to $27,000 per dwelling unit. In addition, approximately $23 million in Section 312 funds was earmarked to support the urban homesteading program. As. another tie-in with homesteading, CPD developed a procedure which will encourage the use of Section 312 loans in connection with Secretary-held properties.
During 1977, CPD, in consultation with local officials, developed recommendations to simplify and streamline Section 312 processing. In addition, HUD devised a Section 312 "Basic Training Course" to indoctrinate local staff.
Urban Homesteading Program The Urban Homesteading Program offers another means of encouraging localities to preserve urban neighborhoods. Begun in 1975 as a HUD Demonstration, homesteading is now being transformed into an operating program by the Office of Community Planning and Development.
The Urban Homesteading Program was authorized by Section 810 of the Housing and Community Development Act of 1974. This legislation permitted the Secretary to transfer, without payment, one- to four-unit HUD-owned properties to units of State or local government, or their designated public agencies, for use in urban homesteading programs.
In this program, HUD provides properties to units of local govern
ment whose urban homesteading plans have been approved by the Department. These cities subsequently convey the properties to selected homesteaders who must:
Restore the property to minimum health and safety standards prior to occupancy;
Prepare the property to meet local code standards within 18 months after occupancy;
Occupy the property for a minimum of three years.
If, at the end of this three-year period, all conditions are met, the homesteader acquires title to the property.
The urban homesteading program allows families or individuals who are in need of housing and are able to make repairs and improvements to the property consistent with local housing code standards to obtain homes for essentially the cost of rehabilitation.
Section 810 authorized the appropriation of $5 million for FY 1976 to reimburse the HUD/FHA insurance funds for the transferred properties. Subsequent increments of $15 million for Fiscal Years 1976 and 1977 brought the dollar value of the Federal homesteading program to $35 million. During FY 1977 alone, CPD allocated $11,340,000 in Section 810 funds among 39 cities currently participating in the program. (Sixteen of them were selected in a second HUD-urban homesteading competition held in 1977.) As of November 1, HUD had conveyed 1,547 properties to these municipalities, and they had selected 1,238 homesteaders and conveyed
257-151 0 - 78 -5
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1,043 properties. More than half of the former HUD properties are now occupied.
Early in 1978 the Department will publish regulations for the operating program which will permit more cities to participate. In addition to using HUD-owned properties for homesteading, HUD also plans to continue the targeting of Section 312 low interest rehabilitation loans to support its homesteading effort, such as with the $13,450,000 allocated for the purpose during the 1977 calendar year.
Relocation and Property Acquisition With the enactment of the Uniform Relocation Assistance and Real Property Acquisition Policies Act (Uniform Act) on January 2, 1971, a uniform policy was established for the fair and equitable treatment of all persons whose property is acquired for a Federal or federally assisted program and/ or who are forced to move as a result of such programs. Most HUD-assisted activities involving the acquisition of real property and the displacement of families, individuals or business concerns are subject to the provisions of the Uniform Act.
The Uniform Act prescribes a broad range of relocation payments and assistance for those displaced as a result of Federal or federally assisted programs. Relocation payments include compensations for moving expenses, as well as payments of up to $15,000 for displaced homeowners who purchase a replacement dwelling
and up to $4,000 for displaced tenants and certain others to assist them in renting a replacement dwelling or in making a downpayment on a home. The Act includes a number of additional provisions to ease the impact of displacement. It also specifies provisions to assure that the procedures used by local agencies in acquiring property are consistent and afford maximum protection.
During Fiscal Year 1976, a total of 22,701 families and individuals, as well as 4,939 business concerns, farm operations and nonprofit organizations were displaced under HUD programs. Relocation payments to displaced families and individuals amounted to $9,854,730 for moving expenses and $95,503,590 for replacement housing payments. For displaced business concerns, farm operations, and nonprofit organizations the total payments for moving expenses came to $42,630,391. HUD's real property acquisition cost during Fiscal Year 1976 amounted to $374,553,061. This covered the acquisition of 20,169 parcels. In all cases, the costs for real property acquisition and relocation are included in the total costs of the project or program carried out by the locality.
Approximately 1,260 communities had active relocation programs in 1977. It is estimated that 655, or more than half of these were connected with the CDBG program. These communities, comprising 25 percent of the block grant recipients budgeted nearly $100 million in CDBG funds for relocation payments and assistance.
Departmental representatives visit localities to assure that the rights of persons affected by
HUD-assisted relocation or acquisition programs are fully protected. HUD field staff review completed cases to determine whether displaced persons and those whose property was acquired received full payment and the services to which they were entitled under law. Reports for the period ending September 30, 1977, indicate that HUD field staff made approximately 2,000 monitoring visits and reviewed more than 7,500 individual cases. Follow-up action was initiated to produce needed corrections where reviews had identified problem cases.
During 1977, the Department published a brochure entitled, ''When a Public Agency Acquires Your Property,” which explains the rights of property owners under Title III of the Uniform Act and generally provides information that may be useful to those whose property is to be acquired for a HUD-assisted program. The Department believes that an informed owner is the best assurance that the acquisition process will be carried out smoothly and in conformance with the law.
1977 Housing Opportunity Plans HUD selected seven locally developed and approved Areawide Housing Opportunity Plans designed to promote housing for lower-income people outside of impoverished neighborhoods. The plans served as the basis for the award of bonus HUD housing, and special grants for community development and planning to areawide planning organizations and communities within each plan's jurisdictions.
A total of $20 million in special Section 8 funds and $1.2 million
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in special discretionary Community Development Block Grants was awarded to local jurisdictions. HUD also awarded $475,000 in supplemental Comprehensive Planning Assistance Grants to areawide planning organizations.
Special Interagency Funding
In FY 1977, HUD cooperatively administered fifty-seven projects with $13,370,257 in funds from other Federal agencies to supplement the Community Development Block Grant program. The Appalachian Regional Commission and three Title V Regional Commissions provided $11,586,340 for communities which had experienced a shortfall from existing Block Grant funds. In a special instance, the Department of Defense provided $1,753,917 in supplementary community development resources for the communities affected by the Trident Submarine Base development on the Kitsap Peninsula near Bangor, Washington.
Comprehensive Planning Assistance Program
In 1977, approximately $62 million in Comprehensive Planning Assistance grants was awarded to 50 States and 5 territories, 225 metropolitan and 310 nonmetropolitan areawide agencies, 750 localities, 125 large cities, and 75 Indian tribes. The grants assisted the jurisdictions to improve their comprehensive planning and were targeted for the completion of statutorily mandated land use and housing requirements.
Out of the total Comprehensive
Planning and Assistance fund, $1.5 million in grants was awarded to 50 applicants who participated with local colleges and universities in the Work Study program. This arrangement made it possible for 325 minority students majoring in urban planning to work at these agencies while completing their college requirements.
Program Evaluation
In 1977, evaluation study activities included preparation of the Third Annual Report to the Congress on the Community Development Block Grant Program, and special studies addressing particular aspects of the block grant and other Community Planning and Development programs.
HUD/Agriculture Project
CPD inaugurated a two-year HUD/USDA program to test the ability of four states (California, Illinois, West Virginia, and Colorado) to deliver housing and Community Development facilities to residents of remote rural areas. Thirty U.S. counties are expected to benefit from this project. HUD provided $3 million in funds, to go along with a Farmers Home Administration contribution of $40 million. Substantial Section 8, land acquisition, and rehabilitation activities are involved in the scheme, in addition to the construction of water and sewer lines and other infrastructure. The target groups in the four States include significant numbers of low-income, minority, elderly, and handicapped persons who have been unable to take advantage of CDBG programs because of their small local governments' relative lack of sophistication.
Economic Commission for Europe Seminar
CPD staff headed up the U.S. delegation to the Seminar on the Impact of Energy Considerations on the Planning and Development of Human Settlements, which was held at Ottawa, Canada. CPD contributed a specialized paper on the Impact of Energy Considerations on Urban Transportation Planning.
Environmental Activities
The Department has proposed an areawide Environmental Impact Statement (EIS) which would reduce substantially the number of EIS's otherwise necessary for individual sites in a geographical area. The prototype proposal concerns the l-95/Route 40 growth corridor in New Castle County, Delaware. It is being circulated to Federal agencies, organizations and individuals for comment in accordance with guidelines established by the Council on Environmental Quality and HUD regulations implementing the National Environmental Policy Act. Once the process is approved, an application for HUD housing assistance or insurance in a given geographic area would not be subject to the present EIS requirement for each housing project over 500 units or lots. Instead, a lower level environmental review and clearance would be sufficient unless other findings indicated that a full EIS is in order. The areawide EIS process, therefore, has significant potential for improving environmental assessment and reducing present delays associated with EIS preparation.
Assistant Secretary for
Housing-Federal Housing
Commissioner
The Assistant Secretary for Housing-Federal Housing Commissioner directs the housing programs of the Department, including the production, financing and management of housing and the conservation and rehabilitation of housing stock.
The Federal Housing Administration (FHA) insures mortgages on single-family homes, multifamily rental, condominium and cooperative projects, as .well as on land purchased for residential development, group practice facilities, and nonprofit and proprietary hospitals. FHA also insures loans for property improvements and for the purchase of mobile homes. Special purpose programs are available to help meet the housing needs of veterans, the elderly, the handicapped, disaster victims, and prospective home purchasers who are marginal credit risks.
Assisted Housing Programs
Section 8 Housing Assistance Payments
The Section 8 Housing' Assistance Payments Program enables the Government to provide housing assistance on behalf of eligible lower-income families (i.e., families—including the elderly—whose incomes do not exceed 80 percent of the median income for a given locality) occupying newly constructed, substantially rehabilitated or existing housing. These payments make up the difference between the approved rent for the unit and the amount the family is required to pay, which ranges from 15 percent to 25 percent of its income.
The Section 8 program, which was created by the Housing and
"We in the Administration are going to concentrate on putting people in homes, not