November 14, 1975
Page 36691
MAINE INAUGURATES NEW HOUSING PROGRAM
Mr. MUSKIE. Mr. President, ground was broken on Wednesday, November 12, is South Paris, Maine, for the first units of housing to be built in the country under the new section 8 program of the Housing and Community Development Act of 1974.
The apartment complex, which will house a number of elderly persons from the South Paris area, is a first step toward the implementation of the new program and signifies the determination of State and local officials to improve the lives of our citizens by providing decent housing.
At the same time, however, the project illustrates some of the problems which housing officials have been encountering. James E. Mitchell, director of the Maine State Housing Authority, has said the program is complicated to administer and that if it is not changed, "it is going to be one of the biggest governmental busts of all time." Unless major administrative and financial alterations in the program are made, he fears that neither the housing authority nor the Federal Government will be able to extend this same type of assistance to the approximately 15,000 other elderly people in Maine who are in similar need of apartments.
Mr. President, Congress enacted the Housing and Community Development Act to improve the kind of housing available to citizens across the country and to correct some of the inequities and failures in previous Government programs. The housing industry cannot afford further catastrophe and needs the stimulus which section 8 was intended to provide.
An article appeared in today's Washington Post discussing the new housing units in South Paris and the section 8 program. I ask unanimous consent that the article be printed in the RECORD.
There being no objection, the article was ordered to be printed in the RECORD, as follows:
HOUSING PROGRAM ADVANCES
(By Charles A. Krause)
SOUTH PARIS, MAINE.—The Government's new $17 billion subsidized housing program, which Secretary of Housing and Urban Development Carla A. Hills calls "just a baby,"took its first step out of the bureaucratic cradle in this small New England town.
Town Manager Paul Brown stuck shovel into the dew laden Maine earth Wednesday morning, breaking ground for the first new apartment complex to be built under the program, which is outlined in Section 8 of the 1974 Housing and Community Development Act.
Sen. Edmund S. Muskie (D-Maine) and Rep. William S. Cohen (R-Maine) sent congratulatory telegrams but said they couldn't attend the ceremony because of business in Washington. Hills was in San Francisco togive a speech. But the 20 or so people who attended the ceremony, most of them South Parisians, didn't seem to miss the VIPs.
Brown said he was delighted with the new10-unit, $275,000 project because it would provide housing for some of the town's 500 elderly citizens and because its owner would pay regular town property taxes.
But the shovelful of dirt he turned this morning had meaning far beyond the boundaries of little South Paris, which is next door to Norway and down the road apiece from Mexico and Peru in south central Maine.
Many housing experts have predicted that Section 8 will never achieve its ambitious goals, especially in the area of new subsidized housing construction, because, they say, the program is poorly conceived, complicated, and mired in HUD bureaucracy.
Secretary Hills, who has enthusiastically backed the program, conceded in congressional testimony last week that the new construction phase of Section 8 had run into serious problems and that it was unlikely that HUD would meet its target of 240,000 new housing units this year.
But the apartment developer, Robert P. Bahre, and the Maine State Housing Authority have proved that Section 8 can be activated under certain circumstances and that other communities across the country may also be able to take advantage of it.
Section 8 is a radical departure from past federal housing programs because HUD no longer subsidizes mortgages as it did under the now-shelved 1968 housing subsidy program. Instead, HUD guarantees state and local housing agencies as well as private developers that the federal government will provide rent subsidies for new and existingapartment units for 20 to 40 years.
With these guarantees as collateral, the housing agency and private developers are theoretically supposed to be able to borrow money to build the new housing.
The problem, as Hills outlined last week, is that the bond market has dried up for state housing agencies as a result of the New York City financial crisis and banks are reluctant to lend money to private developers for rental projects of any kind.
James E. Mitchell, director of the Maine Housing Authority, said Wednesday that the only reason his agency was able to finance the South Paris project was because it had money left over from a previous bond sale.
The only way future Section 8 projects in Maine or elsewhere in the country are going to be possible, Mitchell said, is for HUD to use the authority it has to guarantee state housing agency bonds. A spokesman for HUD said such a proposal is now under consideration.
Bahre said his South Paris project was economically feasible only because the state provided him with a long-term mortgage at an interest rate of 7.5 per cent. Most mortgages here cost about 10 per cent if money is available at all. Bahre also said HUD has required changes in his plans that have driven up costs.
Despite problems, the project is a godsend to South Paris, a town of 3,700 people, a 9.4 per cent unemployment rate, and an over-65 population of almost 15 per cent. It will provide employment and, as Joyce Bennett, housing director of the local poverty agency, said, many of the town's elderly are poor, presently living in unsafe housing, and are in desperate need of the Section 8 apartments.