Box 22, Folder 18, Document 2

Dublin Core

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One area the Federal government has neglected in its effort
to make lower cost housing available is the use of technology and
other innovations to help reduce costs.

Therefore, the idea of establishing an urban development
corporation to create a large enough "market" in the field of
rehabilitation so as to induce innovations is an attractive one.

The need to explore all ways of encouraging rehabilitation of
sub-standard housing is 22> great.

However, there are a number of uncertanties and risks involved
in launching a UDC program.

To begin with, it is unclear to what extent‘echnological and
institutioned innovations can reduct costs. Furthermore, the economic
feasibility of the program, and therefore the assumptions on the degree
of financial support needed, is highly sensitive to such featovs as
acquisition costs, rehabilitation costs, and mortgage terms.

In addition, the program cannot be started small. It must be
launched on a large enough scale to create the necessary "market" for
innovation. Therefore, the program must have top-flight leadership,
and it must have a firm commitment on the availability of 221(d) (3)
below-market funds, FNMA special assistance, and rent supplements.

Given the proposed 30,000 unit target for the first two years
and given the need to operate on a scale of around 10,000 units in
any city, it should be understood that the program will have to be

limited to a small number of cities.

It should also be understood that no matter what cost-savings
may be achieved through innovation, major subsidies in one form
or another will still be required to meet the housing needs of
the poor.


The Task Force therefore recommends:

1. That a program along the lines proposed by HUD be
inaugurated to test the capacity of UDC to stimulate technological

2. That the UDC should seek to encourage and to assist--through
training, technical assistance, loans and otherwise-- the formation -
of competent and qualified local non-profit organizations to help
carry out its mission.

3. That firm commitments be made on the availability of
sufficient 221(d)(3) below-market funds, FNMA special assistance
funds, and rent supplement funds to meet its program objectives.

4 That a clear understanding of the relationship of the UDC
to existing local agencies concerned with housing and urban development
be worked out before the program commences.

5. That careful consideration be given to explorfWith those
most concerned possible political acceptancee of a UDC program

involving new construction as well as rehabilitation.



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