affordable housing for all. I have worked with him on many worthy projects in the past and look forward to working together with him on many more in the future.

That said, the block grant proposal that Mayor Goldsmith and others will discuss indicates that under these proposals Federal requirements of income targeting, protection for elderly and disabled, for mandatory community service requirements, caps on rent at 30 percent, the Brooke Amendment, grievance procedures, and tenant participation all will disappear. That seems to be a bad idea to me, and even if it is a good idea, it is a risky one and better approached through demonstration programs trying similar block grants on a small scale. Such demonstration programs are already in place and will indicate tenants are protected when Federal guarantees are dropped.

Although I have not been an active participant in this subcommittee as long as I would have preferred to have been, my experience with the Indianapolis public housing has been three things. Number one, we cannot continue to allow senior citizens of low-income status to be integrated with other citizens and families who are not. Senior citizens, especially in their golden years, have a right to live in quiet, safe environments without having to be placed in public housing along with people who have not reached that plateau in life.

And I would also like to add that public housing, like any other entity that is public, has not met the problems by its own making. Society has created enormous problems within the public housing spectrum, and I will continue to work with the mayor of our city to try to alleviate some of those social problems so that this country can get on with quality public housing for people who deserve to participate in those kinds of opportunities.

Thank you, Mr. Chairman.

Chairman LAZIO. I would thank the gentlelady.

I am proud to have testifying before the subcommittee one of America's truly great mayors, the mayor of one of America's truly great cities and, I might add, a former prosecuting attorney, as Mrs. Carson referred to, Mayor Stephen Goldsmith of Indianapolis. Mayor Goldsmith has earned a well-deserved reputation as one of America's most innovative mayors. He has not only reduced government spending and held the line on taxes, he has done much more. He identified more than $120 million in savings and reinvested this into his community by providing for more police officers and instituted a $500 million infrastructure improvement program called "Building Better Neighborhoods."

If I were to list all the awards Mayor Goldsmith has received over the years, we would never get out of here. For that reason, I would just mention a few and especially welcome him here before this subcommittee. He has certainly been an exceptional public servant. He has been the national Co-Chairman of the National Council of Public-Private Partnerships, for which he has received the Distinguished Leadership Award. He has been the Chairman of the Center for Civic Innovation, an assistant professor at Indiana University School of Public and Environmental Affairs, and I note there, you probably did not have tenure. I am familiar with that situation.

I want to welcome you, Mayor Goldsmith. Thank you for coming here, and thank you for the fine work you are accomplishing in Indianapolis. It is a role model for our Nation's other cities. The floor is yours.

STATEMENT OF HON. STEPHEN GOLDSMITH, MAYOR,

CITY OF INDIANAPOLIS, IN

Mr. GOLDSMITH. Thank you, Mr. Chairman.

Let me start by thanking Representative Carson for her kind comments and also acknowledging over the last decade, although not always agreeing, we have worked together to solve many of the problems facing the residents of our cities, particularly those who are the poorest, and I appreciate your indulging me today, and not offering any other observations about my successes or failures. So thank you, Representative Carson.

I don't come before you as a public housing expert; quite the contrary, I come before you as a mayor struggling to make our city work and looking for ways to furnish necessary services to those who are the poorest. For large cities, and Indianapolis is the twelfth largest in the country, to succeed we have to be creative and flexible and we have to understand that virtually, at least in the Midwest and the East, cities contain a disproportionate share of those who are poor and those who are in need of shelter.

I also acknowledge, although I think probably we could debate whose responsibility it is, yet there is a public responsibility for shelter, and in the end a mayor is going to be the one responsible. If public housing fails, Section 8 withers away and funding for homeless is insufficient. There is no mayor who is going to allow a mom and her children to sleep on the sidewalks of the streets. It is necessary for cities to respond.

I also would say that we probably had more successes and more failures than most any other city in delivering public housing. I come before you with a long list of each. Let me briefly reference what I think are the problems and issues involved with public housing.

First of all, I appreciate the Chairman's recognition that we are in the middle of a sea change with respect to providing public services in cities, particularly public housing. It has been a Federal responsibility for decades. That responsibility now is, to some extent, being withdrawn.

We have voucher contracts which are now expiring in record numbers, leaving fundamental questions about how the residents who were receiving those vouchers are going to be housed. We have a new Federal/State relationship which devolves money and responsibility both to State governments, thus changing the very fundamentals of the Federal relationship with cities. We have the Federal Government's effort to balance its budget, and we have cities' efforts in resisting raising taxes, especially those in the urban core where the tax rates are already too high.

So inside this package of changes is both a very important opportunity and serious problems for cities.

My city has been, up to a couple of years ago, historically on the troubled list with respect to public housing. After huffing and puffing, we finally got ourselves off of it, and we precariously remain

above that line. Our city has handled public housing as a city agency, not as a city agency, as an outside corporation, and has looked at every possible structural change as an answer to the problem, which I don't think has an answer in that fashion.

I don't want to take much of your time, but let me start with an anecdote. When I got elected Mayor in 1991, one of the first things I did was go to our seniors public housing complex. It was in deplorable shape, and I met with the seniors and I said, boldly, “90 days, all the hallways, all the public areas are going to be repainted and clean." I gave them my word. I left. I decided I was going to use city dollars and not HUD dollars to do this.

I naively started the process of issuing a contract for a commercial painter, when the HUD police knocked on my door and said, "You can't do this." And I said, "OK, I'll just negotiate kind of a new wage rate for painting, because everybody wants the seniors who are impoverished to have a higher quality of living." They said, "No, you are not allowed to negotiate this with your unions; we establish this.” I said, “OK, what would it be?" They said, "We will tell you what, the first three floors will be residential painting rate, but we define floors 4 and above as commercial rate, and therefore the paint rate will triple on floors 4 through"-whatever it was-"15, as contrasted with 1 through 3."

The net result is, we never did paint, at least in that period, the areas that I promised to paint, because the Federal restrictions, the Federal process, just zapped all the energies of both the volunteers and commercial painters. You can replay that story over and over again.

The point is, I think we need more flexibility and more responsibility at the local level. I have had four public housing directors. They have improved our conditions somewhat, and they have a long way to go, and we are searching for a new director right now as well.

I would say, Mr. Chairman, there are some fundamental flaws in public housing that make it virtually impossible to work in large cities. First of all, I think site-based subsidies are wrong. We take the poorest residents, they trap them in monopolies, they can't take those vouchers with them, and they serve as a strong incentive for slumlords. And to the extent and I think we need to be very careful with this.

We can argue about what the extent is of public responsibility for shelter, but it is a very different question than whether government is the best landlord in the country. The question ought to be, "With the resources you have allocated, what is the best way to provide shelter care?"

Entrapping people, either with site-based vouchers or with public housing delivered through government only, I think, is an insult to the people who need the services and is designed not to produce the most effective set of services. And I want to come back to that. So the site-based vouchers create economic inefficiencies.

Second, the assumption—the mayors the San Diego and Philadelphia and I were testifying before the DC. Committee-and there is across the country with mayors a now compelling feeling that we are not the best provider of every single service and that we have to subject these services to the competitive marketplace to see who

is the best at repairing potholes, who is the best at treating water quality, and who is the best at providing housing services.

So if public housing starts with the proposition that government needs to be this business as contrasted to government needs to provide funds for shelter, it starts with a fundamental flaw, as we see with this issue.

Finally, I acknowledge that the concept has been public housing has been housing as a last resort, but that tends to create artificial barriers in the housing continuum that create problems. Those fundamental flaws are aggravated by some structural mistakes. Every time there is an abuse, there is a rule, law, or regulation designed to correct the abuse. So public housing becomes something of an esoteric sport to see if you can weave your way through the process regulations to get to the end.

I was here 4 years ago with Secretary Cisneros, who I think did some important things in HUD, appearing before Congress to give HUD more authority to give communities more authority and flexibility on delivering housing. Some of what Secretary Cisneros proposed has occurred, much of it hasn't, and I would urge Congress to reduce the regulations, and the way to do that is to provide more flexibility and freedom at the local level.

I think this gets us to your proposal, Mr. Chairman. Let me introduce that by saying we have competed out now 70 public services. We have saved $250 million-not public housing, $250 million-and we have reinvested those dollars and more in our most difficult neighborhoods, whether it is for land acquisition, for housing or streets or sidewalks or curbs or parks or police, and the competitive process has allowed us to deliver higher quality services to our residents for lower cost.

What we need, and what I think you can do as a result of our proposed legislation, is to allow cities that wish to participate in local demonstration projects. I would suggest that if you are going to invest X dollars in maintenance costs and subsidies and HOPE VI, then why don't you just cash that out and say to me, "Mayor Goldsmith, we expect you to provide 'X' thousand affordable housing units for your citizens; here is a check; it is now your responsibility."

To the extent you give me some money for CDBG, some money for HOPE, some money for public housing, some money for folks with AIDS, some money for people who are homeless, you create not only bureaucratic overhead but also obstacles in delivery of the continuum, and I, for one, would be willing to accept responsibility because, unlike some mayors, I really want this to work, and I can't figure out how to make it work.

We have an opening now for a public housing director. Unlike anything else I did in my community, instead of finding the best person to provide affordable housing, we don't do that. We acknowledge that public housing directoring is a profession in and of itself, because what you want is a person who understands the rules and regulations the best.

We are not talking about who can produce the most housing per dollar, we are talking about trying to hire the best person to do business with you in the Washington sense. It is not a very productive way to do business.

So I would compliment you on the willingness to allow communities who want to provide more housing an opportunity to do that. Public housing does not exist in a vacuum, and insofar as it is part of this continuum of shelter care, the more flexibility we have to manage people through this system the better off we will be.

Now, as we conclude, I would just say that if I could talk about Representative Carson in conclusion, her last responsibility-she will have the last word, so I will say this very carefully. Her last responsibility is a job called "trustee", to the extent that I did not provide people with public housing, they knocked on her door and received a property tax voucher to get their housing, get their shelter care. And I acknowledged and understand that I, as mayor, and the local officials are the provider of last resort for shelter, and we take that seriously, as I think all other mayors in big cities.

And the best thing Washington can do for us is continue to address its responsibilities, look at the expiration of the Section 8 vouchers, but to do that in a way that recognizes that the best way to produce value is to acknowledge the importance and the humanity and the folks who need the assistance the most. Stop managing them inside a public monopoly and allow a greater variety of public housing to be produced. In that situation, you can hold me accountable for the results, you can audit our performance, but let's stop managing the process pieces in a way that is counterproductive. Thank you, Mr. Chairman.

[The prepared statement of Hon. Mr. Goldsmith can be found on page 427 in the appendix.]

Chairman LAZIO. Thank you.

I would like to reserve my questions to the conclusion. Mr. Gutierrez, do you have any questions?

Mr. GUTIERREZ. Yes. Welcome, Mr. Mayor.

Mr. Mayor, last week we had someone from the National Housing Project who, in testimony before the subcommittee, listed several serious concerns with the Home Rule Flexible Grant Program. Particularly, he noticed that this program would eliminate any income-targeting provisions, the cap on a tenant's rent contribution, and protection against eviction without cause. I believe these are very serious protections that should be retained for any public housing resident.

How would you suggest, Mr. Mayor, we ensure the rights and economic security of public housing tenants on the program that you would put together?

Mr. GOLDSMITH. I think there are probably several areas where we might disagree. Let me kind of walk around that to answer your question.

Whatever you as a subcommittee in Congress decide are important shelter requirements, I would prefer that you expressly address that issue and give us the flexibility to do that. If you think a community should provide I would like maximum flexibility— but if you decide a community should target provision of shelter care for a particular population, then spell that out and then let us figure out how to do it.

To the extent though that you require it to be done inside a public monopoly and pass lots of laws to tell that monopoly how to handle its business, I think you create high overhead cost.