Housing and Urban Development Secretary Samuel Pierce will recommend that President Reagan keep alive the Carter administration's main initiative to help deteriorating cities, a program that was an early target of David Stockman's budget ax.
Armed with a new HUD study on the effectiveness of the Urban Development Action Grant (UDAG) program and backed by a powerful constituency among local governments and business, Pierce indicated yesterday that he is ready to go another round with the Reagan budgeteers to save the program.
Stockman has shown no sign of backing down on the issue, and it may have to be resolved by the president, Pierce said.
The Office of Management and Budget had wanted the program killed in Reagan's first budget proposal, but Pierce won a year's reprieve for it in one of the few successful appeals to the president.
Now he wants the development grants continued indefinitely, with modifications designed to prevent some of the waste that Pierce acknowledged exists in the program.
The grants are provided for urban development projects in distressed areas, with the private sector contributing at least 2 1/2 times the amount of the grant. They are designed to revitalize cities and create jobs.
The OMB had argued that the $500-million-a-year program doesn't create private investment but merely rewards investment in high-risk or economically inefficient areas. In addition, a 1979 General Accounting Office study found that in several cases the grants did little to stimulate investment, jobs or tax revenues for cities.
But the new HUD study, which Pierce said is almost complete, came to a more favorable conclusion.
"It perhaps falls short of being what some of its strongest advocates believe it to be, but it is an effective and proven asset in our efforts to help America's cities to be restored to vitality through economic and community development," Pierce said yesterday in a speech to the National Press Club.
"UDAG subsidies have stimulated additional private investment, created jobs and produced tax revenues that would not have occurred in distressed cities and urban counties without UDAG."
Pierce said he wants to deemphasize aid to housing in the grants program, focusing instead on industrial and commercial projects. He also said HUD will try to target the grants better to projects that could not succeed without them and to eliminate those with only marginal benefits.
The program has a strong constituency among mayors, governors, business groups and unions, which all started a hard lobbying effort for it when they learned that the OMB wanted to eliminate it.
It also has substantial backing on the Hill, including from Sen. Richard Lugar (R-Ind.), a former mayor of Indianapolis and chairman of the Senate Banking subcommittee on housing.
In the District, the new $13 million Hechinger Mall in Northeast was financed in part with $3.25 million from the UDAG. Other UDAG assistance is scheduled to go into the Gallery Row downtown renovation of a building for artists and offices and for a single-family housing project in Shaw, a District Housing Department spokesman said.
Meanwhile, local housing authority representatives painted a dismal picture of the rapid deterioration of public housing if proposed budget cuts in operating subsidies are approved.
Jack Herrington, speaking for the National Association of Housing and Redevelopment Officials, told a House Banking subcommittee that basic maintenance and security services would have to be slashed because rapidly rising utility costs cannot be trimmed significantly.