Officials of the Department of Housing and Urban Development acknowledge that the apartment building programs of the 1960s had serious defects that created housing disasters in Prince George's County and other surburban areas.
Nevertheless, the programs cannot be called failures, Marilyn Melkonian, HUD's deputy assistant secretary for multi-family housing, said in a recent interview.
Prince George's, she said, has an unusual number of blighted apartments, and does not present an accurate picture of the nationwide situation. HUD is taking aggresive action to save the projects in Prince George's and across the country, Melkonian said.
"Americans believe programs are perfectable, that government is perfectable. That's why we build things like nuclear reactors and Skylans," Melkonian said. "We's like to be perfect too. But because we fail a few times in an insurance program, that doesn't mean the whole housing gaol should be written off."
The loans and subsidies HUD gave private developers in the 1960s "put 500,000 units on the market in four to five years," Melkonian said. "That really made it possible to meet the housing demands of an income group that was no longer being served by either the federal government or the private market.
"When you are able to help that many people who were really in a bind when it come to housing, the program cannot fairly be called a failure. We look on it as success," she said.
The failure rate of the projects HUD built in the 1960s and '70s runs between 15 and 18 percent, indicating that between 1,800 and 2,000 projects fell apart physically, financially, or both, Melkonian said.
"That compares favorably with both our other programs and with the conventional market," Melkonian said. "This was an insurance program, and we were insuring development that was of a type that the conventional market wouldn't touch. We had to expect a certain failure rate.
"But our failures had a disproportionate impact," Melkonian said. "A housing failure is obvious to anyone who drives by it. It looks terrible, and it sits out there for a long time. On the other hand, if you drive by a successful project in a suburban area, you don't even realize it's there because it blends right in with the housing built by the private market."
Melkonian and other HUD officials said that many subsidized projects failed because of an unanticipated and unprecedented rise in apartment owners' costs in the early 1970s. The subsidies built into the old HUD programs, they said, could not cover the rising costs, so many projects went broke.
"If it hadn't been for that unexpected rise in costs," Melkonian said, "this program would have probably been looked on as completely successful, instead of being labeled a failure by the Nixon administration."
Since 1977, when Patricia Harris was appointed HUD secretary by President Carter, the government has concentrated on rehabilitating the troubled projects and revising the programs to make the already-built apartments workable, Melkonian said.
"Most of the housing we built between 1968 and 1973 was successful," Melkonian said. "The other housing still stands, and we think it's still a valuable housing resource. It would cost us two to three times more to build all the apartments in the failed projects from scratch. And with a new way of using subsidies and better management by HUD, we can use those old apartments for people who need them."
The current administration, Melkonian said, feels strongly that HUD's efforts to create moderate- and low-income housing should continue.
"In the private market in Washington today," Melkonian said, "a developer who builds an apartment building will have to charge $470 a month to support a two-bedroom apartment. That is the housing crisis in this country. What's happening to the guy who may be able to afford $150 a month for an apartment, but can't find it anywhere?
"Without federal assistance," Melkonian said, "the private market will not build housing for moderate-income people, and those people will find themselves without any decent place to live." CAPTION: Picture, SUBURBAN SLUMS, THE PRINCE GEORGE'S FIASCO