March 23, 1972

scores of Fed and local indictments are imminent in NYC for misuse of funds meant to help solve problems of housing for poor; vast sums, most of which came from Fed Govt, have been diverted from intended purpose to real estate speculators through schemes in which banks, lawyers, brokers, credit‐rating orgns, contractors and city and Fed employes cooperated; inquiries into NYC slum rehabilitation programs, including those already exposed by City Council and NYC Dist Atty Hogan, have resulted in indictment of several landlords, lawyers and city officials with more indictments expected; also under investigation are relocation and 'mini‐loan' programs of HDA, which both use Fed funds, and special loan programs of FHA for purchase of homes by low‐income families; 'finder's fees' of up to $750 are paid to landlords who provide apts for families on welfare under relocation program or families in urgent need of housing because of emergency; investigations reveal unscrupulous landlords collect finder's fees repeatedly, using the same apt, by getting rid of tenants a few weeks after they have moved in, costing taxpayers thousands; speculators in several areas of Bklyn engaged in 'block‐busting', have found finder's fees an extra source of income; speculators have also been successful in obtaining FHA‐insured mortgages large enough to cover inflated prices of houses sold to minorities; when buyer cannot afford to keep house, he loses it through foreclosure and the same or another speculator then buys house cheaply and resells it again at inflated price to another low‐income buyer who will also be foreclosed; numerous NY hearings on this practice have resulted in NY Sec of State Lomenzo revoking state‐issued real estate licenses; alleged misuse of Fed funds from special FHA‐financed programs under inquiry by US Atty Morse in Bklyn and US Atty Seymour in Manhattan; so‐called '312' program, which provides Fed loans for rehabilitation of owner‐occupied 1‐4 family houses, is also under investigation; US Sen Judiciary Com Antitrust and Monopoly Subcom Chmn Hart schedules NYC hearings; will examine problems associated with sales of homes in Bronx, Bklyn and Queens involving FHA or VA; correlates 'dramatic' racial gain in Bklyn of 285,000 blacks and 220,000 Puerto Ricans and exodus of 740,000 whites to 'great number of sales' underwritten by FHA or guaranteed by VA; sets more hearings for Washington later

final returns confirm that Walker has won Ill Dem gubernatorial nomination, defeating Simon; result seen severe blow to Daley orgn; Daley illus

HR Ways and Means Com reaches agreement on Fed revenue‐sharing bill that gives much less money to states than original Nixon Adm bill, but, like Adm bill, would provide $5.3‐billion in funds beginning Jan 1 '73; Adm says it is pleased with bill, despite its differences from Adm proposal; under com bill, states would receive $1.8‐billion, compared with $2.8‐billion they would have received under Adm plan; HR passage of bill seen likely by end of Apr; concept of revenue sharing revd; changes plan has gone through revd; recent changes include: providing money to every local govt unit, no matter how small so long as unit is formed for general govt purposes; putting no restrictions on funds given to states and shortening list of authorized purposes for local govt expenditures; barring money for programs that discriminate on basis of race, color, natl orgin or sex; provision that no Cong action on appropriations will be required this yr or in subsequent 5 yrs program will be in effect; table comparing funds each state and local govts within state would receive under HR proposal and under Adm proposal

Buffalo, NY, Educ Bd, 4‐3, refuses to submit plan for achieving racial balance in city's 98 pss, defying order by NYS Educ Comr Nyquist to submit plan to create racial balance in every school; bd also adopts resolution opposing any form of forced busing; Nyquist makes no comment on action but he is empowered by NYS Educ Law to remove any local school bd for dereliction of duty and to withhold state funds from local dists; recent rept by Fleischmann Comm on racial balance in state schools finds 51 of Buffalo's schools deviated by 31% or more from reflecting city's racial composition; only racial balance busing now being carried out in city schools is voluntary plan which transports 3,700 black children from city to schools in suburbs which have available space; majority of speakers at bd meeting criticize Nyquist and praise Nixon's antibusing statement; some speakers say Nixon should have called for Const amendment against forced busing; only 3 of more than 20 speakers supported busing and were shouted down; Nyquist has noted that he issued order for Buffalo because of legal action suit filed by private citizen; illus of bd hearing

Lindsay scores Temporary NYS Comm to Investigate Govt Operations of NYC Govt Jurisdiction and Structure Task Force decentralization plan as 'amateurish,' news conf, City Hall; describes task force chmn Costikyan as 'Tammany politician'; sees need for both strong Mayor and govt decentralization giving power and responsibility to local communities; criticizes task force for not conferring with city officials; task force vice chmn Lehman holds task force consulted with Deputy Mayor Hamilton, Environmental Protection Admr Kretchmer, Neighborhood Govt Office Dir Feldstein, Human Rights Comm Chmn Norton, Labor Relations Dir Haber and other city officials