AREA ASSISTANCE ACT OF 1956

THURSDAY, APRIL 12, 1956

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY, NEW HOUSE OFFICE BUILDING, Washington, D. C. The committee met at 10 a. m., Hon. Brent Spence (chairman) presiding.

Present: Chairman Spence, and Messrs. Brown, Patman, Multer, Barrett, O'Hara, Fountain, Mrs. Griffiths, Messrs. Vanik, Holland, Wolcott, Talle, McDonough, Betts, Mumma, and Bolton.

The CHAIRMAN. The committee will be in order.

We are met this morning to hear testimony on H. R. 8555, a bill to assist areas to develop and maintain stable and diversified economies by a program of financial and technical assistance and otherwise and for other purposes.

(The bill is as follows:)

[H. R. 8555, 84th Cong., 2d sess.]

A BILL To assist areas to develop and maintain stable and diversified economies by a program of financial and technical assistance and otherwise and for other purposes Be it enacted by the Senate and House of Representatives of the United States of American in Congress assembled, That this Act may be cited as the “Area Assistance Act of 1956."

DECLARATION OF PURPOSE

SEC. 2. The Congress declares that, notwithstanding the prosperity enjoyed by the Nation as a whole, some of our communities are suffering substantial and persistent unemployment; that such unemployment causes hardship to many individuals and their families and detracts from the national welfare by wasting vital human resources; that to overcome this problem the Federal Government, in cooperation with the States, should help areas of substantial and persistent unemployment to take effective steps in planning and financing their economic development; that Federal assistance should enable communities to achieve lasting improvement and enhance the domestic prosperity by the establishment of stable and diversified local economies; and that new employment opportunities should be created rather than merely transferred from one community to another.

AUTHORITY OF SECRETARY OF COMMERCE

SEC. 101. (a) To assist areas in the United States designated by the Secretary of Labor as areas of substantial and persistent unemployment, the Secretary of Commerce, hereinafter referred to as the Secretary, is authorized

(1) to make grants for technical assistance for such areas; and

(2) to provide financial assistance by loans, participation in loans, or guarantee of loans.

(b) The Secretary is also authorized

(1) to assist rural areas and rural communities in the United States in their efforts to develop manufacturing, processing, and service activities to supplement agricultural activities;

(2) to provide technical assistance and field consultation to areas in the United States in establishment of new industries based on local resources, in expansion of existing industries, and in economic diversification; and (3) to coordinate the functions of the Secretary authorized by this Act with other Federal programs affecting local economic conditions.

(c) As used in this Act, the term "United States" includes the several States, the Territories of Alaska and Hawaii, and the District of Columbia.

AUTHORITY OF SECRETARY OF LABOR

SEC. 102. (a) The Secretary of Labor shall from time to time, upon request of the appropriate State government, certify to the Secretary the existence of an area of substantial and persistent unemployment whenever he finds

(1) in the case of a major labor market area or other labor market area for which appropriate historical labor force data are available as determined by the Secretary of Labor, that the unemployment rate in such area (A) is currently 8 per centum or more, adjusted seasonally, and (B) has been at least 8 per centum for the major portion of each of the preceding two years; or

(2) in the case of other labor market areas for which appropriate historical labor force data have not been compiled, that the unemployment rate and duration, based on a survey of available labor force data, generally equals or exceeds the rate and duration specified in section 102 (a) (1). (b) The Secretary of Labor may undertake studies, or provide assistance to others in their studies, of the size, characteristics, skills, adaptability, and related aspects of the labor force of an area certified under section 102 (a).

(c) When skills of the labor force in an area certified under subsection (a) are not suited to remployment of workers in such area, the Secretary of Labor may provide advice and technical assistance in developing and carrying out a program to increase employability of such labor force. Whenever the Secretary of Labor finds a need for vocational education services in such area, he shall so advise the Secretary of Health, Education, and Welfare, through the Commissioner of Education, may provide assistance, including financial assistance when necessary or appropriate, to the State vocational education agency in the provision of such services in the area.

AUTHORITY OF HOUSING AND HOME FINANCE ADMINISTRATOR

SEC. 103. Title I of the Housing Act of 1949, as amended, is amended by adding the following new heading and section at the end of title I:

66 AREAS OF SUBSTANTIAL AND PERSISTENT UNEMPLOYMENT

"SEC. 111. (a) When the Secretary of Commerce certifies to the Administrator (1) that any county, city, or other municipality (referred to as 'municipality' in this section) is situated in an area designated by the Secretary of Labor pursuant to the Area Assistance Act of 1956 as an area of substantial and persistent unemployment, and (2) that there is a reasonable probability that with assistance provided under the Area Assistance Act of 1956 and other undertakings the area will be able to achieve lasting improvement in its economic development, the Administrator is autherized to extend financial assistance to a local public agency in any such municipality under this title and the provisions of this section.

"(b) The Administrator may provide such financial assistance under this section without regard to the requirements or limitations of section 110 (c) of this title that the project area be clearly predominantly residential in character or that it be redeveloped for predominantly residential uses.

"(c) Financial assistance under this section may be provided for any project involving a project area including primarily industrial or commercial structures suitable for rehabilitation under the urban renewal plan for the area.

"(d) Notwithstanding any other provisions of this title, a contract for financial assistance under this section may include provisions permitting the disposition of any land in the project area designated under the urban renewal plan for industrial or commercial uses to any public agency or nonprofit corporation for subsequent disposition as promptly as practicable by such public agency or corporation for the redevelopment of the land in accordance with the urban renewal plan: Provided, That any disposition of such land under this section

shall be made at not less than its fair value for uses in accordance with the urban renewal plan: And provided further, That the purchasers from or lessees of such public agency or corporation and their assignees, shall be required to assume the obligations imposed in conformity with the requirements of section 105 (b) hereof.

"(e) Following the execution of any contract for financial assistance under this section with respect to any project, the Administrator may exercise the authority vested under this section for the completion of such project notwithstanding any determination made after the execution of such contract that the area in which the project is located may no longer be an area of substantial and persistent unemployment."

SEC. 104. The first sentence of section 202 (c) of title II of the Housing Amendments of 1955 is amended to read as follows:

"(c) In the processing of applications for financial assistance under this section the Administrator shall give priority first to applications of counties, cities, and other municipalities and political subdivisions for financing needed public facilities in areas determined to be areas of substantial and persistent unemployment under the Area Assistance Act of 1956: Provided, That the Secretary of Commerce certifies there is reasonable probability that with assistance made available under the Area Assistance Act of 1956 and other undertakings such areas will be able to achieve lasting improvement in their economic development; and second to applications of smaller municipalities for assistance in the construction of basic public works (including works for the storage, treatment, purification, or distribution of water, sewage, sewage treatment, and sewer facilities; and gas distribution systems) for which there is an urgent and vital public need."

SEC. 105. The second sentence of section 701 of the Housing Act of 1954 is amended to read as follows:

"The Administrator is further authorized to make planning grants for similar planning work, (a) in metropolitan and regional areas to official State, metropolitan, or regional planning agencies empowered under State or local laws to perform such planning, and (b) to counties, cities, and other municipalities, having a population of twenty-five thousand or more according to the latest decennial census, situated in areas designated by the Secretary of Labor under the Area Assistance Act of 1956 as areas of substantial and persistent unemployment."

GRANTS FOR TECHNICAL ASSISTANCE

SEC. 106. In carrying out section 101 (a) (1), the Secretary is authorized to make grants for technical assistance including studies evaluating the needs of, and developing potentialities for, economic growth of areas designated under section 102 (a). These grants may be made without regard to section 3648 of the Revised Statutes, as amended (31 U. S. C. 529). Appropriations are hereby authorized for these grants in an amount not to exceed $1,500,000 annually.

LOANS, PARTICIPATIONS, AND GUARANTIES

SEC. 107. (a) In carrying out section 101 (a) (2) of this Act, the Secretary is authorized to purchase evidences of indebtedness and to make loans (including participations therein and guaranties thereof) to aid in financing any project for the purchase or development of land and facilities for industrial usage, for the construction of new factory buildings, for rehabilitation of abandoned or unoccupied factory buildings, or for the alteration, conversion or enlargement of any existing buildings for industrial use. Such financial assistance shall not be extended for working capital, for purchase of machinery or equipment, or to assist establishments relocating from one area to another when such assistance will result in substantial detriment to the area of original location by increasing unemployment.

(b) Financial assistance under this section shall be on such terms and conditions as the Secretary determines, subject, however, to the following restrictions and limitations:

(1) The total amount of loans, loan participations and loan guaranties (including purchased evidences of indebtedness) outstanding at any one time shall not exceed $50,000,000;

(2) Such assistance shall be extended only to persons, both private and public, approved by the State (or any agency or instrumentality thereof concerned with problems of economic development) in which the project to be financed shall be located;

(3) No such assistance shall be extended hereunder unless the financial assistance applied for is not otherwise available from private lenders or other Federal agencies on reasonable terms;

(4) No loan shall be made unless it is determined that a participation is not available, and no immediate participation shall be purchased unless it is determined that a loan on a guaranteed or deferred participation basis is not available;

(5) All evidences of indebtedness purchased and all loans shall provide, in the judgment of the Administrator, a reasonable assurance of repayment;

(6) No loan, including renewals or extensions thereof, may be made hereunder for a period exceeding twenty years and no evidences of indebtedness maturing more than twenty years from date of purchase may be purchased hereunder; Provided, That the foregoing restrictions on maturities shall not apply to securities or obligations received by the Secretary as a claimant in bankruptcy or equitable reorganization or as a creditor in other proceedings attendant upon insolvency of the obligor, or if extension or renewal for additional periods, not to exceed, however, a total of ten years, will aid in the orderly liquidation of such loan or of such evidence of indebtedness;

(7) Such assistance shall not exceed 25 per centum of the aggregate cost of acquiring or developing land and facilities, and of constructing, altering, converting, rehabilitating or enlarging the building or buildings of the particular project and shall, among others, be on the following conditions

(A) That other funds are available in an amount which, together with the assistance provided hereunder, shall be sufficient to pay such aggregate cost; and

(B) That not less than 15 per centum of such aggregate cost be supplied by the State or any agency, instrumentality, or political subdivision thereof or by a community or area organization as equity capital or as a loan repayable only after the financial assistance hereunder has been repaid in full according to the terms thereof and, if such loan is secured, its security shall be subordinate and inferior to the lien or liens securing the financial assistance hereunder; and

(8) No such assistance shall be extended unless there shall be submitted an overall program for the economic development of the area and a finding by the State, or any agency, instrumentality, or local political subdivision thereof, that the project for which financial assistance is sought is consistent with such program: Provided, That nothing in this Act shall authorize financial assistance for any project prohibited by laws of the State or local political subdivision in which the project would be located.

AREA ASSISTANCE FUND

SEC. 108. (a) There is hereby authorized to be established in the Treasury of the United States a revolving fund to be known as the Area Assistance Fund (hereinafter referred to as the "fund"), which shall be available to the Secretary for the payment of all obligations and expenses in connection with the functions authorized under section 101 (a) (2).

(b) When requested by the Secretary, advances shall be made to the fund from the appropriations made therefor. There is hereby authorized to be appropriated for the purpose of making advances to the fund, without fiscal year limitation, an amount not exceeding $50,000,000.

(c) Receipts arising from the program authorized by section 101 (a) (2) shall be credited to the fund.

(d) Any moneys in the fund determined by the Secretary to be in excess of current needs shall be credited to the appropriation from which advanced to be held for future advances to the fund.

(e) Unless the Congress shall otherwise direct, there shall be paid into miscellaneous receipts of the Treasury at the close of each fiscal year interest on advances to the fund at a rate determined by the Secretary of the Treasury, taking into consideration the current average rate on all outstanding marketable obligations of the United States.

(f) Contributions shall be made from the fund

(1) to the civil-service retirement and disability fund, on the basis of annual billings, as determined by the Civil Service Commission, for the Government's share of the cost of civil-service retirement systems applicable to officers and employees (and beneficiaries thereof) occupied on a fulltime basis on this program of financial assistance; and