Answer. High cost of land and slum clearance makes project uninviting to private enterprise since operation cannot be conducted at a profit.

(c) To what extent is your city in a position to finance these costs?

Answer. City could borrow for this purpose.

(d) To what extent are State funds available for this purpose? Answer. None.

(e) S. 866, now pending in Congress, proposes that two-thirds of the net cost of local urban redevelopment programs be carried by the Federal Government and one-third by the locality. In your opinion, is this an equitable and adequate proposal?

Answer. Yes.

(f) Please outline briefly, and describe briefly the practical effect of any alternative proposals which you desire to recommend as a feasible means of meeting this problem.

Answer. None.

8. In carrying out a program for the redevelopment of slums and blighted areas in your city under such a program, what means do you recommend to assure that low-income families now living in such areas will be provided with decent housing?

Answer. Haven't completed our study of the problem in the Madison area and our outline of a program to meet this problem.

9. (a) If your State now has urban redevelopment legislation, please indicate the results achieved under it or now in prospect in your city.

Answer. None now in prospect here.

(b) In your opinion, under this legislation alone will your city be able effectively to carry out its program for the clearance and redevelopment of its slums and blighted areas?

Answer. No.

(c) Please indicate, briefly, the basis for your opinion.

Answer. State legislation merely enabling; provides no State aid.

10. Are there any other matters in connection with low-rent housing for lowincome families, or in connection with the clearance and redevelopment of slums and blighted areas, as to which you desire to comment or make recommendations? Answer. No.

Mr. BOGGS. Now, Congressman Gamble talked about these slum areas. Is it not a fact that by clearing these areas, from the municipal point of view, municipalities will increase their tax yields and probably decrease their expenditures. Tax yields would be increased by putting revenue-producing properties on the cleared land and expenditures would be decreased because of the lessened police problem and lessened social problem existing in those areas, would they not? Do you think that is a fair statement?

Mr. FOLEY. I think that generally is true, although one would have to consider many factors as to whether the increase or decrease was a total net. But, generally speaking, yes.

Mr. BOGGS. Did you have occasion to follow the debate in the Senate when the bill was up for consideration there?

Mr. FOLEY. I did have occasion, Congressman.

Mr. BOGGS. Do you recall whether or not there was any substantial fight made on this slum clearance provision of the bill?

Mr. FOLEY. My recollection is that there was apparently little controversy over it.

Mr. BOGGS. That is all.

Mr. BROWN. Mr. Chairman.
The CHAIRMAN. Mr. Brown.

Mr. BROWN. Mr. Foley, I notice in title VII, under farm housing, you have two types of assistance. One is a direct loan by the Secretary of Agriculture, and the other is an annual contribution. Will the Government make the entire contribution, or will the county government have to contribute also?

Mr. FOLEY. Was your question, Congressman, whether, under this bill, the contribution contemplated would all be made by the Federal Government?

Mr. BROWN. Yes, sir.

Mr. FOLEY. My recollection is that they would. It does not call for a sharing of contributions.

Mr. BROWN. Thank you, sir.
Mr. FLETCHER. Mr. Čhairman.
The CHAIRMAN. Mr. Fletcher.

Mr. FLETCHER. Mr. Foley, you know we passed out a bill for a 1-year extension of title VI. Would you care to give your opinion as to whether that, as an emergency-housing matter, could be handled separately from this bill? It is now before the Senate, you understand. Need we tie it in to this long-range-housing plan? Why can they not act on it separately on the Senate side? Or do you care to comment on that?

Mr. FOLEY. That, Congressman, is purely a matter for determination by the Congress rather than by me. I testified before this committee on a separate bill, you will recall, in favor of the amendments which were proposed. But as to whether the Senate could or would act on it separately, I think, could only be decided by the Senate. Mr. FLETCHER. Your testimony here still stands-that there is no reason why it could not be acted upon separately?

Mr. FOLEY. This committee of the House asked me to testify on a title VI bill separately set up and we testified in support of the bill, as you will recall.

Mr. FLETCHER. I notice on page 2 of your statement (transcript p. 12) you say:

We have many families who must live in slums and other inadequate housing because their incomes are not sufficient to permit them to pay an economic rent for decent shelter, new or old.

The question always arises as to what is the range, because of their incomes, as to what income level you are going to use.

The formula that is in this S. 866, is that the one you support? Mr. FOLEY. Yes, we are supporting that formula generally, and realizing also that no formula will fit every case or be perfect. We hope that in time. our experience will lead us to greater perfection. But what is provided in S. 866 is the preservation of a gap of at least 20 percent between the highest income families, which are housed in the proposed low-rent housing, and the lowest, for which there is locally being furnished an adequate supply of rental housing, those determinations to be made locally by the local authorities.

Mr. FLETCHER. Has this formula ever been tried anywhere? Is it working anywhere at the present time? It seems to me it would be very vague.

Mr. FOLEY. As a matter of fact, what is proposed in the bill would merely make a statutory provision of what is presently a policy being followed, and which has been followed for a considerable time, by the public-housing agency.

Mr. FLETCHER. Followed or not followed?

Mr. FOLEY. I was about to discuss the exceptions.

That has been the basis upon which initial admissions have been approved.

The situation which developed during the war, of course, was one which increased family incomes, and there is a further thing which complicates the public mind on the matter-the war housing-which is not in this class at all, and in which economic rents were charged. This has beclouded the issue and created a serious problem both for those who are seriously trying to find a solution to these matters and for those of us in Government who have the job of administering them.

As you know, many families who were eligible for admission to lowrent housing projects under that rule, and were so admitted originally, during the war, fortunately, had larger incomes, and still have them. Under the policy, or under the conditions which existed because of housing shortages during the war, it was impracticable-in fact, impossible to cause their eviction After the war, both the then Commissioner of the Federal Public Housing Authority, now the PHA, and myself, as the new Administrator, dealt with that problem and attempted to apply a policy leading to the gradual eviction of all overincome families.

Again, the very serious housing shortage which existed in most of the communities resulted in hardship-or at least claims of hardshipfrom such eviction notices, and Congress took action, as you will recall, which, in effect, restricted or limited or almost prohibited eviction in those cases.

This bill contains a provision which would remove that limitation upon us and allow the gradual eviction of overincome families to proceed.

Mr. FLETCHER. Why would it not be well to approach this from the point of view of giving housing to the most needy?

Mr. FOLEY. In essence, the bill does, Congressman, through certain stipulations in it, provide for low-income families most in need of housing. We have a great many statistics on the situation, which I unfortunately cannot carry in mind and I would probably misquote if I tried to remember them all. But the fact of the matter is that presently admissions, on the average, throughout the United States, as vacancies occur and new families are taken in, show an average family income of approximately $1,380. That is only slightly above what was the average annual income on admissions in 1946 and prior years.

The bill before you makes provision for preference being given to those in greatest need, on admissions.

Mr. FLETCHER. During the debate in the Senate there has been this term used: "Welfare housing."

Mr. FOLEY. As to whether the use of this housing should be limited to those receiving welfare aid in a community? Is that your question? Mr. FLETCHER. I was thinking more in terms of those who would receive public housing because of the fact that they were financially unable to provide the income with which to get housing through physical disabilities, mental disabilities, or just inability to earn. In a sense, it is really welfare, is it not? I mean you are aiding people who cannot afford it.

Mr. FOLEY. That is true, Congressman, and in general, of course what I just said in response to your previous question covers a broad field of whether we are aiding people who cannot afford to pay economic rent for housing, because that income level that I gave you is

the average, and is well below the medium income of the lower third of our population.

But on the question of whether or not certain persons are thought of as welfare cases, or receiving relief aid in their communities, that has been a subject of keen interest in these discussions for years, and it was in the debate in the Senate.

There is some misunderstading of the situation. There is no bar or discrimination set up by the Federal agency with respect to the admission of families, otherwise eligible and able to pay the rent required in the project, who are receiving welfare aid, and, as a matter of fact, there is a rather surprisingly large percentage of welfare cases presently living in low-rent housing, ranging from a low of 6 to 39 percent.

Mr.FLETCHER. They would receive priority under this plan?

Mr. FOLEY. Under this plan they would not be discriminated against, and priority would be given to the families with the greatest need, under the definition of the bill. Priority would also be given to veterans who otherwise qualify.

Mr. FLETCHER. I want to commend you, Mr. Foley, for your very fine statement. It is a very fine statement.

Mr. FOLEY. Thank you very much, Congressman. It is a very complex subject.

Mr. BUCHANAN. One further question, Mr. Chairman.

The CHAIRMAN. Mr. Buchanan.

Mr. BUCHANAN. On page 43 of the act, Mr. Foley, lines 16 to 22., would not the provisions of lines 21 and 22 make the maximum rent return the minimum, as provided in lines 19 and 20? Is this not the reason that the insurance companies would not be interested?

Mr. FOLEY. Are we on the yield insurance now, Congressman? Mr. BUCHANAN. Yes.

Mr. FOLEY. May I take a moment to look at it?

Mr. BUCHANAN. Surely.

Mr. FOLEY. The language in lines 21 and 22 sets a maximum.
Mr. FLETCHER. What page is that?

Mr. BUCHANAN. 43.

Mr. FOLEY. The original language was line 16.

Mr. BUCHANAN. Lines 21 and 22 set a maximum return, the same as the minimum in lines 19 and 20?

Mr. FOLEY. I am not at all sure that I understand your point. I will ask you this

Mr. BUCHANAN. Would not the provisions of lines 21 and 22Mr. FOLEY. "Not higher than necessary to meet the needs for dwellings for families of of moderate income.

Mr. BUCHANAN. Yes. Would that not make the maximum rent return the minimum as provided in lines 19 and 20?

Mr. FOLEY. Lines 19 and 20 provide the payment of operating expenses, minimum annual amortization and minimum return. I had not thought of it that way before, Congressman. Possibly it might, although the purpose, I feel sure, of lines 21 and 22 is to keep from having what we might call luxury apartments built under this provision. The idea being, again, as in almost everything else in the private aids of this bill, to focus attention on the moderate and lower income groups. So that the provision there, it seems to me, is in

contemplation of that danger, and to head it off. Whether it would have the effect, as you, if I understand you correctly, seem to feel, of making both figures the same

Mr. BUCHANAN. That is right.

Mr. FOLEY. I might ask Mr. Powell if he thinks it would do that. Mr. Clyde Powell, Assistant Commissioner of the Federal Housing Administration in charge of rental housing.

Mr. POWELL. The provisions of the yield insurance plan proposes to limit the type of construction under that act to housing for people of moderate income, and also restricts the yield that they may receive on their investment.

Mr. BUCHANAN. Is not the maximum yield the same as the minimum, though, according to this language on p. 43?

Mr. POWELL. The maximum yield may not exceed over-all a 5-percent return. In the event it does exceed that, the excess income above a return of 5 percent would, for the purposes of the insurance contract, be applied to accelerate the amortization. For the purposes of the insurance contract, the maximum yield or return would be 5 percent as compared to the minimum yield of 32 percent. The difference between the maximum and the minimum would therefore be 112 percent.

Mr. FOLEY. Conceivably, Congressman, even though a rent could be figured out to meet the provisions in No. 1. No. 2 might render it an ineligible project, because it would not meet the market test of the community.

Mr. BUCHANAN. Thank you.

Mr. FLETCHER. May I ask another question?

Mr. RILEY. Mr. Chairman.

The CHAIRMAN. Mr. Riley.

Mr. RILEY. Mr. Foley, coming back to title V, slum clearance and the determination of the area to be cleared, as I understand it, and the proposed new use of the property would be left to the local authority; is that correct?

Mr. FOLEY. That is correct.

Mr. RILEY. And the method of acquiring the property would be left to them, whether it be negotiation, condemnation, or whatever procedure they might choose?

Mr. FOLEY. That again would be a matter of local determination. Although conceivably, Congressman, the Administrator might well want to examine that decision and determine whether the method proposed might not unnecessarily result in a higher cost than otherwise. Mr. RILEY. That was the question that arose in my mind. In some communities, the method used might result in an increase in the cost of the property.

Mr. FOLEY. The method of procedure would be a part of the original proposal as considered by the Administrator and we would have an opporunity to at least advise him on that subject.

Mr. MONRONEY. Along that line, if I may interrupt, is there any provisions there to take care of the perhaps 2,000 people who might be rendered homeless by this acquisition?

Mr. FOLEY. If I remember correctly, there is a provision that prior to the undertaking of it there must be a satisfactory arrangement, or it must be established that there is housing for them.