that we be permitted to file a statement later, as a part of our testimony, for the record. Our comment on H. R. 9351 follows: In considering the question of providing financial and other assistance to business displaced by title I program, it should be pointed out that the urban renewal program is only one of several Federal programs providing assistance for public undertaking which involve the displacement of business. Under such circumstances, if the Congress were to single out one such program and provide assistance for relocation, considerable difficulty, inequities, and confusion would result in the communities. If assistance is to be given for relocation of displaced business, it would be more equitable to provide assistance for any business displaced by any public undertakings. For example, it is not uncommon for acquisition for federally aided urban highway system or title III programs to be carried out at the same time title I acquisition is underway. In such cases the disparity of treatment of onsite families becomes apparent and vexing to local officials. Families living in renewal projects can and are assisted to find decent, safe, and sanitary new quarters, families living across the street, in the highway right-of-way, or on a title III site, are entitled to no assistance whatsoever under the law. The same sort of inequitability would of course exist between programs if aid were extended only for onsite business displaced by urban renewal. In the last analysis there can be no question that hardships which develop in the course of title I acquisition are no different, or greater in degree, than are the hardships which result from other governmental programs involving the acquisition of private property, residential or business. The extension of such Federal aid, as contemplated by the O'Hara bill, will and should, of course, set a precedent for other governmental acquisition programs. If Congress determines that aids are, indeed, necessary, the O'Hara bill seems to provide a reasonable method for making them available. It could easily be amended to include other Federal programs involving land acquisition. Also, it puts the administration of the program into the hands of an agency ostensibly familiar with the problems of small business, and one which could presumably extend assistance, where hardship is demonstrated, on an equitable basis and in fair manner. We are happy to note that the O'Hara bill does not propose to make direct Federal payments for such intangible losses as goodwill. We do not seriously believe that a program involving direct Federal compensation for such intangible losses as goodwill could be effectively or equitably administered by any governmental agency, local or Federal. Even with the maximum dollar amount that could be paid being established in the law the effect, we fear, would be to subject local and Federal agencies to continuous harrassment on the part of onsite business, possibly to a point where litigation might be endless and the progress of the renewal program seriously jeopardized. We feel that the O'Hara bill provides a sound basis for the ultimate solution of this difficult problem. Sincerely yours, ROBERT D. SIPPRELL, President, National Association of Housing and Redevelopment Officials. Mr. BROWN. Gentlemen, we are very glad to have your testimony. You may be excused. The committee will adjourn until 10 o'clock tomorrow morning. (Whereupon, at 12: 22 p. m., the committee adjourned, to reconvene at 10 a. m., Tuesday, May 15, 1956.) HOUSING ACT OF 1956 WEDNESDAY, MAY 16, 1956 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, The committee met at 10 a. m., Hon. Brent Spence (chairman) presiding. Present: Messrs. Spence (presiding), Brown, Rains, O'Hara, Mrs. Sullivan, Mrs. Griffiths, Messrs, Vanik, Holland, Talle, Kilburn, McDonough, Widnall, Betts, Mumma, Hiestand, Nicholson, and Bass. The CHAIRMAN. The committee will be in order. We will resume hearings on H. R. 10157. The clerk will call the first witness. The CLERK. Mr. Chairman, the first witnesses are Mr. John W. Bates, Jr., and Mr. Robert E. Scott, appearing for the National Association of Real Estate Boards. They are accompanied by Mr. John C. Williamson, counsel. The CHAIRMAN. Gentlemen, you may proceed. STATEMENTS OF JOHN W. BATES, JR., AND ROBERT E. SCOTT, APPEARING FOR THE NATIONAL ASSOCIATION OF REAL ESTATE BOARDS; ACCOMPANIED BY JOHN C. WILLIAMSON, COUNSEL Mr. BATES. Mr. Chairman, we have a prepared statement, and we prefer to read it, if we may, sir. The CHAIRMAN. Proceed. Mr. BATES. Mr. Chairman and members of the committee; I am John W. Bates, Jr., of Richmond, Va. I am engaged in the general real-estate business, and I am here in my capacity as chairman of the realtors' Washington committee of the National Association of Real Estate Boards. Our association is appreciative of this opportunity to express the views of our members on housing matters now before the committee. The National Association of Real Estate Boards consists of more than 57,000 realtors in over 1,200 local real-estate boards, representing ever State in the Union. Our association is the largest realestate organization in the United States. The first part of our statement relates to the problem of urban renewal and related matters. Following this portion of the statement, Mr. Robert E. Scott, of Elizabeth, N. J., vice chairman of the realtors' Washington committee, will discuss the subjects of mortgage insurance, the secondary market operations of the Federal National Mortgage Association, and military housing. URBAN RENEWAL Rehabilitation insurance (sec. 220) We feel that the urban renewal program as provided in the Housing Act of 1954 is soundly conceived and, with full application of its potential, offers the most direct and equitable large-scale method yet devised to combat slums and blight. This approach to the problem recognizes that firm enforcement of adequate municipal standards of health, safety, and sanitation for housing must be the beachhead of large-scale and truly significant local programs to eliminate unfit housing conditions and prevent their spread. It is true that this type of governmental antislum action, which requires property owners to meet local housing standards or demolish structures that cannot be made to meet such standards, is not one for Federal administration but must be carried out by local government. However, we believe that the Federal urban renewal program can offer greater incentive for this important local government action, and we believe the Federal Government must assume the responsibility for requiring such local action if the expenditure of untold billions of dollars in Federal grants for slum clearance and urban redevelopment is to continue and have any meaning or purpose. The initial step a city takes to qualify for Federal assistance is to formulate a "workable program for urban renewal." The purpose of this is to demonstrate the city's willingness and ability to use its local powers and resources to combat slums, blight, and unfit housing conditions. At the present time a city which submits a workable program for approval by the HHFA may simply indicate that at some time in the future it will undertake enforcement of local housing standards. If approval were based on actual performance in this work, rather than upon the promise of some future action, much greater incentive would be given to the cities to take the essential step that no other level of government can take. This kind of procedure could be assured, in our opinion, by an amendment which we are proposing to title I of the Housing Act of 1949, as amended. We believe this amendment would also cure an unfortunate dual standard of eligibility for Federal cooperation which appears to us to have crept into the procedure for processing workable program submissions. I will explain: When a city secures approval of its workable program, even if it contains only the commitment for future action in enforcement of health and safety standards for housing, the city is at once eligible for advances to launch programs of complete urban redevelopment. These programs contemplate the acquisition, at public expense, of entire areas for clearance and resale of the land for redevelopment, usually at considerably less than the acquisition cost. This is a process which has only a limited potential in dealing with our vast areas of urban deterioration and neglect, although we recognize it may be justified in extreme cases. On the other hand, approval of a workable program with only the promise of future action on housing code enforcement does not qualify the community for FHA section 220 rehabilitation mortgage insurance, yet rehabilitation under section 220 can probably cure a square mile of urban neglect and deterioration for every acre that can be dealt with by complete redevelopment. We believe a prime purpose of the urban renewal program is to provide a maximum incentive to cities for applying adequate housing standards. We, therefore, suggest that approval of the workable program be contingent upon the same requirements as to housing-code enforcement that are applied with respect to section 220 rehabilitation mortgage insurance. This is the intent of the amendment we offer for the committee's consideration. It would amend section 101 (c) of the 1949 act by making Federal financial assistance under title I contingent upon a "workable program," which program shall include but not be limited to minimum health, safety, and sanitary housing standards sufficient to meet the requirements of section 220 of the National Housing Act as determined by the Federal Housing Administration. Numerous cities have enacted adequate housing codes and have proceeded to enforce them without the inducement of Federal financial assistance under title I of the 1949 act. This is ample evidence that the amendment we propose is a reasonable one. Lest there be any misunderstanding, our amendment does not contemplate the wholesale and immediate eviction of thousands of families from homes not meeting code requirements. It does contemplate reasonable steps toward enforcement of an actual code in being, and an appreciable start could be made without serious dislocation of low-income families. Title I (home improvement and repair) The bill H. R. 10157 would extend this important title I program for 2 additional years, increase the maximum loan amount from $2,500 to $3,500, and with respect to multifamily structures increase the maximum loan amount from $10,000 to $15,000. The bill would also increase the term of the loan from 3 to 5 years. We recommend that the program be made permanent. Annual or biannual speculation as to whether the program is to be extended is not conducive to the establishment of effective lending procedures by participating institutions. Surely the record of this vital program over the past 20 years has earned for it a permanent role in the Government's overall housing program. We also urge retention of the present 5-percent discount rate on loans which are not in excess of $2,500. Beyond this limit we recognize some justification for a 4-percent rate. However, we are fearful that the provisions in H. R. 10157, which would reduce the rate to 4 percent for loans in excess of $1,000, will impede the flow of money into this important program. Section 221 (relocation housing) We also recommend to the committee's favorable consideration the provisions of H. R. 10157 that would liberalize the terms of FHA section 221 mortgage insurance for families required to relocate as a result of urban renewal programs and other governmental action. These changes would increase the maximum insurable mortgage from $7,600 to $8,600 (or to $9,600 in high-cost areas), increase mortgage insurance from 95 to 100 percent of value, with a minimum cash outlay of $150 for settlement, and increase the amortization term from 30 to 35 years, or to 40 years where necessary to accommodate lowincome families. This is proposed, of course, only for those families required to relocate, and only in communities which have secured approval of workable programs for urban renewal. We believe these changes will increase the extent to which homeownership may be employed to meet relocation needs. PUBLIC HOUSING The fact that once again a request for additional public housing appears in a bill (H. R. 10157) containing much that we endorse does not alter our fundamental disagreement with the philosophy of Government owned and operated family shelter. We believe that the constant shift in objectives of public housing during the past 17 years is in itself an admission that the public housing approach does not provide the proper remedy to any housing program. In 1955, for the fourth consecutive year, the House of Representatives rejected the entire public housing program. It must be evident by now to the Congress, as well as to the American people, that any legislative proposal for the extension or expansion of public housing, were it to stand alone, would not be approved by the Congress regardless of the politiacl party in control. Public housing has been continued by the Congress only because its defeat would carry into oblivion with it the eFderal Housing Administration, whose programs have earned the applause of the American people in all walks of life for more than 20 years. This is the most compelling evidence that the public housing program is a discredited one and should not be extended beyond its present termination date of July 31, 1956. The evils inherent in the program threaten to pauperize the thrifty by forcing them to assume the burden of paying direct subsidies for families who for the most part are not those in the greatest need of some kind of assistance. In addition, thrifty citizens must shoulder a disproportionate share of the cost of schools and other community services, as a result of the tax-exempt status of the projects. There are now about 900 local public housing authorities that will be subsidized by the Federal taxpayers to the extent of $90 million in the next fiscal year, in addition to the contributions of local taxpayers. Our association last year asked for a congressional investigation of these housing authorities and an accounting of their stewardship of the millions in Federal funds for the payment of which the United States is obligated each year for the next 40 years. As the committee knows, the aggregate contracted liability for the existing projects--a liability, by the way, which is nowhere reflected in the public debt-is approximately $5 billion. This method of financing which circumvents the control of the Appropriations Committee of the Congress, as well as distorting the estimate of the public debt, was attacked and repudiated by both the House and Senate when it was sought to extend this principle of financing to highways. We reiterate our stand that public housing is inherently dangerous to our free society and that as a welfare program has debased the very meaning of the word. |