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local problems of the FHA; has a bearing on the selection of sites and the timing of new public housing; forms one of the problems in planning an urban transportation system; and, under the new law, involves a special new loan program to be administered by the Small Business Administration.

In addition to these and related problems involved in the new housing legislation, the Area Redevelopment Act creates other needs for overall coordination and policy direction. The Agency has a number of programs which include special conditions of eligibility and special benefits to redevelopment areas not available in other areas. These must be closely coordinated, since they often will be taking place simultaneously in the same areas. Moreover, close liaison and effective working relationships must be worked out with headuarters and field offices of other agencies active in the area redevelopment program-espe cially the Area Redevelopment Administration of the Department of Commerce, which has overall responsibility for the program, the Departments of Labor and HEW, and the Small Business Administration.

The supplemental amount requested will permit an increase of 25 in employment for the general supervisory functions. Most of these new positions will be added in the regional offices, to strengthen the top staff of the seven regional administrators. This assistance will permit them to work more closely with the field directors of all constituents of the Agency, as well as with local officials and field offices of other Federal departments and agencies.

Consolidated compliance activities

The Office of the Administrator provides a considated compliance and investigative service for the entire Housing and Home Finance Agency. The 1962 budget proposed to maintain the present staff now handling the substantial investigative caseload that comes before the Compliance Division.

The supplemental estimate represents the need for additional professional investigators (and supporting clerical assistance) to enable the Compliance Division to meet the additional demands of the new and enlarged programs and activities contained in the Housing Act of 1961. It can be assumed that in these as in other programs attempts to exploit or defraud the public and the Government through violations of criminal and civil statutes and established regulations.

For example, the existing FHA home loan improvement program has been the greatest source of complaints from the public involving reports of sharp prac tices and fraud. While the new rehabilitation programs under sections 203(k) and 220(h) are somewhat different from the title I program, they are, nevertheless, open to similar abuses.

Under several new and expanded programs, special benefits are made available to nonprofit or limited dividend corporations. It is necessary and desirable before extending these benefits that the Agency determine that no conflicts of interest are involved on the part of the sponsoring corporations, or their officers and directors.

The supplemental estimate of $30,000 will provide for an additional 10 persons during the year-9 (6 professional investigators and 3 clerical employees) in the field offices of the Compliance Division and 1 addition to the headquarters staff.

Low-rent housing demonstration program

Section 207 of the Housing Act of 1961 authorizes the Administrator to carry out a $5 million program of demonstration grants to public or private agencies for the purpose of developing and demonstrating new or improved means of providing housing for low-income persons and families. The supplemental estimate includes $20,000 to establish a small unit in the Office of the Administrator to plan and carry out these projects and supervise the use made of the grants.

It is obvious that the limited amount authorized for this program-$5 million in total-would not permit any considerable number of demonstrations involving financing of the capital cost of constructing multifamily rental housing projects for low-income occupancy. Emphasis will, therefore, have to be placed on finding projects which may permit provision of housing for low-income persons and families in relatively small numbers of units, and with a modest capital investment or subsidy per unit. For example, this staff will explore the possibility of using the demonstration grant authority in conjunction with the new programs of FHA and URA for rehabilitation of existing properties, to determine whether, with the use of a limited subsidy, housing for low-income persons and families can be provided through the use of older structures by putting them in livable, though not luxury, condition.

Regardless of the approach taken, it is clear that $5 million will permit only a limited number of experimental projects. Accordingly, staff effort initially will be directed to a careful screening of the available possibilities, in order to select those which will yield the most useful experience.

Urban renewal programs

The supplemental estimate includes an increase of $75,000 in administrative expense funds for the urban renewal programs.

The amended budget which was considered in connection with the independent offices appropriation bill for 1962 provided for urban renewal programs of approximately the size which, it now appears, will actually be carried out under the new legislation since enacted. However, the Housing Act of 1961 and the Area Redevelopment Act contain several features not anticipated in the amended budget which will have substantial effects on administrative workload. The principal items involved are the following:

1. The 1961 act provides for 75-percent grants-instead of two-thirds-to urban renewal projects in cities and towns of less than 50,000 population. The regional offices report that this provision is attracting great interest in small cities previously inactive in urban renewal, and will undoubtedly lead to many more inquiries and applications from smaller towns and cities than have been experienced up to now.

2. The increase in urban planning assistance grants from a 50-50 basis to a two-thirds Federal share was anticipated in the amended budget. However, the Area Redevelopment Act increases the Federal share to 75 percent in designated redevelopment areas. It is expected that this change will lead to greater activity in these areas than was earlier expected.

3. The Area Redevelopment Act waives the nonresidential limitation in title I for projects in these areas. This provision is expected to stimulate increased activity. In addition, these projects in many cases will have to be worked out in conjunction with other Federal aids, such as industrial or commercial loans or public facility loans and grants. Thus they will involve special complication in terms of planning and processing.

4. The 1961 act.extends the special benefits available under section 112 of title I-previously applicable only to colleges and universities-to hospitals as well. This provision is expected to lead not only to a substantial number of new applications under section 112 but also to a considerable workload in recasting existing projects to bring them into conformance with the revised provisions of the statute.

The estimate will permit the addition of 25 people by the end of the budget year-2 in each urban renewal branch in the field offices, 5 in URAWashington, 1 in the Office of Mass Transportation for Technical Assistance in the mass transportation aspects of the urban planning assistance program, and 5 in other supporting services.

Per diem rate for consultants

The appropriation language recommended would make administrative expense funds of the Office of the Administrator available for the procurement of the services of experts and consultants at rates not to exceed $100 per diem for individuals. Specific authority in the appropriation language is required to permit going above the per diem equivalent of Classification Act rates.

In recent years Congress has authorized the $100 per diem rate for a number of agencies whose functions require the frequent use of experts and consultants on short-term assignments or in connection with special problems. This has become an urgent matter for the Agency with the enactment of the new programs in the Housing Act of 1961. In connection with the programs of demonstration grants and loans for mass transportation and of grants to assist in acquisition of open space land, it is especially important that the Administrator have available the technical skill and background of specialists in these fields. Most of these specialists have no interest in full-time Government employment, and few of them would be willing to accept assignments at Classification Act rates. Accordingly, it is believed that the authority requested to pay up to $100 per diem will be of great assistance in getting these new programs launched on a sound basis. Ability to utility experts and consultants will be of special importance during the early organizational phase of these new activities because of the time that necessarily will be required to recruit qualified people, establish new operating units, and gain experience.

Increase in travel limitation

The appropriation language submitted provides for an increase of $65,000 in the amount made available for expenses of travel in the independent offices appropriation bill for 1962. No increase in funds is requested. The additional travel funds, if the increased limitation is approved, will have to be derived by shifting funds from other controllable expenses, such as personnel compensation, overtime, communications, and supplies and equipment.

A review of current and prospective regional workload indicates that the estimates for travel submitted in the amended budget-which are the basis of the limitation which will become effective when the independent offices appropriation bill becomes law-were low. Several provisions of the Housing Act of 1961 and the Area Redevelopment Act will produce greater travel requirements than were anticipated.

There are several kinds of specialized staffs which can be utilized efficiently only if adequate travel funds are available. Examples of such staff are the auditors, compliance investigators, urban renewal field representatives, and the field engineers. Since many problems can be dealt with more efficiently and expeditiously at the local level than by correspondence or paper processing in the regional office, it is recommended that the $65,000 increase proposed for this limitation be approved.

STAFF INCREASES

Mr. THOMAS. You have two items which attract our attention besides the 25 new jobs. The Office of the Administrator in 1959 had 120 jobs. For 1960 we increased it by 3 to 123. In 1961 we increased it by 6, a total of 129. For the fiscal year 1962 we increased it up to 154. That makes a total increase of 25. Now we have a supplement here for 25 more.

I am assuming that these 25 more, at a cost of $215,000, are for the Administrator's Office solely. They are broken down into Agency supervision, $90,000; consolidated compliance, the eyes and ears of the Administrator, $30,000; low rent demonstration programs $20,000; the urban renewal program, $75,000.

Are these scattered throughout the Agency or are they all for the Office of the Administrator?

Before you answer that question, all these agencies are under the direct supervision of the Office of the Administrator, where there are many programs-urban transportation, open space land program, public facilities loans, housing for the elderly, urban transportation, public facilities loan. Those programs are under the direct supervision of the Administrator and they call for an increase in these five or six programs of 272 jobs. Is that correct, Mr. Budget Officer? Mr. FRANTZ. That is just about right; yes, sir. Mr. THOMAS. Let us look at the language.

EMPLOYMENT OF CONSULTANTS

For the Office of the Administrator you request $215,000. You want some experts for $100 a day. Why can't you get by with sixtysix and two-thirds dollars a day, which is what you are paying now! Is not the request for $100 out of line and won't we get in trouble with that figure?

Mr. WEAVER. I think the reason we have done this is because we are going into these two new areas, mass transportation and open space.

Let me just take mass transportation first, because this is the more difficult one. This is an area in which the number of people who are qualified and knowledgable is extremely small.

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Mr. THOMAS. Off the the record.

(Discussion held off the record.)

Mr. FRANTZ. $100 a day has been authorized on several occasions. Mr. THOMAS. Particularly where scientific and engineering backgrounds are required.

Mr. FRANTZ. We can give you a list, sir.

TRAVEL LIMITATION

Mr. THOMAS. Let us look at the other $65,000.

Provided, further, That in addition to amounts otherwise available for expenses of travel, not to exceed $65,000 shall be available for such expenses. Mr. FRANTZ. It is not $65,000 of the additional $215,000. It increases the limitation resulting from the regular bill.

Mr. THOMAS. Does the $65,000 come out of the $215,000 requested here?

Mr. FRANTZ. No, sir. Out of the total budget.
Mr. THOMAS. I am reading your language.

In addition to the amounts otherwise available for expenses of travel, not to exceed $65,000 shall be available for such expenses.

You left out the word "all." Should it say, all such expenses"? Is the total limitation under this supplemental and your regular bill $65,000?

Mr. FRANTZ. No, sir.

Mr. THOMAS. Explain it, then.

Mr. FRANTZ. Under the regular bill, the travel limitation is $535,000. This would increase that amount by $65,000.

Mr. THOMAS. Where is the $65,000 coming from?

Mr. FRANTZ. Out of the total available from the regular bill and in the supplemental.

Mr. THOMAS. So it increases the regular travel expense by $65,000. Mr. FRANTZ. That is correct; yes, sir. It authorizes additional use of funds for travel.

Mr. THOMAS. Can you specify how much of the $65,000 will come out of the $215,000?

Mr. FRANTZ. None of this would come out of the $215,000 because the $215,000 contains, as you will see on page 7, $9,100 for travel. The limitation on travel

Mr. THOMAS. Page 7 does what, Mr. Frantz?

Mr. FRANTZ. I am referring to page B-7.

Mr. THOMAS. It might help if I had page B-7. I was looking for this breakdown.

Mr. WEAVER. B-6, which you also do not have, is an explanation of these travel funds. Here is a copy of that page, Mr. Chairman. Mr. THOMAS. Travel and transportation of persons is $9,100 of the $215,000.

Transportation of things, rent, and utilities, $8,500. Printing and reproduction is $1,000. You show $43,000 for the other objects, which is 20 percent of your salaries. Is that correct?

Mr. FRANTZ. Yes, sir.

COMPARISON OF ADMINISTRATIVE EXPENSES, 1962

Mr. THOMAS. We shall insert B-7 in the record. (Page B-7 referred to follows:)

Comparison of administrative expenses, 1962

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Mr. THOMAS. As I stated a while ago, the Office of the Administrator was increased by 25 jobs in the regular bill. Now we have 25 more. That is a 332-percent increase in 1 year. Can you not get along and try to carry out your program with the funds in the regular bill, overlook your request altogether, and see how you can do? Certainly you have not had an opportunity to put your new program into effect. Have you been able to recruit the 25 men we gave you in the regular bill?

Mr. FRANTZ. No, sir.

Mr. THOMAS. Then you want to add 25 more without being able to recruit the first 25.

Questions on this, gentlemen?

Mr. KIRWAN. I have no questions.
Mr. ROONEY. I have no questions.

LOW-RENT HOUSING DEMONSTRATION PROGRAM

Mr. JONAS. I have one question.

With respect to your demonstration program for low-rent housing, is there anything about low-rent housing that anybody can discover that the Public Housing people have not heretofore found out?

Mr. WEAVER. We think so, and I think Congress felt we might try some new approaches.

We now have, for example, some 10 proposals which are somewhat unique. One of them, for example, involves an approach which would not involve a local housing authority at all. Private funds would be used. There are other approaches which have been suggested by the private sector.

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