nificance but which does have tremendous employment and industrial and business significance, areas of obsolete factories and commercial structures, to provide for their removal or rehabilitation and making the areas available for new commercial and industrial uses. Under the present program, we are restricted to areas which are now predominantly residential in character or areas which will be redeveloped for predominantly residential uses, with the exception of an excep ion in the bill not to exceed 10 percent of our total program. Under this exception we may go into areas which are not predominantly residential now, or which would not be predominantly residential in the future. But under that 10 percent exception there still is a relationship to housing significance, because there must be, according to the act, at least a substantial amount of housing which administratively we have determined at 20 percent.

Mr. BROWN. Is Mr. Cole in favor of this amendment?

Mr. STEINER. Yes, sir.

Mr. BROWN. Are you sure of that?

Mr. STEINER. Yes, sir. It is my understanding, sir, that these amendments have been cleared with the Bureau of the Budget and are favored by the Bureau of the Budget and that this entire bill is an administration bill.

Mr. BROWN. Well, you answered my question. I asked you if Mr. Cole favored it.

Mr. STEINER. Yes, sir.

Mr. BROWN. Well, now, suppose you put up some kind of industry. What part do you pay for that? To what extent do you participate in that?

Mr. STEINER. We would not pay for the construction of any new buildings or for any work done on the buildings. We would, through our program, finance the acquisition and demolition of obsolete buildings and rearranging the street pattern and utilities in the area and making the land available for the construction of new factories. The actual construction of new factories would be financed through the aids available under this bill through the Department of Commerce. Mr. BROWN. Suppose this factory did well. Would they ever pay you back? Would they reimburse you?

Mr. STEINER. The factory as I understand it would pay back the Department of Commerce for the loan which it obtained from them, but not the funds which are expended to get rid of and eliminate the old obsolete conditions.

Mr. BROWN. What part of the country do you expect to give this aid to?

Mr. STEINER. I would say in any area where there is a surplus labor area, where there is persistent and substantial unemployment as defined in the act.

Mr. BROWN. Do you know the area now?

Mr. STEINER. A considerable list of cities was just read by the Under Secretary of Labor, and I presume that in some of those cities undoubtedly there would be situations of this sort.

Mr. BROWN. You haven't given any study along that line?

Mr. STEINER. We have not made a study as to which cities would come within the purview of this bill. We understand the Labor Department and the Commerce Department have made some studies

along that line. I think the Under Secretary of Labor just read us a considerable list of cities which would come possibly within the purview of this bill.

Mr. BROWN. You don't have any idea how much that would cost? Mr. STEINER. It is hard to say because a lot of the projects that might be done in those cities could very well be done under the existing eligibility in title I. We are talking here only about areas in these cities where housing is not predominant now or would not be predominant afterward or where there is not now a substantial amount of housing but which should be cleared in order to strengthen the economic base of the communities. I can cite to you, sir, as an example, an area in Scranton, Pa., where the local people came to us and wanted to add to an urban renewal project an area in the middle of town where there had been an old coal mine, and where there were large piles of slack and other wastes that came out of the mine. The community wanted to obtain that property, clear it, and put it to a modern, productive, economic use that would benefit the economic base of the community and provide employment opportunities. We were not able to do that in that particular case under our present restrictions.

Mr. BROWN. Don't you think you should have a separate fund for these kind of buildings instead of using slum clearance funds?

Mr. STEINER. It certainly could be a separate fund. I don't know that we have any very strong feeling on that. I think we do feel that in the coming fiscal year

Mr. BROWN. It is liable to hinder slum clearance.

Mr. STEINER. In the coming fiscal year I think we could handle it satisfactorily out of the fund presently authorized by Congress. At the end of that time, by the time we come back to Congress for authorizations for fiscal 1958 and subsequent years, we might have had some experience under this act and could then determine more accurately whether a separate fund should be asked for.

Mr. BROWN. Mr. Nicholson wants to be recognized.

Mr. NICHOLSON. This is a slum clearance bill, isn't it?

Mr. STEINER. Yes. These are two major sections in this bill presently before us, which would constitute amendments to our basic housing legislation.

Mr. NICHOLSON. How much housing have you got authorized now? Mr. STEINER. We have for urban renewal and slum clearance purposes, $1 billion of loan funds authorized, and 700 million of grant funds now available; also authorized by act of Congress is an additional 200 million to become available automatically on this coming July 1, and an additional 100 million which can be released by the President upon recommendation by the Council of Economic Advisors.

Mr. NICHOLSON. We have passed bills and amendments to bills here the last 3 or 4 years saying that the Government built so many houses this year-I forget what it is, 15 or something like that and they haven't built a house.

Mr. STEINER. I think you are referring probably to public housing, which is handled by the Public Housing Administration rather than by the Urban Renewal Administration, all of course, within the Housing and Home Finance Agency. I was talking with the Commissioner

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of the Public Housing Administration yesterday and it is my understanding that this year they expect to use all of the authorization which was given to them by Congress for this year. I am not personally and intimately connected with that program.

Mr. NICHOLSON. I suppose it is intended to build houses in these cities where there is no business. Is that it?

Mr. STEINER. That could be done under the existing law, sir. The specific proposal here relates to an area which is blighted and deteriorated, but which is industrial and commercial in character rather than of residential slum character. Such an area could be cleared through assistance rendered to the locality by the Urban Renewal Administration and that area could be made available by the locality for sale or lease to be used again for commercial and industrial purposes, for modern factories and modern plants and sources of employment.

Mr. NICHOLSON. So what you really want to do is to have the Government go in business of establishing factories, and so forth?

Mr. STEINER. The Urban Renewal Administration portion of this bill would involve the Government's assisting localities in clearing or rehabilitating commercial and industrial areas to be used for commercial and industrial purposes on a modern basis. The Government would assist communities in getting rid of these old obsolete areas, such as, let's say 3- and 4-story factory buildings, and these old coal mining areas in the middle of a town, like Scranton. We are told, for example, that not only are these old factories, say, 3- and 4-story factories in New England, unproductive taxwise and economically in the community, but they also stand in the way of any modern growth or modern renewal of the communities. Projects of this sort mean a great deal to communities which are in economically depressed areas. Only a few weeks ago, the mayor of Lawrence, Mass., for example, was in my office. We are going ahead with a project in Lawrence, Mass., which we can because it meets the present eligibility requirements. The mayor of Lawrence is very enthusiastic about this project, not only because it is clearing up an obsolete area and making it available for new growth, but also because of the intangible psychological or morale factor that is involved in the community's feeling that now a renewal, a rebirth, a recasting along modern, economic lines is coming about.

Mr. NICHOLSON. Lawrence is still a depressed area, isn't it?

Mr. STEINER. Yes, sir. I believe it is. I shouldn't answer categorically. I believe it is. I don't have the exact information. This particular project that we are doing there we are able to do under present eligibility requirements, but we could not, for example, go into a town like Lawrence or Lowell, into an area of old industrial buildings which are obsolete and maybe unused and help the local community to clear out those buildings and make the land available for modern industrial structures.

Mr. NICHOLSON. Of course, you know that they can't sell their goods now in the dilapidated buildings they have got. Why should they want a new business building when there is no business to pay for it? Mr. STEINER. The answer to that is one of the reasons why urban renewal is tied into an area assistance bill. All these aids needed from the Federal Government to assist in a situation like Lawrence. There is a need for the Department of Commerce to be in there assisting in

the ways indicated here, and need perhaps for the Department of Labor to assist with some vocational retraining and otherwise just indicated by the Under Secretary of Labor.

Mr. NICHOLSON. I think Mr. Brown suggested that you have a special bill for this and not have it in a slum clearance or a publichousing proposition.

Mr. STEINER. There certainly could be set up a separate monetary authorization for this type of project within the urban renewal program, if the Congress felt that that was the more proper way to do it. I am certain that we in the Urban Renewal Administration would feel that was entirely proper, if it appeared better to do it that way. Mr. BROWN. Dr. Talle?

Mr. TALLE. Mr. Chairman, may I ask a rather comprehensive question on the hill? Since this bill does not put any limit on the amount or type of money loaned and grant funds that would be used for depressed areas am I right so far?

Mr. STEINER. Yes, sir.

Mr. TALLE. Then the question: Would it not then be possible to use up all of title I financial assistance on depressed area projects? In other words, should there not be a limit on the use of such funds in depressed areas, say for instance, 10 percent, which would still yield $100 million of loan and grant funds, each one of them?

Mr. STEINER. I would guess that we would not reach the $100 million figure within the time that we anticipate present capital grant authorizations would be committed, which is through to the end of fiscal 1957. I don't think there would be any objection if the committee felt that it was wiser to place such a 10-percent limitation. There is a limitation now which might possibly be operative indirectly, and that is a limitation of 10 percent per State. Now, that might possibly effectively limit the amount of this work that could be done in 2 or 3 States where there is a good deal of urban renewal activity and they conceivably might be getting near the 10 percent per State limitation.

Mr. TALLE. In other words, the possibility is there that it could all be used up at this moment, at least, you would not oppose a limitation?

Mr. STEINER. I would say that theoretically there is a possibility. I would think it would be most improbable and I don't think that, as we envisage economic conditions in the near term, the purposes of the bill and the cooperation and participation of the Urban Renewal Administration would be curtailed if the committee felt that a limitation of 10 percent of total capital grant authorizations should be applied.

Mr. TALLE. In other words, it is a point to which the committee could reasonably give attention.

Mr. STEINER. Yes, sir.

Mr. TALLE. Secondly, since this contemplates the use of title I funds to improve sites for industrial uses, why should any grant funds be made available at all? In every case would not the industrial sites be worth more after redevelopment rather than less?

In other words, the site would be written up in value rather than down, and hence there would be no necessity for the use of grants.

Mr. STEINER. I don't think you can reach that conclusion, sır. That certainly might be true in some cases. For example, there has been one project that I know about done without Federal aid, that had an industrial significance, and only that one comes to my mind. That was a project in Pittsburgh which provided for expansion of the Jones & Laughlin steel plant. There an urban renewal project was undertaken by the local agencies without any Federal assistance, without any public assistance funds, which was fully self-liquidating, you might say, fully self-sufficient. But I think in most cases the recovery from the sale of the land would probably not equal the total cost of making the land available. The total cost, the gross project cost, as we call it, would involve the acquisition of the present real estate, the cost of rearranging streets and utilities to the extent that that was necessary to meet modern planning standards, interest and carrying charges, administrative overhead and some other costs of that sort-demolition of the old structures, the old factories, or whatever is on the land now. While in many cases the writedown or loss might not be very large, I think in most cases, ordinarily we would expect that the recovery from the sale of the land, after preparation for use, would not fully repay the cost of doing the undertaking.

Again I ought to say, sir, that this should not be looked upon as in any way underwriting the new industry or in any way subsidizing the new industry, because essentially what we are doing is preparing vacant land available for purchase by a new industry at the same kind of a price that a new industry could buy land, let's say, out on the edge of the city; the same price at which they could buy a cornfield. What I think we are underwriting and what we are subsidizing, if you want to use that term, is the elimination, the getting rid of the old obsolete deteriorated condition, which is blocking progress and which is blocking the rebirth of some of these communities. Some of these old factories in the center of some of these old commercial and industrial cities stand almost as mausoleums, as reminders of the past, and there is a psychological community morale factor here as well as the economic consideration. If they can be eliminated and the community can see that it is being reformed through its own local officials, its own local city planning board, so that it can go forward in the present-day economic process to a new prosperity, I think the Federal Government will have made a very fine contribution to these situations.

Mr. TALLE. You no doubt are familiar with the development commissions, and so forth, that have been organized in several States and also in cities. They are usually called development commissions or associations, and members of those city commissions in any event subscribe money, pay it into the treasury of the commission, and they acquire land which they can show to prospective industrial persons. who come around to look for sites. That is done locally without any Government assistance. The two that I have in mind I know of personally, and I should add that they are not in depressed areas; but that is a good attitude, isn't it, for a city itself, for a State, to undertake a matter of this kind of loan and development without asking the Federal Government for any money?

Mr. STEINER. Yes, sir; I certainly think so, and I know there are a number of such agencies and organizations around the country. I