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OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE (PROPERTIES AND
INSTALLATIONS)-Continued

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Mr. BROWN. Mr. Rains, do you have any questions?
Mr. RAINS. I have several questions, Mr. Chairman.

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Generally, Mr. Arrington, I think your statement is a real good one. I would like to start off by asking the question that was in everybody's mind last year when title VIII was first enacted, and seems to be fading away, but still comes up.

The Department of Defense is not planning on building under the title VIII program any military housing where there is an adequate supply of private housing in the area to house military personnel? Mr. ARRINGTON. No, sir.

Mr. RAINS. In other words, in locating this housing you take into consideration the availability of housing near the military installations, and what might happen to Government-guaranteed financing on homes before you proceed to set aside any title VIII housing for that area?

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Mr. WIDNALL. Don't you sometimes change your criteria as to need, and say all of a sudden that you need all of the personnel on the base because of defense needs?

Mr. ARRINGTON. You will find that different military commanders will place varying emphasis on the proportion of their personnel that they feel they need on base, and of course there is a great deal of difference, depending on the missions of various installations.

For instance, fighter-interceptor stations in the Air Defense Com

mand have an extremely high percentage of personnel whose presence is required on board on short call, and they must live within the 3-mile, 5-minute radius.

Mr. WIDNALL. Isn't it within the discretion of the commander of the base, though, to decide all of a sudden that we need them on-base rather than off-base, as has been the practice in past years?

Mr. ARRINGTON. It would not be possible for a base commander to make such a unilateral decision. That would have to be reviewed by the military department concerned and also by our office before new housing would be built.

Mr. WIDNALL. Isn't that a very important factor in your final decision, that is, in addition to what you have described to Congressman Rains?

Mr. ARRINGTON. You mean the factor of military necessity for people on the post?

Mr. WIDNALL. Yes, sir.

Mr. ARRINGTON. That is true.

Mr. WIDNALL. So that it isn't purely a consideration of whether or not you have got housing off the base?

Mr. ARRINGTON. No. In other words, when we say that we consider the availability of private housing, we mean to the extent that it can meet the military requirement, based on the particular conditions and the mission of the base in question.

For many types of activities, housing in the civilian community, if it is available at reasonable rentals, reasonable distances, and adequate as to facilities, is entirely adequate to meet the total need.

Mr. RAINS. But in the case of an installation such as the Air Force Base at Omaha, General Lemay's headquarters, it would be reasonable to assume that you need more housing on base in this type of an installation, isn't that correct?

Mr. ARRINGTON. That is correct.

Mr. RAINS. In other words, the military necessity is one of the factors taken into consideration.

Mr. ARRINGTON. That is true.

Mr. RAINS. We have heard a lot of talk, on this committee, and on the floor of the House, that you can build a much cheaper military home by appropriated funds.

I want to see if you will agree with what I state to you, as to whether or not it is correct.

The average cost of appropriated-fund housing is $13,500, isn't it? Mr. ARRINGTON. That has been true; yes, sir; particularly in the fiscal 1955 program.

Mr. RAINS. That $13,500 of appropriated funds includes only the cost of the structure and those incurred within 5 feet line of the structure, isn't that correct?

Mr. ARRINGTON. In general that is correct, sir.

Mr. RAINS. In other words, the appropriated funds cover what is known as the cost up to the 5 feet line.

Now, if the appropriatd funds housing required side improvements and the other things which are necessary to complete any housing project, whether it be military or civilian, is it not true that the average cost of an appropriated funds house would be $16,000 to $16,400? Mr. ARRINGTON. That is true.

Mr. RAINS. So the statement that appropriated funds housing is vastly cheaper than housing built under title VIII, is a myth; isn't that correct?

Mr. ARRINGTON. We feel that the margin is actually fairly small, two and three thousand dollars a unit over the period taken to amortize the investment, and that difference is totally due to the difference in assumed interest rates.

Mr. RAINS. On page 12 of your statement you have a recommendation which you list as the third recommendation.

What do you mean by that? I don't understand the third recommendation.

It says that you recommend that section 407 be amended by adding a new subsection providing for the use of military construction funds for capital expenditures authorized by sections 403 through 406 of the Housing Act of 1955.

Mr. ARRINGTON. Well, for example, the cost of acquiring land or housing under section 404 should be charged against appropriations for construction rather than appropriations for quarters allowances. Mr. RAINS. Well now, of course that is a matter for the Armed Services Committee.

Has the Department cleared that matter with the Armed Services. Committee?

Mr. MAYER. No, sir; we have not cleared that particular provision with the Armed Services Committee. However, this is really by means to a great extent it is a clarification of what I think is intended here.

In other words, if we use the funds for the acquisition of housing, we ought to be able to use them also for improvement of such housing to whatever extent is necessary to make it usable for the purposes of this act.

Mr. RAINS. If my recollection is correct, the Armed Services Committee objected seriously and prohibited you using revolving fund money for capital expenditures, isn't that correct?

Mr. MAYER. I don't know.

Mr. ARRINGTON. I don't have the answer to that either, Mr. Rains. Mr. RAINS. How much money would you expect that to be? What kind of savings could you utilize for capital expenditures?

Mr. ARRINGTON. As this is written, it would permit us to utilize unexpended appropriated funds in the military construction program. Mr. RAINS. Wouldn't that be a way for the Defense Department to have funds for capital expenditures without them being cleared with the Appropriations Committee?

Mr. ARRINGTON. Well, for example, one case where this would be necessary would presumably be to purchase equities in Wherry projects, in cases where we should buy them, and to continue the mortgage. Mr. RAINS. I have very serious doubt about that recommendation. Now, on page 12, at the bottom of the page, you make the recommendation that $15,000 average cost per unit be applied to a servicewide basis. And you ask for the average cost set at $16,500.

First of all, let me ask you, will the quarters allowances amortize on a 25-year basis a $16,500 cost?

Mr. ARRINGTON. Yes, sir.

Mr. RAINS. All right.

Then with a $15,000 average cost, wouldn't that be extremelyalmost impossible to administer, that kind of a requirement, where you would have an average servicewide cost basis of $15,000?

Mr. ARRINGTON. It will impose difficulties in administration, but we consider it to be feasible, sir.

Mr. RAINS. Is that $15,000 average unit cost-I haven't had the opportunity to check it-is that the same bill, the one they have reported, or not?

Mr. ARRINGTON. The report that I have seen, I believe, provides for an average of $14,250, and a maximum of $15,000.

Mr. RAINS. But it doesn't have that average cost, servicewide? Mr. ARRINGTON. I believe it does. I am not certain on that point. But I believe

Mr. RAINS. Well, we can check that.

On the last page of your statement, you seem to appear to recommend the formula known as-contained in H. R. 9893.

Have you been informed that both FHA and Wherry owners oppose that formula?

Mr. ARRINGTON. We have had some discussions with FHA and they have indicated problems in the administration of that particular formula, and we are taking that into consideration in preparing the position on 10885.

Mr. RAINS. In other words, 1085, which is the bill I have introduced, you haven't yet been able to formulate your full opinion on the terms and conditions of that bill?

Mr. ARRINGTON. No, sir; but we expect to in the next day or two. Mr. RAINS. There was one other question. I don't see where I have it marked, but I think I recall it.

You stated that the FHA

Mr. ARRINGTON. That was on page 10.

Mr. RAINS. Yes, sir.

You said that

It is true that local Federal Housing Administration offices have curtailed issuance of title II commitments in certain areas as a result of title III programing.

That is counterwise to my information. My information is that the FHA does not take into consideration title VIII housing at all in the issuance of commitments, and I think that can be verified, by certain places, such as Redstone Arsenal, which requires certain special legislation now pending before this committee.

Don't you think that statement of yours is in error?

Mr. ARRINGTON. It is true that in principle there should be no direct connection between the military need for rental housing and between the normal issuance of title II commitments in the area.

But it has been reported to us in a number of areas, such as Fayetteville, N. C., that as a result of the programing of a sizable number of title VIII units, the FHA preferred to pursue a general policy of conservatism in further issuance of title II commitments until they had had an opportunity to observe the market impact.

Mr. RAINS. What you are actually saying is that the FHA says that where there has been a considerable number of title VIII military housing committed, that they won't issue commitments for the people under title II in that area; is that correct?

Mr. ARRINGTON. Apparently they do slow down to some extent. Mr. RAINS. Well, my information was otherwise.

Thank you very much.

Those are all the questions I have, Mr. Chairman.

Mr. BROWN. Mr. Wolcott?

Mr. WOLCOTT. No questions.

Mr. BROWN. Mr. Multer?

Mr. MULTER. Mr. Arrington, does the present title of the law cover your operations for housing in the Territories and Puerto Rico?

Mr. ARRINGTON. The housing amendments of 1955 include the Territories and possessions of the United States, I believe.

Mr. MULTER. I understand it does include Puerto Rico.

Mr. ARRINGTON. However, Guam, Panama, and Cuba are not covered.

Mr. MULTER. I notice you recommend that Midway Island as well as the Canal Zone be included.

Mr. RAINS. If you will yield, the provisions of 10557 do not include Guam. Do you think they ought to be?

Mr. ARRINGTON. Yes, sir; Puerto Rico is included in the amendments of 1955, Mr. Multer.

Mr. MULTER. In your fourth recommendation you refer to exempting your projects from the Renegotiation Act of 1951. You say you ask for that because the act exempts from renegotiation those construction contracts which were awarded on the basis of competitive bidding. Don't you contemplate that all of your contracts will be awarded on the basis of competitive bidding?

Mr. ARRINGTON. Yes, sir; we do, and that is why we feel that similar to other military construction contracts which are exempted from the provisions of the renegotiation act, title VIII contracts should be also. Mr. MULTER. Does the Renegotiation Act of 1951 carry the specific exemption?

Mr. MAYER. If I may answer that, sir, the Renegotiation Act exempts construction contracts awarded after competition, except for housing construction under title VIII. So there is a specific exception from the exemption.

Mr. MULTER. And you do need the exemption here?

Mr. MAYER. Yes, sir.

Mr. MULTER. So as to make the practice the same.

Mr. MAYER. Yes, sir.

Mr. ARRINGTON. We could furnish the committee specific language on that, if it desires.

Mr. MULTER. You might submit your suggested language, and then the staff will check it for us.

Mr. ARRINGTON. All right, sir.

Mr. MULTER. Thank you, Mr. Chairman.

Mr. BROWN. Mr. Widnall?

Mr. WIDNALL. I would like to ask a few questions about the failure to reenlist, about which you spoke.

In those figures do you include the retirements?

Mr. ARRINGTON. I don't believe so, sir, but I am not an expert on personnel matters.

Perhaps the military representatives could answer that.
We could furnish that for the record, sir.

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