relocation problem in any community are inescapable, and all public agencies in the community involved in any way in relocation are extremely sensitive to the problem. Our concern for this matter is the extent to which, in the administration of the program, the communities are left with a wide area of discretion in which to operate. Controls, and attitudes to which the controls respond, stem from fear and concern on the part of the Federal agency that a public body or a combination of public bodies will mistreat or abuse people in a community. Nothing could be further from reality. It is inconceivable that the public official in Washington could be equally aware of the needs, or as concerned for the well-being, of the citizens affected by slum clearance in Centerville as would the public representatives in Centerville. In our community in the last 4 years we have faced this problem. We have displaced and relocated 4,342 families. To our knowledge and belief the Federal agency did not receive one single appeal for assistance. These families looked to and depended upon the local agency for assistance. Certainly this undertaking, with the vast benefits accruing to the entire community, was not carried out without hardship. However, the authority's policy diligently pursued was to hold the hardship to the irreducible minimum. Disposition of land at fair value for the planned uses The basic purpose of redevelopment in the urban renewal program is the provision of an effective means through which cities can assure that the cleared land reclaimed from blighted and deteriorated areas can and will be redeveloped for those uses determined by public governmental authority necessary to meet the sound needs of the locality as a whole. Accordingly, both State and Federal laws provide that the land in the cleared areas be disposed of by the local public agency, not at the highest price obtainable for its highest market use, but at its fair value for the planned use. For the accomplishment of this basic purpose, a high degree of flexibility in land-disposition methods is vitally essential. This has been clearly recognized in the laws enacted by the several States to govern the disposition of the cleared land. For example, the Virginia redevelopment law, a typical State law, specifically provides for flexibility in such disposition in its requirement that the cleared land "shall be made available at its fair value, which represents the value * at which the authority determines such land should be made available in order that it may be developed or redeveloped for purposes specified in such plan." This kind of flexibility in land-disposition matters, which is essential to the development and execution of local renewal programs to successfully meet the varying needs of communities throughout the country, represents a policy carefully established by the legislatures of the several States. The Federal law was carefully drafted to permit the States and the local communities to exercise this kind of initiative and flexibility. For example, the report of the Senate Committee on Banking and Currency in respect to the legislation states: "The bill now being favorably reported by your committee is based upon the firm foundation that although the housing problem is obviously national in scope it is fundamentally a local problem in that the first responsibility for its solution therefore rests with the local community. This bill leaves that primary responsibility with the local communities where it belongs." We strongly urge your committee to scrutinize vigilantly the nature of the administration of the urban renewal program to assure that there is consistently maintained in the urban renewal program (and particularly in this important area of land disposition) the flexibility contemplated by Federal law and called for by the legislative policies established by the several States, and that such flexibility is not restricted or negated by rigid administrative requirements imposed by the Federal executive agencies. Federal officials should be expected to encourage and assist local initiative and responsibility in this important area. FHA's section 220 and high cost areas Under the provisions of section 220 as now in effect, the FHA Commissioner has authority to increase the maximum dollar limitation on the mortgage amount per room of $2,250 by an amount not exceeding $450 to compensate for the higher costs incident to elevator type construction. Also, the dollar limitations may be increased a maximum of $1,000 per room in any geographical area where the FHA Commissioner finds that cost levels so require. Under the present wording of section 220, however, this $1,000 increase for high cost areas applies only to elevator-type structures; it cannot be granted for nonelevator garden-type apartments in high cost areas. This is unrealistic. If an area is a high cost area, the higher costs must be incurred in the construction of nonelevator garden-type apartments as well as elevator-type apartments. We strongly urge that your committee include in the bill reported to the House an amendment of section 220 to make it clear that the presently allowable increase for high cost areas is applicable to noneevevator apartments as well as elevator apartments. Cooperative housing insurance We strongly support the provisions of section 104 of H. R. 10157 which would amend section 213. The new provisions would permit mortgages to be insured up to 85 percent of cost for builder-sponsor mortgagors selling the completed projects to cooperatives at certified cost, with the cooperative eligible for the higher loan-to-cost ratio provided in the present section 213. We feel that such action could contribute substantially toward providing needed moderate income housing in urban renewal areas. We desire to point out that, even in such high cost areas as New York City, it is possible to produce excellent housing under section 213 at monthly costs to the occupant members of $25 or less per room per month. However, no substantial volume of housing is now being produced under section 213. A principal reason for this inactivity is the delay, along with other difficulties, resulting from the necessity of selling 100 percent of the membership of a cooperative before construction can be started. Many members become impatient and withdraw their subscriptions. In many cases in the past this has resulted in 50 percent turnover in membership and, before the project could be started, the memberships have had to be resold. FHA has suggested to your committee that the desired benefits could be achieved under section 207, "applying section 207 tests of both value and economic soundness, with conversion to section 213 upon sale to a cooperative." This leads us to urge your committee to stop, look, and listen and to draw upon your past experience, because, in our judgment, such a suggestion is, in practical effect, an invitation to kill the benefits of the proposed amendment. Your committee will recall that in 1954, upon the recommendation of the FHA, the basis for section 213 insurance was changed from cost to value. At that time FHA gave general assurances that there would be little difference between value and replacement costs. In actual practice, as your committee well knows. the difference was very great-so great, in fact, as to require down payments ranging up to 30 to 35 percent as compared to the 5 to 10 percent contemplated by the statutory provisions. Moreover, at page 116 of the 19th Annual Report of the FHA it is stated that "the relatively low ratio of loan to replacement costs under section 207 results in (1) the maximum mortgage amount under this section is limited by statute to a proportion of the estimated value of the project rather than replacement cost (which invariably averages higher than value)." It was because of these facts and the resulting adverse consequences on both the section 213 and section 220 programs that the Congress last year changed both of these programs from a value to a cost basis. Furthermore, one of the principal factors which led the Congress to establish the section 213 program was recognition of the fact that the type of apartment units required to meet adequately the needs for cooperatives--particularly number of rooms and their size could not generally be produced under the section 207 or other than current FHA programs. Thus, if a project were to he started under section 207 and later sold to a cooperative under section 213, as suggested by FHA. it may be anticipated that the types of housing thus produced under section 207 is not well suited to the needs of a cooperative. Again, I would like to express my appreciation to the committee for allow ing me to make this supplemental statement. Very truly yours, LAWRENCE M. Cox, Vice Chairman, Redevelopment Section, National Association of Are there any further questions? Mr. O'HARA. Mr. Chairman. Mr. BROWN. Mr. O'Hara. Mr. O'HARA. Mr. Sipprell, I notice the National Association of Housing and Redevelopment Officials offices are at 1313 East 60th Street, Chicago. Mr. SIPPRELL. That is right. Mr. O'HARA. That is in the district that I have the honor to represent. That is very close to Hyde Park. Are you acquainted with the plight of the small-business tenants in the Hyde Park area? Mr. SIPPRELL. Only indirectly, Congressman. I am familiar with that general neighborhood, having been in our offices there many, many times. I am not intimately connected with it, but I know, I think, what you are talking about. Mr. O'HARA. I notice that in your recommendations you do not touch upon provision for the relocation of small-business tenants. Have you given some thought to that matter? Mr. SIPPRELL. We have given thought to it, Congressman. It is a new subject to us; those of us in local communities, of course, have dealt with the problem of relocating small businesses. We have not thought through a solution or a formula for changing the relationship that now exists. I did have a brief statement on that which was not in our formal testimony, and I would be glad to read this 3 or 4 sentences, which I think will give you an idea of where we stand on it. Mr. O'HARA. Off the record. (Discussion off the record.) Mr. RAINS. Put it in the record, then. Mr. SIPPRELL. We are concerned with the details and techniques of it, but I can certainly say without reservation we are favorable to your position. Mr. O'HARA. Is that the extent of the statement? Mr.SIPPRELL. I am sorry. We are pleased to see that in connection with the urban renewal program consideration is being given by the Congress to extending assistance to business concerns displaced as a result of title I urban renewal programs. We are most sympathetic to any effort to mitigate the hardships created by such dislocation of small businesses and are basically in favor of legislation alleviating such hardship. We would like to be certain that any assistance rendered to dislocated businesses is done on a fair and equitable basis, without opening the way to possible abuse through the application of unreasonable values. We will be very pleased to submit a supplemental statement on appropriate assistance at a later date, if it is the desire of the committee that we do so. Mr. O'HARA. Thank you very much. I would appreciate if you would make the additional statement. I ask, Mr. Chairman, it be made a part of the record when he does submit it. Mr. BROWN. That may be done. (The statement follows:) NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS Hon. BRENT SPENCE, Chairman, Banking and Currency Committee, The House of Representatives, Washington, D. C. DEAR CONGRESSMAN SPENCE: At the time we presented our testimony on H. R. 10157 to your committee, Congressman O'Hara asked that we comment on his bill (H. R. 9351) relating to extending assistance to business displaced by title I programs. At the time we were not prepared to comment on the bill, and asked 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.) Washington, D. C. 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. |