The removal of the $15,000 ceiling for the secondary market operations would serve to encourage transactions involving housing in higher cost areas, particularly with respect to dwellings with three or more bedrooms for larger families. The amendment should serve to upgrade the portfolio of the FNMA secondary market operations, and should serve to promote sales of FNMA's mortgages. The resulting improvement in the rate at which the portfolio can revolve would accelerate the transition of FNMA from Government operations to private operation.

SECTION 202. CAPITAL CONTRIBUTION TO FNMA BY MORTGAGE SELLERS

This section would make somewhat more flexible FNMA's authority to prescribe the amount of the capital contributions to FNMA required from mortgage sellers in FNMA's secondary market operations. Under present law, mortgage sellers must subscribe to FNMA common stock equal to 3 percent of the unpaid amount of the mortgages, or such greater percentages as may from time to time be determined by FNMA.

Under the amendment, FNMA would have authority to adjust downward as well as upward the percentage of capital subscriptions required, although the contribution could never be less than a prescribed minimum. Specifically, the amendment would provide that sellers of mortgages to FNMA under its secondary market operations would be required to make capital contributions to FNMA equal to 2 percent of the unpaid principal amount of mortgages purchased or to be purchased by the Association, or such other greater or lesser percentage, but not less than 1 percent, as may from time to time be determined by the Association, taking into consideration conditions in the mortgage market and the general economy.

It is the Association's purpose, under its secondary market operations, to provide reasonable and effective financial assistance to the distribution of investment capital available for home mortgage financing under varying economic conditions. The amendment, while giving a prospective seller of mortgages some indication of the percentage of capital subscriptions which may be required of him, would provide the Association with authority to prescribe other rates which could be higher or lower than 2 percent. A reduction in the required percentage of common stock subscription need not result in a lower total amount of such subscriptions, nor a consequent delay in the retirement of the preferred stock held by the Treasury. A reduction in the required percentage could result in an increase in the secondary market operations of the Association of sufficient proportion to increase the total stock subscriptions.

SECTION 203. ESTABLISHMENT OF MORTGAGE PURCHASE PRICES

This section would restate the method for establishing the purchase prices of mortgages to be purchased by FNMA in its secondary market operations. Under present law, the FNMA is required to establish such purchase prices "at the market price" for the particular class of mortgages involved. Experience gained by FNMA since this provision became effective, November 1, 1954, has indicated that the pricing factors affecting individual mortgages are so diverse that it is not practicable to comply literally with the requirement that prices be established "at the market price.' It is practicable, however, to ascertain ranges of market prices from time to time.

Accordingly, this section of the bill would prescribe the criterion that the prices to be paid by the association for mortgages purchased under the secondary market operations should be established, from time to time, "within the range of market prices" for the particular class of mortgages involved, as determined by the association.

SECTION 204. TECHNICAL AMENDMENT

This section would correct a printer's error in the present law.

SECTION 205. REPEAL OF OBSOLETE PROVISION

This section would repeal an obsolete and presently confusing provision in the FNMA Charter Act, passed in 1954, for the initial proration of FNMA's authorization (to purchase and make commitments to purchase mortgages) between the special assistance functions of FNMA and its management and liquidating functions. This proration serves no useful purpose, and is now expressly mis

leading in view of subsequent increases in the special assistance authorization by the Housing amendments of 1955.

TITLE III-URBAN RENEWAL

SECTION 301. URBAN RENEWAL PLAN

Title I of the Housing Act of 1949, as amended, would be amended by this section to remove an unnecessary requirement under which an identifiable "urban redevelopment plan" must be part of an urban renewal plan if redevelopment of part of the urban renewal area is planned. Title I provides Federal aid to local public agencies for carrying out urban renewal plans. An urban renewal plan may provide for part of an urban renewal area to be improved by rehabilitation and conservation and part of the area to be improved by clearance and redevelopment. The requirement that the plan for redevelopment of part of the urban renewal area be identifiable increases paper work, serves no purpose, and would therefore be removed by this section.

SECTION 302. URBAN RENEWAL PROJECT

This section would amend the definition of "urban renewal project" in section 110 (c) of the Housing Act of 1949, as amended, in two respects. First, the definition would be simplified to consolidate the provisions relating to slum clearance and redevolpment with those relating to rehabilitation and conservation, thereby avoiding overlapping and duplication in the definition. This is not a substantive change.

A second change which the amendment would accomplish relates to the present requirement of the law that an urban redevelopment area being assisted under title I must (with certain exceptions) either be predominantly residential to begin with or else be redeveloped for predominantly residential uses. This requirement does not presently apply to the entire urban renewal area, but only to areas which are to be cleared and redeveloped. Under the amendment, this requirement would be applicable to the urban renewal area as a whole, including the portions which are to be rehabilitated. Under the amendment, also, a rehabilitation or conservation project involving no land acquisition or slum clearance at all would nevertheless be subject to the "predominantly residential" requirement. The amendment is desirable to make this requirement consistent with other requirements in title I which apply to urban renewal area as a whole. SECTION 303. ELIGIBILITY AS LOCAL GRANTS-IN-AID OF FACILITIES FINANCED WITH SPECIAL ASSESSMENTS

Title I of the Housing Act of 1949 permits a locality to count as part of its local contributions to an urban renewal project the cost of certain public improvements which are necessary for carrying out the urban renewal objectives. However, the cost of public facilities financed with special assessments against land in the project area may not be counted as part of the local grant-in-aid. The reason for this exclusion is that the levying of a special assessment against land acquired in the project area will tend to lower the resale value of that land. The cost of the public facility is thereby, in effect, transferred to the title I project so that a double allowance would be made if the cost were also credited as a local grant-in-aid. However, this objection applies only to special assessments levied against land acquired as part of the project area and later resold for redevelopment. The objection does not apply to land within an urban renewal area which is not acquired, but is merely scheduled for rehabilitation and conservation activities. Accordingly, this section would amend the law to provide for deducting from the cost of the facilities, for the purpose of computing the amount of the local grant-in-aid, an amount equal to the special assessments against land in the project area which is acquired by the local public agency as part of the project. No such deduction would be made under the amendment with respect to the remaining cost of the public facility. Thus, this section is merely a perfecting amendment to an existing provision of law.

SECTION 304. LOSS OF CERTAIN TAX REVENUES AS URBAN RENEWAL PROJECT COST In many communities, as permitted by State law, payments in lieu of taxes and sometimes tax payments are made (by operation of law or by voluntary

arrangements) on account of land which is acquired as part of an urban renewal project. The payments are made for the temporary period when the land is in public ownership. Such payments are approvable as project costs if they do not exceed taxes which would normally be payable by a private owner with respect to the same land. This section would provide for equitable treatment as between communities which receive such payments and those which do not. This would be accomplished by permitting communities which do not receive such payments to include in gross project cost an amount equal to the ad valorem taxes which would have been levied upon such property if it had been subject to ad valorem taxes. In all cases, in calculating the amount allowable, the amount would be prorated for the period during which the property is owned by the local public agency as part of the project. The inclusion of any such payments in gross project costs would be subject to the approval of the Housing Administrator and such limitations as he may impose.

SECTION 305. URBAN RENEWAL IN MAJOR DISASTER AREAS

This section would assist in the rehabilitation and rebuilding of disaster areas, such as those effected by recent major floods and hurricanes, by providing authority to permit the extension of urban renewal assistance free of certain requirements and limitations which are applicable in normal situations.

Subsection (a) would add a new section 111 to title I of the Housing Act of 1949. Section 111 would provide that where the local governing body certifies. and the Housing Administrator finds, that an urban renewal area is in need of redevelopment or rehabilitation as a result of a flood, fire, hurricane, earthquake. storm, or other catastrophe which the President has declared under existing law to be a major disaster, the Housing Administrator is authorized to extend urban renewal assistance without regard to a number of requirements contained in title I. These would include the workable program requirement (except that a workable program would be required by some future date determined by the Housing Administrator); the requirement that the urban renewal plan conform to a general plan of the locality; the public hearing requirement; and certain requirements with respect to the predominantly residential character or blighted character of urban renewal areas. Also, since the displacement of families will already, in many instances, have occurred as a result of the major disaster, the relocation requirements would be modified to provide only that the local public agency has presented a plan for the encouragement, to the maximum extent feasible, of dwellings suitable for the needs of families displaced either by the disaster or by redevelopment or rehabilitation activities. In the preparation of the urban renewal plan with respect to a project aided under these new provisions, the local public agency would be required to give due regard to the removal or relocation of dwellings from the site of recurring floods or other receiving catastrophes in the project area.

Subsections (b) and (c) would amend sections 220 and 221 of the National Housing Act in order to permit FHA mortgage insurance aids to urban renewal housing to be provided in connection with the proposed new section 111, explained above, without regard to the workable program requirement.

Subsection (d) would amend section 701 of the Housing Act of 1954 to permit Federal planning grants for a community affected by a major disaster without regard to the fact that the community's population is 25,000 or greater.

SECTION 306. URBAN PLANNING AUTHORIZATION

This section would increase the planning grant authorization under section 701 of the Housing Act of 1954 from $5 million to $10 million. Section 701 authorizes grants, not to exceed 50 percent of the estimated cost of the work, (1) to State planning agencies to aid them in providing planning assistance to small munici palities (under 25,000 population) lacking adequate planning resources and (2) to official State, metropolitan, and regional planning agencies for urban planning work in metropolitan and regional areas. This program was delayed by the inadequacy of many State laws, but there was considerable legislative activity on this matter in States throughout the country during 1955 and applications in preparation indicate that operations will increase rapidly. The proposed $5 million increase in authorization is not predicated upon the enactment of subsection 305 (d) of the bill, explained above. However, the enactment of that subsection will, of course, lead to an increased use of the authorization.

TITLE IV-PUBLIC HOUSING

SECTION 401. LOW-RENT PUBLIC HOUSING-2-YEAR PROGRAM

Subsection (a) would amend the United States Housing Act of 1937, as amended, so as to authorize new loan and annual contributions contracts for not more than 35,000 additional public housing units after July 31, 1956, and an additional 35,000 on and after July 1, 1957. Each 35,000 increment would be available for contracting until 2 years after it first becomes available. New contracts for preliminary loans would be authorized only to the extent consistent with the number of dwelling units for which contracts for annual contributions may be entered into.

There is no evidence that private enterprise is yet able to provide the housing needed for families in the lower income groups who are displaced by the elimination of substandard housing. In order to permit the urban renewal program to go forward and to facilitate many other programs of local governments, such as code enforcement, street widenings, and other public improvements, a minimum of 35,000 additional low-rent units a year will be needed. A program for 2 years is necessary in order that both the Federal Government and the local authorities may carry out their development activities efficiently and economically on a stable and well-planned basis.

The second proviso of subsection (a), together with section 402, discussed below, would restore the requirement that the locality have a "workable program" for the prevention and elimination of slums and blight, as a condition to a new contract for additional public housing units.

Subsection (b) would repeal the proviso in the 1953 appropriation act which prohibits the PHA from committing itself to authorize the commencement of construction of more than 35,000 dwelling units in any 1 fiscal year. This proviso creates a needlessly troublesome restriction. The size of the program under this provision would be controlled through the authorization for entering into contracts, and the rate of construction would then take its normal course, subject to reasonable and necessary administrative controls which the PHA already has by virtue of its power under section 15 (5) of the United States Housing Act to authorize the award of the main construction contract. A 35,000-unit-per-year rate of contracting may result in more units being ready to go under construction in a given year, and any delay in authorizing construction when a project is ready would simply mean additional costs to the Federal Government for administrative expenses, interest on loans, and other running expenses which continue while construction is held up. Furthermore, the proviso in the appropriation act serves no substantive purpose so far as the size of the program is concerned since permanent legislation contained in section 10 (i) of the United States Housing Act expressly prohibits new contracts in excess of the number provided for in that section, unless authorized by the Congress. This existing prohibition would be continued by the third proviso of section 10 (i), as set forth in subsection (a) of this section of the bill.

SECTION 402. WORKABLE PROGRAM

Section 402, with the amendment in section 401, would restore the requirement that the locality must have a workable program for the prevention and elimination of slums and blight before a contract can be entered into for Federal aid to low-rent public housing. That requirement was dropped by the Housing Amendments of 1955 in connection with the repeal of other provisions of law. Lowrent housing aids and urban renewal aids should be made available by the Federal Government only to communities which have adopted workable programs for dealing with the problem of slums and urban blight in their own midst. The restoration of the workable program requirement would be in accord with the recommendations made in 1953 by the President's Advisory Committee on Government Housing Policies and Programs. The urban renewal program and the related FHA mortgage insurance operations (secs. 220 and 221) are now subject to this workable program requirement.

SECTION 403. LIMITATION ON EXPENDITURE IN ANY ONE STATE

Section 403 would change from 10 to 15 percent the maximum portion of annual contributions and grant funds for public housing which may be expended within any 1 State.

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SECTION 404. HOUSING FOR THE ELDERLY

Section 404 contains special provisions designed to assist in meeting the housing problems of elderly persons of low income, both families and single persons. Subsection (a) would amend the definition of "families of low income" in the United States Housing Act of 1937 in such a manner as to make single persons 65 years of age or over eligible for low-rent housing units suitable for such persons or especially designed for them.

Subsection (b) would permit local housing authorities to extend a prior preference, as among low-income families which are eligible applicants for occupancy of dwellings of given sizes and at specified rents, to elderly families (including families consisting of a single person 65 years of age or over) for any low-rent housing designed specially for, or suitable to the needs of, such elderly families. As among applicants eligible for this preference, those displaced by slum clearance or other governmental action would be given a first preference. The granting of the preference on the basis of age is left to local determination in the light of local conditions. However, the preference would be given only with respect to units suitable for the occupants. Since the number of such units, consisting of efficiency (zero bedroom) or one-bedroom apartments, is limited, the number of elderly families or persons admitted would be correspondingly limited. The preference proposed could not result in decreasing the supply of units now available for families with children.

Subsection (c) would increase the normal construction cost limitation per room on accommodations designed specifically for elderly families to $2,250. This amount is $500 above the normal limitation for the ordinary type of accommodation and $250 below the normal limitation for housing in Alaska. This increase in the per room cost limitation is needed in view of the smaller number of rooms per dwelling unit which will nevertheless require bathroom and kitchen facilities, and because of the special design features.

SECTION 405. FARM-LABOR CAMPS

This section would add new provisions to section 12 (f) of the United States Housing Act of 1937, as amended, to direct the Public Housing Administration to transfer farm-labor camps without monetary consideration to any public housing agency whose area of operation includes such a project. A request for a transfer under this provision would have to be made by the local authorities within 12 months after enactment of the provision. Moreover the local agency would have to submit a finding and certification (which would be conclusive on the PHA) as to the low-rent need for the project and the preferences to be given in occupancy. Such preference would be given first to low-income agricultural workers and their families and, second, to other low-income persons and families. Authority is also provided for reserving to the United States any mineral rights in the property. Any farm labor camps not disposed of or under a contract for disposal pursuant to subsection 12 (ƒ) of the United States Housing Act would have to be disposed of by the PHA pursuant to the present provisions of that act governing the disposal of real property.

Under this amended responsibility for use of the projects for low-rent purposes and for the administration of the occupancy preferences will rest with the local authority and be subject to the provisions of State law.

SECTION 406. TRANSFER OF HOUSING TO DEPARTMENT OF DEFENSE Subsection (a) would transfer 41 temporary defense housing projects constructed or acquired under the provisions of title III of the Defense Housing and Community Facilities and Services Act of 1951, as amended, and 4 Lanham Act war housing projects from the Housing Agency to the Department of Defense effective July 1, 1956. After the transfer of the properties, the provisions of those acts would no longer apply, and the law applicable to similar properties of the Department of Defense would then apply.

The defense housing projects to be transferred now comprise 6.991 units, but it is expected that this number will be decreased by about 98 units before the effective date of the transfer by the removal of this number of dwellings from Project NC-4D1, Elizabeth City, N. C. The Lanham Act war housing projects consist of the 2 Moreno Court projects (FLA-8082 and 8084, Pensacola, Fla.) comprising 198 units and 2 Passyunk Homes projects (PA-36011 and 36012 in Philadelphia, Pa.) comprising 994 units.