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accuracy than I can. But when I think of the billions of dollars that we are asked to appropriate for other purposes, it seems to me that it is not too large.

Further than that, it is insurance. It gives them the authority to insure loans made by banks and other lending agencies, and they get a substantial income from these insurance charges, enough so that they are asking now for authority to lend up to $50 million from the insurance moneys which have been accumulated on this guarantee of loans. Senator HOLLAND. I notice that this legislation also includes the provision that would raise the present limit under existing law of $500,000 on direct loans and $1 million limit on insured loans to any association up to a $4 million limit on loans and grants to any association.

Senator AIKEN. That is true. If we inquire of Senator Anderson of New Mexico, we will find that in his State there is one critical situation which could not be met with a $500,000 loan. I know there is one in my State which probably could not be met with a $500,000 loan, and I am satisfied there are other areas.

You see, we are raising the size of the community which can be serviced in this way from 2,500 to 5,000, and I have already had some complaints that 5,000 is not high enough.

For instance, one of our New York friends said he has a community of 5,500 people and he thought that the 5,000 should be used as a guideline rather than a hard and fixed number. That is something which the committee will undoubtedly consider.

Senator HOLLAND. What is the limit, the lower limit applicable to the Community Facilities Administration on its loans and grants? Senator AIKEN. I do not know. I am not sure whether there is any limit or not, because they deal largely with the cities and the larger

towns.

Senator HOLLAND. I wonder if counsel for the committee would have that.

Senator AIKEN. Would Mr. Bertsch and his associates come up here? They could answer these questions better than I can.

Senator HOLLAND. Mr. Bertsch has already appeared before our subcommittee. I do not care to have him appear at this time because this is a duplication of the hearing that we have already had in the subcommittee. If we can find from counsel what the limit is, the minimum limit.

Mr. STANTON. On community facilities, Senator, I do not know. I will have to take a look at that.

Senator HOLLAND. Will you supply that for the record? (The information referred to follows:)

Title II of the Housing Amendments of 1955 (42 U.S.C. 1491 et seq.) authorizes the Housing and Home Finance Administrator to make loans to municipalities and other local public agencies to finance needed public works. There is no statutory limit on the amount which may be loaned to a single borrower. Section 202(b) (2) authorizes postponement of the payment of interest on not more than 50 percent of the loan where such assistance does not exceed 50 percent of the development cost of the project and certain other conditions exist.

Section 202 (e) as added in 1962 by sections 5(b) of the Public Works Acceleration Act authorizes the Administrator to make grants to such public agencies to finance up to 50 percent of the construction cost. Such grants could only be made from funds allocated under section 9 of the Public Works Acceleration Act (apparently as incorrect reference to sec. 3 of that act, 42 U.S.C. 2642). Section 3 provided for the allocation of appropriated funds to provide for acceleration

of public works in certain eligible areas. Section 3 provided that notwithstanding the 50 percent limitation, grants of up to 75 percent of the project cost could be made, if the State or local government did not have economic and financial capacity to assume all of the additional financial obligations required. No funds are now available for grants.

There is no lower limit on the size of the public body to which title II loans can be made, but those loans can be made only to public bodies, including unincorporated towns. Preference is given to political bodies having a population of less than 10,000. No loans can be made to any political subdivision having a population of 50,000 or more (150,000 in a community in a redevelopment area or near a research or development installation of the National Aeronautics and Space Administration). The maximum amount of loans outstanding at any time for projects is limited to $600 million. The last three sentences do not apply to mass transit projects.

Senator HOLLAND. The next point I want to raise is this. There was a feeling on the part of some members of the subcommittee that heard this part of the proposed legislation before-and there was not in that at that time the grant portion which is new in this legislation— that there should be some distribution of the new total amount to be insured annually as among those communities that were really farm communities and where the aid was to farmers, and the very sizable number of such communities, which in no sense are farm communities as for instance applications in my State are largely from new subdivision communities.

Does the Senator have any views on that?

Senator AIKEN. No; I have not. I know that in my own area that your farming community and your residential village merge, and usually when one prospers, the other does, and they all need water. I think one of these statements which I submitted for the record recommended that no assistance should be given to any community which was within 10 miles of any established private or public water system. Senator HOLLAND. I do not think that is reasonable.

Senator AIKEN. I do not think that would be reasonable either. Senator HOLLAND. But I do think that the committee should consider the fact that it would not want this agricultural agency—and that is what FHA is-to be placed in a position where it would be overwhelmed by a disproportionate obligation to insure loans to communities that by no means were farm communities but instead were new subdivisions and retirement communities and the like, rather than farm communities in any sense of the word.

Senator AIKEN. I think that that matter could be handled in the bill itself or in the report on the bill. Of course, it is intended to serve rural areas, and it is a fact that when a rural farming area has lights, water, and other facilities that people do move into it for residential purposes and small industries also move in. I think that is good for the country as a whole.

Senator HOLLAND. I would agree with that, but I would not want the Farmers Home Administration to be placed in the position of becoming primarily, as it would in some areas, the agent for financing the development of water systems for areas that were really retirement areas or new subdivision areas and the like, of which there are very many in our part of the country and I am sure in other parts of the country.

Senator AIKEN. I agree with the Senator on that, but I also would say that I would not want Housing and Home Finance or the Commu

nity Facilities going out into the strictly rural areas and dealing with problems for which they are not presently equipped anyway.

Senator HOLLAND. I would not either.

Senator AIKEN. I think we have got to realize that we have two problems. We have the urban problem and the rural problem, and I am strongly in favor of handling the rural problems in the way that we think they should be handled, and then the urban problems should be handled in the way best adapted to suit their needs and requirements within our means, of course.

There is a bill in the House, I think, providing for assistance for urban areas which does cover many different types of services and facilities. But I do not believe the word "agriculture" is mentioned in it.

Senator HOLLAND. I think we have two objectives that might be important here.

Senator AIKEN. Yes.

Senator HOLLAND. One is to make sure that there is no overlapping of the agencies.

Senator AIKEN. Yes.

Senator HOLLAND. And second that there is no provision in this law which would permit the Farmers Home Administration to become a major organization for financing public utility facilities for small retirement subdivisions and the new areas that are being settled, particularly in the fast-growing States, because there are literally hundreds of those areas.

Senator AIKEN. Yes.

Senator HOLLAND. I would want to keep this agency primarily for the service of the really rural areas and the really farming population. Senator AIKEN. I think we can agree on that. But I think we should also realize that when the facilities come into a rural area, that the population does increase, and they will not all be farm people. Senator HOLLAND. Certainly.

Senator AIKEN. I think that is good, too.

Senator HOLLAND. Certainly. That makes the truly rural area much more attractive to obtain settlers who are not directly related to the farm production.

Senator AIKEN. That is right. I think it is up to us to decide where to draw the line btween the rural and urban areas. Maybe Senator Monroney can give us some assistance.

Senator HOLLAND. Senator Monroney wishes to be heard on this. We will be very glad to hear him.

STATEMENT OF HON. A. S. MIKE MONRONEY, A U.S. SENATOR FROM THE STATE OF OKLAHOMA

Senator MONRONEY. Mr. Chairman, first I would like to ask consent of the committee to be listed as cosponsor of this legislation. I thought I had asked my office to notify you.

Senator AIKEN. You are a cosponsor.

Senator MONRONEY. Good. It was not in the printed one I saw.

Senator AIKEN. In fact, you are one of the early ones.

Senator MONRONEY. I think I was left off the printed copy.

Senator HOLLAND. No; your name is on here.

Senator MONRONEY. I must have a different copy. Good. Senator AIKEN. I want it understood that of the seven Members of the Senate who are not cosponsors, most of them stated they were perfectly in accord with the objectives.

Senator MONRONEY. I wanted to be in there very early because I think you have a very important bill.

Mr. Chairman, the measure which you are considering this afternoon can do much to bring better water supplies to many millions of Americans who now live beyond the reach of city mains. It will be of great benefit to the rural areas of Oklahoma. Every piece of legislation relating to water is of interest to Oklahoma, because Oklahoma is without a doubt one of the most water-conscious and water-rich States in the Nation.

This was not always so. In the past, Oklahoma has had its water problems. Droughts and duststorms have plagued vast sections of the Great Plains, from Texas to Kansas, Colorado, and Nebraska and beyond to the Dakotas, in decades past, but over the years the people of the Plains have learned much about husbandry of water. The disasters of the past need not occur again. The progress of this particular bill proves that they are now on the road to overcoming many of the natural causes of adversity-those resulting from drought and scarcity of water.

In Oklahoma, the tremendous accomplishments we have made in preserving and harnessing our water have laid the basis for continued stability of our agricultural economy.

Agriculture must be saved in this State which has over 860,000 rural people, nearly 100,000 farms and ranches, and accounts for an important quantity of the Nation's food production. Oklahoma ranks 4th in wheat, 10th in cattle.

As we look around the State today we see that a great effort has begun to remake the face of rural Oklahoma, to change the predominating landscape of large areas from brown to green.

Two dozen larger multipurpose lakes have been built, and literally thousands of smaller reservoirs down to the size of ponds, in an effort to catch and conserve water. Over 44 million acres are in soil conservation districts-almost every rural acre in the State. Nowhere could public investment in such projects show a higher justification or richer

returns.

But some of the most significant gains have been realized or planned on the basis of Farmers Home Administration-insured loans, using funds put up by private leaders for developments which are organized through local initiative and will pay back the loans from what they earn. These projects draw decisive support but actually absorb no funds from the Government.

As others have told you, the only shortcoming of this insured loan program in Oklahoma is that it no longer can move half as fast as our local people are moving in the development of these sound and urgently needed projects.

Therefore, I thank you for this opportunity to state my wholehearted support of Senate bill 1766 to enlarge the loan insurance authority of the Farmers Home Administration, and otherwise improve the capacity and effectiveness of that agency's insured loan services.

Passage of this bill would be one of the most valuable services we could render in this session of the Congress.

In its struggle against the problem of water supply, Oklahoma's challenge now is to move the water from those reservoirs wherever feasible, and get it to the farms, ranches, and rural towns; or to create rural water distribution systems from other sources wherever

necessary.

Thirty-four such community projects have now been developed, put under construction, or approved for financing through the Farmers Home Administration. Twenty-one other projects have been tentatively approved, and some of these would be underway now if it were not for present limitations on the insured lending authority of Farmers Home. Forty-six additional project applications are now being considered; and hundreds of other small towns and nontown rural areas of Oklahoma have shown their interest in mobilizing local forces to duplicate what has been done in the projects already completed.

In other instances, rural water system development in Oklahoma is held back because systems serving several communities from a single source of water available in the area cannot be built, so long as the Farmers Home Administration cannot make a rural water system loan in excess of $1 million. This obstacle would be removed under S. 1766 by raising the limit to $4 million.

Fundamental, of course, is family ownership of farms and ranches. Less than half of the $57 million loaned for farmownership by Farmers Home and its predecessor agencies in Oklahoma during the past 30 years has been direct loan money. Some $28.7 million of these loans have been made with funds provided by private lenders on an insured basis.

Here again, demand for insured credit through which independent farm and ranch families may better secure their position on the land substantially exceeds the authorization available to the Farmers Home agency.

The development of local recreation centers is another opportunity which goes hand in hand with the development of water reservoirs and water distribution systems throughout our State. Under the provisions contained in S. 1766, progress in developing needed recreation facilities can be speeded up to help meet public demand.

The adjustment upward to $450 million in Farmers Home Administration's insured lending authority, far from excessive, will help bring the program up to a level of adequacy at this time.

Senator HOLLAND. That limit is an annual limit, is it not?
Senator MONRONEY. Is it an annual limit?

Senator HOLLAND. That is my understanding.

Senator AIKEN. The amounts?

Senator HOLLAND. Yes.

Senator AIKEN. $25 million?

Senator HOLLAND. No, $450 million.

Senator MONRONEY. $450 million.

Senator AIKEN. I understand that it is.

Senator HOLLAND. Let us see the 1961 bill; section 308. It is an annual limit.

Senator MONRONEY. Yes, I should change my statement to read adjustments upward to $450 million annually in Farmers Home Ad

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