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At the local level there are things a community has to do under the community development program that is proposed by this legislation. First of all, it has to set forth a program of goals and objectives over a 3-year period, a summary of its planned activities including the relationship of the basic program thrust to the comprehensive plan of the community.

Secondly, a community, in order to receive assistance, has to set forth a program and a budget-what it is going to do in order to meet its goals and objectives, to eliminate or to prevent blight and deterioration, and to deal with housing needs. In this connection, the program statement will indicate the kind of subsidized housing assistance the community needs, whether it is section 235, section 236, conventional, turnkey, or other public housing devices, rent supplements or section 312 rehabilitation loans. When the application is approved, the Department of HUD, will set aside the commitments, for the subsidies or loans to meet this housing program. This will prevent a reoccurrence of the situation all too common in urban renewal, where you go ahead and develop land, get it ready for housing, and find there is no assistance available.

Other local requirements are public hearings, and the city council approval of the application. Following that, cities have to arrange temporary financing, to issue annually a performance statement, and to set forth their subsequent years' program. The community will then receive grant payments from the Federal Government, periodically, generally not less than once a year.

Now, the Federal Government at the executive level has certain responsibilities. After approving the application, the Federal Government has to review the local performance record; has to review what the local need is, particularly in housing and in blight and blight prevention; and has to identify the local capacity to meet replacement and relocation housing, and to conduct an effective program of code enforcement. Finally, the Federal executive should encourage these activities and meet the locality's funding request so long as it is within the grant entitlement, which I will go to in a moment.

These are very minimal kinds of actions. They do not require volumes upon volumes of materials to be submitted by the locality, and I can speak from both Federal administrative experience, as well as local administrative experience in these programs.

Then there are a whole series of other things required by the Federal Government including reporting to Congress on recommended changes in the program, and periodically on the kinds of money for subsequent years that will be needed to carry on this program beyond its initial authorization.

At the Federal level, we have indicated the authorization level, and the appropriations which have to follow; further we have indicated that there are commitments built within the bill to provide for appropriations to complete programs and projects that are already underway.

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COMMUNITY "X": HAS NOT PERFORMED TWO OR MORE ACTIVITIES IN ONE OR MORE

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I want to discuss grant entitlement, because it represents a substantially improved approach over special revenue sharing to tell a city the amount of Federal assistance it will receive.

First of all, it is based on recognizing past performance and demonstrated need from all the programs that are folded into the community development program. It does this by saying that if cities have performed two or more activities in these programs, obviously they have demonstrated some interest, in community development. Further, it provides that the average of the high 3 years in the last 5 years in each program is the base; the aggregate of the averages become the base figure. For the particular community in this chart, all those activities have generated a demand based on the high 3-year average, of $4 million a year.

Now, this is the minimum. This is its basic entitlement, $4 million. In the first year, recognizing growth needs to meet more problems, there is a 15-percent factor built in, and this community can receive as much as $4.6 million. In the second year, a further incremental allowance is permitted-30 percent-again recognizing growth problems, and the need to meet these problems which generates $5.2 million. In the third year, an increase of 45 percent over the base figure, or $5.8 million becomes the maximum grant permitted. That is how the program would operate for a community that has been participating in development programs.

Now, for a community that has never been operating within these programs, it could still receive community development assistance. These are cities that have never had sewer and water, open space, urban beautification, title I urban renewal, code enforcement, the whole range of things that are folded into this program.

Such a community could decide to participate in the community development program, to develop land of $850,000, to develop an advanced plan of public facilities in the community, which will cost this much money to stimulate the development of a library, and to carry out sewer and water activities.

Their basic entitlement, which, in effect, is the same as their application, if approved, comes up to $1.7 million. In the second year it has increased by 15 percent, and the third year by 30 percent. Beyond that point, the bill is silent, but the recognition of the incremental approach to the program, and the growth in the program is implicit.

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How does this work in financing terms for a community? I am not going to list all the possible combinations of activities within each of these categories, but suffice it to say that they are very, very great.

Flexibility is there. For example, the particular community outlined in this chart for its first year, may want to do a total of $7.9 million worth of activity. Remember, this is a city that has a maximum of $4.6 million in entitlement. Of that $7.9 million, a half-million dollars is local investment, in a variety of activities. There is going to be income produced as offsetting these expenses of a million dollars, roughly a million and a half dollars, which is deducted.

Moving over to the other side of the chart, gross expenses equal $7.9 million. From this amount, net income of a million and a half dollars is deducted and the cost is $6.4 million. From this, you deduct local investment $490,000-this gives you the net expense for that program for the first year of $5.9 million.

In addition, in that net figure are the 100-percent grants for rehabilitation and relocation grants. These too are deducted, which gives you the net cost of the project, $4.9 million; 10 percent of that is to be provided by the community, 90 percent by the Federal Government. The community has provided $490,000. The total Federal commitment for this program, and I think it is very important to clarify, is the net cost, the Federal grant, plus the relocation and rehabilitation grants, approximately $52 million.

In addition to the grant commitments, there are loan commitments which provide operating capital. That operating capital is the difference between the gross costs and the local investment, which amounts in this case to $712 million approximately.

In addition, advanced land acquisition is public facility loans and rehabilitation loans are folded in the program.

That, Mr. Chairman, is the way we envision the community development program will function.

The CHAIRMAN. Well, thank you very much. That is very interesting. I enjoyed your presentation. It was most thorough and it will be helpful to us.

Senator Stevenson?

Senator STEVENSON. Thank you, Mr. Chairman.

The CHAIRMAN. May I say before we start, I am going to have to leave in about 5 minutes to keep an appointment. I apologize to you, Mr. Maffin, for having to do it, but the rollcall cut into our time as you know.

Senator Stevenson is going to remain, and I am hopeful that Senator Taft will also, and perhaps come down this way and take a seat with us

here at the center.

All right, Senator Stevenson.

Senator STEVENSON. I want to echo our chairman's words; I think it was a very comprehensive, helpful presentation. I was particularly pleased to hear of your support for S. 2333 as opposed to S. 1618.

I have been concerned about the need for regional cooperation. I would think you would probably agree that the development of one community within the SMSA depends to a very large extent on what takes place in the rest of the metropolitan area. I don't find in S. 2333 any real incentives toward regional planning and cooperation.

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