and 500,000 population of cities." He feels that HUD has been very cooperative in the Willows project, but points out "that alone is not the solution . . . small communities need a program oriented to their needs and circumstances." HOPKINS, MINNESOTA, USES NEW RENEWAL TECHNIQUES Hopkins, Minnesota, a small city of 13,000, 10 miles from Minneapolis, is the first Minnesota municipality to use a technique for funding urban renewal projects, passed into law by the state legislature over two decades ago. Called the "local approach to urban renewal," according to Terry Novak, city manager of Hopkins, the idea enables a community to finance projects through tax increments instead of by using federal funds. Hopkins is also one of three municipalities in Minnesota to be given powers to declare land "development districts" for the purpose of renewal. The city has already financed a 161-unit, 11-story apartment building in its downtown using the tax increment concept. Construction of the 2.5 million dollar, Section 236 project began in April 1971. In March of the same year, Hopkins broke ground for 2.2 million dollars worth of senior citizen housing. The city is now in the process of developing land in the downtown as a parking lot, using the development district concept. The tax increment funding legislation was promulgated in the Minnesota Renewal Statute MSA 462 as long ago as 1949; yet, Hopkins is the first municipality to take advantage of the law. Tax increment financing enables a community to fund urban renewal through a source other than the limited federal dollar renewal pool. The key is "tax anticipation borrowing," according to Mr. Novak. By this he means that the redevelopment agency can "borrow money to finance the 'write-down' and repay that money over a period of years from the increased property tax proceeds derived from the new development on the site." The local school district, which shares 65 percent of the local taxes, will receive the increased proceeds once the renewal bonds have been paid off. In the meantime, the city and the school district will continue to be paid the tax revenues that they had been receiving before the improvements were made. Hopkins has used the tax increment technique together with a second tool, the development district, to accomplish its renewal goals. The city, along with Minneapolis and Robbinsdale, was empowered to establish development districts by the 1971 Minnesota legislature. Such areas are separate from federal renewal project designations and need not be declared blighted, an important psychological advantage, according to Mr. Novak. According to the law, cities can condemn land in designated development districts for parking structures, pedestrian walkways, underground concourses, and special lighting systems. Hopkins is using its first development area for a parking lot to serve the downtown business district and they are financing the project through tax increment funding. Mr. Novak feels that these tools give Minnesota communities a valuable alternative to the federal urban renewal program. Since renewal dollars are limited, tax increment funding enables municipalities to take advantage of a new financing source. It also frees communities from time consuming federal negotiations and approvals. According to Mr. Novak, if the city's Section 236 housing project had been funded through the renewal program, Hopkins would barely be past the survey and planning stage now. Instead, they are well on their way toward a brand new building. MODEL CITIES REVIVES RURAL GEORGIA COMMUNITY Alma, a tiny rural community of 3700 inhabitants on Georgia's coastal plain, is a model city in more ways than one. It is the smallest community in the nation to be chosen for the model cities program and, along with Bacon County, in which it is located, the only county-wide program in the United States. It was one of the first municipalities in the country to sponsor a congregate housing facility with public housing funds (see 1967 JOURNAL No. 9, page 511). Alma not only has a model cities program but also urban renewal, neighborhood facilities, and public housing, not to mention funds from many non-HUD sources. The purpose of all this activity, local officials claim, is to reverse the town's declining population trend and to literally keep Alma's citizens "down on the farm." One reason local residents have been leaving this rural community is that economic opportunities appear greater elsewhere. If the Alma model cities program has its way, that won't be true in the future. Capitalizing on the county's fertile soil, model cities has granted $25,000 to a local group, the Georgia Blueberry Asso ciation, to develop 2000 acres for cultivation in Bacon County by 1980. This program alone could yield the participating farmers up to $500 an acre. In the fall of 1971, the Economic Development Administration announced that it would provide $343,200 to supplement model cities funds for a 200-acre industrial park. In the summer of the same year, the Federal Aviation Agency announced that it would provide over $100,000 to finance 50 percent of the cost of an expanded Alma airport; model cities and state funds will provide the other half. When the Senate rural development agriculture committee toured the nation in the summer of 1971, they were greeted by devastating poverty and acute economic depression at most of their stops. When they reached Alma, however,1 posed of local church leaders and bankers, has received HUD approval for 12 units of middle-income garden apartments on a 5.2 acre site. Construction of the units recently began. Both of these two housing efforts were financed in part through the city's urban renewal program, which wrote down acquisition costs and helped pay for site improvements. Forrestal Heights is located in the city's first urban renewal project area. The LPA, faced with serious relocation problems, took advantage of HUD's "early land acquisition" program. They developed a site that had a light relocation load and built the Forrestal Heights project on it. Now they will use the public housing units to relocate families from the rest of the renewal area. Relocation has been an important component of the Beacon renewal program. When redevelopment began seven years ago, there was no subsidized housing at all in the city. Surveys showed, however, that many families, a large proportion of which are black, could not afford market rents for apartments in the area. Raymond, Parish and Pine, the planning consultants advising the city, made clear that without a comprehensive housing program for Beacon, renewal could not proceed. Forrestal Heights and the Unity Interfaith Housing Corporation are the first two such housing efforts. The city wants to provide "the broadest possible spectrum of relocation housing." according to Mr. McGill, and they are planning 30 townhouses under Section 235, as well as unsubsidized units and single-family lots for families wishing to build their own homes. All in all, the redevolpment agency hopes to develop over 900 new housing units in their first urban renewal effort. The city has also been working with the state Urban Development Corporation to build 190 middle-income apartments on a site overlooking the Hudson River and to develop 50 acres of surplus institutional land in the city for housing and industry. Although new housing is the cornerstone of the renewal program, Beacon has mapped out ambitious industrial and commercial redevelopment plans. An industrial firm that has been in the city for many years recently moved out of its antiquated plant into a modern, enlarged structure under the auspices of the renewal program. The city is also trying to refurbish its downtown and make it competitive with outlying shopping areas through increased parking space, street improvements, and more sites for stores and offices. The key to the downtown renewal plan is a new access road linking the city to the interstate highway. Plans also include the development of park land and improved waste disposal systems. Construction is now under way on the renewal project. Beacon's success can probably be attributed to an active and aggressive city leadership that includes not only elected officials but appointed staff as well. The municipal government reflects a bipartisar and especially representative approach. The mayor and the chairman of the renewal agency are from opposing political parties. Many of the renewal officials are black, giving this large segment of the city's population an identification with the program. The renewal board reflects a cross-section of the community. This strong public representation in all phases of government is one reason why Mr. McGill feels that the renewal program, resisted at first because of fear of federal intervention, has been given enthusiastic acceptance now. He points out that "in the early stages of our program there was an agreement by civic leaders that there were compelling reasons to save the old city." Beacon had learned several important lessons from their experience. They saw that renewal is an extended process that works best when there is "long and personal attention to every detail," according to Mr. McGill. The importance of details is reflected not only in their successful relocation program but also in their insistence on high architectural quality in all new housing. The city also learned that it is best to tackle difficult problems directly and that they cannot be swept away. Only when the redevelopment agency met the relocation problem head-on, was it able to deal with it effectively. Relocation 1 Exhibit, as submitted. Ed. opened up another serious issue-racial discrimination, which the renewal officials also attacked forthrightly. Beacon has tried to disperse housing sites and to mix units by income, age, and race. Now black families are purchasing homes in white sections of the city and the Forrestal Heights project, which reflects a mixture of age and racial groups, is SO far working out successfully. The Beacon renewal agency discovered "that fear of the unknown" is often a dominant problem in a small community, according to Mr. McGill. The Forrestal Heights project includes the city's first highrise: a 10-story structure. Resisted at first, the attractive building is now a source of pride to the community. The "ruggedly individualistic citizens of Beacon," as Mr. McGill characterizes them, were also leery of the unknown of involvement in federal programs. It took courage and effort for the city fathers to persuade them that the alternative to public help could very well be rising taxes, which nobody wanted. According to Mr. McGill, "Beacon's experience has shown that only through taking advantage of every federal and state program can the required level of financing be made available," to give small cities their needed rebirth and make them once more a part of the economic mainstream. Mr. KLUCZYNSKI. Any comment, Mr. Corman? Mr. CORMAN. I have just one question to ask. Do you have any figures as to where most of those municipalities of 50,000 or less are located? Are they in metro areas or nonmetro areas? Mr. MAFFIN. I would suspect in the total aggregate they would be outside the standard metropolitan statistical areas. I am talking about under 50,000. Mr. CORMAN. In population. In other words, taking all of the people of the United States who live in municipalities of 50,000 or less, you think that more of those would live in nonmetro areas? Mr. MAFFIN. As units of government, yes. Mr. CORMAN. I am thinking about in total population? Mr. MAFFIN. In total population, I would suspect that the SMSA's act for around 65 or 70 percent of the population. The central cities, of course, are a predominant percentage of that number. But I believe, if I understand your question of cities under 50,000, just in sheer numbers, probably more of them would live in cities of under 50,000 in the SMSA's, than live outside. I would not swear to that. But in terms of numbers of units of government, obviously not. Mr. CORMAN. Thanuk you very much. Mr. HUNGATE. No questions, Mr. Chairman. Mr. BERGLAND. No questions, Mr. Chairman. Mr. STANTON. No questions, Mr. Chairman. Mr. KLUCZYNSKI. Thank you. It has been a pleasure to have you before this committee. Your testimony will be very helpful to us when we have our executive session. Mr. MAFFIN. Thank you very much, sir. Mr. STANTON. Mr. Chairman, I would like to point out that this is especially good testimony here and it is in contrast with the previous witness. Mr. KLUCZYNSKI. We will have the members of the subcommittee read that and make sure they know what your positions are. Thank you ever so much for being with us. Mr. James Gavin, executive director of the National Federation of Independent Businesses will appear tomorrow morning before this committee. We will recess until 10 o'clock tomorrow morning. Thank you for your cooperation. (Whereupon at 12 noon, the subcommittee recessed to reconvene at 10 a.m., Wednesday, May 3, 1972.) THE FUTURE OF SMALLTOWN AND RURAL AMERICA: THE IMPACT ON SMALL BUSINESS WEDNESDAY, MAY 3, 1972 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON SMALL BUSINESS PROBLEMS Washington, D.C. The subcommittee met, pursuant to recess, at 10:05 a.m., in room 2359, Rayburn House Office Building, Hon. John C. Kluczynski (chairman of the subcommittee) presiding. Present: Representative Kluczynski. Also present: Representative Hungate of the full committee; Donald B. Roe, subcommittee counsel; John M. Finn, minority counsel; and Myrtle Ruth Foutch, clerk. Mr. KLUCZYNSKI. The hearings will come to order. The Subcommittee on Small Business Problems in Smaller Towns and Urban Areas today continues hearings on the future of small town and rural America, the impact on small business. We were all extremely sadden to learn of J. Edgar Hoover's death yesterday. It is my information that the Speaker has invited Members to be present at the Capitol this morning for special ceremonies. Our first scheduled witness this morning, Hon. Earl L. Butz, Secretary of the Department of Agriculture, has also informed us that the White House has requested his presence at the Capitol. Therefore, today's hearings will be postponed until a date to be announced. However, since two of our witnesses are already here, we would like to receive their written statements for the record. The first witness this morning will be Mr. Gavin, the legislative director of the National Federation of Independent Business. We are sorry that we were not able to hear Mr. Gavin yesterday. Is Mr. Gavin here? TESTIMONY OF JOHN MOTLEY, CONGRESSIONAL LIAISON, Mr. MOTLEY. I am John Motley, congressional liaison for the National Federation of Independent Business. Mr. Gavin was unable to be here, and I am representing him. Mr. KLUCZYNSKI. I understand Mr. Gavin has a prepared statement. Hearing no objection it will be made a part of the record in its entirety. (71) |