Housing and Home Finance Administrator. Areas in which the Depressed Areas Administrator determines that there has existed unemployment of not less than 9 percent of the labor force for at least 18 months, or 6 percent for at least 3 years would be designated as depressed areas. In making his determination the Administrator would be guided by information and data compiled by Federal, State, and local governmental agencies, and by similar information compiled by private organizations. The Secretary of Labor, upon request of the Administrator would conduct special studies and compile data deemed necessary by the Administrator to enable him to make a determination. Local committees consisting of citizens of a depressed area would be appointed by the Administrator to prepare plans and cost estimates for the construction of industrial plants and facilities to attract new industries to the area and to enlist the support of private and public lending agencies to finance such construction.

When funds for the construction of industrial plants or facilities are not otherwise available on reasonable terms the Administrator would be authorized to make direct loans for such purposes in amounts up to 66% percent of the cost of construction for a period of 40 years. The Administrator would also be authorized to make loans or grants to assist in financing the construction of public faicilities either upon request of proposals for such public facilities from States, political subdivisions of States, or private or public organizations, or upon his own initiative. To further relieve unemployment the bill provides for the procurement of supplies by Federal agencies, to the maximum practicable extent, from contractors in depressed areas, or from contractors who will undertake to provide employment of additional individuals in depressed areas. In addition, the tax relief provisions authorized by the Internal Revenue Code of 1954 in the case of the construction of facilities necessary in the interest of national defense would be extended to cover the construction of industrial faciliies to relieve unemployment in designated depressed areas. Additional provisions in the bill relate to provisions for vocational training, supplementing payments of unemployment compensation and surplus food supplies.

While this Agency favors the broad objectives of the bill to assist communities and industries in depressed areas, we believe that the Department of Commerce is in a better position to advise the committee with respect to the merits of the particular provisions of this bill. There are, however, certain proposals relating to our existing programs which we believe should be included in legislation enacted on this subject. These proposals, which would adapt certain programs administered by this Agency to fit the special needs of depressed areas, are now contained in sections 103 through 105 of S. 2892. These sections are explained below.

Section 103 of S. 2892 would amend title I of the Housing Act of 1949 by adding a new section 111 which would make the provisions of that title applicable to a municipality when (1) the area is certified by the Secretary of Labor as being an area of substantial and persistent unemployment, and (2) the Secretary of Commerce certifies that there is a reasonable probability that with the assistance provided under the bill and other aids, the area will be able to achieve lasting improvement in its economic development. Such assistance would be made available without regard to the existing limitation of section 110 (c) of title I of that act which requires that the project areas be predominantly residential in character or be redeveloped for predominantly residential uses. The section would expressly make eligible for rehabilitation a project area involving primarily industrial or commercial structures. It should be noted, however, that the waiver of the requirement in title I of the act that urban renewal project areas be predominantly residential does not otherwise involve any substantial change in the basic statute. If, for example, the project area for commercial or industrial use involved the acquisition of open land, all the limitations normally applicable would be in effect.

This section would also authorize the disposition of land in a project area for industrial or commercial uses to any public agency or nonprofit corporation for later disposition. The existing provisions in title I of that act contemplate the disposition of land for immediate redevelopment. Such agencies or nonprofit corporations would be required to pay fair value for the land for uses in accordance with the urban renewal plan. The purchasers from the public agency or corporation, in such cases, would be required to use the land solely for the uses approved in the urban renewal plan in conformity with the requirements of section 105 (b) of the 1949 act. Finally, a contract once executed under this section would remain in force until completion of the project even if it is later determined that the area may no longer be an area of substantial and persistent unemployment.

It is generally recognized that the availability of good building sites at reasonable prices is a prime consideration in business decisions to locate or expand in an area. Under the existing program authorized by title I of the Housing Act of 1949, not only is it possible for communities to remove slums and blight and prevent their recurrence but also to provide suitable sites with the necessary public improvements for industrial and commercial development. About onethird of the net acreage for proposed uses in title I projects which have been approved for final planning or execution will be developed for industrial and commercial uses. It seems to us, therefore, that in many cases land for business development in areas with excessive unemployment could be most advantageously assembled and prepared for uses in line with community objectives by applying this well-established program. Land in these projects could then be acquired and improved with assistance proposed in the bill and sold or leased at prices in line with its value for the specified uses.

Section 104 of S. 2892 provides that section 202 (c) of title II of the Housing Amendments of 1955 be amended by giving first priority in public facility loans to counties, cities, and other municipalities in areas of substantial and persistent unemployment if the Secretary of Commerce certifies there is a reasonable probability that with the assistance provided under the bill such areas will be able to achieve lasting improvement in their economic development. Smaller municipalities would have second priorities (instead of first as in the present act) for assistance in the construction of public works. Since the availability of public facilities to serve industrial installations is frequently as important to the location of an industrial site as is the availability of a building site, giving first prority for public facility loans in depressed areas, seems to be especially desirable.

Section 105 of S. 2892 would amend section 701 of the Housing Act of 1954 by authorizing advances for planning grants to counties, cities, and other municipalities having a population of 25,000 or more in areas designated as areas of substantial and persistent unemployment. Under the existing provisions of section 701, such advances with respect to municipalities having a population of less than 25,000 are authorized only if made to a State planning agency and advances with respect to larger communities are authorized only for metropolitan and regional areas. Since communities of 25,000 and over are likely to have their own planning staffs, it is believed that for the purposes of the proposed act it would be more effective to provide direct Federal assistance to such communities. We have been advised by the Bureau of the Budget that the area development program recommended by the President, although partially covered by S. 2663, would be more adequately met by the enactment of S. 2892.

Sincerely yours,

ALBERT M. COLE, Administrator.

Senator NEELY. The subcommittee is adjourned.

(Whereupon, at 3: 15 p. m., the subcommittee adjourned subject to the call of the chairman.)

APPENDIX

AREA ASSISTANCE ACT OF 1956 (S. 2892) AND DEPRESSED AREAS ACT (S. 2663) COMPARED

Purpose

AREA ASSISTANCE ACT OF 1956 (S. 2892)

(Administration bill)

To provide assistance to areas with substantial and persistent unemployment to take effective steps in planning and financing their economic development.

Organization

Creates area assistance administration, administrator of which is responsible to the Secretary of Commerce, and an advisory board consisting of heads of major Federal bureaus.

Definition of area eligibility

(a) Loan and grant assistance: Labor market areas in which the employment rate is (a) currently 8 percent or more, seasonally adjusted, and (b) has been at least 8 percent for the major portion of each of the preceding 2 years. (b) Nongrant technical assistance: Available to all areas.

State and local responsibilities

(a) Recognizes existing local development organizations as project originators. (b) Loan assistance shall be extended to local areas only upon approval of the State (or State agency responsible for economic development).

Financial assistance, industrial facilities

(a) May make loans to be used for such purposes as: (a) preparing land for industrial use; (b) constructing new factories; (c) modernizing old factories. (b) A revolving fund of $50 million to be established for these purposes. Financial assistance, community improvements

(a) Amends title I of the Housing Act of 1949, as amended, to make the aids authorized under the urban renewal program available to a certified labor surplus area for redevelopment for industrial and commercial uses without regard to present limitations requiring redevelopment and urban renewal to be primarily for residential use.

(b) Directs Administrator of Housing and Home Finance Agency to give first priority to applications from certified labor surplus areas for Federal aid in financing needed public facilities under title II of the Housing Amendments of 1955.

(c) Provides for direct planning grants under section 701 of the Housing Act of 1954 to counties, cities, and other municipalities of 25,000 or more situated in certified labor-surplus areas. At present for metropolitan areas of 25,000 and over planning grants are made to regional and metropolitan agencies. For cities under 25,000 planning grants are made to State planning agencies. Technical assistance

(a) Secretary of Commerce is authorized to make grants for technical assistance including studies evaluating the needs of, and developing potentialities for, economic growth of labor surplus areas.

(b) $1,500,000 is authorized for technical assistance grants. (c) Nongrant technical assistance is available to all areas.

Loans and grants specifications and limitations

a. Industrial and related loans:

1. Must be reasonable possibility that assistance will lead to lasting improvement in local economic conditions.

2. State approval of project required.

3. Funds for project not otherwise available.

4. There must be a reasonable assurance of repayment.

5. Amount of loan plus private and State and/or community funds available to insure completion.

6. No loan in excess of 25 percent of aggregate cost, or for longer than 20 years.

7. Not less than 15 percent of total cost be supplied by the State or a local development organization as equity capital.

8. Proposed project must be consistent with an overall local or area development program.

9. Must not rob another depressed area or cause substantial detriment to area of original location.

10. Not more than $50 million in loans may be outstanding at any one time.

(b) Technical assistance grants, require State approval. Total grants may not exceed $1.5 million annually.

Coordination with other Federal programs

Functions authorized by act are to be coordinated with all other Federal programs affecting local economic conditions.

Funds for program

(a) For loan assistance, a $50 million revolving fund to be established in the United States Treasury.

(b) An annual appropriation of $1,500,000 for technical assistance grants. (c) An annual appropriation for administration of program.

Other provisions

(a) Procurement: No new procedures specified.

(b) Rural development: Provides technical assistance to rural areas and rural communities in their efforts to develop manufacturing, processing, and service activities.

(c) Special labor force studies: Secretary of Labor may undertake special studies of characteristics of labor force in certified areas.

(d) Surplus food: No new procedures specified.

(e) Tax relief: No new procedures specified.

(f) Unemployment compensation: No new procedures specified.

(g) Vocational training: Secretary of Labor to provide advice and technical assistance in developing and carrying out a program to increase employability of local labor force. Secretary of Health, Education, and Welfare may provide assistance, financial and otherwise, for vocational training to the State vocational education agency.

Purpose

DEPRESSED AREAS ACT (S. 2663)
(Douglas bill)

"*** to provide assistance to communities, industries, enterprises, and individuals of depressed areas to enable them to so adjust their productive activity as to effectively alleviate excessive unemployment within such areas."

Organization

Creates an independent Depressed Areas Administration with Administrator. Also an Advisory Committee consisting of heads and subheads of major Federal bureaus.

Definition of area eligibility

Loan, grant and technical assistance limited to areas where at least a 9 percent unemployment rate has existed at least 18 months, or areas where at least 6 percent have been unemployed for at least 3 years.

State and local responsibilities

(a) Local industrial committee is appointed by Administrator, consisting of at least 5 citizens, to act as project originators. (Function apparently limited to loan program for industrial and commercial facilities. Local committees have no vote in the "grant or loan" program for public facilities.)

(b) State approval not required.

Financial assistance-industrial nad commercial facilities

(a) May make loans in financing construction of industrial plants or commercial facilities. (No provisions for preparing land or modernizing old buildings.)

(b) $100 million is authorized for such loans.

Financial assistance-community improvements

Administrator directed to make studies of need, and with advice of Advisory Committee can by loans or grants initiate programs of public facilities with or without proposals from States, municipalities, or private organizations. He is "authorized to receive proposals from States, Territories, possessions, political subdivisions of States (including municipalities), and private or public organizations and associations relating to works of public facilities construction" and is to periodically review such proposals, adopting those which, in his view, "will substantially aid in carrying out the purposes of [the] Act."

Technical assistance

(a) Administrator shall furnish depressed areas with technical assistance and information available within the Federal Government.

(b) No specific fund allocation for these purposes.

(c) Permissibility of technical assistance to nonlabor surplus areas not specified.

Loans and grants specifications and limitations

(a) Industrial and commercial loans :

1. Construction of facility reasonably calculated to lead to lasting improvement in local economic conditions.

2. Funds for construction not otherwise available.

3. Amount of loan plus private funds available to insure completion.

4. Construction of facility will not rob another depressed area or cause another area to be come depressed.

5. No loan in excess of 66% percent of cost of construction, nor for longer than 40 years.

6. Total loans for industrial purposes may not exceed $100 million at any one time.

(b) Public facilities loans and grants:

1. Administrator to select projects "on the basis of the degree to which the construction of such project will result in the most effective and economic alleviation of unemployment within the depressed area."

2. No loans or grants for projects which qualify for another Federal program or State program partially financed by Federal grants.

3. Total loans and grants for public facilities may not exceed $100 million at any one time.

Coordination with other Federal programs

Administrator to furnish to depressed areas information and advice available from Federal agencies. Coordination per se is not specified.

Funds for program

(a) Administrator to issue notes and obligations not exceeding, at any one time, $200 million ($100 million for industrial and commercial loans and $100 million for public facilities loans and grants).

(b) An annual appropriation for administration of program.

(c) Appropriations for supplemental unemployment payments (see "Unemployment Compensation" below) not accounted for.

Other provisions

(a) Procurement: Governmental departments shall procure supplies and services from labor surplus area firms where practicable.

(b) Rural development: Not mentioned.

(c) Special labor force studies: Not mentioned.

(d) Surplus food: Commodity Credit Corporation to distribute processed food to homes and institutions.

(e) Tax relief: Provides fast tax writeoff benefits for all new plants locating in labor surplus areas.

(f) Unemployment compensation: Agree with States for payment of supplementary payments in depressed areas for those engaged in retraining program. United States will pay additional period of 13 weeks beyond State benefit payments.