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rent which these low-income families can afford. Just as the Federal Government makes its annual contribution or subsidy in the form of cash to meet part of the annual charges on the project (and thus reduces rentals) so the local Government makes its annual contribution or subsidy in the form of remission of normal annual tax charges (and thus reduces rentals).

Let us take a million-dollar project. Under the present law, the maximum Federal capital loan is $900,000. The maximum Federal annual contribution provided in the bill would be 31⁄2 percent of that, or $35,000 a year under the present law, and I am trying to distinguish between the present law and the amendment. Under the present law the annual value of the 10 percent local contribution which is now required, if it were a grant, would have an annual value of $3,635. The 20 percent required local annual contribution, that is, the 20 percent which the locality is supposed to put up for every 100 percent put up by the Federal Government, the minimum required in the law that is now usually covered by tax exemption amounts to a total of $7,000 a year. So that under the present law, if the localities pay the minimum required, capital and annual grant, they would cut up a total of $10,635 on this project every year throughout its life.

Now, under the proposed amendment, let us take a million-dollar project. The maximum Federal loan would be obviously the whole million dollars. The maximum Federal annual contribution would still continue to be $35,000. No change. But if we succeed in continuing to get the degree of local participation which we have received in the past, and I do not know of any reason why we cannot do so, that is, 61.9 percent of the Federal annual instead of 20 percent, the local annual contribution will be more than $21,000 per year, a little over double the sum of the 20 percent minimum annual contribution plus the capitalized value of the 10 percent of the local loan.

Do you get me? We are today getting, in other words, over double the minimum that is set forth in the statute, and I see no reason why we cannot continue to do so, so that although you remove the provision that we now lend only 90 percent, and allow us to lend 100 percent, we would still get an effective value in cases of the standard that you set forth in the act.

Mr. WILLIAMS. On what basis do you calculate the tax exemption? Mr. STRAUS. On the actual value of the property as assessed, as though it were assessed in full.

Mr. WILLIAMS. After it is completed?

Mr. STRAUS. Yes, sir; comparable to the amount we pay, for instance-may I take as an example Illinois again? There is no harm in referring to it again, as it is very fresh in my mind.

Mr. MEEKS. As soon as you get through with this statement, I would like to ask you a question about Illinois.

Mr. STRAUS. I hate to go back to Illinois, for I do not want to pick on individual States. Would it be better to take New York? Mr. MCKEOUGH. Take Illinois. We can stand it.

Mr. WILLIAMS. Is the tax remission based on the present value of the property, or on the property after the Government has spent the money?

Mr. STRAUs. If the amount of the contribution were based on the present value of the land, it would be much easier to handle, because then we would not have these high assessments, but the cities assess the properties when completed at approximately 80 percent of the cost, and in Illinois, or New York, or Pennsylvania, if there is no tax

exemption on the amount of the taxes levied against the property, the tax per-room-per-month basis would vary from $1.70 to $2.

Mr. SPENCE. What other contributions do the cities make, besides this tax exemption?

Mr. STRAUS. We occasionally get a park, and sometimes a contribution of water service, but, by and large, it is usually tax exemption.

Mr. WILLIAMS. What would be that contribution if based on the present value?

Mr. STRAUS. Doesn't that depend on the present value of the property? If you are building on expensive land, the valuation of course would be high, but if on the other hand you are building on cheap land, it would be very small.

Mr. WILLIAMS. But if the improvement put on that land is put there at the expense of the Government, the city is not losing anything, is it?

Mr. STRAUS. I do not want to answer that question, but I wholly agree with you.

Mr. SPENCE. I am very much interested in the credit for tax exemption. You have a project in my district, in Covington, in the State of Kentucky, where the only private property that can be exempt from taxation is that given to a manufacturing plant by the municipality as a condition to their locating there for a period of 5 years.

I want to know what constitutional right there exists in the Legislature of Kentucky to exempt you from taxation.

Mr. STRAUS. I am afraid you have me above my depth on a legal question. I have a record here that we made a loan in Louisville Ky., and I know that we would not have made the loan unless both the local legal lights and my own counsel were convinced that the provision for the tax exemption were valid. However, I am not a lawyer, and I base that on what somebody else has told me.

Mr. SPENCE. I do not want you to go any further, if you will just grant it. [Laughter.]

Did Louisville contribute here portion in tax exemption?

Mr. STRAUS. The Louisville contribution is actually 53 percent, 53.7 percent of our contribution. The federal annual contribution is $165,000, and the local contribution is $89,000.

Mr. SPENCE. Is that in tax exemption?

Mr. STRAUS. Yes, sir, mainly.

Let me get this thing straight. A portion of it is in the donation of streets and parks, but most of it is in tax exemption.

Mr. MEEKS. You spoke about some difficulties in Illinois on the question of contribution. I did not quite get what you said. The difficulties were something in the constitution, I believe. Did I understand it correctly, that you had certain difficulties in Illinois about getting contributions, or exemptions?

Mr. STRAUS. Let me see if I can answer you, sir. As to whether that is correct, yes. The question was asked by one member of the committee as to whether there were constitutional obstacles to granting this tax exemption in certain States. I said, yes; and one of the gentlemen asked me if we are not having constitutional difficulties in Illinois; and I said, yes; and then I was asked further questions as to the nature of the constitutional difficulties, and I pleaded off on the ground that I am not a lawyer and I did not fully know.

68538-38-2

Mr. MEEKS. In other words, you do not understand what the difficulties in Illinois are?

Mr. STRAUS. No; I am under the impression, from the statement of counsel, that the matter could be amended by an act of the legislature, but I also understand that there are some difficulties

Mr. MEEKS. Just a little further. What efforts have been made in the line of correction of the difficulties? You approached the Governor, I believe? You stated that?

Mr. STRAUs. Yes.

Mr. MEEKS. How far did you get with the Governor on that subject?

Mr. STRAUS. How far did I do what?

Mr. MEEKS. How far did you get into the matter with the Governor of Illinois?

Mr. STRAUS. I drafted a letter which I first signed myself, in one form, to the Governor, and subsequently, at the request of the President, I brought to him a group of letters addressed to governors of States which did not have adequate enabling legislation. One of those letters was to the Governor of Illinois, and that letter was dispatched by the President, and a reply was received to the effect that the matter would have the Governor's attention.

I do not have that letter with me.

Mr. MEEKS. It then was presented to his attorney general, as I understood you. There is no opinion from the attorney general of Illinois?

Mr. STRAUS. I do not honestly know that. I know that there is uncertainty as to whether it can be cleared up by an act of the legislature.

Mr. MEEKS. If it is a constitutional question, it cannot. It would require an amendment to the Constitution, which would necessitate a general election on that point, and it would have to be carried by a majority of the entire vote cast. It cannot be done by the legislature, if it is a constitutional question.

Mr. STRAUs. But we are not certain it is.

Mr. MEEKS. I am interested in this how this-act can be applied to the State of Illinois. I had that question up when we had the original bill here, and nobody seemed to be able to answer it, except to say that it would apply.

Now, as I get it, and if I am in error I want to be corrected, the policy of your administration is to apply the beneficial terms of the act to the larger centers of population. In Illinois it would be Chicago. In the State of New York, it would be certain large cities. In Michigan it would be Detroit; in Missouri, St. Louis; in Maryland, Baltimore; and in Massachusetts, Boston; in Pennsylvania, Philadelphia and Pittsburgh, and so on.

Now, as to cities running from 5,000 to 6,000 people, on up to 40,000 to 50,000 people, how is this act supposed to be administered? Mr. STRAUS. Mr. Chairman, I would like to answer the Congressman, if I may. I would say that his statement was made without complete knowledge as to how the act has actually worked out in practice.

The bulk of our loans, and the bulk of our earmarkings, in number but not in amount, are to smaller cities. They range down to the very small popluations. May I run over a few?

Mr. MEEKS. In our State. I am particularly interested in Illinois. Mr. STRAUS. Mr. Chairman, I am perfectly helpless in Illinois. There is not any use earmarking in Illinois, if they have not any statute which enables them to take advantage of the act, and therefore we cannot earmark in Illinois.

Mr. MEEKS. Have you attempted to do so?
Mr. STRAUS. Yes, sir.

Mr. MEEKS. How far have you gone in that respect? I expect to interest myself in this very question. It is a question of changing the constitution in some way in the State of Illinois, and I want to lend my influence in that direction. If you are not prepared to answer here, I would like to get some communiction from your office as to the difficulty in our State.

Mr. STRAUS. Thank you for saying that, sir.

May I answer the other question as to Illinois? In Illinois we have three earmarkings, $16,000,000 for Chicago, $1,500,000 for East St. Louis, and $1,500,000 for Peoria, but I would like, Mr. Chairman, not to confine the thing just to one State and answer the point raised there, which I think is important; but I would like to say this, that this is not at all a program that is working only in the large cities, but it is working out everywhere.

I will run over this: In Alabama, our earmarkings are as follows: Birmingham, $4,500,000; Gadsden, $900,000; Mobile, $1,400,000. In California: San Francisco, $15,000,000.

Bridgeport, Conn., $6,500,000.

In Florida: Jacksonville has an actual contract of $1,027,000. Miami is here earmarked at $2,250,000; Orlando, $450,000; Pensacola, $900,000; St. Petersburg, $900,000; and Tampa, $1,500,000.

In Georgia, there is Athens, $270,000 earmarked-and Athens happens to have a population of 18,000 that is associated with certain family memories, and I happen to know the figure; Augusta has an actual contract for $1,369,000, and Savannah is earmarked for $2,700,000.

I do not want to read the whole thing.

Mr. FARLEY. Read Indiana while you are at it.

Mr. STRAUS. Indiana: Anderson, $750,000. Indiana is one of the livest States; they are at it all the time.

Mr. FARLEY. How about Fort Wayne?

Mr. STRAUS. Anderson, $750,000; Decatur, $50,000; Delaware County, $400,000; Fort Wayne, $1,500,000; Kokomo, $600,000; Muncie, $900,000; and Vincennes, $270,000.

Mr. PATMAN. Read Texas.

Mr. STRAUS. Austin, $643,000, which was the first one signed up, as A is in the beginning of the alphabet, and they were very active and very alive; El Paso, $900,000 earmarked; Fort Worth, $2,000,000; Houston, $2,250,000; San Antonio, $3,600,000; and Temple, $180,000.

Mr. TRANSUE. Will you read Michigan?

Mr. STRAUS. In Michigan we are completely estopped by the local situation. Under the Michigan law, no housing commission may be established except in one city, Detroit. That is one of the States that I am most troubled about, but we have an earmarking for Detroit of $25,000,000, and at the risk of skimming off the cream of news coming shortly, I think it will be in the next batch of contracts.

Mr. GOLDSBOROUGH. Gentlemen, don't you think it would be better to have Mr. Straus send you the earmarkings in your States? Mr. PATMAN. Suppose that we put it in the hearings on this bill. Mr. WILLIAMS. Just one question in that connection.

Mr. MEEKS. Pardon me just a moment. I had not quite finished. Now, may I have, for Illinois, a statement from your office as to the difficulties that you encountered? I see that you earmarked nothing under 100,000 population there. I would like to get what the local difficulty is in Illinois, because if we are going to pass a nice fat pie around, I want our State to get some of it.

Mr. STRAUS. Yes, sir; and I am certainly with you, and I will appreciate your help.

Mr. MCKEOUGH. May I offer an amendment to that request?

Mr. MEEKS. I do not know about an amendment. You may offer a suggestion, and I will see whether I will accept it.

Mr. MCKEOUGH. Will you be good enough, Mr. Straus, when you reply to Congressman Meeks, to furnish me with similar information, and amplify it, if you will, by indicating what action has been taken to cure the disability?

Mr. STRAUS. I certainly would like to do it, and I appreciate the invitation.

Mr. GOLDSBOROUGH. Will you do this, for the benefit of the members of the committee? Will you include in your statement the various earmarkings which you have in the different States in the Union?

Mr. STRAUS. Do you mean to put it in the record, or read it?
Mr. GOLDSBOROUGH. Put it in the record.

Mr. STRAUS. I will do that. (Exhibit III.)

(The statement referred to is as follows:)

EXHIBIT III

The complete list of total commitments to date (including earmarkings outstanding, today's earmarkings, and loan contracts, signed) for 77 cities in 23 States and also the Territory of Hawaii is as follows:

State and city

Alabama:

Birmingham..

Gadsden...

Mobile

California: San Francisco.

Connecticut: Bridgeport.

Florida:

Jacksonville.

Miami.

Orlando..

Earmarkings
outstanding tracts signed

Loan con

State total

$4,500,000

900,000

1,400,000

15,000,000

6,500,000

$1,027,000

$6,800,000 15,000,000

6,500,000

2,250,000

450,000

Pensacola.

900,000

St. Petersburg

900,000

Tampa.

1,500,000

7,027,000

Georgia:

Athens..

270,000

Augusta.

1,369,000

Savannah.

2,700,000

4, 339, 000

Hawaii.

2,400,000

2,400,000

Illinois:

Chicago..

16,000,000

East St. Louis.

1,500,000

Peoria.

1,500,000

19,000,000

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