JUSTIFICATION OF THE ESTIMATES

SALARIES AND EXPENSES

For an additional amount for salaries and expenses, including $250,000 for farm housing research and study programs as authorized by subsections (b) and (c) of section 506 of the Housing Act of 1949, as added by section 805 of the Housing Act of 1961 (42 U.S.C. 1471), $2,400,000.

EXPLANATION OF LANGUAGE

The language for salaries and expenses would provide an additional sum of $2,400,000 to be added to the amount contained in the Department of Agriculture and Related Agencies Appropriation Act, 1962, for the Farmers Home Administration. This amount would include $250,000 for farm housing research and study programs to be allotted to other agencies of the Department.

PURPOSE AND NEED FOR SUPPLEMENTAL FUNDS

The supplemental funds for salaries and expenses are needed to employ additional personnel and meet other costs in making additional farm housing building loans and grants, and loans for enlargement and development of farms during 1962, as authorized and made possible by the Public Law 87-70 amendments to title V of the Housing Act of 1949. These amendments extended the expiring authorities of the act, provide additional funds for loans and broaden substantially the authorities for loans and grants. This estimate relates partially to the proposed appropriation of $10 million including $500,000 for grants for repair and improvement of rural dwellings and farm buildings authorized by section 504 (a), and $9,500,000, for enlargement and development loans authorized by section 504 (b) of the act.

FARM HOUSING GRANTS AND LOANS

For grants and loans for the purposes of subsections 504(a) and 504(b) of the Housing Act of 1949, as amended (42 U.S.C. 1474), $10 million, to remain available until June 30, 1965.

EXPLANATION OF LANGUAGE

The new language provides for the appropriation of $10 million, authorized by section 513(b) of title V of the Housing Act of 1949, as amended, to be used for making farm housing grants for repairs and improvements to rural dwellings, related facilities and farm buildings authorized by section 504 (a) of the act, and enlargement and development loans authorized by section 504(b) of the

act.

LOAN AUTHORIZATIONS

The additional loan authorization of $37,500,000 provided under this head in the Department of Agriculture and Related Agencies Appropriation Act, 1962, shall also be available for loans under the act of August 28, 1937, as amended.

EXPLANATION OF LANGUAGE

The Farmers Home Administration item of "loan authorizations" of the Department of Agriculture and Related Agencies Appropriation Act, 1962, contains a contingency authorization to borrow $37,500,000 from the Secretary of the Treasury as necessary for the expeditious and orderly conduct of the farm operating loan program under title II of the Bankhead-Jones Farm Tenant Act, as amended. The proposed language would make this contingency authorization also available, under the same conditions, for soil and water conservation loans under the act of August 28, 1937, as amended.

PURPOSE AND NEED FOR SUPPLEMENTAL FUNDS

Additional funds for soil and water conservation loans are urgently needed. A heavy new and unexpected loan demand is resulting from the severe drought conditions existing in many States which are stimulating the interest of farmers and ranchers in conserving existing water supplies and developing new sources

of supply. The $3 million provided in the 1962 appropriation act has already been obligated or committed for applications from associations and individuals which were carried over from the fiscal year 1961, and no funds are available to meet the demand for additional credit assistance in the drought areas.

Mr. THOMAS. We are delighted to have you.

We have with us this afternoon this distinguished group from the Farmers Home Administration in the Department of Agriculture, who are here in behalf of the supplemental requests contained in House Document No. 217. It is certainly nice to have with us Mr. Bertsch, the Administrator, Mr. Polk, the Director, Real Estate Loan Division, Mr. Barnard, Director, Budget and Statistics Division; Mr. Rodenhiser, Assistant Administrator for Agricultural Research Service, Mr. Wall, Chief, Agricultural Finance Branch, Farm Economics Dvision, Economic Research Service, and Mr. Dashner, Deputy Director, Office of Budget and Finance of the Department.

Welcome, gentlemen. We have got a very interesting subject before us. There are a lot of details in your justification. You have set forth a lot of good figures. They contain a lot of information. Do you have a statment for us, Mr. Administrator?

Mr. BERTSCH. I have, Mr. Chairman.

GENERAL STATEMENT

First of all, my colleagues and I are happy indeed for this opportunity to meet with you.

Mr. Chairman, two of the three supplemental items for the Department of Agriculture are the result of the recent enactment of the Housing Act of 1961, Public Law 87-70. This law extended and expanded the otherwise expiring authorities for rural housing loans and grants and rural housing research and technical studies. First, is an appropriation item of $10 million for farm housing grants and enlargement and development loans administered by the Farmers Home Administration.

Mr. THOMAS. Was your expiring authority from 1958 to 1961 a back door approach to the Treasury for your loans or was that appropriated funds?

Mr. BERTSCH. The Housing Act of 1949 as extended was to expire on June 30, 1961, and the recent omnibus housing bill extended that. Mr. THOMAS. You had a carryover of $427 million in that bill. Was that back-door spending or appropriated funds?

Mr. BERTSCH. Yes, it is a borrowing authorization.

Mr. THOMAS. That is what I thought. Please proceed.

Mr. BERTSCH. Second is a proposed additional amount of $2.4 million for salaries and expenses of the Farmers Home Administration in connection with the expanded rural housing loan program, of which $250,000 is for carrying out, through other agencies, the new and expanded authorization for rural housing research and technical studies contained in the Housing Act of 1961.

The third item is a proposed language change which would make the existing 1962 contingency loan authorization of $37.5 million for farm operating loans also available on a contingency basis for soil and water conservation loans.

I would first like to discuss the two rural housing estimates and to explain the relationship of the proposed supplemental estimates to the present program as recently extended and expanded.

RURAL HOUSING LOANS AND GRANTS

Public Law 87-70 made available for a 4-year period ending June 30, 1965, approximately $427 million for building loans.

This includes the $227 million to which you referred, Mr. Chairman, which was carried over, and an additional $200 million which was authorized in the Housing Act of 1961.

GRANTS AND ENLARGEMENT AND DEVELOPMENT LOANS

Mr. THOMAS. You are discussing grants and loans under the Farm Housing Act?

Mr. BERTSCH. That is correct.

In addition the act includes authority during the 4-year period for appropriations aggregating up to $50 million for grants and enlargement and development loans. The estimate of $10 million, which is part of the $50 million appropriation authorization is composed of $500,000 for grants and $9.5 million for enlargement and development loans.

Grant authority is limited under the statute for the purpose of assisting needy families in rural areas to make minor repairs and improvements to their dwellings and to other farm buildings in order to make them safe and sanitary and to remove hazards to the health of the occupant, his family, or the community. The statute provides for grants alone, or grants in combination with loans for making minor repairs and improvements to the owner's dwelling and other buildings. Assistance under this authority may not exceed $1,000 in the form of a loan or a combination loan and grant, and a grant may not exceed $500 whether in combination with a loan or as a grant alone.

Mr. THOMAS. What is the limitation on that, $500?

Mr. BERTSCH. Yes, sir.

Mr. THOMAS. That must be made to the landowner or tenant? Mr. BERTSCH. It may be made to the occupant. It may be a tenant. Mr. THOMAS. Regardless of how long he will be on the property? Mr. BERTSCH. By statute, yes. As a matter of fact, we would make such a grant only in the event that the grantee would clearly be in possession for a long enough period to be the beneficiary of the modest improvements.

Mr. THOMAS. For how long would he be forced to stay there?

Mr. BERTSCH. It would depend on the use of grant funds, whether we were repairing a set of rotten steps or putting new screens on the windows or installing a pump.

Mr. THOMAS. How long do you expect him to stay there?

Mr. BERTSCH. He would have the right to stay. He wouldn't be forced to stay.

Mr. THOMAS. The landlord would not object if he spent $500 on his property in improvements.

Mr. BERTSCH. I am sure not.

The statute provides for grants alone or for grants in combination with loans.

Mr. THOMAS. This is to subsidize the rural housing project. In truth you are subsidizing the owner of the property, are you not?

Mr. BERTSCH. Let me be sure I am giving you the right answer to that. These grants may be made to tenants, may they not, Mr. Polk?