therefore not able to pass on the increased cost over a period of time through increased rentals), I believe it would be desirable to authorize a maturity for loans in such cases greater than authorized under the regular business loan program. Also, it would be desirable to authorize less stringent requirements as to collateral and assurance of ability to repay to meet unusual rehabilitation situations which might merit additional leeway. I would favor provisions along these lines. Enclosed herewith is a draft revision of section 104 which reflects the foregoing views. The Bureau of the Budget has advised that there is no objection to the submission of this report from the standpoint of the administration's program. With kind regards, I am Sincerely, Enclosure. EUGENE P. FOLEY, Administrator. DRAFT REVISION OF SECTION 104 OF S. 2031 SEC. 104. Section 7(b) of the Small Business Act is amended(1) By redesignating paragraph (4) as paragraph (5); (2) By inserting the following paragraph after paragraph (3): "(4) to make such loans (either directly or indirectly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or defered basis) as the Administration may determine to be necessary or appropriate to assist any small business concern in financing the renovation or repair of its premises, to the extent that such renovation or repair is required in order to prevent the displacement of the concern by a federally assisted urban renewal project. However, no loan shall be made under this paragraph to a business concern which derives more than 50 percent of its income from the rental of realty."; and (3) By striking out the third sentence and inserting in lieu thereof the following: "The interest rate on the Administration's share of any loan made under paragraph (1), (2), or (5) of this subsection shall not exceed 3 per centum per annum. In the case of a loan made under paragraph (3) such rate shall not be more than the higher of (A) 2-3/4 per centum per annum; or (B) the average annual interest rate on all interest-bearing obligations of the United States then forming a part of the public debt as computed at the end of the fiscal year next preceding the date of the loan and adjusted to the nearest one-eighth of 1 per centum, plus one-quarter of 1 per centum per annum. In the case of a loan made under paragraph (4) such rate shall not be more than 5-1/2 per centum per annum." Hon. A. WILLIS ROBERTSON, THE GENERAL COUNSEL OF THE TREASURY, Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 2031, to extend and amend laws relating to urban conservation and development, the provision and improvement of housing, the availability of mortgage credit, and for other purposes. The President in his message of January 27, 1964, made certain recommendations with respect to housing, urban renewal, and community development and transmitted draft legislation to implement these recommendations. This legislation has been introduced as S. 2468 and referred to your committee. In the circumstances, the Department recommends favorable consideration of S. 2468 in lieu of action on S. 2031. The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the administration's program to the submission of this report to your committee. Sincerely yours, G. D'ANDELOT BELIN, General Counsel. 88TH CONGRESS 1ST SESSION S. 2045 IN THE SENATE OF THE UNITED STATES AUGUST 14, 1963 Mr. MILLER (for himself and Mr. MORSE) introduced the following bill; which was read twice and referred to the Committee on Banking and Currency A BILL To amend the Housing Act of 1949 to prohibit the acquisition, disposition, or demolition of buildings which are not substandard. 1 2 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, 3 That (a) section 110 (c) of the Housing Act of 1949 is 4 amended by striking out the third sentence and inserting in 5 lieu thereof the following: "For the purposes of this title, 6 the term 'project' shall not include (except as provided in 7 paragraph (7) above) (A) the construction or improve8 ment of any building, or (B) the acquisition, disposition, or 9 demolition of any building other than a substandard build 2 1 ing. The term 'redevelopment' and derivations thereof shall 2 mean development as well as redevelopment." 3 (b) Section 110 of such Act is further amended by 4 adding at the end thereof a new subsection as follows: 5 "(1) 'Substandard building' means any building other 6 than a building (1) which can be economically improved 7 or modified to meet requirements reasonably established by 8 the local public agency for integration into an urban renewal 9 plan, and (2) whose owner or lessee promptly agrees, and 10 presents satisfactory evidence that he is able, to make such 11 improvements or modifications within a reasonable time limit 12 set by the local public agency." HOUSING AND HOME FINANCE AGENCY, Subject: S. 2045, 88th Congress (Senators Miller and Morse). Hon. A. WILLIS ROBERTSON, Chairman, Banking and Currency Committee, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in further reply to your letter of August 19 requesting views of this Agency on S. 2045, 88th Congress, a bill to amend the Housing Act of 1949 to prohibit the acquisition, disposition, or demolition of buildings which are not substandard. The bill would amend the urban renewal provisions, contained in title I of the Housing Act of 1949, to prohibit Federal grant or loan assistance for the acquisition, disposition, or demolition of any building unless it was "substandard," in that it could not be "economically improved or modified to met requirements reasonably established by the local public agency for integration into an urban renewal plan," or in that the owner or lessee does not promptly agree, and demonstrate that he is able, "to make such improvements or modifications within a reasonable time limit set by the local public agency." This Agency strongly recommends against enactment of S. 2045. Its purpose is praiseworthy, in that it seeks to assure that property within an urban renewal area is, wherever possible, modified or rehabilitated to conform to the urban renewal plan rather than demolished. However, the new legislative requirements proposed in the bill are unnecessary and could well have the effect of crippling urban renewal activity throughout the Nation. The provisions of S. 2045 are somewhat ambiguous. They refer in broad terms to "requirements reasonably established by the local public agency" as the basis for judging whether a building can be integrated into the urban renewal plan. However, in specifying that each building is to be judged on the basis of whether it can be "economically improved or modified" to meet those requirements, the bill in effect concentrates entirely on the question of the structural condition of the buildings in an urban renewal area, and permits the demolition only of those which are structurally substandard to a point beyond economic repair or modification. The structural condition and usefulness of such buildings are always very important, but there are many other factors which may require demolition of a building even though-considered separate from its location—it may be entirely "standard" even without "improvements or modifications." Thus, it may be necessary to acquire and demolish (or move) buildings to lessen density, remove uses which would be detrimental to the proposed new use of the area, or provide land for a needed public facility which specially needs the site in question. Also, standard buildings, or ones easily modified or improved to standard quality, may necessarily have to be demolished to allow for relocation of a street or to make available property for new construction, such as a shopping center or large apartment complex, requiring the assemblage of a large contiguous area for most effective design and use. To require local urban renewal agencies to attempt to devise urban renewal plans which provided for acquisition and demolition only of structurally substandard buildings would completely prohibit a very great proportion of urban renewal projects and limit many others to patchwork efforts having only temporary effectiveness, while in all probability increasing project costs through reducing the usefulness and salability of the urban renewal area land to be cleared and resold. Furthermore, the bill is unnecessary. Present Urban Renewal Administration policies are already adequate to prevent the expenditure of Federal funds on unnecessary or unwarranted clearance of sound structures. The criteria which every project proposing clearance and redevelopment must meet are set forth in section 10-1, page 2, of the Urban Renewal Manual, as follows: "The necessity for clearance of a project area, or of any part thereof, must be satisfactorily demonstrated in all cases. If conditions warranting clearance do not exist, the appropriate treatment will be conservation and rehabilitation which may include spot clearance. "In a built-up project area or a sizable portion thereof which is proposed for clearance, one of the following conditions must exist: "(1) More than 50 percent of the buildings, not including accessory outbuildings, must, by reasonable criteria, be substandard to a degree warranting clearance. "(2) More than 20 percent of the buildings must be substandard requiring clearance, and substantial other clearance must be warranted to effectively remove blighting influences, such as: "(a) Inadequte street layout. "(b) Incompatible uses or land use relationships. "(d) Excessive dwelling unit density. "(e) Obsolete buildings not suitable for improvement or conversion. "(f) Other identified hazards to health and safety and to the general well-being of the community. "The LPA must also (1) show that the extent of clearance proposed is warranted, and (2) fully justify the acquisition of individual parcels of basically sound property which involves high acquisition costs and might not be incompatible with land use proposals. Every possibility must be explored to develop an urban renewal plan which permits a maximum number of sound structures to remain in the area. "HHFA will not concur in the acquisition for demolition of property that is: "(1) Of such quality and potential use that its retention is compatible with the achievement of the urban renewal plan objectives for the project area. "(2) Capable of being improved and successfully integrated into the project." We understand that one basis for Senator Miller's introduction of S. 2045 is his concern over the administration of these quoted requirements in the case of the Erieview Urban Renewal Project No. 1, Cleveland, Ohio, as described in a General Accounting Office report dated June 1963. This report has pointed up certain possibilities of misunderstanding and misinterpretation of these regulations, and the URA is presently taking steps to assure that they are both understood and followed. However, in general this Agency takes exception to both the conclusions and recommendations in that report, for the reasons set forth in detail in Commissioner Slayton's July 30 letter to Senator Sparkman, a copy of which is enclosed. The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely yours, Enclosure. Hon. JOHN SPARKMAN, Chairman, Subcommittee on Housing, Committee on Banking and Currency, U.S. Senate, Washington, D.C. ROBERT C. WEAVER, Administrator. JULY 30, 1963. DEAR SENATOR SPARKMAN: I can appreciate your reaction to the report to the Congress, dated June 28, 1963, by the Comptroller General of the United States, on the URA approval of large-scale demolition for the Erieview Urban Renewal Project I in Cleveland, Ohio. We share your concern with the importance of the issues which it raises. Consistent with this concern, we are reviewing our |