The estimate of approvable demand for the next 2 years takes into account the Urban Renewal Administration's procedures under which additional projects for cities already participating in the program are approved only upon an adequate showing that the community is carrying out its existing projects successfully and has the need and capacity to undertake additional projects.

Increase in nonresidential exception.-Under the urban renewal legislation as originally enacted in 1949, a project area had to be "predominantly residential in character" before redevelopment or "to be developed or redeveloped for predominantly residential uses." This strict requirement was changed by the Housing Act of 1954 to permit 10 percent of the authorized capital grant funds to be used for nonresidential projects, subject to certain restrictions. The Housing Act of 1959 raised the nonresidential limitation to 20 percent and eliminated certain of the restrictions. In the Housing Act of 1961, the nonresidential limitation was raised to 30 percent. This bill would increase the limitation to 35 percent.

The authority to undertake a limited amount of nonresidential renewal has been extremely valuable to cities in helping them eliminate blight and obsolescence in their commercial and industrial areas. The revitalization of these areas through urban renewal is essential to prevent the continued erosion of cities' economic and tax resources and to maintain their capacity of provide essential public services and to undertake comprehensive renewal programs including both residential and nonresidential projects. Unless their commercial and industrial areas are renewed, many cities will continue to lose the job-producing private enterprises that help many of their residents to afford better housing, new or rehabilitated.

Cities are becoming increasingly aware of the valuable part that nonresidential projects can play in a balanced urban renewal program, and are indicating a growing interest in undertaking these projects. The 30-percent limitation is now being fully utilized, and the known demand for nonresidential projects exIceeds the limitation.

Increased capital grants for redevelopment areas.-At present, three-fourth, rather than the usual two-third, urban renewal grants may be made to any community with a population of 50,000 or less. This limit is raised to 150,000 in the case of a community situated in an area designated as a redevelopment area under section 5(a) of the Area Redevelopment Act. The bill would authorize these three-fourths grants also for any community with a population of 150,000 or less in an area designated under section 5(b) of the Area Redevelopment Act.

When the Area Redevelopment Act was enacted, it was assumed that all urban areas eligible for designation as redevelopment areas would be so designated under section 5(a) of the act. It was assumed that designation as a redevelopment area under section 5(b) of the act would be used for very small communities and rural areas for which unemployment data were not readily available. However, the Area Redevelopment Administration has determined administratively that only areas having a labor force of 15.000 or more persons shall be designated as redevelopment areas under section 5(a). As a result, areas truly urban in nature, and with communities having a population between 50,000 and 150,000, have been designated as redevelopment areas under section 5(b) of the Area Redevelopment Act. Accompanying this statement is a list of the 18 areas which are so classified as of January 31. By virtue of being designated under section 5(b) rather than section 5(a), communities of over 50,000 in these areas are ineligible for the three-fourths capital grant available within redevelopment areas designated under section 5(a).

Adequate housing for relocated individuals.—Since the inception of the urban renewal program, there has been a requirement that a community undertaking an urban renewal project make adequate provision for the relocation of displaced families and that there be available to such families decent, safe, and sanitary dwellings within their financial needs, in the urban renewal area or in other areas not generally less desirable. The bill would extend this principle to individuals, because all displaced persons-whether families or individuals— should be assured of assistance in finding decent, safe, and sanitary housing. Although realistic relocation plans must recognize that a significant proportion of individuals may not use such assistance, we believe that it will be of benefit to many individuals and that it can be especially helpful to the elderly and needy.

In order not to disrupt clearance or rehabilitation in projects already planned on the basis of housing resources available to families, the requirement as to individuals would become effective only for projects which receive Federal recognition subsequent to the effective date of this act.

General neighborhood renewal plans.-Under present law, advances repayable from later urban renewal grants are provided for the preparation of general neighborhood renewal plans for slum and blighted areas of such scope that the necessary urban renewal activities may have to be "carried out" in stages over a period of up to 10 years. The bill would revise these provisions in two ways. It would allow such a plan to cover activities to be "initiated" rather than "carried out" within 10 years. Experience with urban renewal activity in GNRP areas has proven the original requirement to be unrealistic. It would also permit the GNRP area to include areas which did not themselves qualify for urban renewal treatment but which has problems specially related to the rest of the GNRP area. This would permit unified planning for well defined residential or commercial areas, including subareas which are not in themselves so blighted or deteriorated as to require urban renewal. For example, the street capacities and requirements of an entire neighborhood could be studied, where that neighborhood was later to receive urban renewal assistance through a series of projects which would cover most but not all of the area.

On the other hand, the proposal would not make eligible for urban renewal activities any areas not presently eligible; and it would not provide any increased grant assistance, through noncash credits or otherwise, to urban renewal projects carried out in the area.

Disposal of land for low- and moderate-income housing.-Under present law, property in an urban renewal area may be disposed of at fair value for the "provision of new or rehabilitated rental or cooperative housing for occupancy by families of moderate income," rather than at the regular market value of the property. The bill would allow such disposition for housing of moderate-income individuals as well as families.

It would also provide a new method of determining the fair value of property in an urban renewal area which is made available to local housing agencies undertaking low-rent housing projects. At present, such land is sold to the local housing agency at a price equal to the fair value of the land for private rental housing having physical characteristics similar to the proposed low-rent housing. Under this bill, property (including land and structures) for low-rent public housing would be made available at the same price as property made available for moderate-income housing under the provisions I have described. This would result in a uniform sales price for such property whether sold for public housing use or for moderate-income housing use. It would also remove the anomaly of a higher price for land to be used for low-rent public housing than for moderateincome housing.

Amendment of definition of “going Federal rate.”—Under present law, loans, or advances for urban renewal projects must bear interest at the "going Federal rate" in effect at the time the loan contract was authorized or, in the case of later additional amounts loaned or advanced, at the time the increase was authorized. Since the "going Federal rate" at the time of such an increase is often different than at the time of the original loan or advance. this requirement has resulted in some projects having loans or advances outstanding with as many as five or six increments, each bearing a different interest rate. This has caused difficult and expensive accounting problems both for the LPA and the Federal Government.

The bill would provide a solution to these problems by requiring the Administrator to set a single interest rate (based on the "going Federal rate" on the date of the authorization of the contract) for all urban renewal contracts for loans or advances authorized after the effective date of this bill. This rate would be applicable not only to the amount originally authorized, but also to any additional amounts authorized by subsequent amendments to the contract.

A corresponding revision would be required in any outstanding contract for loan or advance when it was first authorized to be amended after enactment of this bill. The single interest rate applied to the then outstanding balance (and to any additional amounts provided by future amendments) would be based on the "going Federal rate" in effect on the date the contract amendment was authorized. Under present law and procedures the interest rate on the amount authorized by each contract and by each amendment to a contract is subject to redetermination approximately 5 to 51⁄2 years after each individual authorization. While the interest rate may be increased if at the time of redetermination the

"going Federal rate" has increased, it may not be reduced. The bill would require periodic revision also of the proposed new single-rate contracts, to apply the then effective rate, whether higher or lower, to the outstanding balance of the contract (and to any additional amounts provided by future amendments made before the next periodic revision).

Consolidated loans for two or more projects.-The bill would permit a local public agency to "pool" all of the Federal loans which it obtains for urban renewal activities so that it can keep such borrowing to a minimum. At present, temporary financing for projects is handled on the basis of treating each project as a separate financial undertaking, and funds lent for the project cannot be used for another. This means that if an LPA is concurrently undertaking several projects, it may need to borrow funds for one project at the same time as it has unused funds on hand for another. The new provision in the bill would correct this situation. It would authorize the Administrator to enter into a single loan contract with an LPA covering the temporary financing needed for all of its urban renewal activities. The amount of the loan so contracted for would not exceed at any one time the estimated expenditures to be made by the LPA for the projects then covered by the loan, and the contract would be amended as the LPA undertook or completed projects or revised its estimates of need for project loans.

The assets of the projects in the locality brought under the single loan contract would serve as security for the loan. However, the rights and obligations of the United States and the LPA with respect to the projects would continue to be set forth in separate capital grant contracts for each project.

The proposed single loan contract procedure should result in considerable savings. The reduced loan amount outstanding at any one time will result in reduced interest costs to the LPA. Also, there will be fewer borrowing transactions, with a consequent reduction in overhead and administrative expenses both to the LPA and to the Federal Government.

Under the proposed amendment to the "going Federal rate" interest requirements, described in the last section above, the interest rate for these new consolidated loan contracts would be established at the "going Federal rate" at the time the consolidated contract is authorized, and all subsequent borrowings will be at that rate, subject to periodic revision as provided in the proposed interest rate amendments.

Because of their special nature and relatively limited use, the new consolidated loan contract provisions would not be applied to the temporary loans authorized for early land acquisition and for the provision of public buildings or facilities in connection with open or predominantly open land projects. These will continue to be handled separately as they are at present.

Urban planning assistance program

The urban planning assistance program, carried on under section 701 of the Housing Act of 1954, provides grants to State and local planning agencies to pay two-thirds of the cost of preparing comprehensive development plans and programs. Grants are made for comprehensive planning of small communities and counties, metropolitan areas and urban regions, States, and interstate regions. The bill would strengthen this program and increase its authorization, as follows:

Grant authorization.-The present $75 million limit on planning grants under this program would be removed. However, additional funds would still be made available only through appropriations.

The urban planning assistance program has matured rapidly in recent years. Prior to the passage of the Housing Act of 1961, annual approvals of grant applications had fluctuated around the $3 million level for several years. In fiscal year 1962 the program level rose to over $18 million and continued at close to that rate through fiscal year 1963. In this fiscal year, $21.2 million in grant funds have been appropriated, leaving only $2.3 million in unused authorization. In his budget for 1965, the President requested the appropriation of $25 million for this program.

Urban and regional planning grants.-The bill would permit a grant to be made for planning assistance to any group of adjacent communities of less than 50,000 total population and having common or related urban planning problems, whether or not "resulting from rapid urbanization," as now specified in the statute. Experience has shown that there are groups of communities with declining, stable, or only normally increasing population, which are in need of comprehensive planning assistance.

Another amendment would authorize grants to metropolitan and regional planning agencies for the provision of planning assistance to certain small communities and Indian reservations when the State planning agency or Governor assents. Generally, these areas may now only receive planning assistance through a State planning agency, acting directly or through a contract with a metropolitan or regional planning agency. The availability of direct planning assistance from the metropolitan or regional planning agency would permit closer coordination between planning for such smaller areas and overall metropolitan or regional planning.

The bill would permit planning assistance, without regard to the otherwise applicable 500,000-population limitation, to all municipalities and counties in redevelopment areas designated under section 5 of the Area Redevlopment Act, rather than just those in areas designated under section 5(a) as now permitted. Since both section 5 (a) and (b) are economically depressed areas and would benefit from comprehensive planning, there appears to be no basis for not providing them equal treatment.

The bill would also permit three-fourths grants to be made for planning being carried out for a municipality, county, group of adjacent communities, or Indian reservation located in any redevelopment area. At present the higher grant is authorized only for planning being carried out for municapilities and counties in redevelopment areas designated under section 5(a) of the Area Redevelopment Act.

Planning grants for new communities.—The bill would also authorize grants to planning agencies for the preparation of plans for new communities, as I have previously described.

Planning grants for Indian reservations.-Although Indian tribes on reservations are in fact units of local government, they do not qualify as one of the various types of local political subdivisions to which section 701 planning assistance may now be provided, either directly or through State planning bodies. Moreover, it is doubtful whether some State planning agencies are authorized to assist Indian tribes, because of the special Federal status.

Therefore, the bill would authorize section 701 grants to be made to State planning agencies for the provision of planning assistance to Indian reservations. Where no State agency is so empowered, it would authorize such grants to a qualified tribal council or other tribal body designated by the Secretary of the Interior. Conforming changes would be made by adding "Indian reservations" to the list of areas where comprehensive planning is to be encouraged through section 701 grants and by adding "Indian tribal bodies" to the list of local public bodies to which the Administrator may provide technical assistance in connection with comprehensive planning.

Under other provisions of the bill, these grants for planning for Indian reservations could be increased to three-fourths grants where the reservation is located within a redevelopment area. As of April 1, 1963, there were 52 such reservations.

Urban renewal demonstration program

The urban renewal demonstration program, carried on under section 314 of the Housing Act of 1954, provides grants to public bodies to pay two-thirds of the cost of demonstrating new or improved techniques for preventing or eliminating slums and urban blight. The present $5 million authorization for this program is expected to be completely committed by the end of fiscal year 1964. In order to continue the operation of this program, including the new provisions I will describe, the authorization would be increased to $10 million.

At present, a public body undertaking a demonstration project must pay onethird of the cost of all project activities, including the cost of writing and publishing a report. Because of the benefit accruing to a public body from the undertaking of a demonstration project, it is reasonable to require that it share in the cost of conducting the demonstration. However, the report and its distribution are primarily of national rather than local benefit. The bill would therefore retain the present two-thirds limitation on the Federal portion of the cost of carrying out a demonstration project, but would permit the grant to the public body to cover the full cost of writing and publishing the report on the project. "Writing" would include the normal administrative costs associated with preparing a written report. "Publishing" would embrace the necessary preparatory work, including associated activities such as editing; design and layout; and typesetting, printing, and distribution.

In some cases, it is more economical or more expedient to have project reports written and published under the direct supervision of the Administrator rather than by the public body which undertakes the actual demonstration. The bill, therefore, also contains language to permit the Administrator to expend these funds directly for that purpose.

The section 314 program has been operating for some 9 years, and several of the original reports that are still in demand are out of print. Heretofore, it has been difficult to arrange for the reprinting of these reports because of the understandable reluctance of a public body to expend its own funds on the necessary one-third share of the cost of the reprinting, which is of little or no benefit to it. The Administrator would, therefore, be authorized to pay for the full cost of reprinting out-of-print reports.

In many instances, worthwhile new techniques and ideas that would be of use to other communities in their efforts to prevent and eliminate slums and blight have been developed without the assistance of a section 314 grant. However, these new techniques and ideas are of little use to other communities unless reports on them can be written and distributed to those who are interested. To meet this need, the bill would authorize the Administrator to expend section 314 funds to pay for the full cost of writing and publishing reports on such innovative activities which were carried out under other than section 314 auspices. This provision will help to meet one of the major needs of the urban renewal program-the need to provide all local public agencies with information from any source that can be used to improve their own programs.

The bill would also permit the Administrator to pay the full cost of preparing and publishing summaries and other informational material on reports financed under section 314. Such summaries, containing the central findings of demonstration projects, can be distributed more economically and more widely than the full reports.

TITLE IV-HOUSING FOR LOW-INCOME FAMILIES

Authorization for additional low-rent housing units

Since it was authorized in 1937, the low-rent housing program has involved the provision of more than 700,000 housing units, including units now under development. These units are located in more than 2,000 localities of all sizes, in all parts of the country.

The bill would increase the limit on contracts for annual contributions in the amount necessary to authorize some 60,000 additional units of low-rent housing in each of the next 4 fiscal years.

This authorization would permit contracts for units to be newly constructed at an annual 35,000-unit rate, which is consistent with the rate at which new units were placed under contract in fiscal year 1963, and with the average annual rate that has governed the program over a substantial period of time since enactment of the Housing Act of 1949.

The authorization would also permit advantage to be taken of an opportunity which now exists to broaden the basis of the program, and to enhance its responsiveness to local conditions, through use of the existing housing supply. Based on existing and prospective market conditions, we estimate that over the 4-year period about 100,000 units could be covered under this approach, with an average 25.000-unit yearly rate. This would include an estimated 60,000 units to be provided through purchase or through purchase and rehabilitation, and about 40,000 units to be secured through appropriate lease arrangements.

The total authorization-covering some 240,000 units over the 4-year periodrepresents our judgment as to what progress may practically be achieved toward meeting low-income housing needs. It would represent the combined use of past experience under the regular program and of present and prospective opportunities involving existing housing. Yet this number, when added to the 525,000 units which it has been possible to provide out of the original authorization contained in the Housing Act of 1949, produces a total which is still short of the 810,000 units which the Congress determined should have been built over a 6-year period ending nearly a decade ago. More important, this authorization, while representing our best judgment of what constitutes a reasonable and practical program rate, is nevertheless modest when set against the current total need. This need may be measured in various ways.

There are, for example, 9.3 million, or 20 percent of the total families in the United States with incomes of less than $3,000 in 1962. ilies are 11 million children, or one-sixth of our youth.

Included in these famSince the median income