Hon. A. WILLIS ROBERTSON, DEPARTMENT OF AGRICULTURE, Washington, D.C., October 15, 1963. Chairman, Committee on Banking and Currency, DEAR SENATOR ROBERTSON: This will reply to your request of March 11 for a report on S. 981, a bill to amend title V of the Housing Act of 1949 to assist in the provision of housing for domestic farm labor. The bill would amend title V of the Housing Act of 1949 so as to authorize additional financial assistance by the Secretary of Agriculture through the Farmers Home Administration to provide housing and related facilities for domestic farm laborers. It would make domestic farm labor eligible for loans and grants under section 504 (a) of the act and for insured loans under section 514. It would also authorize two new programs: (1) Direct loans to the same classes of applicants as under section 514, including domestic farm labor, and (2) grants to State agencies, nonprofit organizations, and associations of farmers. The amendment to section 514 would add domestic farm labor to the classes of grants, in amounts up to $1,000, to domestic farm laborers to finance repairs and improvements, essential to health and safety, to dwellings occupied by them as nonowners. The amendment to section 514 would add domestic farm labor to the classes of applicants eligible for insured loans under that section. These classes now consist of farm owners, associations of farmers, States, and political subdivisions, and public and private nonprofit organizations. A new section 516 would be added to the act to provide for direct loans, to be made from a revolving fund of not to exceed $25 million, to the same classes of applicants and for the same purposes as under amended section 514. The direct loans would be limited to maximum terms of 33 years, maximum interest rates of 4 percent per annum, and applicants unable to obtain the necessary financing from other sources on terms and conditions equally as favorable. For loans to borrowers other than domestic farm labor, construction would be subject to minimum wage rates and related requirements. Rental housing financed with these loans would be subject to maximum rents determined by the Secretary of Agriculture, not to exceed capital, operating, and maintenance costs. The loans could also be made to provide housing for ownership by domestic farm labor. The authority for the new grant program would be contained in new section 517 of the act. It would authorize grants to any State or political subdivision, public or private nonprofit organization, or association of farmers to assist in providing low-rent housing and related facilities for domestic farm labor. Financial assistance provided under this section could not exceed two-thirds of the total development cost less any amount the Secretary determined could practicably be obtained from other sources, including a direct loan under section 516. The applicant would be required to agree (a) not to charge rentals exceeding amounts approved by the Secretary, (b) to maintain the housing at all times in a safe and sanitary condition in accordance with prescribed standards, and (c) to give domestic farm labor at all times an absolute priority for occupancy of the housing. By amendment to section 513, appropriations would be authorized not to exceed $75 million for financial assistance pursuant to section 517 until the end of the fiscal year 1968. This Department recommends that the bill be passed, with modifications. The need of domestic farm labor for housing, adequate by even minimum standards, is acute. While progress is being made under the financial assistance programs now authorized in title V of the Housing Act of 1949, we believe that the bill, if modified, will make available important additional means for moving toward the goal of adequate housing for domestic farm laborers and their families. The section 504 (a) amendment permitting assistance to domestic farm laborers for repairs and improvements would not restrict the location of the housing to a rural area. Since this restriction now applies to assistance to individuals under the present provisions of title V, the Department recommends that assistance to individual domestic farm laborers under the bill be also limited to rural areas. The amendment to section 504 (a) of the act would permit, for the first time, making loans and grants under this section to persons who are not the owneroccupants of the housing. Since both migrant and resident farm laborers are in the lowest income brackets and more often are tenants than owners, the amendment should increase substantially the effectiveness of this loan and grant program for minor essential repairs necessary for health and safety. This authority will be particularly helpful in connection with the large nonmigrant segment of the farm labor force. In our view, however, it would not be sound to make a loan or grant to a domestic farm laborer to repair or improve a dwelling occupied by him or his family for only a brief period during the year unless the building were used principally to house other domestic farm laborers during the rest of the year. To help assure that the benefits of section 504 (a) assistance under the bill would accrue to domestic farm laborers and their families, the following change should be made in the bill: In line 10, on page 3, just before the period insert a comma and the following: "Provided, however, that assistance to domestic farm laborers under this subsection may be provided only to repair or improve a dwelling in a rural area occupied by the applicant or his family for a substantial portion of the year and only upon such conditions as the Secretary shall prescribe to assure that the major benefits of such assistance will accrue to the applicant and his family, or to the applicant and his family and other domestic farm laborers." Section 514 of the act would be extended by the bill to include insured loans to individual domestic farm laborers to build or improve their own homes. This Department is opposed to this proposed amendment, primarily for two reasons. One is that farm laborers who own land in a rural area may now qualify for housing loans under section 502. The other reason is that the President has recommended and this Department has submitted to the Congress a proposal to make insured rural housing loans. Enactment of a broad insured loan program would be preferable to a piecemeal approach of authorizing such loans only to individuals who are domestic farm laborers. The Department recommends, therefore, that all of section 3 of the bill be deleted. The proposed new section 516 of the act would authorize direct loans to provide housing for domestic farm labor. They would be made from a $25 million revolving fund and would bear interest at a rate of not more than 4 percent. They would be available to applicants who could not obtain funds from other sources at equally favorable terms. These direct loans because of their lower interest rate would replace the insured loans authorized in section 514. Such a program would also place the Farmers Home Administration in direct competition with other lenders because other credit likely would not be available to the applicant at such favorable terms. The existing programs under title V are subject to the requirement of sections 501 (c) (2) and (3) that an applicant be unable to provide the housing and related facilities on his own account and unable to secure the necessary credit elsewhere upon terms and conditions which he could reasonably be expected to fulfill. Under this policy the Farmers Home Administration is in a supplemental rather than a competitive position with respect to other lenders. For the reasons stated, this Department recommends that all of proposed new section 516 except subsection (e) relating to the Davis-Bacon Act be deleted and that "clause (1) of subsection (a) or under" in line 23 on page 6 be deleted from subsection (e). Subsection (e) may then be transferred to section 517 as subsection (f). Also, on page 2 in line 23 the reference to section 516 should be deleted. New section 517 (a) would authorize grants to any "State or political subdivision thereof, public or private nonprofit organization, or association of farmers." We recommend that applicants eligible to receive such grants be narrowed to public agencies and nonprofit associations of domestic farm laborers by striking "or private" in line 11 on page 8 of the bill and changing "association of farmers" in the next line to "nonprofit association of domestic farm labor." In our judgment it would be incompatible with the nature of the proposed section 517 grant program to authorize grants to a profit organization, even an association of farmers. Moreover, unless perpetual dedication is to be required and enforced, with its attendant long-term costs, grants to any private organization, though nonprofit, would involve the possibility of ultimate financial benefit to the owners or members of the organization upon its dissolution and distribution of the assets. Accordingly, it is our view that no private organization should be made eligible for such grants except nonprofit associations of the intended beneficiaries of the program; namely, the domestic farm laborers. As a general rule, the right and duty of the Government to enforce requirements designed to afford further assurance of carrying out the purposes of the authorized loan programs under title V of the Housing Act of 1949 are limited in each case to the duration of the loan. Under the language of section 517 (c), housing financed with grants authorized by the section would remain subject to Government rent control and maintenance and occupancy supervision perpetually. We believe it would be advisable to make the statutory provisions more flexible. Otherwise the rigidity of the present language would ultimately result in burdening the Government with costs of supervision long after such supervision had become inappropriate or unnecessary. Therefore we recommend that on page 9 of the bill, in line 16, after the word "unless" there be inserted a comma and the following: "to any extent and for any periods required by the Secretary,". The cost referred to in section 517(b) by the language "two-thirds of the total development cost" clearly includes the cost of land. In clause (2) of section 517(a) the language "one-third of the cost of providing the housing and related facilities" may be construed as not including land cost. To make it clear that both fractions are intended to apply to the same whole, and that part or all of the applicant's contribution may consist of funds borrowed under section 514 or elsewhere, we suggest that clause (2) be revised to read as follows: "(2) the applicant will contribute, from its own resources or from funds borrowed under section 514 or elsewhere, at least one-third of the total development cost;". Also, to make it clear that a grant could not be made under section 517 to supply any funds which the applicant could borrow under section 514, on page 9 in line 13 "section 516" should be changed to "section 514." The following additional technical changes are recommended: 1. On page 8, line 10, change section "517" to "516". 2. On page 10, line 17, change "(f)" to "(g)". 3. On page 11, line 10, change "514-517" to "514-516". Since it is difficult to forecast accurately the need for future years pending actual experience, the following estimates of funds needed if the bill is enacted are based on estimates of activity to the end of the fiscal year 1964. Funds for the section 504 (a) loans authorized by the bill would be obtained as needed by borrowing from the Treasury pursuant to section 511. We estimate that $750,000 would be sufficient. Funds for the section 504 (a) grants authorized by the bill would be obtained from appropriations authorized by section 513(b). It is expected that an additional appropriation of $1,500,000 would be needed for this purpose to the end of fiscal 1964. We anticipate a demand of about $3 million for grants under section 517 until the end of the 1964 fiscal year, with an increase in demand during subsequent years. The additional workload which passage of the bill would cast upon the Farmers Home Administration could not be absorbed by its present staff without gravely impairing the agency's overall efficiency. We estimate that $500,000 would be necessary to administer the programs authorized by the bill until June 30, 1964. The Bureau of the Budget advises that there is no objection to the submission of this report from the standpoint of the administration's program. However, the, Bureau requested during our discussion of the use of insured loans under section 514 in connection with grants under section 517 of the bill that we bring to the committee's attention the administration's continued objection to the liquidity or "put" feature in the existing section 514 insured loan program. This is a particular concern since the grant feature of S. 981 is likely to have a stimulating effect on the existing program. Sincerely yours, ORVILLE L. FREEMAN, Secretary. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, October 15, 1963. DEAR MR. CHAIRMAN: This letter is in response to your request of March 11, 1963, for a report on S. 981, a bill to amend title V of the Housing Act of 1949 to assist in the provision of housing for domestic farm labor. This bill would amend title V of the Housing Act of 1949 to authorize additional financial assistance by the Secretary of Agriculture to provide housing and related facilities for domestic farm laborers including domestic migrant agricultural workers. While the technical aspects of the bill are beyond the purview of this Department the bill appears to provide a flexible program for providing safe and sanitary housing for farm laborers in a variety of situations. In general the provisions follow the recommendations made on pages 16 and 22 of the third report of the Committee on Labor and Public Welfare made by the Subcommittee on Migratory Labor, Senate Report No. 167, 88th Congress, 1st session. The Department has for many years been deeply concerned about the inadequate, unsafe, and unsanitary living arrangements of domestic agricultural workers and especially those who must migrate to follow the crops. The work of the various operating agencies of the Department brings them in close touch with the problems of farm laborers and the conditions found by our staff have been described to the Congress in reports and testimony. We are especially concerned about the high rate of infant mortality among migrant agricultural families due to diarrheal disease associated with impure water supplies and unsanitary living conditions. We therefore endorse the objectives of this proposed legislation. We defer, however, to the views of the Department of Agriculture as to whether the provisions of S. 981 are well designed to effect these objectives. We are advised by the Bureau of the Budget that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely, WILBUR J. COHEN, Assistant Secretary. HOUSING AND HOME FINANCE AGENCY, Washington, D.C., October 15, 1963. Subject: S. 981, 88th Congress (Senator Williams, and others). Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, U.S. Senate, Washington, D.C. Dear Mr. CHAIRMAN: This is in further reply to your request for our views on S. 981, a bill to amend title V of the Housing Act of 1949 to assist in the provision of housing for domestic farm labor. This bill would amend section 504 of the Housing Act of 1949 to make domestic farm laborers eligible for direct loans (or loans in combination with grants) for minor improvements to farm dwellings. At present, the benefits of this section are available only to owner-occupants of farm housing. The bill would also make domestic farm laborers eligible applicants under section 514 of the Housing Act of 1949, which presently authorizes mortgage insurance to farmowners, associations of farmers, States or political subdivisions, or public or nonprofit private associations to contract or repair housing and related facilities for domestic farm labor. In addition, the bill would authorize two new programs to provide housing and related facilities for domestic farm labor: (1) direct loans to farmowners, associations of farmers, States or political subdivisions, public or nonprofit private associations and domestic farm laborers to construct or repair housing and related facilities for domestic farm labor, and (2) grants to State agencies, public or private nonprofit organizations, and associations of farmers to provide financial assistance for the provision of low-rent housing. The Housing Agency favors the objectives of this bill. There is an urgent need for improved housing accommodations and related community facilities (such as sanitary facilities, fuel distribution systems, schools, etc.) for domestic farm labor. However, we would defer to the Department of Agriculture as to whether the proposed bill is technically adequate to accomplish its intended objectives. 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, ROBERT C. WEAVER, Administrator. .U.S. DEPARTMENT OF LABOR, OFFICE OF THE SECRETARY, Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in further response to your request for our comments on S. 981, a bill to amend title V of the Housing Act of 1949 to assist in the provision of housing for domestic farm labor. Adequate housing facilities are urgently needed by our domestic farmworkers and the lack of such housing is properly a matter of national concern. Accordingly we strongly support the enactment of legislation of this nature. While the Department defers to the Department of Agriculture for detailed comments on the overall provisions of this legislation, we are enclosing a number of suggestions regarding certain provisions of the bill of particular interest to us. The Bureau of the Budget advises that there is no objection to the submission of this report from the standpoint of the administration's program. Yours sincerely, W. WILLARD WIRTZ, Secretary of Labor. Enclosure. SUGGESTIONS, REGARDING PROVISIONS OF S. 981, OF PARTICULAR INTEREST TO THE DEPARTMENT OF LABOR 1. Subsection (e) of the new section 516 would provide labor standards protection for workers on construction financed under the direct loan and grant provisions of the bill. We strongly support the application of labor standards to this construction but suggest three technical changes in the subsection. First, we recommend deletion of the words "rural part of the" appearing immediately before the word "locality" in the last line on page 6. Second, it should be amended by inserting the words "or under section 517" after the word "section" at line 8 on page 7 of the bill, and by changing the word "section" to "subsection" at line 20 on the same page. Third, the provision regarding the payment of overtime compensation should be deleted. The Contract Work Hours Standards Act would apply by its terms, and this provision is therefore unnecessary. 2. We note with approval that the combined loans and grants under section 504 and the loan insurance under section 514 of title V of the Housing Act of 1949 would not be limited to farmworkers in rural areas. Many farm laborers throughout the country reside either year round or for a major portion of the year in areas which would not technically be considered rural. The majority of the migatory workers will probably seek assistance under the 504 provisions and such assistance should be available to them even when they live near a city. 3. We recommend that resident aliens be included in the definition of domestic farm labor for the purposes of agricultural housing programs. A large percentage of resident alien workers are, for all practical purposes, permanently |