place, the questions raised by witnesses on S. 2468 during the hearings. I might add further that the staff attempted to extract every question or issue raised by witnesses, but it is possible that some questions were overlooked. Members will notice that the questionnaire omits many sections of S. 2468. The reason for these omissions is that witnesses simply did not discuss these sections during the hearings. In this connection, members will also note that there are no questions pertaining to title V of the bill-rural housing loans and grants. Although there was discussion of this title during the hearings, the provisions of title V fall within the administrative jurisdiction of the Farmers Home Administration of the Department of Agriculture. I thought it best to exclude questions concerning title V today, since the Housing and Home Finance Administrator and heads of his constituent agencies would defer to the Department of Agriculture on questions regarding this title. If members wish, we can prepare a questionnaire regarding title V and invite officials from the Farmers Home Administration for a critique session at some later date. As I said, some questions raised during the hearings may have been overlooked and, if so, it was not intentional. Indeed, it is my hope that the questionnaire will serve to remind Senators of the issues raised by witnesses on S. 2468, and that it will provoke other thoughts and questions regarding the bill. I might also add that copies of the questionnaire were sent to the Housing Agency last Saturday morning so that Agency officials could be prepared to answer the questions this morning. Senator Douglas, do you have any comment before we start? Senator SPARKMAN. Let me say that Senator Muskie was hopeful that he would be able to attend the hearings this morning. It may be that he will come in later. However, three amendments to S. 2468 have been submitted to him by the Advisory Commission on Intergovernmental Relations, and at the request of that Commission Senator Muskie has asked that these amendments be submitted for the record, for the consideration of the subcommittee. Without objection, I should like to submit for the record Senator Muskie's letter to me concerning the matter, to which is attached an explanation and the proposed amendments. (The material referred to follows:) Hon. JOHN SPARKMAN, U.S. SENATE, Washington, D.C., March 2, 1964. Chairman, Senate Subcommittee on Housing, U.S. Senate, Washington, D.C. DEAR JOHN: Enclosed is a statement concerning three proposed amendments to the Housing and Community Development Act of 1964. These amendments were suggested by the Advisory Commission on Intergovernmental Relations, and at the request of that Commission I am submitting the amendments for consideration by the Subcommittee on Housing. Sincerely, EDMUND S. MUSKIE, U.S. Senator. EXPLANATION AND PROPOSED AMENDMENTS TO S. 2468, THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1964 Mr. Chairman, I would like to propose three amendments to S. 2468. The first would add a new section 207 to the bill to encourage use of public or com munity water or sewerage facilities in certain cases involving new housing financed with FHA or VA assistance. The second would add a new section 601 (b) (4) to S. 2468 to amend title II of the Housing Act to remove the population limit with respect to loans for water and sewerage facilities. The third would add a new subsection 310(e) to the bill to broaden eligibility requirements for Federal urban planning assistance under the Housing Act to include all municipalities and counties over 50,000 population which are undergoing rapid urbanization. PROVISION OF WATER AND SEWERAGE FACILITIES The proposed amendment to section 207 would permit the Federal Housing Commissioner to refuse assistance under the mortgage insurance program, or make any commitment to insure, any mortgage involving the construction of new housing unless this housing would be served, wherever economically feasible, by public or adequate community water and sewerage systems. In determining whether public or community water and sewerage systems are economically feasible, the Commissioner would not be governed by the fact that the establishment of such systems has not been authorized by State or local law or approved by local governmental bodies. Subsection (b) of section 207 would impose similar requirements with respect to new housing financed with assistance under the Veterans' Administration program. The Federal housing programs as presently administered go far toward encouraging provision of service by public or adequate community water and sewerage systems, wherever such systems are available or economically feasible. In some areas, however, local laws and ordinances do not authorize the construction of public or adequate community systems, though the construction of such systems is made both desirable and economically feasible by the existing or anticipated population. In such circumstances, the Federal housing officials have been unable to assure the provision of pubile or adequate community water and sewerage facilities to properties they insure despite the desirability and economic feasibility of providing such facilities. Septic tank failures, well pollution, and ground water depletion in many urban areas where public or adequate community water and sewerage facilities could, and should, have been provided testify to the undesirability of acquiescing in local ordinances or practices and insuring housing served by individual water and sewerage systems where public or adequate community facilities are economically feasible. I would like to quote from a recent press release of the Surgeon General of the Public Health Service announcing that the Service is stepping up its attack on the health problems caused by the indiscriminate use and failures of septic tanks and private wells in suburban areas of the country. "These individual systems of water supply and waste disposal have caused problems in almost every urbanized area where they have been used, Dr. Terry pointed out, and said that his action follows resolutions adopted separately in recent weeks by the Advisory Commission on Intergovernmental Relations, and the Association of State and Territorial Health Officers, which met in Washington last week. ""The use of individual wells and septic tanks on the fringes of our cities,' Dr. Terry said, 'often endangers public health, rarely provides a permanent solution to the problem of obtaining water and disposing of wastes, and encourages urban sprawl. The only real answer for suburban areas is community systems of water supply and waste disposal, and the encouragement of this development is the long-range objective of the Service.'" I would also like to call attention to the fact that section 201 of S. 2468, now being considered by this committee, which would establish a program of FHAinsured loans for acquisition and development of land to provide sites for residential and related uses in new subdivisions and for developing sites for entirely new communities would require that any such subdivision or new community would have to be served by public water and sewerage systems wherever these are feasible. It appears to me that such a requirement is equally desirable for the more conventional FHA mortgage insurance program. My proposed amendment would have the result of stimulating the construction of public or adequate community systems, where such systems are economically feasible, by permitting the Federal Housing Commissioner and the Administrator of Veterans' Affairs to refuse assistanec to new housing unless such housing will be served by public or adequate community water and sewerage systems. The text of this proposed amendment is as follows: 30-944-6463 "WATER AND SEWERAGE SYSTEMS "SEC. 207. Notwithstanding any other provision of this Act, no mortgage which covers new construction shall be approved for insurance under this Act (except pursuant to a commitment made prior to the date of the enactment of this section) if the mortgaged property includes housing which is not served by a public or adequate community water and sewerage system: Provided, That this limitation shall be applicable only to property which is not served by a system approved by the Commissioner pursuant to title X of this act and which is situated in an area determined by the Commissioner to be an area where the establishment of public or adequate community water and sewerage systems is economically feasible: Provided further, That for purposes of this section the Commission shall determine the economic feasibility of establishing such public or adequate community water and sewerage systems without regard to whether such establishment is authorized by law or is subject to approval by one or more local governments or public bodies." (b) Section 1804 of title 38, United States Code, is amended by adding at the end thereof a new subsection as follows: "(e) No loan for the purchase or construction of new residential property (other than property served by a water and sewerage system approved by the Federal Housing Commissioner pursuant to title X of the National Housing Act) shall be financed through the assistance of this chapter if such property is not served by a public or adequate community water and sewerage system and is located in an area where the Administrator determines that the establishment of such systems is economically feasible. For purposes of this subsection, the Administrator shall determine the economic feasibility of establishing public or adequate community water and sewerage systems without regard to whether such establishment is authorized by law or is subject to approval by one or more local governments or public bodies." Community facilities The amendment to section 601 would amend title II of the Housing Amendments of 1955 (the public facility loans program) to remove the population limitation for a public facility loan thereunder for communities seeking assistance from a water or sewerage project. Paragraphs 2 and 3 of section 601 of S. 2468 make desirable improvements in the existing community facilities program by making financial assistance under this program available for projects serving more than one community without regard to the aggregate population of the communities which it is serving, so long as each of these communities is within the existing 50,000 population limit of the program and by waiving the existing population limits on the program for municipalities which will experience substanial population growth. However, the 50,000 population ceiling limitation would still remain in effect for all other cities, counties, and other local governments. This population limitation has several major disadvantages with respect to meeting governmental responsibilities for water supply and sewage disposal in metropolitan areas. First, it directly discriminates against communities of 50,000 population or more by not permitting them to receive public facility loans. Second, it encourages fragmentation, duplication, and inadequate long-term facilities by prohibiting bond action by a number of communities within a metropolitan area to meet water and sewer needs when even one of these communities has over 50,000 population. Numerous studies have shown that public investment is inadequate in both water and sewer facilities in urban areas. Areawide approaches to the provision of water utility service and sewage service facilities offer enocomies of scale, protection against unwise investment, equalization of rates, and adequate base for long-range developmental programs with capacity for growth. The community facilities program should contribute to the maximum extent possible in meeting these water supply and sewage disposal facility needs of our urban areas in the most economical and effective manner possible. No financial assistance can be extended under the public facility loans program to any applicant unless the financial assistance applied for is not otherwise available on reasonable terms. There is, therefore, no danger that cities which now can finance water and sewerage facilities at reasonable rates with private financing will use this program as a substitute for private financing. In those cases where a community is unable to finance a facility on reasonable terms in the private market, it should not be precluded from using the public facility loans program because of its size. The text of this proposed amendment is as follows: "SEC. 601 (b(4). The last sentence of paragraph (4) of section 202(b) of the Housing Amendments of 1955 is amended by inserting after 'project' the following: (1) for the storage, treatment, purification, or distribution of water, (2) for the provision of sewerage, sewerage treatment, or sewerage facilities, or (3)' ". These proposed amendments are based on a detailed and well-documented report entitled "Intergovernmental Responsibilities for Water Supply and Sewage Disposal in Metropolitan Areas," adopted by the Advisory Commission on Intergovernmental Relations. The Commission directed its attention to the problems of achieving satisfactory water supply and sewerage disposal services in urban areas and the need for adjusting goveremental policies and practices to accommodate current and anticipated increased in population and water use in these areas. Attention should also be called to the fact that the three major organizations of local governmental officials in the United States, the U.S. Conference of Mayors, the American Municipal Association, and the National Association of Counties, have specifically endorsed these proposed amendments to the Housing and Community Development Act of 1964. Planning grants to large urban counties and cities The law establishing the Federal Government's 701 program of financial grants to assist urban planning declares the Government's strong intention of encouraging comprehensive planning for urban development. It authorizes grants to States for direct planning and assistance to municipalities and counties under 50,000 population, to metropolitan, regional, and State planning agencies, to municipalities and counties in catastrophe and economically depressed areas, and to official Government planning agencies in federally impacted areas. Nevertheless, the urban planning assistance program presently excludes Federal planning assistance to counties and cities with populations of 50,000 or greater if such counties and cities are not classified as metropolitan areas in and of themselves. Communities over 50,000 which are not experiencing rapid urbanization are likely to be eligible for adequate planning funds under the community renewal program or the area redevelopment amendment to the urban planning assistance program. Thus, the rapidly urbanizing communities above 50,000 are currently the only major segments of urban American without Federal planning assistance. Many counties and cities with populations over 50,000 are not only in the path of rapid urbanization, but are becoming increasingly important providers of services in metropolitan areas. Many such cities provide urban services beyond their own boundaries, and in many parts of the country, the county assumes an important role as a unit of Government which, while not necessarily encompassing an entire metropolitan area, nevertheless is closer to providing the benefits of areawide performance than are municipalities. Making the best of these situations, it would appear desirable to encourage comprehensive planning in cities and counties with populations of 50.000 and over. Thus, the urban planning assistance program needs to be extended to help these localities keep ahead of development pressures. The text of the third proposed amendment is as follows: SEC. 310. (e) Section 701 (a) of the Housing Act of 1954 is amended by(1) Inserting "and (7)" immediately after "(3)" in clause (c) of paragraph (1); (2) Adding a new paragraph (7) after paragraph (6), as follows: "(7) Cities, other municipalities, and counties having populations of 50,000 or greater, according to the latest decennial census, and which are experiencing rapid urbanization." Senator SPARKMAN. In addition, I have several letters from various organizations pertaining to the bill. Without objection, I should like to submit these for the record. I also have received a letter from Mr. Edward T. McGrath, associate administrator, St. Francis Hospital, Peoria, Ill., in support of S. 2253. Mr. McGrath's letter contains a brief summary concerning the bill, as well as a brochure giving an outline of St. Francis Hospital and a more detailed outline of the urban renewal program being undertaken in Peoria. Without objection, I should like to submit Mr. McGrath's letter and brief summary for the record. However, because of the bulkiness of the brochure, it will not be submitted for the record but will be held in the subcommittee's files for our ready reference. (The materials referred to follow :) Re housing for the elderly. BANKERS BOND & MORTGAGE CO., U.S. Senate, Senate Office Building, Washington, D.C. DEAR JOE: As I may have mentioned to you in a previous letter, I am a member of the Washington committee for the Mortgage Bankers Association of America. At a recent meeting in Washington, I was discussing with some other members of the committee, the lack of productivity on the part of private enterprise in terms of providing housing for the elderly under section 231 of the National Housing Act. Presumably, in this field, the great emphasis has been to provide housing for the elderly under section 212 and under section 231 as it relates to nonprofit corporations. It seems to me that the full force of the building industry has not been brought to bear on this problem, simply because we have not had an adequate program to attract it, and beyond that, the so-called limited dividend corporation program has been discouraged all along the line administratively. I would like to recommend that the section 231 limited dividend program be encouraged and that it be made somewhat more competitive by extending the mortgage term from 20 years to 40 years, the same as it is for the section 213 cooperative housing program. It seems to me that it is a little ridiculous to spend up to $18,000 per unit for public housing when private enterprise is building fine garden-type apartments for $8,000 to $9,000 per unit, including all costs, and renting these properties to middle income people for moderate rentals. This is being done in many cases with conventional financing carrying a rate of 6 percent interest and a mortgage term of 20 years. It just seems to me it is a little hind foremost when we are spending more for public housing than private enterprise is spending to produce middleincome housing. When I am trying to say in effect, Joe, is simply this-let's give private enterprise a chance to bring to bear on this problem of housing for the elderly the full force of its ingenuity. I do not mean necessarily that the present emphasis on the nonprofit portion of the program need be changed; I am saying let's take advantage of this additional tool. I might just add that the 40-year mortgage based on an interest rate of 5 percent and one-half of 1 percent insurance opposed to the 20-year mortgage would have this effect: The constant rate of payment would fall from 8.43 to 6.40 percent. This would mean a difference of almost 2 percent in the rate of amortization in the mortgage and would result in a reduction of rent of approximately $10 to $12 per month rent. Obviously, this could be important. I may say too in defense of the 40-year mortgage that the nonprofit corporations are borrowing for a maximum term of 50 years. Obviously, if this type of nonprofit structure does not fall down in 50 years, I hardly think that the housing provided by limited dividend corporations and private enterprise would fall down in 40 years. As a matter of fact, I suppose one could argue that the housing for the elderly should be financed on the basis of 50 years in order to provide it at the least possible cost. I do hope that you will add to your tremendous store of knowledge in the housing field at least a little from what I have written. I believe you know me well enough to understand that I make this proposal above not alone from the standpoint of a mortgage banker, but as something of a humanitarian as well. With kindest personal regards, I am, Very sincerely yours, GEORGE M. LEADER, Executive Vice President. |