EXPLANATION

This amendment would increase the dollar limit on the amount of a home mortgage which can be insured by FHA under its regular section 203 home mortgage insurance program from $30,000 to to $35,000 in the case of a onefamily home, from $32,500 to $37,500 in the case of a two- or three-family home, and from $37,500 to $42,500 in the case of a four-family home. Corresponding changes would be made in the dollar limits on section 222 mortgages financing servicemen's homes and section 234 mortgages financing family units in condominiums.

It would also reduce the minimum downpayment required under these three programs for homes or units in a condominium having an appraised value in excess of $20,000. The amount of downpayment necessary with respect to that portion of the value of a home or a unit in a condominium which exceeds $20,000 would be reduced from 20 to 15 percent under section 203, from 15 to 12.5 percent under section 222, and from 25 to 15 percent under section 234.

The proposed dollar limits are needed because of continually rising homebuilding and land costs, particularly in and adjacent to high-cost metropolitan areas. The new limits would be more consistent with limits on loans made by Federal savings and loan associations which can make home loans in amounts up to $40,000 for single-family homes. The slightly reduced downpayment schedules on higher cost homes will make the FHA programs substantially more competitive work conventional financing.

"III. INCREASED MORTGAGE LIMITS; LARGER INSURED MORTGAGES IN URBAN RENEWAL AREAS

"(a) Section 220(d) (3) (A) (i) of the National Housing Act is amended by— "(1) striking out '$30,000,' '$32,500,' '$32,500' '$37,500,' '$37,500' and '$7,000' and inserting in lieu thereof '$35,000,' '$37,500,' '$40,000,' '$42,500,' ‘$42,500,' and '$9,500';

"(2) inserting immediately after 'in excess of four located on such property' the following, except that the Commissioner may, by regulation, increase the foregoing $9,500 limitation by not to exceed 45 per centum in any geographical area where he finds that cost levels so require'; and

"(3) striking out '75 per centum' and inserting in lieu thereof '85 per centum'."

EXPLANATION

This amendment would (1) increase the dollar limit on the amount of a home mortgage which can be insured by FHA under its section 220 program for housing in urban renewal areas from $30,000 to $35,000 in the case of a one-family home, from $32,500 to $37,500 in the case of a two-family home, from $32,500 to $40,000 in the case of a three-family home, and from $37,500 to $42,500 in the case of a four-family home; (2) increase from $7,000 to $9,500 the dollar limit on additional units (over 4 but not more than 11) in the case of small rental projects; and (3) reduce the minimum downpayment required under the section 220 program for homes having an appraised value in excess of $20,000 from 25 to 15 percent.

The proposed dollar limits are needed because of continually rising building and land costs. The new limits and slightly reduced downpayment schedules on hogher cost homes will make the FHA program substantially more competitive with conventional financing. In addition, the new limits will encourage construction in urban renewal areas by small builders who ordinarily would not undertake such projects.

Existing law permits up to 11 single-family units to be constructed or rehabilitated and held for rental. However, the existing maximum mortgage for such a development is $86,500, or approximately $7,800 per dwelling unit. Increasing cost levels have rendered this amount grossly inadequate. The proposed increase in the basic limits, coupled with a maximum "high cost" designation would produce a maximum mortgage of approximately $12,600 per living unit. In an area where no "high cost" designation is made, the increased limits would permit a maximum mortgage of approximately $9,900 per living unit. "IV. REDUCED DOWNPAYMENTS ON FHA MORTGAGES FINANCING HOMES FOR VETERANS "(a) Clauses (i), (ii), and (iii) of the next to last sentence of section 203(b) (2) of the National Housing Act are amended to read as follows: '(i) 100

per centum of $20,000 of the appraised value of the property as of the date the mortgage is accepted for insurance and (ii) 90 per centum of such value in excess of $20,000"."

EXPLANATION

This amendment would reduce the minimum downpayment required under the FHA section 203 (b) veterans' mortgage insurance program for homes having an appraised value in excess of $15,000. There would be no downpayment necessary on a home valued at up to $20,000 (rather than the existing $15,000). The amount of downpayment necessary with respect to that portion of the value of a home which exceeds $20,000 would be decreased from 15 to 10 percent.

The larger maximum mortgage at the basic veterans' loan-to-value ratio is needed because of rising housing construction costs and related expenses of homeownership. In many high-cost areas, the $15,000 limit on a mortgage requiring no downpayment does not provide an adequate or appropriate home.

"V. MORTGAGE INSURANCE FOR VACATION HOMES

"(a) Section 203 (i) of the National Housing Act is amended by inserting the following after the second proviso: 'Provided further, That notwithstanding the requirement of this subsection, the Commissioner may in his discretion insure under this section a mortgage on a dwelling to be used by the mortgagor for vacation purposes if the amount of the mortgage is not in excess of 90 per centum of the appraised value of the property and he finds that the project with respect to which the mortgage is executed is an acceptable risk :'."

EXPLANATION

This amendment would authorize the insurance of a mortgage under the section 203 (i) program for low-cost homes in outlying areas where the housing is to be used by the mortgagor for vacation purposes if the property is an acceptable risk, and if the amount of the mortgage does not exceed 90 percent of the value of the property.

The generally rising incomes and increasing leisure time of American families have resulted in a demand for FHA mortgage insurance to provide financing of safe and decent housing for vacation or seasonal use. Under existing law and regulations, schools and other public or community facilities are required to be available to permit year-round occupancy of the home. Under this amendment, the FHA Commissioner would have greater flexibility in determining what facilities are appropriate for vacation homes used seasonally in locations intended for vacation or recreational use rather than year-round occupancy.

"VI. TITLE I PROPERTY IMPROVEMENT LOANS

"(a) Section 2(b) of the National Housing Act is amended by—

"(1) striking out '$3,500' and inserting in lieu thereof '$5,000'; and

"(2) striking out 'five years' and inserting in lieu thereof 'seven years'."

EXPLANATION

This amendment would (1) increase the limit on the amount of a property improvement loan that can be insured by the FHA under its title I property improvement program from $3,500 to $5,000, and (2) permit the loans to have a maturity of up to 7 years rather than the present 5 years.

Home repair costs continue to increase along with home construction costs. Increasing the title I loan amount is necessary to enable the property improvement program to assist homeowners in maintaining their properties. In addition, the longer term will help to reduce monthly financing costs and thereby bring the benefits of the program to more homeowners.

"VII. ELIMINATION OF BUILDER'S COST CERTIFICATION ON SMALL RENTAL PROJECTS

"(a) Section 227 (a) of the National Housing Act is amended by inserting 'consisting of 25 or more units' immediately before ‘approved for mortgage insurance'."

EXPLANATION

This amendment would exempt from the requirements of cost certification new or rehabilitated multifamily projects consisting of less than 25 units. Under the existing law, all such projects are subject to cost certification requirements. Many small builders are unwilling to undertake small rental projects due to the burdensome requirements involved in cost certification. This amendment, by exempting small rental projects from these requirements, would facilitate the construction of small projects by small builders, particularly in urban renewal areas where a demand exists for such projects. It would also encourage participation by small builders in many urban renewal projects.

"VIII. DISPOSAL OF LAND IN URBAN RENEWAL AREAS FOR LOW- AND MODERATE-INCOME SALES HOUSING

"(a) Section 107 (a) of the Housing Act of 1949 is amended by inserting before the period at the end thereof the following:: Provided, That any real property held as part of an urban renewal project may be made available to any purchaser at fair value for use by such purchaser in the provision of sales housing for occupancy by families of low- or moderate-income'."

EXPLANATION

This amendment would permit the sale of real property in an urban renewal area at a reduced price to any purchaser who will use such real property to provide sales housing for low- or moderate-income families.

Under existing law, property in an urban renewal area may be sold at fair value for the "provision of new or rehabilitated rental or cooperative housing for occupancy of families of moderate income," rather than at the regular market value of the property. This reduced purchase price is not available for property to be used for sales housing for families of low and moderate income.

This amendment would remove the anomaly of a higher price for land to be used for rental housing than for low- or moderate-cost sales housing. Its enactment should spur the construction of single-family homes for low- and moderateincome families in those urban renewal areas where the provision of sales housing is in accordance with urban renewal plans for such areas.

"IX. INCREASED AUTHORIZATION FOR SECTION 810 DEFENSE RENTAL HOUSING "(a) Section 810 (i) of the National Housing Act is amended by striking out 'five thousand' and inserting in lieu thereof 'ten thousand'."

EXPLANATION

This section would increase from 5,000 to 10,000 the number of units which may be constructed under the section 810 program of mortgage insurance for rental housing.

It is our understanding that the Department of Defense has allocated all units authorized to be insured under the program. In view of the recent buildup of our Armed Forces and the increased need for housing adjacent to many Defense Establishments, the NAHB strongly recommends reactivating the section 810 program.

"X. EXTENSION OF FHA MORTGAGE INSURANCE FOR VETERANS

"(a) The next to last sentence of section 203 (b) (2) of the National Housing Act is amended by striking out 'If the mortgagor is a veteran who has not received any direct, guaranteed, or insured loan under laws administered by the Veterans' Administration for the purchase, construction, or repair of a dwelling (including a farm dwelling) which was to be owned and occupied by him as his home', and inserting in lieu thereof the following: 'If the mortgagor is a veteran,'."

EXPLANATION

This amendment would amend the FHA mortgage insurance program for veterans authorized by section 206 of the Housing and Urban Development Act of 1965. Existing law makes liberal FHA mortgage insurance available only

for veterans who have not received benefits under the Veterans' Administration program for purchasing, constructing, or repairing homes. The amendment would remove this prohibition and make the FHA program available whether or not VA benefits had been received.

Enactment of this amendment would make an additional 6 million veterans of World War II and the Korean conflict eligible for low down-payment FHAinsured mortgages at no cost to the Treasury.

Senator SPARKMAN. The next witness is Mr. Eugene Nickerson, county executive of Nassau County, N.Y., representing the National Association of Counties.

Mr. Nickerson, we are glad to have you and your colleague with us. We have your printed statement. It will be printed in full in the record, and you proceed as you see fit.

STATEMENT OF EUGENE H. NICKERSON, COUNTY EXECUTIVE, NASSAU COUNTY, N.Y., ON BEHALF OF NATIONAL ASSOCIATION OF COUNTIES; ACCOMPANIED BY C. D. WARD, GENERAL COUNSEL Mr. NICKERSON. Thank you, Mr. Chairman, members of the committee. I have with me Mr. C. D. Ward, who is general counsel of the National Association of Counties.

Senator SPARKMAN. Very good.

Mr. NICKERSON. I am county executive of Nassau County, which is the largest suburban county in the Nation and the third largest unit of government in New York State, next to the State itself and the city of New York.

Nassau's population, which doubled between 1950 and 1960, is now approaching 112 million people. Within Nassau's 300 square miles can be found the full gamut of problems and crises which beset America's metropolitan regions.

We have core cities suffering from symptoms of decay, and new developments growing faster than the tax base necessary for adequate services.

We have old people and poor people and minority group people whose desperate housing needs are not being met. At the same time we have a continuing influx of middle-class families seeking better schools, better homes, a better life.

We have in Nassau 26,000 acres of some of the finest recreation areas in the Nation. Yet, despite the development of 17 new county parks during my administration, we will need at least 9,000 more acres to meet the recreational needs of our expanding population of young families and senior citizens.

We have fine roads in Nassau, jammed bumper to bumper with cars. We have the largest communter railroad in the Nation, just barely rescued from bankruptcy. We have an extensive bus service that specializes in going its own way, oblivious to the needs of the people and the requests of the county government.

We have poverty and affluence, prosperity and unemployment, bigotry and civic spirit-in short, all the unresolved conflicts of urban and suburban living that are the concern of this committee.

I appear today not only in behalf of Nassau County, but also as the spokesman for the National Association of Counties, which represents county governments throughout the Nation.

In that capacity, and stating also my own convictions, I urge the passage of S. 2842, the demonstration cities bill, and of S. 2977, the urban development bill. Both programs have tremendously important implications for the future health and vitality of America's metropolitan areas

And both programs could, in my judgment, have even greater impact and success if the role of county governments in planning and in housing were clearly specified.

Despite the popular misconception that cities and suburbs are invariably at opposite ends of the economic scale, recent studies have shown that in many metropolitan areas, particularly in the South and West, poverty is even more widespread in some suburbs.

The urban development bill recognizes that social and economic problems do not stop at city lines, and that meaningful solutions must be developed and executed on a regional basis.

I would suggest that in many areas of our Nation the role of the county in metropolitan planning is crucial. We have seen time and again that the problems of the central city cannot be solved without full use of the resources of an entire metropolitan area.

The story of American growth in the postwar years has been the development of large metropolitan regions as the population has declined in both central cities and rural areas.

Between 1940 and 1960, nearly 17 million Americans moved from farms to urban areas more people than came to America during its greatest period of immigration.

Yet, in the postwar decade 1950 to 1960, there was almost no growth in our largest cities. Indeed, New York, Chicago, Detroit, Baltimore, Philadelphia, Cleveland, Boston, St. Louis, Buffalo, Newark, and Minneapolis all lost population. At the same time, the suburbs have skyrocketed in population, growing 40 times faster than the central cores, and accounting for 97 percent of the total population increase within all metropolitan areas.

In the same decade that the population of Manhattan declined by 13 percent, Nassau County increased by 93 percent.

This expansion was necessarily accompanied by increases in the cost of local government. From 1942 to 1964 county expenditures across the Nation rose by 536 percent-to more than $9 billion. County indebtedness rose 273 percent to almost $512 billion.

County government is today increasing at the rate of 50,000 new employees a year, and has already passed the 1 million mark. The New York Times recently described local government as the fastestgrowing of all of America's "growth industries."

These figures underscore the imperative need for intelligent planning and action on a regional basis.

In fact, 150 of the 212 standard metropolitan statistical areas defined by the United States Census Bureau are counties.

Yet, in only 16 States do counties play any role in the field of housing. In 34 States, and New York State is one, counties are excluded from participating in vital Federal programs such as urban renewal and public housing.

Of course, action to bring counties into the housing picture must ultimately come from within the States themselves. I have recommended that the New York State Constitutional Convention, which