maximum stimulus of business development and for affording all sectors of our economic system equal access to what I am sure the future is going to consider a very great economic opportunity.

I would like to say that after I accepted the invitation to testify I circulated to my council members a letter in which I advised them that I had been invited to testify. I said in this letter:

In my testimony I will make it plain that I speak only for myself, as economist and as a council member, but that I speak in no way for the council which spoke for itself in the text of its own resolution. I should be pleased, however, to carry along with me any messages or comments you might want to send and to make part of the record.

I would like, Mr. Chairman, since I believe it will help you in evaluating this testimony, if this complete letter were incorporated into the record. (The letter is filed with the committee and is available for reference.)

One member of the council who was present at the session when they passed this resolution sent a very interesting letter to Senator Proxmire, and I would just like to read the middle paragraph of this letter. We have had no previous personal dealings in any way, and I have only known him from our mutual activity on this advisory council. He owns a retail store in a smaller town in Wisconsin but has been fairly active in the council and I might say is a very able member of this council. He said:

As a member of the Wisconsin SBA Advisory Council with Mr. Gottlieb, it was my pleasure to be in attendance at the meeting when this resolution was adopted. I wholeheartedly supported it with all other members present.

The strong point on which I based my decision was the one factor of equal opportunities for small businessmen. It seems to me this is an important factor, among many, that makes our democracy work when others fail. It would be a tragic mistake for our country to deny small businessmen the opportunity to share in the free competitive enterprise system that has made our country great. I am sure you can, at your leisure, read the rest of the letter. letter is available in the committee files.)

(The

The council, as I might add, is broad in its composition. It has 25 members representing the world of banking, real estate, manufacturers, retail dealers. It has two university professors, myself, and a professor from the University of Marquette in the field of business management.

I have found the council deliberations of high quality. The members have pursued their causes and their cases with vigor, and in a way that has been very pleasing to me and I think augurs well.

Our issue of land policy was responsive, so far as I am concerned, to a case of a project in the Milwaukee area. Since this project disposal is rather typical of a considerable number of project disposals, I would like to beg indulgence of the chairman if I just briefly recite its facts and then point out the factors that aroused my concern and the concern of the members of the council in this problem of proper land disposal. May I preface my remark by stating I am one that shares the philosophy and supports the objectives of urban renewal. I have questions as to how far it should be carried, when and where conservation techniques can be used, and I have been interested personally in supporting properties and programs by State and local government through use of tax exemption, to avoid undue reliance on land clear

ance. But I have always felt that a rather considerable amount of clearance operations is now required and will continue to be required for some time.

Our concern is not one that is critical of urban renewal but seeks to make more constructive use of the programs it has opened up at a rather crucial phase; namely, disposal of cleared land, a phase which has gotten relatively little concern and which, to my knowledge, has never received any systematic scrutiny.

If I may briefly allude to this project in Milwaukee, it is a rather typical project that was disposed of over the winter and spring of 1964. It involved 64 acres of very

Senator PROXMIRE. Before you get into that, Professor Gottlieb, may I interrupt?

Professor Gottlieb is a very valued constituent of mine, an extremely able man, a professor at the University of Wisconsin at Milwaukee. He was a professor at the University of Kansas and was a Littauer Fellow at Harvard.

He has written, probably, in more outstanding technical publications than any economist I know.

He is a man with a tremendous amount of interest and energy. His words should be given a great deal of weight here. He feels strongly on this issue that is before us now that he is going to present

to us.

Senator SPARKMAN. Let me say, Senator Proxmire, I am sorry you had to leave to attend another meeting. I rather wanted to wait for you to come back before starting with Dr. Gottlieb.

Senator PROXMIRE. No, no. I am delighted you went ahead.

Mr. GOTTLIEB. Thank you, Senator, for your unduly laudatory remarks. There are many academics who can exhibit an equally extensive record.

May I merely say mine has embraced a much wider range of topics than one would ordinarily find, and in the last 10 years I have become extensively concerned with one or another phase of urban economics, local government economics, public finance economics, and, of course, real estate building economics to which I have been devoting a very extended study.

Well, this Milwaukee project involved 64 acres, 300 families, 162 businesses, 224 structures.

Of the 64 acres, 25 were destined for disposal for private renewal. Some 15 acres, as I understand, were passed on for institutional use. Some 24 acres were dedicated for use as streets and alleys.

I would like to put in the record the actual invitation to purchase this project which was advertised in the city of Milwaukee precedent to procedure which I understand they considered to have been one of competitive bidding (exhibit 2).

Senator SPARKMAN. Without objection, it will be placed in the record.

Mr. GOTTLIEB. This described the property and invited bids from developers.

You understand this is for building on prime urban land, on approximately 25 acres of near-downtown land.

You understand that such building and development on that scale is beyond the scope of even the large-size real estate developers, and

businessmen whom I consider able and of stature would not dream. of participating on a land project of that size in a city of our size.

I was appalled when I considered the implications of this invitation. Three large syndicates, two national and one local, did submit proposals. There was no minimum price stated, and there were five elastic criteria that were to be used by our local development authority as the benchmarks for acceptance.

These criteria are extracted from the plan for redevelopment which perhaps bears full scrutiny, but the most critical part of this plan was really the five criteria which developers were told would be used in evaluating the proposals.

Mr. Chairman, if I may, I would like to read you those five criteria so you can understand what the businessmen of America are bidding against.

(1) The degree to which the proposal meets the objectives and requirements of the redevelopment plan.

(2) The quality of the proposal in relation to the architectural treatment, landscaping, scale and general appropriateness of the design and of the amenities and facilities in the proposal.

(3) The economic soundness of the proposal and the measure of community return provided by the proposed redevelopment as related to the general welfare of the city.

(4) The financial responsibility, qualifications, experience, and ability of the redeveloper to complete the proposed redevelopment. (5) The maximum price obtainable.

I put this item identified as exhibit 9 for complete reproduction in the record.

In public testimony before committees of our local city council at two times I testified that I considered the procedure of lump-sum disposal inadvisable. (See exhibits 3 and 4.) It seemed to me that the policy was precluding participation by virtually almost all of the business interests of the city of Milwaukee and was greatly hampering participation in the development.

I also stated that I thought the five criteria really were extravagantly elastic and were of such a character with their subjective nature that they would permit any disposal which the redevelopment authorities in their good judgment would think wise and prudent.

I might add that broad criteria may have their place, and I do not mean to attack the integrity and good judgment of the members of the redevelopment authority. I have no reason to doubt that they did search their minds and hearts as to which of the various proposals submitted before them in fact met the criteria.

But we also have to realize that these criteria were, in fact, wide open and that fact makes it very difficult for a businessman to invest the time and money needed to develop a proposal when he has no assurance of the principles and the perspectives from which it is going to be evaluated.

This obviously benefits and can help encourage only the more experienced developer who has been acquainted with urban renewal operations, acquainted with its working philosophy, who perhaps knows the members of the local redevelopment authority, who perhaps knows the views and the philosophies of its principal parties for ex

ample, the directors and the staff members-and to that extent encourages inside operations and discourages the broad participation which I know that you and the Congress generally and our public as a whole

want to see.

In the subsequent debate I would like to identify four documents that occurred with regard to this disposal.

One was a letter by our director of the department of city development, Mr. Perrin, who commented rather extensively in his letter on a letter which I sent to our city council, and I would urge that you read this letter because it is indicative of I think a rather wide philosophy that prevails among redevelopment officials (exhibit 5).

He refers to a "hodgepodge of unrelated buildings" to characterize any breakup of the parcel land into separate parcels of smaller size, and he refers to a philosophy of "competitive creativity," by which, Í daresay, he means to characterize the procedure of submission of proposals in what is, in effect, a design contest.

I would also like to put into the record the letter of Mr. Weaver, the head of the Housing and Home Finance Agency, as it was passed on to Senator Proxmire in reference to this debate. (Exhibit 6.) You can see the grounds and the philosophy which underlie the Urban Renewal Administration when it has posed to it this issue of more competitive disposal strategy.

I would also like to put into the record a letter from Frank P. Zeidler, former mayor of Milwaukee and the director of the State of Wisconsin Department of Resource Development (exhibit 7).

One of my colleagues in the university, Prof. Mason Gaffney, who has long concerned himself with urban economic problems and land problems, was kind enough to look over the materials and debate, and he wrote a letter to Senator Proxmire which I think is of unusual interest.

I would like, Mr. Chairman, if I could, to merely read two paragraphs from that letter which is in the form of a reply to Administrator Weaver's letter. He said:

Administrator Weaver is equating sale of land with urban renewal. It is true that the land in the lower third ward project was sold off slowly, but when it was sold, it was built upon, and the present renewal in the area is quite impressive. The sale to the Dovenmuehle group of the Eastside A land has not so far resulted in any renewal, and it is hedged about with so many escape routes that there is no guarantee that renewal will occur and certainly no guarantee that the entire area sold to Dovenmuehle will be renewed at one stroke.

He also goes on to say:

The optimal scale of urban renewal may be larger than the traditional single parcel, but I do not believe it is as large as the acreage sold to Dovenmuehle. What is worse, at the size of the Dovenmuehle parcel, the impact of a single redeveloper on the market becomes so great that he is tempted to underdevelop through a monopolistic motivation to avoid glutting the market. This is in addition to the problem that Professor Gottlieb emphasizes that the small number of bidders for projects of this enormous scale probably reduces the land price which the city can recover.

This entire letter I might say deserves rather considerable attention (exhibit 8).

Senator SPARKMAN. Yes. All these letters will be placed in the record as you request.

62-551-66-pt. 1-26

Mr. GOTTLIEB. Our debate at this time when we were concerned about Eastside A was summed up in a letter that I sent Senator Proxmire September 23, 1964, which reviewed our local experiences with the local redevelopment authority and city council, and the effort made to get a local study of redevelopment strategy, an effort which I might say failed. But I think this letter also is worthy of some consideration (exhibit 9).

Beginning in January, the small business advisory council of the State discussed in broad terms the policy issue of land disposal under urban renewal We weren't concerned with Eastside A; we were concerned with disposal strategy generally. This meeting was broadly attended, with 19 members. The issue was extensively discussed. À very, very short resolution was passed by favorable vote of 16 to 3, and I would like to read it to you.

The advisory board strongly urges SBA and the Congress to examine procedures for disposal of cleared land under urban renewal to assure that small businesses have equal access to development opportunities in cleared land.

This resolution was passed on, as is our practice, to the Administrator of the Small Business Administration. An unusually long time, I might say, occurred before we received a reply, almost 9 or 10 months later, and the response when it did come in my judgment was nonresponsive to the issues raised. If you would not mind, I would like to read that response into the record.

In our 1967 budget request we have asked for the positions of relocation specialists to do the very thing proposed in Resolution IX of the Wisconsin State Advisory Council. Upon receiving Bureau of the Budget authorization, this would make it possible for these needed services to be provided by SBA.

Well, I can understand that Small Business Administration is concerned with relocation because of its impact on small business and seeks to provide some accommodation to assist relocation. The entire relocation problem is one I know that has concerned responsible committees of the Congress. It is a very tragic picture and one that deserves very, very careful consideration. But land disposal of the type that we are concerned with does not primarily involve the problem of relocation. The firms who are originally forced to migrate should, of course, be given some preference where possible or feasible in the design of the new area. But we have not urged that the new renewal area reduplicate the property patterns and the business design of the old, and we do not see small business access in redevelopment as primarily a problem affecting dislocated small business. We have in mind the entire world of business, small and large, I might say, to give it equal access in its participation by suitable strategies of sale and disposal which, in fact, make the land effectively available for use by the world of business.

So we found the letter nonresponsive.

And at the next meeting of the small business advisory council in January 1965 the council passed, after discussion, a more extended resolution which stated in full the basis for our concern.

I have a number of copies of that with me. I would like to read that. Ordinarily documents should not be read, but this document is so important I think if I may, Mr. Chairman, I would like to read it.