To create such communities requires a proper balance between residential construction, on the one hand, and commercial, industrial and community facilities on the other. To obtain that balance, I would recommend that the existing development loan guarantee program be expanded to include the guarantee of longterm mortgages not only on housing units but on commercial and industrial properties as well, so that people can work within their new communities if they so desire.

Further, I would recommend the expansion of existing grant programs for open space, sewers and other community services to include the full range of facilities which people have come to expect when they move into a new community-recreation areas, swimming pools, community centers and the like.

I would also respectfully ask that this Committee consider increasing the existing authorizations for interest subsidies under the Section 235 and 236 programs so that families of modest means, who are hardest squeezed by high interest rates can be assured of a chance to have the housing they need.

I believe, Mr. Chairman, that we are finally learning from the mistakes of the past, that we are beginning to reverse the tide of urban and suburban sprawl that has been sweeping over the nation for the past 20 years and more. The new communities program is a clear recognition by government and industry that we can no longer afford a haphazard, hit-or-miss approach to our national housing problems.

The pending legislation, with the improvements that have been suggested by me and other witnesses, will encourage the development of new towns throughout the country. Most importantly, they will be more viable communities, because it will be possible to develop them in more orderly fashion than heretofore. Given the broader guarantees that I have recommended, developers will be able to put in place all of the required community facilities before the first house is built. Families entering into a new community will be entering a completed, functioning community, and the duration of the project could be shortened from the present 20 years to as little as ten or twelve years.

The creation of successful new communities does not call for a vast outpouring of public funds. But it does require that the people who control the purse strings and the financing mechanisms recognize that it is self-defeating to put a nickel into a new community when a dollar is needed. Let's spend a dollar when it is needed, when it will pay off in a successful community development.

Furthermore, I believe that the times call for a greater show of courage on the part of the government agencies sponsoring our housing programs. Too often. Congress gives industry the go-ahead, only to find the agencies piling on unnecessary restrictions that hamper and sometimes negate the private developer's efforts.

Congress has approved laws that give us the financial tools we need to work with, but the bureaucratic process, the bureaucratic excess of caution, blunts those tools before we ever get to use them. We should concentrate more on making these programs work and less on telling ourselves they may not turn out 100 percent perfect.

Builders are accustomed to erecting an entire building and then renting out the space. Some government programs, on the other hand, proceed as though the agencies wanted to build one floor at a time, making sure it is rented and occupied before they add on the second floor.

In the case of our new communities, I recommend the builder approach: build the community overall as a single, planned project, with the facilities going in first as they should.

Given that approach, and the cooperation that I know will be forthcoming from the private housing industry, I am confident that we will build the new and better communities this nation demands.

Thank you for your consideration.

The CHAIRMAN. Mr. Thomas Appleby-will you come around. please, sir-president of the United Nations Development Corp. And, Mr. Appleby, you are testifying in behalf of S. 4145?

STATEMENT OF VETMAS APPLEBY PRESIDENT, UNITED NATIONS DEVELOPMENT CORPORATION

Mr. APPLEBY. Yes. Mr Chairman.

The CHAIRMAN, That I was just introduced yesterday so you are just getting under the wire.

Mr. APPLEZY. Yes,

The CHAIRMAN Go right ahead, please, sir.

Mr. APPLEBY. Thank you.

I am Ts Apply. I am president of the United Nations De velopment Corp., a nonprofit publie benefit corporation created by a special act of the New York State Legislature. The corporation was established to help meet the growing needs of U.N. related organiza tions for e space, housing, hotel accommodations and visator facilities.

Mr. John J. McCloy, chairman of the corporation, intended to be here today to speak in support of S. 4145 introduced by Senators Mondale and Javits yesterday, as the chairman indicated. The bill provides a Federal guaranty of the corporation's taxable bonds which would be sold to finance the construction of a complex which would nclude a visitors center, hotel for visiting dignitaries, offices for for eign missions and housing for U.N. related personnel. These would be self-maintaining facilities.

Unfortunately, Mr. McCloy was not able to be here to prevent the statement personally. With your permission, Mr. Chairman, I should like to request that Mr. McCloy's statement be included in the record The CHAIRMAN. Yes, that will be done. But I was moving jok a little ahead of you. You say the letter from secretary Voghera appended to Mr. McCloy's statement. Is that right? Mr. APPLEBY. Yes, Mr. Chairman, that i comes

The CHAIRMAN. Of course, all of that will imine dedinke poras Mr. APPLEBY. Thank you, sir.

(The statement of Mr. McCloy and the together with additional correspondence a. 6 der

STATEMENT OF JOHN J. McCoy. Czatza

DEVELOPMENT COON.

Since the establishment of the United Nations in New York it has not only substantially expanded its membership but its functions have become more varied and more extensive. Delegates of the nations now accredited to the United Nations in its expanded form have encountered increasing difficulties in finding the space and housing necessary to enable them to carry out their responsibilities. Missions to the United Nations have been handicapped by the absence of available and convenient office space; the 2 million annual visitors to the United Nations have not been afforded facilities which they should have in order to make their visit to the United Nations memorable and one which would better enable them to sense the United Nations' importance in the task of preserving peace in this nuclear age. Adequate hotel facilities and meeting places to take care of the large number of distinguished officials and visitors who from time to time have to attend the United Nations, particularly at meetings of the General Assembly and the Security Council, do not now exist. Considerable embarrassment, and at times annoying harassments, have taken place because of the limited and inadequate facilities. The impact has at times generated considerable agitation within the United Nations for removal of the Headquarters from New York. Indeed, some of the functions of the United Nations heretofore situated in New York have already moved.

In 1945 the United States invited the UN to make its home here. In doing so. our government recognized that this would not only give our country a unique relationship with the UN as host country, but simultaneously gave us a greater responsibility (than other members) for the arrangements and the manner of their working for this institution. When the United Nations headquarters was established, the United States agreed that the appropriate American authorities would ensure that the amenities of the headquarters are not prejudiced and that the purposes of the headquarters are not obstructed by incompatible use of land in the vicinity.

The importance of having the UN in this country, the obligation of being host nation, the responsibilities explicit in the original headquarters agreement, the inadequacy of current UN visitor facilities and its effect on our citizens, and the obvious impact of UN overcrowding on our foreign relations all serve to make a resolution of these problems a matter of prime national interest.

Secretary of State Rogers has declared that the United Nations Development Corporation's program and the requested legislation is in the naional inerest and is imporant to the successful pursuit of the US interests at the UN. This statement contained in a letter to Secretary Romney is attached to this testimony in the record.

I wish to say a brief word about the United Nations Development Corporation and its members. It is a non-profit public benefit corporation created in 1968 by special act of the New York State Legislature and is endowed with the powers of and acts as a political instrumentality of that State. The Board of Directors is appointed by the Governor or New York State and the Mayor of New York City, in accordance with the special State statute, a copy of which is submitted for the record.

As required by the enabling legislation the development will be in the two block area adjacent to UN headquarters in New York City and includes office space for missions and other UN related organizations, hotel accommodations for visitors and dignitaries, housing for the international community in New York and a public visitors' and information center, including a terminal for visitor buses as well as supporting services. I have with me a brochure showing the plan for this two block area which I am submitting with a copy of my testimony. Also attached is a letter from Police Commissioner Leary attesting to the desirability of the development from the security standpoint.

The brochure also describes the plan for relocating families and businesses to be displaced. The Corporation has made a sincere effort to meet this vital and difficult problem and I believe that a most effective solution has been achieved. I should add that under state law and the bill under consideration today, federal requirements governing relocation from urban renewal areas would apply to the Corporation's activities.

This project represents an unusual opportunity to achieve a major center-city redevelopment without extended federal subsidies. By achieving its public purposes through private resources this project can demonstrate the widening application of this partnership concept.

The activities of the Corporation will be comparable to those of a local public agency operating in an urban renewal area with assistance under the 1949 Housing Act. These include the acquisition of real property, the relocation of

families and businesses, the clearance of land and, in this case, construction of the improvements contemplated by the approved development plan. As with urban renewal plans the development plan of the Corporation has been approved by the local public authorities of the City of New York after public hearings.

The activities and operations of the Corporation are subject to audit by the Comptroller of the City of New York and annual reports and financial statements must be submitted to the Mayor, Governor and Comptroller.

The total cost of the development is currently estimated to be $310,000,000 which the Corporation must raise through the sale of its bonds. Although it is estimated that the revenues to be derived by the development would be sufficient to retire these bonds and pay all interest, the Corporation's underwriters and financial consultants have concluded that it will be impossible to sell such bonds unless they are backed by a federal guarantee. They have also concluded that it is not feasible to achieve the Corporation's public purpose objectives without bond financing. For the record I am submitting a letter from the Corporation's underwriters expressing the basis for these judgments and summarizing project costs and revenue projections.

The proposed legislation would add a new Section to the Housing Act of 1949 authorizing the Secretary of Housing and Urban Development to make commitments for loans to the Corporation to finance the acquisition and clearance of real property, and the development and construction of buildings and other facilities within the United Nations Development District in accordance with the approved development plan. In accordance with established urban renewal practice, the Corporation using the security of the Development's commitment will be able to obtain its funds from private sources. A copy of a letter to Secretary Romney is included with the attachments, because it indicates the rationale for HUD's participation in this project which was initiated to attain foreign policy objectives.

The Corporation's bonds will be fully subject to federal income tax.

The proposal would not require any grants, direct loans or advances for planning. The Corporation plans to issue its bonds over a 5-year period commencing in 1971. As a result of this extended time period, it is anticipated that the issuance of these bonds will have no adverse affect on the bond market.

The proposed legislation would thus impose only a contingent liability on the Government in the event of a default of the Corporation's obligations. With minor exceptions this parallels the existing program which authorizes commitments for loans for urban renewal projects assisted under the 1949 Housing Act.

In closing I would like to point out that the project is economically strong and the interest of the federal government will be fully secured by a first mortgage on the Corporation's properties. Projected revenues available for debt service will be sufficient virtually to preclude the likelihood of the federal government being called upon to honor this contingent liability. This economic vitality is best demonstrated by the Corporation's estimates which show that the federal government would not be called upon to make expenditures under its guarantee unless the net income available to pay principal and interest were to fall short of the amount projected by approximately one third.

Thus, the proposal before you is not a bail out of a private company nearing bankruptcy; it is a strongly secured guarantee extended to the bonds of a financially sound public benefit, non-profit corporation.

I respectfully submit that the proposed legislation is in the national interest and in the interest of international peace and I urge its enactment.

Hon. GEORGE W. ROMNEY,

Secretary of Housing and Urban Development.

THE SECRETARY OF STATE,
Washingon, D.C., May 7, 1970.

DEAR GEORGE: Governor Nelson Rockefeller and John J. McCloy, Chairman of the United Nations Development Corporation, have written me about the need for federal legislation that would in effect guarantee the bonds of this public benefit corporation. Chairman McCloy has recommended that appropriate legislation be added to your Department's 1970 housing bill.

Both the Chairman and Governor Rockefeller have asked for my endorsement of the proposed legislation. I have also given great weight to Ambassador Yost's views which stress the importance of this project to the effective functioning of the U.S. Mission in New York and the successful pursuit of U.S. interests in the United Nations. Without presuming to make expert judgments about the 48-279 0-70-pt. 2-28

architectural, engineering, contracting, planning and financing aspects of this ambitious and imaginative construction project, I can give the purposes of the UN Development Corporation's program my strong and wholehearted endorsement on foreign policy grounds.

It is a matter of importance to the United States that adequate office space be available to the permanent national delegations of UN member states. It is also important that adequate facilities be available to accommodate distinguished foreign visitors having temporary business with the United Nations at its Headquarters and that two million foreign and American visitors to the United Nations each year be received appropriately and efficiently. Additionally, to take even a small step toward easing the housing problems experienced by members of the UN community would be worthwhile. In sum, it is in the national interest of the United States that something consructive be done about the serious difficulties which staff, delegations, and visitors to the United Nations encounter in the highly complex and expensive urban environment of New York.

The United Nations Development Corporation has been chartered as a public benefit corporation by the State of New York to discharge precisely the foregoing functions. Accordingly, I hope very much that my endorsement of the Corporation's program on foreign policy grounds will enable you to seek and obtain the legislation Chairman McCloy requires. Sincerely,

Bill

WILLIAM P. ROGERS.

Mr. JOHN J. MCCLOY,

THE CITY OF NEW YORK POLICE DEPARTMENT,
New York, N.Y., July 24, 1970.

Chairman, United Nations Development Corp.
New York, N.Y.

DEAR MR. MCCLOY: I have been apprised of the activities of the United Nations Development Corporation to develop the two block area across from the Secretariat with United Nations related facilities, including office space for foreign missions and a hotel for visiting heads of state and other dignitaries. The development would include a direct, safe and secure link over First Avenue to the International Headquarters.

Currently, the 125 foreign missions to the United Nations are scattered widely throughout New York City creating severe security problems of a continuing nature. These problems have grown increasingly acute of late. Security problems are severely accentuated when heads of state and other dignitaries come to New York to participate in the deliberations of the United Nations.

From a security standpoint, the development you propose would be most beneficial by providing the opportunity for consolidating foreign mission offices in a single location and constructing a new hotel adjacent to the United Nations Secretariat. This complex would provide foreign missions and visiting dignitaries a higher degree of protection and safety. For this reason the Police Department commends your efforts and supports the development proposal. Sincerely,

H. R. LEARY, Police Commissioner.

MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.,
New York, N. Y., July 21, 1970.

UNITED NATIONS DEVELOPMENT CORP.
New York, N.Y.

(Attention: Mr. Thomas Appleby, President)

DEAR SIRS: We are writing this letter at your request to set forth our suggestions and recommendations for financing the construction of the United Nations Development District in New York City.

On the basis of present cost estimates the financing required for full development of the District will amount to more than $300,000,000. You have also furnished us with your preliminary estimates of revenues to be derived from the facilities to be constructed. We understand that such estimates of costs and revenues have been reviewed by independent consultants.

We considered at length the issuance of bonds of the Corporation secured only by the revenues to be derived from the facilities to be constructed, but concluded