HOUSING ACT OF 1961

FRIDAY, MAY 5, 1961

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

SUBCOMMITTEE ON HOUSING,

Washington, D.C.,

The subcommittee met at 10 a.m., pursuant to adjournment, in room 1301, New House Office Building, Hon. Albert Rains (chairman of the subcommittee) presiding.

Present: Representatives Rains, Addonizio, Sullivan, Ashley, Griffiths and McDonough.

Also present: Representatives Rousselot and Harvey.

Mr. ADDONIZIO (presiding). The committee will be in order.

Unfortunately, Chairman Rains is testifying before another committee this morning. However, he assured me he will get here as soon as he possibly can.

Therefore, we will commence, and our first witness this morning is Congressman Bill Moorhead of Pennsylvania. Will you please come forward, Mr. Moorhead.

STATEMENT OF HON. WILLIAM S. MOORHEAD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. MOORHEAD. Thank you very much, Mr. Chairman. Because of the long list of distinguished witnesses that you have appearing before the committee this morning, Mr. Chairman, I will with your permission, merely summarize my statement and submit the written. statement for the record. Before starting, Mr. Chairman, I should like particularly to advise you that one of the witnesses coming before the committee is Commissioner John McGrady, county commissioner of Allegheny County and a constituent of mine.

Mr. Chairman, I am appearing here in support of H.R. 6028, introduced by the distinguished chairman of this subcommittee. However, I am also appearing to propose one amendment for the consideration of the subcommittee which I think will help to improve the urban renewal process. We in the city of Pittsburgh have found that urban renewal is good for the community generally but that in the process of carrying out urban renewal certain individuals have an undue share of the burden. This we have found particularly true of the small businesses located in an urban renewal area. These small businessmen who are displaced by urban renewal have an undue share of the burden and it is my suggestion that the bill be amended to make particular provision for the small businessman. As you know, the law provides that where a small business has been damaged by a hurri

cane or flood the businessman is entitled to special long-term low-rate interest loans from the Small Business Administration.

Now, a community doesn't benefit from a flood or a hurricane but it does benefit from urban renewal, but the affected businessman suffers just as much—the particular businessman is just as much damaged. Therefore, I propose that you give consideration to amending the bill to include a similar provision for small businesses displaced by urban renewal. I particularly call your attention to the fact that a somewhat similar provision was contained in last year's bill. It didn't go quite as far. It only provided for 4-percent, 15-year loans, instead of the 20-year, 3-percent loans for the disaster loan program. However, I think that some provision either the 3 percent, 20-year loans or the 4-percent, 15-year loans should be included in this bill that you are considering today.

Thank you, Mr. Chairman.

I may.

Mr. Chairman. I will submit my written statement if

Mr. ADDONIZIO. Thank you, Congressman. Without objection you may submit your full statement for the record.

May I just indicate to you that, of course, this committee remembers well the fine work that you did with respect to this amendment last year. We made it part of the housing bill. Unfortunately, we never did get the bill out of the Rules Committee. I am sure that you realize that the committee will be sympathetic to this problem. I for one have many letters from constituents in my district who have similar problems and certainly I will do everything possible to make this part of the general housing bill.

Mr. MOORHEAD. Thank you, Mr. Chairman.

Mr. ADDONIZIO. Any questions, Mrs. Sullivan?

Mrs. SULLIVAN. No questions.

(The prepared statement of Mr. Moorhead follows:)

STATEMENT OF HON. WILLIAM S. MOORHEAD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA, BEFORE THE HOUSING SUBCOMMITTEE OF THE BANKING AND CURRENCY COMMITTEE OF THE HOUSE OF REPRESENTATIVES Mr. Chairman, thank you for taking time from the crowded schedule of your housing subcommittee to hear me today. I support H.R. 6028 introduced by the distinguished chairman of this subcommittee. In so doing, however, I should like to suggest for the consideration of the subcommittee an amendment which, in my opinion, will be an improvement in the urban renewal process.

We in the city of Pittsburgh have proved that urban renewal is good for the community generally. However, during the process of urban renewal certain individuals incur special hardships not experienced by the community as a whole. In the city of Pittsburgh in our East Liberty project we have found, and in our Allegheny Center project we anticipate finding, that small businesses in the urban renewal area suffer unusual hardships.

I propose that H.R. 6028 be amended so as to minimize the hardships on small businesses displaced by urban renewal projects. Relieving such hardships and enabling displaced businesses to return to the renewed areas when they wish to do so are natural refinements in the urban renewal program. It is one of the best ways I know of to win even greater broad-based support for urban renewal at the local level. I like to think of it as urban renewal with a heart.

As a step in this direction, I propose that the subcommittee consider an amendment to the bill which would authorize the Small Business Administration to make loans to businessmen to enable them to reestablish their businesses in cases where plants, stores or other commercial establishments have been displaced by urban renewal projects.

I suggest that these loans be made to small businessmen under the same formula now applicable to similar loans made to small businessmen seeking to

reestablish themselves after floods or windstorms. These loans could be repaid over a 20-year period at an interest rate of 3 percent.

A community receives no benefit from a flood or windstorm and yet the community makes special provision for small businessmen who have been injured. Because a community receives tremendous benefit from urban renewal, the small businessman who has been injured, for the good of all should certainly receive special assistance.

This proposal is not a new one. It was considered by this subcommittee in 1960 and a similar provision was included in the bill reported by the Banking and Currency Committee in 1960. Instead of 20-year loans at 3 percent interest, H.R. 12603 last year provided for 15-year loans at 4 percent interest. At pp. 24-5 of the report accompanying H.R. 12603, it was said:

"RELOCATION FINANCING ON LIBERAL TERMS

"Existing law, coupled with the liberalizing amendments contained in the reported bill, provides reimbursement for moving expenses. We have been impressed, however, by considerable testimony before the Housing Subcommittee that there is also a pressing need to provide financing aids to enable these firms to reestablish their businesses. Since these businesses, mostly with limited assets, are being forced to abandon entirely their present place of business and relocate, often in an entirely new neighborhood, your committee believes that they must have financing help on liberal terms in order to build a new store, to install new equipment, to acquire necessary working capital or to meet some similar expense necessary to restore them once again as a going enterprise.

"Your committee is, of course, aware that there are presently financing aids available under the Small Business Act. Under present law and regulations, business loans are obtainable by small firms at an interest rate of 51⁄2 percent and on terms up to a maximum maturity of 10 years. Because of the special hardships suffered by these displaced businesses, and because many of them are often in a precarious financial position, it is only equitable to provide them with financing on terms more liberal than those presently obtainable under the Small Business Administration program. To achieve this, the bill would make SBA loans available for such businesses at an interest rate not to exceed 4 percent and on terms whose maturities could extend for as long as 15 years. To provide the necessary funds the bill would increase the Small Business Administration revolving fund by $25 million, which amount would be earmarked for loans to displaced businesses."

I respectfully submit that H.R. 6028 be amended to contain provision for liberal financing for small businesses displaced by urban renewal projects. Thank you.

Mr. ADDONIZIO. Our next witness will be Mr. Richard Lee of New Haven, Conn., representing the American Municipal Association and I see that my good friend, Congressman Bob Giaimo from Connecticut is here also. We are going to give him the pleasure and honor of introducing the mayor.

Mr. GIAIMO. Thank you very much, Mr. Chairman. It is a great pleasure to appear before your committee this morning and to introduce to you one of my good friends and also one of our great public servants not only in the New Haven area but the Connecticut area and I think one of the great mayors of the United States. Dick Lee came along about 7 years ago as mayor of New Haven and in these 7 years he has given initiative, he has given foresight, and a great deal of vision to the problems of the future in our cities. Under his able leadership and his outstanding administration, he has given New Haven hope for the future. We have seen a great deal especially in this area of redevelopment and urban renewal. I think we have perhaps one of the outstanding projects in the United States. This is due to the ability of our mayor, Dick Lee, perhaps more than any other person in our area. He is an expert in this field. He is an

outstanding public servant and it is a pleasure for me to introduce him this morning to your committee.

Mr. ADDONIZIO. Congressman, may I just say that we are well aware of the background of Mayor Lee. He has been a witness before our subcommittee on a number of occasions and certainly he has brought to us very valuable information in the field of urban renewal. We are happy to see him here again. I am sure that his statement will be very enlightening to us.

Mr. GIAIMO. Thank you.

Mr. Chairman, one other thing. I would like to ask on behalf of the mayor unanimous consent that he be allowed to extract certain portions of this testimony from the record at the proper time.

Mr. ADDONIZIO. Without objection he certainly may have that privilege.

STATEMENT OF HON. RICHARD LEE, MAYOR OF NEW HAVEN, CONN.

Mr. LEE. Mr. Chairman, Mrs. Sullivan, and gentlemen: I am very grateful for the opportunity to be here this morning and I am very grateful to Congressman Giaimo for his kind words. I have filed with the committee a statement which there is no need for me to read because I am certain that you are all familiar with the problems and with the legislation.

Suffice it to say I would like to say very quickly and briefly that I am delighted to support the provisions in H.R. 6028 which calls for the establishment of an urban-renewal program of $2.5 billion in grant funds and enlargement of mortgage provision firms for rehabilitation and especially long-term, low-interest rates for family of low income, the experimental housing mortgage insurance, and of great importance the increased local responsibility and flexibility and the other improvements in the public housing program. I would like before I go to the exhibits which I would like to enter into the record to say also a word for the open spaces bill which I understand is also being considered by your committee.

There has been in some people's minds a misunderstanding of what this open spaces bill is and it is my interpretation of Senator Williams' intent that the open spaces bill will actually benefit-at least in New England which is the section where I come from-would benefit the small towns far more than it would the larger cities, because all of the cities that I know of in New England have been planned decades, as a matter of fact, several centuries ago and we have our parks and we have our green spaces and we have our open areas and actually the problem in New England is with the growth of the small towns; there has not been any adequate provision on the part of the selectmen or mayors of these small towns to provide for the park space which is so necessary to the kind of life we have in the 20th century.

With the other problems they have today in building new highways and putting in sewers, unfortunately one of the last things these small towns think of is acquiring land for park purposes, not for playground but for park purposes, and so actually the open spaces bill isn't a bill which is designed to extend the control of the cities outward. It is a piece of legislation designed to make life more livable in the small towns, at least in the area from which I come, and I