a disastrous effect upon urban development and be almost as bad for the country as it is good.

That is, unless equal attention is given to the problem of municipal governments in providing needed public facilities. Therefore, I would hope that those municipalities stifled by debts and heavy debt service charges which prevent the prompt extension of municipal facilities will be able to come to the Community Facilities Loan Administration for low-cost water, sewer, and other construction funds.

In any soundly conceived Federal grant-in-aid or loan program, there is always local matching. This is true not only in urban renewal but in airports, water pollution, hospital construction, highways, and other fields. Yes, the local matching ranges from one-third to 70 percent of the total cost of projects. A reasonable loan program would be a great help to many communities in utilization of these Federal programs.

I would point out also that the recently enacted Area Redevelopment Act provides only $100 million of public facilities loans and $75 millions of grants to aid hundreds of communities in distressed areas throughout the country to provide essential public facilities needed for industrial and other economic expansion. Those of us familiar with municipal government operations are certain that these funds will be inadequate, and would hope that expansion of the 701 loan program would be available to meet the deficit.

I would like to comment on the level of interest rates to be charged on community facilities loans. It would just seem reasonable that the Federal Government not make a large profit on these loans to municipalities. It believe that the present rate does really involve a very substantial profit.

Inasmuch as the legislation on similar loans on colleges provides for the average rate on all Federal borrowing plus one-fourth of 1 percent, it would seem that that same formula should be used for these community-facility loans. We don't suggest any subsidy of those loans, nor do we believe that an excessive profit such as a banker would make is justified. Fortunately, the President has recently reduced these rates to 43% for revenue bonds and 4% for GO bonds and that helps the situation.

I believe, in summarizing, that the loan provisions of section 701 of the Housing Act confronts this committee of the Congress with two basic issues of public policy.

First, shall the urban areas of America be fully served by public facilities essential for their growth and development, or permitted to develop in disorder.

Secondly, are the built-in discriminations of the private money markets of the country to destroy the competitive position in American life of the smaller community due to excessively high interest rates on public bonds, concentrating our population and economic activity in a few great metropolitan areas?

Municipal governments have the motivation and the administrative capabilities to provide adequate facilities and services. The only other essential ingredient is access to long-term investment capital at reasonable interest rates. I hope this committee and the Congress will help them meet this need.

Mr. RAINS. Mr. Bingham, that is a very fine statement. I think this committee recognizes the fact that one of the finest and yet one of the most limited programs that we have had has been the community facilities program. I think also that we are fully aware of the great need that exists. In the speech I made on the floor on the area redevelopment bill, I mentioned the community facilities bill and I said I hoped no one would get the false impression that I regarded that particular $100 million for the distressed areas of this country as an adequate community facilities program.

It is not, and it never will be. I was disappointed, I will even say for the record, I had understood that the figure that was coming up from the administration in this bill was going to be $500 million instead of $50 million, and I thought it must be a typographical error when I finally read it at $50 million.

I will say further that I think it was a great mistake to change the figure which had been talked about from $500 million to $50 million. That is in addition, of course, to what we now have and in my opinion it doesn't begin to meet the need. I notice the AMA, on page 2, puts particular stress in their resolution:

That the American Municipal Association continue its active support of Federal legislation to assist communities of all sizes, but particularly small communities, in their efforts to provide adequate public facilities.

It is urgent that this committee should somewhere arrive at an adequate community facilities program for our medium size and smaller towns. This particular program cannot realistically be geared to the very largest cities, can it?

Mr. BINGHAM. No, Mr. Chairman, I don't believe that that is a realistic approach. Our larger metropolitan cities can borrow money cheaper than the Federal Government, as cheaply as the States, 3 or 32 percent interest or less, and they have ample in most cases, debt capacity to finance the public services they need. It is the smaller communities that are growing rapidly and the suburban communities which have these great problems, but I must say that municipal officials kind of shudder with horror when they see a great housing bill come along and know that for every home built they are going to have to spend $2,000 to $4,000 an acre to serve it with roads and streets and firehalls and so forth. They shudder, and what has happened, Mr. Chairman, is that we have built a lot more houses than we have built sewers and waterlines.

In my State today we have over 400,000 people living in urban subdivisions in which there is not a sewer, a fire plug, a fire hall, a street light, a curb and gutter, a storm drain, a sewer, or any of the standard public facilities.

Now we have tried to overcome it, but here we have probably $150 to $175 million backlog of public improvements to go along with the houses that have been built primarily under the various housing acts which the Congress has enacted.

Mr. RAINS. We have had the homebuilders and several other people who we have to look to to carry out the private enterprise aspect of this housing program tell us that their two greatest handicaps were, first of all, the shortage of land, and second, the shortage of community facilities. So if we are to get a housing bill that is really going to get the houses built, since we are going to have to go out on

the edge of the cities in oder to find the land on which to build, we are going to have to have some kind of program for community facilities.

I would like to make one other statement for the record and then I will stop. This is the part of the bill that-I am vitally concerned with all of the bill, I think my record proves it but this is one part of the bill that my heart is in, because as I talked to our Speaker the other day about the failure of having only $50 million additional in this bill for community facilities, he said put some more in it. He said "You know that is for us folks in little towns like Bonham, Tex., that is our urban renewal." Everybody remember that, that is our urban renewal, and I will lay it on the line again. We have to have a lot of votes to get these big city programs through. I notice where the Wall Street Journal criticized me the other day for being so candid in these statements, but if we are going to have a housing bill that covers the whole country, we have got to put in it some of the things to aid the small cities as well as the big ones, isn't that right?

Mr. BINGHAM. Yes, sir, I hope that all 15,000 of these small cities will write their Congressmen, every one of them.

Mr. RAINS. They likely will, as a matter of fact. Any questions, Mr. Ashley?

Mr. ASHLEY. Not at this time. It is an excellent association. You do a good job for your association.

Mr. RAINS. Mr. McDonough?

Mr. MCDONOUGH. Mr. Bingham, in view of your statement that the small cities are having difficulty in finding money in the bond market to build these facilities, do you think that the bill ought to be amended to limit community facilities to cities of 100,000 or less?

Mr. BINGHAM. Mr. Chairman, that would be realistic, particularly if the interest rates are to be lower. I think some system of priorities should be set up which tunes itself to the interest rates that you are going to provide under the bill, perhaps 50,000 or less. There is a breaking point on the accessibility of communities to the private money market.

Mr. MCDONOUGH. Of course, if they have sufficient credit and security for the bonds

Mr. BINGHAM. One break point is what Moody's and other rating services of New York for bonds-there is a break point on what various communities have to pay as to size.

Mr. MCDONOUGH. You say with the new building small cities shudder at the responsibility for building facilities to take care of this housing? You said there were some 450,000 in subdivisions scattered around the country without facilities? How many in Tennessee alone?

Mr. BINGHAM. Mr. McDonough, in my State alone, we have 400,000 people living in urban subdivisions which do not have any of these facilities.

Mr. MCDONOUGH. That is the point. Now, are these within the jurisdiction of the city in the immediate area of-neighborhood of where they are located? Are they in the county area or the city area? Mr. BINGHAM. I want to say that up until 5 years ago our city did not have the authority to annex new territory. These grew up beyond corporate boundaries, but in the last 5 years our cities have annexed

300,000 people but meanwhile this urban growth has continued to occur. We estimate in our State

Mr. MCDONOUGH. Then they would be under the jurisdiction of the county if they are not under the State.

Mr. BINGHAM. In my State they are now under the jurisdiction of the city government.

Mr. MCDONOUGH. Do you mean all of these 450,000 you are speaking about?

Mr. BINGHAM. Yes, since our cities secured the authority to annex new territory 300,000 of them have been brought under the jurisdiction of the cities by being annexed to the corporate territory of the city and our cities are moving as rapidly as possible to annex all of the rest of them.

Mr. MCDONOUGH. The point I am getting at is there must be some control over a subdivider in going in to take over acreage to build houses in a community. In California we require that the facilities be included in the permit of the builder applying to build these houses. If you put the responsibility on the local government where a tract of land cannot be subdivided unless there are curbs, highways, sewage disposal, water facilities and other things. This idea of promiscuously building wherever a man wants to in order to make a dollar is not orderly procedure and this is the kind of building that brings about slum areas because eventually if you don't have those facilities, even if they are new they eventually become undesirable to live in.

Mr. RAINS. Would the gentleman yield at that point? There are very few counties in the United States like Los Angeles County. Any of these counties he is talking about are rural counties which have no regulations of any type concerning the type of building, issue no permits of any kind. Your county is a metropolitan county throughout.

Mr. MCDONOUGH. Mr. Chairman, the point I am making is this: As a result of the default on the part of people in local government we are carrying the burden. It applies to urban renewal. It applies to most of the things that the AMA-I have a copy of your resolutions, you are asking for everything under the sun. In other words, you are not governing yourself. You are not planning your own communities. You are not planning the financial responsibilities that come with a municipality or a county. You allow these things to grow up without any control and then you come to the Federal Government and say, "Well, I wish you would bail us out." Now, I think this ought to start at the local level. This is our problem with juvenile delinquency. Because the parents don't take care of the children they come to the government, county, State, Federal, or city, to look after their neglected children. The same thing is true with the cities and counties and States throughout the United States. There ought to be some order at the local level and not allow this thing to develop to the point where we have to consider $500 million of the money from all parts of the Nation, from many places where there is orderly procedure to take care of the disorderly procedure in other parts of the country.

Mr. BINGHAM. Well, Mr. McDonough

Mr. MCDONOUGH. I am not attempting to malign you, Mr. Bingham. I am not saying that you are at fault. This is a fault that a whole lot of people are responsible for.

Mr. RAINS. Well, I would like to put in the record my viewpoint. I have heard that a great many times and to me it doesn't make any real good cogent reason-

Mr. MCDONOUGH. It doesn't because you don't agree with it.

Mr. RAINS. The Federal Government takes practically all of the tax base of local communities throughout the country and time after time I have advocated that either the Government ought to get out of the taxing structures in which cities and towns can't operate and let them have the money to do the job you are talking about and not starve them to death for tax revenues, or else if we are going to collect it all we should give back to the people who pay it at least a part of it for the needs that they have.

Well, I have been in your community. I don't know of a single community in the whole United States including yours but what is up here constantly saying the very same thing that a small city and town is saying from Tennessee or Alabama or somewhere else. And I have been sitting here for 17 years.

Mr. MCDONOUGH. Well, I don't know that we have been asking for

Mr. RAINS. You mean you haven't heard your mayor

Mr. MCDONOUGH. He wasn't here.

Mr. RAINS (continuing). Norris Poulson, who represented the AMA and the conference of mayors, has appeared twice and I chided him about changing his viewpoint after he got to be a mayor from the time he was a Congressman.

Mr. MCDONOUGH. I still think he is wrong.

Mr. RAINS. I have an idea if you got to be mayor of Los Angeles you would change your viewpoint.

Mr. BINGHAM. The powers of cities and counties depend upon State government. The American Municipal Association recently adopted a policy statement recommending a sound annexation law whereby cities could get jurisdiction over these developing areas as they develop and serve them, regulate them, control them. Only 16 States have such a law. We enacted such a law that gives our cities jurisdiction over new development 5 years ago. We have annexed huge territories containing 2,000 people and that is our problem.

Mr. MCDONOUGH. Certainly there are efforts being made to bring about orderly procedure in the city government, municipal government, county government, State government. However, in this bill we are proposing an open space acquisition of land as a buffer area around cities. This is in anticipation of preventing slums from developing. This would be, we will say, for instance, a 5-mile area around a city in which they would have control over the use of this land for an indefinite period of time.

The only use that it could be put to is to come to the Federal Planning Commission, the Federal Government assists the cities in taking control of this land, getting title to it, of course there are a lot of legal questions involved in this kind of procedure because there may be some States in which it couldn't be done at all. The question of the indefinite use of land for an indefinite period of time around a city in order to prevent the development of slums and subject only to the decision of the Federal Planning Board is rather difficult procedure but, nevertheless, here is another example of the fault on the