you to be misled. That does not mean that all debentures would be freely usable for the payment of premiums under any section of the act. The recommendation of the Federal Housing Commission was that otherwise debentures be limited to payment of premiums only against the particular insurance program for which they were issued. In other words, section 203 debentures could not be used to pay premiums under section 207. However, the old title I, section 8, debentures would be usable for the payment of premiums in section 203 housing. Senator SPARK MAN. That would apply to debentures that might be issued in connection with mortgages that have already been written. Mr. FITZPATRICK. Yes, sir. Senator SPARK MAN. Since title I, section 8, is being merged with section 203, under title II, those debentures that will be issued in the future against title I, section 8, will be usable in section 203? Mr. FITZPATRICK. Yes. That is what the Federal Housing Commissioner said in answer to your question the other day. Senator SPARKMAN. I want to be certain I understand you there. It is not across the board, but it is section 203? Mr. FITZPATRICK. Yes. Senator SPARK MAN. Thank you. Mr. Chairman, I hate to leave you but I have an appointment which I must keep. The CHAIRMAN. We hate to see you go, but we understand. Mr. COLE. Do you prefer to ask the questions now, Senator? The CHAIRMAN. These were some questions Senator Frear wanted to ask: "Does the Federal Government set up a local housing authority?" Mr. COLE. No, that is done by the local people. The CHAIRMAN. That is the Government does not set up authority, the local people do it? Mr. COLE. Yes. The CHAIRMAN. "Can a public-housing project be built in any community without approval of local government?" Mr. COLE. No; it cannot. The CHAIRMAN. In other words, the answer is "No"? Mr. COLE. That is right. The answer is "No." The CHAIRMAN. The Federal Government cannot go in and put in a public-housing project without the approval of a local community? Mr. COLE. That is correct; they cannot. The CHAIRMAN. The third question: "How much interest has there been in public housing on the part of the various localities?" Mr. COLE. In that connection, Senator, I might point out that there are now section 887 local housing authorities with active programs serving 1,228 localities. By that I mean that in some cases a single authority may serve several localities. As I traveled over the country last year, I saw in many places a great interest in public housing. The CHAIRMAN. You say there are 887 of them? Mr. COLE. Yes. The CHAIRMAN. Private housing authorities, or municipality housing authorities, or State, or local. Let's put it that way. Local housing authorities. Mr. COLE. That is right. The CHAIRMAN. Have they all actually built some? Mr. COLE. They have programs in operation. The CHAIRMAN. And actually have built some buildings? Mr. COLE. Yes. The CHAIRMAN. You would consider, then, with 887 of them, there was considerable interest? Mr. COLE. Yes, Senator, I would feel so. Yes; definitely. The CHAIRMAN. No. 4: "What are the incomes of the families in public housing? Can they get housing any other way?" Mr. COLE. The average income of families admitted in 1952 was $1,986, The CHAIRMAN. That was their annual income? Mr. COLE. Yes. The CHAIRMAN. If they had more than that they could not get into a public housing project? Mr. COLE. That is the average. The average income of all families already in residence in 1952 was $2,087. Now, in response to the latter part of that question The CHAIRMAN (interposing). "Can they get housing any other way?" Mr. COLE. Well, Senator, that is a very broad question but I can answer it in this way: I am quite sure that there are many, many people in this Nation who are living in unsafe and unsanitary homes, who do not have sufficient income to pay an economic rent, or to buy a house. Now, I personally believe that there are people living in slums who do have that income, and can pay an economic rent, or buy a house. The problem is to get enough houses for all of the people. As we proceed year after year to develop slum clearance programs, rehabilitation programs to enforce overoccupancy codes, we do force out of these houses people with low incomes who are unable to obtain decent housing. Now, you either meet that problem, or you don't. Either you say, "Well, it is none of our affair, and somebody must look after it," or else you do something about it. I have been quite a critic of some of the programs and policies of public housing. I personally feel that as the Federal Government proceeds with its program of slum clearance, rehabilitation, asking the cities to enforce their codes with respect to overoccupancy, and so forth, that there are some people who will be removed forcibly through these federally aided assistance programs, and, therefore, it seems to me there must be, at least for the present, a continuation of the public housing. The CHAIRMAN. Senator Frear's fifth question is, How long can tenants stay in public housing? Mr. COLE. They can stay in public housing as long as their income is lower than that which is authorized for continued occupancy. That average income for 1952 was $2,000. That means, of course, in some localities The CHAIRMAN. How do you handle it if you have public housing in a city where there are only 1,000 public-housing units, and there are 2,000 people with incomes of less than $2,000? Then how do you handle it? Mr. COLE. The local authority selects between those people who are eligible, based upon their criteria. The CHAIRMAN. That is, the local people do that, and you have nothing to do with it? Mr. COLE. The Public Housing Administration-the Washington office-audits their criteria, but they have nothing to do with the actual selection of the tenants. The CHAIRMAN. But the administration and the operation of these projects is in the hands of local people? Mr. COLE. Yes, sir. The CHAIRMAN. Senator Frear's sixth question is: Do you have to build nothing but high rise buildings, institutionalized construction? Mr. COLE. The answer is "No." The CHAIRMAN. Do you know what it is? Mr. COLE. Part of that is my own idea. The CHAIRMAN. Let me read the question again: Do you have to build nothing but high rise buildings, institutionalized construction? Mr. COLE. Let me answer it in this way: In many of these cities, public-housing units are built in multifamily, 8, 10, 12, and 20 stories, I believe. The CHAIRMAN. Let me make it clear. I think what he means here is that they have to build high housing-I presume that is apartment buildings-and then must they be institutionalized. I guess he means by that, they must all look alike, look like a hospital or a factory, and why can't they look like something to live in rather than an institution. Mr. COLE. That is right. Both Mr. Slusser and I are aware of that program. We are also aware of the needs in the great cities where they must have high rise buildings in the downtown areas, but we look forward that a program in the less densely populated areas where we can encourage the construction of less institutionalized appearing buildings. I think it is important to try and fit the community pattern. The CHAIRMAN. Now, Mr. Follin, you have a statement? The CHAIRMAN. Is that the statement I hold in my hand? The CHAIRMAN. Go ahead. Mr. FOLLIN. Mr. Chairman and members of the committee, I am grateful for this opportunity to appear before you today to discuss briefly certain aspects of S. 2938 pertaining to the urban renewal program as provided in title IV and section 701 of the bill. As you know, the Division of Slum Clearance and Urban Redevelopment has been administering the slum clearance and urban redevelopment program since July 15, 1949, under title I of the Housing Act of 1949, the basic legislation therefor. The bill which you are now considering provides for substantial amendments to title I of the Housing Act of 1949 for the purpose of expanding the scope of the Federal aid authorized thereunder in conformity with the President's program. Status of existing title I program: Since its beginning in July 1949, the title I program has been gaining momentum. The lack of adequate State enabling legislation has been substantially remedied and at the present time approximately two-thirds of the States have enacted legislation authorizing local public agencies to undertake slum 44750 -54- -pt. 1 -16 clearance and urban redevelopment projects. The constitutionality of such enabling legislation has been upheld by most of the supreme courts to which the constitutional issues have been presented for adjudication. The enactment of such State legislation has been accompanied with an increase in the scope of the title I program. As of December 31, 1953, 211 localities in 30 States, and in Alaska, Hawaii, and Puerto Rico, and the District of Columbia, had made reservations of capital grant funds for slum clearance and urban redevelopment programs. Of these 211 localities, 166 have actually initiated by such date slum clearance and urban redevelopment projects with title I assistance. As of December 31, 1953, in these 166 communities, 60 projects had reached the land acquisition and development stages, 94 reached the final planning stages, and 105 were in the preliminary planning stages. Urban renewal programs better suited to needs of smaller communities: It is interesting to note that most of these 166 localities are in the higher population brackets and that comparatively few of them are in the lower population brackets. All but one of the 18 cities above 500,000 and more than half of the 109 cities above 100,000 have initiated slum clearance and urban redevelopment projects with title I assistance. Of the 3,865 incorporated places in the continental United States with populations between 2,500 and 500,000 fewer than 150 have initiated title I projects. It is, therefore, clear that the slum clearance and urban redevelopment type of program for which title I assistance is available is not the type that a small city can readily engage in. The clearance of any sizable portion of a small community would constitute a rather audacious undertaking. That accounts for the fact that very few of the smaller communities have initiated programs of the type for which Federal aid is presently available. The rehabilitation of deteriorating areas and spot clearance, as authorized in the bill, are better suited to the needs of the smaller communities and it is my expectation that with the enactment of the bill a higher percentage of the smaller communities will avail themselves of the benefits provided under the bill. Urban renewal service: The urban renewal service which is authorized under the provisions of the bill on page 73, beginning at line 23, of the bill, will involve the furnishing to communities of services to assist them in the preparation of the workable program and technical and professional assistance for planning and developing local urban renewal programs. The establishment of this urban renewal service will be particularly valuable to the smaller communities with limited staffs and resources. These services will be rendered only upon the request of the respective cities to assist them in their slum and blight elimination and prevention programs. No additional authorization of funds required: It is expected that the broadened program of Federal assistance authorized under the bill may be initiated and carried out during the coming fiscal year without any increased authorization of loan or capital grant funds. Under the provisions of title I, loan funds of not to exceed $1 billion outstanding at any one time and capital grant funds in a total amount not exceeding $500 million are authorized. As of December 31, 1953, approximately $74 million of loan funds were committed. It is estimated that by June 30, 1955, approximately $284 million of loan funds will have been committed. Hence, it is believed that the loan authorization in the existing legislation will be adequate for the present even under the broader urban renewal program. Moreover, it is likely that only a small portion of the loan commitments will actually result in loan payments. Under the provisions of the existing law, local public agencies may pledge their rights under Federal loan contracts as security for short-term private loans. Through such procedure most of the loan funds for the projects will be provided through private financing and the amount of Federal loan funds actually disbursed will be materially reduced. In addition, by emphasizing resort to such private financing savings of hundreds of thousands of dolars in interest costs may be effected. With respect to capital grant funds as of December 31, 1953, $105 million of capital grant funds were allocated for specific projects. It is estimated that as of June 30, 1955, a total of more than $235 million of capital grant funds will have been definitely committed for slum clearance and urban renewal projects initiated under the 1949 act. Hence, out of the total $500 million authorization for capital grants, approximately half will have been definitely committed by the end of fiscal year 1955. It is difficult to estimate, with any degree of accuracy, what the volume of activity under the new program may be. During the first year following the enactment of the new legislation, it is safe to assume that much preparatory work will have to be done by the local communities in studying their local situations, developing workable programs, organizing their staffs and machinery, and otherwise in getting ready to undertake the broad-scale programs of the type contemplated under the provisions of the bill. The demands upon us for funds will be largely confined in the first year to advances for planning. Pending projects to be administered under existing title I provisions: The savings provision in section 412 of the bill makes it clear that pending projects will not have to be modified to conform to the new law and local public agencies need not be concerned about having new requirements under the bill imposed on projects which are under way when the bill is enacted. Thus, during the period required for a readjustment to the new program, local public agencies will be considerably occupied in completing the slum-clearance work undertaken before the enactment of the bill. Urban renewal operations within the framework of existing State legislation: It is believed that even though supplementary State enabling legislation may be desirable or necessary, the existing State legislation will prove adequate to permit local public agencies to carry out urban renewal projects, although such projects may have to be limited in scope to conform to existing legal authorization. In general, the State enabling legislation which is presently in force authorizes redevelopment agencies, housing authorities, or other local agencies to undertake and carry out slum clearance and urban redevelopment projects of the type for which Federal aid may be extended under the existing provisions of title I. Such State-enabling legislation does not generally vest in such redevelopment agencies or local authorities the powers to carry out urban renewal projects involving rehabilitation and conservation, in |