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does not provide specific assurance that the housing to be constructed will be moderate income housing because no ceilings are placed on construction which for all practical purposes determine the levels of rents or charges.

Section 6(d) provides for maturity of mortgages ranging from 50 years to 63 years. We wish to point out that the maximum term of mortgages insured by the Federal Housing Administration under the current Housing Act is 40 years, and that the lengthening of the terms of the loans tends to increase the risk of the loans.

We also question whether the one-half of 1 percent charge to the borrower as provided by section 6(d) will be adequate to cover administrative costs plus the creation of the reserve for losses. Section 8 of the bill provides that the "Insurance Fund" reserve will be established "from interest receipts on mortgage loans amounts to one-fourth of one per centum per annum of the then outstanding balance of such mortgage loans," and that the Board shall establish such other reserve or reserves as it deems necessary. There thus may be a relatively small amount of funds charged to the borrower to cover administrative expenses. Although section 6(g) of the bill provides for the Corporation to charge the borrower for inspection and other services during construction of any housing project. it does not require a charge to prospective borrowers for application fees. We suggest that the bill be revised to require the Corporation to charge prospective borrowers a fee to cover its costs of processing applications. The Federal Housing Administration generally charges application and inspection fees.

Section 7 of the bill contemplates that the Corporation's obligations will be issued only to the investing public as there is no authorization for purchase by the Secretary of the Treasury. The Corporation's obligations will not be guaranteed either as to principal or interest by the United States. However, debentures issued to holders of such obligations in case of default by the Corporation will be fully and unconditionally guaranteed as to principal and interest by the United States.

While the Corporation's obligations are not guaranteed as to principal and interest by the United States, they are redeemable, in case of default, by debentures. Such debentures are guaranteed as to principal and interest and are includible in the determination of the public debt limitation.

Despite the fact that the Corporation's obligations (other than debentures) are not guaranteed by the United States, we think that, so far as the investing public is concerned, they would be regarded as obligations of the U.S. Government and, as a practical matter, they actually are obligations of the United States. We do not believe that the fiscal and debt management responsibilities of the Treasury Department should be weakened by authorizing other Government agencies to enter a field which is a normal function of that Department nor that these obligations should be initially created outside the scope of the limitation on the public debt.

Section 10(b) provides that a private corporation may obtain a loan from the Corporation to construct housing for sale to a nonprofit organization. However, the bill does not appear to contain any provision that will prohibit the private corporations from making a profit on the sale. We suggest that the bill be revised to provide that a private corporation should sell this housing to a nonprofit organization at actual cost of such property as certified pursuant to section 227 of the National Housing Act. It is noted that this restriction is placed on private corporations who sell housing to nonprofit corporations pursuant to section 313 (a) (3) of the National Housing Act.

We also wish to call your attention to editing errors we noted in the bill.
On page 8, line 20, “(a)" should be changed to "(1)".

On page 12, line 24, page 15, line 22, and page 19, line 11, "Section 11(b)" should be changed to "Section 10(b)."

On page 15, line 2, "Section 13" should be changed to "Section 12."
On page 15, line 24, "Corporation" should be changed to "corporation."
Sincerely yours,

JOSEPH CAMPBELL,

Comptroller General of the United States.

[S. 1680, 86th Cong., 1st sess.]

MR. JAVITS

A BILL To amend section 106 of the Housing Act of 1949 with respect to the provision of civil defense shelter facilities in urban renewal areas

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 106 of the Housing Act of 1949 is amended by adding at the end thereof a new subsection as follows:

"(g) (1) Notwithstanding any other provision of this title, an urban renewal project respecting which a contract for a capital grant is executed under this title may include the construction of civil defense shelter facilities, and the acquisition of any real property in the urban renewal area necessary thereto; and such contract shall provide that the capital grant otherwise payable under this title shall be increased by an amount equal to the cost of providing such facilities and that no part of such cost shall be required to be contributed as part of the local grant-in-aid.

"(2) As used in this subsection, the term 'civil defense shelter facilities' means facilities which (1) are designed for the protection of lives or the care of injured or evacuated persons in the event of enemy attack, (2) conform to standards prescribed by the Director of the Office of Civil and Defense Mobilization, and (3) are approved by the Housing and Home Finance Administrator. "(3) Any contract with a local public agency which was executed under this title before the date of the enactment of this subsection may be amended to provide for increasing the capital grant otherwise payable under such contract in accordance with the provisions of this subsection."

S. 1680

DIGEST OF BILL

Amends section 106 of the Housing Act of 1949 to permit the construction of civil defense shelter facilities in urban renewal areas. Provides that the Federal grant shall be increased by an amount equal to the cost of such shelter facilities and that no part of the cost shall be required to be contributed as a local grant-in-aid.

Re S. 1680, 86th Congress.
Hon. A. WILLIS ROBERTSON,

HOUSING AND HOME FINANCE AGENCY,

OFFICE OF THE ADMINISTRATOR, Washington, D.C., September 21, 1959.

Chairman, Committee on Banking and Currency,
U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This is in further reply to your April 17 letter requesting the views of this Agency on S. 1680, a bill to amend section 106 of the Housing Act of 1949 with respect to the provision of civil defense shelter facilities in urban renewal areas. The proposed amendment would allow a local urban renewal agency to include in a project the construction of approved civil defense shelter facilities and would provide 100 percent Federal grants for such facilities.

Enactment of this bill would do substantial harm to the urban renewal program itself, by diverting capital grant funds from its basic purposes. In addition, the proposed program would be contrary to the administration's decision announced by the Federal Civil Defense Administration on May 7, 1958, that although all reasonable encouragement would be given for shelter construction, there will be no massive federally financed shelter construction program. In providing 100-percent Federal grants the bill would also be contrary to the administration policy of encouraging State, local, and individual participation in civilian defense.

Even if there were to be a 100-percent federally financed shelter program, we do not believe that it should be established as an appendage to our program of capital grants for urban renewal projects. The need for shelter facilities is at most only indirectly related to the number and location of urban renewal

areas. If there is to be a Federal program for the construction of shelters, it should be proposed and defended on its own merits and as a separate program, to be used where it would do the most good whether or not this coincides with urban renewal project areas.

In Regional Circular No. 455, I believe that we have already gone as far as is reasonable to support local proposals for shelters in urban renewal projects. That circular, dated January 27, 1959, instructs our regional offices to cooperate fully with the administration policy of encouraging shelter construction, by giving maximum consideration and support to fallout shelter proposals where urban renewal projects are involved. Local public fallout shelters are made eligible to count as local noncash grants-in-aid on the same basis as schools and other public facilities necessary to the development of the project area. In effect this enables localities which are not already providing all of their required one-third contribution through noncash grants-in-aid to construct fallout shelters in urban renewal areas at relatively small net cost to themselves. The fact that localities have shown almost no effective interest in such construction would seem to indicate either that they consider other facilities which are eligible as noncash grants-in-aid to be more important or that they do not feel that fallout shelters are at all essential in connection with their urban renewal projects.

We have been informed by the Bureau of the Budget that this report is without objection insofar as the Bureau is concerned.

Sincerely yours,

NORMAN P. MASON, Administrator.

TREASURY DEPARTMENT,
September 17, 1959.

Hon. A. WILLIS ROBERTSON,

Chairman, Committee on Banking and Currency,
U.S. Senate,

Washington, D.C.

MY DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 1680, to amend section 106 of the Housing Act of 1949 with respect to the provision of civil defense shelter facilities in urban renewal

areas.

The proposed legislation would amend title I of the Housing Act of 1949, relating to slum clearance and urban renewal, to provide that urban renewal projects for which capital grant contracts have been executed may include the construction of civil defense shelter facilities and that the capital grants shall be increased by an amount equal to the cost of providing such facilities.

The proposed legislation is not of primary interest to this Department and the Department has no comment to make as to its general merits. However, it is suggested that your committee critically examine the expenditures that would be authorized by the bill to determine whether they are essential when viewed in relation to the objective of maintaining a balanced budget. Also, Federal participation in programs which are more appropriately the primary responsibility of States and localities must be held to a minimum if budget expenditures are to be kept within reasonable limits in the years ahead.

The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your committee.

Very truly yours,

JULIAN B. BAIRD, Acting Secretary of the Treasury.

DEPARTMENT OF DEFENSE,

May 12, 1960.

Hon. J. W. FULBRIGHT,

Chairman, Committee on Banking and Currency,
U.S. Senate.

DEAR MR. CHAIRMAN: Reference is made to your request to the Secretary of Defense for the views of the Department of Defense with respect to S. 1680, 86th Congress, a bill to amend section 106 of the Housing Act of 1949 with respect to the provision of civil defense shelter facilities in urban renewal areas.

The Secretary of Defense has delegated to the Department of the Army the responsibility for expressing the views of the Department of Defense thereon. This bill would provide for inclusion of construction of civil defense shelter facilities in contracts for urban renewal projects and for increase in capital grants to take care of this added construction.

The Department of the Army on behalf of the Department of Defense has no objection to the enactment of this bill.

The enactment of this legislation will cause no apparent increase in the budgetary requirements for the Department of Defense.

This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense.

The Bureau of the Budget advises that there is no objection to the submission of this report.

Sincerely yours,

WILBER M. BRUCKER,
Secretary of the Army.

EXECUTIVE OFFICE OF THE PRESIDENT,
OFFICE OF CIVIL AND DEFENSE MOBILIZATION,
Washington, D.C., May 13, 1960.

Hon. A. WILLIS ROBERTSON,
Chairman, Committee on Banking and Currency, U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN: This is in reply to your request for a report on S. 1680.
The bill would amend section 106 of the Housing Act of 1949 to provide capital
grants for the construction of civil defense shelters in urban renewal construc-
tion projects financed with the assistance of the Federal Government.

"The National Shelter Policy of the Administration," announced on May 7, 1958, stated:

"The administration has conducted exhaustive studies and tests with respect to protective measures to safeguard our citizens against the effects of nuclear weapons. These several analyses have indicated that there is a great potential for the saving of life by fallout shelters. In the event of nuclear attack on this country, fallout shelters offer the best single nonmilitary defense measure for the protection of the greatest number of our people."

Emphasis in this fallout shelter program, in carrying out the national policy on shelter, is placed upon education of the public; the acceleration of research in the incorporation of fallout shelters in existing and new buildings; and the construction by the Federal Government of a limited number of prototype shelters of various kinds. The policy does not include a massive federally financed shelter-construction program, but leadership and example by the Federal Government through incorporation of fallout shelters in appropriate new Federal buildings designed for civilian use is an integral part of the fallout shelter program. Accordingly, members of my staff have had conferences with the Urban Renewal Administration regarding the construction of fallout shelters in urban renewal projects.

The Urban Renewal Administration makes urban planning grants for "master planning" by local authorities. Such grants are currently running at about $2 million annually. Following agreement with the Housing and Home Finance Agency, steps are now being taken to encourage and promote planning for shelters under this program. Moreover, the Federal Government provides two forms of aid for urban renewal: (1) temporary project financing and (2) capital grants, which ultimately defray two-thirds of the cost of acquisition, clearance, and redevelopment. Local authorities provide "site improvements," such as roadways, sewers, water, and parks in making up their one-third prorata share. Under the rulings of the Housing and Home Finance Agency and the Urban Renewal Administration, local redevelopment authorities may build fallout shelters and credit their costs to the local share of the project.

The urban renewal program provides adequate authority to carry out the national shelter policy. At the present time, therefore, there is no need for S. 1680. Accordingly, the Office of Civil and Defense Mobilization does not support the proposed bill.

The Bureau of the Budget advises that it has no objection to the submission of this report.

Sincerely,

LEO A. HOEGH.

[S. 1955, 86th Cong., 1st sess.]

MR. FULBRIGHT AND OTHERS

A BILL To expand the public facility loan program of the Community Facilities Administration of the Housing and Home Agency, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Community Facilities Act of 1959".

SEC. 2. Title II, Public Facility Loans, of the Housing Amendments of 1955, is amended to read as follows:

"TITLE II-PUBLIC FACILITY LOANS

"DECLARATION OF POLICY

"SEC. 201. It has been the policy of the Congress to assist, wherever possible, the States and their political subdivisions to provide the services and facilities essential to the health and welfare of the people of the United States. The Congress finds that in many instances municipalities or other political subdivisions of States, which seek to provide essential public works or public facilities, are unable to raise the necessary funds.

"The Congress finds that the immediate construction of these essential public works and public facilities would enhance the health and welfare of the people of the United States and would reduce unemployment and stimulate business activity.

"It is the purpose of this title to authorize the extension of credit to assist in the provision of essential public works or facilities by States, municipalities, or other political subdivisions of States, where such credit is not otherwise available on equally favorable terms or conditions.

"The foregoing declaration of policy and findings apply equally in the case of nonprofit hospitals, and it is likewise the purpose of this title to authorize the extension of credit to assist in the provision of those facilities.

"FEDERAL LOANS

"SEC. 202. (a) The Housing and Home Finance Administrator, acting through the Community Facilities Administration, is authorized to purchase the securities and obligations of, or to make loans (including construction loans) to, States, municipalities, and other political subdivisions of States, public agencies, and instrumentalities of one or more States, municipalities, and political subdivisions of States, and public corporations, boards, and commissions established under the laws of any State, to finance specific public projects under State or municipal law; and to purchase the securities and obligations of, or to make loans to, nonprofit hospitals to finance specific projects. No such purchase or loan shall be made for payment of ordinary governmental or nonproject operating expenses. “(b) The powers granted in subsection (a) of this section shall be subject to the following restrictions and limitations:

"(1) No financial assistance shall be extended under this section unless the financial assistance applied for is not otherwise available on equally favorable terms and conditions, and all securities and obligations purchased and all loans made under this section shall be of such sound value or so secured as reasonably to assure retirement or repayment, and such loans may be made either directly or in cooperation with banks or other lending institutions through agreements to participate or by the purchase of participations or otherwise.

(2) No securities or obligations shall be purchased, and no loans shall be made, including renewals or extensions thereof, which have maturity dates in excess of fifty years.

"(3) Interest shall be charged on loans made under this section at a rate determined by the Administrator which shall not be more than the total of onequarter of 1 per centum per annum added to the rate of interest paid by the Administrator on funds obtained from the Secretary of the Treasury as provided in section 203 of this title. In determining from time to time the rate of interest within the limits provided in this paragraph, the Administrator shall be guided by the then current urgency of the need to encourage and promote essential public works and public facilities and to provide the maximum stimulus to business activity and employment, and by the then current urgency of the need for construction, repair, or improvement of nonprofit hospitals.

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