3586, S. 3595, and also on H.R. 10213. That last is the bill that has been just recently passed by the House of Representatives. For the first time in many years, the administration has not requested the enactment of general housing legislation. Of the bills before us, the only administration bills are: (1) S. 3500, which would make the FHA home improvement program permanent, (2) S. 3498, which would permit appropriation acts to increase the public facility loan fund, (3) S. 3499, which would permit appropriation acts to increase funds for the special assistance functions of the Federal National Mortgage Association, and (4) S. 3504, which would remove the limitation upon the general insurance authorization of the Federal Housing Administration. While legislative action on these four subjects is essential, these proposals do not, in my opinion, by any means represent a comprehensive concern for the many things which must be done to improve housing conditions in the Nation. Perhaps it is for this reason that there are so many other bills pending before the subcommittee. I was disappointed to read the President's message of May 3, in which he requested legislative action on some 20-odd subjects, and to find that he had only one recommendation concerning housing. The President recommended that we abandon a program of loans for college dormitories which has worked successfully since 1950, and undertake a new program which is unanimously opposed by every association of higher educational institutions that has ever appeared before this subcommittee, and, as must be known to all, has no chance of enactment. In spite of the lack of Presidential interest in solving the housing problems of the Nation, I am hopeful that this subcommittee can produce legislation which is necessary in the public interest and which is consistent with the capacity of the most prosperous Nation in the history of Western civilization. Today we will hear the views of the Administrator of the Housing and Home Finance Agency, and the heads of his constituent agencies. Mr. Mason and his associates have always been helpful to the subcommittee and I know that we will be attentive to their testimony. In addition to recommendations concerning the specific proposals before us, I am hopeful that these witnesses will furnish information about the present status of the several programs administered by the HHFA. I am particularly interested in the current condition of the FHA general insurance authorization. This is a subject which was discussed in the hearing last February. At that time, Commissioner Zimmerman indicated some doubt about the adequacy of the general insurance authorization. At this time, I submit for the record the bills to be considered, digests of these bills, and agency reports on them which have been received to date. If, during the course of these hearings, other bills and reports are received, they will be inserted at this point in the record. (The bills, digests, and reports referred to follow :) [S. 467, 86th Cong., 1st sess.] MR. CHAVEZ A BILL To amend title II of the Housing Amendments of 1955 (relating to public facility loans) to authorize additional financial assistance in connection with public projects made necessary by certain activities related to the national defense Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the first sentence of section 203 (a) of the Housing Amendments of 1955 is amended by striking out "$100,000,000, notes and other obligations", and inserting in lieu thereof the following: "$200,000,000, notes and other obligations, of which not to exceed $100,000,000 shall be issued to finance activities under section 206 of this title". (b) Section 203 (b) of the Housing Amendments of 1955 is amended to read as follows: "(b) Funds borrowed under this section (1) for the purposes of section 202, and any proceeds therefrom, shall constitute a revolving fund which may be used by the Administrator in the exercise of his functions under section 202, and (2) for the purposes of section 206, and any proceeds therefrom, shall constitute a revolving fund which may be used by the Administrator in the exercise of his functions under section 206." SEC. 2. The second sentence of section 204 of the Housing Amendments of 1955 is amended to read as follows: "Funds obtained or held by the Administrator in connection with the performance of his functions (1) under section 202 shall be available for administrative expenses of the Administrator in connection with the performance of his functions under section 202, and (2) under section 206 shall be available for administrative expenses of the Administrator in connection with the performance of his functions under section 206." SEC. 3. Title II of the Housing Amendments of 1955 is amended by adding at the end thereof the following hew section: "FEDERALLY IMPACTED AREAS "SEC. 206. (a) In furtherance of the purposes of this title, the Administrator, acting through the Community Facilities Administration, may make loans and/or grants to any municipality or political subdivision of a State (including any public agency or instrumentality thereof) to finance the construction of specific public projects (under State or municipal law) in any federally impacted area. As used in this section, the term 'federally impacted area' means a locality which has sustained a substantial and rapid increase in population as a result of activities of the Atomic Energy Commission or any license of the Atomic Energy Commission. "(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 granted under this section unless the Administrator shall determine (A) that the project for which assistance is requested under this section is necessary as a result of the locality, in which such project is proposed to be constructed, becoming a federally impacted area, and (B) that such project cannot be undertaken without an unusual and excessive increase in the tax burden or debt of such locality, if assistance is not provided under this section. "(2) Loans made under this section shall bear interest at such rates, not in excess of 4 per centum, and have such maturity dates, as the Administrator shall determine. The interest rate and maturity date for any particular loan under this section shall be fixed by the Administrator with due regard to the ability of the affected locality to repay such loan from tax revenues. The amount of any such loan shall be fixed with due regard to the debt limit, if any, of the locality incurring the obligation. "(3) Grants, defraying such part of the cost of any project as the Administrator shall determine, may be made under this section if the Administrator determines that such assistance is necessary to the construction of such project, giving due consideration to the ability of the affected locality to finance such project without such assistance. Nothing herein shall be construed to prohibit the making of grants sufficient to pay the full cost of constructing any project if the Administrator shall determine that such project would not be constructed without such assistance, and that such project is of particular importance from a national defense standpoint." 55869-602 S. 467 DIGEST OF BILL Amends title II of the Housing Act of 1955 (public facility loan program) to add a $100 million revolving fund with which to make loans and grants to local governments to assist in financing public works in federally impacted areas (defined as, "a locality which has sustained a substantial and rapid increase in population as a result of activities of the Atomic Energy Commission or any license of the AEC.") HOUSING AND HOME FINANCE AGENCY, Re S. 467, 86th Congress. Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: This is in further reply to the January 20 letter from your committee requesting the views of this Agency on S. 467, a bill to amend title II of the Housing Amendments of 1955 (relating to public facility loans) to authorize additional financial assistance in connection with public projects made necessary by certain activities related to the national defense. On March 14, 1957, we provided you with our views on an identical bill in the 85th Congress. A copy of that report is enclosed. We find upon review that it still represents the views of this Agency on the proposed legislation. Sincerely yours, NORMAN P. MASON, Administrator. Re S. 467, 85th Congress. HOUSING AND HOME FINANCE AGENCY, Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: This is in further reply to your letter of January 15, requesting the views of the Housing Agency with regard to S. 467, a bill to amend title II of the Housing Amendments of 1955 (relating to public facility loans) to authorize additional financial assistance in connection with public projects made necessary by certain activities related to the national defense. The bill would amend title II of the Housing Amendments of 1955 which authorizes this Agency's public facility loan program. The Housing Administrator's authority under that title to borrow from the Treasury would be increased by $100 million in obligations outstanding at any one time, and the additional funds would be earmarked, under a proposed new section of title II, for loans and grants to municipalities and other local public agencies for the provision of public facilities in areas which have sustained a substantial and rapid increase in population as a result of activities of the Atomic Energy Commission or any licensee of the Commission. The proposed special aid program for AEC-affected areas would not be subject to the present requirements of title II that a priority be given to applications from localities of less than 10,000 population for such basic public works as water and sewer lines and water and sewage-treatment plants. This change, along with the increased authorization, is apparently intended to make the special program freely available for a greater variety of public facilities in communities, regardless of their population, which have grown rapidly as a result of AEC activities. In addition, the Federal aid terms proposed for AEC-affected areas would be very much more liberal than those now authorized in the public facility loan program. Thus, in the proposed program, the interest rate would be limited by law to 4 percent; the present 40-year maximum maturity on loans would not be applicable; interest rates, as well as loan maturities, would be required to be fixed partly on the basis of ability to repay; Federal grants would be authorized es a supplement to loans; and, where the Administrator finds that a project which is of particular importance to national defense would not otherwise be provided, a Federal grant could be made equal to the full cost of the local public facility. The Housing Agency has no information which would support the need for the increased loan program and the grants proposed by S. 467. It may be that on the basis of information available to the Atomic Energy Commission or particular communities some amendments to title II of the Housing Amendments of 1955 should be developed in order to channel additional public facility loan assistance to AEC-affected areas, as is now done for smaller communities. Similarly, there may be special needs in areas affected by activities essential to programs of the military departments and the Office of Defense Mobilization as well as of the AEC. However, this legislation is not primarily addressed to these problems. In addition, there are a number of objections to the terms of aid which would be authorized by the bill. The present statutory maximum maturity of 40 years is as long as would seem warranted. It is substantially longer than private lenders usually are willing to allow, even for localities with established high credit rating. Flexible interest rates kept generally in line with changing money market conditions, as now provided in the public facility loan program, also would be preferable to a fixed 4-percent maximum. Another objection to the loan terms proposed by the bill arises from the provision that the interest rate and maturity shall be fixed with regard to the ability of the locality to make repayment of the loan from tax revenues. Expected income from assessments and other charges should be considered in this type of loan as well as tax revenues. Also, while it is often helpful and sound to adjust loan maturities to ability to make periodic payments, it appears clearly undesirable to reduce the interest rate in order to compensate for inability to repay. The grant provisions are likewise open to a number of serious objections. The Housing Agency has no information indicating a need for the proposed grants. However, if such provisions were to be enacted, the legislation should provide satisfactory criteria for determining when a grant is to be given and its size. Under the bill, grants up to 100 percent of the full cost of the facility could be made under extremely general criteria. The grant provisions also appear to us to be an inappropriate feature of a revolving borrowing authorization. Nonrepayable expenditures are more appropriately made from prior appropriated funds or by means of contract authority funded from later appropriations. We have not attempted in this letter to comment on possible improvements to detailed provisions of the bill. Sincerely yours, NORMAN P. MASON, Administrator. TREASURY DEPARTMENT, July 13, 1959. Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, MY DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 467, to amend title II of the Housing Amendments of 1955 (relating to public facility loans) to authorize additional financial assistance in connection with public projects made necessary by certain activities related to the national defense. The bill would increase by $100 million the amount that the Housing and Home Finance Administrator could borrow from the Treasury for the purpose of making public facility loans under title II of the Housing Amendments of 1955. The $100 million increase would be made available for loans for public projects in localities which have sustained a substantial and rapid increase in population as a result of the activities of the Atomic Energy Commission or its licensees. The bill would also authorize grants to defray the costs of such projects in such localities. No provision has been made in the President's budget program for either the expansion of the public facility loan program or the grants that would be authorized by the bill. Consequently, the Department would not favor its enactment. 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, LAURENCE B. ROBBINS, Acting Secretary of the Treasury. ATOMIC ENERGY COMMISSION, Hon. J. W. FULBRIGHT, Chairman, Committee on Banking and Currency, DEAR SENATOR FULBRIGHT: I refer to your letter of January 20, 1959, requesting the comments of this Commission on S. 467, a bill to amend title II of the housing amendments of 1955. As we understand the bill it would authorize the Housing and Home Finance Administrator to make loans or grants to a municipality or a political subdivision of a State to finance the construction of specific public projects in a locality which has sustained a substantial and rapid increase in population as a result of activities of the Atomic Energy Commission or any licensee of the Commission. The bill would provide for $100 million of notes or obligations to finance activities under the foregoing authority. This Commission has in general sought to look to the programs of other Federal agencies to provide needed community facilities assistance to areas which may be impacted by activities of the Commission or its contractors. It understands that at the present time the Housing and Home Finance Administrator has certain authority to make loans to assist communities in the acquisition of public facilities. Several communities in the uranium milling areas of the West have been affected by an influx of population resulting from atomic energy activities. However, we are not aware of any situation where existing financing facilities are likely to prove inadequate. Apart from uranium milling, the Commission is not aware of any activities of its licensees which have had significant impact on local communities. Presently licensed activities generally involve the use of radioactive isotopes or the installation of research reactors which either form an incidental part of existing activities of the licensees or result in relatively small employment. It is anticipated, of course, that in the future large privately owned power reactors will be licensed under the Atomic Energy Act; such reactors are, however, expected to be located fairly near large population centers and would not be expected to have a large number of operating employees. The Commission believes, moreover, that there is a serious question of policy whether the activities of such licensees should be deemed to constitute a Federal impact which would justify special Federal assistance to local communities, any more than the activities of licensees under the Federal Power Act or the Federal Communications Act or holders of certificates of convenience and necessity under the various Federal Transportation Acts constitute such an activity. In general, the Commission's licensees would consist of organizations engaged in normal business activities such as electric power generation, food treatments, transportation, manufacture and sale of pharmaceuticals, and the like, or in normal research, educational and medical activities, which require a license from the Atomic Energy Commission because they are conducted through the use of atomic energy rather than by other means. In anticipation of the likelihood that atomic energy will eventually find uses in a major part of the economic and scientific life of the United States, we believe serious consideration should be given to the wisdom of establishing a precedent by which activities of such licensees would create a basis for special Federal assistance to communities affected by those activities. The Bureau of the Budget has advised that it has no objection to the transmission of this report and that it recommends against enactment of S. 467. Sincerely yours, R. E. HOLLINGSWORTH, |