and local governments and their public instrumentalities in improving mass transportation services in metropolitan areas." The amendments proposed by this bill to our section 701 urban planning grant program would specifically include the coordination of transportation systems in urban areas in the purposes for which the Housing Administrator is authorized to make matching planning grants to qualified planning agencies. The amendments would also add a new subsection requiring the Administrator to encourage such activities as planning to determine metropolitan transportation needs, coordination of local transportation planning activities, and studies to relate possible patterns of urban growth to metropolitan transportation needs. The amendments proposed by this bill to our public facilities loan program under title II of the Housing Amendments of 1955 would increase by $100 million the revolving loan fund authorization for that title. The additional money would be used to finance the acquisition, construction, reconstruction, maintenance, and improvement of facilities and equipment for use, by operation or lease or otherwise, in mass-transit or commuter service in urban areas, and to integrate and coordinate highway, bus, surface-rail, underground, and other mass-transportation systems in such areas. The loans would be available to States and their instrumentalities or political subdivisions, with a priority to applicants determined by the Housing Administrator to have the best mass-transit plans and the greatest need for assistance. Our present program of loans for basic public works such as water, sewer, and gas systems would be continued, with its existing priority for localities of under 10,000 population. In both the new and the old programs the loans would be made available where financing was not otherwise available on equally favorable terms rather than on reasonable terms as in the present program. In addition, there would be a new interest rate in both programs, based on the current interest rate on all Government obligations rather than on obligations of comparable maturities. The increasing mass transportation requirements or our rapidly growing metropolitan populations have given rise to numerous difficult problems in our urban localities. These problems will undoubtedly increase further as the impact of the huge Federal highway program is more widely felt, with its anticipated increase per person in travel into and through our cities. Because the planning of local transportation facilities is an inseparable and vital part of over all urban planning and redevelopment, this Agency is in accord with the underlying purpose of the bill, namely, the encouragement of transportation systems which will not only provide good local transportation economically in the short run, but will be so planned as to be consistent with sound patterns of growth of the community. However, we believe that the bill as drafted is open to serious objections. These will be discussed below along with our more detailed comments on the two principal sections of the bill. SECTION 2. URBAN PLANNING Grant AMENDMENTS As you know, transportation planning is already included in the comprehensive urban planning authorized in our section 701 urban planning program, as extended by the Housing Act of 1959. This authority applies to all of the kinds of transportation planning spelled out in the proposed amendments to that section, but it is true that specific reference to transportation planning, as provided in the amendments, would give additional and desirable emphasis to this authority. We believe, however, that such a reference should make more explicit the proper function of transportation planning as one part of comprehensive urban planning, with proper land-use planning as a necessary prerequisite. This could be done, without adding a new subsection, by changing the clause designated "(1)" in the present subsection "(d)" to read as follows: "(1) preparation, as a guide for long-range development, of general physical plans with respect to the pattern and intensity of land use, including the provision of transportation and other public facilities and utilities, to gether with long-range fiscal plans for such development;". (Words to be added are italic.) Such a provision would encourage investigation of ways to reduce the need for transportation in urban areas and to obtain the most economical transportation facilities, rather than just to meet needs projected from past patterns and trends in urban development. Another important question raised by section 2 of the bill concerns the need for additional money for transportation planning under our urban planning program if legislation is enacted along the lines of that section. In the past only a limited amount of transportation planning has been undertaken as part of federally assisted comprehensive planning projects, due to the limited availability of program funds. Already $12,400,000 has been appropriated from the cumulative section 701 program authority of $20 million. The House of Representatives has passed legislation appropriating $4 million for the next fiscal year. Undoubtedly, additional appropriations would be necessary to carry out the purposes of section 2 of the bill. Highway construction is increasingly outstripping the development of landuse plans for the urban areas they serve. The increased encouragement to better coordinated planning of transportation facilities and of metropolitan growth generally could well contribute to saving far larger sums of Federal and local money than are involved in the section 701 program. For example, if additional Federal planning funds were made available, it would be easier to provide for new highways in urban areas consistently with land-use plans for the urban areas through which they run. This would serve the double purpose of insuring that transportation funds were most effectively used and of encouraging comprehensive urban planning, which is essential also for the effective expenditure of funds for sewer and water lines, schools, and other public facilities. We understand that the Public Road Administration is financing areawide studies designed to determine total transportation needs and the best ways of meeting them through coordinated use of all types of transportation. These areawide transportation studies are financed from public roads research funds which are automatically provided as 12 percent of all its program funds made available for highway construction. This kind of study is an aspect of comprehensive urban planning and is also eligible for assistance under section 701. However, we understand that in the Public Roads Administration program there is no provision that such planning be based on and coordinated with other elements of comprehensive planning for the area, including land-use planning and the coordination of transportation facility construction with the construction of other public utilities. We believe that closer coordination of planning finances from these two sources could result in more effective planning and significant savings in actual development cost. SECTION 3. PUBLIC FACILITIES LOAN AMENDMENTS We believe that the interest-rate formula proposed in S. 3278 for Federal mass transportation loans would result in a program far exceeding any proper Federal responsibilities in this field. The formula is the same as that now required by statute in our college housing program. For loans during fiscal year 1960 it resulted in an interest rate of 3% percent. If the average interest rate on Treas. ury borrowings at the end of June 1960, is the same as that at the end of March, the rate will be 35% percent for fiscal year 1961. To make Federal funds available for transportation loans at the subsidy interest rate provided in the bill would result, in fact, in virtually complete concentration of such loans in the Federal Government, and would also make them impossible to resell without great loss. It would be unreasonable, of course, to require the Federal Government to provide the necessary financing for all the proposed transportation systems and improvements throughout the United States. To do so would certainly require funds out of all proportion to the $100 million proposed to be authorized for this program, The bill also proposes that the present public facilities loan program interest rate be replaced by the subsidy rate referred to above. We strongly recommend against such an unnecessary change. It would not, in any case, be really germane to the purpose of this bill, as expressed in its section 1. As you know the proposed financing of this new loan program through the present public facility loan fund would provide it with "back door" financing, not subject to Appropriations Committee approval. We recommend against this method of financing for any additional loan authorization. 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. Hon. A. WILLIS ROBERTSON, TREASURY DEPARTMENT, May 9, 1960. Chairman, Committee on Banking and Currency, MY DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 3278, "To amend section 701 of the Housing Act of 1954 (relating to urban planning grants), and title II of the Housing Amendments of 1955 (relating to public facility loans), to assist State and local governments and their public instrumentalities in improving mass transportation services in metropolitan areas." The proposed legislation would expand the urban planning grant program under section 701 of the Housing Act of 1954 to authorize grants to States and local governments for planning the development and coordination of mass transportation systems and services in urban areas. The bill would also expand the public facility loan program under title II of the Housing Amendments of 1955 to authorize the Housing and Home Finance Administrator to make loans to States, municipalities, and other political subdivisions to finance mass transportation systems in urban areas. The Department would be opposed to the enactment of the bill. The Department believes that Federal financial assistance should be limited to situations where such assistance is considered necessary to achieve impelling national policy objective and Federal participation in programs which are more appropriately the responsibility of States and local authorities must be held to an absolute minimum if budget expenditures are to be kept within reasonable limits in the years ahead. We feel that the development of adequate urban transportation systems is the primary responsibility of the municipalities and public and private transit authorities. The financial burden of transit projects should be borne by the localities receiving the principal benefits from such projects. That burden should not be shifted to the taxpayers of the Nation as a whole through the means of the subsidy interest rate on Federal loans that would be provided by the bill, particularly when the large urban areas are capable of raising funds in the capital markets at rates, which because of the tax exemption on their securities, are as low or lower than the rates at which the Federal Government can borrow money. 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. INTERSTATE COMMERCE COMMISSION, Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, OFFICE OF THE CHAIRMAN, DEAR CHAIRMAN ROBERTSON: Your letter of March 30, 1960, addressed to the chairman of the Commission, requesting comments on a bill, S. 3278, "To amend section 701 of the Housing Act of 1954 (relating to urban planning grants), and title II of the Housing Amendments of 1955 (relating to public facility loans), to assist State and local governments and their public instrumentalities in improving mass transportation services in metropolitan areas,” has been referred to our Committee on Legislation. After consideration by that committee, I am authorized to submit the following comments in its behalf : In our opinion, the provision of adequate mass transportation facilities is essential to continued healthy growth of large metropolitan areas, and ranks equally in importance with, and bears a close relationship to, the provision of adequate housing. Considering the Federal aid which has been and is being given in the housing field, we see no reason why similar aid should not be given to mass transportation. With respect to the passenger-train problem generally, the Commission stated in its 73d annual report to the Congress (1959), at pages 2 and 3, as follows: "In order that such service might be preserved, we recommend nine steps that could be taken by the Federal, State, and local governments, and by the railroads, toward alleviation of the problem, together with two additional areas which might be studied under Senate Resolution 29. "There has been at least partial implementation in connection with three of the nine recommendations. One was the reduction of the 10-percent tax on passenger fares to 5 percent, effective July 1, 1960. The Commission recommended repeal of the tax. Another recommendation involved action by State and local governments to maintain necessary local or commuter service by paying the carrier the cost plus a reasonable profit where the carrier cannot maintain such service at a profit. Some type of aid was undertaken experimentally in at least three of the largest metropolitan areas in the country. The third involved revision of taxes on railroad property. In at least one State a plan was proposed to reimburse local governments granting such relief. "These few steps, however, have provided very little aid where much is needed." The nine steps referred to in the foregoing quotation were made in the report of the Commission in Railroad Passenger Train Deficit (306 I.C.C. 417, decided May 18, 1959). The six additional recommendations not specifically mentioned in the Commission's annual report were, in substance, as follows: 1. Revision of Federal tax laws to encourage local and State tax relief, as for example, disregarding State and local provided "pretax net income" for Federal tax purposes. 2. Consideration by the Federal executive departments of the implications of the national transportation policy in the procurement of passengertrain services by Government agencies such as the Post Office Department and the Department of Defense. 3. Elimination by railroad management of duplicate passenger trains, terminals, and other facilities where consistent with the law and public interest. 4. Continued experimentation by the railroads with new types of coaches, sleeping cars, and other facilities. 5. Continued efforts by railroad management to stimulate increased traffic by improving the attractiveness of railroad passenger service. 6. Investigation by railroad management of the elasticity of demand (effect of price on volume of traffic) for railroad passenger service in order to provide a basis for adjusting fares and schedules, and improving public acceptance of rail travel by means of systematic, continuous, and higher quality advertising and promotion. In discussing the railroad commuter problem in its report of May 18, 1959, on the passenger train deficit, the Commission pointed out at pages 464 to 470, that the causes of the increasing unprofitability of commutation service are essentially the same as those affecting passenger traffic generally, i.e., a decrease in business and an increase in operating expenses, which, because of the adverse conditions peculiar to this service are abnormally high. The principal but not the sole reason for the decline in commutation traffic is, as stated in the report, the increase in motor travel between cities and their suburbs. Other reasons cited were the widespread adoption of a 5-day workweek and the decentralization of retail business resulting from the commercial growth of the suburbs. The Commission also pointed out that since commutation traffic is, for the most part, concentrated in two morning and two evening hours 5 days a week, a carrier is able to use its entire commutation fleet only a fraction of the time. During the idle period, the cars not only do not earn any revenue, but they must also be stored on tracks in metropolitan areas which are expensive to own and maintain. The concentration of such traffic in so few hours also has the effect of requiring the carrier to pay engine and train employees engaged in this service for periods of the day when they are necessarily off duty. In the passenger train deficit report, the Commission further observed that commutation traffic is one of the oldest kinds of railroad passenger business, and that it is the least likely to disappear since, despite the extensive construction of highways and other facilities such as tunnels and bridges for the benefit of motor transportation, a considerable number of commuters will continue to be dependent on rail transportation for some time to come. In its report of June 3, 1958, which accompanied the Transportation Act of 1958, the Senate Committee on Interstate and Foreign Commerce stated with respect to the commutation problem: "*** It may be said that basically the commuter service problem is a local one having both social and economic implications. However, it is also a matter of deep concern to the Federal Government because of the impact that losing commuter service can have on the ability of an interstate rail carrier to render its interstate service. *** Because of the burden that these losing intrastate services are imposing on interstate commerce, the subcommittee feels that the Federal Government can no longer stand aside to the extent it has in the past. ** Because the solutions which may be found for this problem are essentially local, the subcommittee deems it desirable to leave to the local government agencies involved the job of seeking specifically tailored solutions to their particular problem." This proposed measure seems to be entirely consistent with the views expressed in the Senate committee report in that it would provide Federal assistance to State and local governments in attempting to solve what is essentially a local problem, but one in which the Federal Government has a real concern. In our view, S. 3278 appears to be a step in the right direction, and we perceive of nothing therein that would conflict with the provisions or objectives of the laws administered by the Interstate Commerce Commission. However, since the programs provided for would be administered by the Housing and Home Finance Administrator, we offer no comments respecting the adequacy or reasonableness of the specific provisions contained in the bill to carry out its purposes. Editorially, it is suggested that, since the Housing Act of 1954 was extensively amended by the Housing Act of 1959, the words ", as amended," be inserted immediately after the words "Housing Act of 1954" in lines 8 and 20 on page 3 of the bill. For purposes of clarity, it is also suggested that section 2(b), lines 20 through 23 on page 3 of the bill, be changed to read as follows: "(b) Section 701 of the Housing Act of 1954, as amended, is further amended by redesignating subsections (d) and (e) as (e) and (f) and by inserting after subsection (c) a new subsection, as follows:". Respectfully submitted. Hon. A. WILLIS ROBERTSON, JOHN H. WINCHELL, Chairman, Committee on Legislation. HOWARD G. FREAS. EVERETT HUTCHINSON. CIVIL AERONAUTICS BOARD, Chairman, Committee on Banking and Currency, Washington, April 4, 1960. DEAR MR. CHAIRMAN: This is in reply to your letter of March 30, 1960, asking the Board for a report on S. 3278, a bill proposing a number of amendments to the Housing Act of 1954 and Housing Amendments of 1955 primarily directed to solving problems of mass transportation and commuter service in metropolitan areas. The proposed legislation does not appear to be concerned with air transportation and we have no comment to make on it. Sincerely yours, JAMES R. DURFEE, Chairman. EXECUTIVE OFFICE OF THE PRESIDENT, Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: This is in reply to your request for a report on S. 3278, 86th Congress, a bill to amend section 701 of the Housing Act of 1954 (relating to urban planning grants) and title II of the Housing Amendments of 1955 (relating to public facility loans) to assist State and local governments and their public instrumentalities in improving mass transportation services in metropolitan areas. It is doubtful that any marginal benefits to civil defense preparedness which might accrue from this legislation would justify support of a proposal to increase Federal financial assistance to urban transportation programs. Under these circumstances, we cannot recommend enactment of this bill. |