S. 3292 would create a new executive department in the executive branch to be called the Department of Housing and Metropolitan Affairs. All functions of the Housing and Home Finance Agency would be transferred to this new Department. The President would be directed to make recommendations under the Reorganization Act of 1949 to consolidate within the Department such other functions and agencies as would further the purposes of the act. The Secretary would be directed to conduct a continuing study of the problems peculiar to metropolitan and urban areas and to provide technical assistance to State and local governments in solving such problems. The Secretary would also be responsible for advising the President on the coordination of Federal programs as they affect metropolitan areas.

It is recognized that many of the challenging problems of the Nation have their greatest impact in urban areas. The extent of the problems and means of dealing with them were recognized by the President in his state of the Union message for this year when he said:

"Our vigorous expansion, which we all welcome as a sign of health and vitality, is many sided. We are, for example, witnessing explosive growth in metropolitan areas.

"By 1975 the metropolitan areas of the United States will occupy twice the territory they do today. The roster of urban problems with which they must cope is staggering. They involve water supply, cleaning the air, adjusting local tax systems, providing for essential educational, cultural, and social services, and destroying those conditions which breed delinquency and crime.

"In meeting these, we must, if we value our historic freedoms, keep within the traditional framework of our Federal system with powers divided between the National and State Governments. The uniqueness of this system may confound the casual observer, but it has worked effectively for nearly 200 years." The Bureau of the Budget believes the basic structure of the Federal Government should not be altered until the soundness of specific proposals has been carefully explored. Aside from the Department of Defense, established in 1949, only one other new executive department, the Department of Health, Education, and Welfare, has been created in the last 50 years, despite the expansion of Federal responsibilities and programs in this area during that time. There are no generally recognized criteria for determining when a particular group of Federal programs warrants creation of a new executive department. Nor, can any conclusive guides be developed by reviewing past history, except to note that executive department status apparently has been given to agencies in recognition of the permanence and general national significance of their activities. We believe careful consideration should be given to the precise activities which should be lodged in a Department of Housing and Metropolitan Affairs. Since it is not specific, S. 3292 cannot be given the thorough evaluation necessary in this respect. The general guides laid down by the first Hoover Commission on departmental organization may prove useful in giving consideration to the activities which should be included. The Hoover Commission recommended that Federal programs be grouped into departments and agencies on the basis of major purposes. This may be contrasted with grouping on the basis of geographic areas, clientele, or process. Likewise, the Commission recommended that statutory functions be vested in department heads and not in subordinate officials.

Almost all Federal programs affect urban areas. Any executive department based on geography or process would increase, rather than lessen, organizational and administrative problems.

In considering creation of such a department, the existing functions and responsibilities of the Housing and Home Finance Agency should be reviewed to determine their appropriateness in such a department, and to identify any departures from the principle of organization by major purpose. Likewise, functions of other agencies which might fall within the scope of the proposed department should be reviewed for possible transfer to it. In this connection, consideration should be given to the declaration of housing policy contained in the Housing Act of 1949 which might serve as a useful guide in considering what functions might be included in a new executive department:

"The general welfare and security of the Nation and the health and living standards of its people require housing production and related community de velopment sufficient to remedy the serious housing shortage, the elimination of substandard and other inadequate housing through the clearance of slums and blighted areas, and the realization as soon as feasible of the goal of a

decent home and a suitable living environment for every American family, thus contributing to the development and redevelopment of communities."

Section 5 of S. 3292 directs the Secretary to advise the President on coordination of Federal programs affecting metropolitan areas, and to initiate consultation among Federal, State, and local officials to improve coordination of Federal programs in metropolitan areas. Coordination of Federal programs is a primary responsibility of the President. It is desirable that he not be restricted by statutory limitations with regard to the assignment of coordinating functions. The executive branch has been increasingly active in recent years in exploring methods of coordinating Federal programs affecting metropolitan areas. The Office of the Deputy Assistant to the President for Intergovernmental Relations and the Office of the Special Assistant to the President for Public Works Planning have a continuing interest and responsibility in this field. The National Housing Council, established by statute, and the Interagency Committee on Metropolitan Area Problems also provide coordinating mechanisms. The new Commission on Intergovernmental Relations is likewise in a position to consider the Federal Government's role in meeting the problem of metropolitan development and growth.

In summary, we believe proposed legislation to establish a Department of Housing and Metropolitan Affairs should contain specifications which would enable both the Congress and the executive branch to thoroughly review the activities which would be placed in a new department. In the absence of a proposal which would enumerate the functions and powers to be vested in the Secretary, and since our own review of the matter has not produced suitable specifications, the Bureau of the Budget does not recommend enactment of S.

3292.

Sincerely yours,

PHILLIP S. HUGHES, Assistant Director for Legislative Reference.

[S. 3379, 86th Cong., 2d sess.]

MR. SPARKMAN

A BILL To establish an annual or biannual national housing goal, to provide for a research and study program to improve the quality of residential construction without increasing the cost thereof, to encourage advanced techniques in housing construction, and to continue the farm housing program under title V of the Housing Act of 1949

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

NATIONAL HOUSING GOAL

SECTION 1. The program of the President as expressed in his annual message to the Congress shall include statements and recommendations concerning a residential construction goal. In furtherance of the realization of this goal the President shall transmit to the Senate and the House of Representatives, after the beginning of each session of the Congress, but not later than January 20, a report which shall include the following: (1) a statement indicating the minimum number of housing units which should be started during the then current calendar year, or such year and the next following calendar year, in order t be consistent with the program of the President, (2) an indication of the manner in which the law will be administered by the executive agencies to achieve the number of housing units specified under clause (1), and (3) any recommendations for legislative action that the President determines are necessary or desirable in order that the construction of such specified number of housing units may be started.

HOUSING RESEARCH

SEC. 2. (a) It is the sense of the Congress that technological advance represents the best opportunity for improving the quality of residential construction without increasing unit cost. In order that this opportunity may be fully exploited, the Housing and Home Finance Administrator is authorized and directed to undertake and carry out a research and study program (1) to identify problems in residential construction which are preventing an improvement in the quality of construction and which could in all probability be solved without

increasing the unit cost thereof, if the necessary research were undertaken, and (2) to undertake such research.

(b) In performing the functions vested in him by his section, the Administrator may

(1) carry our research and studies within the Housing and Home Finance Agency;

(2) enter into contracts with any State or local public agency or instrumentality, or educational institution, or other agency or organization, and for such purpose exercise any of the powers vested in him by section 502 (c) of the Housing Act of 1948;

(3) encourage research and studies which are not instigated by the Federal Government but which hold promise of results furthering the purposes of this section, and, when requested, provided technical advice and guidance in the conduct thereof.

(c) The Administrator shall disseminate, without regard to section 306 of the Act of June 25, 1948, as amended (39 U.S.C. 321n), the results of the research and studies conducted under this section in such forms as may be most useful to industry and to the general public.

(d) The provisions of the third and fourth sentences of section 301(a) of the Housing Act of 1948, as amended, shall apply to contracts and appropriations pursuant to this section.

(e) Nothing in this section shall limit any authority of the Administrator under title III of the Housing Act of 1948, as amended, or any other provision of law.

(f) There are hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this section.

ENCOURAGEMENT OF IMPROVED DESIGN AND TECHNOLOGY IN HOUSING CONSTRUCTION SEC. 3. Title V of the National Housing Act is amended by adding at the end thereof a new section as follows:

"HOUSING CONSTRUCTION

"SEC. 517. The Congress hereby declares that the provisions of this Act should be administered to encourage the utilization of advanced design and technology in the construction of residential structures where such design and technology will reduce unit costs without sacrificing quality or livability. In accordance with this policy, the Commissioner shall, in the processing of applications for mortgage insurance, give careful and sympathetic consideration to applications for the insurance of mortgages which are secured by residential properties designed and constructed in accordance with advanced techniques to reduce unit cost without sacrificing quality or livability."

FARM HOUSING

SEC. 4. (a) The second sentence of section 511 of the Housing Act of 1949 is amended

(1) by inserting "(1)" after "section"; and

(2) by inserting before the period a comma and the following: "and (2) during the period beginning July 1, 1961, and ending June 30, 1971, shall not exceed $500,000,000: Provided, That the total principal amount of such notes and obligations issued in any fiscal year commencing after June 30, 1961, shall not exceed $50,000,000".

(b) Section 512 of such Act is amended

(1) by inserting "(1)" after "aggregating"; and

(2) by inserting before the period a comma and the following: “and (2) not to exceed $20,000,000 during the period beginning July 1, 1961, and ending June 30, 1971: Provided, That the aggregate commitments for contributions made in any fiscal year after June 30, 1961, shall not exceed $2,000,000".

(c) Clause (b) of section 513 of such Act is amended to read as follows: “(b) for grants pursuant to section 504(a) and loans pursuant to section 504(b), not to exceed (1) $50,000,000 during the period beginning July 1, 1956, and ending June 30, 1961, and (2) $10,000,000 for any fiscal year commencing after June 30, 1961, and ending prior to July 1, 1971; and".

S. 3379

DIGEST OF BILL

Section 1.-Requires the President, in furtherance of the national housing goal, to transmit an annual report to the Congress containing recommendations indicating

(1) the minimum number of housing starts which should be undertaken during the following year or 2 years;

(2) the manner in which the Federal Government proposes to assist in achieving the number of starts specified; and

(3) legislation which may be necessary to achieve such starts. Section 2.-Directs the Administrator of the Housing and Home Finance Agency to undertake and carry out research and studies for improving residential construction without increasing costs. Permits the Administrator to carry out these studies within the HHFA or to enter into contracts for such studies to be made by State or local public agencies or educational institutions. Further requires that the results of such studies and research be published for general public use.

Section 3.-Declares it to be the intent of the Congress that the Commissioner of the Federal Housing Administration should encourage the utilization of advance design and technology in the construction of residential structures in order to reduce costs, provided that such design and techniques do not sacrifice quality or livability.

Section 4.-Extends title V of the Housing Act of 1949 to provide for a 10year farm housing program, commencing July 1, 1961, and ending June 30, 1971, by authorizing (1) $500 million to be made available, at not to exceed $50 million in any one year, for direct farm housing loans; (2) $20 million to be made available, at not to exceed $2 million in any one year, for contributions pursuant to commitments made by the Secretary of Agriculture to prevent defaults in payments on loans for potentially adequate farms; and (3) an appropriation of $10 million per year for grants and loans for minor improvements and repairs to keep farmhouses safe and sanitary and also to encourage family. size farms.

Re S. 3379, 86th Congress.
Hon. A. WILLIS ROBERTSON,

HOUSING AND HOME FINANCE AGENCY,

OFFICE OF THE ADMINISTRATOR,
Washington, D.C., May 6, 1960.

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

DEAR MR. CHAIRMAN: This is in further reply to your letter of April 19 requesting the views of this Agency on S. 3379, a bill to establish an annual or biannual national housing goal, to provide for a research and study program to improve the quality of residential construction without increasing the cost thereof, to encourage advanced techniques in housing construction, and to continue the farm housing program under title V of the Housing Act of 1949.

I will comment separately on each section of the bill, as each relates to a separate subject.

SECTION 1. NATIONAL HOUSING GOAL

This section would require that the program of the President, as expressed in his annual message to the Congress, shall include statements and recommendations concerning a residential construction goal. He would also be required to transmit to the Senate and the House of Representatives, not later than January 20 of each year, a report which would include: (1) A statement of the minimum number of housing units which should be started during that year, or that year and the next following one, (2) an indication of the manner in which the law will be administered by the executive agencies to achieve the number of housing units specified, and (3) any recommendations for legislative action necessary or desirable in order that the construction of that number of housing units may be started.

This Agency believes statements of national housing policies and objectives may be desirable and helpful. The "Declaration of National Housing Policy" enacted in 1949 sets forth the very desirable general objective of providing a

decent home in a suitable neighborhood for every American family with maximum dependence upon private enterprise. However, I do not recommend goals expressed in terms of the number of housing units to be started in a specific 1- or 2-year period. So much more is involved than the number of houses to be built. We must consider the income groups for whom the housing is provided, the quality of the housing, and the special needs of our people, such as elderly families and minority groups. We cannot expect all needed housing to be built in a single year, and the amount which should be built during a particular year will depend upon many factors affecting our people and our economy, including production in other fields.

I would particularly recommend against the requirement that the President submit the statements in the report described above. It would, in effect, require a commitment by the President that he would assure the construction of a specific number of housing units during the year. Giving such assurance would imply a programing and some effective control over the building industry by the Government, if that is necessary to produce the number of units specified. Also, the report would involve judgments by the executive branch not only on housing production but on appropriate production levels in other segments of the economy affecting housing, which in turn may require Government controls in other sectors in order to be effective. Economic resources would have to be allocated by law rather than by market forces in order to achieve specific housing goals in a specific time period. Whatever our goals and objectives, I believe Federal assistance should be in a form which permits them to be pursued within a framework of a free market with due consideration for a stable economic growth.

SECTION 2. HOUSING RESEARCH

This section would authorize and direct the Housing Administrator to carry out a research and study program (1) to identify problems in residential construction which are preventing an improvement in the quality of construction, and which could be solved without increasing costs if the necessary research were undertaken, and (2) to undertake such research.

The Housing Agency strongly favors the objectives of this section. However, there is broad general authority now for the Housing Administrator to undertake a research program under existing law (title IV of the Housing Act of 1949). This is not being done because no funds are available for such a program. In the budget of the United States for the next fiscal year, the President recommended $600,000 for housing research, but no amount is included for this purpose in the Independent Offices appropriation bill, 1961, which is presently before the Senate Committee on Appropriations.

Of course, certain studies and research are necessarily being carried on in connection with day-to-day operations of each of our constituent agencies. For example, the FHA undertakes technical studies which constitute an essential element in providing the information necessary to establish standards for "economic soundness" and other statutory requirements applying to property securing FHA-insured mortgages. In connection with its secondary market operations, the FNMA undertakes current studies of prevailing discounts on the various types of FHA-insured or VA-guaranteed mortgages. The URA acquires and disseminates information in connection with its demonstration grants program, and many other examples could be given. However, the studies now being undertaken are only those incidental and necessary to presently authorized operating functions. They are in no way a substitute for the basic research contemplated by section 2 of S. 3379 or title IV of the Housing Act of 1949, which could be effectively directed toward the solution of major housing problems and consistently pursued to conclusion.

Residential construction costs have advanced 90 percent since 1945, as compared with an advance of 60 percent in the overall consumer price index. Therefore, a broad focus of the proposed research program is needed to deal with aspects of housing costs which may not come under the heading of "technological advance" that is treated in section 2 of the bill. It would seem desirable that research aimed at reducing housing costs should be under an authority broad enough to permit analysis of aspects of land, material, and labor costs as well as the effects of building codes and mortgage lending policies upon residential construction costs and upon the ability to institute technological advances. Therefore, if favorable action is to be taken on section 2, the bill or the legislative history should make it clear that this desirable authority is being covered.