That also put a brake on the people who thought that we were helping them plan something for which later on they were going to get Federal money to aid construction.

We had to set up, within our own organization, provision for clearance with the local communities to make reasonably sure that they could finance the construction of projects. That meant that there was a little delay in getting the program fully under way. Some people came to us and said, "If you are not going to help us finance

the construction, we do not need an advance.

PURPOSE OF THE ADVANCE PLANNING PROGRAM

The whole purpose of this program was to encourage the preparation of plans by advances to local communities who did not have the capacity to do the planning in advance of selling their bond issues.

Mr. CANNON. But did have the resources with which to finance their effort, once it was planned?

Mr. FIELD. Yes; they must have the capacity. I think we have carried out that part of our program very prudently.

REPAYMENTS OF ADVANCES

The program has gone now to the point where we are beginning to get repayments of these advances, in a few projects, where they have started construction. One typical project was in a little town in Florida. The mayor recently talked to me about it. We made an advance to plan a water system. At that time they did not know whether they were going to be able to build within 6 months or a year. They had to float revenue bonds before they could actually start construction. We advanced about $5,000 to plan the system. They completed the plans in February and then by April 1, there was a tremendous expansion of housing in that area and they had to go right ahead with construction. They were able to make a much better arrangement with the private bond firms for revenue bonds, because the plans were complete. Now they have paid us back. We are starting to get repayment on other projects.

Mr. CANNON. Have there been any instances in which repayment was due and has not been made?

Mr. FIELD. No, sir. We have had no such situations. There has been a little slowing up, during the last 6 months, in the completion of these plans, mainly because, as you remember, we adopted a policy, when we approve these advances, that we would only issue a check for half of the amount, and the other half we would not pay until the drawings and specifications were complete. We put that restriction in our regulations because we felt that if the community had actually completed the plans up to the point where a contractor could put firm bids on it, they would be in a much better position to go ahead with the project. The work preliminary to construction would be complete.

PLANS ALREADY COMPLETED

Plans have been completed for about 180 of the 3,600 projects on which we have advanced Federal funds. There is another thing about our program that I think is quite significant. In the past, a great deal of the public work was planned by the people employed by the community, the engineers and the architects on their own staff. These public officials would work out plans on a sewage-disposal plant

or a water-filtration plant or a school building up to the point where they would have to go out and hire outside architects or engineers to complete the plans.

Of the 3,600 projects we have approved to April 30, over 3,000 are being planned by private architectural and engineering firms. That is an action of the local people themselves. It is not anything that we have required, but it was done in order to do the job that was necessary without increasing public employment.

Our own records here show that we will not spend about $12 million of our present money by June 30. There are two or three reasons for that.

ABANDONMENT OF PROJECTS

Mr. CANNON. Just before you take that up, have there been any instances where you have advanced the money, and they have gone ahead and completed the plans, but have abandoned the project?

Mr. FIELD. We have had some instances where we gave a preliminary or initial advance, and plans were started, but it was then found that they wanted to abandon the project, and the money was paid back to us.

Mr. CANNON. And you have lost no money on that account?
Mr. FIELD. We have lost no money on that account at all.

Mr. CANNON. This money is repayable on the beginning of construction?

Mr. FIELD. Yes, sir.

Mr. CANNON. What action do you take in case of complete abandonment?

Mr. FIELD. We have not had any of those cases yet. I do not believe we will have very many. But if it came to that point, we would have to say that it was an obligation that they owed to the Government which should be met. But so far the attitude of the local

communities and of the State Governments has been very fine.

Mr. CANNON. And where you have discontinued, they have repaid? Mr. FIELD. They have gotten the money out of their general taxes or some other place and repaid the advance.

Mr. CANNON. And always you impress upon them the fact that this money does not commit the Government in any way to any assistance in construction?

Mr. FIELD. That is exactly right.

Mr. CANNON. They all understand that we are merely helping them to plan, and that the money is to be repaid to the Government ultimately and that the Government is donating nothing?

Mr. FIELD. That is correct.

Mr. CANNON. And that under no circumstances is the Government to assist in construction.

Mr. FIELD. I think some of these tables that I have here will show that the local officials recognize that by the kinds of projects that we have been helping them plan.

STATUS OF ADVANCES TO PUERTO RICO

Before we get to that, I want to make this one point, why we have not used up all of the money. Even though we have a big backlog of applications, we have about $365,000 of our funds earmarked according to the law in Puerto Rico. We have not approved any advances there for the simple reason that during the war, the insular government received money from the rum tax, which was a Federal

tax. They have a large reserve of cash. The insular government has taken over some of the sewer and water and school construction that formerly the municipalities had responsibility for.

When this bill originally was passed in the House, Puerto Rico was not included. That was added later on. It is our feeling, even though the law sets that money up, that we should not advance funds to a few small municipal projects when most of the public works in Puerto Rico now can be handled by the insular government.

STATES IN WHICH NO ADVANCES HAVE BEEN MADE

We also have about $750,000 in New York State that we have not used. That is because of the fact that about 2 years ago, they set up a State fund to help make plans in advance on a grant basis. That law was peculiar in that State, because it gave the local communities authority to issue special obligation bonds of some sort, to match the money of the State Government and that program, therefore, has been able to meet the present demand.

We also have a few other States, like Delaware, Iowa, Nebraska, Wyoming, and South Dakota, where we have not used the full amount apportioned to them. That is mainly because in most of these central Western States, during the war, the population went down, and their demand for public works in the future will not be as great as they are in areas where the population has expanded. We feel that that indicates that we are not putting the money into places where it is not needed or where the problem has been met locally.

BACKLOG OF APPLICATIONS

There is a table on page 6 of our presentation that gives a summary as of April 30, which shows we have a backlog of about 2,500 applications under review, in which they have requested $32,000,000 from us for plan preparation. Of those 2,500, we have completed the engineering review on 619, for about $7,200,000.

That means that we are sure that of the $32,000,000 requested as of April 30, 1946 there is $7,000,000 on which construction can be financed. We are ready to approve these requests, but are held back because we do not have the funds to apportion to them. This review is continuing and it is expected that by June 30, 1946 we will have ready for approval about $12,000,000 of advances out of the $32,000,000 requested.

There are a few other tables here to which I would like to call your attention, because they summarize the situation very clearly.

DISTRIBUTION OF ADVANCES BY SIZE OF COMMUNITIES

On page 16, we show the distribution of the money by the various sized communities within a State. When we started this program, we soon found that a lot of the requests came from many of the larger cities. In Missouri, for example, we had requests from St. Louis that would have taken up all the money allocated to the State. We felt that in order to accomplish the purpose of this program we should spread it around.

This table shows that of the $25,900,000 obligated on April 30, the State departments and State agencies had received $1,778,000, the rural counties and small communities of under 10,000 population had received $6,183,000. This rural group of communities we felt needed.

more help than the others, and if we could increase the amount there, we would meet a big demand.

The next group are those counties which contained cities from 10,000 to 50,000. Six million dollars was allotted to that group. Two million dollars was allotted in the group from 50,000 to 100,000; and $9,800,000 in the counties that have cities of over 100,000 population. Mr. TABER. Are your allotments made to counties or towns or what?

Mr. FIELD. They are made to individual communities. But what we do is to set up a sort of a budget unit so that all of our money does not go into one spot. We have budgeted it by all the communities in these groups of counties. That was an administrative determination of our own, to try to get it spread into areas where they did not have the architects and engineers on their own staff.

METHOD OF FINANCING CONSTRUCTION BY COMMUNITIES

On page 22 is a table that shows the method by which the communities intend to finance the proposed public works that we have helped them plan.

When plans are completed, the $25,000,000 will represent about $1,000,000 of public works. And this table shows where they intend to get the funds for construction.

The cash on hand represents land that they own, and the main reason that that seems high is because of the fact that our requirements are that we will not advance money to plan a building or a school or a courthouse, or any project of that kind, unless they have selected a site and really know where they are going to be located, because if they have not gone that far, it might just be a dream.

The table shows that they expect to get some money from tax receipts. The major amount is to come from bond issues. Some of the bond issues are already authorized as of April 30. About 850,000,000 of the billion-dollar program will be financed through the floating of new bond issues.

ABILITY OF COMMUNITIES TO FINANCE PUBLIC WORKS

We have found that the State and local governments are in much better shape to float bond issues for public works than they have been for a long time.

It is very interesting to note that in the last 4 war years, the communities could not build public works except those that were needed because of the war, and they went back and refinanced a lot of the public works bond issues that they had at 4, 5 and 6 percent interest, and went into a refinancing plan, getting the interest down to 1/2 and 2 percent. And now their new bonding capacity is much greater. So we find that the firms which buy municipal bonds, either revenue or general obligation bonds, give them a much better rating, if the plans and specifications are complete.

Mr. WIGGLESWORTH. What is that last column, "Other sources"? Mr. FIELD. The column headed "Other sources" includes miscellaneous sources of revenue. For example, some of the communities on water projects are not always sure whether they are going to get all the money from revenue bonds. They get money from private industries where there happens to be a large concentration of certain industries which may make cash payments to the city to help put in a sewer system or a water system, if it is partly for their own industrial purposes.

There are other places where they are not sure whether they are going to get all of the money from general-obligation bonds, or from revenue bonds, and they have shown the costs in the column under "Other sources" an amount of money that totals $89,000,000.

Mr. CANNON. And in one case it is a legacy.

Mr. FIELD. In some cases there are donations particularly for hospitals. A great many seem to be combining their private and the public hospitals, especially throughout the Southern States, and there they get donations from certain groups.

This is the best information we have from our documentation. After they complete the plans and when we make the final payment to the local community, then we will have a much better record of exactly what source of funds will be used to finance their construction.

An example is the project I mentioned in Florida where they have already paid us back. When that came to us, they were not certain where they were going to get the money for construction, but they found when they had the plan completed, they could issue revenue bonds.

A great many communities have found that revenue bonds are a much better way of financing sewer and water facilities than any other type, because in that way the cost is paid by the people who get the direct benefits.

Mr. CANNON. And there is no obligation upon the property owners? Mr. FIELD. As a matter of fact, our experience in the last year or so has been that most of the communities are getting away from special-assessment bonds, although some of them indicate they are still using that process.

DISTRIBUTION OF ADVANCES BY STATES

On page 24 the table shows the break-down by States and the break-down of the cost of construction. The interesting thing there is the total cost of the plan preparation of $33,000,000. We had advanced $25,000,000. That combined program will complete the construction of $1,084,000,000.

Now, that is important, because you will remember that when we started this program we thought that it was going to cost about 4 to 5 percent of the total construction cost to get the planning done. But the projects that the local communities have selected are the ones on which they have done some preliminary work with their own engineers and architects, and they paid for planning about $8,000,000 through their own resources. What they have asked us for is the balance to complete the plans.

Out of the money already appropriated, we will have completed plans for a larger program than we anticipated.

You remember we originally came with a request for $124,000,000 for planning advances.

On the next page, page 26, there is a break-down similar to the other one of the requests that we now have under review. As I said before, we have already reviewed 619 of those 2,500 requests, amounting to $7,200,000 for advances. The other requests we are still reviewing as they come in. We think that the appropriation estimate of $50,000,000 will provide an additional $1,500,000,000 of public works, which added to what has already been planned with our advances, and what has been planned with their own local funds will give us a reservoir of 32 billion of public works that we are trying to achieve.