SAFEGUARDS TOWARD REPAYMENT OF ADVANCES

Mr. RABAUT. Now, this planning they propose or that you offer to assist them with-is that apt to go on on a wholesale basis for a lot of things they wish they could have, or is it guarded by you to such an extent that it is the actual things they plan are what they will need? In other words, what I am trying to get at is how much certainty is there of your getting the money back?

Mr. FIELD. We analyze their financial ability to actually construct. We ask them where they are going to get their bond requirements. If it looks as though the bonds would be beyond their capacity, then we go back to them and check up before we make an advance.

In a few places, where the community wanted to plan an over-all school program and all they had was bonding authority to build the first unit which they really needed, we make an agreement with them that we will advance the money to plan the whole project on the understanding they will pay us back out of the first construction money. That is common practice in architectural and engineering work, to get the master plan finished and then pay for it out of the first money that becomes available.

REPAYMENTS OF ADVANCES TO DATE

Mr. RABAUT. What experience have you had thus far of anybody paying you back?

Mr. FIELD. As I said before, we have actually been paid back on 15 projects on which construction has been started. Most of the communities, and it is a good thing, in my judgment, are holding back on construction of public works; because, after all, prices are high and materials are scarce, and they cannot go into the market at the present tine and get competitive prices. But as soon as that market goes down, they will start moving.

I think we have done a prudent job in seeing to it that they can actually finance construction. We have had more conferences on that one point in our field offices and in our own office than on anything else.

ANTICIPATED PERCENTAGE OF LOSSES

Mr. RABAUT. What is the estimate of the percentage of loss that you will have had if this program is allowed?

Mr. FIELD. When we first started the program, we estimated we would probably have a loss of about 10 percent. I think that is very conservative. I think we are going to get more than that back.

Mr. RABAUT. And the general good to the Nation far exceeds that, of course?

Mr. FIELD. That is right.

Mr. RABAUT. That would be 10 percent on what-on 3 percent? Mr. FIELD. Ten percent on $30,000,000 so far; but if we got $50,000,000 more, it would be 10 percent on $80,000,000.

Mr. RABAUT. This planning money is about 3 percent of the total? Mr. FIELD. That is right.

Mr. RABAUT. So it would be 10 percent of 3 percent of the total appraisal?

Mr. FIELD. That is right.

Mr. RABAUT. It is not very much of a loss, is it?

Mr. FIELD. No, sir; I think we are sound on that. Our experience so far has been that the attitude of the local communities is good. It took a long time to get their attitude changed about the Federal Government wanting to help construct. By working on this planning program as we are, I think by carrying on this thing one more year it would have a healthy effect on the entire country.

(After discussion off the record:)

Mr. FIELD. We have also had this take place, where we have made an advance and they are ready to start construction on a project and have gone in and floated some bonds or been able to save some funds out of their general finances, they pay us back even before the plans were completed. They have said "All right; as long as we have to start construction now, we have our money to plan so we will not need the Federal advance."

Mr. RABAUT. As I see it, some sort of planning which gives constructive thinking along some over-all line is for the general good; but if you get some back, I do not think it is so bad.

LIMITED AIRPORT PLANNING

Mr. FIELD. In this program, you notice we have approved the planning of some airports. When we started this program, we knew there was some legislation pending for Federal aid for airports and we discouraged giving any money at that time for airport plans, although we did finally approve 31 projects and advanced $362,000. But on those airports and the work for which we advanced the planning money, they could build the project themselves. On those projects, they may get some additional aid under this new Federal-aid airport program. We have only helped them plan what they could build with their own funds.

A large volume of these public works is for sewer, water, sanitation, and schools-70 percent of it. If we get another billion and a half of that kind of work planned within another year, a substantial part of the public works program is taken care of by the State and local governments themselves. I think it would have a healthy effect if we stepped this planning program up. In some cases we have had applicants say "We do not want your advance, because the law under which it is made, makes no commitment for construction. We are going to wait until some future time when the Federal Government gives us an advance."

ADMINISTRATIVE EXPENSE AND PROCEDURES

Mr. TABER. How long has this program been running?

Mr. FIELD. We started about the middle of last June; just about a year; not quite.

Mr. TABER. So that you have been going about 9 or 10 months? Mr. FIELD. That is right.

Mr. TABER. And your expenditures to April 30 were $98,932 for administrative expenses, according to this document here. For what is that?

Mr. FIELD. The reason for that was this: During the year we have been operating our advance planning program, the staff of the Bureau

has been paid initially from Lanham Act funds, but we have kept card records of the time they have actually worked on planning. As of April 30, we had not yet transferred those charges to the advance planning program. But that $98,000 spent up to April 30, was for supplies, equipment, my salary, and a few other things that were charged directly to this program. By the end of May the charges will be transferred from our Lanham Act funds to this planning program. It will require all of the funds provided for administering this program for 1946 as the original 3 percent was based on a $75,000,000 program instead of $30,000,000, which has been appropriated.

It was impractical to make a division of our staff between programs; so that the only thing we could do was to set up time cards.

Mr. TABER. The way this thing operates, what do you do? These people come in here and make application?

Mr. FIELD. That is right.

Mr. TABER. What do you do?

Mr. FIELD. Applications come into our nine division offices on a 1-page project application, in which they request that we advance for planning, so many dollars to plan a specific project. We require, when that comes in to us, they have along with it a letter from the over-all planning agency in the community or State, whichever has jurisdiction, stating that the project does fit into their over-all plan. Then, if there is any question about where they are going to get the money to construct, we write back to them and say "How are you going to get the money to construct? What is your bonded limit?" We then review to see whether or not there is any complication with any highway projects with Public Roads. We have a clearance with Public Roads so that we have no duplication. We ask some engineers of the Public Buildings Administration, who know more about the cost of buildings, to review the computation of costs as shown by the applicant, to see whether they are proper. A lot of communities are coming in with projects saying they can build a school for $100,000 that we know from our own records will cost $200,000 or perhaps for $75,000. We might write back to them and say "We think your estimate is out of line."

After we are satisfied in our division office that the project meets all of our requirements, it comes into the central office and very little review is given, except in a few projects where there may be some overlapping with another Federal agency. An airport project would be cleared with CAA to make sure there is no conflict with what they have planned. Then the request is submitted to General Fleming for approval. After he approves the advance, we send out a simple, one-page agreement, to the local community saying we agree to advance so much money with the understanding it will be paid back out of money available when they start construction. We ask that they have a meeting of the town board, or council, or some official action acknowledging the offer. By requiring that we have weeded.

out some.

We have never accepted an application directly from any engineers or architects. If a request comes in from an engineer or architect, we sent it back to the community. We require that it come in from a public body, so that there is a real agreement in advance from them. Mr. TABER. Now, after the architect or engineer has developed the plans, are they submitted to you?

Mr. FIELD. The architect and engineer submit them through the local government. Then the local government is required, by our regulations, to get approval of any State agency or State health department of its water or sewer project; or if there is some State law, like in Massachusetts, where any kind of public works has to go through the State body, we require the local community to do that before it comes to us. Then they submit their plans to us on the basis that they should be complete enough so that they could award contracts. We review the plans and if they are sufficient, we make the final payment of the advance. We also require that they show they can actually finance the construction. They revise their estimates at that time, also, and may revise their method of financing so that it is up to date.

It may be that when it first comes in, they are not sure whether they are going to finance it out of general obligations or revenue bonds. When the plans are complete, they can give us better estimates. We do not try to check the design. When we make the final payment to them they sign an agreement that the plans are completed to their own satisfaction and they will pay the advance back when they start construction.

FORMER PROCEDURE OF PREPARING PLANS

Mr. TABER. How did these folks ever get up plans in the old days before you got into this picture?

Mr. FIELD. Well, they got them up in all kinds of ways.

Mr. TABER. You mean that the local communities are so far helpless that they do not know enough to look after getting up plans of this sort?

Mr. FIELD. Before the war, when they were carrying on construction programs, an architect or engineer was in a position to say: "I am doing some work for you now; I have an organization; the cash is coming in from supervision of actual construction, and I am getting money from you day by day. I will make some preliminary plans for you and take it on the cuff, and you can pay me back when you sell your bonds and when you start construction." That was the way it was normally done. That was a common way of doing it, but many times public bodies lost a lot of money because of the fact they did not have a real, good, honest set of plans and specifications. Some cities did a good job. There are some cities we do not have to go into at all, because they have a capable staff of their own, and they can do the work without any help from us. But, by and large, most of these small communities do not have the funds to plan in advance. During the war they could not construct and could not get the revenues for planning.

Mr. TABER. And you are figuring on this to go on forever, I suppose?

Mr. FIELD. No, sir. We think we ought to get a balanced program of about $5,000,000,000 of public works planned, and the question of whether it goes on beyond June 30, 1947, is going to be up to the Congress as to whether they want to extend the authorization for a longer time. I think the very fact that the Government does not want local communities to construct public works now is just as good an argument now to help them get work planned as it was during the war.

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PROGRAM ACCOMPLISHMENTS TO DATE

Mr. TABER. All together, you started on a number of projects the middle of June last year. About how many did you make allotments for in June?

Mr. FIELD. We have a table here on page 32 which shows when we started the program. You remember the first appropriation we got was 121⁄2 million. We got that in the latter part of June and we allotted $1,000,000 in that month; June; $793,000 in July. And the reason that was held up was because of the fact the program was just starting and we wanted to make sure that all of our requirements were well established. Then we went to $2,400,000; $1,800,000; $3,900,000; $2,100,000. Then it dropped to $1,000,000 in December, when we ran out of money; then up to $2,400,000; $3,500,000; $5,000,000, and then down to $1,500,000, when we started to run out of money this spring.

Mr. TABER. Now, down to the end of 1945, you had cumulative advances of $13,248,000?

Mr. FIELD. That is right.

Mr. TABER. On the 30th of April, 4 months later, there were plans completed, according to your table on page 30, for 180 projects with the plan preparation costing $693,000, and the projects involved the construction of $17,500,000.

Mr. FIELD. That is just the construction cost.

Mr. TABER. Now, according to what you told us a few minutes ago, there were about 15 out of 180 on which construction had actually begun.

Mr. FIELD. That is right.

Mr. TABER. So that this whole job has resulted in 15 projects getting started and plans being completed for 180 projects, with just under $700,000 cost. And you have allocated just about 20 times that amount of money down through the end of December. That is about the picture, is it not?

Mr. FIELD. Yes, but

Mr. TABER. Just about 5 percent of the money was allotted through the end of the year, which resulted in plans being completed by the 30th of April and only 15 projects out of the whole business were under construction.

I wonder about the urgency of this program. You claim now that you have got allocations made for over a billion dollars of projects and we are having pressure put upon the Congress all the time to pass bills which permit somebody to regulate and control the construction of everything. I am wondering about the whole picture.

TIME TO PREPARE PLANS AND SPECIFICATIONS

Mr. FIELD. When we started this program, we expected that it would take at least a year, on the average project to complete the plan preparation.

Mr. TABER. At least a year?

Mr. FIELD. Yes, sir.

General FLEMING. It often takes longer to complete the plans than it takes to do the construction, Mr. Taber.

Mr. TABER. These 180 projects, the construction costs thereof total $17,578,000, or just a little under $100,000 average per project.