going to be concerned with the entirely new provisions that we recognize are in the bill. And one of these new provisions that will concern us greatly, I am sure, is the one having to do with the land insurance out in suburban areas and in the building of new towns and so forth. Now, let me ask you a specific question or two. In the proposed FHA insurance program for subdivisions, what size projects do you contemplate? Mr. WEAVER. We talk about large subdivisions and we envision subdivisions that would provide hundreds of homes. Now, this would vary, of course, from locality to locality, but the subdivision would have to be large enough to provide a sufficient volume to have an economic system of sewage and water supply to provide for the better land use which we would hope to encourage. Mr. RAINS. Who are these people? I am not asking the names or classes, but who do you visualize needs the type of subdivision development that you are talking about? Mr. WEAVER. Well, may I point out, sir, that there are two proposals here? There is the new community proposal, which contemplates development of a community much larger than a subdivision, and then there is the new subdivision proposal. They are the ones to which I am addressing myself. Mr. RAINS. One of the great or perhaps the greatest problem facing building in this country today is that adjacent to the urban areas, there is a shortage of land and, actually, one of the things causing building to cost more and more is the cost of the land, and I agree thoroughly that there ought to be some kind of planning in connection with it. The only thing that troubles me or one of the things that troubles me about it is: Is this not likely to tie up a great deal of the land which the private builders, particularly small builders, could use? Is it not likely to tie the land up for a long period of time? Mr. WEAVER. No, sir; I do not think it will, because of two cir cumstances. In the first place, in order for this assistance to be offered there would have to be a demonstration that this land is to be used within a given period of time; that there are plans to use it, and the financial resources to use it, and so assurance that it will be used and not held off of the market. Certainly, if this is done at this time we will have, as the population increase comes and the increased demand for housing occurs, more land on the market which is developed. Also, the type of use of land which this would stimulate would provide more economic development. Although the price of acreage may go up, this will happen whether we are in the field or not because of the sheer pressure of demand. As to the price to the individual homeowner, if the land is used better, clusters of houses, much better land planning, the use of better community facilities and public facilities, the individual homeowner will probably have to pay less for the land than he would if this were not in the bill. Mr. RAINS. In the 1961 housing legislation, Doctor, you will remember that this committee put the FHA land insurance in after many years of struggle on it. There was a struggle in the committee, and we finally incorporated it in the 1961 bill but, under pressure, it was eliminated in the Senate conference. And as I visualize this particular section, it not only provides for the land insurance program, which we had envisioned, but it also goes considerably farther than the proposal that we then had. Do you not think that is true? Mr. WEAVER. Yes, sir. I think it has, however, some protections that probably we had not envisioned at that time. Mr. RAINS. I notice Mr. Brownstein is here, and since this is a rather technical question I think I will address this to him. I do not see any statutory provision on maturity for the loans. Am I right about that? What do you think it should be in a typical case? Mr. BROWNSTEIN. There is none specified in the statute, Mr. Chairman. It, of course, would depend on the size of the subdivision and also on what the proposal is for developing the building program. We would expect that there would be deferred amortization until the units start coming on to the market, and then there would be a release provision in the blanket mortgage which would allow the sale of the individual units, and the maturity would be geared to this program. Mr. RAINS. I note, also, that you call for a 6-percent interest rate maximum for the new land development insured loans which you propose. I am wondering if you think the program can really work at 6 percent? Mr. BROWNSTEIN. We believe that it could work at 6. We are now considering whether it can work at anything less than that. The 6 percent is the maximum that would be authorized by the statute. Mr. RAINS. I will have to move faster in order for other members to ask questions, and we will get down to more details when we come back for the second round. Now, this has to do with urban renewal. One of the troubles in this bill or one of the things that worries me, and it has worried this committee perhaps more than anything else, is the proper treatment of people who have to be relocated. We have worked with this problem many times, and we do not know exactly what to do. I see that you suggest that the cost of the new relocation payments be paid 100 percent out of Federal funds. Are you not afraid that that is going to take an excessive amount away from the Federal fund total? Mr. WEAVER. We have estimated what this will involve and we think it is a manageable amount and that it can be absorbed without hurting the program. We also feel very strongly, Mr. Chairman, that not only is this equitable but that unless this is done we are going to create such an adverse feeling on the part of those who are displaced as to endanger the total program; but it is really from the point of view of equity that we are concerned. And I might say that we have figures, from a preliminary study, which are contained or are summarized in the more general statement, to indicate that in some cases relocation is an extreme burden. On the average it is not too great, but in some cases it is an extreme burden and that is why we have put it in these terms. Mr. RAINS. I am talking about money now. I agree exactly with what you have said. But suppose that this committee were to decide that we wanted to include, say, $700 million a year for the urban renewal, do you not think it would be necessary to add at least another $100 million year in order to take care of the increased relocation costs? per Mr. WEAVER. Well, this will, of course, absorb a great deal in the first year because we will have to charge against urban renewal grant funds in the first year of operation of this relocation program all the relocation payments that will be made on all of those contracts which are now in the execution stage, and this will cut down the volume of the urban renewal program. The program will not go at a $700 million clip, from the point of view of its present operation, without this form of rehabilitation. Without this method of paying for it there would have to be an extra amount, and that amount is contained in our more detailed study. We could give you figures on it. My own feeling, and that of the Bureau of the Budget, is that the rate of urban renewal which would be possible under the proposed allocation to urban renewal with the paying of this additional amount for relocation is one which is a reasonable one and which can be absorbed well. One of the problems, of course, in a new program of this sort is that we go too quickly. We think it has to be built up over a period to what we call digestibility. You can have too much urban renewal in any one community to the detriment of the community, in my opinion. Mr. RAINS. I noticed that among the cost to be included in this is the rent subsidy for 24 months and, of course, that is a new idea. Do you intend to give it to the man himself, instead of paying his rent? Mr. WEAVER. May I explain how that would work? Mr. RAINS. Yes. Mr. WEAVER. If a person were eligible we would determine what the monthly payment would be on the basis of his present income. We would not check income any further. We would, however, require that he be placed in a standard house. If he were to move we would require that the local public agency certify that he had moved to a standard house and, at the end of the first year, we would have him visited to make sure he was then living in a standard house. The administrative burden would be minimal and the amount would go to the man and not the landlord. As to which man got these payments and which man did not, it would be known only to the man involved. Mr. RAINS. Of course, one of the dangers of that is when you come to the type of a program where a great many people will be relocated, are you not afraid they will take the money and dissipate it away? Mr. WEAVER. Well, this, of course, is what we provide for. First, when he moves into a place it has got to be standard. If he moves away, the place he moves to has to be standard and, at the end of the year, he has to be in a standard unit. So we are getting the family in standard housing with this money and the only way you could get an abuse would be if at the end of the first year he did not move and the house went down in quality. Mr. RAINS. What would happen, for instance, if he moved in with a relative and did not pay anything? Mr. WEAVER. What he pays is not involved here, and these folks, at this level, have very few relatives who can afford to take them in. Mr. RAINS. One of the other things that troubles me about this bill, and I admit that the great pressures on urban renewal are coming because of some of the injustices on the people, but the same injustices come every time the Government moves into any field, whether it is in highways or whether it is in some other place, whether it is to build a big Federal building, whether it is to build an overpass or what, and the same situation occurs. Now, I am advocating that we do the best that can be done, but I am also afraid that we can go overboard because the reaction of what we do here is going to become a pattern for what the Government will do in all of its programs affecting the uprooting of people because of governmental exercise of the right of eminent domain. Now, we want to go far enough but we do not want to go too far, do we, Doctor? Mr. WEAVER. No, sir. I think this is something of a unique case, however. Here you have a program which primarily tears down housing and then rebuilds housing. By the very nature of the program, very often it cannot rebuild for the same economic group that was formerly living in the housing torn down. And I think there is tremendous resentment, and rightfully, in having housing occupied by poor people torn down and rebuilt for other than poor people and having the poor people take the main burden. of the displacement. That is different from a road that does not house anybody. Mr. RAINS. Thank you. My time is up. Mr. Widnall? Thank you, Dr. Weaver, and others on the panel who have come with you today. We also welcome your testimony. I was very disturbed to read an article in the Washington Post this morning, headlined "Family With 10 Children Told They're Too Poor for Aid!" Too poor! They were rejected by Public Housing because they said that there was not sufficient income in the family to pay, I think they mentioned, $46 a month but the man actually is paying $70 a month. For that he has his family in one room in an area here in Washington. What is there in your program now that is going to help these people who need help more than commercial redevelopment? Mr. WEAVER. One of the provisions of this bill is to aid families of that type insofar as they are dislocatees. This provision would provide a $10 a month additional subsidy for a family of that type which is admitted to a public housing project. Mr. WIDNALL. In this family the man has a job and he has been working odd hours, and the kids are carrying packages from the store. They are not welfare people and yet you have a lot of welfare people in public housing, have you not? Mr. WEAVER. Under the present subsidy provisions, the maintenance and upkeep and operation of a public housing project have to come out of the rents that are paid. The subsidy covers costs of financing the project over and above these operating expenses. If you have more than a given percentage in any project, of families who cannot afford to pay rents that cover these operating expenses then this project is in financial straits and it cannot operate. So there is a limit as to how many very poor people can be housed in public housing. This is inherent in the Mr. WIDNALL. Doctor, do you not think there is a priority to provide decent housing for people like this rather than to tear down 15 square blocks in Washington for a new area that is not going to be used to rehouse people in these circumstances; to leave fallow in the Southwest block after block, with no new housing being provided for people like this? But we are spending millions of dollars in subsidies to people who can well afford to build their own middle-income Mr. WEAVER. Well, I might say that the money that is spent in urban renewal is not spent as a subsidy for any individual family. This is Mr. WIDNALL. I mean for the builder and developer. Mr. WEAVER. Well, the builder does not get a subsidy either. The builder gets the land at its economic value, which is determined by competent appraisers, on the basis of what the land is worth for the particular use planned. I believe that this problem here is a problem of providing adequate relocation payments for housing for people who are displaced. Even if this displacement is not caused by urban renewal it is going to occur anyway. For example, in the East Side of New York City, a city I know so well, thousands and thousands of people have been displaced by economic factors. Displacement of people is inevitable in urban growth, and the problem is to get those people adequate housing and to give them adequate economic provisions to secure this housing without too much economic hurt to themselves. Mr. WIDNALL. But are we not just putting the cart before the horse in many cases and tearing down buildings without having adequate relocation facilities? Mr. WEAVER. I think this was done 15 years ago. It was done 12 years ago, and it was done 10 years ago. I happen to be one of those individuals who has written voluminously on this subject, tearing down before you have a supply of housing in which to move people. The economic situation has changed. Today we have in many cities a loose housing supply. We have vacancies, and one of our main purposes is to use these vacancies as a means of relocation and as a means of housing low-income families. Mr. WIDNALL. Doctor, how many people who lived in the Southwest remained in that area that has undergone the tearing down and bulldozer approach? Mr. WEAVER. I think quite a few. That area is surrounded by public housing and there is quite a sizable amount of public housing in the Southwest. I think that many people of the economic level displaced were rehoused in that area. |