I just take that as almost absolute authority to you in connection with this.

Secretary WEAVER. It is not. In the first place, this has nothing to do with existing grants which are now available to the localities. They get those on the existing basis, most of which are on a 50-50 basis. This is a supplemental grant given to those which voluntarily decide that they want to cooperate in order to get a metropolitanwide approach. If they do not want it, they certainly do not have to do it, and many of them will not do it.

Mr. WIDNALL. Do you think they are in a position to refuse 20 percent more for their primary roads?

Secretary WEAVER. I think they are.

Mr. WIDNALL. The college housing program, Is it to continue at the $300 million, or have you got to phase out the program?

Secretary WEAVER. The program is now budgeted at a $300 million level.

Mr. WIDNALL. You don't expect to phase it out?

Secretary WEAVER. NO.

Mr. WIDNALL. The program for elderly housing, What is the future of that program?

Secretary WEAVER. That program will continue, it will expand. I have forgotten what the figure is, I can supply it for the record. I do not have the budget before me.

Mr. WIDNALL. It has been a successful program. And I certainly hope it is going to be continual and will be expanded.

Secretary WEAVER. I have no idea that it will not continue and expand.

(The information referred to follows:)

Loans for rental housing for the elderly or handicapped (sec. 202 of the Housing

Program funds for loan commitments and disbursements are provided through a revolving fund. The budget proposes an appropriation of $80 million to this fund.

Enacted in 1959, this program provides long-term loans for new construction, rehabilitation or conversion of housing for elderly or handicapped persons. Loans may be made to private nonprofit corporations, consumer cooperatives, and eligible public bodies. Qualified applicants who can demonstrate that they cannot obtain a private loan on equally favorable terms may borrow funds to cover total development costs including advisory services, land and site improve

ments. The direct loan program supplements the Department's other programs serving the Nation's elderly population, the low-rent public housing program for the low-income elderly, and the program for insuring housing loans to the elderly under section 231 of the National Housing Act.

The current rate of interest on loans is 3 percent, the maximum permissible under the Housing and Urban Development Act of 1965. Loans may be made

for the total development cost and may run for as long as 50 years. With the program levels projected, there will be $95 million of unused authorization remaining on June 30, 1967.

Mr. WIDNALL. One question of Mr. Brownstein.

What is the current status of your acquired properties? Do you have any information with you?

Mr. BROWNSTEIN. Yes. Our foreclosures have leveled off at a rather high level, Mr. Widnall. We have about 42,500 single family units on hand. This is down from a high of about 53,000 units at one time.

Mr. WIDNALL. And you feel that you are really making progress in disposing of those?

Mr. BROWNSTEIN. In our disposition of them, yes. In slowing the rate of acquisition I think that as long as we are going to be insuring mortgages on these kinds of terms, and as long as we have relative stability in the real estate market, we are going to have to expect a foreclosure rate at about what we now have.

Mr. WIDNALL. In the disposition of the assets that you required, how much of a loss are you taking?

Mr. BROWNSTEIN. We lose a little under 30 percent of the original mortgage amount.

Mr. WIDNALL. That amounts to what to date on the properties that have been sold? Do you have any accurate figures on this?

Mr. BROWNSTEIN. Well, our average sale price is about $11,000. And our average loss per property is a little under $3,000. Mr. WIDNALL. Thank you. That is all.

Mr. BARRETT. Mr. Ashley?

Mr. ASHLEY. Mr. Secretary, it seems to me that there may be a danger with respect to the demonstration cities program and plans will be tailored so that there will be included those Federal projects on which the local community either has or can get a commitment for approval. This, of course, is not what was contemplated in the act. Secretary WEAVER. I don't think I follow you, sir.

Mr. ASHLEY. Let's suppose that there are some 62 Federal programs that might be available for inclusion in a demonstration project. Let's suppose further that a city in its planning would determine initially that it can, based upon its need-that it should put together a plan that would incorporate a dozen Federal programs, open space, and urban renewal, public housing, 221(d) (3), et cetera. Suppose that the city, anxious to proceed, recognizing, perhaps, problems in getting approval from various departments or agencies outside of your jurisdiction, recognizing perhaps its own financial limitations, even acknowledging that the local share would be picked up, as it would under the act, would not there be a tendency on the part of such community to plan its project with an eye toward those Federal programs under which it could or likely could get prompt approval, and would not this be something over which you would have no overall jurisdiction?

Secretary WEAVER. I think that there would be a step antecedent to that. And that would be the fact that the city would come in with a proposal. The proposal would be evaluated in terms of the criteria

which are set forth in the act, and primarily in terms of whether or not this proposal would make a sizable impact on the solution of the social and the economic and the human as well as the housing requirements of that area. And it would then, I think, attempt to get as many of the existing Federal grant programs as would contribute to that end.

It would be our responsibility to look at the proposal as far as its feasibility is concerned. And it would be the responsibility of the local public agency which is coordinating the local program to try to facilitate that particular technique. And one of the things that we would judge would be the reasonableness of the mix-the availability of Federal grant programs of the type that it wanted. I think the danger here would not be too great if we were realistic in looking at it. In other words, if a city came in with a proposal for twice as much money from a given Federal program as was available in that program, we would have means of knowing what would be available, and we would know that this was not a realistic proposal.

Mr. ASHLEY. Would this not be a problem if we have, let's say, 60 demonstration cities-it is not unreasonable to suppose that most plans would call for a certain amount of open space, inasmuch as there is a general lack of open space in the hands of the communities?

Secretary WEAVER. Yes.

Mr. ASHLEY. If you take a look at the appropriations that the Congress makes annually for this program, it would be difficult for me to see how these 60 projects could be accommodated and have anything left over, or whether there would be anywhere close to enough even for the 60 projects.

Secretary WEAVER. I think this is something we would have to look at as it came up. My guess would be that this would not be too serious a problem. I think when we plan the open space program, particularly that part that applies to the built-up areas, which would be most of what would be involved here, expected them to be concentrated in just such areas as this. Add to this the fact that this is not the open space requirement for 1 year, this goes over a period of 5 years. Mr. ASHLEY. Yes. But you would not want to have to wait 5 years for funds for one of the principal ingredients for its projects? Secretary WEAVER. But you couldn't fund it all in 1 year either, because you could not execute it in 1 year.

Mr. ASHLEY. Yes. But it is very hard to full approvement in 1 year unless the money is available.

Secretary WEAVER. Let's go back to the open spaces. Assuming that there was a deficiency in the amount of Federal funds for open space, that part of the $2.3 billion that a given city would have would be used to supplement the open space funds.

Mr. ASHLEY. That is, of course, what I am getting at. Why would not it be a good idea for thought to be given at least to where a Federal project might be approved on its merits, but for which there would be a lack of funds, why would not it be a good idea for part of the $2.3 billion to be directed to assuming the funding for that particular project?

Secretary WEAVER. I think this is something that will have to be decided as we go along, when we get the projects, and see what the components are. We are now estimating. And I don't think we can evaluate this with any degree of certainty at this time.

Mr. ASHLEY. Has thought been given to this?

Secretary WEAVER. Yes. This has been a possibility. We have made no decision on it.

Mr. ASHLEY. Is it your thought that perhaps a decision will be reached within the next few weeks, or is it something to which you feel that experience is necessary; a year or so of working on the program?

Secretary WEAVER. The funding of this phase of it will not be until next fiscal year anyhow, and by that time we will have the first answers. to those problems.

Mr. ASHLEY. The question is directed to you, Doctor, with respect to college housing. Last year, the Congress changed its program significantly, in that it now makes possible $300 million a year for 4 years directly for this purpose. I wonder if it would be possible to furnish for the record some indication of the extent to which this program has tended to eliminate from the financing of college housing the mortgage underwriting segment of our financial community?

Secretary WEAVER. This would not come under the mortgage underwriting section, I think it would come under the bond market, it is usually done by bond rather than mortgages.

We could give you a statistical review of what is happening in this, and from that you would have to make the deductions.

Mr. ASHLEY. It would not be difficult to do, because we know that the private market engaged in this to get a certain level over a certain number of years. And my interest is the extent to which this kind of private participation has been short-circuited and eliminated by virtue of the program that it adopted last year.

Secretary WEAVER. Of the 3-percent rate. We could give you the statistics on this.

Mr. ASHLEY. That would be very helpful. Thank you. (The information referred to follows:)

TRENDS IN COLLEGE HOUSING BOND FINANCING

Comparison of college housing bond financing during the past 5 months with the financing in corresponding periods during the preceding 2 years indicates that there has not been any diminution in the volume of private financing.

Heretofore, private investors have evidenced interest only in the college housing bonds issued by public institutions where the interest income is tax exempt. As shown in the following table, during the period October 1965 to February 1966, a total of $75.6 million of college housing bonds issued by public institutions were purchased by private investors. In contrast, during the corresponding period in 1964-65, private purchases of such tax-exempt bonds totaled $60.2 million and in 1963-64 private purchases totaled $55.2 million. Thus, private purchases during the 5-month 1965-66 period rose by 37 percent over the private purchases during the comparable 1963-64 period. On the other hand, for the same calendar period, purchases by the Department of Housing and Urban Development rose from $71.6 million in 1963-64 to $77 million in 1965-66, an increase of 8 percent. Significantly, the proportion of college housing bonds issued by public institutions accounted for by private purchases rose from 43.5 percent in 1963-64 to 49.5 percent in 1965–66.

In the case of private institutions, where the interest income is not tax exempt, there has been negligible private investor interest in such bonds so that virtually all of the borrowing for college housing purposes by private institutions is made from the Department of Housing and Urban Development. will be noted, the volume of bonds issued by private institutions to HUD during the October to February period changed from $58.4 million in 1963-64 to $50.8 million in 1964-65 and to $65.7 million in 1965–66.

As

In evaluating these figures, it should be recognized that many of these bond purchases reflect basic determinations (as to whether or not to apply for Federal loan assistance) that were made some time prior to the actual bond sale. But so far there is no evidence of any significant diminution of private purchases of college housing bonds. In fact, notices of bond sales during March 1966 indicate that there will be no abatement of private purchases during the current month.

College housing bond purchases by private investors and Department of Housing and Urban Development during October-February, fiscal year 1964-66

1 Preliminary figures; full compilations of bond sales during January-February, 1966, as presented by the bond buyer, coupled with HUD reports, will probably result in figures higher than those shown for these 2 months.

Mr. ASHLEY. Just a final question. I want to make certain with respect to a question and a concern that Mr. Reuss voiced. The $2.3 billion figure, if I understand you correctly, is predicated upon a certain number of participants in the act. Is this 60-is there a number that you can give us?

Secretary WEAVER. I can give you a series of numbers which I think will give the scope of what we are thinking about. These are again estimates rather than firm figures. We assume about 60, as I said, to 70 cities. We expect that the number of families in the demonstration areas will be over 600,000. We expect that the number of people in the demonstration areas will be over 2 million. We expect that there will be about 250,000 dwelling units rehabiltated, and that an additional 40,000 units of low- and moderate-income housing will be built under this program. This is the housing component of it.

Mr. ASHLEY. Now, the 60 to 70 cities, those that would be fortunate enough to secure approval, be selected to serve as examples and illustrations, as you put it, of what is meant to be useful to other cities, would not this bring them into an extremely advantageous position over the duration of the 6-year program, and would not actually a question arise as to other cities that would not find them also in this