of Oceanic Properties, and Mr. Harlan S. Geldermann, of Calif., president of Gelco Developments.

wo gentlemen have long been involved in homebuilding and lopment. They are noted throughout the West for their work in the planning of new communities. They have imnd thoughtful testimony in connection with provisions of ng bill which have to do with the provisions for new towns sure that you will find your discussions with them most your present considerations. Thank you.

RRETT. Thank you, Mr. Edwards.

IPICH. Thank you, Don.

DEMONSTRATION CITIES

le the conference of may it is significant that the of Honolulu are both st s with which we are con rse today.

sion of title II will prov at the American public as y are capable of produci el, the housing industry its anxiety to create a bett come level. The grea

-RRETT. You may proceed with your testimony, Mr. Simpich. ish that objective has

ELDERMANN. Thank you, Don.

here representing a joint venture in the development of a

IPICH. Thank you, sir.

Sive preplanned urban a probing over the past t

munity on 12,000 acres of land in San Jose, Calif. A sub-cate capital, one fact

f Castle & Cook of Honolulu, Hawaii, of which Mr. Simpich ent, is also developing a 2,000-acre new community on the outthat city. The following comments in support of certain

C

the new communities ally needed are (1) single-s (2) a clearinghouse se

of the housing legislation under consideration are pertinentiate factual informatio

f these substantial new community developments.

marks will be in support of H.R. 12939 introduced by ConBarrett, chairman of the Subcommittee on Housing, and 46 introduced by Congressman Patman, chairman of the full ee on Banking and Currency.

ear the Congress enacted a significant new program of morturance for privately financed land development, which en1 the formation of new communities. There was thus estabsnational policy the principle that the creation of such com

are no conventional sour etallers must either comp

development or resort to not unusual, plus some inducement may take the equity or other collate Conventional financin

of 3 years or less, whil will take from 10 to 20

=is one valid ingredient of urban expansion. And urban of title II will have a n

on there will be, sooner than most realize. The Nation's ast expand to accommodate 200 million people in the next 20 For example, Honolulu, small among American cities, with a million population, will nearly double in size in this period uire urbanization of 25,000 acres of the scarce land on the f Oahu.

permit better housing Semarket at lower prices. insure smaller develope ommunities concept by to them.

is urban expansion is to occur in an orderly and planned it must take place in the form of new communities and, nately, the $10 million limitation imposed on the FHA mort

permit devotion of grea

of more generous amenities. permit better quality thro sure better planning. to residence, recreation,

surance program for land development in last year's legisla-permit the creation fro

inadequate. We have before us the cash flow requirements w community within the city limits of San Jose. This stateased on over a million dollars of planning, research, and ring work and generated by computer, shows that a cash

provide properly sized ut

the future thereby reduc

the service costs to the ho

in excess of $20 million is required for this development.ke for comprehensive

only organizations with vast resources can undertake such opment. Passage of Congressman Barrett's and Patman's s will make it possible for smaller developers and builders to ate in the way urban America should and must grow.

enbelts and open space, her regionwide cultural all of the regular amen

A have been provided,

new communities concept

oment, in extending the term of such mortgages beyond 7 years the home buyer in the u

er, the latitude given the Secretary of Housing and Urban rtant. Again referring to the cash flow for the new comin San Jose, we find that 11 years are required for the develrecover his investment of cash.

ake one final point. Th been concerned that encou would somehow divert co

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their

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towns

most

While the conference of mayors has remained silent on this legislation, it is significant that the city manager of San Jose and the mayor of Honolulu are both strong advocates of the two new communities with which we are concerned and of the legislation which we endorse today.

Adoption of title II will provide the spur to the proper urbanization that the American public aspires to and which our economy and technology are capable of producing. Although almost entirely profitmotivated, the housing industry has, nonetheless, repeatedly demonstrated its anxiety to create a better living environment for Americans of every income level. The greatest and most dramatic opportunity to accomplish that objective has, in recent years, been couched in comprehensive preplanned urbanization. Unfortunately, however, after much probing over the past two decades, involving vast expenditures of private capital, one fact has become inexorably clear: The success of the new communities concept requires Federal assistance. Specifically needed are (1) single-source, large, long-term, low-interest loans; and (2) a clearinghouse set up to efficiently amass, organize, and disseminate factual information relating to this vast new industry. There are no conventional sources for the type of loan required. Smaller builders must either compromise the concept of the new communities development or resort to exorbitant interest payments, 12 percent is not unusual, plus some "sweetener" to attract the lender. The added inducement may take the form of an option on a large share in the equity or other collateral participation in the success of the venture. Conventional financing for land development is usually for a term of 3 years or less, while the development of a true new community will take from 10 to 20 years to complete.

Adoption of title II will have a multiplicity of benefits:

1. It will permit better housing and a better environment to be put on the market at lower prices.

2. It will insure smaller developers an opportunity to participate in the new communities concept by providing credit sources not now

available to them.

3. It will permit devotion of greater areas to open space and the provision of more generous amenities.

4. It will permit better quality throughout.

5. It will insure better planning.

6. It will permit the creation from the outset of an environment balanced as to residence, recreation, open space and employment.

7. It will provide properly sized utilities and roads which will yield economies in the future thereby reducing the capital cost of the facilities as well as the service costs to the homeowners.

8. It will make for comprehensive planned coordination of transportation, greenbelts and open space, regional parks, recreational facilities and other regionwide cultural and physical amenities.

9. Because all of the regular amenities, such as schools and public buildings, will have been provided, it will do much to insure the Success of the new communities concept, as this is directly related to the confidence of the home buyer in the ultimate outcome of the project. May we make one final point. The very small builders and contractors have been concerned that encouragement of the new communies concept would somehow divert construction business away from

them and to the bigger contractors. While we cannot speak for others, valid business considerations in both San Jose and Honolulu have lead us to quite the contrary position. As a result of extensive and comprehensive market studies and analyses, and upon the unanimous recommendations of our consultants, we plan not to build ourselves, but, once having developed the basic roads, utilities, and amenities, to encourage a number of builders with a vast divergence of styles and price ranges to come in and build competitively within the general framework of our controlled and operational master plan.

Thank you, Mr. Chairman, for this opportunity to be heard.
Mr. BARRETT. Thank you, Mr. Simpich.

Mr. Simpich, I have a very short question I would like to ask you. I want to thank you for your excellent and informative statement. As you know, this proposal for FHA insurance of loans to establish new towns and communities has been before our committee for several years. Last year we authorized FHA insurance for suburban subdivisions, but the Congress did not extend the FHA insurance to embrace new towns. Frankly, there is considerable doubt about new towns on the part of the homebuilders and mayors. Would you think if Congress were to authorize FHA insurance for a limited number of new towns, say, for example, a half dozen-in other words, we would set it up as a demonstration program to see how it would work—do think this would be good strategy?

you

Mr. SIMPICH. Well, I think we would be a little disappointed that the Congress did not accept the legislation as now drafted. We certainly would be candidates to participate in such a demonstration program, because we are satisfied from both the business and esthetic point of view that the future growth of America should be in the form of new communities, new towns, however it is phrased. Do you have anything to add to that?

Mr. GELDERMANN. In our particular cases, Mr. Chairman, each of these developments is within the city limits of a major city. So it is not the new town that has gone away from the neighboring city and started up on its own with the political subdivision, et cetera.

Mr. BARRETT. Mr. Geldermann, I want to say that many on our committee are in favor of new towns. We are hopeful that we can give an abundance of housing units to the people that are in dire need of them. But we also have to be practical and look at the opposition to this type program.

Now, would authorizing the programs for a few, as I said, say a half a dozen cities, for the purpose of convincing the mayors that it is not detrimental to their own cities, be better than trying to get the entire whole cake, and losing it entirely?

Mr. GELDERMANN. I would consider that a valid approach.

Mr. BARRETT. You think that would be a sensible approach?

Mr. GELDERMANN. I would have to think more about it, sir. But I think that the principle is good, if it means that it has to be approached on that basis in order to enact the enabling legislation, then I would be in favor of it.

Mr. SIMPICH. May I add a point?

It would be my opinion that one of the reasons that the mayors are indecisive on this is that many of them have not been exposed to the detailed planning and the arguments which are available on

rothers.

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behalf of this means of growth, and the fact that if properly planned the new community concept will permit reductions in the expenditures of tax dollars for city services over those that would prevail through conventional expansion and growth. But this takes a long and persuasive discussion with an individual mayor in terms of his own town. Now, as I said in my statement, in both San Jose and Honolulu the mayors are the greatest advocates.

Mr. BARRETT. I can appreciate that. And I certainly appreciate your statements here. But some of the mayors think differently. Thank you very much. Mrs. Sullivan.?

Mrs. SULLIVAN. No questions, Mr. Chairman but I would like to observe that on the short trip we made to Honolulu last year some of the committee saw some of the new developments being done in Hawaii. Your testimony has been most helpful to the committee. Mr. BARRETT. Mr. Moorhead?

Mr. MOORHEAD. Thank you, Mr. Chairman.

Do I understand that the development of the new community in California is within the city limits of San Jose?

Mr. SIMPICH. That is correct.

Mr. MOORHEAD. And how about the development in Hawaii, is that within the city limits of Honolulu or outside?

Mr. SIMPICH. Within. The whole island there, it is the city of and county of Honolulu, so that the same zoning and tax base throughout the island are involved.

Mr. MOORHEAD. I think it is significant that it is within the corporate limits, and you have the support of the mayors. I think that where we lose the support of the mayors is where we are planning a new community outside of the city limits. I would like to see if I understand correctly your position with respect to Chairman Barrett's question. If in order to get this legislation passed as a practical matter, if we would have to put some limits on the number of new communities, or the total amount of money authorized which would have substantially the same effect, you would regret this, but accept it as a step in the right direction and only wish it were a bigger step, is that correct? Mr. SIMPICH. That is correct; yes.

Mr. MOORHEAD. Thank you, Mr. Chairman.

Mr. BARRETT. Thank you, Mr. Moorhead.

As I promised you, Mr. Simpich, we are not going to exhaust you this morning. We appreciate your very fine statement, and your answers and those of your associate to the questions.

very fine statements.

All time has expired for your testimony. We thank you for your

Mr. SIMPICH. Thank you.

committee.

Mr. GELDERMANN. Thank you, Mr. Chairman and members of the

Mr. BARRETT. Our next witness this morning will be Frederic A. Fay, president, National Association of Housing Redevelopment Officials. I wonder if Mr. Fay would come forward.

Mr. Fay, we are glad to have you this morning.

I notice you have an associate with you. Would you be kind enough to introduce your associate?

STATEMENT OF FREDERIC A. FAY, PRESIDENT, NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS; ACCOMPANIED BY JOHN D. LANGE, EXECUTIVE DIRECTOR, NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS

Mr. FAY. The man accompanying me is Mr. John Lange, the execu tive director of the National Association of Housing and Redevelopment Officials.

You have identified me as the president of the association. And I am executive director of the Richmond, Va., Redevelopment and Housing Authority.

Mr. BARRETT. Of course, we are well acquainted with John Lange as a witness before our committee, and we greatly appreciate the previous very fine statements of your organization. And I am sure the statement that you will give us this morning will be edifying. We are glad to have you and we certainly want you to feel at home. If you desire to complete your statement you may do so, and we will ask you some questions afterward.

Mr. FAY. Thank you, Mr. Chairman.

My testimony consists of a prepared statement and a supplemental statement that we should like to furnish for the printed record. And then, of course, I will be pleased to answer any questions that may come from the committee.

It is with considerable pride, that I appear before you this morning. For 33 years, our association, which, in the interest of brevity, I will refer to as NAHRO, has represented the views of the operating officials who have the responsibility of making both existing and new housing, redevelopment, and code enforcement programs effective on a day-to-day basis. This is a great responsibility, for, as you well know, the success of any program lies in its execution.

Our membership consists of Federal, State, and local public officials representing every section of the Nation. They are actively involved in all types of federally aided housing, code enforcement, and urban renewal operations in over 2000 localities across the country.

Therefore, Mr. Chairman, we come before the committee to present the point of view of the individuals who must translate Federal assistance programs into action. Our problem is getting the job done, once the legislation has been approved.

Today, we are here to give our support to three bills proposed by President Johnson and introduced by the chairman of this subcommittee, Mr. Barrett, the Demonstration Cities Act of 1966, the Urban Development Act, and the Housing and Urban Development Amendments of 1966.

The proposals for new large-scale demonstrations for cities and metropolitan areas are truly exciting and promising. NAHRO members are deeply concerned and involved with the improvement of liv ing in cities and metropolitan areas. We recognize that only the highest order of commitment of both our physical and social resources will be sufficient to turn the tide of blight and unplanned growth. NAHRO is ready to work cooperatively with other interests, public and private, at both national and local levels, to achieve the goals of the proposed demonstration acts.