Secretary WEAVER. Yes. We had $7,347,600,000 in 1961, $8,081 million in 1964, and $8,937 million in 1967, and we estimate $10,973,200,000 in fiscal 1968.

Mr. EVINS. These figures which the Secretary has just testified to relate to FHA guarantees for housing, multipurpose, single-family, and college. They run into the area of $7, $8, and $10 billion. Secretary WEAVER. Yes.

Mr. EVINS. In addition to the grants of $1.6 billion.
Secretary WEAVER. Yes.

FEDERAL AIDS TO URBAN AREAS

Mr. EVINS. So, Mr. Secretary, I wish you and your staff would, when you look at this record, supply some tables and give some totals. Secretary WEAVER, Yes, sir.

(The information follows:)

FEDERAL AIDS TO URBAN AREAS, 1969

Mr. EVINS. The press tends to pick up the round figures in totals. We are proud of what we have done, proud of the accomplishments; but you hear statements that we have done nothing. I think that we should let it be known-what has been accomplished. It has not been minimal, it has been substantial.

92-792-68-pt. 3

According to the Special Analyses of the Budget the Department of Housing and Urban Development estimates that the total Federal financial commitment for urban social and community development aids could be considered to exceed $37 billion in 1969

Secretary WEAVER. Yes.

Mr. EVINS (continuing). More than twice the level in 1961. The Department figures indicate the magnitude of Federal financial involvement in communities of 2,500 population or over as measured by obligations or commitments, including loans, insured and guaranteed. That is what the Secretary has testified to.

Secretary WEAVER. Yes. If we would take all of the departments we would have the figures in 1961, both grants and direct loans, loan guarantees, a total figure of $16,793,900,000, and the estimate for 1969 is $37,526,300,000, or over double.

Mr. EVINS. This is very impressive. It is stated in the "Special Analysis of the Budget."

In 1969 all programs of urban social and community development in the Government will be in excess of $37 billion.

Secretary WEAVER. Yes, sir.

Mr. EVINS. I think this is what the special studies have been concerned with.

Do you have any general questions, Mr. Boland?

Mr. BOLAND. The figure of $37 billion includes everything, all types of programs?

Secretary WEAVER. Yes.

Mr. BOLAND. That is, the total to assist individuals and communities. But this really isn't too significant a figure when we start to attack some of the problems of the cities themselves that we are trying to solve now; is that so?

Secretary WEAVER. I think it is an impressive figure if looked at from where we were and where we have come to. I think it is a figure which is not of the magnitude that will solve all of the problems. In some of these areas, particularly the areas of construction, you have a limitation on how fast you can increase and how fast you can spend additional funds well without having them either become inflationary or become bogged down. This is a concern that we have had. In our best judgment, the figures that are in the President's Housing and Urban Development Act of 1968 are realistic, in the sense that they can be achieved.

ROLE OF PRIVATE ENTERPRISE

Mr. BOLAND. Your departmental summary is rather eloquent in indicating that the budget seeks to maintain and enlarge the increasing role of private enterprise in the solution of problems of housing and urban development. All of us agree that this is a task that cannot be done by the Federal Government alone, that it does require the cooperation, the assistance of all governments on every level; Federal, State and local. Above and beyond that, it requires the cooperation of private enterprise. Without this, it is impossible to solve because there isn't enough money around to do it without that kind of a partnership. How have you been progressing in this area? What do you see in the partnership program with private enterprise in trying to solve some of the very complex and difficult problems of our cities?

Secretary WEAVER. I would like to divide that into two parts. First, I would like to speak to what has been done to date. We have done two major things: First, in 1961, as you will recall, we passed the first act which set up a viable, moderate income housing program, so-called section 221 (d) (3). That program provided that the sponsors would be nonprofit, limited dividend, and cooperatives. We have now-as will be set forth in subsequent testimony by Assistant Secretary Brownstein-gotten that program fully underway. It has proven that it is an attractive program, not only to the nonprofit but also to the limited dividend people, and this is where you get your volume. Right now we have more sponsors than we have funds to provide for those sponsors. So that we have involved private enterprise in a type of housing that never before on a national basis, and except for maybe New York State on a local basis, it had been participating in in the past.

Mr. BOLAND. What would be some of the significant figures here with respect to limited partnerships?

Mr. BROWNSTEIN. We have applications on over 163,000 units totaling about $2.2 billion. We have actually committed on about 112,000 units totaling about $1.5 billion.

An interesting feature of this program is that over 20 percent of these are cooperative units. The balance breaks down fairly evenly between limited dividend and nonprofit.

Secretary WEAVER. And we have a backlog of applications and of interest in this, which indicates that we could expand this program materially if we had the funds.

Second, under the rent supplement program we have involved private enterprise in building for low-income families, a thing which had never been done before. That is a newer program. The results are not yet as impressive statistically, but they certainly indicate a responsiveness in this direction. Third, we have modified our public housing program by adding the turnkey approach which, as you know, is an approach where the private builder gets the site, draws up the plans and builds the structure, meeting the requirements which the local authority and the Federal standards require, and after he has finished he turns the key over. You get private involvement there.

LIFE INSURANCE COMPANY SUPPORT

Then, just 4 or 5 months ago the life insurance industry indicated that it would provide $1 billion to finance low-cost housing primarily in the deprived areas. What we are doing is that they are really picking up two types of mortgages. They are picking up the mortgages on the rent supplement programs at the same rate at which FNMA was committing on them, which was somewhat below what the market would ask. This is taking out FNMA activity and reducing the pressure on special assistance. They are also buying mortgages in blighted areas and in the ghetto areas and the slum areas.

MORTGAGE INSURANCE IN BLIGHTED AREAS

Here again they are supporting our 203 FHA program. I might say that in passing, just to document one thing, we are now insuring at a rate of over 1,000 mortgages a week in these blighted areas, whereas

before we were insuring practically none. So that these are three areas in which we have already gone.

Mr. EVINS. Repeat that figure again, Mr. Secretary.

Secretary WEAVER. We are now insuring mortgages in the blighted areas, in the central cities, around about a thousand a week.

Mr. BROWNSTEIN. The last 3 weeks it has run over 1,500 a week.

PROPOSED LEGISLATION

Secretary WEAVER. We had practically none 6 or 8 months ago. What we are proposing in the new legislation is to accelerate this activity. In the first place, we are proposing a new type of financing for both homeownership for low- and moderate-income families and a substitute program for the 221 (d) (3). Briefly, it is a program of subsidy of the interest rate for 1 percent up to the market rate. Second, instead of getting those programs financed by special assistance, with its terrific budgetary impact, we are changing them and having those projects financed at the market rate of interest so that you can get private sources to take out the mortgages. We would then have the interest subsidy in connection with the project, and the cost to the Government would be the difference between the two, varying as incomes change. As the incomes go up, the subsidy goes down.

In that connection, we are asking that the interest rate on FHA-insured loans and VA-guaranteed loans be set free so that it can meet the market. As it is now, it is pegged at 6 percent.

When you have the 6 percent at the present time you just don't have any money.

Finally, we are proposing other things. In order to improve the amount of money going into this and particularly from new sources, like pension funds, we are proposing a new instrument which would be in effect a bond issued by the Federal Government and guaranteed by the Federal Government with the full credit of the United States behind it which would be made up of mortgages which are FHA or VA, and the reason for this is that many of the institutions which are not in mortgage financing-trust funds and pension funds-don't like to handle mortgages.

In the first place, you have a whole lot of paper. You have maybe a hundred different pieces of negotiable paper, a hundred different loans. You put them all in one in this guaranteed bond. They don't have to have a mortgage department to service it, and it, therefore, becomes more attractive. We think this will attract more money in the mortgage market.

We are also proposing that there be a partnership made up from large corporations which would participate as limited dividend sponsors under the new programs both for homeownership and for rental, and this would operate in such a way that the participants in this new partnership and this would be authorized under law-would be able to pass through the tax benefits that would go to the corporation because of rapid depreciation and early losses, back to the parent corporation, and thereby this would become attractive for them as an investment. If you didn't have this, you might have a situation where you would have a new corporation which would have tax benefits but nothing to apply them to, because the only thing it would be in

would be in the particular activity giving it the tax benefit. Unless they can apply it to other tax responsibilities, it is meaningless and that is what this law would propose to do.

JOINT EFFORT OF SAVINGS AND LOANS AND MUTUAL SAVINGS BANKS

Mr. BROWNSTEIN. I might mention also, Mr. Chairman, that about 2 weeks ago the savings and loan associations and the mutual savings banks announced the creation of a joint committee aimed also at funneling money into the central city areas and assisting with the financial problems of the model cities areas.

COOPERATION OF PRIVATE ENTERPRISE

Mr. BOLAND. Are you satisfied with the cooperation that private enterprise is starting to give? This has been generated within the last couple of years, as you know, on a much larger scale than ever before, and it is going to so expand a great deal more.

Seceretary WEAVER. There is no question but what there is a decidedly new attitude on the part of private enterprise in this country: a new attitude, first, toward its responsibilities for dealing with the problems of low- and moderate-income families, and also its responsibilities for dealing with the problems of the economic and racial ghettos in this country.

I might say that I have been remiss because I haven't mentioned that the idea of the partnership and many of the other ideas of participation of private enterprise has been occasioned by a committee, a presidentially-appointed committee under the chairmanship of Edgar Kaiser and they have done valiant service in this area.

Mr. BOLAND. Mr. Chairman, since you have detailed a very fine schedule here, I think I will reserve some of my questions for some of the specific programs when they are discussed.

NEW LAND ACQUISITION POLICY

Mr. JONAS. Doctor, what is this new directive you recently issued dealing with market value?

Secretary WEAVER. We have discovered that very frequently where there would be one and two and three appraisals, and particularly in urban renewal areas, that the local authorities-not all of them; I don't want to give that impression, but some of them-would go to the poor and the people who had no idea of what was involved except the Government was going to take their property, and say to them, "Look, we will give you the lowest appraisal for your property." In some instances either by implication or otherwise, these people who had very little knowledge of this and no bargaining power, would immediately accept that because they didn't want to get into any trouble with the Government. The result was that the sophisticated people-the people who had the properties that were more expensive and worth more and who were more knowledgeable-would be holding out and getting the highest possible appraisal, and the people who were the most disadvantaged would be getting the lowest possible. Our directive says they cannot go and offer just the lowest possible; they have to offer