The budget looks toward a rapid expansion of both activity and capability in bringing to bear modern technology and modern techniques of research and development in the area of housing and urban problems. Increased funding is provided for the research and development program now getting underway pursuant to authorization. granted by the Congress last year. The first formal steps are expected to be taken soon toward the establishment of an urban institute, as a nongovernmental agency which will fill an important gap in the available resources for enlarging and perfecting our knowledge of the physical, social, and economic aspects of urban problems.

The budget provides for continuing and gradually expanding the first steps being initiated this year toward meeting the acute shortage of skilled manpower-one of the most serious limiting factors in the capability of all levels of government to respond to the urgent needs of the people living in urban areas. Funds are provided for a very small program of fellowships in critically short urban skills; for supporting State-sponsored training programs; and for launching and developing State programs to provide urban information and technical assistance to smaller communities.

HIGHLIGHTS OF THE ESTIMATES

In an introductory statement, Mr. Chairman, it is impossible to do more than touch on the highlights of the matters on which you are being asked to act. I would like, therefore, to identify for you quickly the key items of appropriation action which this budget calls for:

RENEWAL AND HOUSING ASSISTANCE PROGRAMS

For programs under the direction of the Assistant Secretary for Renewal and Housing Assistance and focused primarily on the problems of the central cities, we recommend

An increase from $30 to $40 million in appropriations for grants to neighborhood facilities projects, which are designed to bring into neglected low-income areas facilities which will house a wide variety of services to their people. Responsibility for the choice of services and for their financing remains with the local community.

A forward appropriation of $1.4 billion for urban renewal for the fiscal year 1970. Action on this appropriation is dependent on enactment of authorizing legislation.

Appropriation of an additional $500 million for urban renewal for the fiscal year 1969, as a special item in support-and available solely in support of the model cities program. Of this amount, $150 million can be appropriated under existing authority, and $350 million requires authorization as proposed in the pending legislation.

Continuation, without additional appropriations, of a program of low interest rate loans to encourage the rehabilitation of both homes and business properties in urban renewal and code enforce

ment areas.

Appropriation of $358 million to continue Federal subsidy payments to public housing projects involving almost 800,000 units, an providing standard housing to more than 3 million low-income people.

Inauguration, with appropriation of $1 million, of a new program of loans and grants to help provide housing for low-income residents of Alaska, authorized by section 1004 of the Demonstration Cities and Metropolitan Development Act of 1966.

Continuation, with funds to be provided through participation sales, of the programs of college housing loans and loans for housing the elderly and handicapped, at net loan reservation levels of $300 million and $85 million, respectively.

METROPOLITAN DEVELOPMENT PROGRAMS

For programs under the direction of the Assistant Secretary for Metropolitan Development dealing with urban area and metropolitan area wide problems, we propose

An increase from $45 to $55 million in the appropriation for grants to assist comprehensive urban planning generally-from small town to metropolitan area to statewide. Of the total proposed, $16.2 million requires legislative authorization which would be provided by the pending bill.

A proposed appropriation of $10 million to initiate a new program of supplementary grants authorized by the Congress in title II of the Demonstration Cities and Metropolitan Development Act of 1966, designed both to encourage comprehensive approaches on an area-wide basis and to encourage the practical use of comprehensive plans in the area wide programing of facilities. Appropriation of $85 million to supoprt an expanded program of grants for the preservation of open space land, for the creation of open spaces in developed areas, and for urban beautification.

An additional appropriation of $150 million for grants to assist in the provision of basic water and sewer facilities in projects which fit into an areawide plan for the provision of public facilities.

A forward appropriation-for the fiscal year 1970-of $230 million for grants to encourage improved urban transportation through capital improvements, demonstration projects, system studies, and research and training; $190 million of this forward appropriation requires legislative authorization. Also proposed is an additional appropriation of $15 million for the fiscal year 1969 to permit a major attack on the research and development problems of providing modern transportation systems in our cities.

Continuation, without appropriated funds, of the program of loans for public facilities, primarily for the benefit of small communities which have difficulty obtaining funds in the private market.

DEMONSTRATIONS AND INTERGOVERNMENTAL RELATIONS

For programs under the direction of the Assistant Secretary for Demonstrations and Intergovernmental Relations, dealing with demonstration programs and the development of new and improved methods of coordination and cooperation between Federal, State and local agencies involved in the interrelated problems of housing and urban development, our key budget items are

Appropriation of $500 million for supplementary grants-the full amount authorized by Congress-to fund the second year of the model cities program. In addition, as I mentioned, the budget requests appropriation of $500 million for urban renewal projects which are scheduled to be carried out as part of approved demonstration projects under the model cities program-making up a total model cities programs effort of $1 billion for the coming year.

Appropriation of $5 million to continue the program authorized by Congress in title IX of the Demonstration Cities and Metropolitan Development Act of 1966 under which information on urban needs and resources is made available and technical assistance provided to cities having a population of less than 100,000. Additional authorizing legislation is required for this budget request and it is contained in the pending Housing and Urban Development Act of 1968.

Appropriation of $7 million to assist States in developing and financing special training programs for people employed or training to be employed at the local level in community development activities, together with $500,000 to continue the program of urban fellowships.

URBAN TECHNOLOGY AND RESEARCH

The Department is asking an appropriation of $20 million to continue and expand the major new effort being begun with the $10 million appropriation provided by Congress for the current year to bring modern research and development techniques to bear on problems of housing and urban development. We also propose continuation of modest levels of research and demonstration programs concerned with the provision of housing for low-income families and for the handicapped; means of providing and utilizing open space land; and methods for making comprehensive planning more effective in shaping the development of urban areas.

MORTGAGE CREDIT PROGRAMS

Although no appropriated funds are involved, the budget projects an active and significant role in the economy for all of the mortgage insurance programs of FHA, and for the support programs of the Federal National Mortgage Association in both its secondary market operation and special assistance functions.

FHA unit applications are estimated to increase by a factor of about 20 percent to a total of over 1,200,000 in all categories. Under the policies which we have put into effect, FHA's programs are progressively more meaningful to people with moderate and low incomes, both in terms of homeownership and the availability of rental housing. They are moving also into the core city, and even into the slums where the lack of financing is one of the many contributing causes of decay. FNMA will continue to provide essential support to the general housing market through its secondary market functions, and through its special assistance activities will backstop such essential programs as housing for moderate-income families under section 221(d) (3) and housing in urban renewal areas. The budget program estimates

a substantial drop in mortgage purchases in the secondary market, resulting from improved availability of private mortgage funds under proposed legislation. As already noted, such legislation would permit interest rates on Government-insured mortgages to go to realistic levels in the market, and would authorize transfer of FNMA secondary market operations to private ownership and management. The assumption of improved availability of private funds also leads to an estimated decline in mortgage purchases by FNMA in connection with the sale of FHA-held properties.

Of critical importance is the budget request for authorization, through appropriation action, of an additional $65 million in contract authority for annual rent supplement payments. With amounts previously approved by the Congress, this will bring the ceiling on annual payments which may be contracted for up to $107 million, providing decent housing for over 100,000 families or individuals who previously lived in substandard housing, who were displaced from their homes, or are elderly or handicapped, or were made homeless by natural disaster.

And last but far from least, Mr. Chairman, we seek appropriation or provision from other available funds of necessary amounts for administrative and other operating expenses. We all know that these new and often complex programs are not self-executing. They will be effective only if the Department has the wisdom, the skill, and the resources to make them effective. Unless we gear our capabilities to the magnitude of our responsibilities, we shall not perform as the President, or the Congress, or the public, rightly expects us to perform.

TRANSPORTATION REORGANIZATION

Before closing, Mr. Chairman, I should mention one technical complication in which you and we find ourselves. The estimates and justifications before you include proposed appropriations for grants and for supporting administrative expenses authorized by the Urban Mass Transportation Act of 1964, as amended. As you know, however, since the presentation of the Budget the President has sent forward to the Congress his Reorganization Plan No. 2 of 1968.

The plan would transfer to the Department of Transportation the loan and grant programs and a substantial part of the research and development activity under the Urban Mass Transportation Act. It would retain within HUD certain aspects of research related to transportation, as well as important functions bearing on the relationship between transportation and comprehensive planning in our urban areas. I should be glad to detail to your committee the thinking behind this proposed reorganization, if that is your pleasure.

We will also be glad to describe and explain the appropriations requested in the Budget and included in these justifications. However, the details as to the allocation of specific activities, funds and staff in the coming year as between the two Departments are matters committed by the plan to the determination of the Director of the Bureau of the Budget, and cannot be worked out specifically until he has made the appropriate determinations after the plan, Congress willing, has taken effect. So I regret that we will not be able to be

too helpful to the committee on that kind of matter in these hearings. Mr. Chairman and gentleman, I appreciate your indulgence in listening to these preliminary remarks, and at this point I shall end them and invite your questions..

AUTHORIZATION FOR APPROPRIATIONS REQUESTED

Mr. EVINS. Thank you, Mr. Secretary, for a very excellent statement. It gives a summary of the budget concepts and of your plans and proposals.

There are several contingencies that you have pointed out. At the end you stated that there will be a transfer of some of your functions to the Department of Transportation. No. 2, that legislation is pending in the Congress before appropriations can be made for additional parts.

Mr. Secretary, can you tell us in a few words the amount that is contained in this budget proposal that has not yet been authorized?

Secretary WEAVER. We have set forth in volume 1 a table on page A-7 indicating this. There are five items:

In the appropriations requested for fiscal year 1969, for the urban renewal programs in the model cities areas, $350 million authorization will be required.

Mr. EVINS. In other words, $350 million urban renewal in model cities areas has yet to be approved?

Secretary WEAVER. Of the $500 million recommended in this budget; yes, sir.

For urban planning grants, of the $55 million recommended in this budget, $16,162,000 has not been authorized. For the urban information and technical assistance, we are requesting $5 million, and none of that has been authorized, so the total needs to be authorized.

Mr. EVINS. How much did we appropriate for that program last year?

Mr. FRANTZ. $2,200,000.

Mr. EVINS. $2,200,000 last year, and you are requesting a $5 million new authorization?

Secretary WEAVER. Yes.

Mr. EVINS. Double last year?

Mr. FRANTZ. Yes. The authorizing legislation has not expired, Mr. Chairman, but as it was written it provided a specific dollar amount for each year, and there is no dollar amount in the act for 1969.

Mr. EVINS. There is no dollar amount for 1969?

Mr. FRANTZ. That is correct.

Mr. EVINS. For 1969 you are asking for $5 million?

Mr. FRANTZ. Yes, sir.

Mr. EVINS. You were funded in fiscal year 1968 at $2,200,000?
Mr. FRANTZ. That was the first year; yes, sir.

ADVANCE FUNDING FOR URBAN RENEWAL

Secretary WEAVER. As you know, we have been for some time, with the concurrence of the committee-something we more or less worked out with you-having advance appropriations for two of our programs, urban renewal and urban transportation.