Mr. WEAVER. We do not force any program under any set of circumstances. As I said before, this operates just as any other FHA program operates. Whatever the local requirements are will be met on a local governmental basis. First, in order to get a program of this type, you have to have a sponsor. Secondly, that sponsor has to meet the local governmental requirements for a project of this type, just as he would if he were building for any other group in the community. The whole genius of this is that this is private-enterprise-oriented and the rules are the same as for any other private-enterprise-oriented program. EXTENT OF RENT SUPPLEMENT OBLIGATION Mr. JONAS. Does the contract obligate you to pay the amount of the supplement even if the unit becomes empty? Mr. WEAVER. No. This goes with occupancy, and it has to go with occupancy because it is based upon the occupancy income. Mr. JONAS. I know, but how can you protect the nonprofit sponsor in his amortization payments or how is he protected or what will he use for money if some of his units become vacant and you do not contribute? Mr. WEAVER. If we get the funds we are asking for, we will have adequate market analyses to know that there is a demand in that community for this type of housing, and a demand which will never be fully met by whatever we may do under this program. So, he is assured by the market forces, just as anybody is assured of this if he builds wisely, and if he builds wisely Mr. JONAS. He is not assured of anything except that you will pay the supplement if the unit continues to be occupied. Mr. WEAVER. That is right. Mr. JONAS. And he takes the risk. Mr. WEAVER. He does not take too much of a risk. Mr. JONAS. What if there is a shift of population. Mr. WEAVER. There is a backlog of about 6 million potential occupants for this type of housing, so I think he is fairly safe. FEDERAL PROMOTION OF RENT SUPPLEMENTS Mr. EVINS. Let us say in X community in a certain State the city fathers are not as progressive as some might like them to be, and they do not vote for public housing and they do not adopt an urban renewal program. Yet, your market survey shows there might be some need in this area for this type of housing. Are you then going to say to B contractor, "You go into X area and build a project in this area. city hasn't moved." Mr. WEAVER. No. Mr. EVINS. You do not plan to proceed on that basis? GRANTS FOR WATER AND SEWER FACILITIES This Mr. EVINS. We will now turn to "Water and sewer grants." This is another one of the popular programs. The authorization is for $200 million, and you are asking for $100 million, or one-half. The testi mony this morning showed they could use it all or perhaps more, even though there are some other agencies in the field. Mr. Reporter, we will place in the record C-1 through C-8. (The pages follow :) COMMUNITY FACILITIES ADMINISTRATION GRANTS FOR BASIC WATER AND SEWER FACILITIES PROPOSED APPROPRIATION LANGUAGE 66 GRANTS FOR BASIC WATER AND SEWER FACILITIES "For grants authorized by section 702 of the Housing and Urban Development Act of 1965, $100,000,000, to remain available until expended." SUMMARY OF BUDGET REQUESTS The supplemental budget request for fiscal 1966 for the program of grants for basic water and sewer facilities purposes: (1) An appropriation of $100 million for grants. (2) An appropriation of $1,750,000 for administrative expenses as part of the "Salaries and expenses" appropriation to the Administrator. This amount provides for year-end employment of 250 and includes $100,000 for services which the authorizing act requires the Department of Health, Education, and Welfare to perform. Section 702 of the Housing and Urban Development Act of 1965 authorizes the Administrator to make grants to local public bodies and agencies to finance up to 50 percent of the cost of constructing, expanding, enlarging, and improving basic public water and sewer facilities (other than sewage-treatment works as defined in the Federal Water Pollution Control Act). Under certain circumstances, discussed below, a grant may finance up to 90 percent of the cost of a facility. To finance these grants, section 708 of the act authorizes appropriation of $200 million in each of the 4 consecutive fiscal years beginning in 1966. Amounts authorized but not appropriated for any fiscal year may be appropriated for any succeeding fiscal year commencing prior to July 1, 1969. Need for improved basic facility assistance The Housing and Urban Development Act of 1965 recognizes the need and emphasizes the importance of basic water and sewer facilities for the economical and orderly growth and development of communities. Both built-up metropolitan and developing areas are often characterized by basic public facility systems that have been designed and installed without regard for the need for area wide systems or economies of scale. Many urban and developing communities are faced with the current necessity for radical redesign of basic water or sewer facilities permitted to develop without adequate overall planning; often, the costs of accommodating yesterday's ill-planned system to today's conditions-as, for example, the separation of sani tary and storm sewer systems-put a severe financial strain upon a community's resources. From an individual property owner's point of view, he may well be assessed today to provide basic water and sewer facilities as replacement for well and septic tank facilities unwisely permitted because of lack of adequate planning for foreseeable conditions. Well-designed basic water and sewer facilities provided at the lowest economic cost as a result of careful planning are prerequisite in most developing areas to the provision of an adequate supply of land suitable for moderate-income residential development. While most towns and cities have made conscientious efforts to provide ade quate water and sewer facilities, this task remains one of the most pressing problems facing many American communities. Local sources of tax revenue are heavily strained; individual government units impose additional tax burdens at the cost of prompting industry and employment to move to other locations. Basic requirements for financial assistance Before Federal assistance may be provided under the act, the Administrator must determine that 1. The applicant is a local public body or agency established by the action of one or more States or entities thereof. 2. The applicant has the legal authority to plan, finance, construct, and operate the proposed project. 3. The project is necessary to provide adequate water or sewer facilities for, and will contribute to the improvement of, the health or living standards of the people in the community to be served, and that the project is (a) designed so that adequate capacity will be available to serve the reasonably foreseeable growth needs of the area: (b) consistent with a program for a unified or officially coordinated areawide water or sewer facilities system as part of the comprehensively planned development of the area; and (c) necessary to orderly community development. 4. All contracts for construction work contain the usual provisions relating to the Davis-Bacon Act and other labor standards. 5. Any waste material carried by the facilities will be adequately treated before it is discharged into any public waterway, as certified by the Secretary of Health, Education, and Welfare. 6. Each applicant will adhere to the statutory requirements set forth in title IV of the Housing and Urban Development Act of 1965 when acquiring real property by eminent domain in connection with this program. Two exceptions to basic program requirements (1) In administering these provisions the Administrator may, prior to July 1, 1968, authorize grants if a program for an areawide water and sewer facility system is under active preparation but not yet completed. The need for the proposed facility must be urgent, and there must be reason to expect it will be required as part of the areawide program. (2) In the case of a community in a metropolitan area that has under 10,000 population and no adequate sewer facility serving a substantial portion of its people, the Administrator may increase the amount of the grant for a basic public sewer facility to not more than 90 percent of the development cost, provided that: (a) The rate of unemployment is and has been, continuously over the preceding year, double the national average; and (b) The community is unable to finance the construction of the facility without the increased grant. Statutory requirements regarding comprehensive planning and designing to meet the reasonable growth needs of the area are waived in the case of communities that qualify for grants under these special conditions. Facilities eligible for assistance Water facilities include facilities to store, supply, treat, purify, or distribute water of sufficient quality and quantity for domestic, commercial, and industrial use. Sewer facilities include sanitary sewer systems for the collection, transmission, and discharge of liquid wastes; storm sewer systems for the collection, transmission, and discharge of storm water caused by rainfall or ground water runoff; and other facilities for the collection and disposal of other categories of wastes. The basic parts of a water or sewer facility for which a grant may be made would include all the parts of the water or sewer facility except individual household connections. Treatment works as defined in the Federal Water Pollution Control Act are not eligible under this program. Relocation provisions under the Housing and Urban Development Act of 1965 Title IV of the act extends to this program the relocation payment provisions, which under prior law applied only to persons displaced under the urban renewal and low-rent public housing programs. Displaced individuals, families, business concerns, or nonprofit organizations are eligible for relocation assistance. Relocation payments authorized will be subject to the rules and regulations of the Administrator. Regular program grant funds will finance the relocation assistance effort. Budget program During fiscal year 1966, following appropriation of grant and administrative expense funds for the program, it is expected that applications for grant assistance may be filed aggregating some $600 million, representing 1,500 separate projects, and that action may be taken on approximately 250 projects to reserve the requested grant funds of $100 million. The program for advance planning of public works, authorized by the Housing Act of 1954, as amended, has resulted in accumulation of an estimated 1,800 plans in the reserve of public works planned but not yet undertaken as of June 30, 1965; over half of these plans are for water and sewer projects some of which may be expected to qualify for grant assistance under the new basic water and sewer facilities program. Perhaps a major share of the total funds requested for grant commitments in the first year-although perhaps not the largest share of total project applications may come from larger communities. These communities are typically staffed to expedite preparation of plans and applications for Federal grants, and, generally, already meet the comprehensive planning requirement of the program. Program administration The program will be administered by the Community Facilities Administration and the HHFA regional offices under guidelines established by the Administrator. During the initial year under the new act, program policy decisions and program operations must be closely interwoven to assure that the program develops in accordance with legislative intent. Detailed policies, standards, and operating procedures will be developed and adapted to changing program characteristics. Accordingly, for a limited initial period, final approval of applications may necessarily be centralized. Application review and construction inspection will be carried out in the HHFA regional offices and field stations. Administrative expenses Administrative expenses for this program would be provided in the salaries and expenses appropriation to the Administrator, described earlier in this justification (see sec. A). The supplemental budget estimate includes $1,750,000 for this program and provides for 250 yearend employment. Community Facilities Administration staff will coordinate the program within the Agency and with other Federal establishments; develop policies, standards, and operating procedures to assure uniform program administration by the regional offices; supervise and manage regional operations; interpret and control program policies; and direct and report on program execution. 53-537-65-17 Prior to approval, the regional staff will interpret the program and provide technical assistance to communities that need it in preparing applications; process the applications including legal, financial, and engineering reviews of the proposed project or facility; and recommend approval or disapproval action to the Commissioner. After the Commissioner takes formal action, regional staff will review and approve detailed plans and specifications; negotiate with applicants on all stages of the project, providing technical assistance where necessary; and perform the various administrative activities connected with contract awards, construction, disbursements, project audits, and final reports. Section 702 provides that no grant may be made for sewer facilities unless the Secretary of Health, Education, and Welfare certifies to the Administrator that the waste carried by such facility is adequately treated before being discharged. The certification by HEW will require an extensive staff review of each proposal. The review will include an analysis of the amount of waste likely to be generated and the adequacy of existing or proposed waste treatment facilities. To carry out this portion of the activity, a reimbursement of $100,000 is proposed for 1966. The table on the following page shows details of the administrative expense estimate included in the appropriation for salaries and expenses. Reimbursement to the Secretary of Health, Education, 26 Supplies and materials____. 31 Equipment_-- Nonrecurring equipment costs for new employees---- Total obligations--- Mr. EVINS. Are there any questions on this program? ADVANCE ACQUISITION OF LAND Supplemental estimate, 1966 250 $1,305, 400 68, 000 2, 600 15, 100 68, 000 15, 000 14, 300 100, 000 14, 000 28, 000 119, 600 1, 750, 000 We will next turn to "Advance acquisition of land"-$25 million is authorized. You are asking for $10 million. Doctor, are you not about $5 million too high on that request? Mr. WEAVER. I do not think so. I think there is a tremendous need for this. Last week, at the request of one of your colleagues, I was in New Jersey talking to a group of mayors he had assembled. These were mayors of rather small communities in the northern part of New Jersey. No large city was involved. Every mayor was very much interested in this particular program because he has been faced with the problem of having to pay enormously high prices for land for public use. I think we will have a goodly number of applicants here. I think, on the other hand, this is a program that we will have to start out and learn as we go along. I think this is a reasonable figure. |