Mr. WEAVER. Since I do not have any of my top lawyers here—yes, I do. Mr. Foard, what about that? Mr. FOARD. It has to be a public body that applies. Mr. BOLAND. A public body can apply? Mr. FOARD. It can operate through a private corporation provided the public body has control. Mr. BOLAND. It is conceivable you could build a building worth $1 million under this program? Mr. FRANTZ. There are some estimates along those lines on page 3, Mr. Boland. Mr. EVINS (reading) : AID BY SIZE OF CITIES Consulting with the Office of Economic Opportunity, estimates have been made of the number of cities needing facilities of the type eligible for assistance and average cost and grants. It is estimated 360 applications will be received from 345 different cities totaling $42 million. Not all of these will have been processed by yearend. However, it is estimated 245 applications from 238 cities requesting grants of $30 million will have been approved or rejected, at the end of the year. Your tables at the bottom show that cities over 1 million in population will get 99 percent of the grant. Mr. WEAVER. I beg your pardon? Mr. FRANTZ. That table shows that of the cities more than 50 percent would be under 25,000-if these estimates are correct-165 out of 345 cities applying. Mr. BOLAND. And the grant for facility would run around $200,000. Mr. FRANTZ. Yes; for the larger cities, the average would be somewhat smaller in the smaller cities. FUNDS REQUIRED FOR INITIAL YEAR Mr. EVINS. The authorization is for $50 million, and you estimate you can use $25 million. Mr. Boland points out that there will be very few of these buildings that will go up to $1 million. Don't you think $5 or $10 million would be enough the first year? Mr. WEAVER. No, sir; we have checked this out rather carefully with the antipoverty people who are pretty well conversant now with what the needs are, and we think we won't have any difficulty in using $25 million effectively and could probably use more. We would rather keep this modest at first. RELATIONSHIP TO ANTIPOVERTY PROGRAM Mr. JONAS. If the chairman will yield, I think you are tying this closer to the antipoverty program than the statute contemplates. That is only one of the things to be considered. As I understand your presentation here, you would not consider as eligible a project to rebuild a boy's club, for example, that had been destroyed as the result of an urban renewal program unless that area was accessible to a great many people in the lower and middle income groups. Mr. WEAVER. I would say two things to that. First, my remarks about the antipoverty program were only estimates of what would actually happen, not what the law requires. In the first year I think those cities which have community action programs will be the communities that have the type of programs which the law requireswhich is a program, rather than just a one-shot approach. They will come in first, earliest, with the "mostest," and I think will be primarily the communities in which we will operate at first. I do not believe that the statute involves just a one-shot approach with one particular building. As I recall the statute, and my memory may be wrong, there has to be some plan for this type of activity. Mr. FOARD. That is correct. Mr. WEAVER. So the reason that I think the poverty program will be so important is that they have been developing such plans. Where it must be located-the second point, is in the statute. Mr. JONAS. It says "available." AVAILABILITY TO LOW AND MODERATE INCOME FAMILIES Mr. WEAVER. So located as to be available for use by significant portions or numbers in the case of large urban places of the area's low or moderate income residents. Mr. JONAS. I understand. I just read that myself. I say that under this language, as you have interpreted it, a facility would not be eligible if it were not in an area that would make it available for use by a significant portion of the area's low or moderate income residents. Mr. WEAVER. I think that is what the law says, does it not? Mr. JONAS. I am reading it. What is an "area?" What area do these people have to come from? How big is the area? Mr. WEAVER. I think the language says no grant shall be made unless the project is so located as to be available for use by a significant portion of the area's low or moderate income residents. Mr. JONAS. What is an area? That is what I asked. How wide a territory? Mr. WEAVER. It says here, "or number" in the case of large urban places. In a small place I think it would be the community. In a large city I think it would be a section of the city. Mr. JONAS. So the answer to my question is "Yes"-a project would not be eligible to be built in an area of a city unless it was available to a significant number of low income people? Mr. WEAVER. Low- and moderate-income people. That is what the statute says. Mr. EvINS. Mr. Giaimo, you had a question? Mr. GIAIMO. Mr. Boland got the answer how they handled the 30 percent that were not tied in with the poverty program. Mr. WEAVER. There is no 30 percent. That is an approximation. Mr. BOLAND. Under the act, as Dr. Weaver said, it does not all have to pertain to the poverty program. I notice this section of the act says no grant shall be made for any project unless the Administrator determines it is necessary for carrying out a program for recreation, social, or community service. So actually this is the kind of program. Mr. JONAS. It has to meet three. There are two others. Consistent 53-537-65--20 with comprehensive planning, and three, located so as to be available to a significant portion and so on. Mr. WEAVER. I think this will probably give some flavor to it. One of the things we contemplate under this is community facilities for senior citizens of low and moderate income. This is why I think the language was modified so that private groups can be the operators of these projects. Mr. BOLAND. But the applicant must be a public authority or agency. Mr. WEAVER. Yes. Mr. FRANTZ. There is specific reference in the statute to the poverty program in the next paragraph in terms of a priority. Mr. BOLAND. Yes, I see that. Mr. FOARD. There also you will notice it is in the alternative. It doesn't have to be connected with the poverty program. Mr. BOLAND. That is true. I would think a number of these projects would not be connected with the poverty program, as such. I envisage the opportunity here for a number of boys' clubs and girls' clubs and that type of facility to improve themselves under this act. Most of these clubs are located in areas that are low- or moderate-income so they would qualify insofar as the area is concerned. They are certainly producing the facilities for health and recreation that the act requires. So I would think these would be eligible. Mr. WEAVER. There is also the comprehensive planning required. Mr. BOLAND. Yes. FACILITIES IN HIGHER INCOME AREAS Mr. JONAS. That is what is worrying me, because the sponsorship has to be a public body. You are going to build this facility for the public body to control and operate in an area available to low- and moderate-income people. Who is going to build similar facilities in other areas of that municipality? The public body cannot discriminate against one section of the community, can it? Mr. WEAVER. It has been doing so for a long time, and that is the reason you need this particular type of activity. Mr. JONAS. I am asking you a serious question. Mr. WEAVER. I am trying to give a serious answer. Mr. JONAS. Who will build facilities in areas slightly above moderate income areas? Mr. WEAVER. I do not know. Mr. JONAS. You will leave them to shift for themselves? Mr. WEAVER. No; I think if you look at our cities, you will find at the present time that the areas which have the largest and best recreation-just look where our swimming pools are located-I think you will find they are not in the areas that serve the low- and moderateincome people for the most part. If you look at the boys clubs—not exclusively and not increasingly in recent years-if you look at the best recreation, very often completely supported by public fundsit is not in areas occupied by low- and moderate-income people. Mr. BOLAND. Most boys clubs are. Mr. WEAVER. I think so. Mr. JONAS. That is not my experience. We are not talking about country clubs. Mr. WEAVER. No. Mr. SLAYTON. The parks and general recreation facilities generally have been applied like that. Mr. WEAVER. Parks in our cities are practically negligible in lowand in moderate-income areas. MORTGAGE RELIEF FUND Mr. EVINS. We have the mortgage relief fund, one page. Mr. Brownstein has already told us about that. He says he has not a single application and therefore he does not need the money and we will put it in the report. Do you have any further comments, Mr. Brownstein? Mr. BROWNSTEIN. Silence should not be interpreted as agreement, Mr. Chairman. Mr. WEAVER. We are asking for the money. Mr. EVINS. We shall insert page L-1 in the record. (The page follows:) FEDERAL HOUSING ADMINISTRATION MORTGAGE RELIEF FUND PROPOSED APPROPRIATION LANGUAGE “For the fund established pursuant to section 107 (e) (1) of the Housing and Urban Development Act of 1965, $500,000, to remain available until expended." JUSTIFICATION This appropriation will enable the Commissioner of the Federal Housing Administration to carry out the provisions of section 107 of the Housing and Urban Development Act of 1965. This section authorizes the FHA Commissioner to issue certificates of moratorium to homeowners with FHA insured mortgages who are unemployed as the result of the closing of a Federal installation, and in accordance with the terms of the certificate, to assume the obligation of the mortgagor for the payment of principal and interest under the mortgage, including certain arrears, for a period not to exceed 1 year. Administrative expenses in connection with the program will be paid for out of the operating expense authorization under the nonadministrative expense limitation. In the absence of definitive information about the exact number of distressed mortgagors who will seek this form of relief, the budget estimate is based upon the assumption that some 500 applications will be received during the balance of the fiscal year, requesting relief at an average of about $1,000 each. It is important to note that in each case, the mortgagor must enter into a binding agreement to repay the aggregate amount advanced by the FHA in his behalf. Such repayment will be credited to the fund and eventually returned to the Treasury. FHA NONADMINISTRATIVE EXPENSES Mr. EVINS. Nonadministrative expense. All through this budget, the biggest item is the administrative and nonadministrative expense. We will put pages M-1 through 5 in the record. (The pages follow :) FEDERAL HOUSING ADMINISTRATION NONADMINISTRATIVE EXPENSES PROPOSED AUTHORIZATION LANGUAGE "LIMITATION ON ADMINISTRATIVE AND NONADMINISTRATIVE EXPENSES, FEDERAL HOUSING ADMINISTRATION "In addition to amounts otherwise available for certain nonadministrative expenses, as classified by law, of the Federal Housing Administration during the current fiscal year, not to exceed $1,430,000 shall be available for such expenses of said agency, including expenses of carrying out section 107 of the Housing and Urban Development Act of 1965." Summary of budget request Available, Independent Offices Appropriation Act, 1966 (Public Proposed supplemental for administration of new insurance pro- Revised estimate____ $80, 275, 000 1,430,000 81, 705, 000 SUPPLEMENTAL REQUIREMENTS FOR NONADMINISTRATIVE EXPENSES, FISCAL YEAR 1966 The supplemental nonadministrative expense authorization of $1,430,000 is needed to provide for additional mortgage insurance workload resulting from the Housing and Urban Development Act of 1965. The new land development mortgage insurance program provided by the act is expected to result in applications covering more than 50,000 units during the current fiscal year. The new mortgage insurance benefits made available under the National Housing Act for veterans are expected to result in approximately 25,000 additional applications for home mortgage insurance this year. An additional 13,000 units will be covered by applications for multifamily project mortgage insurance in connection with the rent supplement program this fiscal year to provide housing for occupancy by low-income families on a rent supplement basis. Substantial additional units will come under preapplication consideration as sponsors qualify and develop plans for FHA insured rental projects for low-income families eligible for rent supplement assistance. Overall, the new legislation will result in an increase in units under FHA applications, including sites under the land development program, of approximately 8 percent. The requested increase in the nonadministrative expense limitation is less than 2 percent. Mortgage insurance for veterans.-The amendment to section 203 of the National Housing Act to provide liberalized mortgage insurance provisions for veterans who have not received benefits under the VA housing program is estimated to result in the receipt of 25,000 applications for home mortgage insurance in the current fiscal year. Veterans may obtain loans for as much as 100 percent of the value of the property up to $15,000, plus 90 percent of the value over $15,000, but not over $20,000, and 85 percent of the value above $20,000. These terms are significantly more advantageous than those available to nonveterans under the regular FHA home mortgage insurance program. Summarized below |