Mr. MILES. The Housing and Home Finance Agency, or rather the Federal Security Agency will have to work very closely with the Housing and Home Finance Agency. We have already good working relationships with them and these will have to be considerably extended. We might indicate to you the various steps that will have to be gone through in connection with each project.

First, an area will have to be designated as critical. That involves a number of steps in itself. The second procedure that we will go through will be to receive from the various communities which are designated as critical requests in the form of project applications. The Housing and Home Finance Agency will also receive project applications in connection with their parts of the law. When these project applications are received, we will obtain from the State departments of health-if they are health applications-their recommendations on these projects. Most of the State health departments have some legal responsibilities in respect to the water purification, sewage treatment works, and hospital plans. So we, obviously, want to bring them into the picture and get their recommendations upon them.

Then, when we have them screened and have the State recommendations, we will establish criteria of priority here in Washington and will deal closely with the Housing and Home Finance Agency. The highest priority will, of course, be given the projects which involve the provision of utilities-the essential utilities, the water purification plants, the sewage treatment works and so on-for whatever housing is built in these critical areas under this program, so that we will be working particularly closely with the Housing and Home Finance Agency in that area.

We will have a project review committee within the Federal Security Agency and I assume we will meet from time to time with the Housing and Home Finance Agency to make sure that the projects of the highest priority in the areas which are most critical will receive the highest attention.

That is our general operating procedure.

REQUIREMENTS FOR INCLUSION ON CRITICAL AREA LIST

Mr. FOGARTY. What are some of the factors that will lead up to an area being declared critical and included on the list? What steps are taken?

Mr. MILES. The law established three criteria:

(1) A new defense plant or installation has been or is to be provided, or an existing defense plant or installation has been or is to be reactivated or its operation substantially expanded;

(2) Substantial in-migration of defense workers or military personnel is required to carry out activities at such plant or installation; and

(3) A substantial shortage of housing required for such defense workers or military personnel exists or impends which impedes or threatens to impede activities at such defense plant or installation, or that community facilities or services required for such defense workers or military personnel are not available or are insufficient, or both, as the case may be.

The second and third criteria involve the determination of facts and exercise of judgment. We will be involved in surveys of the local community situations in order to determine just what the shortage of community facilities is and what the most economical and expeditious way of remedying that shortage will be. So, we will participate with the Housing and Home Finance Agency in these determinations of the extent of shortage of community facilities and the ways of meeting these shortages.

CONSIDERATION OF BENEFITS TO LOCAL AREAS

Mr. FOGARTY. Is there anything in the law that recognizes and takes account of the benefits to a local community because a military installation or defense plant has been put there?

Mr. MILES. There is nothing in the law on that subject, no sir. To the extent that there are important benefits I think that would be taken into account in administering what we sometimes refer to as the "means test" which will have to be administered in respect to each loan or grant which is made to a local community.

CRITICAL AREAS NOT YET DETERMINED

Mr. FOGARTY. And the President is required to make this list of critical areas, is he not?

Mr. MILES. The law vests in the President the responsibility for making the determination of critical areas.

Mr. FOGARTY. What has he done?

Mr. MILES. The proposed Executive order, which I am quite sure has been agreed upon, delegates to the Director of Defense Mobilization, Mr. Wilson, the responsibility for designating critical areas under Public Law 139. The old Interagency Critical Areas Committee is being reconstituted in the Defense Production Administration. That committee has met and is in the process of making recommendations for designation of critical areas under Public Law 139. I would expect within a few days the first designation will be made.

Mr. FOGARTY. Up to this point, none has been made?
Mr. MILES. As of today, none has been made.

Mr. FOGARTY. So you actually do not know which areas will be determined to be critical?

Mr. MILES. We do not know precisely. We do have a pretty good idea that the majority of those which were earlier listed as the 42 critical areas which were designated for the purpose of relaxing credit restrictions will be on the initial list of critical areas for the purposes of Public Law 139.

LOANS AND GRANTS PROVISIONS

Mr. FOGARTY. As I understand the law, you also have the power to make loans and to make grants. Who will determine whether a grant should be made or a loan?

Mr. MILES. That will be made by ourselves in consultation with the Housing and Home Finance Agency on this sort of a basis. If a project is of a character which is self-liquidating, and if for any reason such as a debt limit, the local community cannot provide the

necessary funds and cannot even borrow the necessary funds, then we might well make a loan to that community in view of the fact that the project is a self-liquidating one. We will exhaust first the possibility of making loans and if a community is in such a position that it could make a repayment of the loan without an excessive tax burden or an excessive debt, then a loan will be made.

If on the other hand an excessive tax burden would be imposed or an excessive increase in the debt incurred, the community would become eligible for a grant.

COMMUNITY RESPONSIBILITIES

Mr. FOGARTY. How would you determine whether it was excessive or not?

Mr. MILES. That is going to be a difficult thing to do. The Housing and Home Finance Agency has a staff of people at present who are working on that subject. They also in their portion of the estimate have asked for funds to do that job. We propose to hire them to undertake our portion of the responsibility and there is $50,000 in this estimate for transfer to the Housing and Home Finance Agency to do the work that is necessary in order to determine whether or not a tax burden is excessive.

They have to go down to the local community to make an analysis of the local community budget. They already have data collected on the average tax burdens, the spread of tax burdens throughout the United States and they will have to arrive at a point which is determined to be excessive. It will be a high point well above the average. I do not know that it will be the highest point of all tax burdens. In fact, I would assume it would not be. But it will be a point based on careful studies which they will make and will be very substantially above the average tax burden of the United States.

Mr. FOGARTY. Will the loans be interest-bearing?

Mr. MILES. Yes. Mr. Snyder, I am a little uncertain on that point.

Mr. SNYDER. Interest in such amounts as the Administrator may determine to be in the public interest. It is not specified in precise terms.

Mr. HEDRICK. What amount should that be? There should be some rate set for interest to be paid, should there not?

Mr. MILES. I would have no personal knowledge of what that would be. I think that will be worked out as between ourselvesthe Housing and Home Finance Agency and the Treasury. We will consult with them and determine that.

Mr. HEDRICK. About what do you think it would be?

Mr. MILES. I would assume it would be somewhere in the neighborhood of 21⁄2 to 3 percent.

Mr. FOGARTY. Would it be possible for local bond issues to handle this situation in some of these areas?

Mr. MILES. Yes, Mr. Chairman, I would assume that in many areas local bonds will be issued. In virtually all these areas, the first resort will be to local bond issues. If they show evidence of having done everything that they reasonably can to provide adequate facilities before the Federal Government helps in the financing and one of the first things to be looked into will be the availability of loans to take

care of local needs. I am sure that the amount of money involved in this estimate is such that it contemplates that the vast majority of the whole job of providing community facilities and services in critical areas throughout the country will be borne by the local communities.

FACILITIES PROVIDED FROM MILITARY APPROPRIATIONS

Mr. FOGARTY. What would this program affect most-military installations or defense installations? Are there more military areas to be affected or areas where there are defense industrial installations? Mr. MILES. I would think at the outset in terms of numbers, you would have a smaller number of areas in the category of industrial defense areas and a larger number of areas of military impact. But the areas of the industry would be much larger in size than the average. There are many military areas where military camps are close to smaller towns and the impact on the small towns is terrific. On the other hand you have larger industrial areas such as the Savannah River area which would be involved right at the outset. I would say that by and large you would have more military areas numerically though I am not sure that the majority of the funds would necessarily go into them.

Mr. FOGARTY. Do not the military departments provide recreational and health facilities for these people in military installations?

Mr. MILES. They do on post but they do not provide recreation facilities for military personnel in the towns, in the nearby communities, or for the families of military personnel.

In that connection I would like to point out that the USO will be undertaking a drive this fall starting next month in conjunction with the community chest all over the Nation asking for about $14 million to provide various kinds of services including recreation to military personnel in the areas adjacent to military camps and so on. It is the policy of the USO to spend their money on services and not on facilities. So there is an acute need expressed by the military establishment for recreation facilities in some of these isolated areas adjacent to military camps and installations. As a matter of fact we have a letter from an official of the Department of the Air Force which lists 12 areas which are in acute need right now of recreation facilities where the number of military personnel and their families so greatly overburden the local community that they are almost at their wits, end.

Mr. FOGARTY. They do not provide near enough recreational facilities on a base to take care of personnel?

Mr. MILES. Certainly not. They do not provide facilities on a base for the families of military personnel living off post.

Mr. FOGARTY. In other words, any money appropriated by Congress for the military for these purposes is just for the facilities on the base itself.

Mr. MILES. Yes. I would like to check that with Mr. Snyder. Mr. FOGARTY. Now, they would have no authority to spend any of outside the base area?

this money

Mr. MILES. To the best of my knowledge, no.

Mr. FOGARTY. Would you happen to know what is the basis for the $60,000,000 authorization?

Mr. MILES. No, sir. I am afraid I do not. That was set by the Congress.

AGENCY REQUEST TO BUDGET BUREAU

Mr. FOGARTY. How much did you request from the Bureau of the Budget?

Mr. MILES. I believe the figure was $44,000,000. It was approximately $44,000,000.

Mr. DENTON. Is that for next year?

Mr. FOGARTY. No. For this year. For this new law.

What did you request of the Bureau of the Budget?

Mr. BROWN. $44,000,000.

Mr. FOGARTY. And they allowed you $25,500,000?

Mr. MILES. Yes. I believe the theory was not that the need was not sufficient to require over the span of the law the $60,000,000. But the reason why less than the full $60,000,000 was sent to the Congress was that the amount sent forward now would provide a sufficient amount to get the program moving and then when Congress reconvenes in winter and spring the factual basis upon which we can determine how much money is needed and where it is needed, will presumably be more fully available than it is now. It will then be possible to do a better job of budgeting with the remainder of the

money.

HOSPITAL FEATURES OF PUBLIC LAW 139

Mr. FOGARTY. What about the hospital features of the law? How do they relate to the Hill-Burton Act?

Mr. MILES. I would like to have the Deputy Surgeon General, Dr. Dearing, speak to that.

Dr. DEARING. Mr. Chairman, the hospital facilities authorized in the act we take to be those particularly related to the defense buildup, in-migration as a result of defense activities over and above the normal needs of the community which the Hill-Burton Act is designed to take care of and which are estimated in the plans and provided to the extent that funds are available both from the Federal appropriations and the State and local funds. In other words, the authorization under this we take to be special needs over and above those contemplated under the Hill-Burton Act.

Mr. FOGARTY. What are the special needs?

Dr. DEARING. The needs for hospital beds as a result of these population shifts are sort of related to defense.

Mr. FOGARTY. How many new hospital beds do you expect will be needed under this program?

Dr. DEARING. Well sir, we can only give indications from the results of the areas which we have studied as Mr. Miles indicated. Those we have set forth in our justification of the budget are not precisely, necessarily, those areas which will eventually be designated critical although we would expect that practically all of them would be. On the basis of our own planning and on the basis of information and advice from the Department of Defense, we have studied 50 areas which we refer to in our justification and in those areas, making allowance for the beds planned, not necessarily there under the HillBurton Act, and assuming they were all there, we find shortages of 3,000 beds in addition to the Hill-Burton plan beds in these 50 areas.