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portions of the housing program, and we are all available to attempt to answer your questions on any phase of the legislation.

Thank you.

(The prepared statement of Mr. Reed follows:)

STATEMENT BY JOHN J. REED, DEPUTY ASSISTANT SECRETARY OF DEFENSE (FAMILY HOUSING)

Mr. Chairman, members of the committee, it is indeed a pleasure to appear before this committee again this year. Secretary Ignatius' statement at the beginning of these hearings covered the highlights of the military family housing program. It is our purpose to cover the legislative proposals in title V of the bill. As usual, representatives of the military departments are present and will be ready to answer any questions on the specific items in the bill at the completion of this statement.

Although this committee is well aware of the basic objectives and policies of the military family housing program, we would like to take just a moment to reiterate these basic precepts.

The Department's primary mission in the field of housing is to assure that our service families are adequately sheltered. This responsibility is fulfilled by whatever reasonable means, either private or public which are available to us. We are well aware of the tremendous resources made available to us in the past by the Congress and that it is this support which has generated our current inventory of 338,000 units of public quarters. These assets have done much to im-prove the livability conditions of these career military families.

In the realm of private support, many of the service families have been able to find satisfactory housing. However, we have concluded it is not reasonable to expect these servicemen to be forced to purchase homes in order to provide shelter for their families and as a consequence we do not classify "for sale" housing as a potential solution for the military family's housing problem.

We do not believe that the military family, which is subject to the call of their Government for reassignment every 2 or 3 years, should be required to assume the risks of homeownership which many people with an occupation that provides a more stable location readily assume. Accordingly, we consider only vacant rental housing as available for potential occupancy by military families when we survey a community. Naturally, if a military man chooses to purchase a house, we have no objection and he is classified as being adequately housed.

Mr. Chairman, we attempt to utilize the community to the greatest extent possible. In fact, we prefer that the greater portion of our people live in the community. Our reliance upon the community is, of course, subject to several necessary exceptions:

First, there are certain military personnel who must live on base because of their military responsibilities.

Second, in many instances because of the remoteness of our military installations, there is little or no community support available.

Third, there are situations where either the quality of the community support, its location, or its cost create a distinct hardship for military personnel, and it becomes necessary to help alleviate these hardships.

It is these exceptions which cause us to have a sizable annual housing new construction program.

In the bill before you we are requesting authorization for 12,500 new family housing units. This is about the same level that we have asked for in the past few years. The committees have not been able to support our total requests in the past, and we fully recognize that there are valid reasons from their point of view which have necessitated their position on the matter. We do hope that in the future, conditions will be such that we can gain approval for the allocation of resources which the Department believes is necessary.

We feel that there are three basic reasons why the Government should see that the military forces are adequately housed.

The first of these is that decent living conditions create a better professional military man-with his mind at ease regarding his family problems, he is better able to devote his entire being to his military mission. Although I am sure that we all can cite instances where a commendable performance by a military man was accomplished under adverse personal conditions, I think we would all agree that it is better if the men responsible for controlling our complex and sophisticated modern weapons systems are not beset with anxiety over their family's housing conditions.

Second, we feel that the Nation has an obligation to provide decent living conditions for the family of the military man who has pledged to risk his life for the common defense. We feel that adequate housing for his family is a small price to help pay for this type of dedication.

Third, decent living conditions make a military career more attractive-it assists the military forces to retain qualified personnel in competition with higher paying civilian careers.

It is this last point which we would like to discuss with you. This committee has heard from various witnesses during the posture hearings about the low rate of retention of junior officers and the low reenlistment rates. This decline in our ability to retain our highly skilled and trained personnel is a matter of record and is a concern to all of us. You have also been advised by many people over the years, including this witness, that adequate family housing is one of the foundation stones required to enhance career attractiveness. We have gone further, and stated that additional military family housing would increase our retention rate. We are convinced that adequate housing is a critical factor in a man's choice of career.

Unfortunately, we have not been able to back up this contention with any correlation of the facts available to us. We have attempted repeatedly to find a direct correlation between retention rates and family housing. All of our efforts to date have been to no avail. Mr. Chairman, as you are aware, a man's decision to either make a career of the military service or to return to civilian life is a complex one based upon many factors of which the family living situation is but one.

Thus, we are in no position to prove that an increase in adequate military housing will assure a direct increase in retention rates. We know that it is a factor in making a military career more attractive but how big a factor is unknown.

We feel, however, that the Government must make the assumption that it is a significant factor and take a chance on the correctness of that assumption. If additional family housing can possibly stem the awesome ebbing tide of talent which is flowing from the services, it is well worth the investment involved in providing the 12,500 units requested. We are hopeful that the committee will be able to support the requested new construction program and to take this gamble with us. Perhaps adequate housing may be the key to reversing the trend of great numbers of our highly skilled people leaving the military service.

We wish to assure you that each of the projects presented for authorization has been reviewed in detail and constitute our most urgent needs. Appended to this statement are the pertinent statistics and our analysis of each of the projects for new housing units.

We are also requesting authorization for 600 trailer court spaces, 200 for the Navy and 400 for the Air Force. Where our military personnel who own trailers are not able to find adequate trailer court facilities in the community, we try to provide adequate facilities on-post. These trailer spaces are rented to the military personnel and the investment cost is amortized over a 15-year period. Another major category of our housing program concerns improvements to adequate quarters. This year, we are requesting $18.2 million for this purpose. This amount of money represents about one-third of 1 percent of the acquisition value of our existing housing inventory. We feel that it is good business management to invest this percentage of value of our houses annually to update and modernize our aging inventory. This investment prevents block obsolescence and extends the useful life of our existing housing assets.

We are also asking for authority to relocate 200 units of relocatable housing from Glasgow Air Force Base, Mont., to other military installations where there are housing shortages. Glasgow Air Force Base will be phased out and reported as surplus to the General Services Administration by July 1968; therefore, we need the authority now to go forward with the relocation of these units in an orderly fashion before that date.

It was against such a contingency as this, coupled with a high order of program, that led us to the determination in the past that the project to be built at Glasgow would be "relocatable" housing. This housing is designed to be folded up and to be moved to another installation. Although we must leave some investment, such as foundations, behind, we are able to recoup a major portion of our investment. We estimate the cost of relocating the 200 units from Glasgow at $1.5 million.

Taking into account the above proposals and the categories of minor construction and planning, we are requesting authorization for appropriation for construction related functions of $245.9 million.

Additionally, for support of military family housing, including operating expenses, leasing, maintenance, and payment of debt and insurance premiums, we request authorization for appropriation of $489.7 million. This amounts to a total request for authorization of $735.6 million to cover all costs of the military family housing program.

We would like to explain some of our other legislative proposals which are in the bill before you. In section 502(a), we are requesting a change in the cost limits for housing for general officers. We currently have statutory limitations on both unit cost to the 5-foot line and square footage for the various ranks of intended occupants of the housing. Working these limits out as a cost per gross square foot indicates that most ranks of officers and all enlisted housing exceeds $10 per gross square foot. Only the housing for general officers is limited to less that $10 per square foot ($9.68 to be exact). We wish to raise the cost limit to the 5-foot line on general officers housing from $24,000 to $26,000 in order that we may build as much quality into this category of housing as we do for all other military family housing. Concomitantly, we request that the total cost limitation in section 502(e) be raised to $32,000 to accommodate the proposed cost limitation increase to the general officers housing without penalizing site preparation or other supporting features.

We are also requisting a change in section 502 (d). Previously, we had a limitation of an average unit cost of $17,500 per project. We propose that in lieu of a project being the controlling increment, that this average unit cost limitation be applied to each military department's domestic program. This would allow the departments to take advantage of varying cost indexes, which fluctuate by geographical location, and develop a comparable house with equal features of livability anywhere within the country. Currently, we frequently find that we must compromise various desirable features on houses in the North or in high-cost areas whereas in low-cost areas or milder climate zone we can obtain these well within the cost limitations. An average cost limitation by military departments will allow the department to smooth out these differences and produce a better and more uniform quality product.

We also request that the housing for the U.S. Military Academy at West Point be excluded from the $17,500 cost limitation. At West Point, two factors work against us. One is the high cost of labor which is the same rate as that of New York City and, second, the very rocky and steep terrain. The only available sites suitable for family housing involve placing foundations in rock and moving rock for both the installation of utilities and the construction of the necessary roads. We propose that the total average cost of the units at West Point not exceed $36,000. The last time we constructed housing at the Military Academy (in 1960) the total average cost of the units was $37,627. In section 503, we propose a special exemption to existing cost and space limitations in order that two sets of representational quarters may be acquired. These quarters would be constructed or purchased for the commander in chief, North American Air Defense Command, Colorado Springs, Colo., and the commander in Chief, Strike Command, MacDill Air Force Base, Fla. of these positions involve exceptional representational responsibilities for the benefit of the United States, requiring dealings with the highest Government officials and foreign dignataries. It is considered essential that adequate quarters which contain the space and accouterments to properly discharge the occupant's representational responsibilities, and which reflect the prestige of the United States be established for these positions. We request authorization of $100,000 for each of these sets of quarters whether they be constructed or purchased.

In section 505, we are requesting a 1-year extension to the domestic leasing program. We are not requesting a change in the existing average lease cost of $160 per month but are asking that this average unit limitation be placed upon the military department's overall leasing program rather than on an individual unit as is now the case. The departments have had difficulty administering the leasing program under an average cost limitation per unit and have frequently had to cancel specific leases before expiration in order not to exceed the statutory limitation even though other leases in the same area were running less than the average unit cost limitation. Such cancellation have an adverse impact upon the military families accupying the leased unit and seriously impair our ability to convince the occupants that the Government is interested in their well-being and has their best interest at heart. We also seek authority to enter into 7,500 leases with the option of a multiple-unit basis or a single-unit basis rather than the 5,000-unit limitation on an individual lease basis which currently exists. The Department of Defense feels that a sound domestic leasing program offers a desirable alternative to construction of new housing in some circumstances. To limit the program to tactical use or where the requirement is of short tenure removes most of the flexibility of the program. Although we heartily agree that the leasing program is a valuable asset in those situations of uncertain tenure, we feel that there are additional uses which could be made of the program which would accrue to the benefit of the Government. The prime example is in the case of some metropolitan areas. We have found that with the extremely high price of land and the high cost of labor, that there are situations under the existing authority where it is just not possible to build military family housing. In these situations, with the high price of real estate, the military man finds that he too cannot afford to adequately house his family. The Department of Defense currently can offer him no relief from his dilemma. He must either suffer extreme financial hardship, remain separated from his family, or live with his family in the slums of the city. A liberalized leasing program would give one further alternative which would help to rectify the situation of such an individual. Mr. Chairman, we know that you and the members are aware that an expanded leasing program is not an exclusive solution to this classic case that we have outlined. Over the years many solutions have been discussed by the Congress and the departments. These range from changes in assignment policy, to an increased basic allowance for quarters, to a basic allowance for quarters indexed to the cost of living of the geographical area of assignment.

Unfortunately, none of these possible solutions are beyond the discussion state and none, to the best of this witness' knowledge, are currently seriously being considered by the Congress. Thus, our only immediate solution for the military man assigned to the extremely high cost area is to provide an expanded leasing program or continue to ignore his dilemma.

Further, the Department of Defense is convinced that under a liberalized leasing authority that would allow us to enter into an agreement for a number of units for a specified period of time that we could "strike a bargain" which would be in the financial interest of the Government. By this, we mean that perhaps under such an arrangement we could reduce the unit cost beneath the basic allowance for quarters and well beneath the price that the individual serviceman would have to pay for an individual lease.

Naturally, such a supposition on our part is somewhat speculative. We think that we could do this, but we really don't know; we have never had the authority to enter into such an arrangement. We think that the experiment is well worth trying. All we ask is the authority to negotiate a lease which will have such a purported advantageous arrangement. If it won't work, we will be the first to admit it. If it will work, the Government will have made a great step forward in solving a most perplexing problem. We think it is worth a try.

We are convinced that if we are permitted to utilize the leasing authority on a more liberalized basis, including leasing in metropolitan areas, that we can exhibit the advantages (or the disadvantages) of the leasing program to the Congress in a short period of time.

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Finally, title V would continue in effect during the next 2 fiscal years the 5,000-unit limitation on rental guarantees continued in the present law. We have high expectations that this program will start producing sizable numbers of oversea housing units in the near future.

This, then, sums up the legislative proposals for title V.

In conclusion, we would like to take this opportunity to express to you the appreciation of the Department of Defense for the committee's continuing support of the military family housing program. We know we share a mutual objective of having the program respond to the needs of our servicemen and to aid career retention, while at the same time assuring that it is managed in an economical, businesslike fashion.

This committee, in particular, has been extremely helpful to us in the establishment of sound accounting and management procedures, and for this assistance we are most appreciative. Representatives of the three military departments are present to discuss their respective portions of the housing program, and we are all available to attempt to answer your questions on any phase of the legislation.

Thank you.

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