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427,142 400,592 396,974

-382,410-381,891 -381,536


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and donations, affecting deficit.....


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1.910 12,029

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20,838 18,182 15,083 13,938

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1966 estimate



Federal assistance to local governments for acquisition, clearance, redevelopment, and rehabilitation of slums and blighted areas was authorized by the Housing Act of 1949, as amended (42 U.S.C. 1453). Federal grants may defray two-thirds of the net project cost, except in cities with a population of less than 50,000 (or 150,000 if located in a redevelopment area as designated by the Area Redevelopment Administration) where the Federal share is threefourths for projects approved after June 30, 1961.

The authorization to make contracts for urban renewal grants now totals $4,725 million, of which $25 million was provided for emergency projects in Alaska following the earthquakes of early 1964. The unexpended balances of the $25 million made available for mass transportation demonstration grants by the Housing Act of 1961 is being transferred to the Urban mass transportation fund. Temporary project financing and long-term financing of land disposed of under lease agreements through direct or 115 guaranteed loans are provided from a Treasury borrowing authorization of $1 billion.




During the current fiscal year not to exceed [$110,000 $115,000

shall be available for administrative expenses, but this amount shall be exclusive of expenses necessary in the case of defaulted obligations to protect the interests of the Government and legal services on a contract or fee basis and of payment for services and facilities of the Federal Reserve banks or any member thereof, any servicer approved by the Federal National Mortgage Association, the Federal home-loan banks, and any insured bank within the meaning of the Federal Deposit Insurance Corporation Act, as amended (12 U.S.C. 1811-1831). (Independent Offices Appropriation Act, 1965.)

Program and Financing (in thousands of dollars)

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For an additional amount for payment of grants as authorized by title I of the Housing Act of 1949, as amended (42 U.S.C. 1453, 1456), [$200,000,000 $331,000,000. (Independent Offices Ap

propriation Act, 1965.)

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Contract authorization (unreserved).

21.49 Unobligated balance available, start of year:

23.49 Unobligated contract authority transferred to Urban mass transportation fund (12 U.S.C. 1749; Public Law 87-70; Public Law 87-365): Contract authorization (unreserved)..

24.49 Unobligated balance available, end of year:

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Contract authorization (reserved).

Contract authorization (unreserved).

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Contract authority.


Fund balance..

73.98 Obligated balance transferred to Urban mass transportation fund (12 U.S.C. 1749; Public Law 47-70; Public Law 87-365)

Obligated balance, end of year:


Contract authorization....


Fund balance....

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-1,451,227 -1,672,230 -1,737,230 -656,965 -10,176 -769,457

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1 Balances of selected resources are identified on the statement of financial condition.




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Unfunded balance brought forward..
Contract authorization transferred to
urban mass transportation fund (12
U.S.C. 1749; Public Law 87-70;
Public Law 87-365).
Contract authorization.

Unfunded balance carried forward.

Appropriation to liquidate contract authorization:

1964 actual

1965 estimate


1966 estimate

June 30,


1964 actual



1966 estimate

Projects approved for loan and grant..
Projects completed (Federal closeout).
Projects active, end of year..









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2. Relocation.-Grants also are provided to reimburse the community for relocation payments made to cover 2,911,219 4,105,500 moving expenses of families and businesses displaced from urban renewal areas, including actual direct losses of property not otherwise compensated for. A maximum of $200 per family and the actual certified costs, not in excess of $25 thousand per business are allowable. In addition, 2,911,219 -4,105,500-3,774,500 legislation enacted as a part of the Housing Act of 1964 provides relocation adjustment payments to families, individuals and small businesses under certain circumstances to ease the burden of relocation.

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Budget program.-New reservations and adjustments in existing, reservations will total $760 million net in 1966. This assumes the enactment of $675 million in additional authorization in 1965. An administrative reservation of contract authority for grants is made at the time of approval of each urban renewal project (including the estimated cost of relocation payments), community renewal program, and urban renewal demonstration.

1. Projects.-Urban renewal projects are usually approved for grant reservation at the beginning of the planning period. In the case of general neighborhood renewal plans, which cover a larger or more complex area from which more than one project is expected to develop, reservations are made for the first project when approval is initially given for preparation of the overall plan. The reservation assures the availability of grant assistance when it is needed after the substantial community activity required for planning an urban renewal project. The following table reflects planning activity for urban renewal projects, including general neighborhood renewal plans:

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4. Community renewal.-Federal grants are available to pay up to two-thirds of the cost incurred in preparing a local community renewal program covering the full range of urban renewal action required to meet needs on a citywide basis. All the deteriorated and deteriorating areas of the city can be identified and classified as to the relative urgency and degree of urban renewal action needed. The locality's resources for taking urban renewal action can be established and the community can develop a long-range program for urban renewal, including provision of related public improvements. The following table shows estimated community renewal activity (dollars in millions):

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Progress and final grant payments for urban renewal activities are expected to reach a cumulative total of $1,623 million by the end of 1966, requiring a grant appropriation of $331 million in the budget year. 6. Alaska disaster. The 1964 amendments to the Alaska Omnibus Act (Public Law 88-451, approved August 18, 1964) provided $25 million of contract authorization for urban renewal projects to aid in the reconstruction and redevelopment made necessary by the March 1964 earthquake. The Federal share of net project costs project area has either been rendered unusable by the may be increased up to 90% if a major portion of the disaster or is needed for new locations for those displaced by the disaster.

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1 Balances of selected resources are identified on the statement of financial condition.

Budget program.—The Treasury borrowing authority of $1 billion is available for loan assistance to finance the planning and execution of urban renewal projects through the following types of commitments:

1. Planning advances.-Advances provide for costs directly associated with project planning. They are repayable, with interest, from funds made available to the projects during execution.

short-term direct

2. Temporary loans.-These are Federal loans to provide initial financing for projects under contract. Thereafter, the local public agency generally relies upon private borrowings secured by pledge of the Federal loan commitment. Temporary

155,970 214,311 252,600 -135,203 -184,535 -227,420

loans are repaid from the proceeds of land sales and from local and Federal cash grants.

3. Definitive loans.-Definitive loans permit the disposition of project land through long-term leases in lieu of sale, at the option of the community. In such cases, commitments are issued to secure private financing for the net value of redeveloped land.

The loan commitments cover total expenditures by the local public agency in carrying out the project. Both the statute and experience recognize that only a minor portion of the Federal loan commitment is outstanding at any one time as direct Federal loans, and demand on Federal funds will not equal or even approach commitments made

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because: (a) project expenditures take place over several years; (b) early borrowings are progressively retired with funds provided from local and Federal grants and from the sale of land; and (c) private financing (guaranteed with a pledge of the Federal loan commitment) is relied upon as the major source of funds for temporary loans and definitive loans. Cumulative loan commitments will be $4,956 million by the end of 1966 but this amount will be reduced by $1,613 million in repayments and commitment waivers resulting in a net outstanding commitment of $3,343 million. The maximum Federal exposure (i.e., maximum demand for Federal loans at any one time) is estimated at $658 million on June 30, 1966.

The following table shows the status of loan commitments outstanding at the end of each of the years covered by the budget (in thousands of dollars):

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Loans and planning advances:

Net income for the year. Analysis of retained earnings: Retained earnings, start of year. Retained earnings, end of year..




5,004 6,650


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2,126,941 151,013 1,179,923 1,487,753 796,005 1,049,984

2,719,235 181,498

3.343.535 207,478


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Government equity:

1,856, 173

Interest-bearing capital:


Start of year..

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Borrowings from

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Financing. Borrowing authority previously committed is replenished by means of: (a) Repayment of planning advances; (b) repayment of temporary loans from project settlement funds (which include proceeds from the sale of land and Federal and local grants); (c) cancellation of temporary loan commitments; and (d) retirement of commitments due to the repayment of guaranteed nonFederal loans from project settlement funds.

The ratio of Federal exposure to temporary loan commitments set by the Administrator is estimated at 18% in 1965 and 1966. Planning advance commitments are included at 75%. Repayments of Federal temporary loans from the proceeds of non-Federal guaranteed loans, estimated to total $146 million in 1966, are reflected on the program and financing statement; such repayments act as receipts affecting budget expenditures, but from an obligation standpoint result in an increase in undisbursed commitments.

Operating results.-The use of grant appropriations is authorized to repay Treasury borrowing otherwise unrecoverable due to losses on planning advances and interest for terminated projects. The deficit resulting from capital grant payments and from uncollectible planning advances for terminated projects has been offset by the appropriation of funds for such purpose as shown in the following table (in thousands of dollars):

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