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Mr. CASE. In that connection, on public housing, at least, the Government has been making contribution to local tax authorities in lieu of taxes. Now, what will be the status of this public housing after it is declared surplus; will the Government continue any responsibility for making contributions in lieu of taxes after the property is once declared surplus?

Colonel HowsE. Mr. Case, I think, again, that will depend on the particular category of housing. You will recall, I am sure, that in the act itself certain specific exceptions are made of existing legislation, one of which is the Lanham Housing Act. I think that would be a legal matter that I am not either qualified to determine for you now, nor am I in a position to make any comment on it.

Mr. CASE. The National Housing Agency is the designated agency to dispose of housing property?

Colonel Howse. That is correct. The Federal public Housing Authority I think is the designated agency.

Mr. Case. But even if it is the designated agency to dispose of its own property, will it not go through the step of making a declaration of surplus first?

Colonel Howse. Yes.
Mr. CASE. To the Board?

Colonel Howse. Yes; it will, except in the cases that are specifically exempted in the act. Just what categories they include, I do not know.

Mr. CASE. Well, it seems to me that that point should be determined and the committee should know, because the policy of sales will be dictated, in part, by the costs of holding; and if the contributions which these public-housing properties have been making are to continue after they have been declared surplus, we will be creating quite a liability there.

Colonel Howse. The contributions will certainly have to be considered as part of the cost of care and handling the property. There is no question about that.

Mr. CASE. But when property is owned by the Federal Government, it can claim immunity. In fact, it does have immunity except where liability is recognized in the law. Tax liability was recognized, and, in lieu of that, contribution was provided by the Federal Government. I would appreciate it if you would check up on that.

Colonel Howse. Yes.

Mr. CANNON. You can include your reply in the transcript when you revise your remarks.

Colonel Howse. Thank you.

(The following statement was supplied by Norman R. Miller, associate general counsel of the Federal Public Housing Authority:)

Section 306 of the Lanham Act (Public, 849, 76th Cong., as amended) provides

"Sec. 306. The Administrator shall pay from rentals annual sums in lieu of taxes to any State and or political subdivision thereof, with respect to any v property acquired and held by him under this Act, including improvements themes The amount so paid for any year upon such property shall approximate the tas which would be paid to the State and or subdivision, as the case may bè, upon ser: property if it were not exempt from taxation, with such allowance as mar the considered by him to be appropriate for expenditure by the Government or streets, utilities, or other public services to serve such property. As used in section the term State' shall include the District of Columbia.” [Italics support

The necessary funds to defray our obligations for payments in lieu of taren housing property subject to the Lanahm Act as well as expenses of operation

maintenance and expenses found necessary in the disposition of any such property or the removal of temporary housing are sequestered in accordance with the provisions of section 303 of the Lanham Act which provides as follows:

"Sec. 303. Moneys derived from rental or operation of property acquired or constructed under the provisions of this Act, or Public Laws Numbered 9, 73, and 353, Seventy-seventh Congress, and of section 201 of the Second Supplemental National Defense Appropriation Act, 1941, as amended, shall be available for expenses of operation and maintenance and expenses found necessary in the dis position of any such property or the removal of temporary housing by the Administrator, including the establishment of necessary reserves therefor, and administrative expenses in connection therewith: Provided, That moneys derived by the Administrator from the rental or operation of any such property may be deposited in a common fund account or accounts in the Treasury: And provided further, That except for necessary reserves authorized by this Act or by section 201 of the Second Supplemental National Defense Appropriation Act, 1941, as amended, the unobligated balances of the moneys deposited into the Treasury from the rental or operation of such property shall be covered at the end of each fiscal year into miscellaneous receipts.' (Italics supplied.)

It is our view that the obligation to make payments in lieu of taxes with respect to housing property subject to the Lanham Act continues so long as the housing property is held by the National Housing Administrator; that is, until such housing property is disposed of by him.

War housing and facilities which are subject to the provisions of the Lanham Act are exempt from the provisions of the Surplus Property Act by virtue to the savings clause embodied in section 34 of the Surplus Property Act. In this connection it has been the interpretation of the Board (with which we concur) that property acquired under the provisions of the Lanham Act which is not considered to be "housing property” such as unimproved real estate, does not come within the meaning of “war housing and facilities” as set forth in section 34b of the Surplus Property Act and therefore such “nonhousing property" is subject to the provisions of the Surplus Property Act. According to our view, when unimproved Lanham Act real property is declared surplus by the National Housing Administrator and assigned to the Surplus Property Board for disposition such real property is no longer held by the National Housing Administrator under the Lanham Act and the obligation of the Government to make payments in lieu of taxes thereupon ceases.

By virtue of SPB Regulation 1 the National Housing Agency is the disposal agency for all surplus property of other agencies of the classification of housing property. Most of such housing property of other agencies is immune from taxation and there is no legal obligation to pay sums in lieu of taxes with respect thereto; however some of such housing property of other agencies is subject to taxation. For example, Defense Plant Corporation has developed a number of war housing projects; we understand that all of the real property of R. F. C. and of its subsidiaries is subject to taxation. There may be surplus housing property held by other Government corporations which is similarly subject to taxation. With respect to the surplus housing property of such corporations it is believed that the liability to pay taxes will continue even after such property is declared surplus and assigned to another agency of the Government for disposition.

DISPOSITION OF NEWSPAPERS ESTABLISHED IN GERMANY

Mr. Ludlow. There is one more question I would like to ask, which is a rather difficult question to answer, perhaps, and that is, if newspapers are established in Germany as part of the operation over there, and to serve a temporary purpose, when they have served that purpose and they are to be disposed of, would they be declared surplus property and liquidated thfough your agency?

Colonel Howse. To give you a horseback opinion, Mr. Ludlow, I would say they would be.

Mr. LUDLOW. They would be?
Colonel Howse. Yes, sir.

RIGHTS OF VETERANS UNDER THE SURPLUS PROPERTY ACT

Mr. WOODRUM. I was interested in your reply to Mr. Ludlow about the rights of veterans. Section 16 of the act provides:

The Board shall prescribe regulations to effectuate the objectives of this Act to aid veterans to establish and maintain their own small businesses, professional or agricultural enterprises, by affording veterans suitable preferences, to the extent feasible and consistent with the policies of this Act, and the acquisition of the types of surplus property useful in such enterprises.

Mr. LUDLOW. What act is that?
Mr. WOODRUM. The Surplus Property Act.

That would seem to contemplate that the congressional intent was that the veterans should have a preference.

Mr. McNAMARA. In establishing and maintaining a business. It is confined to that, Congressman.

Mr. LUDLOW. Suppose the purchases were essential to the establishment of the business, would that put him in a preferential class? Mr. WOODRUM. It is to aid veterans to establish and maintain their

businesses, professional or agricultural enterprises. Likely a farmer could either get farm machinery, a truck or an automobile or whatever he needed.

I was surprised to hear that there was any doubt about veterans having a pretty definite preferential right.

Colonel Howse. I might delineate further in my remarks, if I may. I think I stated that the veteran was not regarded as having a prior right of purchase in the same manner that the Federal, State, and municipal governmental agencies are accorded prior rights of purchase. He may be accorded preferential treatment which probably will be a price preference. The question then immediately arises whether a veteran should be given a discount specifically, or a lower price than the average purchaser, in the purchase of surplus goods, and, if so, then the question arises as to the legal authority of this Board within the construction of the act to make price concessions.

Mr. WOODRUM. Suitable preference in the acquisition of types of surplus property would indicate to me that the veteran should have preferential treatment in being able to buy this stuff under more favorable circumstances than other people could buy it, both as to the right to buy under more favorable circumstances and as to their right of preference, and certainly it would seem to me that is something ihe Board would want to clarify and take action on at a very early date, because those questions are going to arise.

Colonel Howse. Mr. Woodrum, the question has arisen. We have under discussion a veterans' policy, and it is a matter that has occasioned a great deal of discussion in our office. I think there is no question but that the Congress is quite anxious to accommodate veterans. It would be foolish to quibble that point. There seems to be some question in the legislative history of the act as to whether Congress meant to accommodate them with a bonus of some kind, or whether they meant to accommodate them with price preferences in the purchase of surplus property. The determination of that question legally has not yet been made. It is an extremely difficult one to determine.

Further there is this problem: There are 12,000,000 men in the services, and perhaps 1,000,000 women.

Mr. O'NEAL. The veterans of the last war would be included in that, too, and you would have to increase that number.

Colonel Howse. The act does not specifically provide for them, but if they are to be included the number would be increased.

Mr. O'NEAL. It says, "veterans."

Colonel Howse. Yes, and “veterans” is further defined in the act as follows: “The term 'veteran' means any person in the active military or naval service of the United States during the present war, or any person who served in the active military, or naval service of the United States on or after September 16, 1940, and prior to the termination of the present war, and who has been discharged or released therefrom under honorable conditions." The question arises as to whether the veteran of the last war is entitled to the same privileges as the veteran of this war.

Mr. CANNON. Of course, the pertinent thing, as far as you and the Board are concerned, is the direction, whether mandatory or permissive, that the Board shall issue regulations.

Colonel Howse. That is correct.
Mr. CANNON. Now, have you issued any such regulation?

Colonel Howse. We have, Mr. Cannon. I stated them for the record on Friday, and we have filed with the committee a list of the regulations we have issued.

Mr. Ludlow. But they do not go to the point of veterans' preferences, do they?

Colonel Howse. No.

Mr. CANNON. Just one more question. You designated the regulations, did you not?

Colonel Howse. I did; yes, sir. Mr. Cannon. But did any of those regulations contain preferences for veterans?

Colonel Howse. They do not; no, sir.

Mr. Cannon. In the end the question of drawing up the regulations governing the preference of veterans is for the Board. Have you drawn up such regulations?

Colonel Howse. We have not; no.
Mr. CANNON. Have you not been rather dilatory in that respect?

Colonel Howse. Mr. Cannon, we may bave been. It is a question as to which you are going to do first.

Mr. Cannon. When do you expect to reach that question and take some action with regard to it?

Colonel Howse. We have the veterans regulations presently, included as one of the three regulations that have been up for discussion. Just which one of them will be completed first I do not know, but the veterans regulation is one of the three top-priority regulations that we have to complete.

Mr. CANNON. It seems to me that is a matter that you should determine. A million and a half veterans have already come back and they are returning at the rate of something like 200,000 a month, and if you are going to issue regulations I think now is the time it should be done.

Colonel Howse. It is a very pressing matter.
Mr. CANNON. You expect to do it very soon?
Colonel Howse. We do expect to do so very soon.

Mr. LUDLOW. I was intensely interested in Judge Woodrum's question. To take a concrete illustration, because I have had many inquiries about jeeps: Is there any preference contemplated that will enable the veteran to go direct to the procurement agency and buys jeep on his own?

Colonel HowsE. Mr. Ludlow, there is this contemplation: That the veterans will be able to go to a dealer and buy a repaired and rehabilitated jeep at a discount. I can assure you that if that arrangement does not work out satisfactorily we will distribute jeeps direct to veterans or others, the disposal agencies will be instructed to distribute them directly. But I think I must point out to you that the sale of 500 jeeps at any one distributing point prejudices the rights of veterans who live 250 miles away, who cannot come in, who must buy sight unseen. If a veteran can go to a local dealer and make arrangements to get his jeep at a discount we perhaps may have done a greater service to the veteran than if we were selling directly to him.

Mr. Ludlow. That would give him a preferred status so far as the dealer is concerned, but would there be a preferential status in regard to the right to secure the jeep itself?

Colonel Howse. If I may go back to the statement I made earlier, that there are about 12,000,000 men and about 1,000,000 women in the services. There are no surpluses of this particular kind today except those that are badly needed in agricultural areas and under certification of the A. A. Å. and the War Food Administration as being essential to farm production. Several questions arise in connection with items in short supply: First, should we sell for essential use today, or sell to a veteran that might not have an essential use for the item; or should we sell to veterans today and not keep some back for veterans who are going to be back at the end of the war?

It is an extremely difficult question to determine.

Mr. O'NEAL. The provisions of the act providing for veterans preference, runs as an arrangement for assisting the veteran who wants to get into business or in agriculture, and it is not just for personal use entirely.

Colonel Howse. I think that generally is the interpretation.

Mr. O'NEAL. There seems to have been something written into the law confining it to some purpose-needs for setting up a business or agricultural uses-or for some use that is meant to tie in with reestablishing him in business?

Colonel Howse. I think that is generally the interpretation of the act at the present time.

Mr. WOODRUM. There ought to be some kind of a policy announced so there will not be confusion, because tremendous repercussions will no doubt be felt if you do not establish or declare a policy on it very soon.

Colonel HowsE. Under the general interpretation of the act st the present time there is a very well defined desire to give veterans whatever preference it may be possible to give to them. The question arises as to whether or not we give a general price preference for personal use, right across the board, to any veteran, whether he is going to enter agriculture or business, or other occupation, and it is a question as to whether or not we would be contravening the act That is a question, as I stated, that we have not yet decided upon.

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