I Land in addition to that shown above will be required for aircraft control and warning, ballistic missiles, and strategic missiles at various locations where the exact acreage and cost have not yet been established.

Secretary BRYANT. As you have indicated, in my opinion it is encouraging that it is smaller than has been the case in the past.

New bases: The utilization of new weapons and the assignment of new missions require that certain new bases be provided. A list of the new bases which are in this bill at unclassified locations is shown below. In addition to this, other new bases which are necessary to support certain classified activities are also included in this bill. Details on this latter type of new bases can be given during subsequent closed sessions.

I will not take the trouble

The CHAIRMAN. That is right.

Secretary BRYANT. Unless you wish it

The CHAIRMAN. Put that in the record.

Secretary BRYANT. To read these, but submit them for the record. (The table follows:)

The CHAIRMAN. Go to military housing.

Secretary BRYANT. Now, military family housing:

I need not emphasize to this committee the importance of adequate family housing to the retention of skilled, career military personnel, the great majority of whom are married. I am pleased to report that during the past year excellent progress has been made in two principal military family housing programs: Capehart and Wherry acquisition. At the same time, the Defense Department has given considerable study to the overall problem of construction, management, and maintenance of family housing, in order to determine the best means to achieve uniform standards, maximum efficiency, and economy. The authority to operate inadequate public quarters on a rental basis is being vigorously implemented by the military

departments. Two areas of some concern are the extremely slow progress in the surplus commodity program, and the taxation of Wherry projects remaining in private hands.

Magnitude of need: Currently, there are 679,000 officers and upper grade enlisted men who require family housing. To meet this need, there are in being or planned a total of 515,000 adequate housing units; 173,000 private units, 283,000 military controlled units in being or under construction, and 59,000 units planned for construction under our various programs. Thus, the projected deficit is on the order of 164,000 units. A summary of our requirements versus our assets is set forth here, and in more detail on table No. 1. (See p. 7066.) Military family housing requirements and assets: Unless you wish me to go into detail

The CHAIRMAN. That is right, put that in the record. (The table follows:)

Military family housing requirements and assets

Secretary BRYANT. I should like to comment here that the 164,000 deficit figure does not represent a programing target. As a matter of caution we never provide for more than 90 percent of gross requirements, so that a minimum of 68,000 units should be subtracted to allow for this 10 percent safety factor. Furthermore, overall gross requirements are expected to drop by about 20,000 units by the end of fiscal year 1959. Our unfulfilled requirement for programing in fiscal year 1960 and later years will therefore be on the order of 70,000 units, worldwide.

This year' bill: Section 406 of Public Law 241, 85th Congress, provided that effective July 1, 1958, no family housing project could be placed under contract unless the actual number of units involved had been specifically authorized by the annual military construction authorization bill. Therefore, we have included in this year's bill for the first time, line items for family housing to be developed under the Capehart and surplus commodity programs and to be acquired permissively under the Wherry acquisition program. A summary of the family housing authorizations proposed in this bill is set forth below. The 935 appropriated fund units consist of 158 Army units and 777 Air Force units, mostly at foreign locations where there is no possibility for surplus commodity programs. The CHAIRMAN. Put the table in the record.

Secretary BRYANT. In addition to the above, title III contains a request for authorization for the acquisition by Air Force of 9,374 permissive Wherry units.

Although many of these projects have previously been approved by my office and cleared by this committee under the requirements of section 419, Public Law 968, 84th Congress, they have been included in this year's bill as a safety measure in the event contracts cannot be awarded prior to July 1. For example, authorization to award contracts is requested for 50,116 units under the Capehart program. Of these, 36,524 units have already been cleared by this committee under section 419, and 13,592 units have not been cleared. Most of the latter area are in projects which have only recently been approved by my office and have never been reported to the committee. The status of each Capehart line item with respect to clearance under section 419 is shown in table No. 2. (See p. 7066.)

The Capehart program: Until recently the Capehart program had been seriously hampered by a shortage of private capital under the old 4 percent interest ceiling. However, pursuant to a request by my office during testimony on March 4, 1958, before the Senate Housing Subcommittee, Congress has raised the interest ceiling to 42 percent, and a going market rate of 44 percent has been established for this program. As of May 13, a total of 41,209 units were either completed or under construction, and 5,972 of these have been started since March 4.

Of these recent starts, 3,527 units totaling $53,288,000 were financed with Federal National Mortgage Association purchase commitments, and 2,445 units totaling $38,493,000 were financed with private long-term capital. Our present schedule calls for contracts. to be signed between May 13 and June 30 for 24 projects with 10,820 units totaling $164,697,000, all with private funds. This means that private investments in Capehart mortgages should almost double within a 6-week period. The anticipated continued availability of substantial private investment capital leads us to believe that during the first half of fiscal year 1959 the Capehart program should be able to proceed with construction starts at the rate of about 5,000 units ($80 million) per month.

To summarize the Capehart program briefly, as of May 13, 1958, the Office of the Secretary of Defense has approved for development a total of 280 projects containing 99,223 units; 48 of these projects, containing 9,377 units, are presently deferred pending further evaluation of need. As shown on the attached summary table No. 3 (p. 7068), these units are in the following stages of development.

The CHAIRMAN. I will let the following figures speak for themselves, sir. Put that in the record. (The table follows:)

Secretary BRYANT. Wherry acquisition: The Wherry acquisition program has been proceeding at a most satisfactory rate. Of the total of 83,718 units in the Department of Defense Wherry program, acquisitions to May 9, 1958, total 37,776 units, divided as follows:

Army.
Navy---.

Air Force____

Units

9,990

1,073

26, 733

In addition to the above, 9,064 units (2,819 Army and 6,245 Navy) are scheduled for acquisition prior to June 30, 1958. Of the June 30 cumulative total of almost 47,000 units, about 26,000 were mandatory, the balance permissive.

At present, acquisitions subsequent to fiscal year 1958 are scheduled for about 18,000 units, including the 9,374 permissive Air Force units proposed in this bill. This leaves about 19,000 units for which no acquisition is presently contemplated, because there is no specific requirement or need for acquisition at this time.

Wherry taxation: The taxation of unacquired Wherry projects by local taxing authorities is causing us considerable concern. Section 511 of Public Law 1020, 84th Congress, provides that taxes on such projects shall not exceed the amount of taxes on other similar property of similar value, and further provides that the taxes shall be reduced by the amount of Federal payments to local authorities for school aid, plus the amounts expended by the Federal Government or the owner for services and facilities customarily rendered by the local taxing authority.

Authority to determine the amouts to be deducted has been delegated to the Secretaries of the three military departments. Determinations have been made in many cases, but their acceptance by local tax authorities is by no means general or uniform. In some cases, perhaps a third of those made to date, the tax deduction is accepted, and the case is then settled. In the remaining cases the local tax authorities either refuse to acknowledge the tax deduction at all, in effect questioning its constitutionality, or while accepting the principle, find points of disagreement on the amounts involved. As a result we now face an increasing number of cases where litigation will indefinitely postpone the orderly resolution of tax problems and the closely associated rent-increase problems. In this atmosphere we must decide whether to

(a) Allow rent increase to cover (and hold in escrow) the full amount of the tax, which would work an unjustified hardship on the occupants; or

(b) Allow rent increases to cover (and hold in escrow) the amount of the net tax after deductions, which would result in a loss by the Wherry sponsor in the event of an unfavorable court decision.

Furthermore, the burden of litigation and its cost fall on the mortgagor and the mortgagee who, quite naturally, are then tempted to follow the simpler course of yielding to the full local tax and increasing the rental payments accordingly.

Because of the wide variety of complications which have arisen in these cases, I have directed a survey of all Wherry tax problems in order to evaluate the effectiveness of our present program and to determine whether additional legislative authority is required.

The surplus commodity program attacked is a summary showing its status which I have labeled "Table No. 4," and which I will offer for the record. During the past 12 months, additional increments have been added to the United Kingdom program, and new contracts have been developed in only three countries-France, Spain, and Morocco. Detailed reports are as follows:

United Kingdom: The initial project of 1,500 units of housing in the United Kingdom is completed and occupied. A second increment of 748 units and a third increment of 307 units, plus schools and chapels at certain of the locations, have been approved and are expected to be placed under construction before the end of the current fiscal year. A fourth increment of 1,840 units is planned for execution during fiscal year 1959.

Italy: The project for 493 units of housing for United States military personnel in Italy has been approved for several months, and design work is complete. Actual construction has been long delayed pending final acquisition of building sites by the Italian Government (at no cost to the United States). This acquisition has now been completed and construction is expected to go forward in the near future.

Spain: A project for 334 units of housing at the Naval Air Station, Rota, Spain, and a project for 92 units at 3 Air Force locations were placed under contract in the fall of 1957. In addition, a contract was executed for the in-leasing of 1,581 units of rental guaranty housing being constructed at Madrid, Sevilla, and Zaragoza. In this case it was possible, by executing a prepaid lease for 7 years under the surplus commodity housing program, to assure the completion of this urgently required housing while keeping costs at the same levels which prevailed before the recent inflation of Spanish currency. Additional projects totaling 1,061 units of family housing are planned for execution in Spain during fiscal year 1959. These projects will be financed directly from title I, Public Law 480 funds, supplemented by 25 percent support in appropriate funds.

France: The initial project of 2,700 units of housing at 19 locations in France was financed with the proceeds of a "barter" sale conducted by the Commodity Credit Corporation under the authority of its Charter Act. This construction is proceeding satisfactorily and is expected to be completed during the fall and winter of 1958-59. An additional project for 400 units of family housing in France is planned for execution during fiscal year 1959. This project will be financed from the proceeds of a Public Law 480, title I, sale of agricultural commodities to France.