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Second, a replacement demand exists for facilities which are wearing out or which need to be modernized. Unless the existing public works plant is maintained and replaced according to regular schedule, public services will fall ever farther below the minimum level. Our backlog will increase, and our shortages will grow. To keep our plants reasonably up-to-date requires approximately another $29 billion in the next 10 years.

Finally, there is an expansion demand. This is the construction necessary to accommodate our expected growth in population and to bring the standards of services to an acceptable minimum. As shown on chart I, from the time the Pilgrims landed until 1940 our population increased 131 million. Between 1940 1955, another 34 million were added. For the next 20 years as 3 persons are born for every 1 who dies, another 63 million can be expected. This increase of 97 million people from 1940 to 1975 is more than two-thirds of the entire population growth of America in the previous 320 years. Between 1955 and 1965, we will need to spend a minimum of $45 billion to meet this growth.

Keeping up with the population growth is only one component of the expansion demand. Another factor is the improvement of standards in public works programs. Even while backlogs have been accumulating, professional and citizen groups have called for higher qualitative and quantitative standards. These improved and increased goals of public service require additional facilities. They call for still more projects in the estimate of public works for the years immediately ahead.

When these three demands are compared to the present rate of public works construction, as shown on chart II, the problem becomes clear. In the next 10 years, the estimates show that over $200 billion will be needed eliminate accumulated backlogs, to overcome obsolescence and depreciation and to meet growth needs. For the decade, 1965–75, all evidence points to an even greater volume. If we were to assume a catchup period of 10 years as desirable, it would require an annual rate of construction of State and local public works of over $20 billion. As shown on chart II, the actual rate is less than half such rate.

Two examples may serve to dramatize the extent and urgency of these needs. In the field of highways, for instance, we tend to blame the startling recent increases in the number and use of automobiles for our traffic congestions and delays. Certainly, these have skyrocketed from 250 billion vehicle miles in 1945 to 600 billion in 1950. Clearly, there is no sign that the increases are leveling off, for estimates indicate that a figure of 814 billion vehicle miles will be reached by 1975. Yet, this growth demand is not the primary source of difficulty. The Nation has fallen so far behind in highway construction that 80 percent of the highway needs for the next 10 years are really backlog.

An even more elementary need exists so far as water supply is concerned. The amount of water per capita used in this country has tripled since 1900 from 540 to 1,570 gallons per day. The trends shown in chart III indicate that it will increase one-third more to 2,100 gallons per capita per day by 1975. In many areas demands for water are increasing more rapidly than supplies can be provided. Real shortages are currently being experienced, and one out of every eight American cities faces a water shortage.

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Washington, D.C., April 24, 1959. Hon. BRENT SPENCE, Chairman, House Banking and Currency Committee, New House Office Building, Washington, D.C.

DEAR MR. SPENCE: The Chamber of Commerce of the United States opposes H.R. 5944, which provides Federal loans for water and sewer facilities and public nonprofit hospitals and nursing homes, in the belief that such legislation is unnecessary and unsound.

In our opinion, the existing program for financing community facilities is entirely adequate. The Community Facilities Administration presently has $42 million available for water and sewer facilities loans from the authorization of $100 million which was made available in 1955. Only $58 million has been committed for loans in the 4-year period since this program was authorized, and of this amount, only $20 million has been expended.

Beyond that, sufficient funds are available through the private market to meet the demand for community facilities financing. A recent analysis of local government bond issues for water and sewer facilities, made by the Investment Bankers Association, for the 6-month period of July 1 through December 31, 1958, shows that more than 99 percent of all the issues offered were purchased by the private investment market. In 1957-58, the aggregate of water and sewer facilities financed in the private investment market was over $2 billion-more in each year than is proposed in this bill for the expanded Federal program.

This proposal would set up an interest rate incentive which would shift the demand for community facilities funds from private market sources to the Treasury. The interest rate formula as prescribed in the bill would, if it had been in effect during the past year, have made 80 percent of the 1958 bond issues for water and sewer facilities, bought by the private investment market, eligible for Federal loans.

The loan interest rate would be lower than current Treasury borrowings and result in additional inflationary spending or additional taxation in order to sustain the below-market rate.

H.R. 5944 would have a number of undesirable effects.

It would provide direct Treasury financing of a community facilities program and thus would bypass the Appropriations Committee. The bill, on page 6, line 6, calls for “a public debt transaction.”

It would provide another new financial burden, no matter what the method of financing

It would add to inflationary pressures, particularly since no plan has been suggested to provide new taxes equal to the cost of the program.

Of fundamental importance, is the fact that it would make the Federal Government larger and local governments less important. To increase the Federal spending responsibility and to subtract an equal amount of financing responsibility from local governments would result in a weakening of local responsibility for community development. For all of these reasons, the national chamber urges you to reject H.R. 5944. Cordially yours,


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Partial list of municipal water and sewer bonds with net interest cost of 4 percent

and above

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4. 70
4. 67
4. 43

Santee Water District.
Ora Loma Sanitary District.
San Ramon Valley County Water District.
Rainbow Municipal Water District.
Poway Municipal Water District
Rocklin-Loomis Municipal Utilities Dis-

Fresno County Water District No. 29.
Union Sanitary District.
Half Moon Bay Sanitary District
Otay Municipal Water District (Improve-

ment District No. 2).

Mar. 3

Apr. 4


5, 150, 000

835, 000

5. 49
4. 13

14. 25



4. 09

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4. 16
4. 17


Apr. 7




Pinellas Co

4. 38
4. 12

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14. 28

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Style of bonds

Sewer general obligation.
Sanitary general obligation..
General obligation
Water general obligation..
Water revenue..
General obligation..
Sewer general obligation.
Water general obligation.
Water revenue..
Sewer revenue
Sewer general obligation.
Water general obligation..

Sewer general obligation..

Utilities revenue..
Cigarette taxation revenue

certificate (finance water

and sewer facilities).
Sewer certificate..
Utilities revenue certificate

for water and sewer.
Sewer revenue.-
Water certificate..
Water revenue certificate....

Water revenue..

Waterworks and sewer reve-

Waterworks general obliga-

Water revenue.
General obligation
Waterworks revenue
Water and sewer revenue..

Sewer revenue.


Waterworks refinance and

Water revenue.


Water general obligation..
Sewer general obligation.


See footnotes at end of table.

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