defense program." Following this was a listing of authorized activities for which the Lanham Act was to be primarily-although not exclusively devoted. The act was also considerably broader than Public Law 139 in terms of its original authorization which included $150,000,000 for community facilities and services, as compared with $60,000,000 in the present act.

LANHAM ACT EXPENDITURES

Under the initial Lanham Act authorization and subsequent amendments covering community facilities and services, an amount of $357,655,056 (combined Federal and local funds) was spent for construction of community facilities over a period of 5 years, excluding schools which are not included in the present act. This money was broken down as follows:

Child care-
Hospitals

Water systems..
Sewer systems.

Recreation__.

Fire and police-

Streets and highways-
Other

$3,080, 340 120, 987, 093 103, 934, 841 65, 509, 67831, 847, 458

3, 640, 031 6, 156, 256 22, 499, 359

Approximately 77 percent of this total cost of construction was contributed by the Federal Government. Local communities contributed. the remaining 23 percent.

In addition to construction, a total of $77,240,023 of Federal money was spent for maintenance and operation of facilities and for other necessary community services.

PROVISIONS OF PUBLIC LAW 139

The current law is more restrictive than the old Lanham Act in that it does not include school construction or educational maintenance and operation. The present law is also much more precise: than the old Lanham Act in its procedure for the declaration of critical areas, and in the requirements of section 103, which makes necessary very thorough inquiry into the financial capacity of a designated area to provide community facilities and services with its own local funds.

At the outset, the President, or his designated representative, must. find the area to be critical under the three criteria set forth in the law a new or reactivated Defense Establishment, substantial inmigration, and substantial shortage of housing or community facilities or services. Also, before a loan can be made, there must be a Federal finding, and the chief executive officer of the municipality or county must certify that the facilities needed to meet the defense impact could not otherwise be provided when needed. Before a grant or other payment can be made for community facilities and services, there must be both a Federal finding and a certification by appropriate local authority that the facilities or services cannot be provided and maintained without the imposition of an increased excessivetax burden or an unusual or excessive increase in the debt limit.

Furthermore, Public Law 139 makes it very plain that the maximum use of private resources and of nonprofit agencies-as well as the use

of local public money and facilities-must be made in meeting community needs, before any Federal funds can be made available.

During our current defense mobilization program, the Federal Government has taken several limited steps in dealing with the problems of critical areas prior to the enactment of the recent Defense Housing and Community Facilities and Services Act (Public Law 139). These steps included the creation of an Inter-Agency Critical Areas Committee-with a chairman in the Defense Production Administration for the purpose of designating critical areas so that credit restrictions could be relaxed where new housing was urgently needed for defense purposes. That procedure was begun approximately 6 months ago. To date, however, due to shortage of mortgage money and other factors, few new houses have been built as a result of private initiative in the 42 areas which were designated as critical and in which credit restrictions were relaxed to encourage housing construction. It is evident, therefore, that the relaxation of credit restrictions alone is not an adequate answer to the needs of those communities and the needs of the defense mobilization program. This fact was in part responsible for the enactment of this new law. We have confidence that this new law will result in the construction of many thousands of badly needed new housing units. When the new houses are built, there have to be new community facilities. That is why we are appearing before you with this estimate to cover needed community facilities (and I might interpolate "and services") for which we have responsibility-water-purification plants, sewagetreatment works, hospitals, health facilities, and day-care and recreation facilities.

DESIGNATION OF CRITICAL DEFENSE HOUSING AREAS

As a result of the enactment of Public Law 139, the Interim Critical Areas Committee is in the process of being converted into an InterAgency Committee which will recommend for the guidance of the Director of the Office of Defense Mobilization, Mr. Charles E. Wilson, the areas to be designated as critical under Public Law 139. That Committee is composed of representatives of the Department of Defense, the Economic Stabilization Agency, the Department of Labor, the Housing and Home Finance Agency, and the Federal Security Agency. The Committee Chairman represents the Defense Production Administration.

To date, no areas have been designated and announced as critical under Public Law 139. A procedure has been agreed upon, however, and it is anticipated that the naming of critical areas will proceed promptly. It may be anticipated that the first areas to be designated as critical under Public Law 139 will be drawn from the list of 42 areas previously designated as critical for purposes of relaxing credit restrictions on new home construction. In addition, as time goes on, many other areas will be added to that list.

It is possible to obtain a preview of other areas that will be designated as critical under Public Law 139 by looking at the experience so far with the rent-control provisions of the Defense Production Act. The procedure for designating critical areas for purposes of Federal rent control is somewhat different from that contained in Public Law 139, but the criteria are similar. In the intervening time since the

Defense Production Act amendments were enacted, nine areas have been designated as critical for purposes of Federal rent control. I can give you a list of them if you wish to have it.

It is anticipated that many more areas will be added to this list as time goes on. The Department of Defense submitted to the Congress a list of more than 200 areas which it thought might well have sufficiently severe housing problems so as to require Federal rent control. We have attached a copy of that list to our justification since it is illustrative of the additional areas that are potentially critical under Public Law 139. It is reasonably safe to predict that the majority of areas which will be designated as critical for the purposes of Public Law 139 will be drawn initially from the combination of the two lists of areas attached to our justifications-one of which is an actual list of critical areas previously designated administratively for relaxing credit restrictions on housing, and the other is a list of potentially critical

areas.

Since no designations have yet been made under Public Law 139, we have not made a series of detailed surveys which could be used as a basis for preparing detailed budget estimates. We do have some data, however, which are indicative of need. For example, upon the advice of the Defense Department, the Public Health Service last spring made limited preliminary surveys in 50 areas which were regarded as potentially critical from the standpoint of health needs. These 50 areas contain 18 areas which have been heretofore designated as critical under the interim procedure for relaxation of regulation X. That is the regulation covering credit restrictions on houses. Virtually all of the 50 areas studied by the Public Health Service are included in the potentially critical list heretofore prepared by the Defense Department in connection with Senate hearings on housing shortages and need for rent control.

The over-all needs in these 50 areas for hospital and health facilities and for additional sanitation facilities totaled $117 million. I would like to interpolate there that the $117 million represents the additional amount estimated to result from defense impact and does not include any amounts which represent shortages in local housing before the defense impact occurred. This is the total needed without taking into account the possible local and State funds which may be available to help finance these facilities. No studies of local fiscal capacity have yet been made in these communities and will not be made until funds are appropriated under this act. The request before you represents a sufficient amount of money to get this program underway, but will provide only the most basic essentials of community living in the areas of greatest need. I should like to emphasize strongly that funds which are appropriated to carry out the purposes of Public Law 139 will be used in a manner which will provide those facilities which in our judgment are the most essential to the successful completion of our defense mobilization program. We shall endeavor to make every dollar go as far as we possibly can.

This is a brief statement of our approach to the manifold problems of community facilities and services. We shall be glad to endeavor to answer any questions which I am sure you have about the program covered by the estimate which is before you.

FUNCTIONS OF THE AGENCY UNDER PUBLIC LAW 139

Mr. FOGARTY. Now, as I understand Public Law 139, it vests all the powers and functions in the Housing and Home Finance Agency excepting those related to health.

Mr. MILES. Yes, sir.

Mr. FOGARTY. Do you know what the over-all estimate is for this program? You can insert the exact amounts later.

Mr. MILES. The estimate for community facilities for the Housing and Home Finance Agency is approximately $15 million so that the combined total estimate for the two agencies is approximately $40 million.

Mr. FOGARTY. I understand the President has also authorized the transfer of the power and functions of community services to other agencies.

Mr. MILES. Yes, Mr. Chairman.

Mr. FOGARTY. What did he transfer to the Federal Security Agency?

Mr. MILES. He has transferred to the Federal Security Agency responsibility in connection with the programs relating to day care and recreation. These are the only ones except for consultation responsibilities on libraries, if any, that may be built.

Mr. FOGARTY. Do you have a copy of the order making the transfer? Mr. MILES. The Executive order has not been signed though we have been given a copy of it. I would like to ask Mr. Snyder whether that has been signed.

Mr. SNYDER. It has not been signed.

Mr. MILES. I believe it will be signed by the early part of the week and we can either give you a copy of the latest draft or provide you with a signed copy.

Mr. FOGARTY. It does not amount to anything until it is signed, does it?

Mr. MILES. No. It does not, except that these budget estimates are based upon an understanding that that Executive order will be issued in the manner stated to us by the Budget Bureau.

Mr. FOGARTY. If the Executive order is issued and signed who will assume responsibility in your agency?

Mr. MILES. The responsibilities with respect to day care will be undertaken by the Children's Bureau with close collaboration with the Office of Education.

Mr. McGRATH. Mr. Chairman, do you think we should proceed in the absence of an order signed by the President? I think it is improper of Mr. Ewing's department to set this up before he has decided what he is going to do.

Mr. FOGARTY. The estimates have been submitted by the Bureau of the Budget and the President. I think we should proceed. We have original estimates here from the President, so I think we can proceed. What the final determination will be, the decision of the committee, is another question.

STEPS INVOLVED IN CONSIDERING PROJECTS

To what extent will the Housing and Home Finance Agency be involved in this part of the act?

89877-51- -9

Mr. MILES. The Housing and Home Finance Agency, or rather the Federal Security Agency will have to work very closely with the Housing and Home Finance Agency. We have already good working relationships with them and these will have to be considerably extended. We might indicate to you the various steps that will have to be gone through in connection with each project.

First, an area will have to be designated as critical. That involves a number of steps in itself. The second procedure that we will go through will be to receive from the various communities which are designated as critical requests in the form of project applications. The Housing and Home Finance Agency will also receive project applications in connection with their parts of the law. When these project applications are received, we will obtain from the State departments of health-if they are health applications-their recommendations on these projects. Most of the State health departments have some legal responsibilities in respect to the water purification, sewage treatment works, and hospital plans. So we, obviously, want to bring them into the picture and get their recommendations upon them.

Then, when we have them screened and have the State recommendations, we will establish criteria of priority here in Washington and will deal closely with the Housing and Home Finance Agency. The highest priority will, of course, be given the projects which involve the provision of utilities—the essential utilities, the water purification plants, the sewage treatment works and so on-for whatever housing is built in these critical areas under this program, so that we will be working particularly closely with the Housing and Home Finance Agency in that area.

We will have a project review committee within the Federal Security Agency and I assume we will meet from time to time with the Housing and Home Finance Agency to make sure that the projects of the highest priority in the areas which are most critical will receive. the highest attention.

That is our general operating procedure.

REQUIREMENTS FOR INCLUSION ON CRITICAL AREA LIST

Mr. FOGARTY. What are some of the factors that will lead up to an area being declared critical and included on the list? What steps are taken?

Mr. MILES. The law established three criteria:

(1) A new defense plant or installation has been or is to be provided, or an existing defense plant or installation has been or is to be reactivated or its operation substantially expanded;

(2) Substantial in-migration of defense workers or military personnel is required to carry out activities at such plant or installation; and

(3) A substantial shortage of housing required for such defense workers or military personnel exists or impends which impedes or threatens to impede activities at such defense plant or installation, or that community facilities or services required for such defense workers or military personnel are not available or are insufficient, or both, as the case may be.