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Leasing authority.-Meanwhile, we are continuing to use the authority to lease a maximum of 7,500 units at tactical installations; we resort to leasing under this authority in lieu of proposing new construction wherever possible. As of March 15, 1960, 5,650 units had been allocated to the Services, 5,500 to Army, 25 to Navy, and 125 to Air Force. Approximately 4,700 leases were in force, at an average rent of $135 per month, which amounts to $44 above the average quarters allowances forfeited by the occupants.

Wherry acquisition.—As of December 31, 1959, the military departments had acquired 60,183 units of Wherry housing, compared to 53,776 on December 31, 1958. It is expected that prior to June 30, 1960, an additional 6,753 units will be acquired, and during fiscal year 1961, a further 2,102 units, for a total of 69,038 units. This figure, together with 4,319 units in default or acquired by the Federal Housing Administration, represents almost 88 percent of the original Wherry total of 83,742 units.

Foreign programs.—The committee is familiar with our two principal foreign programs, surplus commodity, which utilizes the foreign currency proceeds of agricultural commodity sales, and rental guarantee, which involves the guarantee of a specific level of rental income to foreign builders for a period of years.

The surplus commodity program has moved extremely slowly; during calendar year 1959 only 5 projects totaling 257 units were placed under contract. The principal reason was that few international sales agreements were made which produced currencies usable in this program, due to improving economic conditions in Western Europe.

We have checked into the possibility of converting to sterling sizable balances of other currencies accumulated through Public Law 480 sales to other countries. Unfortunately, we have found that these currencies are either restricted as to their use, are not convertible to sterling, or their conversion and use would have an adverse economic effect on the third country involved. Accordingly, in this bill we are requesting authorization for a relatively modest number of surplus commodity houses to be located in Great Britain, Spain, Turkey, and Japan.

Beginning this year, direct appropriations (classed as “Currency restricted” appropriation) will be utilized to reimburse the Commodity Credit Corporation for foreign currencies at the time they are used. For this reason, authorization for appropriations for surplus commodity housing projects is requested in the bill in the same manner as for other appropriated fund projects. Further use will not be made of reimbursement from quarters allowances withheld from occupants of the housing, as authorized by section 407 of Public Law 83–765, as amended.

Rental of inadequate quarters.—The Military Construction Authorization Act of 1957 (sec. 407, Public Law 85–241, Aug. 20, 1957) authorized the Secretary of Defense to operate inadequate public quarters on a rental basis. Subsequently, the military departments reviewed all existing public quarters to determine which are inadequate and may be operated as rental housing. Under this plan, the fair market rent is determined in accordance with a Bureau of the Budget circular, this amount is deducted from the serviceman's quarters allowance, and the balance of the allowance is paid to him in cash. All inadequate quarters must be brought up to acceptable standards or they must be demolished, converted to nondwelling use, or otherwise disposed of by July 1, 1961. Wherry housing cannot be designated inadequate under this authority.

Improvement of inadequate public quarters is based upon standards of adequacy established in Department of Defense Instruction 4165.34, which clearly indicates the basic condiitons which quarters must fulfill in order to be declared adequate. Many inadequate quarters are of relatively advanced age, and improvements frequently consist of major repairs and replacements to extend their useful life, and modernization of interior finishes, kitchens, bathrooms, equipment, heating, and electrical service, and other utilities.

With minor exception, the military departments have completed their review of the potentially inadequate quarters. Of the more than 73,000 units evaluated, almost 54,000 units have been determined to be adequate and are being continued as public quarters, while almost 19,000 or 26 percent were found to be inadequate. Of these 19,000 inadequate units, 600 have been improved and redesignated adequate, 3,500 demolished or sold, and 1,900 converted to other than family housing use for a total of 6,000 units already acted on. With respect to the remaining 13,000 inadequate units, approximately 10,000 are to be demolished or sold, and the balance converted to other than family housing use, or repaired and redesignated as adequate.

An analysis of the 10,000 units planned for disposal indicates that approxi-mately 3,300 are located at installations where either replacement housing is: planned, or the uncertainty of future missions makes inadvisable permanent new construction or significant expenditures for rehabilitation. In these cases we believe the Secretary of Defense (or Health, Education, and Welfare) should have some discretion in regard to future utilization.

General provisions.-Sections 501 through 506 of the general provisions pertaining to the active forces, as shown in title V, follow the pattern established in prior military construction acts.

Section 507 would provide for the necessary increase in the limitation on the number of Capehart housing units which can be contracted for after June 30,1959.

Section 414(a) of last year's act (Public Law 86–149) amended section 803 (a) of the National Housing Act by adding a proviso that no mortgages could be insured after September 30, 1960, and that not more than 20,000 units could be contracted for after June 30, 1959. Subsequently, section 701 (a) of the Housing Act of 1959 (Public Law 86–372) further amended section 803(a) of the National Housing Act by changing the expiration date for insuring section 803 mortgages from September 30, 1960, to October 1, 1961.

Sections 104 (b), 204 (b), and 304 (b) of Public Law 86–149 authorized the construction of 23,971 units under section 803 of the National Housing Act, but as noted above, section 414 limited the number to be built to 20,000. The execution program for fiscal year 1960 has been restricted to 20,000 units, but since some fiscal year 1959 projects had to be carried over and since we are requesting new authorization for 8,718 units in the fiscal year 1961 program, the limitation of 20,000 on units which may be contracted for after June 30, 1959,must be increased to 30,000.

Section 508 would extend from July 1, 1961, to January 1, 1962, the terminal date for the disposition of all inadequate public quarters under the jurisdiction of the Army, Navy, Air Force, and Health, Education, and Welfare. This extension was requested in order to allow additional time for the orderly disposition of about 10,000 inadequate quarters which cannot be made adequate with a reasonable expenditure of funds. In some instances replacement projects have been programed but will not be available for beneficial occupancy by the present terminal date.

During testimony before the House Armed Services Committee on this section, amended language was presented based on a further analysis of the 10,000 units planned for disposal. This language provided that when either the Secretary of Defense or of Health, Education, and Welfare or his designees determines that it would not be in the best interest of the United States to improve, demolish, or otherwise dispose of any family housing which has been determined inadequate, he may exempt such quarters from the requirement for improvement, demolition, or disposal by July 1, 1961, provided, that any quarters so exempted shall be improved, demolished, or otherwise disposed of by July 1, 1962.

H.R. 10777 incorporates the amended language, except that a final termination date of December 31, 1961, was substituted. For the reasons stated above, we feel that we need the full year's extension to July 1, 1962, in lieu of the 6: months' extension provided in both H.R. 10777 and S. 3006.

Section 509 prescribes the customary cost limitations on certain common and repetitive categories of construction.

Section 510 would repeal section 2662, title 10, United States Code, and section 43 of the act of August 10, 1956 (70 Stat. 636). These provisions, formerly contained in title VI of Public Law 155, 82d Congress, provided that the Secretaries of the military departments and the Administrator of the Federal Civil Defense Administration shall come into agreement with the Armed Services Committees with respect to certain real estate actions involving $25,000 or more. The Attorney General has advised the President that these sections violate fundamental constitutional principles and, in view thereof, the President recommended to the Congress in his budget message earlier this year that these sections be repealed. However, during their examination of this section, the House Armed Services Committee revised and expanded this language to that now shown in section 510 of H.R. 10777.

We do not believe that section 510 in its present form is as desirable as the language contained in the original draft of amendment proposed in the House Committee on Armed Services, copy of which is hereby submitted for the record (see table C), and which we endorse and offer as a practical and workable sub

Estitute. Our principal objection to the wording as now contained in H.R. 10777 is that real estate transactions over $50,000 come to a complete halt during adjournment sine die in those categories where it cannot be certified that the national defense would be imperiled. Obviously, there will be any number of occasions in the ordinary course of proper business management of real property when it would be difficult if not impossible to make such a certification. Yet a substantial delay in management actions might well be critical, both financially and otherwise. In essence, we believe that the provision as now incorporated in H.R. 10777 will create serious administrative problems with possible serious financial impact.

Section 511 is required to differentiate between the Military Construction Act and the Reserve Forces Facilities Act, which is included under title VI of this bill.

Housing to be provided under section 810 of the National Housing Act.—Mr. Chairman, before dealing with title VI of this bill, which pertains to the Reserve Forces, I should like to discuss briefly the so-called section 810 housing, which was added to the National Housing Act by section 704 of the House Act of 1959 on September 23, 1959.

This new section makes provision for building under FHA-insured mortgages off-post, private rental housing for military and essential civilian personnel at military installations. The Secretary of Defense or his designee is required to certify as to the need and feasibility of the proposed housing. Upon receipt of the certificate, the FHA Commissioner may insure a mortgage without making -a finding of economic soundness (as required for basic FHA programs), although if he finds that the mortgage is not an acceptable risk, he may require the Secretary of Defense to guarantee the FHA insurance fund from loss. The insured mortgage may not exceed 90 percent of the estimated value of the property and $2,500 per room (up to $3,500 in high-cost areas) in multifamily housing or $22,500 per single-family house.

This office, Mr. Chairman, opposed this legislation on the grounds that the Department of Defense cannot accept as military assets any housing in which it does not have control as to location, design, and rental. However, since passage of the legislation, we have worked with the FHA toward procedures which we hope to some extent might alleviate these objections. Although the procedures which have been agreed upon are not entirely satisfactory from our standpoint, they do mitigate to a considerable extent some of our concern with respect to controls.

Nevertheless, certain objectionable features which are inherent in the program remain. These are as follows:

The program, in our opinion, is fundamentally infeasible because, with few exceptions, reasonably adequate private housing cannot be built to rent at prices which military personnel can afford to pay. For example, a five-room unit under this program should cost about $12,000 to $13,000, which would mean that the gross rent would or should be about $125 per month, as against an average quarters allowance of $92 per month for personnel entitled to quarters and a maximum allowance of $96.90 for enlisted men. While it appears that reasonably adequate housing might be built in low-cost areas, it is believed that in other areas the military services would be under strong pressure to accept housing which would be somewhat less than adequate or which would require rents considerably in excess of quarters allowances.

Other anticipated problems are similar to those encountered in the Wherry program. For example, proper maintenance by private management could not be assured, because the military would have even less control than it had under the Wherry program. Also, rents might be reasonable at the beginning, but in many cases as in the Wherry program, they might eventually be increased due to increased cost of maintenance, operation, taxes, and other items, to levels which servicemen could not afford.

Should the housing become less attractive due to improper maintenance and increased rents, excessive vacancies might develop in the future. Such vacancies would lead inevitably to default and, although there is presently no authority for mandatory or permissive acquisition of section 810 housing the military might sooner or later be required to acquire this housing, which would be less than adequate and which would present very difficult problems of administration.

Those, essentially, Mr. Chairman, were the problems that beset us in trying to implement section 810, My reason for presenting this matter to you is that in their action on H.R. 10777, the House Armed Services Committee has added in a new general provision (section 507 (b)), which requires that section 810 housing must now be authorized as a line item project in our annual authoriza=:: tion bill. Although section 810 housing is not strictly comparable to that for which line-item authorization is currently required, we do not object to this new provision.

Authorization requested for the Reserve components.—Title VI of S. 3006 contains the authorization required to carry forward during fiscal year 1961 : the facilities programs of all of the Reserve components of the Armed Forces. A total of $42,108,000 of authorization for new projects, including expansions and alternations, is contained therein, divided as follows: $12,168,000 for the Army National Guard, $11,674,000 for the Army Reserve, $6,450,000 for the Naval and Marine Corps Reserves, $7,226,000 for the Air National Guard, and $4,590,000 for the Air Force Reserve.

Following the procedure begun 2 years ago for the Reserve components at the request of the Congress, the authorization requested is in the form of specific projects, or so-called line items. The programs of the respective Reserve components are of such a magnitude as to provide for orderly accomplishment of the maximum of projects within the financial program of the President. For any component, the total authorization program will not exceed the financial resources programed to be available by more than approximately 25 percent-a modest degree of flexibility which experience has indicated to be adequate.

In order to give the committee a concise view of the status of the construction program for the Reserve Forces, the following summary is provided (all figures are in millions of dollars):

[blocks in formation]

Carryover of unfunded authorization into

fiscal year 1960.
Fiscal year 1960 authorization (Public
Law 86-149)

Subtotal.
Less fiscal year 1960 appropriations for

projects
Less authorization no longer required (to
expire)....

Carryover of ralid unfunded au

thorizations to fiscal year 1961.. New authorivation proposed for fiscal year 1961 (S. 3006).

Total unfunded authorization avail

able in fiscal year 1961. Less proposed fiscal year 1961 appropriations for projects..

Unfunded authorization end of fiscal

year 1961 Fundable authorization available for fiscal

[blocks in formation]

year 1961.

(13. 5)

(11.1)

(6.6)

(3.9)

(57.5)

The last two lines of this tabulation serve to confirm my statement above to the effect that the unfunded authorization will not be more than approximately 25 percent of the financial resources programed to be aavilable for fiscal year 1961.

We also have prepared two charts which indicate in total, and for each Re serve component, where we stand with respect to fulfilling the total long-range requirements for facilities. These are appended to the copies of this statement. Chart D shows, in terms of dollars, what has been authorized and appropriated for facilities for the respective Reserve components since enactment of the Na. tional Defense Facilities Act of 1950, the amounts proposed for fiscal year 1961 in title VI of S. 3006, and the tentative future requirements, which latter, it should be emphasized, represent estimates by the Reserve components based on their assigned missions and strengths, and which are subject to review and

refinement as they are proposed incrementally for inclusion in future, annualprograms for authorization by the Congress. Chart E shows the same data translated in percentages of the total program of each Reserve component, in order to allow a comparison of the relative status of the requirements between the various components.

Army Reserve Forces.-When we appeared before your committee in support of the proposed Reserve Forces Facilities Act of 1959, the reorganization of the Army National Guard and Army Reserve was in progress. We are pleased to report that, since that time, complete stationing plans for the entire Army National Guard and Army Reserve have been developed. This has been a significant achievement which has been possible only by the commendable efforts and cooperation by the National Guard officials of the respective States and by the various Army agencies concerned. While some minor adjustments in the plans are still to be made, these stationing plans will provide a continuing basis for our annual authorization programs. In accommodating units of the revised organizational structure in the armories and training centers already existing, every effort is being made to utilize the existing capacity to the fullest extent feasible. In a number of instances, however, the results have been less than we originally desired, but appear to be all that is practicable of accomplishment at this time. We shall continue, however, to explore every possible means to further improve the utilization picture.

For the Army National Guard, authorization proposed for fiscal year 1961 comprises 65 new armories, 13 major conversions and expansions of existing armories, and 7 nonarmory projects which are summer training and supplyadministrative facilities. This proposed authorization will support an execution program of approximately $20 million during the coming fiscal year. Title VI also contains, for the Army Guard, an item of correction of a deficiency in estimated cost of one armory project authorized in the Reserve Forces Facilities Act of 1958.

For the Army Reserve, the proposed authorization consists of 42 new Reserve centers, 10 alterations and expansions of existing centers, and 6 minor additions, including the necessary site acquistions for the new centers.

Naval and Marine Corps Reserves.—More than half of the $6.4 million of new project authorization proposed for these Reserve components is for essential additional facilities at 10 established Naval Air Reserve installations which serve both Naval Reserve and Marine Corps Reserve aviation. The remainder consists of 19 projects for the Naval Surface Reserve and 3 projects for the Marine Corps Reserve. It is significant to note that 14 of the 19 Naval Reserve nonaviation projects and 2 of the 3 Marine Corps Reserve projects involve joint utilization or joint construction.

Air Force Reserve components.For the Air National Guard, the proposed authorization consists of essential projects for the operation and support of Air National Guard aircraft at 10 locations, 7 of which are at civil airports and 1 at a jointly used military airfield.

The relatively small authorization proposed for the Air Force Reserve again reflects the substantial fulfillment of urgent requirements for this component, and consists of various operational and support facilities at nine locations, three of which are civil airports and six are jointly used military airfields.

As mentioned earlier in the portion of my statement concerning projects for the Active Forces, the need for certain project deletions, substitutions and cost estimate adjustments also has arisen in the Reserve program during the past several weeks since this bill was first introduced. With your permission, the details with respect to these items will be presented to the committee during the testimony on the line items by the respective departmental witnesses.

Certain general progisions are included in title VI, which correspond to those contained in the Reserve Forces Facilities Acts of both 1958 and 1959, namely: Section 601 (4)--A provision for authorization of urgent projects made necessary by changes in assignment of weapons and equipment; section 603 which provides, with respect to Reserve Forces facilities, the same ancillary authority that is regularly contained in the general provisions for military construction for the Active Forces; and section 605 which provides for a limited degree of flexibility in costs indicated for the individual line items within the overall dollar totals for the respective Reserve component programs. In addition, there is included in this year's bill-as section 606—a provision which would repeal the authorization for any projects which have not been initiated within 3 years subsequent to their authorization. This provision is similar in effect to a provision which

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