think we can start with the general statement. They will be coming in later, and they will catch up.

Mr. Cole, I understand that you want to start now on Title III: Urban Renewal.

Mr. COLE. May I comment on some colloquy which you had with Mr. Norman Mason with respect to any amendments to title I? As the chairman knows, the Agency is constantly examining and reexamining possible antirecessionary amendments to legislation-we are studying the field which covers many possible amendments even yet to be submitted. I am sure the chairman and the committee is doing the same thing.

I wanted to leave open, if the administration would find something in this field or any other field that we felt might be helpful in this situation, that we might present it.

Senator SPARK MAN. We would certainly be glad to have it any time before we conclude action on these bills. I am sure the House would be glad too, after we have.

Mr. COLE. I just did not want the door slammed on us.

Senator SPARKMAN. My only thought with reference to title I was if you did not offer any recommendations, we would simply give it a simple extension in order that people interested would be on notice that the program itself would be extended. We would be glad to have any suggested changes at any time.

Mr. COLE. Title III: Urban Renewal. Capital Grants.

Some of the most important provisions of S. 3399 are contained in title III, relating to the urban-renewal program of the Federal Government. I know the members of your committee are vitally interested in this program and have recently studied its operations in a number of cities in various parts of the country. No program of our Agency has received more of my personal time, attention, and interest than our urban-renewal functions. The elimination of urban slums and blights is one of the greatest challenges of our time. With our rapidly growing population and migration to urban areas, it is especially important also that cities take timely steps to assure future growth best suited to the needs of our people.

With Federal financial assistance, most of the larger cities of the Nation have now made urban renewal a major undertaking of local government. Since 1954, when a new and broader approach to urban renewal was taken by the Federal Government, over 300 additional projects in some 200 localities have been approved for Federal aid. Communities have already moved to clear thousands of city blocks of the most squalid slums. Good housing, parks and other improvements are replacing slums and are providing decent neighborhoods suitable for family life. It is essential for the Federal Government to continue to play an important part in aids to local urban renewal and development programs.

As this program has developed and we have acquired experience, the need for further amendatory legislation has become evident, if we are to carry out the long-range and tremendous job which lies ahead. First, there is need for sufficient statutory authorization for the program to continue over a period of years. Title III of the bill would give this authority by making available additional capital grants for each of the next 6 fiscal years.

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Localities must have the assurance of continued Federal support if they are to properly plan and undertake urban renewal and related improvements which may require several years to plan, undertake, and complete. The planning and development of local administrative or financing machinery may also be involved, as well as the general planning of the metropolitan area. The assurance of Federal support may also be a significant factor in maintaining the interest of private investors and developers in urban renewal undertakings. I believe the additional 6-year period of capital-grant authorization provided in the bill is both necessary and adequate to give the required as

surance.

The increased amounts of the additional capital-grant authorization under the bill would be $200 million on July 1 of this year, $250 million on July 1 in each of the years 1959 and 1960, and $200 million on July 1 in each of the years 1961, 1962, and 1963. As approximately $50 million of presently authorized funds would be carried over at the end of this fiscal year, the new authorization would in effect permit $250 million of Federal grant funds for each of the next 3 years and $200 million of such funds for each of the 3 years thereafter. These amounts must be considered in relation to provisions in the bill for gradual increases in local grants. With these increases, the grant level of $200 million in the latter 3 years of the authorization could be applied to more projects and to a total program slightly larger than that covered by the $250 million grant level under the present grant formula.

Existing law limits the aggregate capital grants paid with respect to the projects of a local public agency to two-thirds of the aggregate net costs of such projects. The remaining one-third of net project costs must be borne by the locality in the form of cash or noncash local grants-in-aid, the latter consisting of such things as land donations and the provision of necessary public improvements and facilities. Under the bill, the Federal Government's two-thirds share would be reduced to 60 percent on July 1, 1959, 55 percent on July 1, 1960, and 50 percent on July 1, 1961, with resulting increases in the local share of project costs bringing such share up a matching 50 percent. The gradual reduction of Federal contributions would give localities and States time to gear themselves to the provision of a large share of project costs.

I recommend enactment of the provisions of the bill with respect to the gradual reduction of the Federal share of net project costs. The reasons for this recommendation are based, of course, upon considerations of the general fiscal policy of the Government and the need for greater participation on the part of States and localities in bearing the financial burden of undertakings having primary local as well as national benefit. If essential programs such as urban renewal, which require large amounts of funds, are to be continued at their present levels, States and communities should bear a greater share of the financial burden. We do not know the total ultimate cost of eliminating all of the slums and blight in our country, but we can agree it is a staggering sum and that all of the Federal funds that could be made available would accomplish only a part of the job in the immediate future. Local expenditures should be of equal importance to the amount of work completed.

Unlike many other Federal-aid programs, urban-renewal projects result in direct financial benefits to communities, in addition to the immediate objective of the program. In addition to slum elimination and all of its benefits, cities receive an increased tax base of great and immediate financial value. In the long run, many cities may receive over a period of years sufficient increased taxes as a result of redevelopment and improvements in urban renewal areas to pay all of their local grants-in-aid-not only their cash contributions but their grants in the form of improvements and facilities. It is because of these facts, as well as other advantages of urban renewal, that so many cities are enthusiastically proceeding with their projects. Under the bill, communities would eventually pay one-sixth more of the net project cost than they pay with respect to projects now being undertaken. In view of the extent of present activities, it seems wholly unrealistic to assume that this modest increase would restrict our program.

It has been stated that the future reduction of the Federal share in urban renewal would result in a "modern-day gold rush" of applications that would cause administrative chaos in the Agency. I agree it would cause some problems, but of a type with which we are quite familiar in the Housing Agency. Actually, I believe the problem would be somewhat less than in other programs because of the substantial planning and other local work a community must do before submitting an eligible application.

PLANNING GRANTS

I wish to urge the enactment of a very important provision of the bill relating to urban-renewal planning. The bill would remove the authority of the Housing Administrator to make advances of funds to local public agencies for urban-renewal planning, and would substitute authority for him to make Federal grants for a share of urbanrenewal planning costs. This share would be the same as the Federal share of project costs.

Under existing law, the Housing Administrator makes advances of funds to cover the entire cost of the planning work, and these advances are repayable solely from moneys becoming available to the local public agency for the actual undertaking of the project involved. Thus, the advances are repaid only if and when the urban-renewal project is actually undertaken. As most of these projects are carried out with further assistance in the form of loans and grants, the Federal Government ultimately bears two-thirds of the cost of planning while the locality bears the remaining third through cash or noncash contributions. The community makes no contribution to the cost of planning a project until and unless the project is actually undertaken, and the loss of all planning costs is borne by the Federal Government.

Under the present system, significant amounts have been advanced to a number of cities for urban-renewal planning which has never been completed. In some other cases the planning was completed but no project was ever undertaken. Often this results merely in the utilization of Federal funds without adequate local interest to carry out the project. Requiring the community to initially bear a modest cost of the undertaking, as provided in the bill, would cer

tainly reduce the loss of Federal funds in this manner. This modest cost should not be burdensome to the community. It could simply pay one-third of the planning costs in the form of salaries and other expenses as they are incurred. The Federal grant would be made periodically to assist in meeting those expenses. The amount needed for planning an urban-renewal project is not sufficiently large to create a substantial financing problem for a city that is equipped to carry out an urban-renewal project and bear its share of the cost. Although the lessons of good planning can demonstrate the need for urban renewal, I do not believe that the Congress intended Federal funds to be used for promotional work among the cities. I understand title I of the Housing Act of 1949 to give local communities sole responsibility for determining whether urban renewal will be undertaken within their boundaries. Unless the city government is firmly behind a local program, I do not believe planning money should be advanced by the Federal Government. If the city is behind the program, it should have no difficulty in paying its share of the planning costs as they are incurred, rather than at the completion of the urban-renewal project.

Local initial participation in planning cost would result in the assumption of greater local responsibility for urban-renewal activities. The community would have a greater incentive for economies in operation, which should lessen the need for documentation and Federal supervision.

It should be pointed out that the change to planning grants, as provided in the bill, would not remove the present authority for approval of urban renewal projects on a three-fourths Federal share basis where the city bears not only the cost of planning but also the administrative overhead and legal expenses. Actually, the change to planning grants would be in line with that authority in the law, as the sharing of some of the planning cost may lead some localities to assume the entire planning and administrative cost in order to receive three-fourths (or other proportionately higher) Federal share.

LOANS FOR NONRESIDENTIAL PROJECTS

The bill contains authority for a very desirable new program of assistance to communities in redeveloping their blighted commercial and industrial areas. Under existing law, urban renewal projects assisted by the Federal Government must be predominantly residential, either as to the original site or the redeveloped area. An exception from this requirement, up to 10 percent of the capital grant authorization, is allowed under present law for nonresidential projects where the site included a substantial number of slum or blighted dwellings.

The bill would authorize the Housing Administrator to extend financial assistance, other than capital grants, for an urban renewal project which does not meet the "predominantly residential" requirement. In addition, a new form of financial aid would be authorized for the project. When it is completed and the land sold, the amount of the usual temporary Government loan which could not be repaid from the proceeds of the project could be refunded by the locality with a new type of Government loan having a maturity up to 10

years. The total amount of these refunding loans which could be outstanding at any one time would be $150 million. Wherever feasible, the Administrator would require the locality to obtain. private financing by pledging its rights under the loan contract, as communities now do with respect to temporary loans. In these cases there is no actual disbursement of Federal funds.

Cities are often most interested in redeveloping areas which are not best suited for residential redevelopment and are not presently residential in character. The redevelopment of these areas for commercial or industrial uses may be essential to the proper redevelopment of surrounding residential properties and to the financial soundness of the municipality as a whole. The weakening of the tax bases of cities caused by the declining character of their central areas has led to a rapid increase in requests for assistance to the redevelopment of blighted commercial and industrial sites for nonresidential use. It is certainly true that preservation of the values in downtown business districts would often go a long way toward strengthening of the city's tax base.

We believe that the new loan program authorized in the bill would permit many of these projects to be undertaken, particularly in or near the central business districts where net project costs would be low because of the high market value which the property would have for the construction of downtown office buildings and other nonresidential structures of high value. Although the Federal Government would not furnish capital grants under this program, there should be adeqaute incentive where the net project cost is low, because the project would normally result in greatly increased taxes from the area that would strengthen the tax base of the city.

Although the new loan program would meet the needs of many nonresidential projects, I believe there will continue to be essential projects which are nonresidential and which must have Federal capital grants of the large write-downs involved in the clearance of structures and the sale of land for typical commercial or industrial

uses.

Accordingly, I recommend that the 10 percent exception from the "predominantly residential" requirement in the law be retained.

It is very important that projects which cannot meet the "predominantly residential" requirement be undertaken without capital grants wherever possible, so that the capital grant authorization can be maintained for projects which directly improve the living conditions of our people in accordance with the basic purposes of the Housing Act of 1949.

If agreeable to you, Mr. Steiner will give his statement on title III. Senator SPARKMAN. Very well, Mr. Steiner. Just proceed.

STATEMENT OF RICHARD L. STEINER, COMMISSIONER, URBAN RENEWAL ADMINISTRATION

Mr. STEINER. Mr. Chairman and members of the committee, the program of Federal assistance for urban renewal, which had its origin in the Housing Act of 1949, was broadened to its present form by the Housing Act of 1954. Since that time, the number of localities making use of Federal assistance under title I of the act has grown