Partial list of municipal water and sewer bonds with net interest cost of 4 percent Partial list of municipal water and sewer bonds with net interest cost of 4 percent Partial list of municipal water and sewer bonds with net interest cost of 4 percent and above-Continued STATEMENT OF HON. HUGH J. ADDONIZIO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY Mr. ADDONIZIO. Mr. Chairman, I think you and the other members of the subcommittee are to be commended for the community facilities legislation which you now have under consideration. I am in wholehearted support with the objectives of the bill and it is a pleasure to testify in its support. I do, however, Mr. Chairman, have several suggestions to expand the scope of the bill which I would like to present to the subcommittee. This year's bill is confined to public facilities which have a direct bearing on the national health problem. In other words, the only eligible purpose for loans would, as I understand it, be for hospitals and loans for sewer and water facilities. I certainly agree with the chairman that the health problem is one of paramount importance. But I believe it is only one of the many public facility problems which should be brought within the scope of this bill. As we all know, last year's community facilities bill was much broader in its application. In addition to water and sewer facilities and nonprofit hospitals, the bill included all types and sorts of local public works, including, for example, public streets, parkways, bridges, parking lots, parks, police and fire protection projects, just to mention some of the eligible items. While I have been glad to join the chairman in introducing the bill in its present form, personally I would favor seeing the bill expanded to cover all types of local public facilities. The need for some form of Federal financing aid on favorable terms continues undiminished. Our cities and towns are just unable to keep up with the expanding needs generated by their growing population. Present water systems, sewer facilities, roads, hospitals, and all the other essential public works have been strained beyond endurance. I think it absolutely vital that we do everything possible to help communities cope with the community facilities problem which, in my judgment, is growing faster than the community's ability to handle them. The plan fact is that most local communities are in the most serious financial straits. Their real estate taxes are already heavily utilized. The Federal Government has first call on the largest revenue producer, namely the income tax, and I think it essential, as well as just and equitable, that the Federal Government give a helping hand to communities in meeting the growing menace of the health problem as well as the mounting needs for community facilities generally. Because I would recommend expanding the scope to include all types of community facilities, I also would recommend that the amount of funds available to the program be increased beyond the $1 billion contemplated in H.R. 5944. Clearly, if the bill is to be expanded beyond the health field, it will need larger resources and consequently I recommend a program of at least $2 billion. I have noted that in questioning witnesses during this hearing, the point has been made that the expanded health facilities to be provided by the bill would also help the unemployment problem. This would be done directly by the new jobs which the construction of the projects would create, and also would help indirectly in many communities through the attraction of new industry now deterred because of water or sewer pollution in the area. Mr. Chairman, I am glad to see this emphasis upon the employment-generating aspect of the bill. I am disturbed by the complacent attitude on the part of the administration which gives a clear implication that the serious recession which has blighted our Nation has somehow disappeared, and that we are now completely recovered from our economic suffering. I wish some of these gentlemen would come and try to use their persuasion upon the unfortunate families in my district who are out of work. They, and the nearly 42 million Americans who are still unemployed, know that the recession is still a grim reality. I certainly hope that the economists who assure us that economic recovery is on the way are correct. Despite all their propaganda, however, the recession is still with us, and I think that as a matter of wise public policy as well as human compassion, we must do everything possible to support programs which will make economic recovery an actuality rather than a myth, and which will restore our economy to a full employment level so that every willing American can find gainful employment. An expanded public works program, in my opinion, would help create hundreds of thousands of jobs. There are already many projects planned and ready to get underway if only financing were available. Once these projects were put under construction, we would inevitably see the economic multiplier at work which would create a rising spiral of job opportunities. The other suggestion I would respectfully like to make to my colleagues on the Banking Committee, concerns the financing terms proposed in the bill. H.R. 5944, as introduced by Chairman Spence, calls for loans with a miximum maturity of 40 years and an interest rate based on a formula which would work out to a rate to the borowing community of approximately 3 percent. Compared with terms available in the private market, these terms contemplated by the bill are clearly favorable and desirable. But I would like to recommend to the committee that it consider an alternative formula which would lead to a lower rate as well as a change which would increase the maximum loan mautrity from 40 years to 50 years. Such a longer maturity would help immeasurably in reducing the annual financing costs to the borrowing cominunity. I realize that the interest rate formula is a controversial one. I do feel, however, that the financing needs, particularly of our larger urban centers, would be better served by a formula which would work out at an interest closer to 2 percent than to 3 percent. The committee might consider 22 percent as an acceptable compromise figure. But on the general objective of the bill, Mr. Chairman, I do not think there can be any legitimate disagreement. The community facilities problem is one of the gravest facing our Nation. No one can dispute the fact that our cities are daily falling behind their minimum needs. We must give them the tools to do the job and we must help provide the means to step up economic activitiy so that unemployment can be banished from our land. Mr. Chairman, I am grateful for this oportunity to present my views and I commend my colleagues for their work on this bill. I know we can be confident that the bill which the committee finally reports will be a bill which will really come to grips with the problem, and which will enhance the public interest and promote our general welfare. STATEMENT OF UNITED STATES SAVINGS AND LOAN LEAGUE RE COMMUNITY FACILITIES BILL-H.R. 5944 The United States Savings and Loan League endorses the objective of H.R. 5944. We commend Chairman Spence and the members of the committee for their continuing interest in constructive legislation which will stimulate home construction and encourage the planning and building of better American neighborhoods. Virtually all of the available land within our established cities has been taken and as the builders move farther into the suburbs they encounter many problems in the acquisition and preparation of housing sites. The tremendous cost of sewer, water, and other utilities, is a deterrent to economical home construction. If we are to have well designed, healthful new community developments, it is imperative that ways and means be developed for financing the construction of all of the needed neighborhood improvements. The United States League applauds that portion of H.R. 5944 which seeks to encourage private financing of these projects and suggests that the interest rate on these obligations be such as to keep the cost of improvements down as low as possible while making certain that private investors will be attracted to the program. The League further believes that it is appropriate and desirable to earmark a percentage of the revolving fund for the small towns or rural areas, since many, if not most of the larger cities have been able to handle their financing of community facilities without Federal assistance. For several years the United States League has made two concrete suggestions for changes in existing law which the savings and loan business feels would substantially assist in the financing of the construction, repair, or improvement of community facilities such as water and sewage facilities. The first of these proposals was to permit Federal savings and loan associations to lend on raw land which is to be developed primarily for single family homesites. Such a provision is included in the Senate version of the housing bill, and we believe that if it is adopted by the Congress it will go a long way toward helping solve the problem of financing community facilities. The second proposal would permit Federal savings and loan associations to lend or invest in securities or obligations of municipalities or other political subdivisions. If H.R. 5944 is amended to permit Federal savings and loans to invest in these obligations, we think it would be much more beneficial to the local communities and would improve the assistance available to communities. The bill itself now suggests that banks and other lending institutions should be permitted to participate in the financing of these facilities. It would appear, then, to be highly appropriate that the bill be amended to permit Federal savings and loans to participate in the financing of these community facility programs. NATIONAL HOUSING CONFERENCE, INC., Hon. BRENT SPENCE, Chairman, House Banking and Currency Committee, DEAR MR. CHAIRMAN: On behalf of the National Housing Conference, I should like to submit a statement in support of H.R. 5944, a bill introduced by you to meet the critical shortage of water and sewer facilities and hospitals which exists in so many of our communities today. |