Senator SPARK MAN. Mr. Cole, you have two of your commissioners who have not yet appeared, Mr. Slusser and Mr. Steiner.

Mr. COLE. Mr. Steiner is here. We don't expect Mr. Slusser to be here. If you need someone from the Public Housing Administration, we will have someone.

Senator SPARKMAN. I don't know that

Mr. COLE. Mr. Slusser is recovering from a very serious operationcataract removal.

Senator SPARKMAN. By the way, I noticed Mr. Steiner's statement is very short.

Mr. COLE. We would be glad to present it.

Senator SPARKMAN. Let Mr. Steiner come around.

I notice, Mr. Steiner, your statement is quite short, so I thought we might be able to go through it rather hurriedly. Just go right ahead, sir.

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

Mr. STEINER. Mr. Chairman and members of the committee, our proposed legislation for the urban renewal program consists of four changes in the existing law, which are contained in the bill referred to as the "Housing Amendments of 1957." These changes include a necessary increase in the capital grant contract authorization for the program and several proposals which we believe will simplify the program and will enable us better to assist communities undertaking urban renewal projects.

The need for an increase in the capital grant authorization is indicated by our present situation. As of March 1, 1957, some $853.8 million of the aggregate available capital grant authorization of $900 million was already reserved or was in the process of being reserved for 441 local urban renewal projects and 18 demonstration projects. In recent months we have received a larger volume of applications for new projects than was anticipated. Because of the desirability of administering the program within the presently available contract authority, we are now directing the $46.2 million balance of available authority to the most urgent needs of the existing program, and particularly to urban renewal projects in which the process of acquisition and clearance of slum areas has already commenced or is about to begin. For this reason, it has been necessary to defer action on some initial applications for survey and planning assistance.

Senator SPARKMAN. Mr. Steiner, I wonder if we might put the statement in the record. Senator Capehart is going to have to leave. By the way, I am going to place in the record at the end of Mr. Mason's testimony an exchange of letters that I had with Mr. Mason a few days ago with reference to the downpayment schedule. (See p. 135.)

(The remainder of Mr. Steiner's statement follows:)

It is, of course, extremely important to the urban renewal program that additional capital grant authorization be provided by the Congress so that there will be capital grant authority sufficient to cover necessary adjustments of fund reservations for existing projects and for further program growth. For this purpose we are requesting an increase in capital grant authorization of $175 million for

the next fiscal year. I will now describe briefly the three proposals which are intended to provide some simplification of the urban renewal program and to enable the Government better to assist communities carrying out projects.

Section 302 of the bill would establish an alternative formula for calculating the Federal capital grant which represents the Government's share of the ultimate cost of an urban renewal project. When a community elects, with the consent of the Administrator, to follow this alternative formula, it would provide for capital grants by the Government amounting to not more than three-fourths of the aggregate of the net project costs of the urban renewal projects involved. This would be in lieu of the present capital grant formula under which capital grants may amount to not more than two-thirds of aggregate net project costs. The justification for the larger Federal share of project cost under the new alternative formula would be the elimination from project costs, and the consequent assumption by the locality, of many of the smaller cost items relating to an urban renewal project. These excluded costs are frequently those which are most difficult to budget, to evaluate, and to control. We believe that the result of the utilization, by those localities which are able to do so, of the proposed alternative basis for calculating capital grants will be a simplification of the administration of the program, with resulting savings in time to both the Federal Government and local governments, and the elimination of many procedural requirements and controls frequently regarded as redtape and bureaucracy. The alternative formula may also strengthen local control and permit greater local responsibility in the carrying out of urban renewal projects.

The proposed alternative formula will, according to our estimates, result in no substantial increase or decrease in the relative share of the overall cost of projects borne by the Federal Government or the local government. What the formula does is to apply a larger percentage of Federal participation to a smaller cost base. Under this alternative formula, project cost-that cost which is used for calculating the sharing of costs by the Federal Government and the localitywould consist solely of major, easily definable items of expense. These items would include the cost of land being acquired, direct costs of demolition and site clearance, site preparation and improvements, land disposition, and related carrying charges (except for taxes and payments in lieu of taxes). The alternative formula would exclude from the project cost upon which the three-quarter Federal share is based, many smaller cost items which are difficult to identify and which cause time-consuming budget auditing and processing problems in the administration of the program of Federal assistance. Such items include survey and planning costs, costs of legal services, taxes and payments in lieu of taxes, and all administrative and overhead expenses of local public agencies. All such costs would be borne locally and would not constitute a part of the project cost which is shared by the Federal Government and the locality on the three-quarter, one-quarter basis.

No community would be required to follow this new formula. Furthermore, it is not intended that a community, in choosing whether to follow this formula or the existing two-thirds, one-third formula, shall be forever bound by its choice. It is intended, however, that the program will be so administered as to prevent a community from changing formulas from project to project during the foreseeable future. Rather, after one formula is elected, a change will be permitted only upon adequate justification based on long-range considerations.

The use of the alternative formula is not expected to cause any substantial change in overall cost to either the Federal Government or the localities receiving Federal assistance. The major effect of its use will be a simplification of Federal procedures, particularly as they relate to necessary control of local expenditures, with a resulting saving of time and elimination of redtape and possible Federal interference in local affairs. A more detailed explanation of the alternative formula and its effect is given in the section-by-section analysis of the bill.

Another proposal intended to simplify administration of the program of Federal assistance for urban renewal appears in section 303 of the bill. This proposal would reduce paperwork involved in review and approval of relocation payments which were authorized by the Housing Act of 1956. It would enable the Administrator to include in his rules and regulations respecting such payments to individuals and families displaced by urban renewal projects, provisions authorizing the payment of fixed amounts to such individuals and families in lieu of their actual moving expenses. Such authority would make it possible to eliminate in many cases the burden of receiving and reviewing evidence of moving expenses in order to approve relocation payments. This would reduce

paperwork for both the Federal Government and the local public agency. The $100 limitation in the law on such payments to individuals and families would, of course, remain applicable, regardless of whether payments were based upon substantiation of actual moving expenses or upon fixed amounts established by the Administrator.

Section 304 of the bill would amend a provision of the Housing Act of 1954 which authorized the amount of certain local grants-in-aid to be computed on an estimated cost basis, rather than on an actual cost basis, if such grants-in-aid for a particular project are not completed at the time of final land disposition, provided the Administrator has been assured that they will be completed when needed and within a time prescribed by him. For example, when a school or similar facility, which is being provided to a project as a local grant-in-aid, is not yet finished at the time the urban renewal project is otherwise completed, the project may be closed out on the basis of the estimated cost of the facility. This provision thus makes possible the closing out of projects which would otherwise be delayed, with certain continuing costs, such as interest charges. The present law does not apply. however, to certain projects proceeding under the law as it existed prior to the enactment of the Housing Act of 1954. The present proposal will simply make the 1954 act provision available for these older projects and will thus make earlier closings, and consequent Federal and local savings, equally possible with respect to all urban renewal projects receiving Federal assistance.

Senator SPARKMAN. Let me ask you this question: Your program is beginning to move quite well; isn't it?

Mr. STEINER. Yes, sir; there is a great deal of activity in the pro

gram.

Senator SPARKMAN. You are pleased with the manner in which it has gotten off the ground, so to speak?

Mr. STEINER. Yes, sir. There are always small ways in which a program can be further perfected, but, generally speaking, it is moving in a very satisfactory manner, I think.

Senator SPARKMAN. Do you believe that the additional amount which you are requesting-is that $175 million?

Mr. STEINER. Yes, sir.

Senator SPARK MAN. Do you believe that is adequate?

I will say to you, frankly, I have been somewhat disturbed by seeing in the papers the last few days what has been written up as a slowdown on the urban renewal program. I view it as a program that we have been trying to get underway ever since 1949 and now, when you have it going, it seems to me that it is very bad to slow it down.

I thought while Senator Capehart was here I would like to ask you to comment on that.

Mr. STEINER. Yes, sir.

Senator SPARKMAN. Your statement will be printed in full in the record.

Mr. STEINER. Fine. Thank you.

I think perhaps it is best for me to comment under two headings. There are two different situations that we face that have perhaps been somewhat confused in the public mind and in the press.

In the first place, the applications received so far this year in fiscal 1957 have come in at a rate faster than anticipated. As a result, we are running short of funds available in fiscal 1957. As a result of that, we have about $46 million; I think that is the figure just referred to in the statement of funds available for the rest of this year.

We have set that aside to assist projects which are already moving, are already under contract, or which after several years of planning are now ready to go into an execution contract. We have also said

that those funds would be used for any disaster area projects, new projects, which might originate.

In the light of that utilization of the remaining funds for fiscal 1957, it is necessary to defer action on some of the new applications to start new projects.

Now that is the first aspect of this situation. The second aspect relates to our needs for fiscal 1958.

For fiscal 1958, we are asking for $175 million new contract authorization, and this is an amount which we feel will permit the program to go forward with vigor.

Senator CAPEHART. Will you yield a moment.

What did you have this fiscal year?

Mr. STEINER. This year we had $200 million, sir.

Senator CAPEHART. And you are asking for $175 million?

Mr. STEINER. Yes, sir.

Senator CAPEHART. But you will have no carryover?

Mr. STEINER. No, sir. We will not have a carryover.

Senator CAPEHART. Why shouldn't it be as big next year as it was this year?

Mr. STEINER. Well, this figure, I think, must honestly be said, reflects

Senator CAPEHART. An economy drive?

Mr. STEINER. A determination to achieve some economy in Government operation, and I think we will be looking at projects with considerable scrutiny as to expensive cost features, the expensive items, but I think I can say very definitely that the $175 million is a figure which will permit the program to move forward, to move forward with vigor during 1958.

Senator SPARKMAN. Do you want to ask any more questions before you go?

Senator CAPEHART. No.

Senator SPARKMAN. Actually this is authorization that you are referring to and not expenditure of funds, isn't it?

Mr. STEINER. This is contract authorization; yes, sir.

Senator SPARKMAN. The funds might be spread out over a period of several years, might they not?

Mr. STEINER. Yes, sir. There is a time lag of several years in actual disbursements.

Senator CAPEHART. Is there a lot of the $200 million that you have this year then that is going to be spread out over a number of years to come?

Mr. STEINER. Yes, sir. That $200 million is available this year for contract commitments.

Senator CAPEHART. How much has actually been spent of the $200 million?

Mr. STEINER. None of it has actually been

Senator CAPEHART. But $160 million has been disbursed?

Mr. STEINER. No, sir.

Senator CAPEHART. $159 million has been authorized but none of it has actually been spent, is that correct?

Mr. STEINER. None of it has been disbursed, that is correct.

Senator CAPEHART. So if you add $200 million last year, $175 million this year, that would be $375 million, all of which could be disbursed later?

Mr. STEINER. The total picture, Senator, is something like this: Nine hundred million is available in contract authority. About $855 million has been reserved. Out of that, about $252 million has actually been or is in process of being committed by contract. About $157 million has been appropriated by the Congress for disbursement, and about $872 million has been disbursed. That is the total picture. Senator CAPEHART. I thought you said a moment ago none of it had been disbursed.

Mr. STEINER. The figures I have just given you are total cumulative for the program since the beginning, 1949.

Senator CAPEHART. I see. I get it.

Mr. STEINER. None of the $200 million available for 1957 has actually been

Senator CAPEHART. I see.

Senator SPARK MAN. It seems to me, though, the fallacy of the reasoning that it is economy in government-expenditures, that is, in the immediate future-that that is a fallacy because actually it involves funds that may not be spent for 1957.

Senator CAPEHART. I have been reading these resolutions that have been floating around here, and I can well understand why these gentlemen might get a little economy minded.

I would just as soon forget it, you understand.

Senator SPARKMAN. The program is taking hold, though.

The thing about it is that this involves cleaning up the slums of this country and redeveloping them. It is a fine program, and it is just getting going and I don't want to see it crippled right in its beginning.

Mr. COLE. Senator, we don't think this will cripple the program and we do, as Mr. Steiner said, think that it will provide a strong progressive program.

Now it is true that this reduction will be effective a year or two hence. This will give the Congress and also, frankly, give the agency an opportunity to examine, to determine what we should do in the future. It isn't a matter of an exact thing.

Senator SPARKMAN. All right.

Mr. Steiner, I will keep you a few minutes longer, if I may, because you do have some technical amendments that you are requesting, don't you?

Mr. STEINER. Yes, sir.

Senator SPARKMAN. You have explained those in your printed statement which I think is sufficient, but is there any particular item regarding those technical amendments that should be called to our attention?

Mr. STEINER. Well, there is one technical amendment which perhaps is of greater significance than the others that I think ought to be commented upon at least briefly.

Senator SPARKMAN. If you will, please, sir.

Mr. STEINER. The present formula for Federal cost sharing provides for two-thirds of the ultimate net project cost to be paid by the Federal Government in Federal grants.

In arriving at this net cost, a great many costs go into the project, into what we call gross project cost administration, the cost of buying the lands, demolition of structures, improving the site, site improve