Subsection (a) would provide that this award would include the purchase price of real or personal property to reproduce the interest previously possessed; all moving expenses, rents, profits lost, and overhead expenses due to a suspension of the business, reinstallation of fixture and equipment; reopening costs; attorney and broker fees; and duplication of taxes, interest, and rent.

Subsection (b) would provide for protection against an overly generous award in the case where property would be replaced by a substantially different interest.

Subsection (c) would provide for the case of damage to property or a portion of property being taken.

Section 512: Taking and Damage Defined. This section would define taking to relate to any acquisition by eminent domain of a property interest in a whole or partial manner. It would define damage to relate to the net decrease in value of a property located adjacent to property acquired for a project, as a result of the project.

Section 513: Requirements for Approval of Contracts or Agreements for Federal Financial Assistance. This section would provide that no new contract for assistance would be entered into after July 1, 1966, without the agreement by the applicant to the procedural and compensation requirements of this act. Although the staff study for the Special Subcommittee on Real Property Acquisition, in their proposed legislation, provides for such a requirement, it does not have any leeway for the time needed to change certain State and local ordinances, where necessary. A minimum amount of time should certainly be allowed.

Section 514: Enforcement. This section would provide for review of compliance and possible suspension of funds.

Section 515: Application. This section would provide that nothing in this title would apply to any project contracted or planned for prior to enactment of this act.

Senator MUSKIE. Do I take it that if title IV is retained in the Housing Act that the comparable features of S. 1201 will have been covered adequately or, at least, covered to the extent that they are not covered now?

Mr. WIDNALL. I think that it would not be covered as adequately as it might be. This is a new approach. It has caused the breakthrough, as you know. There is that feature which makes it mandatory, which is not in the bill before the Senate committee.

Senator MUSKIE. The Senate did not include it as it is in the House bill, because, in fact, S. 1201 and S. 1681 were pending in this subcommittee. That may have been a mistake, but I am sure that we will examine sympathetically your title IV. I think that with the inclusion in the record of the documents you have presented, we can cover that. I think you have made some excellent suggestions here for dealing with this proposition, and have presented a concept that ought to underlie our condemnation policy. It might be open to some abuses. I am not sure.

Mr. WIDNALL. I think that it will make a tremendous contribution in this field. And what you are attempting to do has a wider scope than we have had in the housing field and in the urban renewal field, but for one I have seen so many abuses, so many hardship cases created by the Federal demolition and taking that it is time that the Congress acted on this aspect as expeditiously as possible.

Senator MUSKIE. You have had a much longer experience than I have had in this field. When looking into the housing field, of course, we become rather accustomed to these concepts of compensation. I have found in my State, for example, and, I think, in other States, that the State highway departments are very reluctant to get into the problem at all. Have you found that in New Jersey?

Mr. WIDNALL. In the past. At the present time there is pending in the New Jersey Legislature a change in condemnation procedures and, also, using the concept of a 75-percent immediate payment.

Senator MUSKIE. I think that is an excellent provision.

Mr. WIDNALL. This can solve a lot of problems in our opinion. Particularly for people who have no income.

Senator MUSKIE. I think that back in the days when people had advance information as to where a highway was to be located, the concept developed in the State highway departments that you somehow had to trap the owner into and maybe that is too harsh a phrase― a lower price for his property. I think it is unfortunate, but understandable, that this concept is still imbedded in the policy and the practices of the State highway departments, but it is there.

Mr. WIDNALL. I have seen it take place. They also take advantage of the known fact that if a property owner must enter into contention with them over the amount of the reward, he has to pay x number of dollars for an attorney and he gets involved in quite a serious expenditure of money on his own part in going into the courts. He suffers a great deal of financial loss by doing that. I think that this can curb some of the abuses in that area and it makes it possible for the property owner to plan, which he cannot do under the present system.

Senator MUSKIE. We will take a good look at your title IV and see if we cannot use it in developing the Senate's position on this proposition. We will have to reconcile the two versions of the housbill and then move on from there to achieve a fairer handling of this problem.

ing

I thank you very much.

Mr. WIDNALL. Thank you.

Senator MUSKIE. We will put you on now, Mr. Drought, although it is out of order. But I believe it would be to your convenience.

I know Senator Kennedy wanted to be here to present you to the committee. I am sorry that he cannot be here at this point, but he has a heavy schedule.

You know how welcome you are and how pleased we are that you are here to testify on behalf of Mayor Collins and the U.S. Conference of Mayors and the National League of Cities.

STATEMENT OF JAMES DROUGHT, ASSISTANT ADMINISTRATOR FOR DEVELOPMENT OF THE BOSTON REDEVELOPMENT AUTHORITY, ON BEHALF OF HON. JOHN F. COLLINS, MAYOR OF THE CITY OF BOSTON, THE U.S. CONFERENCE OF MAYORS, AND THE NATIONAL LEAGUE OF CITIES

Mr. DROUGHT. Mr. Chairman and members of the committee, my name is James Drought and I am assistant administrator for development of the Boston Redevelopment Authority. I wish to present a statement on behalf of the Honorable John F. Collins, mayor of the city of Boston, the U.S. Conference of Mayors and the National League of Cities, formerly the American Municipal Association, of which organization Mayor Collins is past president.

We appreciate the opportunity to participate in this hearing and to present to the committee our views with respect to Senate bills 1201 and 1681.

We endorse the objective of each bill to standardize practices and procedures with respect to the relocation of displaced persons and of providing dislocation allowances and increased relocation adjustment payments. We believe, however, that it is essential to standardize practices and procedures with respect to real property acquisition as well, and therefore encourage the adoption of the provisions of Senate bill 1201 with respect to real property acquisition.

Senator MUSKIE. Is that the position of each of the organizations that you represent?

Mr. DROUGHT. It is, Mr. Chairman.

We would like to present our views on some of the provisions of the bills in the light of our experience.

As the committee is aware, there have been and are significant differences among Federal agencies and State and local government agencies with respect to policies and procedures for the acquisition of real property. These differences have resulted in misunderstanding and confusion which have worked to the disadvantage of the communities and the government agencies involved. There is no justification for unequal treatment in public programs. We, therefore, endorse the comprehensive provisions of Senate bill 1201 with respect to real property acquisition, which would, in our opinion, go a long way toward the elimination of the disparity of treatment.

We believe every property owner should be entitled to reasonable information concerning the taking agency's opinion of the value of his property and he should be entitled to receive an offer for his property at the time of taking which represents a fair price. This practice was adopted by the Commonwealth of Massachusetts last year.

The Boston Redevelopment Authority has had a year's experience with a "full and fair price" system under which the owners of residential property were offered initially the approved maximum acquisition price for their property. We believe the "full and fair price" system has been a success. It has offered the advantage of assuring each property owner that the price which will be paid for his property is made on the same basis as that of his neighbor and that the amount of compensation offered is not dependent upon his or his attorney's trading ability and that he is not forced to bargain with the negotiator from the low limit of a price bracket to reach the top offer.

Senator MUSKIE. The "full and fair price" system relates to the value of the property itself?

Mr. DROUGHT. It does.

Senator MUSKIE. And it is designed, I take it, to insure that the property owner receives the full and fair market value?

Mr. DROUGHT. The full value as determined by the upset price approved by the agency.

Senator MUSKIE. Is there a definition in the law that we should include in the record at this point as to the full and fair price?

Mr. DROUGHT. No, there is not. This is something that has been adopted—that is a policy that has been adopted for the acquisition of real property, for residential property.

Senator MUSKIE. Has the "full and fair price" standard been defined in any way by regulation or otherwise?

Mr. DROUGHT. It has not been defined by regulation, to my knowledge.

Senator MUSKIE. Well, where is it found?

Mr. DROUGHT. It is being used in 38 States, in the public growth program, it is my understanding.

Senator MUSKIE. It has not been codified at this time?

Mr. DROUGHT. Not to my knowledge.

Senator MUSKIE. Is there no standard which the administrators use that assures uniformity of application?

Mr. DROUGHT. Well, in essence the method is that we have two independent appraisals made of the property and these are examined and referred to the Federal agency under our program and they establish an upset price or price at which we are authorized to buy. Senator MUSKIE. Somewhere a policy must be stated.

Mr. DROUGHT. There is not a policy which states that we must offer the full and fair value of the property. In many instances the price is arrived at by the same means and then the individual agency at its discretion has been authorized to negotiate. What we seek to eliminate is the problem of the individual property owner having to argue his case and determining that he is getting the highest price.

Senator MUSKIE. I think that I understand the concept on the basis of the way you describe it, and I am certainly in accord with it, but you have stated that this practice is adopted, or was adopted, by the Commonwealth of Massachusetts last year, and I want to be sure what form that adoption took.

Mr. DROUGHT. The statement with respect to the Commonwealth of Massachusetts has reference to the clause that the property owner must be offered the price which represents the fair value of the property at the time of the taking.

In prior years it was possible in the Commonwealth of Massachusetts for the department of public works, or some other department to file a declaration of taking and to pay $1 and then at a subsequent date to obtain an appraisal and negotiate for the purchase price of the property.

This policy which was enunciated by the attorney general of the Commonwealth states that this is no longer acceptable in the Commonwealth; that all taking agencies must be prepared or must have had appraisals made prior to the acquisition and must offer a reasonable price to the property owner at the time of the taking so that really it is an administrative determination which has been handed down by the attorney general.

Senator MUSKIE. For the record I would like to have any papers that spell this out to any extent. They would be useful.

Mr. DROUGHT. I think, Mr. Chairman, that I can obtain this for the committee and submit it at a later date.

Senator MUSKIE. Fine. Thank you very much. (The information follows:)

THE COMMONWEALTH OF MASSACHUSETTS,
DEPARTMENT OF THE ATTORNEY GENERAL,
Boston, December 27, 1963.

Re Land-taking procedures, department of public works.
JACK P. RICCIARDI,

Commissioner, Department of Public Works,
Boston, Mass.

DEAR SIR: With your support and that of the Federal Bureau of Public Roads the eminent domain division of this department was authorized to establish a new section for the analysis and codification of the laws of the Commonwealth relating to all aspects of its highways. For many months the initial review of those laws has been in progress during the course of which the existing law and procedures in connection with the taking of property by eminent domain by the Commonwealth have been considered. One product of that work has been the filing with the General Court of a legislative program by me. If enacted, it will improve the law and procedures governing the exercise of that sovereign power of eminent domain by protecting more promptly and equitably the rights of the individual citizen.

During the study of present practices it became apparent that the department of public works continues to employ some land-taking procedures, established by your predecessors, which do not comply with the existing law. The purpose of this letter is to call your attention to those land-taking practices of that department which are in urgent need of change. One is the award, at the time land is taken, of only nominal damages in the amount of $1 without regard to the severity of the damage actually caused. Another is the failure of the department, in many instances, to give written notice of the taking to the owner of the land taken. Finally, the delay in processing damage claims by the department is such that the landowner must wait many months and often years before any compensation is received.

Those three practices impose hardships on landowners whose property is taken. Many of them feel compelled to bring costly lawsuits against the Commonwealth in order to get fair compensation. That adds to the congestion in the courts and creates a significant demand on the staff and financial resources of both the department of the attorney general and the department of public works. Meanwhile the interest to be paid by the Commonwealth accrues with each month that damage claims remain unpaid. On November 6, 1963, the rate of interest on such claims was increased by the general court by half from 4 to 6 percent. (St. 1963, c. 793, sec. 1.)

Under normal circumstances these problems and their solution would have been brought to your attention many weeks ago with full confidence that you would take prompt remedial action. However, passage of the Department of Public Works Reorganization Act argued for postponement of this letter until it could be addressed to the members of the newly created public works commission. The delay in the appointment of the new commissioners was not anticipated or expected by me in view of the emergency preamble inserted in the Reorganization Act by the Governor on November 15, 1963, declaring that postponement would "defeat its purpose which is to reorganize the department of public works immediately in order that the important highway programs of the Commonwealth may be undertaken without delay." (St. 1963, c. 821.) However, it is not now clear when the appointment and confirmation of the new public works commissioners will be accomplished. In any case, I am certain that they would agree that any possible administrative convenience to them is greatly outweighed by the benefit to citizens of the Commonwealth which will accrue from immediate implementation of this letter.

I am aware of the difficulties confronting the department of public works in attempting at this time to act on a problem of this scope. The active management group of that department may soon be faced with removal. Through no fault of the present commissioners several key positions are not presently staffed. However, the matters to which this letter refers cannot wait any longer. Whatever view one might take of the merits and urgency of the Reorganization Act, it is clear that these problems constitute, at present, a genuine emergency.