35. Can you estimate the cost under the provisions of S. 1681 which would provide full Federal reimbursement up to $25,000 and Federal sharing according to the project matching formula for the amounts in excess of $25,000?

The Federal share of such payments under S. 1681 which would provide 100 percent Federal funds up to $25,000 and Federal sharing on a project basis for amounts in excess of $25,000, is estimated as follows:

36. Can you estimate the costs of the provisions of S. 1201 and S. 1681 for compensation of businesses which close rather than move?

Information accumulated for the Select Subcommittee on Real Property Acquisition indicates that approximately 23 percent of businesses displaced by highway construction discontinue operations.

The same source indicates that 3,876 businesses will be displaced annually by highway activity. This would indicate an annual discontinuance rate of 891 businesses using the maximum payment of $5,000 for estimating purposes indicates an annual cost of approximately $4,455,000.

This does not include those businesses which relocate and are still eligible for the payments provided by these provisions of the bills.

37. How does the definition of "fair value" in S. 1201 (pp. 9, 10, sec. 102(b) (1)) differ from the definition used by your agency in authorizing payments for acquisition of real property?

No nationwide definition of value has been required in administering the Federal-aid highway program. Each State operates under the definition provided by its own laws. In general the differences between the definitions used by the States and section 102(b)(1) of S. 1201 is that the latter spells out that the influence of the proposed project on the value of the property shall not be taken into consideration and that both general and special damages and benefits are to be considered. Some States in varying degrees contain these items in their laws.

38. What would be the impact of the definition of "fair value" in S. 1201 on your agency's grants?

The definition of "fair value" in S. 1201 would have very little effect on our program since practically all acquisitions are by the State highway departments and would not be governed by the definition.

39. In the process of appraising properties before your agency authorizes negotiating a purchase, does the owner or his representative have an opportunity to accompany the appraiser of a State or local agency on his inspection of the property?

We have no regulation that requires that the property owner or his representative have an opportunity to accompany the appraiser on his inspection of the property. However, such a procedure is highly recommended and the States are urged to follow such a practice.

40. Does the owner have this opportunity when your agency inspects the property?

Our right-of-way representatives do not inspect all properties but work on a spot check basis. The owner or his representative is normally requested to accompany our representative on his inspection.

41. Would giving the owner this opportunity interfere with or assist in the appraisal process?

Such a procedure would undoubtedly assist in the appraisal process in the vast majority of cases. However, in the case of an absentee owner such a requirement could cause considerable delay.

42. How many acquisitions per year under your grant programs require the exercise of the power of eminent domain?

Approximately 12,000 acquisitions per year require the exercise of the power of eminent domain.

43. What percentage of the total land purchased and total payments made are involved in eminent domain proceedings?

Approximately 27 percent of the total number of acquisitions are involved in condemnation proceedings. Approximately 50 percent of the properties condemned proceed to trail. The 27-percent condemnation represents an estimated 54 percent of total expenditures.

44. When your agency determines the amount to be offered for property to be purchased, is the initial offer by the State or local government authorized to be the full appraised fair value of the property?

We authorize the State to proceed with right-of-way acquisition on the basis of total estimated cost. The amount to be offered for a particular parcel is determined by the State. Under our regulations the State is required to make an appraisal of the fair market value of the property to be acquired and damages, if any, to the remainder. We do not require that the full market value be offered, but the States are urged to offer the full amount.

45. Do the States and local governments usually offer the full amount you authorize at the outset?

The majority of the States offer the full market value as determined by the State review appraiser.

46. Do you encourage the State and local agencies to buy for less than the full amount you authorize-if they can?

We do not encourage the State and local agencies to buy for less than the full market value. In fact, our regulations require that if a settlement is substantially less than the fair market value justification for the settlement must be in the file.

47. When only a part of a piece of property is required under one of your grants, does your agency authorize, in addition to the value of the property to be purchased, an amount to compensate for any damages to the remainder of the property?

Under our requirements the States are to pay the fair market value of the property taken plus damages, if any, to the remainder.

48. Does your agency reduce the amount authorized to be paid because of benefits which remaining property might receive as a result of Federal activity?

The handling of benefits is in accordance with the law of the particular State involved. Some States do not require that benefits be offset, some require that special benefits be offset, and some require that both general and special benefits be considered in establishing value. In some States benefits can be offset against damages only, while in other States they may be offset against damages and value of property taken.

49. Under your grant programs, does the State or local agency normally pay the agreed price, or deposit the offer with a court, before the owner is required to surrender his property?

Approximately 80 percent of the States normally pay the agreed price, or a substantial portion thereof, or deposit into court the estimated value of the property before the owner is required to surrender his property. The payments and deposits vary from 60 to 100 percent of value. In some instances the courts determine whether and the extent to which the property owner may draw down the deposit without prejudice.

50. Section 104 of S. 1201 authorizes the acquisition of evidence of debt under certain circumstances. Would this practice coincide with the procedures observed by the State and local governments receiving grants from your agency? We do not know of any State highway department that acquires evidences of debt as provided for in section 104 of S. 1201.

51. S. 1681 (sec. 8(a)) provides full Federal reimbursement for the first $25,000 in the cost of a relocation, while S. 1201 (sec. 111) provides full Federal reimbursement for the first $10,000.

Can you estimate the number and cost of relations each year which are in excess of $10,000?

It is estimated that there would be approximately 6,000 relocations a year in excess of $10,000 at an estimated cost of $115 million.

52. Can you describe the cost impact of these provisions on your program? The cost of relocating businesses under the various procedures for the period ending October 1, 1972, are summarized as follows:

53. Would the use of the higher allowance save some businesses otherwise forced to close?

The use of the higher allowance might prevent the closure of some businesses. However, the number would probably be rather small since our estimate indicates that only approximately 19 percent or 750 annually of the businesses displaced would have moving costs in the $10,000 to $25,000 bracket.

54. Would the higher Federal share induce more States to undertake more extensive relocation programs?

It is doubtful if the higher Federal share would induce more States to undertake more extensive relocation programs. There is no incentive for them to do so, as the law specifically provides that they need not provide for payments in excess of $25,000. The States would be content to act as disbursing agents for the Federal funds without providing any program of their own. Without State funds being involved the States would have very little interest in the economics of the program.

55. Do you believe that Federal reimbursement to State and local governments for relocation expenses should be limited to or greater than the Federal share of other costs of the projects cost?

It is our position that Federal reimbursements to States for relocation expenses should be on the same basis as Federal reimbursement of other project costs.

56. If you do not favor full Federal reimbursement for some of the relocation costs, do you prefer limitation to this full reimbursement to be the $10,000 as provided in S. 1201 or the $25,000 as provided in S. 1681?

As stated above we feel that Federal reimbursement should be on a regular project ratio rather than providing either dollar limitation.

57. Do you feel that any relocation payments over $25,000 should be shared under the Federal grant formula? Or do you feel that Federal reimbursement for payments over $25,000 should be limited to 50 percent?

We feel that all relocation payments, including those in excess of $25,000, should be reimbursed to the States at the project ratio rather than a 50percent basis.

58. Would limiting reimbursement of any relocation costs to the project formula continue to leave many States unwilling to offer compensation for relocation?

It is believed that limiting reimbursement of any relocation costs to the project formula might result in some States being unwilling to provide for relocation compensation. This is borne out by the failure of some 20 States to pass enabling legislation since the passage of the Federal legislation on October 23, 1962. Some States fear the effect on their own programs where no Federal funds are available. However, this opposition would probably be overcome if withdrawal of highway funds would result as provided in the bill.

59. Section 7 of S. 1681 authorizes use of funds which are already appropriated for acquisition to implement the new relocation provisions. Would these funds be adequate?

It is believed that additional funds would need to be provided if the proposed relocation procedures are enacted. Such enactment would increase Federal expenditures by $244 million under S. 1201 and $309 million under S. 1681. These sums are too large to be absorbed in the present appropriations.

60. One key difference between these two bills is that S. 1201 provides that there shall be notice of 180 days before an occupant is to be required to move as a result of a property acquisition (sec. 112(a) (2)) while S. 1681 requires "an assurance that there are or are being provided" adequate housing facilities for those displaced (sec. 8(a) (2) (D)).

Which provision do you prefer?

Either provision would cause a slowdown in the highway program. Of the two provisions it is believed that the 180-day requirement of S. 1201 is to be preferred since it is definite and would permit more realistic planning and scheduling.

61. Doesn't the amount of time required for highway planning easily permit 180 days of notice and provision for substitute housing?

The amount of time required for planning is not the controlling factor since in many instances the notice could not be given until the planning is complete and final right-of-way lines have been established. The 180-day requirement would provide additional leadtime for orderly right-of-way acquisition. After an initial slowdown to provide this leadtime the program should proceed without further delays because of the requirement.

62. One of the key differences between these two bills as they relate to Federal reimbursement for business relocation expenditures is the provision in S. 1201 for Federal reimbursement of costs up to $10,000 while S. 1681 provides for reimbursement of costs up to $25,000 for each relocation case. Do you feel that there is a substantial difference in the costs of your agency's grants related to these two provisions?

The difference between the two bills would create a substantial difference in Federal funds. The provisions of S. 1681 would cost approximately $8 million annually more than S. 1201.

63. Do you feel that the S. 1681 provision could achieve greater uniformity among the States in their treatment of businesses forced to relocate?

Since the majority of business relocation costs will be below the $25,000 maximum provided by S. 1681, it would achieve greater uniformity among the States in their treatment of businesses forced to relocate. The vast majority would be relocated under Federal regulations and would not be subject to the variances existing in State laws and procedures.

Senator MUSKIE. Our next witness is Mr. Clarence Mitchell, Director of the Washington Bureau of the National Association for the Advancement of Colored People. It is a pleasure to welcome you again, Mr. Mitchell, to this subcommittee.

Mr. MITCHELL. Mr. Chairman, thank you very much. It is always nice to come before your subcommittee to receive courteous treatment, and because you show such a deep interest in human problems. I have a short statement and I would like to read it with your permission, Mr. Chairman, because, at one point, I have discovered that a line was omitted and I would like to interpolate that into my statement. Senator MUSKIE. All right. Fine. You may proceed.

STATEMENT OF CLARENCE MITCHELL, DIRECTOR, WASHINGTON BUREAU, NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE

Mr. MITCHELL. Mr. Chairman and gentlemen of the subcommittee, I am Clarence Mitchell, Director of the Washington Bureau of the National Association for the Advancement of Colored People. Today I am present to express support for the purposes of S. 1681 introduced

by Senator Edmund S. Muskie and S. 1201 introduced by Senator John Sparkman. Approximately 63 percent of the persons displaced by urban renewal projects are nonwhite. It is almost inevitable when an old or dilapidated area of a community is marked for demolition, improvement, or a change of use, one will find that the largest burden of displacement is borne by those least able to move to another locality without serious financial loss and inconvenience.

The intent of the proposed legislation is to give uniformity and also some administratíve flexibility in compensating persons, businesses or farms displaced by Federal and federally assisted programs. The Advisory Commission on Intergovernmental Relations, in its January 1965 report, makes this statement on page 114:

*** the Commission concludes that in the interest of (a) expeditious handling of relocation claims, (b) effective provision of an overall system of relocation assistance, including advice as well as compensation, and (c) the needs of those most urgently requiring relocation help, responsibility for determining relocation payments should be vested in administrative agencies subject to maximums established by statute.

From a practical standpoint it is imperative that those vested with the administrative discretion be given very little room to act in a way that will put the displaced person at a disadvantage.

For example, section 101(a)(3) of the Sparkman bill states that the offering price to the person whose property is being taken "should" [not] be less than the appraised fair value." Section 101 (a) (6)

states:

The construction or development of public improvements should be so scheduled that no person lawfully occupying real property will be required to move from a dwelling or to move his business or farm operation without at least one hundred and eighty days' written notice from the head of the Federal agency concerned, of the date by which such move is required.

In each of these vital sections the word "should" appears instead of "shall." We suggest that if "should" has the same meaning as "shall" in the statute then the latter word would be better because then there would be no doubt that these safeguards are binding on an administrative official. Anything less than a clear mandatory requirement will undoubtedly open the door for abuse of the rights of those who are being displaced.

You may remember that in the book written by John Steinbeck, "Grapes of Wrath," when farms were being taken away from the people, somebody suggested that they have the bulldozer move a little closer every day to one of the shanties and that eventually it would hit it and knock it down, and thereby they would force the people off the land. That is too much the spirit in these programs, just making people move, when there is no place for them to go.

Usually, at the community level, the pressures to get the job done may outweigh the human considerations. Unless he is certain that the property owner can get redress under the statute, an official dealing face to face with the owner may give lipservice only to permissive regulations. While it is important to get on with roadbuilding, public improvements, and slum clearance it is equally important to make certain that overzealous officials do not put material results ahead of the rights of people who must move from their homes, their places of business, or their farms.

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