Each business concern eligible for a small business loan must be so informed and the local renewal agency must get in touch with the local Small Business Administration office, which will provide appropriate technical and financial assistance. SBA is authorized to make loans of up to 20 years to assist displaced small business concerns in reestablishing themselves. If, for the convenience of project execution, a business is required to make a temporary move to another location in the project area, the moving expenses will not be charged to the business.

When the local renewal agency becomes the landlord, rents charged business concerns may be adjusted if the rate becomes unreasonable because of adverse conditions caused by project activities.

When the local renewal agency becomes the landlord, rents charged nonprofit institutions may be the amount necessary to cover out-of-pocket costs to manage the property, chargeable to the urban renewal project.

Results

Through December 1964, 47,770 business concerns and nonprofit institutions were displaced or scheduled for displacement from urban renewal areas. As of this same date, 28,526 concerns and institutions had received relocation payments totaling almost $46 million. Of this total, $32 million was for reimbursement for moving expenses and the remainder was paid for loss of property. Some 8,744 business concerns have discontinued operations for a variety of reasons; mainly retirement, involvement in other business, marginal nature of their operations, and inability to find suitable new location.

WASHINGTON, D.C., May 1965.

URBAN RENEWAL ADMINISTRATION,
HOUSING AND HOME FINANCE AGENCY.

Question. In your statement, you say that in connection with the relocation adjustment payments, some States are unable or unwilling to go along with the expressed congressional intent that they "should not be considered as 'income or resources' for the purpose of applying the 'needs' test under any of the public assistance programs in the Social Security Act." Would you develop this point further?

Answer. URA has been advised by the regional offices and the Bureau of Family Services of Health, Education, and Welfare that many State and local welfare agencies have determined that the relocation adjustment payments authorized by the Housing Act of 1964 are to be treated as "income or resources" for the purpose of applying the "needs" test under public assistance programs. This action of welfare officials produces a result which is out of harmony with the intent of Congress and denies the full benefits of relocation adjustment payments, which were intended by Congress to lessen the hardships of displacement. In addition, this action has the effect of channeling urban renewal funds indirectly into welfare assistance.

While both this agency and Health, Education, and Welfare are distressed at these determinations by State welfare officials, we are well aware of the fact that the primary responsibility for welfare administration rests upon the States and their political subdivisions. Responsibility for policy formulation and administration is shared between HEW and the States, but major responsibility rests with the States. Thus, within this framework of responsibility, the determination as to the manner of treating relocation adjustment payments is clearly a local matter. State Letter No. 785, issued by HEW, attempts to persuade State and local welfare officials not to consider the relocation adjustment payments as "income or resources." However, the letter does not purport to be binding. Joint checks

In an effort to conform to the statutory language directing that the relocation adjustment payments be made "on behalf of the displaced family or person" the Housing Agency administratively adopted the requirement that the payments be made jointly to the claimant and landlord. Lump-sum payments are made to persons purchasing homes, and those who are not directly assuming housing costs. It is the joint check-carrying the landlord as a payee-which has been largely responsible for the problem.

Most public assistance payments are determined by constructing budgets which allocate specific amounts for shelter, food, clothing, medical care, etc. Local and

State officials have taken the position that the joint checks to which the landlord is a party constitute payments for rent in duplication of the sum allocated to shelter in the public assistance budget. HEW agrees that this is a proper assumption for welfare officials to make, and that it is incumbent upon them to reduce the public assistance payment by the amount they have allocated to rent.

State Letter No. 785.

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,
WELFARE ADMINISTRATION,
Washington, D.C., December 8, 1964.

To State agencies administering approved public assistance plans.
Subject: Relocation adjustment payments.

The interest of the Bureau of Family Services in better housing for assistance recipients is of long standing. Our working relationships with the Housing and Home Finance Administration have been important to this aspect of program development.

The Housing Act of 1964 (Public Law 88-560) makes it possible for local public agencies engaged in urban renewal projects and local housing authorities constructing new public housing to make relocation adjustment payments to some people who must be relocated. Eligibility for such payments will be determined by such local agencies. Payments may be made for up to a 5-month period of up to $500 on behalf of the displaced low- or moderate-income family or elderly individuals (62 years or over) as a relocation adjustment payment. In the conference report (H.R. Rept. No. 1828, 88th Cong., 2d sess.) the following statement appears:

"The committee wishes to point out that the new relocation payments to individuals or families are in the nature of a substitute for the housing costs which they must pay immediately after their displacement at a time when they are faced with many additional difficulties and expenses, and should not be considered as 'income or resources' for purposes of applying the 'needs' test under any of the public assistance programs in the Social Security Act.”

In accordance with handbook IV-3120, item 4, State public assistance policies may provide that these payments are not "income" for purposes of determining the money payment grant or medical need under such programs. If your State's plans for assistance make provision for this kind of consideration of complementary assistance, the local urban renewal agencies and housing authorities should be so advised.

If your State's public assistance plans do not already provide for agreements that permit organizations and agencies to provide supplementation for needs not encompassed as a public assistance responsibility in accordance with handbook IV-3120, item 4, I hope you will review this matter. If new policy is necessary, the State public assistance plan must show the nature of the payments to recipients from other agencies and organizations which complement the public assistance payment. For example, relocation adjustment payments are for a different purpose than the assistance granted under the State's federally aided programs, and thus may be provided to public assistance recipients without affecting the public assistance payments. If the property that an AFDC family has been renting is part of an urban renewal project and the local urban renewal agency or housing authority finds them eligible, it may make relocation adjustment payments for the initial move to new quarters.

Under the above cited handbook section, the State public assistance plan will need to show that one or more of the following factors applying to complementary program relationships exists in this instance:

1. That none of these costs is adequately recognized in the State's standards of assistance, i.e., they do not encompass the purpose of relocation and rehabilitation in new neighborhoods to which these families or elderly people are having to be removed by the local housing and relocation agency.

2. That payments, such as relocation adjustment payments, cover goods and services not included in the State's public assistance standard. For example, transportation of family and household goods, deposits for utilities, fees for initiating service, and similar costs.

3. That the payments will be regarded as a "supplement" to the State's money payment grants under the federally aided programs because the latter do not meet money payment need as computed under the public assistance standard.

Current rulings regarding complementary program relationships when applied between federally aided public assistance programs and the payments made under Public Law 88-560 should assure that no duplication exists in assistance granted by the public assistance programs and the payments made by local housing authorities or by other public agencies under Public Law 88-560. Pertinent citations from the law are enclosed.

Sincerely yours,

FRED H. STEININGER,

Director.

HOUSING ACT OF 1964 (PUBLIC LAW 88-560)-CONFERENCE REPORT (88TH CONG., 2D SESS., PP. 21, 22)

"RELOCATION

"SEC. 114. (a) Notwithstanding any other provision of this title, an urban renewal project may include the making of payments as prescribed in this section to displaced individuals, families, business concerns, and nonprofit organizations; and any contract for finanical assistance under this title shall provide that the capital grant otherwise payable for the project shall be increased by an amount equal to such payments and that no part of the amount of such payments shall be required to be contributed as part of the local grant-in-aid. As used in this section 'displaced' refers to displacement from an urban renewal area made necessary by (1) the acquisition of real property by a local public agency or by any other public body, (2) code enforcement activities undertaken in connection with an urban renewal project, or (3) a program of voluntary rehabilitation of buildings or other improvements in accordance with an urban renewal plan. * * *

"(c) (1) A local public agency may pay to any displaced individual or family his or its reasonable and necessary moving expenses and any actual direct losses of property (which are incurred on and after August 7, 1956, and for which reimbursement or compensation is not otherwise made): Provided, That such payment shall not exceed $200 And provided further, That the Administrator may authorize payment to individuals and families of fixed amounts (not to exceed $200 in any case) in lieu of their respective reasonable and necessary moving expenses and actual direct losses of property.

"(2) A local public agency may pay (in addition to any amount under paragraph (1)), on behalf of any displaced family or any displaced individual sixtytwo years of age or over, during the first five months after displacement, a relocation adjustment payment, not to exceed $500, to assist such displaced individual or family to acquire a decent, safe, and sanitary dwelling. The relocation adjustment payment shall be an amount which, when added to 20 per centum of the annual income of the displaced individual or family at the time of displacement, equals the average rental required, for a 12-month period, for such a decent, safe, and sanitary dwelling of modest standards adequate in size to accommodate the displaced individual or family (in the urban renewal area or in other areas not generally less desirable in regard to public utilities and public and commercial facilities): Provided, That such payment shall be made only to an individual or family who is unable to secure a dwelling unit in a low-rent housing project assisted under the United States Housing Act of 1937, or under a State or local program found by the Administrator to have the same general purposes as the Federal program under such Act: Provided further, That payments under this paragraph shall be available only in the case of families, and individuals sixtytwo years of age or over, displaced on or after January 27, 1964."

Question. Would there be any serious difficulties involved in making a finding that a business cannot be relocated without a substantial loss of its existing patronage?

Answer. A determination that a business could not be relocated without a substantial loss of its existing patronage could be made based upon specific criteria. If we were required to make such a finding we would probably be inclined to limit it to the following circumstances:

(1) The business concern would have to be establishment;

51-896-65-19

a retail or service

(2) The bulk of its trade would have to be derived from the immediate, surrounding neighborhood (this implies a "neighborhood store" or service concept which depends upon the convenience of location and perhaps credit policies designed to service clientele known to the owner);

(3) No relocation resources available which could serve the same trading area, i.e., clientele.

In all probability we would not consider such a finding to be applicable to a wholesale or manufacturing establishment, which though neighborhood based, would have a trading area which encompassed other than the immediate neighborhood.

Question. The urban renewal program has not been involved in the problems of restrictions in State law against State and local participation in relocation payments because relocation payments authorized are 100 percent Federal payments. In your statement you recommend that all such payments should be placed on a project cost-sharing basis. Under your proposed approach, how would you deal with the problem of those States which do not authorize the use of State and local funds for such purposes?

Answer. As I indicated in my statement, some 32 States have authorized State contributions to match Federal funds for relocation payments in connection with federally aided highways. Furthermore, we know of no State court which has held expressly unconstitutional the use of State funds for such purposes. We believe that if there were a clear Federal intent to include relocation payments as part of the cost of undertaking federally aided programs, most States would take appropriate action to amend their State laws and constitutions to allow their participation. However, we do recommend a 2-year delay in the effective date of any such Federal action to permit States enough time to take such actions.

In the event some States were unwilling to take such an action, we believe that there is an alternative approach which might be adopted in the Federal legislation to make relocation payments effective on a nationwide basis. In any case where a State failed to authorize its participation in relocation payments, the Federal Government would pay the full amount of such payments itself. However, wherever such action was necessary, the grant otherwise payable as the Federal contribution toward a project would be reduced by the amount the State or locality would have contributed toward such payments if they had the authority to do so.

Question. Mr. Slayton, under the relocation payments provisions of the urban renewal law, there is a provision authorizing "fixed payments." Who determines the amounts to be paid? What basis is used, and how has the provision worked? Answer. An LPA which desires to pay fixed amounts to eligible individuals and families, in lieu of reasonable and necessary moving expenses and any loss of property, is required to prepare a fixed payments schedule. The schedule, which is subject to HHFA approval, must be accompanied by a resolution of the governing body expressing approval of the schedule.

The fixed payments schedules provide for a graduated scale of payments related to the number of rooms occupied, based upon the lowest normal charge for carting expenses for the average time required to move personal effects. The schedules are subject to the statutory limitations of $200.

The most recent payment schedule for New Britain, Conn., for example, ranges from $40 for one room to $160 for seven rooms. For Baltimore, Md., the schedule provides for $26 for one room and $108 for seven rooms. These payments reflect local rates for carting.

The displaced family or individual has the option of claiming reimbursement according to the fixed schedule, or for actual moving expenses and actual direct loss of property.

The Agency has found that the fixed payment schedules have facilitated the handling of moving cost payments and have served as guidelines for gaging the accuracy of actual costs incurred.

Question. What would be the financial impact on the urban renewal program of adopting the relocation payment provisions of S. 1201 and S. 1681?

Answer. We cannot give a full answer to this question since some of the cost estimates would have to be based on data which we do not currently have. However, we can give some partial estimates.

For families and individuals, the present urban renewal program provides relocation payments covering the full cost of moving expenses and losses of personal property not to exceed $200. The bulk of these payments are made

on the basis of a fixed-fee schedule. The current rate of displacement is approximately 26,000 families and individuals a year, and the average payment for moving expenses is approximately $70. On this basis, the yearly cost for moving expenses would be approximately $1,820,000 per year. (It should be noted that actual disbursements tend to run a little behind this figure because of timelags and other adjustments.) Only a very small percentage of displaced families and individuals make claims for losses of personal property with an annual cost of approximately $60,000 per year. Thus, the current cost for both these payments is approximately $1,880,000 per year.

Under S. 1201 and S. 1681, moving expenses for families and individuals would be under a fixed-fee schedule, not to exceed $200. We would presume that the cost of these payments would be identical with the cost of the present moving expense payments, or approximately $1,820,000 per year. The two bills would not provide for payments for losses of personal property, but rather would provide for a dislocation allowance equal to moving costs, but not to exceed $100. Since the average moving expense payment is well below the $100 maximum, the dislocation allowance should be equal to the cost of moving expenses, or another $1,820,000 per year. The two bills provide for a $300 allowance to displaced homeowners. Our experience is that approximately 25 percent of displaced families and individuals are owner-occupants. Applying these factors to the annual displacement rate gives a yearly cost factor of approximately $1,950,000. In total, the direct payments to families and individuals under the two bills would be approximately $5,590,000 a year, compared to the present cost of $1,880,000 per year.

The Housing Act of 1964 authorized relocation adjustment payments for displaced families and certain individuals substantially similar to those proposed in the two bills. The principal difference between the present payments in the urban renewal program and those proposed in the two bills is that the former provides for a $500 maximum to cover additional housing costs for a 1-year period, while the latter provides for a maximum of $1,000 to cover additional housing costs for a 2-year period. The URA is still in the process of working with local renewal agencies in the implementation of such relocation adjustment payments, so only tentative figures are available on total cost. It is our rough estimate that 60 percent of displaced families and 25 percent of displaced individuals will be eligible for these payments with an average payment of approximately $264 per family or individual. Applying these factors to annual displacement rates would result in an annual cost of approximately $3,287,000. Under the proposed bills, this annual cost should be doubled, or $6,574,000. Combining all payments to families and individuals, the present urban renewal program provides for an average annual cost of approximately $5,167,000, while the proposed bills would cost approximately $12,164,000.

Under urban renewal legislation, a displaced business is entitled to be reimbursed for its actual moving expenses and any direct losses of property up to $3,000, or its actual moving expenses only if they exceed $3,000. By regulation, a ceiling of $25,000 has been set on moving expenses. Currently, approximately 5,800 businesses are displaced yearly with an average payment of $2,300, for an annual expenditure rate of approximately $13,300,000. (As noted above for families, disbursements tend to run a little behind this figure.) In addition, a system of small business displacement payments were authorized last year providing for payments of $1,500 to any displaced business with an average annual net income not in excess of $10,000. These latter payments would be increased to $2,500 under the pending Housing and Urban Development Act of 1965. The URA is still in the process of working with local renewal agencies in the implementation of the small business displacement payments and firm cost data are not yet available. However, a very rough estimate is that 90 percent of all displaced businesses will be eligible for these payments with an expected annual cost of $13 million. Thus the anual rate of relocation payments to businesses in the urban renewal program is expected to be approximately $26,300,000.

S. 1201 and S. 1681 provide for an optional payment to displaced businesses of an amount equal to the annual net earnings of the business, or $5,000, whichever is the lesser. Since we do not have any data on the annual net earnings of businesses displaced, we cannot make any estimates of the costs of this provision in comparison with the existing program of relocation payments.

Question. What has been the experience of the urban renewal program with respect to large business relocation payments; i.e., those ver $10,000?