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EMERGENCY COMMUNITY FACILITIES AND PUBLIC

INVESTMENT ACT OF 1972

TUESDAY, MAY 23, 1972

HOUSE OF REPRESENTATIVES,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C. The committee met, pursuant to recess, at 10 a.m., in room 2128, Rayburn House Office Building, Hon. Wright Patman (chairman) presiding

Present: Representatives Patman, Barrett, Reuss, St Germain, Gettys, Annunzio, Griffin, Hanley, Chappell, Koch, Cotter, Mitchell, Curlin, Widnall, Johnson, Stanton, Blackburn, Brown, Williams, Wylie, Heckler, Rousselot, McKinney, Lent, and Archer.

The CHAIRMAN. The committee will please come to order.

I have a statement that I would like to read while the members are assembling.

This morning we begin consideration of emergency legislation designed to help meet two desperate national needs:

Reduction of massive unemployment.

Provisions of adequate funds for construction of basic public works and facilities demanded by rapid community growth and the necessity to eliminate environmental pollution.

The bill before this committee, H.R. 13853, the Emergency Community Facilities and Public Investment Act of 1972, is a tool that will make performance of both of these tasks possible. H.R. 13853 authorizes an appropriation of $5 billion to provide emergency grants to States and localities for basic public works and facilities-mainly water and sewer system facilities.

A total expenditure of this amount for public works and facilities can result in the creation of a minimum of 500,000 jobs in less than 12 months. The job production capacity of this level is possible because 100 jobs are normally created for each $1 million spent on public works. Forty of these jobs will be at the project site and the remaining 60 will be produced among related suppliers and service industries. Under this formula, an expenditure of $5 billion will produce 200,000 onsite jobs and another 300,000 employment opportunities among businesses, plants, and service organizations related to public works projects.

I stress the point that a minimum 500,000 jobs can be created through emergency funding provided by H.R. 13853. Grants provided under this legislation can be for the total cost of the project. Some, perhaps many, of the grants which will be made will be matched with funds provided by the States and communities themselves. Viewed from this perspective, it can be seen that we are dealing with a legis

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lative package that could inject a total of $7.5 billion or more into the economy, thus producing as many as 750,000 on- and off-site employment opportunities in States and localities suffering from or threatened by economic depression.

There can be no question that emergency funding must not only be provided quickly, but provided on a grant basis. Few if any Members of Congress represent districts or States where local governments have not been forced to drastically curtail housing, commercial and industrial construction because water and sewer facilities required for developments like these simply could not be provided due to the fact that local governments have exhausted their tax base. In effect, the ability of many communities throughout the Nation to finance the total cost of constructing public works and facilities from their own resources is now impossible. This in turn means that these communities have reached a point where they find it impossible to provide the facilities that must exist if growth and prosperity are to be achieved and maintained. The problem is all the more critical because of the additional and equally inescapable need for facilities to reduce environmental pollution.

The fact that a total of more than $5 billion in water and sewer facility grant and loan applications are now pending under its regular 702 program in the Department of Housing and Urban Development is a graphic example of the enormous backlog of projects. The need of rural areas alone is almost overwhelming in its scope. The Farmers Home Administration reports that there are over 30,000 rural communities without water systems and over 40,000 without basic sewer systems.

Criticism has been directed against the Emergency Community Facilities and Public Investment Act on the grounds that legislation of this type should be handled by the Public Works Committee. To this I would simply say that the Banking and Currency Committee has well-established responsibilities in the public works and facilities area. There are a large number of examples I could cite, but suffice it to say that there have been many instances in the past when the committee has approved bills authorizing appropriations for public facilities under various housing acts. This is but another case in point. In this legislation we are amending the Housing Act of 1965. In any event, the paramount issue is to provide the funding. It matters far less which committee does it.

At this point I also wish to note that questions have arisen in connection with the manner in which the appropriation for this bill is authorized. In its present form, funds would be appropriated after the Secretary of Housing and Urban Development enters into contracts for grants with the States and localities which have applied for grants. Congress, because it is bound to do so by the conditions imposed by this bill, would then appropriate the money. The procedure is sometimes referred to as side door financing. I do not wish this approach to create a needless obstacle to passage of the bill and I would offer no objection to an amendment which provides for a direct appropriation for funding.

Some Members of this Congress may take a literal view of the word "grant” and think it synonymous with gift in terms of this legislation. In my judgment, funds that would be provided under the Emergency Community Facilities and Public Investment Act should be looked on solely as an investment in and for the people and communities of our Nation. We're not talking about funds that can be expended. We're talking about investments that must be made if Congress and the administration are to live up to their primary responsibility to the people of this Nation.

I know that there are those who view this legislation with undisguised cynicism. Their assessment of this effort concludes that Congress will proceed to appropriate funds through this act knowing that the administration will block expenditures for the sake of presenting a more attractive balance sheet to the public in general and the voters in particular. I hold no such conviction. The need for this appropriation is obvious to anyone who only glances at the requirements of our population and the fiscal problems confronting the States and local governments. That being the case, Congress can do no less than respond to this need through this legislation. If the administration choses to ignore the will of Congress and the critical community needs of the Nation, it will do so at its own peril. I am not willing to concede that this or any other administration would openly admit that it is blind to urgent public needs. Our democratic system provides the opportunity to take care of that situation, something of which I am certain the administration is both fully and acutely aware.

Our first witness this morning will be Mayor John Rousakis of Savannah, Ga., representing the National League of Cities-Conference of Mayors.

Other witnesses are:

Ray Alexander, director of public works, Oakland County, Michigan, representing the National Association of Counties.

William H. Wilcox, Secretary, Department of Community Affairs, State of Pennsylvania.

Harry J. Peyton, Jr., president, National Utility Contractors Association.

(The text of H.R. 13853 follows:)

(H.R. 13863, 92d Cong., second sess.) A BILL To amend title VII of the Housing and Urban Development Act of 1965 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the “Emergency Community Facilities and Public Investment Act of 1972”.

Sec. 2. (a) Tax and other financial resources currently available to local governments are being strained beyond their capacity to provide vital community facilities. The burden of providing the funds for necessary public facilities has reached the point of being unbearable for residents of communities throughout the Nation and emergency measures must be taken to provide long overdue relief to prevent disastrous reductions in community facilities programs. Adequate funding for water and sewer systems and other similar public facilities is absolutely necessary to safeguard the health and welfare of the Nation's population and to assure orderly and efficient growth; but continued progress in this area has become impossible for a vast number of cities and towns in every sector of the country because local financial resources have reached the point of exhaustion. Moreover, the absence of additional sources of funds for this purpose jeopardizes local, State, and regional efforts to eliminate environmental pollution and conserve irreplaceable resources.

(b) It is imperative that effective action be taken to combat intolerably high unemployment. This is especially true for those urban and rural communities where rates of joblessness have reached and often exceed depression era levels. Moreover, the lack of adequate facilities in such areas greatly diminishes the possibility of revitalizing the economy of these communities and significantly reducing unemployment.

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(c) The Congress finds that in order to reduce the rate of joblessness, both in immediate and long-range terms, and to regain and safeguard the high quality of life which is synonymous with the potential of the Nation, emergency funding for vital community facilities is urgently needed and must be provided.

Sec. 3. (a) Title VII of the Housing and Urban Development Act of 1965 is amended by adding at the end thereof the following new section:

"EMERGENCY ASSISTANCE TO CERTAIN STATE AND LOCAL PROJECTS “Sec. 709. (a) The Secretary may contract to make grants, in an aggregate amount not exceeding $5,000,000,000, for projects of States and local governments of the type referred to, as eligible for assistance, in section 3(b) of the Act of September 14, 1962 (76 Stat. 542).

"(b) A grant made under the authority of this section may be in any amount not exceeding 100 per centum of the development cost of the project for which the grant is made, and shall be subject to such other terms and conditions as the Secretary may prescribe.

"(c) În the processing of applications for assistance under this section, the Secretary shall give priority to applications of

"(1) communities in areas designated by the Secretary of Commerce as ‘redevelopment areas' or 'economic development centers' under title IV of the Public Works and Economic Development Act of 1965, and communities in areas designated under section 102 of such Act, and

“(2) communities in any other areas which may be designated by the

Secretary (f Labor as being areas of substantial unemployment, for assistance in the construction of basic public facilities (including facilities for the storage, treatment, purification, or distribution of water, and sewage, sewage treatment, and sewer facilities) for which there is an urgent and vital public need.

“(d) The faith of the United States is solemnly pledged to the payment of all grants contracted for under this section, and there are hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the amounts necessary to provide for such payments."

(b) Section 707 of such Act is amended by striking out "sections 702 and 703" and inserting in lieu thereof "sections 702, 703, and 709”.

The CHAIRMAN. Before hearing the first witness, I would like to call your attention to the fact that I have here a volume that contains all of the pending applications in HUD up to October 1971, for water and sewer facilities, and in the back there is a compilation showing that for water and sewer facilities grants programs that were filed up to October 1971, there were a total of $5,061,480,656 in grant applications and a total of $523,354,449 in loan applications. The total costs of all applications would be $12,605,438,200.

Now, that doesn't include the applications in the HUD regional offices of the country.

I ask unanimous consent to make the application file and other pertinent documents part of the hearing record so we will not be required to do this as we go along.

Mr. Williams. You mean to put that big book of total applications received in the record?

The CHAIRMAN. That will be one of them. Yes.
Mr. Williams do you really think that is necessary?

The CHAIRMAN. It is absolutely necessary. We are dealing with one of the biggest things in the Nation. There is no other way to do it. If it only involved one county and a few projects it would be necessary to put it in. It is very necessary to have public information on this subject.

Without objection, so ordered. (The documents referred to above may be found in the appendix.)

The CHAIRMAN. Now, the first witness will be the mayor of Savannah, Ga.

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