STANDBY CAPITAL IMPROVEMENTS ACT OF 1962 TUESDAY, MARCH 27, 1962 HOUSE OF REPRESENTATIVES, Washington, D.C. The committee met, pursuant to recess, at 10:05 a.m., in room 1302, New House Office Building, Hon. George H. Fallon presiding. Mr. FALLON. Ladies and gentlemen, the Public Works Committee is meeting this morning for a continuation of hearings on H.R. 10113 and H.R. 10318 known as Standby Capital Improvements Act of 1962. Our first witness this morning will be Mr. Jack Conway, Deputy Administrator of the Housing and Home Finance Agency. STATEMENT OF JACK CONWAY, DEPUTY ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY; ACCOMPANIED BY SIDNEY H. WOOLNER, COMMISSIONER OF COMMUNITY FACILITIES ADMINISTRATION; AND MILTON SEMER, GENERAL COUNSEL, HOUSING AND HOME FINANCE AGENCY Mr. FALLON. Mr. Conway? Mr. CONWAY. Yes. Mr. FALLON. I want to say that Mr. Conway is accompanied by Mr. Sidney H. Woolner, Commissioner of Community Facilities Administration and Mr. Milton Semer, General Counsel. Mr. Conway, on behalf of the committee, I want to express our appreciation for your coming here this morning. Mr. CONWAY. Thank you, Mr. Chairman. I appreciate the opportunity to appear before this committee and assist in your consideration of legislation to provide authority to accelerate capital improvements when needed to stimulate the economy (H.R. 10318 and similar bills containing administration proposals, and H.R. 10113 and similar bills, introduced by Representative Buckley, Representative Blatnik, and others; and amendments to H.R. 10318 proposed by the administration). My remarks will be directed primarily to the aspects of the legislation relating to the Housing and Home Finance Agency, as the general merits of the proposals have been discussed by other administration witnesses. Mr. Sidney Woolner, the Community Facilities Administration Commissioner, and Mr. Milton Semer, our General Counsel, are here to assist in answering any questions you may have concerning our existing programs or the role of the Housing Agency under the proposed legislation. Under the administration proposal (H.R. 10318), the Housing and Home Finance Administrator would have responsibility for carrying out functions with respect to three important programs: (1) A new program of grants to States and local public bodies, under section 6 of the bill, for capital improvement projects not eligible for grants under existing Federal programs; (2) A new program of Federal loans to States and localities, under section 7, for capital improvement projects where the State or locality is otherwise unable to furnish its share of the cost; and (3) Assistance for the advance planning of public works by localities. In administering the new grant program, the Housing Administrator would have available such funds as are allocated under the bill by the President for this purpose. These grants would be available for the initiation or acceleration of a broad range of "capital improvements" as defined in section 13 of the bill, including such facilities as libraries, firehouses, public streets, sidewalks, and other public facilities. However, there would be excluded from this new grant program administered by the Housing Administrator any facilities which are eligible for grants under existing Federal programs, such as hospitals eligible under the Hill-Burton Act and airports eligible under the Federal Aid to Airports Act. The amount of each grant under this new grant program in the bill could not exceed 50 percent of the cost of undertaking and completing the project being assisted. In administering the new Federal loan program, the Housing Administrator would have available such funds as the President allocates for this purpose under the bill. These loans could be made only to a State or local public body or nonprofit organization which otherwise would be unable to meet its share of the cost of a project for which a Federal grant is made under the bill. The loans could be made in connection with projects assisted with grants under either the grant program administered by the Housing Agency or a grant program pursuant to section 5 of the bill, which relates to projects eligible for Federal grants under existing law. The loans would be repayable over a period not to exceed 40 years. They would have a maximum interest rate that would currently be 35% percent, which would be similar to that presently charged in the public facility loan program administered by the Housing Agency. The administration proposal reemphasizes the importance of the advance planning of capital improvement projects as a necessary step to assure that an adequate backlog will be ready for prompt action when Federal assistance is made available under the standby authority of the bill. Thus, section 2 would require that the Federal Government shall assist and encourage the States and local governmental bodies, under provisions of existing law, to make advance plans for capital improvement projects. Section 10 of the bill would authorize the appropriation of additional funds for the existing program of the Housing Agency (sec. 702 of the Housing Act of 1954) for making interest-free advances to localities for public works planning. The purpose of this program is to assist States and localities in the advance preparation for public works construction, thereby facilitating efficient long-range planning and providing a pipeline of planned public works, which can be placed under construction within a reasonable period of time. At present there is a statutory $58 million limitation on the amounts available for advances. Of this amount, $43 million has been appropriated, and less than a million dollars of these funds remain uncommitted. Independently of the proposed legislation administration requests for additional appropriations for the program during this session of Congress will exhaust the $58 million limitation. The bill would remove the dollar limitation on the authorization for appropriation. Under existing law, the Housing Agency also is authorized— to conduct surveys of the status and current volume of State and local public works planning and surveys of estimated requirements for State and local public works. Upon enactment of the administration proposal, the Housing Agency would expand its public works planning assistance program, initiate continuing current surveys of the status of State and local public works planning and of estimated requirements for State and local public works, and encourage the establishment of a comprehensive reserve of State and local planned public works. The action of the Congress in establishing the existing public works planning assistance program was based on the recognition of a tremendous need for additional public works construction. In 1960, the Census Bureau, on behalf of the Housing and Home Finance Agency, conducted a survey of public works expenditures by State and local governments that were in the planning stage. The survey indicated that over an 18-month period ending December 31, 1961, State and local governments were scheduled to complete the planning of public works projects with an estimated total construction cost of $21.7 billion. A total of 88,000 projects were contemplated, of which about 58,000 were estimated to cost under $100,000 per project, 25,000 were estimated to cost between $100,000 and $1 million per project, and 5,000 were estimated to cost in excess of $1 million per project. Assuming an average cost of $50,000 per project for the 58,000 projects estimated to cost under $100,000, there is approximately $2.9 billion worth of such small project work planned. Assuming an average cost of $500,000 for the 25,000 projects estimated to cost between $100,000 and $1 million per project, there is approximately $12.5 billion worth of such moderate-sized project work planned. The construction of a building, such as a college dormitory costing $1 million takes about 11 months to complete, a $1 million sewer facility about 8 months, and a $100,000 street repair job about 3 to 4 months. A great many of these planned State and local projects could be initiated within a reasonably short time after the President declares an acceleration period, and could be completed within 12 months. Many types of community facilities are needed and have been planned. In addition to improved sanitation and water facilities, there is an urgent need to increase the number of hospitals and other health facilities. 83015-62-- -8 Many communities are faced with the need to make large expenditures to improve transit system ways and structures, and to maintain and provide other fixed facilities for bus operations, many of which are publicly owned. The increased flow of urban traffic has also greatly increased the need for highway and railroad overpasses, and street improvements and repairs. There are also great backlog needs for community buildings. The population growth and replacement needs for firehouses, police stations, and administration buildings requires an acceleration of such construction. To keep abreast with population growth, the construction of new public library space should be twice as great as it has been. With your permission, Mr. Chairman, I will submit for the record a statement giving a summary of the planning advances made by the Housing Agency during 1961 and indicating the types of facilities planned, their location, and the estimated costs of construction. Mr. FALLON. Without objection, it is so ordered. (The summary referred to follows:) HOUSING AND HOME FINANCE AGENCY, COMMUNITY FACILITIES ADMINISTRATION, CFA advances for public works planning, Jan. 1 to Dec. 31, 1961 |