Chairman PASTORE. Have the bond people told you that this would be satisfactory to them?

SUGGESTION TO DELETE REFERENCE TO 1979 IN STATUTORY AMENDMENT

Mr. JOYCE. They think that the figure 10 is the critical figure, and we can't ask the Congress to say permanently, because we don't want it permanent. We want to be self-sufficient when we can be, but the figure 10 is a red flag. If we could take that out, and put the word "continuing" in there, we are willing to rely on the judgment of the Commission and/or the Congress at any time in the future as to what should be done.

Mr. TROSTEN. You are referring to the actual date, aren't you?
Mr. JOYCE. Yes: 1979.

Mr. TROSTEN. Rather than the figure 10?

Mr. JOYCE. I beg your pardon; yes.

Chairman PASTORE. How would you write that? It says here "to make assistance payments of just and reasonable sums through June 30, 1979." What is your suggestion?

Mr. JOYCE. We would say, in effect for a continuing period so long as in the Commission's judgment and/or the committee's judgment that the city needs financial assistance because of the impact of the Government installation there being 99 percent of the total industrial base.

Senator GORE. Why not change it a little bit? Suppose you say, "authorize the Commission to make payments until such time as the Commission finds that the city is capable of self-sufficiency"? Well, this is something we can consider in executive session.

Chairman PASTORE. The only trouble is, let us assume some day much of the activity there for national purposes becomes obsolete. You have to be pretty careful here that you don't tie yourselves down ad infinitum. You say, "not permanently"; but what we are actually saying here is that it could be permanent.

I think we will have to find some language of art here.

Mr. JOHNSON. Mr. Chairman, Richland has not had this same experience. They have floated bond issues of $2.1 million and $1.8 million, at satisfactory interest rates. They have presumably the same kind of limitations.

Now we have had experience, of course, where underwriters have bought bond issues and misjudged the market and, of course, they will try to get more favorable terms in order to sell them so that they don't have to sell at a loss. I believe there might be something of this sort in this case, but I don't know.

But there are other things on the horizon. If someday in the future some of the gaseous diffusion plant becomes committed to the private power industry, for example, there is a very good chance there that the future prospects will be good. We don't know just what will happen there, but we are keeping our fingers on that, of course.

Senator GORE. In which event, or if as a result of whatever event the Commission found that the community was capable of selfsufficiency, then the authorization would cease.

Mr. JOHNSON. I don't think we would object to the proposed language. I did not, myself, think the Congress would be willing to make an open ended commitment.

Chairman PASTORE. I am afraid that is where our problem is. We recognize the problem. We will have to think about this.

Senator GORE. Oak Ridge is not asking for an open ended commitment. As a matter of fact, Mr. Joyce, can you give us some figures of how you have raised your own local revenue?

Mr. JOYCE. As far as the actual dollar value, are you asking?
Senator GORE. Yes.

Mr. JOYCE. Our taxes have been raised by reassessing our property one way, which has been a significant one, upward from $28 million to $100 million since we became a city. Only 1 percent of that is industrial base. We have raised our taxes a very substantial percentage, which evades me, but it is in the formal testimony. I think it is 57 percent.

Is that right, Mr. McMullin?

Mr. McMULLIN. Yes.

Mr. JOYCE. Fifty-seven percent our tax rate has been advanced. Senator GORE. You have increased your assessed valuation from $28 million to $100 million and increased your tax rate 57 percent? Mr. JOYCE. That is right.

Senator GORE. This is the result of this very much greater local taxation, largely on homeowners, that has made it possible for the percentage of payment to be reduced some 23 percent?

Mr. JOYCE. That is right. If I may, Senator, inject one other item with reference to the so-called cutoff time, as we have been referring to it here. That is in our attempts to attract new industry; we have made vigorous efforts there, and on each occasion we have run into a road block wherein the industry will come in, look at us, like the climate and the scientific atmosphere and all the other good things about the community but the tax base. Its rate, which is the highest in the State of Tennessee, is a deterrent, but not a fatal one. The one that apparently is fatal, from our experience, is the fact that industry thinks they might be soaked, in the vernacular, some time in the future for double taxation if and when this cutoff date becomes a reality. They are not voters, and they realize they would be the ones that suffer the most severely.

Senator GORE. Mr. Chairman, I did not mean to interrupt the whole hearing. It only came up tangentially. I suggest we go back to the Commission. I have one or two other questions for the Director.

Representative HOLIFIELD. If the gentleman will yield for just a moment, I would like to ask Mr. Joyce a question. If this has been already asked, please ignore the question. What is the present rate of tax, related to normal assessment procedures, of Oak Ridge relative to other cities of commensurate size in the State of Tennessee?

Mr. JOYCE. It is the highest, Congressman.

PROSPECTS FOR OAK RIDGE TO BECOME SELF-SUFFICIENT BY 1979

Senator GORE. I have one other question with respect to Oak Ridge, Mr. Commissioner or Mr. Erlewine. Do you believe it is in prospect that Oak Ridge can actually and realistically be fully self-sufficient within a 10-year period with no industrial base there, that is unless the Commission sells its facilities or leases its facilities, or otherwise brings in private ownership?

POSSIBILITY OF SALE OR LEASE OF GOVERNMENT URANIUM
ENRICHMENT FACILITIES TO PRIVATE INDUSTRY

Mr. JOHNSON. The prospect of private ownership or private leasing, either one, for private operations in those facilities within 10 years is, I think, very good. The power industry is growing at a greatly accelerated pace. The major use of the type of facilities that Oak Ridge has will, within about 10 years, be for commercial instead of governmental enterprise.

Senator GORE. Will you elaborate on that?

Mr. JOHNSON. The supply of enriched uranium for power reactors is produced by the Oak Ridge, Paducah, and Portsmouth plants of the Commission. The Atomic Industrial Forum, representing industry, is looking at the entire matter of the supply and demand relationships from a commercial point of view. The Commission is likewise doing this. In one way or the other, whether the Commission operates the plants or not, the supply of enriched uranium for the power reactor business will have to come from those three plants for the next 10 or 15 years at least. This is a very rapidly increasing market.

Senator GORE. Then, if it developed-this is one I would want to examine very carefully, of course, but if it should develop that Oak Ridge did become a major private enterprise, industrial center, then the production facilities themselves would be subject to local taxation? Mr. JOHNSON. That is right.

Senator GORE. Ad valorem?

Mr. JOHNSON. If the Commission were to lease the facilities, presumably the State could take some appropriate action to still see that the tax burden belonging on the facilities got assessed.

Senator GORE. What we are talking about here is, in one way or another, a contribution by the industry of the community to the governmental structure of the community. If it be privately owned and private industry, then it would be paid in the form of local taxation. So long as the U.S. Government owns it, it would have to be in a different form.

Mr. JOHNSON. It would be in a different form, payment in lieu of taxes, to the extent that we were providing commercial uranium enrichment services.

Senator GORE. Again, advanced to the decade mark, unless this be accomplished or some other program is initiated that would bring a major broadening of the tax base for Oak Ridge, do you think it would be possible for a community that is dependent for its taxation almost entirely upon homeownership, to be self-sufficient with the type of community facilities that are necessary to be provided at Oak Ridge? Mr. JOHNSON. Senator, I am not very expert on that, because obviously that depends on the particular State laws, and so on. But I would think that it would be unfavorable, unless the community is able to get some industry in there. I am just not sure whether it is feasible or practicable for them to attract the industry.

Mr. ERLEWINE. There are other possibilities, of course, for revenue. The State's contributions for schools could increase. They are not nearly as large as is the case at Washington. There are other sources, for example, these industrial lands that are being made available to the city, they might come through in that regard, or other forms of

Federal aid may change. We just don't know exactly what the 10-year period holds. But that is not the only prospect.

Senator GORE. We must give, I think, at least I feel that way and I hope you do, "A" for effort to the people of Oak Ridge. They have made marvelous progress. We cannot foretell what they may or may not do, but at least they have made great progress and aspire to complete self-sufficiency.

Would the Commission, Mr. Commissioner, give some more thought to this, the implications, and confer with the people at Oak Ridge with the new information which has come? I have only heard it today. Mr. JOHNSON. Senator, the reason that this legislation or proposed legislation is left open as to specific arrangements is exactly because we know in the next 10 years there will be different situations facing Oak Ridge and Richland, both. We have to be able to adjust as these conditions arise. If we find that they do have trouble in bonding, we will have to find a way to help the city out of it in one way or another. Senator GORE. Thank you, Mr. Commissioner.

UTILIZATION OF LAND AT OAK RIDGE

Representative HOLIFIELD. What is the acreage of the Oak Ridge reservation?

Mr. WENDE. The original reservation was about 60,000 acres. It is now reduced to thirty-odd thousand acres.

Representative HOLIFIELD. I am wondering, in view of our experience, if 30,000 acres is still not too high, that if a good deal of that could not be either sold off by the Government or converted in one way or another to the tax rolls?

Mr. WENDE. Of course, we are working with TVA and the city to try to make 1,300 acres of river land available for industry. The type of topography at Oak Ridge is such that the bulk of the land is in steep ridges, rather poor land. Much of it is really only good for forestry purposes. We have three major installations and we also have certain ecology programs going on that take up a fair amount of land. We also have a large experimental farm operation that takes several thousand acres.

To provide, let us say, a reasonable protective area around each of our plants, we pretty much use up the 38,000 acres we still retain.

HORN RAPIDS TRIANGLE

Senator JACKSON. In the interest of time, I have just one question. Senator Gore has, I think very helpfully, gone into many of the aspects of the problem that concern not only Oak Ridge but I would say are applicable with equal force in many instances to other

areas.

So, I have only one question. It is a followup on the chairman's question. I noted, Mr. Erlewine, that you did make reference to the area just north of Richland, I think it is referred to as Horn Rapids Triangle.

Mr. ERLEWINE. Yes, sir.

Senator JACKSON. 5,800 acres that could be annexed to the city. I hope that you can move as expeditiously as possible with GSA and

Interior on this. This would certainly help the city in furthering their tax base and to get private undertakings into that section. What are the prospects?

Mr. ERLEWINE. We are working closely with the city. At the present time that entire acreage has been leased to the city on a short-term basis to enable them to zone it. We are working both with the GSA with regard to the AEC-acquired portion of the property, which is about two-thirds of the 5,800 acres, and with the Department of Interior on the remaining third, toward making this available to the city on as reasonable a purchase basis as we can. We have every reason to think this will take place.

Senator JACKSON. I am glad to hear that. That is all I have at this time. We have a number of out-of-town witnesses, Mr. Chairman. I thought maybe we could kind of push along so that they could get

away.

you.

Representative HOLIFIELD. Thank you, gentlemen. We will excuse Mr. Fuller, Mr. Clark, Mr. Diettrich, and Mayor John Sullivan. Could you come up at the same time?

KADLEC METHODIST HOSPITAL

Senator JACKSON. Mr. Chairman, I want to have placed in the record a statement from K. M. Harmon, chairman of the board of trustees of the Kadlec Methodist Hospital. They have presented a problem which I would like to have the staff dig into. It is a matter that we can take up in executive session. There is no need to read it at this time.

Representative HOLIFIELD. Without objection, it will be received for the record.

(The statement referred to and additional correspondence follows:)

FINANCIAL HISTORY OF KADLEC METHODIST HOSPITAL

At the time operation and ownership of Kadlec Hospital was transferred by the Federal Government to its present board of governors on September 10, 1956, it was recognized by the Atomic Energy Commission that many financial problems were involved and financial assistance would be required until the hospital could adjust to the competitive status of a non-profit community hospital. As a result, two short term agreements were entered into providing temporary financial assistance until contract No. AT (45-1) 1249 was executed covering the remainder of financial assistance for a total period of 10 years, terminating September 10, 1966.

During the first five years of the agreement, the hospital budget was supplemented annually from A.E.C. funds in accordance with the terms of the contract. At the termination of the first five year period, it appeared that the hospital had stabilized its financial position sufficiently that it could operate without subsidy from the Commission for the remaining five years of the contract. As a result no funds were requested or received for hospital operation during the remainder of the period for operational purposes.

The present hospital plant was constructed in 1944 as a temporary structure to fill the medical and hospital needs for what was then thought to be a war-time associated industry. Construction was basically a one-story, army-type structure of wood, built with a life expectancy of from 5 to 10 years. The hospital was operated as a federal hospital by the prime contractor for the Atomic Energy Commission, not subject to State standards, inspections or licensure. When it became evident that the industry of the area was permanent, the hospital was presented to the Methodist Church to be operated as a non-profit, church related