that Federal assistance for the acquisition and preparation of open and predominantly open land to be developed for predominantly residential use is essential so that adequate provision can be made for the necessary dispersion of some portion of the central city population. In the case of predominantly open land, both loans and capital grants are authorized, but in the case of open land no capital grants may be made. As already noted, the bill authorizes temporary loans also to finance schools or other public facilities necessary to serve or support the new uses of open or predominantly open land. Such loans are to be repaid with interest as soon as the development of the area and its tax base permits the appropriate local body to refinance the loan from the proceeds of a regular bond issue, and in any event within 10 years.

SLUM CLEARANCE AND HOUSING

While the slum-clearance program provided in this title is separate from those provisions dealing directly with housing, your committee wishes to emphasize that the primary justification for Federal assistance for this purpose is the improvement of housing conditions for urban families. This program must be conducted in such a manner that it will contribute to, rather than detract from, this essential objective. H. R. 4009 would assure the adherence to the primary housing purpose in two principal respects.

In the first place, the bill clearly recognizes that the clearance of slums and the provision of decent housing for families who live in them are inseparable. Any slum clearance which fails to assure adequate housing for the families who presently live in slums would be merely forcing them into worse conditions. This applies with particular force to families of minority races for whom the problems of relocation are particularly difficult.

The slum-clearance program, therefore, is set in the context of a bill which has as one of its major purposes the provision of adequate housing for such families. There are, in addition, three specific safeguards. First, the extension of Federal financial aid to a local public agency for slum clearance is prohibited unless a feasible method is provided for the temporary relocation of families displaced from proj ect areas and unless permanent housing has been or is being provided for them either in the project areas or elsewhere. The permanent housing must consist of decent, safe, and sanitary dwellings which are located in areas not generally less desirable in regard to public and commercial facilities and which are available at rents and prices within the financial means of displaced families. Second, the demolition of residential structures in slum-clearance projects is prohibited prior to July 1, 1951, if the local governing body determines that undue hardship would result. Third, first preference for occupancy of low-rent public housing projects assisted under this bill must be extended to families displaced from slum-clearance projects if they are otherwise eligible for admission.

The second basic principle relating the slum-clearance program to the major purposes of this legislation is through the restrictions on the nature of the projects for which Federal assistance may be provided. Federal aid to localities for slum clearance is restricted to those areas which are predominantly residential or which will be redeveloped for predominantly residential use. It is important to point out, however,

that this requirement will not interfere with but will rather assist the broad-scale redevelopment of our urban areas. Slums and blighted areas as they exist today are predominantly residential. It is also true that in residential slum-clearance projects, it will normally be necessary to include some adjacent nonresidential blighted areas in order to assure the proper kind of redevelopment.

The bill requires that the redevelopment plans for the locality afford maximum opportunity for private enterprise. Much of the construction required in connection with the development or redevelopment of these areas would be under private auspices, although there will necessarily be some public participation through the provision of schools, parks, and other public facilities, and of public housing where the localities determine that the sites are best suited for that

use.

LOCAL RESPONSIBILITIES

As indicated above, H. R. 4009 fully recognizes the importance of local initiative and local responsibility. Your committee believes that local slum-clearance programs should be locally executed in such manner as to promote the achievement of the objectives stated elsewhere in this bill. Thus, in addition to providing the limitations already described, H. R. 4009 requires the Administrator in extending financial assistance to give consideration to the extent to which localities have encouraged housing cost reductions through the adoption, improvement, and modernization and other local codes.

The bill also requires that, in extending financial assistance under this title, the Administrator shall give consideration to local codes. and regulations with respect to land use, minimum standards of health, safety and sanitation, and other matters relating to the prevention of the recurrence or spread of slums and blighted areas.

Your committee feels that maximum benefits from the Federal aids provided for slum clearance can be obtained only if excessive prices are not paid for the areas to be cleared. The bill therefore authorizes the Administrator to include in any contracts or instruments for financial aid such covenants, conditions, and provisions as will prevent the payment of such excessive prices, and requires that the provisions of the title be administered so as not to permit speculation in land holding. Further, your committee calls attention to the fact that the carrying-out of a slum-clearance and redevelopment project will naturally be a relatively long-term job. Accordingly, your committee fully expects that the administering agency will require that there be used every practicable device to assure that the prices paid by the local public agency for the land in the project area will be held at the absolute minimum. For example, once an area has been selected locally, the administering agency should require that the local government exercise its police power to the fullest possible extent in such area so that prices paid for the land will not reflect any excess values which may arise from uses in violation of local regulations as to health, safety, and sanitation.

VI. LOW-RENT PUBLIC HOUSING

Title II of the bill would extend the low-rent public housing program which was originally established by the United States Housing Act of

1937. That program would be augmented by the provision of an additional 1,050,000 homes for both city and iural nonfarm families who cannot afford to pay for adequate shelter either in new or existing private housing.

HOW THE PUBLIC HOUSING PROGRAM OPERATES

The public housing program in the various localities is directly administered by local housing authorities which develop, own, and operate the low-rent projects. Local authorities are created pursuant to State law, and their members are usually appointed by the mayors of the respective localities. The basic responsibility for the provision of low-rent housing is thus reserved to the various localities. The role of the Federal Government is appropriately restricted to the provision of financial assistance to the local authorities, the furnishing of technical aid and advice, and assuring compliance with statutory require

ments.

Two types of Federal financial assistance are provided under the United States Housing Act-loans and annual contributions. Loans may be made to assist local authorities in the capital financing of their projects, but under the proposed financing provisions of this bill it is expected that local authorities will be able to meet the great bulk of their capital requirements by the sale of bonds to private investors. The Federal loaning power will be used primarily in connection with the temporary financing of projects during the construction period. The annual contributions paid by the Federal Government, together with the contributions made by local governments, serve to make up the difference between the rents which families of low income can afford to pay and the annual operating costs and debt service of the projects. The Federal contributions are limited to maximum amounts fixed in relation to the costs of the projects, but the amounts actually paid each year are restricted to the amounts actually needed in such year. On the basis of past experience, it is expected that, over a period of years, not more than two-thirds or three-quarters of the maximum amount will be required.

The local governments contribute to the reduction of rents through the complete exemption of the low rent projects from all real and personal property taxation, subject to the making of small payments in lieu of taxes. Local contributions for the present projects under a similar system have averaged well over half the amount of the Federal contributions.

The present low-rent housing program has worked well in practice. It has taken families from the slums and has provided them with simple but adequate homes. It has provided these homes at rents within the means of low-income families, without forcing them to deplete their meager budgets for food, clothing, and other necessities. This program has received the almost unanimous support of public officials and public-minded citizens in the municipalities where it has operated.

NEED FOR PUBLIC HOUSING

The extension of the low-rent housing program as provided in title II of H. R. 4009 is a basic necessity if we are to move toward the goal of a decent home and suitable living environment for every American

family. As the Administrator of the Housing and Home Finance Agency stated in his testimony before your committee:

We cannot ignore the fact that there remains today, and will undoubtedly remain for years to come, a considerable percentage of our families whose incomes are so low that they must continue to live in slums or other inadequate housing unless we take action to prevent it. The breadwinners of most of these families are usually gainfully employed, and with proper budgeting their incomes are usually sufficient to supply all the basic needs of their families except adequate shelter. Adequate shelter is not available to these families because rents or prices charged for such shelter would represent an unduly and prohibitively high proportion of their limited income. The problem, both in its extent and nature, is not the sort which can be solved in the foreseeable future by private enterprise even with further possible financial aids.

The testimony presented to your committee makes it abundantly clear that the great majority of the families living in the slums do so only because they cannot afford to pay what private enterprise must charge for decent existing housing. The rents which they can pay represent an even smaller portion of what private enterprise would have to charge on the basis of a sound economic return if it were to supply new housing for these families from the slums.

Despite high postwar levels of employment and income, the reports of the Bureau of the Census show that 19.7 percent of urban families had money incomes in 1947 of less than $2,000, while 30.3 percent had incomes of less than $2,500. On the generally accepted rule that the cost of housing should, if possible, not exceed one-fifth of income, the average rent which the urban families in this lowest 30 percent income group can afford to pay would be approximately $27 per month, including heat and all other utilities.

If the families now living in the slums are to be provided with decent homes, it is, therefore, evident that a large additional supply of adequate housing must be provided at rents which will average somewhat under $30 per month, including all utilities. Your committee is convinced that this can be done only with the assistance of substantial public subsidies, both Federal and local. Your committee is equally convinced that the public interest amply justifies the provision of such subsidies.

PROGRAM AUTHORIZED under H. R. 4009

The bill authorizes the construction of not to exceed 1,050,000 new low-rent dwellings in urban and rural nonfarm areas. This authorization will become available in 7 annual installments of 150,000 units. After weighing all the evidence presented to it, your committee has concluded that the number of dwellings authorized over the 7-year period is essential in view of the acute and urgent need for housing by underprivileged slum dwellers.

The bill authorizes the commencement of construction on the first installment of 150,000 units after July 1, 1949. Each year thereafter this authorization is increased by 150,000 units until the full program of 1,050,000 units is authorized in 7 stages. In order that the progress of the new program may be adjusted, if necessary, to changing economic conditions, the President is authorized (after receiving the advice of the Council of Economic Advisers as to the effect of such action on conditions in the building industry and on the national economy) to increase or to decrease any of such authorizations at

any time or times by amounts aggregating not more than 100,000 dwellings, provided that the total authorization can never exceed 1,050,000. Any of the authorizations could, accordingly, be increased by 100,000 units at any time, or, for example, it could be increased by 50,000 units at one time and increased by a further 50,000 units at a subsequent time; but, after any authorization was increased by a total of 100,000 units, no further increase could ever be made with respect thereto. Thus, under the provisions of the bill, the President can adjust any of the authorizations between a top limit of 250,000 units and a bottom limit of 50,000 units. In the event that the full number of starts authorized in respect to the beginning of any fiscal year was not fully used in that year, such authorization would, of course, remain effective for subsequent use, subject, of course, to the total limitation of 1,050,000 units.

The Public Housing Administration is authorized under the pending bill to enter into annual contributions contracts for $85,000,000 after July 1, 1949. This limit will be increased by three annual increments of $80,000,000 and a final $75,000,000 on July 1, 1953. The total maximum contributions thus authorized would amount to $400,000,000 per year. Although contracts may be written up to this maximum amount, it is expected that, on the average, the contributions actually paid will not exceed more than two-thirds or three-quarters of this amount. Subject to the total of $400,000,000 per year, the authorization for annual contributions can also be accelerated by the President, and authorizations which become available at the beginning of one fiscal year may, if unused in such year, be carried over for subsequent

use.

The total amount which the PHA may borrow from the Treasury and have outstanding at any time is increased to $1,500,000,000, instead of the present authorization of $800,000,000. It also places the borrowing power on a revolving-fund basis. This borrowing power will be used primarily to provide security for short-term loans made by the local authorities from private investors during the construction period. It is therefore anticipated that the funds actually borrowed from the Treasury will be very substantially less than the authorized amount.

AMENDMENTS RELATING TO SELECTION OF TENANTS

Almost 12 years' experience in the operation of the United States Housing Act has disclosed the desirability of a number of amendments to that act. H. R. 4009 therefore includes several amendments which your committee believes to be desirable improvements and which will make the United States Housing Act a more flexible and useful device for providing adequate housing for low-income families.

The first of these proposed amendments is designed to relate the public housing program to the new slum-clearance program. Lowincome families who are displaced or are about to be displaced by public slum-clearance or redevelopment projects or by low-rent housing projects will be given a first preference for admission to low-rent hous

In this way, suitable dwellings will become available to families. who are to be displaced and will aid slum-clearance projects in complying with the requirement in this connection which is included in the slum-clearance title. Since a positive program of slum clearance is