PAGENO="0001" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION (3q)c) ç31~V~3 HEARINGS BEFORE THIJ SUBCOMMITTEE ON INTERGOVERNMENTAL IRi~LATJONS OF THE COMMITTEE ON GOVERNMENT OPERATIONS TJNJTED STATES SENATE N~NETIETH CONGRESS SECOND SESSION ON S 698 THE PROPOSED INTERGV Tw~(1~AL COOPERATION ACT OF 1967 S 735 THE PROPOSED FEDERAL GRANT IN AID REVIEW ACT OF 1967 S. 458 TO PROVIDE FOR PERIODIC CONGRESSIONAL REVIEW OF FEDERAL GRANTS-IN-AID TO. STATES AND TO LOCAL UNITS OF GOVERNMENT AND S. 2981 THE PROPOSED JOINT FUNDING SIMPLIFICATION ACT OF 1968 MAY 9 10 14 15 16 21 22 28 AND 29 1968 Printed for the use of the Committee on Government Operations U.S. GOVERNMENT PRINTING OFFICE 95-626 WASHINGTON: 1968 ~ c~ SD PAGENO="0002" COMMITTEE ON GOVERNMENP OPERATIONS JOHN L. MCCLELLAN, Arkansas, Chairman HENRY M. JACKSON, Was1 -~to~ KARL E. MUNDT, South Dakota SAM J. ERVIN, JR., North ~a1o1ina CARL T. CURTIS, Nebraska ERNEST GRUENING, Alasixa JACOB K. JAVITS, New York EDMUND S. MUSKIE, Mai~e CLIFFORD P. HANSEN, Wyoming ABRAHAM RIBICOFF, ~ HOWARD H. BAKER, Ja., Tennessee FRED H. HARRIS, Oklah~ma ROBERT F. KENNEDY, New York LEE METCALF, Montanaj JOSEPH M. MONTOVA, ~ew Mexico JAME~ H. CALLOWAY, Chief Clerk and ~t~ff Director ARTHUR A. SHARP, ~taff Editor I SUBCOM~ITTEE ON INTERGOVERNMENTAL RELATIONS Efr~MUND S. MUSKIE, Maine, Chai'man SAM J. ERVIN, Ja., North C~roiina KARL B. ~iDN~T, South Dakota ABRAHAM RIBICOFF, Conn~ec~~~t CLIFJURD P. HANSEN, Wyoming ROBERT F. KENNEDY, New York -~O'VARD H. BAKER, Ja., Tennessee LEE METCALF, Montana JOSEPH M. MONTOVA, New Mexico CHARLES M. SMITH, staff Director ROBERT B. BERRY, Minority Counsel B. WINSLOW TURNER, aeneral Counsel LUCINDA T. DENNIS, Administrative secretary (II) PAGENO="0003" CONTENTS Page~ Dpening statement of the chairman - 1 Text of S. 698, the Intergovernmental Cooperation Act, and remarks upon the introduction on January 26, 1967, by Senator Edmund S. Muskie 6 Text of amendments intended to be proposed by Mr. Muskie, and remarks upon the introduction on May 8, 1968 28 Text of S. 735, the Federal Grant-in-Aid Review Act of 1967 31 Text of S. 458, a bill to provide for periodic congressional review of Federal grants-in-aid to States and to local units of government 32 Text of S. 2981, the Joint Funding Simplification Act, and remarks upon the introduction on February 16, 1968, by Senator John L. McClellan 34 Joint Funding Simplification Act of 1968, explanatory statement 39 Examples of application of the grant simplification proposal to hypotheti- cal projects 41 Agency reports on S. 698: Advisory Commission on Intergovernmental Relations 48 General Accounting Office 53 Department of Health, Education, and Welfare 57 Department of Transportation 65 General Services Administration 66 Agency reports on amendment No. 748: General Accounting Office 68 General Accounting Office, supplemental report 70 Agency repor~s on S. 735 and S. 458: General Accounting Office 72 Advisory Commission on Intergovernmental Relations 72 Council of Economic Advisers 74 General Services Administration 74 General Accounting Office 75 Department of the Army 76 Department of Transportation 77 Agency Reports on S. 2981: Department of Transportation 78 Office of Emergency Planning 79 Bureau of the Budget 80 Department of the Treasury 81 Post Office Department 81 Department of Labor 82 Department of Agriculture 82 Office of Science and Technology 83 Civil Aeronautics Board 84 Office of Economic Opportunity 84 Department of the Army 85 Department of State 86 Department of Housing and Urban Development 86 Department of Justice 88 Atomic Energy Commission 88 General Accounting Office 89 Department of Health, Education, and Welfare 90 Veterans' Administration 91 WITNESSES MAY 9, 1968 ~hjllip S. Hughes, Deputy Director, Bureau of the Budget, accompanied &~~mes M. Frey, Deputy Director, Office of Legislative Reference 91 (III) PAGENO="0004" Iv MAY 10, 1968 Statement of Hon. Jack Miller, a U.S. Senator from the State of Iowa William G. Oolman, Executive Director, Advisory Commission on Inter- governmental Relations, accompanied by David B. Walker, Assistant Director (Governmental Structure and Functions), and Albert J. Richter, senior analyst Statement of Hon. John Connally, Governor of Texas, vice chairman of the National Governors' Conference, as presented by Wayne Gibbens, Texas director, State-Federal relations, State of Texas, accompanied by David Hill, liaison officer, National Governors' Conference ~Naithaniel S. Keith, president, National Housing Conference, Inc Max 14, 1968 Mrs. Gladys Speilman, county commissioner, Prince Georges County, Md__ lion. Beverly Briley, mayor, Metropolitan Nashville-Davidson County, Tenn Edward FoUthoff, city manager, Saginaw, Mich., representing the Interna- tional City Managers' Association Statement of William L. Rafsky, president, National Association of Housing and Redevelopment Officials MAY 15, 1908 John G. Reutter, presi~ent, National Society of Professional Engineers, Consulting Engineers Council, accompanied by Billy T. Sumner, regional vice chairman, Professional Engineers in Private Practice, National Society of Professional Engineers; and John Fisher-Smith chairman, Urban Design Committee, AlA Matt Priggs, assistant legislative director, American Farm Bureau Federation Joseph L. Miller, legislative representative, National Parking Association__ Theodnre Libby, Republic Pipe & Supply Co., and James Goralnick, Premier Packing Co., representing the Chamber of Commerce, Roxbury, Mass.; and Charles Akerson, Nordblom Co., Boston, Mass Miss Jo Bingham, assistant to the vice president of the Government Rela- tions Division of the National Association of 1\tanufacturers MAY 10, 1908 William L. Raf sky, president, National Association. of Housing and Redevel- opment Officials, nccompanied by John D. Lange, executive director, and Mary K. Nenno, associate director for program policy and research 275 Dr. George Sterniieb, research director, Graduate School of Business, Rutgers-The State University, Newark, N.J 283 Harold F. Wise, legislative chairman, American Institute of Planners 292 MAY 21, 1968 Statement by the chairman 297 The Reverend Canon Donald A. Griesanann, director of the Episcopal Corn- munity Center, Camden, N~J 298 Charles Sharp, chairman, Blach Peoples' Union Movement Miss Marian Wright, 01' the Southern Christian Leadership Conference, accompanied by Mrs. Lela Mae Brooks, Sunflower, Miss.; Mrs. Barbara Arsenault, Berkeley, Mich.; Vincent Negron, Bi~ownsvil1e, N.Y.; George Francis, PassamaquoddY Indian Reservation, Perry, Maine; and Thomas Willian~s, Jackson, Miss_________________________~~_ ~ 321 MAY 22, 1988 Wendell G. Freeland, member of the board of trustees, National Urban League, accompanied by Mrs. Murice Jeffenies, community organizer, Neighborhood Development Center and Program, Wa'shing~ton Urban League ~ 33~ Clarence M. Mitchell, Jr., director, Washington Bureau, National As~o- citation for the Advancement of Colored People_____________________ PAGENO="0005" V Page on. Joseph D. Tydings, a U.S. Senator from the State of Marylantl____ 370 erkeley G. Burrcil, president, National Business Le1ague, aceompianieci by Charles T. Williams, vice president, Schenley Distillers Co.; and Bux- ton Cook, associate director of research, National Business League_~. MAY 28, 1968 ETon. Frank E. Moss, a U.S. Senator from the State of Utah 387 ETon. Chester L. Mize, Representative from the Second Congressional This- trict of Kansas 391 Ton. Robert C. Weaver, Secretary of the Department of Housing and Urban Development, acicOmpanied by H. Ralph Taylor, Assistant Secre- tary for Demoustrations and Intergovernmental Relations, Ashley A. Foard, Deputy General Counsel, and John Frantz, Budget Offi'cer~_ 393 illiam L. Taylor, Staff Direetor, U.S. Commission on Civil Rights, ac- companied by Martin E. Sloane, Special Assistant to the Staff Dire~tom_ 415 MAY 29, 1968 owell K. Bridwell, Federal Highway Administrator, accompanied by Francis C. Turner, Director of the Bureau of Public Roads 425 oney W. Hart, Chief, Legislative Services Office, Directorate of Real Estate Office, Chief of Engineers, Department of the Army, accompanied by Roy Markon, Chief, Acquisition Division; Henry V. Saunders, Assist- ant Chief, Management and Disposal Division; Mark S. Gurnee, Chief, Operations Division; and Theron C. Riley, Planning Division 440 ettin Stalling, chairman, Council on Community Affairs, FBA, District of Columbia Chapter of the Federal Bar Association 453 arry L. Graham, legislative representative of the National Grange 455 tatement of Hon. Wilbur J. Cohen, Secretary of Health, Education, and Welfare - 467 Communications and statements submitted for the record: Hon. John W. Gardner 473 Hon. Stuart Symington, a U.S. Senator from the State of Missouri; amendment intended to be proposed to 5. 698 by Mr. Syfl~ington (for himself and Mr. Long of Missouri), and correspondence related thereto Hon. Edward V. Long, a U.S. Senator from the State of MissourL__ 477 Hon. Milton R. Young, a U.S. Senator from the State of North Dakota 478 National Council of Churches of Christ in the U.S.A. 479 National Governors' Conference 479 Hon. John A. Volpe, Governor of the Commonwealth of Massachu- setts 480 National League of Cities, U.S. Conference of Mayors 483 National Association of Counties 488 National Association of Housing and Redevelopment Officials 488 Angus McDonald, director of research, National Farmers Union~ 490 Hon. Philip H. Hoff, Governor of the State of Vermont 491 Washington Urban League, Neighborhood Development Center and Program__pi~r~~ Street: An Urban Renewal Experience 2 Years Later 507 Shelby County (Tenn.) Department of Coordination 511 Report of Joint Administrative Task Force 512 Homi. William F. Ryan, Representative from the 20th Congressional District of New York 521 The New England Council 522 National Association of State Budget Officers 525 Department of the Army 527 Federal Highway Administration 529 General Services Administration 531 Department of the Interior 532 Department of Commerce 532 ~~tment of Housing and Urban Development 533 PAGENO="0006" PAGENO="0007" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AN1) RELATED LEGISLATION THURSDAY, MAY 9, 1968 TJ.S. SENATE, SUBCOMMITTEE ON INTERGOVERMENTAL RELATIONS OF THE COMMITTEE ON GOVERMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to notice, at 10:30 a.m., in room 3302, New Senate Office Building, Senator Edmund S. Muskie (chair- man) presiding. Present: Senator Edmund S. Muskie, Democrat, Maine. Staff members present: Charles M. Smith, staff director; Robert E. Berry, minority counsel; E. Winslow Turner, general counsel; Lucincla T. Dennis, administrative secretary. OPENING STATEMENT OF THE CHAIRMAN Senator MUSKIE. The committee will be in order. I have an opening statement. Today we open hearings on S. 698, the Intergovernmental Cooperation Act and related legislation, S. 735, S. 458, and S. 2981. S. 698 is a comprehensive bill devoted to improving the adminis- tration of Federal assistance programs at State and local levels. It provides for uniform Federal policies of coordination and coopera- tion with those levels of government which must carry out national goals, and meet national needs at the local level. Last year, President Johnson sent a special message to Congress on the "Quality of American Government." The President in his conclusion said in part: Because of the social and economic legislation passed by the 88th and 89th Congresses-legislation unmatched in all the annals of our history-this Nation now has programs which can lift the quality of American life higher than any before us have known. What remains for us now is to improve the quality of government itself- its machinery, its manpower, its methods-so that those programs will touch and transform the lives of the people for whom they were intended. Governor Terry Sanford, in his book, "Storm Over the States" sees the need for modernizing our federal system in the light of the impact of our future technological revolution. He says: The shadowy outlines of the future are sharpened day by day, and with emerging clarity we begin to see the forms of dome-covered cities, agriculture with oil, commercial rocket travel, drugs which alter personality, control of t Jather, and coatainment of the population explosion. With all these perplexing influences on man's life, it is predictable that our system of Govern- ment will adjust and readjust. Where weaknesses and inequities show, they will be corrected or overcome. The forms of our Government will remain, in (1) PAGENO="0008" 2 deference to history, but their role in the technological tomorrow will be se by our concern of today. These statements are symbolic of the increasing concern being ex pressed by administrative officials at all Government levels, by acad emicians, by legislators, by industry and labor, and the public a large. It is the concern for an integrated federal system, a coopera tive venture, a modern, machine to meet the increasing needs an services of tomorrow. It has been the responsibiJity of this committee over the past years to investigate the workings of our federal system. In most areas we have found a far greater degree of individua freedom and decisionmaking at the local level of government thai exists in any other major country in the world. This makes possibl the greatest extent of popular participation and consent envisione by our Founding Fathers. Increased grassroots citizen participation is essential to the vitalit of our democratic system. At the same time, it does contribute to problems of intergovernmental coordination and cooperation, inequi- table applications of collecting and distributing fiscal resources, and a tremendpus demand for more qualified administrative personnel. We have over 82,000 local units of government, most with their own taxing, planning and operating authorities. We have 50 States with thousands of relatively automous agencies, departments, and authorities carrying on additional operating and planning responsibilities. And at the Federal level we have over 21 Federal agencies and hundreds of regional and subregional offices administering over 500 separate grant-in-aid authorizations. The needs for cooperation, not competition, for closing the in- formation gap between levels, for developing a partnership in the interests of economy and efficiency in our federal system were never more serious than they are today. Testifying before this subcommittee during the first phase of our creative federalism hearings, Secretary John Gardner, scholar and firsthand observer of federalism in action at every level, said this: In almost every domestic progr~im we are encountering crises of organiza- tion. Coordination among Federal agencies leaves much to be desired. Commu- nications between the various levels of government-Federal, State and local- is casual and ineffective. State and local government is in most areas seriously inadequate. We will never get more than a fraction of the full yield from the taxpayer's dollar until local, State and Federal governments-and the American people generally-decide that action is needed. The time has come to correct these deficiencies. And the American people are capable of correcting them. We have a President who is keenly interested in the problem. We can improve coordination at all levels. We can revitalize State and local government. We have it in our power to create a healthier Federal-State-local partnership than has ever before existed-and healthier partnerships between the governmental and non-governmental worlds than ever before existed-partnerships that will ensure the integrity and vitality of the non-Federal partner. The challenge Secretary Gardner was making was to this Co re~ FecoglPzipg~tt the sam~e time that there are some things that ot tate and local governments can do for themselves. But it is the ongress which must take the lead in helping the States and localities solve their problems of management, money, manpower, and modernization. PAGENO="0009" 3 S. 698 and the related legislation upon which these hearings are based, are attempts to provide at least a start to better intergovern- mental cooperation. Most of the titles and legislative language are familiar to a majority of the members of this committee. The titles of S. 698 providing for improved administration of grants to the States, periodic congressional review of grants, provision for Federal technical services to the State and local governments, a co- ordinated Federal urban assistance policy and an urban land utiliza- tion policy were passed by the Senate in the last Congress and were in varying forms the subjects of extensive hearings going back to the 87th Congress. The same is true of 5. 458 and S. 735, dealing `with con- gressional review. Title VIII of S. 698, making relocation payments and assistance available to persons and businesses displaced by Federal or federally assisted programs, and title IX, providing for a uniform land acquisi- tion policy, `are similar to 5. 1681, which also passed the Senate in the last `Congress an'd whi'ch includes additional language based on 5. 1201 on which hearings were held in the 89th `Congress. This legisla- tion came out of the recommendation contained in a special study on the problems of real property acquisitions conducted by a select subcommittee of the House. `The entirely new legislation in 5. 698 involves title VI, providing a method for the `consolidation `of Federal grant programs, and my amendment to the bill which would add a new title X providing for improved coordination in the `accounting, auditing and reporting of Federal assistance programs. With so much of t'his legislation previously heard and agreed upon on the Senate side, the question might be raised: why `additional `hear- ings? Why not move it up and out? First, we have t'w'o new members who, from the beginning of their assignment to the committee, have exhi'bited an active interest in inter- governmental problems and will have, I am sure, a special interest in time subject matter of S. 698. Second, the accelerating problems faced by our State and local gov- ernments-in riots and tension; in expanding urbanization; in utiliz- ing Federal aid programs, and in developing meaningfu'l planning- make a new look at this legislation mandatory. Third, `although we h'ave labored diligently during t'he past few years to perfect the legislative language and to incorporate workable con- cepts, the recent proliferation of studies in the field of Federal-State- local relations give us justification for reviewing the latest thinking on these subjects, particularly with respect ~o assisting persons and businesses displaced by Federal programs. Fourth, we have befo're us also S. 458 and S. 735, which propose somewhat different approaches to the objective `of periodic congres- sional review of grant-in-aid programs. `These need to `be considered along with the corresponding provisions of S. 698. Finally, we shall be taking testimony on `S. 2981, an entirely new bill, I~~losely related to the `other legislation we `are considering. This is~ie Joint Funding Simplification Act of 1968, introduced by Sethttor McClellan "at the request of the admini'stration, to provide temporary authority to expedite `procedures for consideration and approval `of projects drawing upon more than one Federal assistance PAGENO="0010" 4 program, to simplify requirements for the operation of those projects and for other purposes. This raises some of the questions we woul like to explore in these hearings. S. 698 has 10 prospective titles and a great number of separat sections. It is, in fact, an omnibus bill. We welcome comments an suggestions on any and all parts of the bill, but I hope the witnesses will make a special attempt to cover some of what we consider to b the more significant current issues. In title II, we provide for grant information to the States. What i the moist effective means of channeling usable information to Gover- nors and legislators concerning the impact and scope of Federa programs? To what degree have the Bureau of the Budget and the Federal agencies coordinated their resources to provide this information? The President's message on the quality of American Government and various executive orders have stressed the need for a free flow of information of this kind and we shall be interested to learn what new approaches can be used. Title II also gives a permissive waiver to the single State agency concept. What has been the degree to which this requirement has tended to weaken executive power and leadership in State and local development programs, and how has it added to the difficulties of pro- gram coordination and planning? In title III, permitting Federal technical assistance, we made a special attempt to improve the legislative language to meet the concern of private interests also providing special and technical services to State and local governments. Were our changes adequate, and are further c~hanges needed to assure private enterprise an appropriate role in helping tb improve our Federal system? Title IV, although general in its language, is one of the most far- reaching requirements in the bill. It is a congressional mandate for a Federal intergovernmental coordination policy with respect to grant administration in urban development. In view of what we now know of the urban crisis, is the language of title IV properly geared to present needs? Does it lead in the direction of a national policy that takes into account the need for bal- anced development of both urban and rural areas? Does it provide for coordination on the full scale necessary if national, regional, State and local priorities are all to be fairly served? This is the delicate balance of federalism. I have suggested a special "working secretariat" in the Office of the President~ a National Inter- governmental Affairs Council, to speak for the President in ham- mering out this policy. That legislation is not a part of this bill; but this title deals with the same problem. Title V concerns congressional review of future Federal grant pro- grams. So also do S. 458 and S. 735. This idea has been with us for a long time, but there has been continuing opposition to some of tb~e~ langauge we have used, particularly with reference to the prov~ion for expiration after 5 years of grant programs hereafter ~ roved without a termin~ttion date. In title VI, we have a new approach to coping with the prolifera- tion of Federal grants which, in some cases, has caused confusion in the Federal system. PAGENO="0011" 5 I would like testimony on the benefits of this proposal. What are the merits, the savings, the `advantages to coordination and flexibility for State and local governments of this title? Is this a realistic way of reducing over 500 authorizations and appropriations? Title VI is a step forward, but additional steps may be needed. On title VII, I have a basic question. Will the language assurc that future land transactions by the GSA will support, rather than frus- trate, the efforts of local communities in their land planning and use programs? Title VIII is, in my opinion, one of the most important titles in the bill. Although figures tend to be speculative, particularly in view of re- duced Federal spending, we may expect the dislocation of over a million families and individuals, 180,000 businesses, and 40,000 farm operators over the next 10 years as a result of Federal or federally assisted programs. Much of this will concern the poor and the elderly-white and black-where the impact hits with greatest force. Are the measures we have provided adequate to assist and compen- sate these people and businesses in the light of what we now know about the personal and economic impact of dislocation today? For those whose property is taken to make way for public improve- ment, is the fair market value standard of compensation enough to enable people to take up their lives in a similar or improved manner elsewhere? What can be done to provide for relocation assistance at an earlier stage than is presently provided-for assistance at the stage when the planning and surveying of the proposed project is aimnounced, and people panic? What caim be done to relieve them of the fear of removal and smooth the road to orderly relocation? WTit~h respect to title IX, have we succeeded in providing ground rules sufficient to insure that the Federal Government and State and local governments using Federal funds will deal fairly, whether by negotiation or condemnation, in taking land for public improvement? In closing, I want to say that 1 am optimistic about this bill. The House Committee on Government Operations held hearings on the first five titles in 1966, and is continuing with its consideration this year. The mood may be changing toward the concept of meaningful com- pensation and assistance for acquisition and relocation under Federal and federally assisted programs. It always takes years for good ideas to surface, and eventually become law. We are hopeful that the administration today will set the stage for a much stronger support for the measures contained in 5. 698 than it has in the past. Last year we passed the first really significant step forward in inter- governmental relations legislation in years-the intergovernmental personnel bill. That bill is moving forward in the House, and would provi nds and `assistance for the development of State and local perso systems, training programs, fellowships, and exchange of personnel. The support among State and local ad~ministrators for this legislation was tremendous. Now we are down to the next big step this year: The Intergovern- mental Cooperation Act. PAGENO="0012" 6 I emphasize again that this is a congressional initiative to help th States modernize their administration of Federal programs; to hel the local governments to obtain coordinated Federal assistance in line with their comprehensive planning; and to help the people and the businesses to get a fair shake when the Federal bulldozer plans t niove in on them. The cost of this bill is marginal compared with the efficiency, econ- omy, and human protection it will generate to help build a better America. Finally, passage of the legislation would demonstrate rec- ognition by the Congress that cooperation and coordination-the basic ingredients of the "new federalism"-start with local and Stat~ governments, with every measure of assistance and cooperation from the Federal level. I think I appreciate today, as I have for sonic time, that this is for most people a dry, technical, incomprehensible subject, but I think it is concerned with issues which are the very life of our democratic system. I notice that we now have some new additions to our audience this morning, some young, who probably will find it dry, technical language with which we will be dealing this morning, completely dry and incomprehensible, almost as much as in their classrooms, but what we are dealing with here is of great importance to them, and if they will remember nothing more about their visit here, what we are con- cerned with is ways to make our Government better, to make it work more effectively for the benefit of youngsters like yourselves. We welcome you here this morning. I shall now, without objection, place in the record the texts of S. 698, amendment No. 748, intended to be proposed to S. 698, S. 735, S. 458, and S. 2981, together with explanatory statements and agency reports on these bills. (The material referred to follows:) [S. 698, 90th Cong., first sess.] A BILL To achieve the fullest cooperation and coordination of activities among the levels of government in order to improve the operation of our federal system in an increasingly complex society, to improve the administration of grants-in-aid to the States, to provide fo~ periodic congressional review of Federal grants-in-aid, to permit provision of reim- bursable technical services to State and local government, to establish coordinated inter- governmental policy and administration of grants and loans for urban development, to authorize the consolidation of certain grant-in-aid programs, to provide for the acquisi- tion, use, and disposition of land within urban areas by Federal agencies In conformity with local government programs, to establish a uniform relocation assistance policy, to establish a uniform land acquisition policy for Federal and federally aided programs, and for other purposes Re i.t enacted by the Senate and House of Representatives of the United States of A merica in Congress assembled, That this Act be cited as the "Intergovern- mental Cooperation Act of 19G7." TITLE I--DEFINITIONS When used in this Act- FEDERAL AGENCY Sac. 101. The term "Federal agency" means any department, agency, or insjru- mentality in the executive branch of the Government and any wholly ~tvned Gover~ment corporation, and for the purposes of title VIII, the A f~ of the Capitol, STATE SEc. 102, The term "State" means any of the several States of the United States, the District of Columbia, Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State, but does not include the governments of the political subdivisions of the State. For the purposes of title VIII and title IX the term "State" does include such political subdivisions, PAGENO="0013" 7 POLITICAL SUBDIVISION OR LOCAL GOVERNMENT SEC. 103. The term "political subdivision" or "local government" means a local unit of government, including specifically a county, municipality, city, town, township, or a school or other special district created by or pursuant to State law. UNIT OF GENERAL LOCAL GOVERNMENT SEC. 104. "Unit of general local government" means any city, county, town, arish, village, or other general-purpose political subdivision of a State. SPECIAL PURPOSE UNIT OF LOCAL GOVERNMENT SEC 105 Special purpose unit of local government means any special district ublic purpose corporation or other strictly limited purpose political subdivision ~ a State but shall not include a school district GRANT Oil GRANT-IN-AID SEC. 106. The term "grant" or "grant-in-aid" means money, or property pro- vided in lieu of money, paid or furnished by the United States under a fixed an- ~l or aggregate authorization- (A) to a State; or (B) to a political subdivision of a State; or ( C) to a beneficiary under a State-administered plan or program which is subject to approval by a Federal agency; if such `authorization either (i) requires the States or political subdivisions to expend non-Federal funds as a condition for the receipt of money or property from the United States; or (ii) specifies directly, or establishes by means of a ~ `~, the amounts which may be paid or furnished to States or political sub- `~, or the amounts to be allotted for use in each of the States by the States, 1 snbdivisions, or other beneficiaries. The term does not include' (1) iared revenues; (2) payments of taxes; (3) payments in lieu of taxes; (4) loans or repayable advances; (5) surplus property or surplus agricultural cOm- modities furnished as such; (6) payments under research and development con- tracts or grants which are awarded directly and on similar terms to all qualifying organizations, whether public or private; or (7) payments to States or political subdivisions as full reimbursement for the costs incurred in paying benefits or furnishing services to persons entitled thereto under Federal laws. FEDERAL FINANCIAL ASSISTANCE SEC. 107. The term "Federal financial assistance" does not include any annual payment by the United States to the District of Columbia authorized by article VI of the District of Columbia Revenue Act of 1947 (D.C. Code, secs. 47-2501a and 47-2501b). SPECIALIzED OR TECHNICAL SERVICES SEC. 108. "Specialized or technical services" means special statistical and other studies and compilations, development projects, technical tests and evaluations, technical information, training activities, surveys, reports, documents, and any other similar service functions which the Secretary of any department or the administrative head of any agency of the executive branch of the Federal Gov- erment is authorized by law to perform. COMPREHENSIVE PLANNING SE~\~09. "Comprehensive planning", except in title VI, includes the following, to the elr~ent directly related to area needs or needs of a unit of general local governme ) preparation, as a guide for long-range development, of general physical p1 tb respect to the pattern and intensity of land use and the pro- vision of p ~` - facilities, including transportation facilities; (B) programing of capital impi'~?vements based on a determination of relative urgency; (C) long- range fiscal plans for implementing such plans and programs; and (D) proposed regulatory and administrative measures which aid in achieving coordination of all related plans of the' departments or subdivisions of the goveruments con- cerned and intergovernmental coordination of related planned activities among the State and local governmental agencies concerned. PAGENO="0014" 8 URBAN DEVELOPMENT SEC. 110. "Urban development" means all projects or programs for the acquisi- tion, use, and development of open space land; and the planning arid construc- tion of hospitals, libraries, airports, water supply and distribution facilities, sew- erage facilities and waste treatment works, transportation facilities, highways, water development and land conservation, and ether public works facilities. STATE AGENCY SEC. 111. For the purposes of titles VIII and IX, the term "State agency" means any agency or instrumentality created by a State, or by a political subdivision of a State or by agreement between two or more States or by two or more political subdivisions of a State or States. HEAD OF AGENCY SEC. 112. The term "head of a Federal agency" or "head of a State agency" includes a duly designated delegate of such agency head. DISPLACED PERSON SEC. 113. The term "displaced person" means- (1) any person who is the owner of a business which moves from real property or is discontinued on or after the effective date of this Act as a result of the acquisition or reasonable expectation of acquisition of such real prop- erty, in whole or in part, by a Federal or State agency; (2) any person who is the farm operator of a farm operation which moves from real property or is discontinued on or after the effective date of this Act as a result of the acquisition or reasonable expectation of acquisition of such real property, in whole or in part, by a Federal or State agency; (3) any individual who is the head of a family which moves from real property occupied as a dwelling on or after the effective date of this Act, as a result of the acquisition or reasonable expectation of acquisition of such real property, in whole or in part, by a Federal or State agency, or which moves from such dwelling as a result of the acquisition or reasonable ex- pectation of acquisition by such Federal or State agency of other real property on which such family conducts a business or farm operation; (4) any individual, not a member of a family, who moves from real prop- erty occupied as a dwelling on or after the effective date of this Act, as a result of the acquisition or reasonable expedtation of acquisition of such real property, in whole or in part, by a Federal or State agency, or who moves from such dwelling as a result of the acquisition or reasonable expectation of acquisition by such Federal or State agency, of other real property on which such individual conducts a business or farm operation; and (5) any individual, not described in paragraph (1), (2), (3), or (4) of this section, who moves his personal property from real property on or after the effective date of this Act as a result of the acquisition or reasonable expectation of acquisition of such real property, in whole or in part, by a Federal or State agency: Provided, That this shall not include the owner of property on the premises of another under a lease or licensing arrangement where such owner is required pursuant to such lease or license to move such property at his own expense. BUSINESS SEC. 114. The term "business" means any lawful activity conducted primar~iy (1) for the purchase and resale of products, commodities, or any other personal property; (2) for the manufacture, processing, or marketing of any such prop- erty; (3) for the sale of services to the public; or (4) by a nonprofit ization. Such term does not include the activity of an investor in acqui holding real property for resale for gain. FARM OPERATION SEC. 115. The term "farm operation" means any activity conducted solely or primarily for the production of one or more agricultural products or commodities for sale and home use, and customarily producing such products or commodities in sufficient quantity to be capable of contributing materially to the operator's support. PAGENO="0015" 9 FARM OPERATOR SEC. 116. The term "farm operator" means any owner, part owner, tenant, or harecropper who operates a farm. FAMILY SEc. 117. The term "faxpily" means `two or more individuals living together in he same dwelling unit who are related to each other by blood, marriage, or doption. ELDERLY INDIVIDUAL SEC. 118. The term "elderly individual" means a person, not a member of a amily, who is sixty-two years of age or over. HANDICAPPED INDIVIDUAL SEC. 119. The term "handicapped individual" means a person, not a member of a family, who is handicapped within the meaning of section 202 of the Housing Act of 1959. DISPLACED SEC. 120. The term "displaced", when used in relation to any person, means any person moved or to be moved from real property on or after the effective date of this Act as a result of the acquisition or reasonable expectation of acquisition of such property for a public improvement constructed or developed by or with funds provided in whole or in part by the Federal Government. OWNER AND PERSON SEC. 121. The terms "owner" and "person" mean any individual, and any partnership, corporation, or association. TITLE Il-IMPROVED ADMINISTRATION OF GRANTS-IN-AID TO THE STATES FULL INFORMATION ON FUNDS RECEIVED SEC. 201. Any department or agency of the United States Government which administers a program of grants-in-aid to any of the State governments of the United States shall, upon request, notify in writing the Governor or other official designated by him, or the State legislature, of the purpose and amounts of actual grauts4n-aid to the State. DEPOSIT OF GRANTS-IN-AID Sno. 202~ No grant-in-aid to a State shall be required by Federal law to be deposited in a separate bank account apart from other funds administered by the *tate. All Federal grant-in-aid funds made available to the States shall be prop~rly accounted for as Federal funds in the accouhts of the State. In each case the State agency concerned shaU render regular authenticated reports to the appropriate Federal agency covering thie status and the application of the funds, he liabilities and obligations on hand, and such other facts as may be required by said Federal agency. SCHEDULING OF FEDERAL TRANSFERS TO THE STATES SEC. 203. Heads of Federal departments and agencies responsible for adininis- tering gr5ut-in~aid program's shall schedule the transfer of grant-in-aid funds consistent with program purposes and applicable Treasury regulations, so as~ to minimize tb~~ie elapsing between the transfer of such funds from the United States Treat~~Mnd the disbursement thereof by a State, whether such dis- burSement occu1~'prior to or subsequent to such transfer of funds. States shall not be held accountable for interest earned on grant-in-aid funds, pending their disbursement for program purposes. ELIGIBLE STATE AGENCY SEC. 204. Notwithstanding any other Federal law which provides that a single State agency or multimember board or commission must be established or desig- nated to administer or supervise the administration of any grant4n-aid program, PAGENO="0016" 10 the head of any Federal department or agency may, upon request of the Governor or other appropriate executive or legislative authority of the State responsible for determining or revising the organizational structure of State government, waive the single State agency or multimember board or commission provision upon ade- quatie showing that such provision prevents the establishment of the most effective and efficient organization arrangements within the State government and approve other State administrative structure or arrangements: Provided, That the head of the Federal department or agency determines that the objectives of the Federal statute authorizing the grant-in-aid program will not be endangered by the use of such other State structure or arrangements. TITLE Ill-PERMITTING FEDERAL DEPARTMENTS AND AGENCIES TO PROVIDE SPECIAL OR TECHNICAL SERVICES TO STATE AND LOCAL UNITS OF GOVERNMENT STATEMENT OF PURPOSE Szc. 301. It is the purpose of this title to encourage Intergovernmental coopera- tion in the conduct of specialized or technical services and provision of facilities essential to the administration of State or local governmental activities, many of Which are nationwide in scope and financed in part by Federal funds; to enable State or local governments to avoid unnecessary duplication of special service functions; and to authorize all departments and agencies of the executive branch of the Federal Government which do not have such authority to provide specialized or technical services to State and local governments. AUTHORITY TO PROVThE SEEVICE SEc. 302. The Secretary of any department or the administrative head of any agency of the executive branch of the Federal Government is authorized within his discretion, upon written request from a State or political subdivision thereof, to provide specialized or technical services, upon payment to the depaFtmellt or agency by the unit of government making the request, of salaries and all com- putable overhead and indirect costs of performing such services: Provided, how- ever, That such services shall include only those Which the Director of the Bureau of the Budget through rules and regulations, determines may be pro- vided by Federal departments and agencies. Such rules and regulations shall be consistent with and in furtherance of the Government's policy of relying on the private enterprise system to provide those services which are reasonably and expeditiously available through ordinary business channels. REIMBURSEMENT OF APPROPRIATION SEC. 303. All moneys received by any department or agency of the executive branch of the Federal Government, or any bureau or other administrative division thereof, in payment for furnishing specialized or technical services as authorized under section 302 shall be deposited to the credit of the principal appropriation~ from which the cost of providixig such services has been paid or is to be charged, or to the appropriation currently available for the cost of similar services. REPORTS TQ CONGRJ~SS SEC. 304. The Secretary of any department or the administrative head of any agency of the executive branch of the Federal Government shall furnish1 annua1jy~ to the respective Committees on Government Operations of the Senate and ~Ei1Ise of Representatives a summary report on the scope of the services provided under the administration of this title. RESERVATION OF EXISTING AUTHORITY Sue. 305. This title is in addition to and does not supersq~~any existing authority now possessed by any Federal department or agenc~~i~i respect to furnishing services, whether on a reimbursable or nonrelimbursabTe basis, to State and local units of government. TITLE IV-COORDINATED INTERGOVERNMENTAL POLICY AND ADMINISTRATION OF GRANTS FOR URBAN DEVELOPMENT DECLARATION OF URBAN ASSISTANCE POLICY SEC. 401. (a) The economic and social development of the Nation, its strength In world affairs and the achievement of satisfactory levels of living depend in PAGENO="0017" 11 large degree upon the sound and orderly development of urban communities. In pursuit of this basic objective, the President shall establish rules and regulations for uniform application in the formulation, evaluation, and review of urban development programs and projects for the provision of federally aided urban facilities, and Federal projects having a significant impact on the development of urban and urbanizing communities. Such rules and regulations shall provide for full consideration of the concurrent achievement of the following specific objec- tives of urban development, and, to the extent authorized by law, reasoned choices shall be made between such objectives when they conflict: (1) Appropriate land uses for residential, commercial, industrial, govern- mental, institutional, and other purposes; (2) Wise development and conservation of natural resources, including land, water, minerals, wildlife, and others; (3) Balanced transportation systems, including highway, air, water, pedestrian, mass transit, and other modes for the movement of people and goods; (4) Adequate outdoor recreation and open space; (5) Protection of areas of unique natural beauty, historical, and scientific interest; (6) Properly planned community facilities, including utilities for the supply of power, water, and communications, for the safe disposal of wastes, and for other purposes; (7) Any other objective through which urban development activities car contribute to the economic, social, and cultural development of the Nation, its strength in world affairs, and the achievement of enhanced levels of living; and (8) Concern for high standards of design. (b) All viewpointa-national, regional, State, and local-shall, to the extent possible, be fully considered and taken into account in planning urban develop- ment programs and projects. Regional, State, and local government objectives shall be considered and evaluated within a framework of national public ob- jectives, and available projections of future national conditions and needs of regions, States, and localities shall be considered in plan formulation, evaluation, and review. (c) To the maximum extent possible, consistent with national Objectives, all Federal aid for urban development purposes shall be consistent with and further the objectives of State and local government comprehensive planning for urban development. Consideration shall be given to all developmental aspects of the total urban community, including but not limited to housing, transportation, eco- nomic development, natural resources development, community facilities, and the general improvement of living environments. (d) Each Federal department and agency administering an urban develop- ment aid program shall, to the maximum extent practicable, consult with and seek advice from all other significantly affected Federal departments and ages- ~s~es in an effort to assure fully coordinated programs \Le) Insofar as possible, ~ystematic planning required by individual Federal prog~i~ns (such as highway construction, urban renew~al, and open space) shall be coordim~ted with and made part of comprehensive local and areawide urban- developmen't planning. FAVORING UNITS OF GENERAL LOCAL GOVERNMENT SEc. 402, WI re Federal law provides that both special-purpose units of local government and~1nits of general local government are eligible to receive loans or grants-in-aid~or urban development, heads of Federal departments and agen- cies shall, in the a~~nce of substantial reasons to the contrary, make such loans or grants-in-aid r urban development to units of general local government rather than to s cial-purpose units of local government. RULES AND SEGULATION5 SEC. 403. The Bureau of the Budget or such other agency as may be designated by the President is hereby authorized to prescribe such rules and regulations as are deemed appropriate for the effective administration of this title. 95-626-68----2 PAGENO="0018" 12 TITLE V-CONGRESSIONAL REVIEW OF FEDERAL GRANTS-IN-AID TO STATES AND TO LOCAL UNITS OF GOVERNMENT STATEMENT OF PURPOSE Sno. 501. It is the purpose and intent of this title to establish a uniform policy and procedure whereby programs for grant-in-aid assistance from the Federal Government to the States or to their political subdivisions which may be en- acted hereafter by the Congress shall be made the subject of sufficient subsequent review by the Congress to insure that (1) the effectiveness of grants-in-aid as instruments of Federal-State-local cooperation is improved and enhanced; (2) grant programs are revised and redirected as necessary to meet new conditions arising subsequent to their original enactment; and (3) grant programs are terminated when they have substantially achieved their purpose. It is further the purpose and intent of this title to provide for continuing review of existing Federal programs for grant-in-aid assistance to the States or their political subdivisions by the Comptroller General with a view to the formulation of recom- mendations to assist the Congress in making changes in requirements and proS cedures applicable to such programs in the interest of eliminating areas of con- ifict and duplication in program operations and achieving more efficient, ef- fective, and economical administration of such programs, and greater uni- formity in the operation thereof. EXPIRATION OF GRANTS-IN-AID PROGRAMS SEC. 502. Where any Act of Congress enacted in the Ninety-first or any sub- sequent Congress authorizes the making of grants-in-aid to two or more States or to political subdivisions of two or more States and no expiration date for such authority is specified by law, and such grant is not specifically exempted from the provisions of this title, then the authority to make grants-in-aid by reason of such Act to States, political subdllvisions, and other beneficiaries from funds not therefore obligated shall expire not later than June 30 of the fifth calendar year which begins after the effective date of such Act. COMMITTEE STUDIES OF GRANT-IN-AID PROGRAMS SEc. 503. Where any Act of Congress enacted in the Ninety-first or any subse- quent Congress authorizes the making of grants-in-aid over a period of three or more years to two or more States or to political subdivisions of two or more States, then during the period beginning not later than twelve months im- mediately preceding the date on which such authority is to expire, the com- mittees of the Senate and of the House to which legislation extending such authority would be referred shall separately of jointly, conduct studies of the program under which such grants-in-aid are made with a view to ascertaining, among other matters of concern to the committees, the following: (1) The extent to which the purposes for which the grants-in-aid arç( `authorized have been met; (2) The extent to which such programs can be carried on Without ~ur~her financial assistance from the United States; (3) Whether or not any changes in purpose, direction, or p ~\ inistration `of the original program, or in procedures and requi'remj~ applicable `thereto, to conform to reoomm'enda,tions by the Oomptroliej~ eral under `section 504, should `be made; (4) Whether or not `any changes in purpose, direction,'~frdministration of the original program should be made in the light `o'f rep' s and recom- mendations submitted on request by the Advisory Coi~euiiss'ion on Inter- governmental Relations; and (5) The extent to' which such grant-in-aid programs e adequate' to meet the growing and changing needs which they were desi ned to support. Each such committee shall report the results of its investigation and study to its respective House not later than one hundred an'd twenty days before such au- thority is due to' expire. STUDIES BY COMPTROLLER GENERAL OF FEDERAL GRANT-IN-AID PROGRA~ES SEC. 504. The Oo'mptiioller General shall make continuing studies o'f presently existing and all future programs for grant-in-aid assistance from `the Federal Government to the States or their political subdivisions concerning `the extent PAGENO="0019" 13 o which programs conflict and duplication can be eliminated and more effective, fficient, economical, and uniform administration of such programs could be tchieved by changing certain requirements and procedures applicable thereto. In reviewing such programs the Comptroller General shall consider, among ther relevant matters, the equalization formulas, and the budgetary, accounting, reporting and administrative procedures applicable to such programs. Reports on ;uch studies, together with recommendations, shall be si~bmitted by the Oomp- roller General to the Oongress. Reports on expiring programs should, to the ~xtent practicable, be `submitted in the year prior to the date set for their ?xpiration. STUDIES BY ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS SEC. 505. Upon request `of any committee referred `to in section 503, the Ad- ~risory C~minission on Intergovernmental Relations (established by Public Law ~6-3SO, as amended) shall, during the same period referred to in such section, cenduct studies of the intergovernmental relations aspects of programs which are subject to the provisions of such section, including (1) the impact of such programs, if any, on the structural organization of State and local governments and on Federal-State-local fiscal relations, and (2) the coordination of Federal sdministration of such programs with Stat~e and local administration thereof, and shall report its findings and recommendations to such committee. RECORDS AND AUDIT SEC. 506. (a) Each State or political subdivision thereof receiving assistance under (1) any Act of Congress enacted after the effective `date of this Act which provides for a grant4n-aid from the United States to a State or a political subdivision thereof, or (2) any new grant4n-aid agreement, or extension, modi- fication, or alteration `of any existing grant-in-aid agreement pursuant to existing law shall keep such records as the Federal agency administering such grant may prescribe, including records which fully disclose the amount and disposition by such recipient of such grant-in-aid, the total cost of the project or under- taking in connection with which such grant-in-aid is given or used, and the amount of `that portion of `the cost of the project or undertaking supplied by other sources, and such other records as will facilitate an effective audit. (b) The head `of the Federal agency administering such grant and the COmp- troller General of the United States, or any of their duly authorized representa- tives, shall have access for the purpose of audit `and examination to any books, documents, papers, and records of such recipients that are pertinent to the grants received. TITLE VI-CONSOLIDATION OF GRANT-IN-AID PROGRAMS STATEMENT OF PURPOSE Sac. 601. (a) The President shall from time to time examine the various programs of grants-in-aid provided by law and shall determine what consolida- tions are necessary or desirable- (1) .t~ promote the better execution and efficient management of indi- vidual grant programs within the same functional area; (2) to p~vide better coordination among individual grant programs within the saJ~unctional area; or (3) to prOn~fè more efficient planning and use by the recipients of grants under programs within the same functional area, (b) The Congress declares that the pithlic interest demands the carrying out of the purposes of ~bsection (a) and that the purposes may be accomplished in great measure b~' proceeding under this' `title, and can be accomplished more speedily thereby than by the enactment of specific legislation. PREPARATION AND TRANSMITTAL OF PLAN SEC. 602. (a) When the President, after investigation, finds that a consolicla- tion of individual grant-in-aid programs within the same functional area is necessary or desirable to accomplish one or more `of the purposes set forth in section 601 (a), he shall prepare a grant consolidation plan for the making of such consolidation, and shall transmit `such plan (bearing an identification num- ber) to the Congress, together with a declaration that with respect to each mdi- PAGENO="0020" 14 vidual program consolidated under such plan, he has found that the consolidation is necessary or desirable to accomplish one or more of the purposes set forth in section 601 (a). Each such consolidation plan so transmitted- (1) shall place responsibility in a single agency for administration of the consolidated program, and (2) shall specify in detail the formula or formulas for the making of grants under the consolidated program, and shall set forth the differences between such formula or formulas and the formula for making grants under each of the individual programs consolidated under such plan. (b) Each grant consolidation plan shall provide for only one consolidation of individual grant programs. (c) The President shall have a grant consolidation plan delivered to both Houses on the same day and to each House while it is in session. CONGRESSIONAL CONSIDERATION Snc. 603. (a) Except as otherwise provided in subsection (c), a grant consoli- dation plan shall become effective at the end of the first period of ninety calendar days of continuous session of the Congress after the date on which the plan is transmitted to it unless, between the date of transmittal and the end of the ninety-day period, either House passes a resolution stating in substance that the House does not favo~ the grant consolidation plan. (b) For purposes of subsection (a)- (1) continuity of session is broken only by an adjournment of the Con- gress sine die, and (2) the days on which either House is not in session because of an ad- journment of more than three days to a day certain shall be excluded in the computation of the ninety-day period. (c) Under provisions contained in a grant consolidation plan, a provision of such plan may become effective at a time later than the date on which such plan becomes effective under subsection (a). (d) A grant consolidation plan which b~comeis effective shall be printed (1) in the Statutes `at Large in the same volume as the public laws and (2) in the Federal Register. SEC. 604. (a) This section Is enacted `by the Congress- (1) as an exercise of the rulemaking power of the Senate and the House of Representatives, respectively, and as such it is deemed a part of the ru1es~ of each House, respectively, but applicable only with respect to the procedure to be followed in th'at House in the cas'e `of resolutions described in subsec- tion (b) ; and it supersedes other rules only to the extent that it is incon- sist'en:t therewith; and (2) with full recognition of the constitutional right of either Ho'use to change the rules (so far as relating to the procedure of that House) at any time, in the same manner and to the same extent as in the case of any other rule of that House. (b) The provisions of sections 910 through 913 of title 5 of the United SJa'tes Code shall apply with respect to a grant consolidation plan and, f~ such purpos;es~- (1) all references in such sections to "reorganization plan" shall be treated as referring to "grant consolidation plan", and (2) all references in such sections to "resolution" shall ~ treated as re~ ferring to a resolution of either House of the Congress,~!natter after the resolving clause of which is as follows: "That the does not favor the grant consolidittion plan numbered transmitted tO the Congress by the President on , 19 .", the first blank therein being filled with the name of the resolving House and the other blank ~ces therein; being appropriately filled. EXPIRATION DATE SEC. 605. The `authority of the President under section 602 to transmit grant consolidation plans shall expire three years after the date of the enactment of this Act. PAGENO="0021" 15 TITLE VII-ACQTJISIPION, USE, AND DISPOSITION OF LAND WITHIN URBAN AREAS BY FEDERAL AGENCIES IN CONFORMITY WITH LAND UTILIZATION PROGRAMS OF AFFECTED LOCAL GOVERNMENT AMENDMENT OF FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT Sac. 701. The Feder~l Property and Administrative Services Act of 1949, as amended (40 U.S.C. 471 et seq.), is amended by adding at the end thereof a new title as follows: "TITLE VIII-URBAN LAND UTILIZATION "SHORT TITLE "SEc. 801. This title may be cited as the `Federal Urban Land-IJse Act'. "DECLARATION OF PURPOSE AND POLICY "SEC. 802. It is the purpose of this title to promote more harmonious inter- governmental relations by prescribing uniform policies and procedures whereby the Administrator shall acquire, use, and dispose of land in urban areas in order that urban land transactions entered into for the General Services Administra- tion or on behalf of other Federal agencies shall be consistent with zoning and land-use practices ui~d shall be made to the greatest extent in accordance with planning and development objectives of the local governments and local planning agencies concerned. "DISPOSAL OF URBAN LANDS "Sac. 803. (a) Whenever the Administrator contemplates the disposal for or on behalf of an~ Federal agency of any real property situated within an urban area, he shall, prior to offering such land for sale, give reasonable notice to the head of the gove~aniug body of the unit of general local government having juris- diction over zonL~ig and land-use regulation in the geographical area within which the land or lands are located in order to afford the government the opportunity of zoning for the use of such land in accordance with local comprehensive planning. `(b) The Administrator, to the greatest practicable extent, shall furnish to all prospective pcurclhasers of such real property, full and complete information concerning- "(1) current zoning regulations and prospective zoning requirements and Objectives for such property when it is unsoned; "(2) current availability to such property of streets, sidewalks, sewers, water, street lights, and other service facilities and prospective availability of such services if such property is included in comprehensive planning. ticable- ~er all objections made to any such acquisition or change use ~f government upon the ground that the proposed acquisition of us or would conflict with the zoning regulations or planning oh- ject~ ~ach units; and "(~ ~ ~ply with and conform to such regulations of the unit of general local gt~~hment having jurisdiction with respect to the area within which such proj orty is situated and the planning and development objectives of such local government. "Sac. 805. The procedures prescribed in sections 803 and 804 may be waived during any period of national emergency proclaimed by the President 111 "ACQUISITION OR CHANCE OF USE OF REAL PROPERTY `~) T~ the extent practicable, prior to a commitment to acquire any noted aim urban area, the Administrator shall notify the unit of emit exercising zoning and land-use jun sthct.ion over the )urchased of his I to acquire land amid tIme pro- - - - - ` Or that -~e, he situated in an to thO extent PAGENO="0022" 16 "DEFINITIONS "Sac. 806. As used in this title- "(a) `Unit of general local government' means any city, county, town, parish village, or other general-purpose political subdivision of a State. "(b) `Urban area' means-. "(1) any geographical area within the jurisdiction of any incorpoi~ city, town, borongh, village, or other unit of general local government, excep county or parish, having a population of ten thousand or more inhabitants "(2) that portion of the geographical area within the jurisdiction of `a' county, town, township, or Similar governmental entity which contains i incorporated unit of general local government but has a population densit~ eqtial to or exceeding one thousand five hundred Inhabitants per square mile and "(3) that portion of any geographical area having a population densil equal to or exceeding one thousand five hundred inhabitants per s~ and situated adjacent to the boundary of any incorporated unit c~ local government which has a population of ten thousand or inliabitanta "(c) `Comprehensive planning' includes the following, to the extent dire'-~1- related to the needs of a unit of general local government: "(1) preparation, as a guide for long-range development, of genera physical plan.s with respect to the pattern and intensity of land use and t' provision of public facilities including transportation facilities, together v- long-range fiscal plans for such development; "(2) programing of capital improvements based on a determination relative urgency, together with definitive financing plans for the improve-I ment to be constructed in the earlier years of the program; "(3) coordination of all related plans of the department or subdivisions the government concerned; "(4) intergovernmental coordination of related planning activities amo the State and local governmental agencies concerned; and "(5) preparation of regulatory and administrative measures in s----- of the foregoing." TITLE VIlI-UNIFORM RELOCATION ASSISTANCE DECLARATION OF POLICY Sac. 801. The purpose of this Act is to establish a uniform policy for the fair and equitable treatment of owners, tenants, and other persons displaced b- acquisition of real property in Federal and federally assisted programs Su policy shall be as uniform as practicable as to (1) relocation payments advisory assistance (3) assurance of a~ ailability of standard housing and Federal reimbursement for relocation payments under federally programs. PART A-FEDERAL PROGRAMS RELOCATION PAYMENTS Sac. 802. (a) If the head of any Federal agency i public use in a State, he shall make fair and reasonal displaced persons in accordance with the regulations estal under section 805 of this Act. -~ (b) If any displaced person who moves or discontinues his business e - accept the payment authorized by this subsection in lieu of the payment author- ized for such business by subsection (a) of this section, the head of such Federal agency shall make a fixed relocation payment to such person in an amount equal to the average annual net earnings of the business, or $5,000, whichever is the lesser. No payment shall be made under this subsection unless the head of such agency is satisfied that the business (1) cannot be relocated without a sub- stantial loss of its existing patronage, and (2) is not part of a commercial enterprise having at least one other establishment, not being acquired by the United States, which is engaged in the same or similar business. For purposes of this subsection, the term "average i~nnual net earnings" means one-hulf of any net earnings of the busines~s, before Eederal, State, and local income taxes, during the two taxable years immediately preceding the taxable year in w~hich such business moves from the real property acquired by the United States and PAGENO="0023" 17 includes any compensation paid by the business to the owner, his spouse, or his dependent children during such two-year period. Such earnings and compensation shall be established by Federal income tax returns filed by such business and its owner and his spouse and dependent children for such two taxable years. (c) If any displaced person who moved from a dwelling elects to bccept the payments authorized by this subsection in lieu of the payments authorized by subsection (a) of this section for moving from such dwelling, the head of such Federal agency shall make the following fixed relocation payments to such person: (1) A moving expense allowance, determined according to a schedule established by the head of such agency, not to exceed $200; (2) A dislocation allowance equal to the amount paid under paragraph (1) of this subsection or $100, whichever is the lesser; (3) An additional payment of $300 if the displaced person purchases a dwelling for the purpose of residence within one year from the date of actual displacement except that such displaced person shall only be eligible for payment under this subsection when the dwelling purchased is situated upon real estate in whiCh such person acquires fee title, life estate, ninety-nine- year lease, or other type of long-term lease equivalent to fee ownership; and (d) If any displaced person who moves or discontinues a farm operation elects to accept the payment authorized by this subsection in lieu of the payment authorized for such farm operation by subsection (a) of this section, the head of such Federal agency shall niake a fixed relocation payment to such person in the amount of $1,000. In the case where the entire farm operation is not acquired by such Federal agency, the payment authorized by this subsection shall be made only if the head of such agency determines that the remainder property is no longer an economic unit. (e) (1) In addition to any amount under subsections (a), (b), (c), and (d) of this section, the head of such Federal agency may pay to or on behalf of any displaced family, displaced elderly individual, or displaced handicapped indi- vidual, monthly payments over a period not to exceed twenty-four months in an amount not to exceed $500 in the first twelve months and $500 in the second twelve months to assist such displaced family or individual to secure a decent, safe, and sanitary dwelling. Subject to the limitation imposed by the preceding sentence, the additional payment shall be an amount which, when added to 20 per centum of the annual income of the displaced individual or family at the time of displacement, equals the average annual rental required for such a decent, safe, and sanitary dwelling of modest standards adequate in size to accommodate the displaced individual or family in areas not generally less desirable in regard to public utilities and public and commercial facilities: Pro- vided. That such payment shall be made only to an individual or family who is ~iasqble to secure a dwelling unit in a low-rent housing project assisted under the United States Housing Act of 1937, or under a State or local program found by the Se~ketary of Housing and Urban T~evelopment to have the same general purposes ~$ç the Federal program under such Act, or a dwelling unit assisted under sectioi~01 of the Housing and Urban Development Act of 1935. (2) The Secré'~jy~hf Housing and Urban Development shall make the deter- minations under twig' subsection on the amount of assistance according to family size, family or indf'vidual income, average rents required, or similar considera- tions for all agencies ~aking such payments. (3) The additionrn payments under this subsection may be paid on a lump sum or other than monthly basis in cases in which the small size of the payments that would otherwise be required do not warrant a number of separate payments or in other cases in which other than monthly payments are determined war- ranted by the bead of the Federal agency. (4) No payment received under this subsection shall be considered as income for the purpose of determining the eligibility or the extent of eligibility of any person for assistance under the Social Security Act or any other Federal act. (f) All functions performed under this section shall be subject to the operation of the Act of June 11, 1046 (60 Stat. 237), as amended (5 U.S.C. 1001-1011). Any displaced person adversely affected or aggrieved by the operation of this section after the effective date of this Act may institute in the district court of the United States for the judicial district in which such claimant resides or in which such claim first arose an action for the review of such determination. Upon the filing of such action, such court shall have jurisdiction to hear and PAGENO="0024" 18 determine such action and to enter therein such judgment, decree, or order as it shall deem appropriate and may modify such determination upon a showing that such determination was arbitrary, capricious, or in violation of standards ap- plicable to such determinations in similar cases. RELOCATION ASSISTANCE PROGRAMS SEC. 803. (a) If the head of any Federal agency acquires real property for public use in a State, he shall provide a relocation assistance program for dis- placed persons which shall offer the services described in subsection (c) of this section. If the head of such agency determines that other persons, occupying property adjacent to the real property acquired, are caused substantial eco- nomic injury because of the public improvement for which such property is acquired, lie may offer such persons relocation services under such program. (b) Federal agencies administering programs which may be of assistance to displaced persons covered by this Act shall cooperate to the maximum extent feasible with the Federal or State agency causing the displacement to assure that such displaced persons receive the maximum assistance available to them. (c) 1~lach relocation assistance program required by subsection (a) of this section shall include such measures, facilities, or services as may be necessary or appropriate in order (1) to determine the needs of displaced families, individuals, business concerns, and farm operators for relocation assistance; (2) to assure that within a reasonable period of time prior to displacement, there will be available, in areas not generally less desirable in regard to public utilities and public and commercial facilities and at rents or prices within the financial means of the families and individuals displaced, decent, safe, and sanitary dwellings equal in number to the number of, and available to, such displaced families and individuals and reasonably accessible to their places of employment, except that such assurance may be waived during any period of national emergency pro- claimed by the President; (3) to assist owners of displaced businesses and dis- placed farm operators in obtaining and becoming established in suitable business locations or replacement farms; (4) to supply information concerning the Fed- eral Housing Administration home acquisition program under section 221(d) (2~ of the National Housing Act, the small business disaster loan program under section 7(b) (3) of the Small Business Act, and other programs offering assist- ance to displaced persons; (5) to assist in minimizing hardships to displaced persons in adjusting to relocation; and (G) to assure, to the greatest extent practicable, the coordination of relocation activities with other project activities and other planned or proposed governmental actions in the community or nearby areas which may affect the carrying out of the relocation program. (d) Paragraph (3) of section 7(b) of the Small Business Act is amended to read as follows: "(3) t~ make such loan (either directly or in cooperation with banks or other lending institutions through agreements to participate on an J~iilme- diate or deferred basis) as the Administration may determine to I~e neces- siary or appropriate to assist any small business concern in c~~~dnuing in business at its existing location, in reestablishing its busines~in purchasing a business, or in establishing a new business, if the~A~nistratiOn detter- mines that such concern has suffered substantial eeon~Thni~ injury as the result of its displacenient by, or location in, adjacent to, or near, a federally aided urban renewal project or highway construction~prOgram or any other public improvement program conducted by or with fu~Is provided in whole or in part by the Federal Government or by the States; and the purpose of a loan made pursuant to such project or program may, in the discretion of the Administration., include the purchase or construction of other premises whether or not the borrower owned the premises occupied by the business and," STATES ACTING A5 AGENTS FOR FEDERAL PROGRAMS SEC. 804. Whenever real property is acquired by a State agency for a Federal public improvement project, such acquisition shall, for purposes of this Act, be deemed an acquisition by the Federal agency having authority over such project and such Federal agency shall make relocation payments, provide relo- cation assistance, and provide assurance of availability of housing as required in the case of acquisitions of real property by a Federal agency. PAGENO="0025" 19 AUTHORITY OF THE PRESIDENF SEC. 805. (a) To carry into effect the provisions of this title, the President is authorized to make such rules and regulations as he may determine to be necessary to as'sure- (1) that relocation payments authorized by section 802 shall be fair and reasonable and as uniform as practicable; (2) that a displaced person who makes proper application for a relocation payment authorized for such person by section 802(a) shall be reinibursed for or paid- (A) his actual and reasonable expenses in moving himself, his family, his business, farm operation, or other personal property, and in the ease of a farm operation, for his actual and reasonable expenses in searching for a replacement farm; (B) if he disposes of personal property on moving his business or farm operation and replaces such property `at the new location, an amount equal to the reasonable expenses that would have been required in moving such personal property to the new location; and (0) such other expenses authorized by section 802 (a) as may be provided for in regulations issued under this section; (3) that a displaced person who makes proper application for a reloca- tion payment authorized for such person by this title shall be paid promptly after a move or, in certain hardship cases, the President may, by regulation, authorize advance payment ef certaib relocation costs; (4) that any person aggrieved by a determination as to eligibility for a relocation payment authorized by `this title, or the amount of a payment, may have his application reviewed by the head of the agency; and (5) that a displaced person shall have a reasonable time in which to apply for a relocation payment authorized by this title. (b) The President may, by regulation, establish a limitation on the amount of a relocation payment authorized by section 802(a) with due consideration for the declarathin of' policy in this title and the provisions of subsection (a) of this section and section 807(b). (c) In order to prevent unnecessary expense and duplication of functions, an to promote uniform and effective administration of relocation assistance pro rams for displaced persons, the President is authorized to require that any Fede?~J agency make relocation payments or provide relocation services, or otherwhie carry out its functions under this title, by utilizing the facilities, personne1,~\gnd services of any other Federal agency, or by entering into appro- priate comti~aets or agreements with any State `agency having an established organization for conducting relocation assistance programs. (d) The Pre~ident may make such other rules and regulations consistent with the provisions o~ this title as he deems necessary or appropriate to carry out this title. FUND AVAILABILITy SEC. 806. Fund ppropriated or otherwise available to any Federal agency for the acquisitio of real property or any interest therein shall be available also for obligation and expenditure to carry out the provisions of this title. PART B.-FEDERALLY ASSISTED PROGRAMS RELOCATION PAYMENTS AND ASSISTANCE; ASSURANCE OF AVAILABILITY OF HOUSING SEc. 807. (a) Notwithstanding any other provision of law, on and after the effective date of this Act, no grant to, or contract or `agreement with a State agency, under which Federal financial assistance will be available to pay the cost in connection with the acquisition of real property or of a public improvement for which real property is to `be acquired or as the result of which displacement ~vill otherwise occur, may be approved by the head of the Federal agency responsible for the administration of such Federal financial assistance unless such State agency has entered into an agreement with the `head of such Federal agency to provide to displaced persons for moves from such real property- (1) fair and reasonable relocation payments as described in section 802 (a) of this title and in accordance with regulations established by the President under section 805 of this title; PAGENO="0026" 20 (2) fixed relocation payments in the same amounts and under the same terms and conditions as are required to be made by a Federal agency by subsections 802 (b), (c), (d), and (e) of this title; (3) relocation assistance programs offering the services described in section 803 (c) of this title; and (4) a feasible method for the temporary relocation of families and in- dividuals displaced from the property acquired, and assurance that within a reasonable period of time prior to displacement, there will be available in areas not generally less desirable in regard to public utilities and public and commercial facilities and at rents' or prices within the financial means of the families and individuals displaced, decent, safe, and sanitary dwellings equal in number to the number of and available to such displaced families and individuals and reasonably accessible to their places of employment. (b) Phe cost to a State agency providing the payments and services described in subsection (a) of this section may be included as part of the cost of the project for which Federal financial assistance is available to such State agency, and such State agency shall be eligible for Federal financial assistance with respect to such payments and services in the same manner and to the annie extent as with respect to other project costs, except that the Federal agency providing such assistance shall contribute the first $25,000 of the cost of providing a re- location payment to any displaced person. However, no State agency need agree to make any relocation payment in excess of $25,000 to any displaced per- son In order to receive the assistance authorized by the subsection. (c) In order to prevent unnecessar~V expenses and duplic~ition of functions, and to promote uniform and effective administration of relocation assistance programs for displaced persons, any agreement by a State agency under sub- section (a) of this section shall provide that such agency may make reloca- tion payments or provide relocation assistance or otherwise carry out its functions under this title by utilizing the facilities, personnel, and services of any other State agency having an established organization for conducting relocation assistance programs. (d) Any grant to, or contract or agreement with a State agency executed before the effective date of this Act, under which Federal financial assistance is avail able to pay the cost in connection with the acquisition of real property, or of t~ e improvement for which such property is acquired, may be amended to includ an agreement as described in subsection (a) of this section. (e) If the head of a Federal agency determines that is necessary/for the expeditious completion of a public improvement for which a State ~ency has entered into an agreement, as described in subsection (a) of ~1~is section, to make relocation payments to displaced persons, or to provj*l'e the funds necessary to meet the requirements of section 905(b) (1) of tI~ds Act, he may advance the Federal share of such relocation payments and an tinount necessary to make the required payments under section 905(b) (1) to ~dch State agency. Upon determination by the head of such Federal agen~that any part of the funds advanced to a State agency under this subsectio no longer required, the amount which be determines not to be required shall b ep;aid upon demand. Any sum advanced and not repaid on demand shall be ucted from sums otherwise available to such State agency from Federal sources. DISPLACEMENT BY CERTAIN PROGRAMS RECEIvING ASSISTANCE TJNDER TITLE I OF THE HOUSING ACT OF 1949, AS AMENDED SEc. 808. A person who moves or discontinues his business, or moves other personal property, or moves from his dwelling on or after the effective date of this Act, as a direct result of any project or program which receives Federal finan- cial assistance under title I of the Housing Act of 1949, as amended, shall, for the purposes of this' title, be deemed to be a displaced person. SEvERABILITY SEC. 800. If any provision of this title, or the application thereof to any person or circumstance is held invalid, the remainder of this title and the application of the provision to other persons or circumstances shall not be affected thereby. ACTS REPEALED SEC. 810. (a) The following laws and parts of laws are hereby repealed: (1) The Act entitled "An Act to authorize the Secretary of the Interior to PAGENO="0027" 21 reimburse owners of lands required for development under his jurisdiction for their moving expenses, and for other purposes," approved May 29, 19~8 (43 U.S.C. 1231-4234). (2) Paragraph 14 of section 203(b) of the National Aeronautics and Space Act of 1958 (42~ U.S.C. 2473). (3) Section 2680 of title 10, United States Oode. (4) Section 133 of title 23, United States Code. (5) Section 7(b) of the Urban Mass Transportation Act of 1964 (49 U.S.C. 1603(b)). (6) Section 105(c) of the Housing Act of 1949 (42 U.S.C. 1455(c)). (7) Section 114 of the Housing Act of 1949 (42 U.S.C. 1465 (a)-(d)). (8) Paragraph (8) of section 15 of the United States Housing Act of 1937 (42 U.S.C. 1415(8) ), except the first sentence of such paragraph. (9) Section 404 of the Housing and Urban Development Act of 1965 (42 U.S.C. 3071-3074). (10) Section 107 of the Demonstration Cities and Metropolitan Development Act of 1966. (b) Any rights or liabilities now existing under prior Acts or portions thereof shall not be affected by the repeal of such prior Acts or portions thereof under subsection (a) of this section. TITLE TX-UNIFORM LAND ACQUISITION POLICY PART A-FEDERAL PROGRAMS UNIFORM POLICY ON LAND ACQUISITION PRACTICES SEC. 901. (a) In order to encourage the acquisition of real property by amicable agreements with owners, to relieve congestion in the courts, to assure consistent treatment for owners in the many Federal programs, and to promote 4ublic confidence in Federal land acquisition practices, heads of Federal agencies Shall, consistent with program requirements, be guided by the following policies: (1) The head of a Federal agency should make every reasonable effort to ac- quiri real property by negotiated purchase. (2) ~teal property should be appraised before the initiation of negotiations, and the owner or his designated representative should be given an opportunity to accompany the appraiser during his inspection of the property. (3) Before the initiation of negotiations for property, the head of the Federal agency concerned should establish a price which he believes to be a fair and rea- sonable consideration therefor and should make a prompt offer to acquire the property for the full amount so established. (4) No owner shoi~1j1 be required to surrender possession of real property be- fore the head of the I~ederal agency concerned pays the agreed purchase price, or deposits with the court, in accordance with section 1 of the Act of February 26, 1931 (46 Stat. 1421; 4 U.S.C. 258a), for the benefit of the owner an amount not less than the apprais air value of such property as determined by such agency head, or the amount'of the award of compensation in the condemnation proceed- ing for such propei~y. (5) The construction or development of public improvements should be so scheduled that no person lawfully occupying real property will be required to move from a dwelling, or to move his business or farm operation without at least ninety days' written notice, if consistent with project requirements, from the head of the Federal agency concerned, of the date by which such move is required. (6) If the head of the Federal agency concerned does not require a building, structure, or other improvement acquired as a part of the real property, he should offer to permit its owner to remove it. As a condition of removal, an ap- propriate agreement should be required whereby the fair value of such building, structure, or improvement for removal from the real property, as determined by such agency head, will be deducted from the compensation otherwise to be paid for the real property, however such compensation may be determined. (7) If the head of a Federal agency permits an owner or tenant to occupy the real property acquired on a rental basis for a short term or for a period subject to termination by the Government on short notice, the amount of rent required should not exceed the fair rental value of the property to a short-term occupier. (8) In no event should the head of a Federal agency either advance the time of condemnation, or defer the condemnation and the deposit of funds in court for the use of the owner, in order to compel an agreement on the price to be paid PAGENO="0028" 22 for the property. If an agency bead cannot reach an agreement with the owner, after negotiations have continped for a reasonable time, he should promptly in- stitute condemnation proceedings and, at the same time or as soon thereafter as practicable, file a declaration of taking and deposit funds with the court in ac- cordance with the Act of February 2~, 1931 (46 Stat. 1421), if possession is re- quired prior to the entry of the judgment in the condemnation proceeding. (9) If an interest in real property is to be acquired by exercise of the power of eminent domain, the head of the Federal agency concerned should, except as to property to be acquired under section 25 of the Tennessee Valley Auithority Act of 1933 (48 Stat. 70, as amended; 16 U.S.C. 831x), request the Attorney Gen- eral to institute formal condemnation proceedings. No Federal agency bead should intentionally make it necessary for an owner to institute legal proceedings to prove the fact of the taking of his property. (10) If the acquisition of only part of a property would leave its owner with an uneconomic remnant, `the bead of the Federal agency concerned should ac- quire the entire property. (11) In determining the boundaries of a proposed public improvement, the head of the Federal agency concerned should take into account human considerations, including the economic and social effects of such determination on the owners and tenants of real property in the area, in addition to engineering and other factors. (b) The previsions of this section, being general policies for the guidance of Federal agencies, shall create no rights or liabilities not otherwise existing or available, nor affect the validity of any property acquisitions by purchase or condemnation. COMPENSATION FOR PROPERTY ACQUIRED SEC. 902. If the head of any Federal agency acquires real property for public use in any State or the District of Columbia, by purchase or condemnation, thej fair market value of such property shall be paid as compensation therefor unles~f it is the intention of the seller to convey the property for less than fair inark4 value. BUILDINGS, STRUCTURES, ANI) IMPRovEMENTS SEC. 903. (a) Notwithstanding any other provisions of law, if the bAd of a Federal agency acquires land or any interest in land for public use mu State, he shall acquire a like interest, or greater interest, in all buildings, structures, or other improvements comprising part of the real property so acquired which are required to be removed from the land or which, in the opiniofi of such agency head, will be adversely affected by such public use, if such improvements are not required to be removed. (b) As used in this section, the term "real property" 4~eans land, or any in- terest in land, and (1) any building, structure, or other improvement imbedded in or affixed to land, and any article so affixed or att died to such building, structure, or improvement as to be an essential and integ, part thereof; (2) any article affixed or attached to such real property in such anner that it cannot be removed without material injury to itself or the real property; and (3) any article so designed, constructed, or specially adapted for the purpose for which such real property is used that (A) it is an essential accessory or part of such real property, (B) it is not capable of use elsewhere, and (C) it would lose sub- stantially all its value if removed from the real property. (c) For the purpose of determining the extent of the acquisition of real property and the valuation thereof, no building, structure, or other improve- ment shall be deemed to be other than a part of the real property solely because of the right or obligation of a tenant, as against the owner of any other intercst in the real property, to remove such building, structure, or improvement at the expiration of his term, and the head of the Federal agency shall pay to the tenant the fair value of the building, `structure, or improvement, which fair value shall be determined by such agency head as the greatest of (1) the contributive value of the improvement to the present use of the entirety, (2) the current cost of reproduction less depreciation of the improvement, or (3) the value of the improvement for removal from the property. EXPENSES INCIDENTIAL TO TRANSFER OF TITLE TO UNITED STATES SEc. 904. (a) The head of a Federal agency, not later than the date of payment of the purchase price or the date of deposit of funds to satisfy the award of com- pensation in a condemnation proceeding to acquire real property, whichever is PAGENO="0029" 23 the earlier, shall reimburse the owner, to the extent the head of such agency deenis fair and reasonable, for expenses necessarily incurred for- (1) recording fees, transfer taxes, and similar expenses in conveying such real property to the United States; (2) penalty costs for prepayment of mortgage incident to such real property; and (3) the pro rata portion of real property taxes allocable to a period sub- sequent to the date of vesting title or the effective date of a court order of possession, whichever is the earlier. (b) The determination as to such payments by the head of such agency shall be final and no provision of this section shall be construed to give any person a cause of action in any court, nor may any violation of this section be raised as a defense by such person in any action. PART B.-FEDERALLY ASSISTED PROGRAMS REQUIREMENTS FOR APPROVAL OF CONTRACTS OR AGREEMENTS FOR FEI~ERAL FINANCIAL ASSISTANCE SEC. 905, (a) Notwithstanding any other provision of law, on and after the date of enactment of this Act no grant to or contract or agreement with a State agency, under which Federal financial assistance will be available to pay in whole or in part the cost of the acquisition of real property or of a public improvement for which real property is to be acquired, may be approved by the head of the Federal agency responsible for the administration of such Federal financial a ss~stance unless such State agency has entered into an agreement which shall pro~ide- (1) that every reasonable effort shall be made to acquire the real property by negotiated purchase; ~(2) that the construction or development of the public improvement will so ~hedmled that, to the greatest extent practicable, no person will be re- quire'~it~4~o move from a home, farm, or business location without at least ninety d~ys' written notice, if consistent with project requirements, from such State agency of the date by which the move is required; and (3) that it will be the policy of the head o4~ the State agency, before initiat- ing negotiatth~1s for real property, to establish a price which he believes to be a fair and rea)~onable consideration therefor, and to make a prompt offer to acquire the property for the full amount so established. (b) Notwithstandl~ any other provision of law, on andafter January 1, 1970, no grant to, or contract~r agreement with a State agency, under which Federal financial assistance wi1l~~e available to pay in whole or in part the cost of the acquisition of real property, or of a public improvement for which real property is to acquired, may be approved by the head of the Federal agency responsible for the administratioft~f such Federal financial assistance, unless such State agency has entered in~~tbe agreements described in subsection (a) of this section and has agreed-~ (1) that no owner will be required to surrender possession of real property before the head of the State agency' (A) pays the agreed purchase price, (B) makes available to the owner, by court deposit or otherwise, an amount not less than 75 per centum of the appraised, fair i~a1ue of such prOperty, as approved by such State agency head, without prejudice to the right of the owner to contest the amount of compenstWon thie for the 1~ro~erty, or (C) deposits or pays the fiual award of compensation in the condemnation pro- ceeding for such property; (2) that any decrease in the value of real property prior to the date of valuation caused by the public improvement for which such property is acquired, or by the likelihood that the property would be acquired for the proposed public improvement, other than that due to physical deterioration within the reasonable control of the owner, will be disregarded in determin- ing the compensation for the property; and (3) that for the purposes of determining the extent of the acquisition of real property and the value thereof, no building, structure, or other improve- ment will be deemed to be other than a part of the real property solely be- cause of the right or obligation of a tenant,, as against the owner of any other interest in the real property, to remove such building, structure, or improvement, and that an amount not less than the value which such build- ing, structure, or improvement contributes to the value of the real property PAGENO="0030" 24 acquired, or the value of such building, structure, or improvement for re- moval from the real property, whichever is the greater, will be paid to the tenant therefor. PROVISIONS REPEALED SEC. 906. Effective on January 1, 1970, sections 401, 402, and 403 of the Housing and Urban Development Act of 1965 are hereby repealed. [From the Congressional Record, Jan. 26, 1967] INTERGOVERNMENTAL COOPERATION ACT OF 1967-JANUARY 26, 1967 * Mr. MUSKIE. Mr. President, on behalf of myself and Senators JACKSON, Booos, MTJNDT, and MOSS, I submit, for appropriate reference, a bill entitled the Inter- governmental Cooperation Act of 1967, to achieve the fullest cooperation and coordination of activities among the levels of government in order to improve the operation of our Federal system in an increasingly complex society to improve the administration of grants-in-aid; to provide technical services to State and local governments; to establish a coordinated intergovernmental policy and administration of grants and loans for urban development; to authorize the President to submit to the Congress for its consideration plans for the consolida- tion of individual categorical grants within broad functional areas; to provide for conformity in Federal acquisition, use, and development of urban land with local government programs; to provide for uniform relocation assistance to persbns and businesses affected ~y federally assisted real property acquisiti~1x; and to provide for a uniform land acquisition policy in Federal and federally assisted programs. I ask unanimous consent that the bill remain at the desk for 10 days to p~rmit other Senators to add their names as eos~onsors. Mr. President, developments in the past year have demonstrated a growing concern for the administration of Federal grant-in-aid programs~ These pro- grams, which have been described-and correctly, I think-~a's `the mj~st important vehicle of intergovenimental relations, now number around 220. `They are con- cerned with, and critical to, the development of the resourceWof this Nation. Their growth over the past two decades is a testament to thei~ acceptance by a vast majority of the American people. Their effects on the development of our human resources, our natural resources, and our community environment are in- estimable. They are critical to the development of our Gre~I~ Society. However, the administration of this multitude of pro~ttms has severely taxed the resources of all levels of government. And the pro1if~ation of Federal grants has put the spotlight on the Federal system-4that durable, but delicate balance of Surisdictions and powers that has evolved throughout our history. Since its inception, the Subcommittee on Intergovernn~ital Relations has car- ried on a continuing study of the problems of the rel~mships which operate within our Federal system. In the 89th Congress, the subcommittee considered a nun~ber of proposals designed to resolve the problems associated with its findings. Several of these proposals focused on the grant-in-aid device. Others involved the problemb of the inequities of property `acquisition for public devel- opment programs, and the relocation of persons and businesses affected. The Senate approved legislation in both of these areas during the 89th Congress. INTERGOVERNMENTAL COOPERATION First, the Intergovernmental Cooperation Act was passed by the Senate on August 5, 19f15. This proposal was designed to achieve the fullest cooperation and coordination of activities between the levels of Government in order to im- prove the operation of our federal system. As passed by the Senate, the meas- ure would- First. Authorize full information for the Governors on grants made `to their States and would provide for more uniform administration of Federal grant funds to the States. It would also improve the scheduling of fund transfers to the States and permit the States to budget Federal grant funds in much the same manner as they budget other revenues; Second. Provide for Congressional review of future grant programs to insure that such program~ are re-examined in a systematic fashIon and reconsidered in the light of changing conditions; PAGENO="0031" 25 Third. Authorize the Federal departments and agencies to render technical ssistance and training services to State and local governments on a reimbursable asis; Fourth. Establish a coordinated intergovernmental urban assistance policy, by equiring local government review of certain applications for Federal aid in urban rograms. This provision would serve to strengthen metropolitan planning ma- hinery and encourage more orderly metropolitan growth; and Fifth. Prescribe a uniform policy of procedure for urban land transactions nd use undertaken by the General Services Administration, by requiring consist- ucy of that agency's policies with local zoning regulations and development bjectives. As I mentioned, the Senate unanimously adopted a bill which contained h~se five provisions. That bill had been introduced with 42 cosponsors, and had rawn broad support from many sources, including national organizations and ublic officials at all levels of government. Unfortunately, the House of Rep- esentatives did not take final action on this measure. Therefore, the bill I am introducing today contains, in titles I through V and itle VII, the measure which received the unanimous consent of the Senate in the ast Congress. This is a proposal of utmost importance in the improved func- ioning of the federal system, particularly as grant-in-aid programs affect that ystem. It contains all the provisions of H.R. 17955 of the 89th Congress, which he House Subcommittee en Executive and Legislative Reorganization reported o its parent committee in the last week of the 89th Congress. It also includes itle V-the Senate-approved provision for periodic review of grant-in-aid pro- rams by the Congress, which the House measure omitted. I believe this pro- isien is a sound management technique which is badly needed and of `critical im- ortáflce to the overall grant system. CONSOLIDATION OF CATEGORICAL GRANT PROGRAMS Title VI ~f the bill I am introducing today contains a new proposal designed to improve the h~nagement of grant-in-aid programs. Briefly, it would authorize the President to submit to the Congress plans for the consolidation of individual categorical grantli within broad functional areas and to effect the interagency transfer of administrative responsibility for grant programs, subject to the type of congressional veto, proviso that governs executive reorganization plans. This proposal would `involve the submission to Congress of categorical grant consolida- tion plans, including sflh modifications in apportionment formulas and alloca- tion requirements as th~ President deems necessary. The Congress would accept the plans or disapprove ~bem in a manner similar to that provided in the Reorganization Act of 194~' Mr. President, Federal grants-in~aid are unquestionably essential and effective methods of financing and administering essential programis to achieve national objectives. But, because ~r number and variety have increased so rapidly in recent years, the need coordination in their administration is persistently acute. it was pointed out, in recent hearings before the Subcommittee on Inter- governmental Relations, that over 220 Federal grants-in-aid to assist State and local governments are now administered by 16 of the 21 departments and agencies of the Federal Government. We have 50 different progr~ams to aid general educa- tion; 57 programs for vocational and job training; 35 programs involved in housing; more than 20 programs involving transportatIon; 27 for utilities and services; ~2 for community facilities; 32 for land use; 28 for recreational and cultui~al facilities. One relatively simple example of the problems which a number of similar cate- gorical grants produce may be found in Federal grant programs for community water supply, sewer and sewage treatment facilities. Five agencies of the Federal Government are presently involved in administering such grants: First. The Farmers Home Administration in the Department of Agriculture; Second. The Department of the Interior's Federal Water Pollution Control Administration; Third. The Economic Development Administration of the Department of ~ommerce; Fourth. The Appalachian Regional Commission (for communities within that 3ommission's jurisdiction) ; and Fifth. The Land and Facilities Development Administration of the Department )f Housing and Urban Development. PAGENO="0032" 26 In this particular group of aids, the agencies concerned have worked out arrangements which are designed to minimize adm'inistrativb confusion. But during our recent subcommittee hearings, it became evident that confusion con- tinues to charficterize the administration of `these programs. The simple form 101, by which local officials attempt to present their case for Federal aid, cannot be filled out until the local official has carefully rea'd-~an'd understood-four pages of closely typed instructions. Judging from a number of examples of cases of grant applications from which local officials have had no response-for sometimes as long as 2 years-I think it can safely be said that improvements in their adminis- tration are imperative. This may require action beyond voluntary cooperation among `the agencies involved. Title VI of my proposed bill would give the President the authority he needs to consolidate these program's~-subject to congressional review-if he determines such action would improve their administration. Mr. President, this proposed title has been suggested by the Advisory Commis- sion on Intergovernmental Relations. It has `been studied carefully by `the Corn- mis's'io'n~s experts, and I believe it merits the Senate's serious consideration. I believe the Congress itself provided a precedent for such a consolidation of programs when it enacted the Comprehensive Health Planning and Public Health Service Amendments of 1906. I hope this proposal will be seriously considered as a means to more effective management of these important grant programs. UNIFORM RELOCATION Mr. President, the bill I am introducing today contains two other imp'ort~nt titles. The first of these-title Vill-is' c'on'cern'ed~ with a program `of unitt~rm relocation assistance for those forced to relocate a's a result of `the acqui~ftlon of real property for Federal and federally aided public improvement programs. Title VIII is not a new measure in this body. I introduced it as S. 1681 in the 89th Congress. It was passed unanimously `by the Senate in July 1966 and subse- quently was referred `to `the House Committee on Public Works, where no action wa's taken. Very briefly, this title would provide a policy of uniform tr~4tment for the thou'sand's of individual's who are affected every year by ~ucb Government projects a's urban renewal `and highways. Mr. President, relocation is a serious `and growing problem in the United States. Federal and federally aided programs are displacing approximately 111,000. families an'd individual's, 18,000 businesses and nonprofit ~ganizati'ons, and 4,000 farm operators each year. The pa'ce of Federal programs ~idicat,e's this trend will continue. Federally assisted programs ~ione-mo'stly u~1an renewal an'd highway programs-displace about 96 percent of the families a41 individual's, 96 percent of the businesses, and 34 percent of the farms affected by land acquisition. The uniform relocation bill passed by the Sena'te in t~ last Congress was the result o'f `an intensive study `conducted by the Hou ~elect Subcommittee on Real Property Acquisiti'o'n of the Public Wo'rks Ooth and `by the Advisory Commission on Intergovernmental Relations in coo'pera'ti'on with the U.S. Con- ference of Mayors, as well as by cur own Subcommittee on Intergovernmental Relations. These studies revealed serious inconsistencies among Federal and federally assisted programs with respect to the amount and scope of relocation payments and advisory assistance. For instance, a homeowner whose property is take'n for a federally aided urban renewal pr'o~jec't is en'titled to' moving eo'st~' up to $200. His neighbor, whose property is taken for a federally aided highway program, is `als'o entitled to $200 but only if the State has authorized participation in the Federal relocation program. Inconsistency in payments for business moving ex- penses is even greater. Here, the Federal~Aid Highway Act allows such dis- placement by a federally aided urban renewal project entitles the `businessman up to $25,000 for movinig `costs. Finally, urban renewal provides fairly c'omp're- hensive advice an'd counseling to business and individuals; the Federal highway program provides no' sueh service. Among other findings in the studies to which I referred is the fact that the single greatest problem in relocating families and individuals is the shortage of standard housing for low-in'come groups. Small businesses-particularly those owned and operated `by the elderly, such as "Mom and Pop" grocery stores- are major casualties:. They have less capital, find it more difficult to se'c'ure out- side financing, and need assistance to supplement their energy or spirit to resume business in a ne'w location. PAGENO="0033" 27 Advisory assistance is of growing importance in the relocation process. The poor, the nonwhite, the elderly, and the small business people all need intensive counseling to prepare them for, and to help them carry out, their move: With the continued growth of Government property acquisition, there has been more, and more concern that relocation programs be made more uniform, and more equitable. Both Presidents Kennedy and Johnson have expressed con- cern over the human costs and `the lack of uniformity in relocation of both fami- lies and businesses. Title VIII of the bill I am introducing would establish uniform relocation payments, and advisory assistance programs for those displaced by Federal and federally assisted programs. Compliance with these relocation requirements would be a condition in Federal grants to State and local governments. The bill would impose on all federally assisted programs the present urban renewal re- quirement that no property acquisition project may proceed until there is as- surance of available standard housing for those displaced. It would provide full Federal reimbursement of relocation payments up to a maximum of $25,000; and above that, Fe!d'eral sharing according to the project's cost-sharing formula. Urban renewal and public housing now pay up to $25,000, fully reimbursed by the Federal Government, for `business moving expenses. The Fedeiral highway program now allows only up to $3,000 for businesses reimbursed by the Federal Government on `a 90-10 basis for interstate, and 50-50 fo'r primary- secondary hig~wàys. today's measure would thus make Federal reimbursement 100 percent up to $25,000, and would assure that relocation payments will be made by those States where highway displaoees are not now entitled to such payments. Mr. President, I belh~'ve the features of this relocation as'sistance `title of the bill I am introducing today, which were passed unanimously by this body last summer, are of utmost im'portap~'e to the welfare of those who are adversely affected by Federal and federally `s'ted programs. URBAN ND ACQUISIPION POLICY The final title of this legis Lion-title TX-provides for the establishment of a uniform policy for the acqu~it1on of real property by Federal Government agen- cies `and by State agencies ~ising Federal funds for public improvement programs. Mr. President, this tithyfollow~s `the legislative recommendation introduced by Senator Sparkman in tl~ .la'st Congress as S. 1201. His original proposal com- bined both a re'locaitioxi ~stistance program and one dealing with a uniform acquisition policy for `real,4state in Federal and federally assisted programs. It is `the latter `of those twc~4roposials by Senator Sparkman that is incorpora~d in title IX. Hearings were held on this proposal b~fore the Subcommittee on Intergovernmental Relations in late June and `early July of `1965. Title IX was drafted to include most ~ recommendations made `to the subcommittee by the Departments `of Defe~e, Commerce, and Justice, and the Bureau of the Budget. As I mentioned in my discussion of the need for uniform relocation assistance policy in Federal and federally assisted programs, growing activity in develop- ment programs aided by Federal funds will continue to affect large numbers of property `owners each year. Studies, particularly the one conducted by the Select Subcommittee on Real Property Acquisition, reveal that widespread and serious inequities are found in the acquisition of real property In public devel'oipnient programs. The select subcommittee's stu'd~ revealed that, in many eases, Federal agencies acquired land at less than the agency-approved appraisals'. This is true of some acquisi- tions by States and localities using Fod'eral funds. In some jurisdictions, it was found that property ownerS are, in effect, penal- ized for lowered market values whic'h result from preliminary announcement of a p'ropo'sed project; in Other instances, `the public is compelled to pay higher prices fo'r propeirties whose values are increased by announcements of a proposed project. Mr. President, title IX of this `bill would institute a uniform policy to guide Federal and federally aided land acquisitions. This is a matter of equity which ought to be an overriding `consideration in such acquisitions. I should say that this title, so far, has not yet been forn~fly endorsed by the Senate as have most of the other titles in the bill. But I believe it is of utmost importance in restoring a measure of ass'urance to property Owners faced with 95-626-68-----3 PAGENO="0034" 28 acquisition of their property by the Government. They should be able to expect equitable treatment. Mr. President, I realize that the bill I am introducing is long and, at first glance, complicated. But as I have said, most of its provisions have already been accepted-unanimously-by this body. Only titles VI and IX are new, and I hope they will be thoroughly studied by all Members. Mr. President, I ask unanimous consent that the text of the bill be reprinted in the RECORD at this point. The PRESIDING OFFIc1o~. The bill will be received and appropriately referred; and, without objection, the bill will be printed in the RECORD, and held at the desk, * as requested by the Senator from Maine. The bill (S. 698) to achieve the fullest cooperation and coordination of activi- ties among the levels of government in order to improve the operation of our federal system in an increasingly complex society, to improve the administration of grants-in-aid to the States, to provide for periodic Congressional review of Federal grants-in-aid, to permit provision of reimbursable technical services to State and local government, to establish coordinated intergovernmental policy and administration of grants and loans for urban development, to authorize the administration of grants and loans for urban development, to authorize the consolidation of certain grant-in-aid programs, to provide for the acquisition, use, and disposition of land within urban areas by Federal agencies in conformity with local government programs, to establish a uniforn~ relocation assistance policy, to establish a uniform land acquisition policy for Federal and federally aided programs, and for other purposes, introduced by l~r. MusKnc (for himself, Mr. Booos, Mr. JACKSON, Mr. MUNDT, and Mr. Moss), wa~ received, read twice by its title, referred to the Committee on Government Operations, and ordered to be printed in the RECORD, as follows: [S. 698, 90th Cong., s seas.] AMENDMENTS Intended to be proposed by Mr.1 ~iz to `S. 698, a bill to achieve the fullest cooperation anid coordination of activities a~ the levels of government in order to improve the operation of our federal system ~ increasingly complex society, to improve the administration of grants-in-aid to the St~es, to provide for periodic con- `gressional review of Federal grants-in-aid, to permit pro~ision of reimbursable technical services to State and local government, to establish coordizijated intergovernmental policy and administration of grants and loans for urban developi'nent, to authorize the consoli- dation of certain grant-in-aid programs, to provide for the acquisition, use, and disposi- tion of la~d within urban areas by Federal agencies In conformity with local government programs, to establish a uniform relocation assistance poUc~, to establish a uniform land acquisition policy for Federal and federally aided prograi~s,~ and for other purposes On page 2, line 4, strike out "1967" and insert in t~~i thereof "1968". On page 2, line 19, `strike out "title VIII and title IX" and insert in lieu thereof "titles VIII, IX, and X.". On page 59, after line 4, insert the following new~: "TITLE X-ACCOUNTING, AUDITING, AND REPORTING OF FEDERAL ASSISTANCE FUNDS "STATEMENT OF PURPOSE "Sne. 1001. It is the purpose of this title to encourage simplification and im- proved coordination of accounting, auditing, and financial reporting require- ments of Federal assistance programs, to survey the adequacy and effectiveness of the accounting and auditing systems of recip'ient jurisdictions, and to' author- ize the Co~nptrol1er General of the United States to prescribe rules and regula~ tions for using State and political subdivision accounting and auditing in meeting fiuianclal management requirements of such programs. "MORE UNIFORM FINANCIAL REPORTING "SEC. 1002. Notwithstanding any other provision of law, the President shall have authority to promulgate rules and regulations simplifying and, to the extent feasible, unifying financial reporting requirements of Federal assistance programB "ACCEPTANCE OF ACCOUNTING AND AUDITING OF STATES AND THEIR POLITICAL SUBDIVISIONS "SEC. 1003. (a) The Comptroller General of the United States, the Secretary of the Treasury, and the Director of the Bureau of the Budget shall conduct a PAGENO="0035" the executive agen ies its of `time required to perf( - ~ly with recommendations s1~ ..e submitted not Lter ., months after the date of enactment of this Comptroller General shall study and review the accounting and ~ of States and political subdivisions receiving Federal assist- r to determine (1) the adequacy and effectiveness of such systems, nature of any changes in the accounting and auditing procedures Lu such systems which would be required for compliance with the standards, and related requirements prescribed by the Comptroller ?neral i i' protecting the interests of the United States with regard to account- ing for expenditures of Federal assistance funds by States and their political subdivisions. "(c) The Comptroller General, after consulting the Secretary of the Treasury and the Director of `the l3ureau of the Budget concerning their accounting and auditing needs, and conside ing statutory requirements and the needs of executive agencies responsible for ministering Federal assistance programs, shall prescribe rules and reguL,~,ins whereby such agencies may substitute for their accounting and auditing the accounting and auditing performed by States and political subdivisions receiving Federal assistance, when such accounting and auditing meet the requirements prescribed by the Comptroller General applicable to the administration of such assistance received by such States and political subdivisions. The Comptroller General shall make a report to Congress on the operations of this subsection at the~end of each fiscal year, beginning with the first full fiscal year following thcx~t~te of enactment of this Act." tFrom the Congressional Record, May 8, 1968] INTEROOVERNMENTAL COOPERATION ACT OF 1967-AMENDMENTS (MAY 8, 1968) 4AMENDMENT NO. `148 Mr. MUSKIE. Mr. President, I submit, for appropriate reference, amendments which I intend to propose to ~. 698, the intergovernmental cooperation bill, now pending in the Subcommitt~ on Intergovernmental Relations, Committee on Government Operations. The amendments I will offer are intended to encourage simplification and improved coordination of accounting, auditing, and financial reporting require- ments of Federal assistance programs. E~very Federal agency administering Federal assistance programs to State and local governments is charged by the Congress and by the regulations of the Comptroller General with assuring proper legal use of Federal funds made avail- able to State and local governments through such programs. As a result each administering agency and each major bureau engaged in grant-in-aid adminis- tration deploys a number of fiscal auditors throughout the States at various times to audit grant-in-aid accounts. The General Accounting Office has its own field operations with its "spot audit" program, which is geared to ascertaining the effectiveness of agency audits of Federal expenditures and which also Involves audits of grant expenditures at the State and local levels. Yet, Federal agency auditing and accounting activities have bad to keep pace with the growth in the number and variety of Federal assistance programs. Moreover, State governments in recent years and many local governments have made strenuous efforts to improve the capability of their own accounting and auditing systems-thanks to the rapid growth of State and local programs and expenditures. Federal assistance programs differ in objectives, magnitude, governments, and governmental agencies involved, and the clientele served and in many other char- acteristics. Such programs then can hardly be expected to yield completely to uniform accounting and auditing requirements. Nevertheless, there remains the question as to whether the existing financial reporting, accounting, and 29 I ance and PAGENO="0036" 30 auditing requirements are reasonable in their demands. Most State and local of- ficials feel they are not. Some Federal aid administrators feel they are not. The recent experience of the Department of Health, Education, and Welfare and the Office of Economic Opportunity in placing reliance on State and local auditing, accounting, and reporting systems suggests that a rigid adherence to the status quo is not the best way to improve intergovernmental relations in this area. To help correct this condition, the Advisory Commission on Intergovernmental Rela- tions in its fiscal balance report adopted a three-pronged recommendation urg- ing enactment of general legislation by the Congress applicable to Federal grants- in-aid to States whereby: first, the Comptroller General would study and review the accounting and auditing systems of the States receiving Federal grants-in- aid and ascertain their general adequacy and integrity; second, for those States certified by the Comptroller General as meeting standards of adequacy and integrity, the results of State audits of expenditures of Federal grant funds would be accepted by the administering Federal agencies in lieu of their own fiscal audits with such acceptance to cease if the Comptroller General finds that the accounting and auditing system of a particular State no longer meets prescribed standards; and, third, this authorization would be extended at the discretion of the Comptrol1er~ General to units of local government receiving siz- able grant-in-aid funds from Federal agencies. The amendments I intend to propose are based on tlti~ recommendation. First, they would assign authority (to the President to pi~ ulgate rules and regula- tions on a Government-wide basis for simplifyi nd, to the extent prac- ticable, unifying the financial reporting requiremen s in Federal grant-In-aid programs. At the present `time-tbanks to diverse enabling legislation, appro- priation acts, departmental regulations and various other factors-the proce- dures, format, frequency, and intensity of financial reporting requirements dif- fer greatly from department to dearptment and frequently from program to pro- gram within a department. The amendments are designed to provide the Presi- dent with sufficient authority to achieve ~eater consistency, simplicity, and order in an area of grant-In-aid administraI1~rin that thus far largely has also been ignored. The amendments also provide the basis for acceptance of the accounting and auditing system in certain States and certain political subdivisions in lieu of Federal efforts in these fields. The Comptroller General, the Secretary of the Treasury, and the Director of the Bureau of the Budget are mandated to conduct a joint study of the principles, standards, and relat~i requirements of executive agencies as they relate to the accounting and aud~~g of Federal grants-in-aid with a view to identify ways and means of ~t~reloping Government-wide accounting and auditing procedures that foster greater interdepartmental co- ordination among financial management officials j~ the various Federal agencies administering grant programs, These provisions'4~re designed then to reduce unnecessary duplication and excessive time requu1~ed to perform these vital fiscal functions. The Comptroller Genoral is authorized to study and review the accounting and auditing systems of the States and their political subdivisions in order to determine the adequacy and effectiveness of their respective systems and what change's, if any, would be required in them to comply with the principles, standards, and related requirements prescribed by him in the area of grant-in-aid financial accountability. After consulting with the Secretary of the Treasury and the Director of the Bureau of the Budget and after assessing the statutory requirements and the administrative needs of executive agencies administering grants-in-aid, the Comptroller General is authorized to prescribe rules and regulations that would permit such agencies to substitute the accounting and auditing systems of States `and local governments when their systems meet standards prescribed by him as `they relate to the administration of Federal assistance programs. The intent of these amendments is not to shortcut in `any way the exercise of fiscal prudence and accountability at all levels of government. But they seek to develop new intergovernmental arrangements in the accounting and auditing field which would lead to a significant saving in time and energy and would provide the impetus for significant improvements in the whole `area of inter- governmental fiscal man'ager~ent. PAGENO="0037" 31 (S. 735, 90th Cong., first sess.] A BILL To provide for periodic review of Federal programs of grant-In-aid assistance to the States Be it enacted by the senate arnd IJov$e of Representatives of the United states of America in Congress assembled; That this Act may be cited as the "Federal Grant-in-Aid Review Act of 1967". STATEMENT OF PURPOSE Sno. 2. (a) It is the purpose and intent of this Act to eatablish a uniform policy and procedure whereby programs, which may be enacted hereafter by the Congress, for grant~in-aiid assistance from the Federal Government to the States or to their political subdivisions shall he made the subject of sufficient subsequent review by the Congress to insure that (1) the effectiveness of grant-in-aid programs as instruments of Federal-State-local cooperation 15: im- proved and enhanced; (2) grant-in-aid programs are revised and redirected as necessary to meet the new conditions arising subsequent to their original enact- ment; and (3) grant-in-aid programs are terminated when they have substan- tially achieved their purpose. (b) It is further the purpo ~ind intent of this Act to provide for a continuing review by Congress of existinf Federal programs for grant-in-aid assistance to the States or their political subdivisions with a view to developing legislation terminating those grant-in-aid programs whose purposes clearly have been achieved and revising or redirecting all other existing grant-in-aid programs to improve and enhance their effectiveness as instruments of Federal-State-local cooperation or to meet new conditions arising subsequent to their original enactment. EXPIRATION OF GRANT-IN-AID PROGRAMS SEc. 3. Whenever any Act of Congress enacted in the Ninetieth or any subse- quent Congress authorizes any program for grant-in-aid assistance to two or more States or to political subdivisions of two or more States and there is no termination date otherwise specified for such authority, the authority to make any grant-in-aid under such Act to any State, political subdivision, or other beneficiary from funds not theretofore obligated shall, unless the provisions of this section are specifically excepted from application to such program, expire not later than June 30 of tb fifth calendar year which begins after the calendar year in which the effective d e of such Act occnrs. COMMITTEE STUDIES OF GRANT-IN-AID SEc. 4. (a) Whenever any Act of Congress enacted in the Ninetieth or any subsequent Congress authorizes the establishment of any program for grant-in- aid assistance over a period of three or more years to two or more States or to political subdivisions of two or more States, each standing committee of the Senate and House of Representatives which exercises legislative jurisdiction and oversight with respect to such program shall, daring the period beginning not later than twelve months immediately preceding the date on which tha authority by such program is to expire, separately or jointly, conduct studies and appraisals of such program. Each such committee shall report the results of its study and appraisal to its respective House, together with recommendations for such legislation as it deems appropriate, ncd later than one hundred and twenty days before the authority for such program is due to expire. (b) (1) In the case of any existing statute authorizing the eStablishmetnit of any program for grant-in-aid assistance over a period of three or more years to two or more States or to political subdivisions of two or more Stalest, each standing committee of the Senate and House of Representatives which exercises legislative jurisdiction and oversight over such program shall review and study, on a continuing basis, the application, operation, administration, and execution of such program. (2) To assist it in carrying out this review and study function, each stand- ing committee of the Senate and House of Representatives is entitled to employ a review specialist as a member of the professional staff of such committee in addition to the number of members of such professional staff to which such committee otherwise is entitled. Such review specialist shall be selected and appointed by the chairman of such committee, with the prior approval of the ranking minority member, in a permanent basis, without regard to political PAGENO="0038" 32 affiliation, and solely on the basis of fitness to perform the duties of the position. (3) Each standing committee of the Senate and House of Representatives shall submit, not later than March 31 of each year, to the Senate and House of Representatives, respectively, a report on its activities under this subsection during the immediately preceding calendar year. (c) The studies referred to in subsections (a) and (b) with respect to any program of grant-in-aid assistance shall be conducted by each standing com- mittee of the Senate and House of Representatives involved with a view to ascertaining, among other matters of concern, the following: (1) The extent to which the purposes for which such grants-in-aid are authorized have been met; (2) The extent to which the purposes for which such program can be carried on without additional financial assistance from the United States; (3) The extent to which such program is adequate to meet any growing and changing needs related to the purposes for which it was originally designed; and (4) Whether or not any changes in purpose, direction, or administration of the original program, or in procedures and requirements applicable thereto, should be made. DEFINITIONS Sue. 4. As used in this Act- (a) The term "State" means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State, but does not include any political subdivision of a State; (b) The term "political subdivision of a State" means any local unit of government of a State, including, but not limited to, a county, parish, munic- ipality, city, town, township, village, or school or other special district created by or pursuant to State law; and (c) The term "grant-in-aid" means money, or property provided in lieu of money, paid or furnished by the United States under a fixed annual or aggregate authorization- (1) toaState;or (2) to a political subdivision of a State; or (3) to a beneficiary under a State-administered plan or program which is subject to approval by a Federal agency T if such authorization (A) requires such Stat r political subdivision to expend non-Federal funds as a condition for the ceipt of money or property from the United States; or (B) specifies directly, or establishes by means of a formula, the amounts which may be paid or furnished to such State or political subdivision, or the amounts to be allolted for use in such State by such State or political subdivision; but such term does not include (i) shared revenues, (ii) payments of taxes (iii) payments in lieu of taxes, (iv) loans or repayable advances, (v) surplus property or surplus agricultural commodities furnished as such, (vi) payments under research and development contracts or grants which are awarded directly and on similar terms to all qualifying organizations, whether public or private, or (vii) payments to States or political subdivisions as full reimbursement for the costs incurred in paying benefits or furnishing services to persons entitled thereto under Federal laws. [S. 458, 90th Cong., first seas.] A BILL To provide for periodic congressional review of Federal grants-in-aid to States and to local units of government Be it enacted by the senate and House of Representatives of the United states of America in Congress assembled, STATEMENT OF PURPOSE Sucriox 1. It is the purpose and intent of this Act to establish a uniform policy and procedure whereby programs for grant-in-aid assistance from the Federal Government to the States or to their political subdivisions which may be enacted hereafter by the Congress shall be made the subject of sufficient sub- ~equerit review by the Congress to insure that (1) the effectiveness of grants-in-aid as instruments of Federal-State-local cooperation is improved and enhanced; (2) grant programs are revised and redirected as necessary to meet new conditions arising subsequent to their original enactment; and (3) grant PAGENO="0039" 33 programs are terminated when they have substantially achieved their purpose. It is further the purpose and intent of this Act to provide for continuing review of existing Federal programs for grant-in-aid assistance to the States oi: their political subdivisions by the Comptroller General with a view to the formulation of recommendations to assist the Congress in making changes in requirements and procedures applicable to such programs in the interest of eliminating areas of conflict and duplication in program operations and achieving more efficient, effective, and economical administration of such programs, and greater uniformity in the operation thereof. EXPIRATION OF GRANT-IN-AID PROGRAMS SEc. 2. Where any Act of Congress enacted in the Eighty-ninth or any sub- sequent Congress authorizes the making of grants-in-aid to two or more States or to political subdivlidons of two or more States and no expiration date for such authority is specified by law, then the authority to make grants-in aid by reason of such Act to States, political subdivisions, and other beneficiaries from funds not theretofore obligated shall expire not later than June 30 of the fifth calendar year which begins after the effective date of such Act. COMMITTEE STUDIES OF GRANT-IN-AID PROGRAMS SEc. 3. Where any Act of Congress enacted in the Eighty-ninth or any sub- sequent Congress authorizes the making of grants-in-aid over a period of three or more years to two or more States or to political subdivisions of two or more States, then during the period of not less than twelve months or more than twenty-four months immediately preceding the date on which such authority is to expire the committees of the House and of the Senate to which legislation extending such authority would be referred shall, separately or jointly, con- duct studies of the program under which such grants-in-aid are made with a view to ascertaining, among other matters of concern to the committees, the following: (1) The extent to which the purposes for which the grants-in-aid are authorized have been met. (2) The extent to which such programs can be carried on without further financial assistance from the United States. (3) Whether or not any changes in purpose, direction, or administration of the original program, or in procedures and requirements applicable thereto to conform to re~pmendations by the Comptroller General under section 4, should be made. (4) Whether or not any changes in purpose, direction, or administration of the original program should be made in the light of reports and recom- menda,tions submitted on request by the Advisory Commission on Inter- governmental Relations. Each such committee shall report the results of its investigation and study to its respective House not later than one hundred and twenty days before such authority is due to expire. STUDIES BY COMPTROLLER GEREBAL OF FEDERAL GRANT-IN-AID PROGRAMS Sno. 4. The Oomptroller General shall make continuing studies of presently existing and all future programs for grant-in~aid assistance from the Federal Government to the States or their political subdivisions concerning the extent to which program conflict and duplication can be eliminated and more effective, efficient, economical, and uniform administration of such programs could be achieved by changing certain requirements and procedures applicable thereto. In reviewing such programs the Comptroller General shall consider, among other relevant matters, the equalization formulas, and the budgetary, account- ing, reporting, and administrative procedures applicable to such programs. Reports on such studies, together with recommendations, shall be suibmitted by `the Comptroller General to the Congress. Reports on expiring programs should, to the extent practicable, be submitted in the year prior to `the date set for their expiration. STUDIES BY ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS ~no. 5. Upon ~equest of any committee referred `to in `section 3, the Advisory Commission on Intergovernmental Relations (established by Public Law 86-380) PAGENO="0040" 34 shall, during the same period `referrbd to in such section, conduct studies o the intergovernmental relations aspects of programs which are subject to provisions of such section, `including (1) the impact of such programs, if any, on the structural organization of State and local governments and on Federal- State-local fiscal relations, and (2) the coordination of Federal administration of such programs with State and local administration thereof, and shall report its findings and recommendations to such committee. RucoaDs AND AUDIT Sac. 6. (a) Each recipient of assistance under (1) any Act of Congress enacted after the effective date o.f this Act which provides for a grant-in-aid from the United States `to a State or a political subdivision thereof, or (2) any new grant-in-aid agreement, or extension, modification or alteration of any1 existing grant-in-aid agreement pursuant to existing law shall keep such records as `the Federal agency administering such grant shall prescribe, including records which fully disclose the amount and disposition by such recipient of such grant- in-aid, the total cost of the project or undertaking in connection with which such grant-in-aid is given or used, and the amount of that portion of the c~ of the project or undertaking supplied by other sources, and such other records I as will facilitate an effective audit. (`b) The head of the Federal agency administering such grant and the Comp- troller General of the United States, or any of their duly authorized representa- tives, shall have access for the purpose of audit and examination to any books, documents, papers, and records of the recipients that are pertinent to the ~ reeeived~ DELE'INITIONS Ste. 7. For the purposes of this Ac't-~ (1) The term "State" means the government of a State, or any agency or instrumentality of a State. (2) The term "political subdivision" means a local unit of government, including specifically a county, municipality, city, town, township, or `a school or other special `district created `by or pursuant to State law. (3) The term "grant-in~aid" means money, or property provided in lieu of money, paid or furnished by the United States under a fixed annual or aggre~ gate authorization- (A) to a State or political subdivision of a State; or (B) to a `beneficiary under a State-a'dmii1~'tere'd plan or program which is subject `to approval by a Federal agency; if such authorization either (i) requires the Staths or political subdivision's expend nop-Federal funds as a condition for `the `receipt of money or property from the Uin'ted States, or (ii) `specifies directly, or establishes by means. of a formula, the amounts which may `be p'aid or furished to State's or political sub- divisions, or the amounts `to be allotted for use in each of the States by `the State, political subdivision's, o'r other beneficiaries. The term dde's not include (1) shared revenues, (2) payments of taxes, (3) payments in lieu of `taxes, (4) loan's `or repaya'ble advances, (5) surplus property or surplus agricultural com- modities furnished as such, (6) payments under research and development contracts `or grants which are awarded directly and on similar terms to all quali- fying organizations, whether public or private, or (7) payments to States or poli- tical `subdivisions as full reimbursement for the costs incurred in paying benefits or furnishing services to person's entitled thereto under Federal laws. [`S. 2981, 90th Cong., second sess.] A BILL To provide temporary authority to expedite procedures for consideration and approval of projects drawing upon more than one Federal assistance program, to simplify requirements for the operation of those projects, and for other purposes 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 a's the "Joint Funding Simplification Act of 1968". PURPOSE Sac. 2. The purpose of this Act is to enable States, local governments, and other public or private organizations and agencies to use Federal assistance more PAGENO="0041" 35 effectively and efficiently, to adapt that assistance more readily to their particular needs through the wider use of projects drawing upon vesources available from more than one Federal agency, program, or appropriation and to acquire experi- ence which would lead to the development of legislative proposals' respecting the consolicijation, simplificatio~, and coordination of Federal assistance programs. It is the further purpose of this Act to encourage Federal-State ~rrangeme~ts un- der which local governments and other public or private organizatiOns and agencies may more effectively and efficiently combine State and Federal resources in support of projects of common interest to the governments, agencies, and organizations concerned. BASIC RESPONSIBILITIES OF TIlE HEADS OF FEDERAL AGENCIES SEC. 3. (a) In order to carry out the purposes of this Act and subject to such regulations as the President may prescribe, the heads' of Federal agencies may take actions, by internal agency order or interagency agreement, including but not limited to: (1) identification of related programs likely to be particularly suitable or appropriate for providing joint support for specific kinds of projects; (2) development and promulgation, of guidelines model or illustrative projects, joint or common application forms, and other materials or guidance to assist in the planning and development of projects drawing support from different programs; (3) review of administratively established program requirements in order to determine which of those requirements may impede joint sñpport of projects and the extent to which these may be appropriately modified, and making modifications accordingly; (4) establishment of common technical or administrative rules among related programs to assist in the joint use of funds in the support of specific projects or classes of projects ; and (5) creation of joint or common application processing and project super- vision procedures or mechanisms including procedures for. designating lead agencies to assume responsibilities for processing on behalf of several agencies and for designation of managing agencies to assume responsibilities for project supervision on behalf of several agencies. (b) The head of each Federal agency shall be responsible for taking actions, to the maximum extent feasible under applicable law, which will further the pur- poses of this Act with respect-to Federal assistance programs administered by his agency. Each Federal `agency head shall also consult and cooperate with the `heads of other Federal agencies in order similarly to promote the purposes of this Act with respect to Federal assistance programs of different agencies which may be used `together or jointly in support of projects undertaken by State or local govern- ments or other public or private agencies and organizations. APPLICATION PROCESSING SEC. 4. Actions taken by Fe4eral agencies pursuant to tbi~ Act which relate to the pa-ocessing of applications or requests for assistance under two or more Federal programs in support of any projeet shall be designed to assure, so far as reasonably possible (1) that all required reviews and approvals are handled expeditiously; (2) that full account is' taken of any special considerations of timing that are made known by the applicant that would affect the feasibility of a jointly funded project; (3) that the applicant is required to deal with a mini- mum number of Federal representatives, acting separately or as a common board or panel; (4) that the applicant is promptly informed of decisions with respect to his application and of any special problems or impediments which may affect the feasibility of Federal provision of assistance on a joint basis; and (5) that the applicant is not required by representatives of any one Federal ager~cy or pro- gram to obtain information or assurances concerning the requirements, or actions of another Federal agency which could better and more appropriately be secured through direct communication among the Federal agencies'involved. SPECIAL AUTHORITIES-BASIC CONDITIONS SEC. 5. Where appropriate to further the purposes of this Act, and subject to the conditions prescribed in this section, heads of Federal agencies may use the authorities described in sections 6, 7, and 8 (relating to the establishment PAGENO="0042" 36 of uniform technical or administrative requirements, delegation of powers and responsibilities, and establishment of joint management funds) with respect to projects assisted under more than one Federal assistance program. These au- thorities shall be exercised only pursuant to regulations prescribed by the President. Those regulations shall include criteria or procedures to assure the authorities are limited in use to problems that catinot be adequately dealt with through other actions pursuant to this Act or other applicable law; that they are applied only as necessary to promote expeditious processing or effective and efficient administration; and that they are applied consistent with the protec- tion of the Federal interest and with program purposes or statutory requirements of a substantive nature. ESTABLISHMENT OF UNIFORM TECHNICAL OR ADMINISTRATIVE REQUIREMENTS SEC. 6. (a) In order to provide for projects which would otherwise be subject to varying or conflicting technical or administrative provisiotis of law, the heads of Federal agencies may adopt uniform provisions respecting: (1) inconsistent or conflicting requirements relating to financial ad- ministration, including accounting, reporting and auditing, and maintaining separate bank accounts, but only to the extent consistent ~vith the require- ments of section 8; (2) inconsistent or conflicting requirements relating to the timing of Fed- eral payments where a single or combined schedule is to be established for the project as a whole; (3) inconsistent or conflicting requirements that assistance be extended in the form of a grant rather than a contract, or a contract rather than a grant; (4) inconsistent or conflicting requirements for merit personnel systems, but only to the extent that the combination of assistance contemplated would cause those requirements to be applied to portions of projects administered by agencies not otherwise subject to such requirements; (5) inconsistent or conflicting requirements relating to accountability for, or the disposition of, property or structures acquired or constructed with Federal assistance where common rules are to be established for the project as a whole; and (6) other inconsistent or conflicting requirements of an administrative or technical nature, as defined in regulations of the President and subject to such conditions as he may prescribe. (b) In order to permit processing of applications in accordance with the pur- poses of this Act, Federal agency heads may provide for review of proposals for projects by a single panel, board or committee in lieu of review by separate panels, boards, or committees when such review would otherwise be required by law. (c) In promoting the more effective and efficient use of Federal assistance resources, Federal agency heads may waive requirements that a single or specified public agency be utilized or designated to receive, supervise, or otherwise admin- ister a part of the Federal assistance drawn upon by any jointly funded project to the extent that administration by another public agency is determined to be fully consistent with applicable State or local law and with the objectives of the Federal assistance program involved. This authority may be exercised only upon (1) request of the head of a unit of general government, with respect to agencies which be certifies to be under his jurisdiction, or (2) with the agree- ment of the several State or local public agencies concerned. DELEGATION OF POWERS SEC. 7. With the approval of the President, agency heads may delegate to other Federal agencies any powers relating to the approval, under this Act, of projects or classes of projects under a program if such delegation will promote the purposes of that program. Agency heads may also delegate to other Federal agencies powers and functions relating to the supervision of administration of Federal assistance, or otherwise arrange for other agencies to perform such activities, with respect to projects or classes of projects subject to this Act. Delega- tions under this section shall be made only on such conditions as may be appro- priate to assure that the powers and functions delegated are exercised in full con- formity with applicable statutory provisions and policies. PAGENO="0043" 37 FUNDING ARRANGEMENTS AND PROCEDURES SEc. 8. (a) In order to provide for the more effective administration of funds drawn from more than one Federal program or appropriation iii support of proj- ects under this Act, there may be established joint management funds with respect to such projects. The total amount approved for such a project may be accounted for through a joint muanagememit fund as if the funds had been derived from a single Federal assistance program or appropriation. There will be ad- vanced to the joint management fund from each affected appropriation, from time to time, its proportionate share of amounts needed for payment to the grantee. Any amounts remaining i.n the h:mds of the gr:rntee at the completion of the project shall be returned to the joint management fund. (b) Any account in a joint management fund shall be subject to such agree- ments, not inconsistent with this section and other applicable law, as may be entered into by the Federal agencies concerned with respect to the discharge of the responsibilities of those agencies and shall assure the availability of necessary information to those agencies and to the Congress. These agreements shall also provide that the agency administering a joint manag~ment fund shall be respon- sible and accountable for the total amount puovided for the purposes of each account established in the fund; and may include procedures for determining, from time to time, whether amounts in the account are in excess of the amounts required, for returning that excess to the participating Federal agencies in ac- cordance with a formula mutually acceptable as providing an equitable distribu- tion, and for effecting returns accordingly to the applicable appropriations, subject to fiscal year limitations. Excess amounts applicable to expired appropria- tions will be lapsed from that fund. (c) For each project financed through a joint management fund established pursuant to this section, the recipients of moneys drawn from the fund shall keep such records as the head of the Federal agency responsible for administering the fund will prescribe. Such records shall, as a minimum, fully disclose the amount and disposition by such recipient of Federal assistance received, the total cost of the project in connection with which such Federal assistance was given or used, the amount of that portion of the cost of the project supplied by other sources, and such other records as will facilitate an effective audit. (d) The head of the Federal agency responsible for administering such joint management fund and the Comptrkller General of the United States, or any of their duly authorized represents tives, shall have access for the purpose of audit and examination to any books, documents, papers, and records of such recipients that are pertinent to the moneys received from such fund. (e) In the case of any project covered in a joint management fund, a single non-Federal share may be established according to the Federal share ratios applicable to the several Federal assistance programs involved and the proportion of funds transferred to the project account from each of those programs. AUXILIARY PROVISIONS SEC. 9. (a) Appropriations available to any Federal assistance program for technical assistance or the training of personnel may `be made available for the provision of technical assistance and training in connection with projects pro- posed or approved for joint or common funding involving that program and any other Federal assistance program. (b) Personnel of any Federal agency may be detailed from time to time to other agencies as necessary or appropriate to facilitate the processing of applica- tions under this Act or the administration of approved projects. FEDERAL-STATE ASSISTANCE AND AGREEMENTS SEC. 10. Subject to such regulations as the President may prescribe, Federal agencies may enter into agreements with States or State agencies as appropriate to extend the benefits of this Act to projects involving assistance from one or more Federal agencies and one or more State agencies. These agreements may include arrangements for the processing of requests for, or the administration of, assist- ance to such projects on a joint basis. They may also include provisions covering the establishment of uniform technical or administrative requirements, as authorized by this Act. PAGENO="0044" 38 AUTHORITY OF THE PRESIDENT SEc 11 In addition to POWOFS and authority otherwise conferred upon him by this Act or other law the President may take such action prescribe such proce dures and promulgate such rules as may be necessary or appropriate to assure that this Act is applied by all Federal agencies in a consistent manner and in accordance with `its purposes. He may, for this purpose, require that Federal agencies adopt or prescribe procedures that will assure that applicants for assistance to projects under this Act make appropriate efforts (1) to secure the 1 views and recommendations of non-Federal agencies that may be significantly affected by such projects, including units of general government, and (2) to resolve questions of common interest to those agencies prior to submission of any application. The President shall also, from time to time, make reports to the Congress on actions taken under this Act and make such recommendations for additional legislative action as he may deem appropriate, including recommenda- tions for the consolidation, simplification, and coordination of Federal assistance programs. S DEFINITIONS SEC. 12. As used in this Act- (1) "Federal assistance programs" are program's that provide assistance through grant or contractual arrangements, and include technical assistance pro- grams or programs providing assistance in the form of loans, loan guarantees or insurance. (2) "Applicant" includes one or more State or local governments or other public or private agencies or organinations acting separately or together in seek- ing assis$~ance with respect to a single project. (3) "Project" includes any undertaking, however characterized and whether of a temporary or continuing nature, which includes components proposed or approved for assistance under more than one Federal program, or one or more Federal and one or more State programs, if each of those components contributes materially to the accomplishment of a single purpose or closely related purposes. (4) "Federal agency" includes any agency in the executive `branch of the Government. (5) "State" means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, and American Samoa. EFFECTIVE DATE AND EXPIRATION SEC. 13. Phis Act shall become effective one hundred and twenty days follow- ing the date of enactment and shall expire three years after it becomes' effective, but its expiration shall not affect the administration of projects previously approved. S. 2981-INTRoDUcTIoN OF BILL To EXPEDITE PROCEDURES FOR CERTAIN FEDERAL A55F5TANcE PROGRAMS (FEBRUARY 16, 1908) Mr. MCCLELLAN. Mr. President, I introduce, by request, a bill to provide tem- porary authority for expediting procedures for consideration and approval of projects drawing upon more than one Federal assistance program, to simplify requirements for the operation of those projects, and for other purposes. This bill was drafted by the Bureau `of the Budget and submitted to the Presi- dent of the Senate for introduction, in order that the objectives enumerated in the President's message of March 17, 1907, on the quality of American Government may be fulfilled. The `President of the United States recommended th'at legislation be enacted to permit "Federal agencies to combine related grants into a single financial package, thus `simplifying the financial and administrative procedures- without disturbing, however, the separate authorization, appropriations, and substantive requirements for each grant-in-aid program." The purpose of the proposed legislation is to remove or simplify certain ad- ministrative and technical impediments which hamper or prevent the considera- tion, processing, approval and administration of projects which draw upon resources available from more than one Federal agency, program or appropria- tion. Phis bill would enable the State and local governments and other public or private agencies to use Federal financial assistance under two or more pro- grams in support of multiple-purpose projects. Under this bill- PAGENO="0045" 39 Federal agency heads would be authorized to estahlish uniform requirements ~of certain provisions of law so that jointly funded projects would not have to be sulbject to conflicting rules and regulations; In appropriate cases, I~'ederal agencies would have authority to delegate to other agencies power tO approve portions of projects In thrir behalf; Federal agency heads could establish joint management funds in their agencies to finance multiple-purpose projects drawing upon appropriations from several different accounts; The President would prescribe appropriate regulations for, and approve agency delegations of power and functions under this act. He would make reports to the Oongress on action taken, and make recommendations for additional legislative action, including proposals for consolidation, simplification or coordination of grant programs. The Joint Funding Simplification Act of 1948, would not, except as specifically provided, affect substantive provisions of law relating to Federal assistance pro- grams but would provide a legal basis for consolidating some of the financial procedures under centralized direction and control. S. 2981, JOINT FUNDING SmJPLIFICATI0N Acr Or 10G8 EXPLANATORY STATEMENT In his March 17, 1967, message on the Quality of American Government, the President instructed the Director of the Bureau of the Budget to develop a legis- lative proposal that would provide for the simplification of Federal grant-in- aid programs. This statement constitutes a brief summary of the problem and an outline of the proposal that has been developed in response to the President's directive. PROBLEM A number of Federal assistance programs which finance different activities could be brought together in a single project to support similar or directly re- lated purposes. Such combinations of related programs would encourage a com- prehensive approach to certain problein!s and enable State and local governments and other grantees to use Federal assistance more effectively and efficiently. (At- tached are several examples of projects which are being, or might be, jointly financed.) However, existing laws and regulations often make these combinations some- what difficult to "package" and administer. Each Federal grant program may have different requirements in such matters as application forms, accounting procedures, advisory panels, reporting dates, etc. Further, the grantees often must work with several Federal agencies (or constituent elements of a single agency) - each with its own distinct administrative practices. (Attached is an example of a jointly funded multipurpose neighborhood center which illustrates some of the complexities involved.) The purpose of this proposal is to remove or simplify certain administrative and technical Impediments which hamper or prevent the consideration, process- ing, approval and administration of projects which draw upon resources avail- able from more than one Federal agency, program or appropriation. PROPOSAL The Joint Funding Simplification Act of 1968 would achieve this objective by (1) authorizing the removal or modification of certain statutory require- ments; (2) authorizing agency heads to delegate the approval and administration of Federal assistance programs to other agencies; (3) providing for a special fund in each agency to finance joint projects; (4) describing the actions which Federal agency heads should take to further joint projects; and (5) authorizing the President to establish standards and procedures to implement the Act. (Ex- cept as specifically provided, the ~ct would not change substantive provisions of law relating to Federal assistance programa such as eligibility criteria, main- tenance of effort, matching ratios, authorization levels, program availability, etc. Such questions will be the focus of a later study.) WAIVER Federal agency heads would be authorized to waive or modify certain technical and administrative statutor3r provisions with respect to joint projects, e.g. re- PAGENO="0046" 40 quirements relating to reporting and auditing, merit personnel systems (under certain conditions), the timing of Federal payments, etc. Agency heads could also waive the requirement that a single public agency be designated or utilized to administer a specific program when that program waa part of a joint project but only with the agreement of the public agencies concerned. Such waivers would have to be consistent with applicable State or local law and with the objectives of the program involved. DELEGATION With the approval of the President, Federal agency heads would be authorized to delegate to other agencies powers or functions relating to the approval of pro- grams of their agencies which were component parts of a joint project if such delegation was necessary to accomplish the purposes of the Act. Such delega- tions would have to be exercised in full conformity with applicable statutory provisions. Authority to `supervise the administration of projects could also be delegated. FUNDING Pederal agency heads would be authorized to establish joint management funds to finance joint projects. AGENCY ACTIONS The head of each Federal agency would be responsible for taking actions to facilitate joint funding and to expedite the processing of applications for joint projects. Such actions might include development of common application forms, establishment of common administrative rules, designation of "project man- agers" in one agency to' supervise joint projects, etc. (The possible administrative procedures are developed in more detail below.) PRESIDENTIAL AUTHORITY The President would be authorized to (a) approve the agency delegation of powers and functions noted above; (b) prescribe regulations, procedures and rules to assure' that Federal agencies apply the provisions of this Act in a uniform manner; and (c) require that Federal agencies adopt procedures which assure that applicants for joint projects under this Act make reasonable efforts to secure the views and recommendations of agencies that may `be significantly affected `by the project, including units of general local government to the fullest extent appropriate. In summary, this proposal would enable Federal agencies and grantees more readily to "package" and administer a project whose constituent elements were funded under different assistance programs and to operate it as a single, inte- grated project with common requirements, funding and procedures. PROPOSED ADMINISTRATivE OPERATION 1. pregident.-As noted above, the proposed legislation would grant the Presi- dent broad authority to make rules and regulations' for its implementation. Those rules and regulations might deal, for example, with the format and content of application forms for joint funding, the processing of such forms, procedures for determining lead-agency or project-manager assignments, conditions under which various waivers of statutory provisions would occur, and the manner in which joint funds will be obligated and accounted for. There would probably also have to be a Presidential effort to bring agency rules, regulations and procedure's into line with the needs of the joint `funding process. The President would establish methods and procedures by which the represent- atives of the major grant-in-aid agencies and the Bureau of the Budget would assist him in carrying out his regulatory functions. The agencies would be ex- pected to work coopGratively to harmonize their regulations, develop procedures for disseminating information about the joint funding approach and consider problems that develop in implementation of the concept. 2. AgencieS.-Eacb agency will have to develop certain new rules and regula- tions, or modify its existing rules and regulations as necessary to facilitate the joint funding concept. Its regulations will also have to be in harmony with those issued by the President. As experience is gained and if patterns' of applications for certain types of joint funding emerge, it is expected that agencies will enter into agreements involving specific joint application forms, the processing of those forms, lead-agency or PAGENO="0047" 41 project-manager assignments and possible delegations of approval authority and allocations of funds. If possible, typical grant packages will be identified, and certain highly desirable ones may be given priority treatment. 3. Giant reeipients.-Under the proposal, grantees will fall into two broad categories: (a) any eligible grantee will be able to apply for joint funding of any or all grants for which he is otherwise eligible; and (b) the head of a unit of general government (e.g., a governor, mayor, or county chief executive) will be able to apply for joint funding of any or all grants for which the agencies and the unit of general government under his jurisdiction are eligible. The grantee would be faced with several possibilities once he determines what sort of a joint funding proposal he wishes to make: (a) in the simplest situation, in which his proposal involves only grants from one Federal agency for which he is directly eligible, the grantee would simply apply to, and deal with that agency; (b) if his proposal involves grants from more than one Federal agency but only grants for which he is directly eligible, the grantee would prob- ably apply initially to one of those agencies pursuant to instructions and regula- tions as to which agency had the lead role in processing the particular type of proposal; and (e) if his proposal involves grants from Federal agencies for which he is both directly and indirectly eligihie (e.g., if a mayor's proposal in- volves both direct grants to his city and grants which are made to the State and then passed on by the State), the grantee would have to apply not only to the Federal lead agency but to the State or other. jurisdiction involved. In any case (except as expressly provided otherwise in the bill) the proposal would have to meet the substantive requirements of each one of the grants involved in the package. That is, the planning, eligibility, and matching requirements of each one of the component grants in the package would have to be observed. In addition, the proposal would have to provide for separate accounting for construction and nonconstruction components. However, it could involve the waiver of certain technical and administrative provisions as described in the bill. Under the draft bill it is also contemplated that a combined application by two or more eligible grantees could be made. Thus, a State having a direct federally- funded community project might combine with a community also applying sepa- rately for a Federal grant in a related area for a multigrant project to be jointly funded by the Federal Government. Similarly, a county and a city might submit a combined project application for joint funding. At the Federal level, several alternatives for handling applications for joint funding are possible. First, the agency receiving the application may simply send copies to the other agencies involved or to the various program units within its own jurisdiction for processing, approval and granting of necessary waivers with an effort to coordinate approval of the overall proposal. Second, pursuant to interagency agreements, the agency might establish a project manager for cer- tain types of proposals who would play an active role in coordinating the process- ing of the proposal. Third, again p~iirsuant to interagency agreements, the agency might have allocated to it cerb~in funds from other agencies and be delegated the `authority to obligate those funds for use in certain joint funding proposals. [Attachment] EXAMPLES OF APPLICATION OF THE GRANT SIMPLIFICATION PROPOSAL TO HYPOTHETICAL PR0TEOT5 A STATE RECREATION PROJECT The State desires to acquire and develop a historical site and the immediately surrounding property for a recreation project in a metropolitan area. It has de- cided to apply for the following Federal grants-in-aid which could be elements of the project: 1. A grant for acquisition and rehabilitation of a historically significant `build- ing, under the Historic Properties Preservation Act of 1966 (P.L. 89-665). The Federal share may be up to 50%, providing the project is included in an approved State plan for historic preservation, and is coordinated with the State outdoor recreation plan. The grant application is made to the National Park Service of the Department of the Interior. The project grant is approved within an annual allotment made to the State by the Secretary of Interior. 2. A grent for acquisition of surrounding property for park purposes, under the Land and Waler Conservation Fund Act (P.L. 88-578). The Federal sha~'e may be up to 50%, providing the project is included in the approved State plan PAGENO="0048" 42 for outdoor recreation. The grant application must be reviewed and commented upon by a metropolitan review agency, pursuant to Title II of the Demonstration Cities Act. The grant application is made to the Bureau of Outdoor Recreation of the Department of the Interior. The project grant is made within an annual allotment made to! the State by the Secretary of Interior. 3. A metropolitan development supplemental grant to Increase the Federal share of the park land acquisition element by 20% under Pitle II of the Demon- stration Cities and Metropolitan Development Act of 1966 (P.L. 89-754)0 This will increase `the Federal share in item (2) to 70%. The supplemental grant may be obtained from the Land `and Development Facilities Administration of the Department of Housing and Urban Development, provided `that the Initial park land acquisition proposal is found to contribute significantly to the planned de- velopment of the metropolitan `area by the metropolitan review agency and HUD. The supplemental grant is a project grant. 4. A grant for `urban beautification of the grounds of the project under the Housing and Urban Development Act of 1965 (P.L. 89-117). The Federal share I may be up to 50% of the costs of beautification. The grant application must be submitted for review and comment to the designated metropolitan review agency. The `application is made to the Land and Development Facilities Admin- istration of the Department of Housing and Urban Development. It is `a project grant, executed as a contract between the grantee `and HUD. 5. A grant for landscaping the Federal~aid highway right~of~way adjacent to the overall project. It is a project grant financed from the three percent of Federal~ aid highway funds allotted to the State annually which is available for land- scaping purposes. The grant application is made to the Bureau of Public Roads of the Department of Transportation. The Federal share is 100%. A continuing cooperative comprehensive transportation planning process is required in any metropolitan area in which Federal-aid h'ighway funds are expended. Under the current legislative and administrative regulations, the applications process for the recreation project would look like this: ~eaera1 agency ~ ~ ~t. of the L~i JN.P.S~ B.O.L ~JL.D.F.A.J -~ .-. - ~etro. Bevie~r Agency j . with transportation State agency ~ate Hi~wa~j }State Park astn~) Dspt. t~pt. ~L L~J~ ~ -_ Grant appli- I~andscapin~flhistoric turban 1 t~creation 1 f~etro.' cation ~grant `preservation' lbcautifii lnnd accjui.. I I supple4 `grant I (cation I 1sition grant1 Irnental LI f j icrant I , 1grant ~J L.... ~ ~J L~. ~L The hypothetical recreation project application process has- 1. `Four bureaus in three Federal agencies administering five grant programs. 2. Five separate grant appropriations, obligations, and five separate ac- counting requirements. 3. Five separate applications (two straight project grants, and three grants which are approved within annual State allotments by the relevant Federal agency). 4. Two State agencies as separate grantees. PAGENO="0049" 43 Under the proposed grant simplification mechanism, which encourages the owbination of separate grants into an application for joint funding by the several rederal grantor agencies, the application process would look like this: Federal J~pt. of D~pt. of the J!Jept. of Housing á~ agency Trans. rtnt~or~ Interior (!Jrbai~ ~velop~ent B.P.S. H.P.S. jLO.R. L.D.F.A.j Lead A~ency de.~natjon ~roJect ~ Joint Ma~age~ ment Funci (Single account for the uroject) ~etro. Review A~ency (with transportation V j ~la~~cection) combined State AoDlicatjOfl agency j~a ~ ~j Grant landscaping historic urban land ..-.--metro. elementfi preservation beautifi.. acquisition supplemental L........ ______ ______ cation The hypothetidal project, under the grant simplification proposbi has- 1. A single Federal lead agency and project manager coordinating all the Federal agencies appro~aJls. 2. A single project account from which the grantee may draw funds. 3. A single doiubinecj applicttion. 4. Two State agencies as grantees coordinated under the Governor. CONCEETBATED (SLUM) EMPLOYMENT PROGRAM 1. $tatement of Purpo5e.-Tb prOlride useful job training, experience, and em- ployment in urban ghettos. II. Brief History.-The Ooncent:rated (slum) Employment Program will be launched in 1967 in 19 clities. Funcl~ from the Office of Economic Opportunity's Nelson, Scheuer, anid other "Special Impact" programs will be used as the nu- cleus of the program, with other programs added as appropriate and feasible. Under current proposals these three programs would be replaced by a single Concentrated E~mploym~t Program (CEP) in 1968, when it will be extended. to a total coverage to 3O~-45 cities by 1968. III. Outline of Grant Programs To Be Utilized..-Siuce the Concentrated Em- ployment Program is a new venture, the exact composition of grants to be em- ployed is not known in athcance. However, the grants listed below are likely canilldates for being grouped together. A brief description of their operation is included in each case. A. Concentrated employment program (Office of Economic Opportunity; deiega:ted to Department of Labor) .-This will be the so-called "glue money" for bringing together the v'arious constituent elements of the program. The program operates through project grants largdly to ldcal community action agencies. B. Neighborhood Youth Corps (Office of Eronomic Opportunity; delegated to Department of Labor).-This program provides Work and training for out-of~school youths in the 1&-21 age bracket. rt operates through project grants largely to lodal community action agencies. `C. Community Action (Office of Economic Opportunity) .-Project grants will be available to ~oeal community action ag~ci~s to pursue this, and other community action, projects. 95-62.6-68---4 PAGENO="0050" 44 D. Manpower Development and Tra4ning (Department of Labor). 1. Institutional training is provided through a bewildering miaz which starts with the Bureau of Em~p1oymersi Security and fsilo'ws tw separ~te paths to actuhi implementation, The 11.5. E)mployment Servic identifies the need and people to receive training, and pays living al lowances to the trainees. The Labor Department makes use of the De pariment of Health, Education, and Welfare to handle the actual train ing, in cooperation with State voc'oitional education agencies. 2. On-the-job training is handled by the Bureau of Apprenticeship an Training either through direót negotiation with employers, or by usin ~ national or community organization as an intermediary. E. Work ecrperience (Office of Economic Opportunity; delegated to Depart- ment of Health, Education, and Welfare) -This program is designed to hel recipients of public assistance and other needy persons acquire the Jo' skills needed to become self-supporting. 1. Ourrently, the State welfare agency ari~anges for training, pays It allowances, etc. 2. Under new procedures which Will take effect on July 1, 1967, th De~a~tment of Labor will take on the responsibility for the training `aspedts of the program. The new path Will be a circuitous one. The OEO tielegation to HEW will continue in effect. However, while the payment of allowances will remain in the hands of the Federal and State welfare agencies, the training will be shifted to the Department of Labor rwhich will, in turn, make use of HEW's vodatiional educttio'n complex to provide the actual training. Hence, on the training side, `the flow of funds goes from OEO to HEW (Welfare Administration) to Labor to HEW again (OE) to actual implementation. F. Uomuinnnity work and training (Department o'f Health, Education, and Welfare) .-The purposes and process are much the same as in "E" above, except that the funds are appropriated directly to' HEW. IV. Administrative and Technical Problems.-Many of the administrative and technical obstaclOs to joint funding which would be anticipated in the tangled skein above are partially overcome by two factors: (1) as in moSt gr'ant pro- gram's, the obstacles are not statutory in nature, but are lodged in adminis- tr'athre regulations; and (2) the extensive pattern of delegation puts the actual ndministratiOn of many o'f the programs in the hands of one agency. FUNDING AN URBAN COMPREHENSIVE HEALTH CENTER The purpose of this example is to delinOalte the variety of Federal funding sources potentially available to a community organization dntiring to establish ~ com'pr~hen5ive health cei~ter which Will provide a comprehensive program of diagnostic and treatment services for the poor in `an urban community. While a sabstanti'al number of gr'ant programs `are potentially `atailable to construct, s'thff, and operate a health cen'ter, th'e description below Is limited to those programs which ap'p~ar mast susceptible to utilization `and some form of consolidation. A. Pacitities (Jonstraction 1. Community Mental Health Center `Construction (National Institute of Men- tal Health, PBS). Fbrmula grants `are available fo'r construction of new is- cililties or tomodoling or expansion of existing facilities to provide the mental health component of the community health center. The project must conform to the State mental health facility plan. Funds are made available by the State agency administering the plan upon determination that the project meets `a com- munity need. B. ~tafJtng 1. Community Mental Health Staffing (NJMH, PBS). Project grants are ;avaihible `to cover a portion of the costs of professional `and te~hnic'ai personnel nerving in a comprehensive community mental health center. The program of the `center must be in eonson'alwe with the State mental health plan. C. Operations 1. ComprehensiVe hettith services (PBS). Block formiida grants are available under `the "P~rtnerShiP for Health" program. Fund's are allocated to the State PAGENO="0051" munit 45 agency for disti~ib~tion. community project must be con- an- (Welfare Ad- a's Burehu to ```i youth - proJeCt 4. Bas ort Grants (Vo ational .~ehabilitation Administration, HEW). FormulaS are available through VRA to assist States in meeting the costs of providing ~ s to eligible individuals. These may include diagnosis, physical restoration, as ~. ~i as vocational guidance and job training. Additional funds ~j he made available to local health centers in the form of "expansion grants" obtained directly from VRA. Such grants must have the prior approval of the nate State vocational rehabilitation agency. `~ ~Mrt Program (OEO). Project grants are available through the corn- ~u program of OBO for diagnostic and treatment programs for 6. Neighborhood Health Centers (OEO). Project grants are available for such services as family planning, prenatal care, and preventative medicine in centers providing comprehensive family care. The projects are funded through local community actions groups. A SPECIAL ScHooL FOB Dno~oues (BASED ON AN ACTUAL MULTIFUNDED, MULTIAGENOY PROJECT) A non-profit agency with experience in manpower training programs proposes a new kind of residential school for school dropouts in big city slums. Some students will take up residence in the school and others not, but all will remain in their own community environment, thus preserving home ties. The program is to include not only training in occupational skills and appren- ticeship, but a new basic curriculum integrated with the skill training as well as activities designed to lead the students to profound changes in life style and attitudes, hopefully, to break out of the ghetto. Moreover, the presence of the institution in the community is intended to induce changes in the community and the students' families. The whole project is experimental initially, but if successful, might be repli- cated in many places. It is not wholly supportable by any single agency or appropriation. It would require participation of at least the following: Office of Education; Vocational Education Research-Research, evalua- tion, curriculum development Office of Economic Opportunity-Residential costs, health services, and recreation Department of Labor; Manpower Development and Training experimental and demonstration projeeta-Recruitment of trainees, job counseling, and development of new occupational lines. Office of Education; Manpower Development and Training-Institutional training costs Department of Labor; Manpower Development and Training-Student stipends and on-the-job training costs Some of the problems of packaging such a grant concern the designation of a 4'iead" agency `to carry the main burden of contracting; allocation of costs to appropriations; limitations (administrative or legal) on some agencies "buying into" another agency's project; maintenance of continuity in agency review, approval and monitoring so that a good project is not allowed to falter merely because of staff turnover; securing State approval for release of MDPA funds which ordinarily are reserved for public schools; and arranging for transfer of funds to the contracting agency. PAGENO="0052" 46 A UNIVERSITY INsTRUCTIoNAL IMPROVEMENT PROGRAM A large university proposes a "package" of activities to support a center t help the faculty find new and better ways to maintain high quality instruction. Center staff could consult with and conduct workshops for faculty members wh need technical information and skills in such areas as programmed instruction testing and grading, and computer assisted instruction in improving classroo instructional techniques. In cooperation with several university depart~ients the Center could help prepare graduate students for positions as teaching fellows In addition to serving the university, the services of the Center could be made available to a group of smaller and, weaker colleges that, alone, cannot kee apace of fast moving developments in higher education and technology. Building on a group currently receiving National Science Foumiatio~i support for the development of new college-level science curricula and an OJ~ supported language laboratory, a university submits a package of proposals which would create a center to improve college-level instruction in science and non-science fields. The ingredients proposed and sources of funding are- Research on the learning process-OE research funds (or NIH-N1MH);. Science curriculum development-continued support from NSF; Non-science curriculum development-O1~ research program; Language teaching-continued OE language and area study support; Exploring the effective use of computers-NSF's program designed for~ this purpose; Science teacher training-NSF's institutes; A subsidiary program for upgrading of teachers from small, weak colleges~ at this center-OE developing colleges program; Research participation support to enable teachers to work on outstanding research projects receiving funds from AEC, NASA, DOD, NIH, or NSF- NSF funds; Library books-OE's college library grant program. Some of the problems of packaging such a grant include- The designation of a "lead" agency; Allocation of costs to appropriations; Arranging for joint agency review and monitoring; Arranging for a single set of out~ide consultants in connection with the review; Transfer of funds to contracting agency. PAGENO="0053" JOINTLY AJNDED MIJLTIPURPOSt NEIGhBORHOOD CENTER Facilities or services Program Grantee Annual cost Comments 1. Center facilities Neighborhood facilities grants (HOD) Local public bodies 2. Core services: Center management, intake, Cummunityactionprogram grants(0 EO) Community action agencies outreach, community organization, and so forth. 3. Headstart, child, and parentservices,legal ._do Community action agency (or other local services, public or nonprofit agencies). 4. Community health services outreach Comprehensive health planning and service `State health agency grants (P'HS, HEW). 5. Maternal and child health services Maternal and child welfare service grants ......clo (Children's Bureau, HEW). 6. Welfare information, referral, counseling_ - Grants to States for public assistance. (Wel. State welfare agency administered by fare Administration, HEW). county welfare agency. 7. Adult basic education classes Grants forlibrariesandcommtnvityservice.s State education agency. Administered by (HEW). local schdols except project grants may be administered by nonprofit agencies. 8. Neighborhood youth corps projects Work and training program grants (OEO). Community action agency or other public or nonprofit agency. 9. Employment counseling, youth opportunity Grants to States for `employment service State employment security agency center. functions (Labor). 10. Remedial education services Title I or Ill grants under Elementary and Local schools Secondary Education Act (HEW). `Total cost of faculties. 1 $600, 000 ~ grants; limited to new construction or major rehabilitation. No State involvement. 400, 000 1110 percent grants for demonstration; othergrants require some matching. No State involvement required for demonstration grants. 300, 000 Some matching required (usually 20 percent) Governor has veto. 250, 000 Formula grants; 70 percent must be passed through to communities; 3.~ to ~ matching based per capita income and' population; single State agency requirement. Merit system requirement. 100, 000 Formula grants; 50 percent matching on half of funds; single State agency requirement. Merit system requirement. 100,000 Single State agency requirement; 25 to 50 percent matching. Service must be provided statewide or this requirement waived. Must be part of State plan. MerIt system requirement. 50, 000 Formula grant; stogie State agency requirement; 10 percent matciting; State plan requirement; 20 percent of funds may be used for' special project grants directly to local agencies. 100,000 10 percent local matching required. Governor has veto. 100,000 Ito State matching. Merit system requirement. State carries out program directly. 100, 000 Formula grant; no local matching. Single State agency requirement for title I grants. State approves projects for title I giants. PAGENO="0054" 48 AGENCY Rnronrs on S. 698 ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS, Washington, DC. April 6 i967. Hon. EDMUND S. Musxnr, Chairman, Subcomm4ttee on Inter~1overR/niental Relations, Committee thi Govern ment Operations, U.S. Senate, Washington, D.C. DEAR Mn. CHAIRMAN: This is in reply to your letter of February 28 requestin the Advisory Commission's views on S. 698, the "Intergovernmental C'ooperatio Act of 1967." The basic purpose of this legislation, as stated in its preamble, i to "achieve th~e fullest cooperation and coordination of activities among the level of governmei~t in order to improve the operation of our federal system in a increasingly complex society." The proposed meanure contains a number of the most significant recommen dations for F~deral action advanced by this Commission over the past seve years. Equally significant, it represents a distillation of the thinking and experi ence of a great many departments and agencies of the Federal Government of State and local officials throughout the country, and of various nationa organizations of public interest groups on how some of the more severe impedi mencts to effective intergovernmental collaboration and administration enn b removed. These proposals include: more uniform administration of Federal grants t State governments; strengthening the hand of the governor in the administration of Federal grants going to State agencies; and `Congressional review of new grant programs at a fairly early stage in their development. At the local level, they include favoring cities and counties over special districts as applicants fo Federal grants; strengthening local and metropolitan planning; and providin more information and greater authority to local governments with respect to Federal land development decisions. Finally, the legislation would help to achieve greater equity and consistency in the treatment of the mounting number of families and businesses displaced by Federal and federally aided programs. The Ooinmission strongly supports this legislation. Titles V and VIII imple mont key recommendations advanced in the Commission reports, Periodic Con- gressional R~assessment of Federal Grants-in-Aid to State and Local Govern- ments (June 1961) and Relocation: Unequal Trethnent of People and Businesses Displaced by Governments (January `1965). Title IV implements recommenda- tions advanced in the AiCIR reports, Impact of Federal Urban Development Programs on Local Government Organization and Planning (January 1964) and The Problem of Special Districts in American Government. All told, some 12 separate ACIR recommendations are incorporated in 5. 698. IS. 698 contains two new titles relating to grant consolidation plans and to land acquisition practices which the `Cbthmission has not had an Opportunity to consider. Permit me, then, to explain in more detail the purposes of the titles that the Commission has considered and endorsed and to document the extent to which these `provisions either represent current practice in certain grant prkgram~s or `seek to correct significant deficiencies in present intergovernmental administration. Title I of `5. 698 is limited to standardized definitions covering the remaining titles and `functions. In effect, it combines and makes uniform the `definitions used in S. 1681 (89th Congress) and S. 561 (89th Congress). Title II provides `for more uniform administration of Federal grants to the States. Federal grants-tin~aid now total over 175 general progrhm~s `and are covered by more than 400 separate authorizations. Despite the increase in the number and size of direct Federal-local grants in recent years, approximately $10.8 billion out of a total of $14.6 `billion for fiscal 1967 were accounted for by Federal grants going to the `States. `This title effects a number of basic changes in the procedural aspects of Federal~State grant-in-aid administration. It provides that, when requeste~1, the governor will be informed b'y Federal departments and agencies of the pur- poses and amounts of actual grants being received in the State. This procedural innovation would permit the governor to prepare a more suitable budget by giving him fuller information on the State's `flnartcial resources and needs and would enable him `to more effectively coordinate his executive departments and agencies. Further, it would facilitate `State legislative assessment of the impact of Federal programs on the Stato's budgetary arni administrative proc- esses. The title would make more uniform the handling of grant funds by elimi- PAGENO="0055" 49 rove] ~~tot~ lative ~ for Trea lit is estaL ~ied for the dte or other ~ ~. Went Federal Reserve Board, permitting s to draw upon grant ft vare needed. be last section of. Title II would alleviate another `major, point of. Federal'- ~ friction `by authorizing Federal. departments and agencies to waive the iirement for "a single State agency" and to `approve edher forms of adminia. lye organization, providing the objectives of the grant program are not [dangered. The "single agency" requirement is found in about a quarter of .x'l grant programs and in certain, concrete inStances, `it has been used ~ the States in their efforts to achieve administrative reorganization'. ~J authorizes Federal departments and agencies to provide specialized chnical `assistance and services to State and local governments on a `reimburs- ~ basis. This concept was formulated first and a'pproved by the Cbmmission response to the expressed interest of individual Federal agencies and organi- Ltions of governmental officials. The title would establish, as a general authority, practice of intergovernmental comi'ty already enjoyed by several Federal ~eneies, including `the `Census Bureau, Bureau .of Reclamation, and Internal evenue `Service of the `Treasury Department. ~Phis `discretionary authority `would in no way modify the ability or practice d Federal agencies to provide special technical assistance and consultation ervices as a `direct activity `without reimbursement `as might be authorized in ~r substantive legislation and appropriations. Further, the `title is wholly ~rmissive; under it, the requesting State or local agency and the affected ederal agency would have to agree on the scope and class of the services ormed. Finally, the services provided would include `only those that ~r of the Bureau of the Budget through `rules an'd regulations deter- s may be provided by such Federal agencies an'd these rules must be in iarmony with the government's policy of relying on the private enterprise to "~7ide `those services that are reasonably and expeditiously available through nary business channels. The Commission is of `the opinion that this title d encourage intergovernmental cooperation in the conduct of specialized technical services and enable State and local governments to avoid unnec- duplication of special service `functions and to achieve genuine economies. -~ IV~. esta~blishes a coordinated intergovernmental policy regarding ad- ~~istratfoñ ~f grants for urban development.' `The first section of this title (1) authorizes the President to establish government'wide guides in the formuiation~ evaluation and review of urban development programs and projects; (2) estab- ~ as a matter of Congressional policy that agencies, to the extent feasi'ble~ Into account all vie'wpoin'ts~-national, regional. State and local-4n the ining and ad'usinlstlla'tion of `such programls; (3) declares it to be `the intent `~~s that Fedei4ai departments and agencies c'edsult w'it'h and seek advice a one another through interagency and other mechanisms in order to achieve ~ coordination in this critical area; and (4) requires, insofar as possible, that systematic planning stipulated under various individual Federal programs be geared `to local and regional comprehensive planning. `This section then seeks to come to grips with some of the basic difficulties impeding a more effective Federal role with respect to metropolitan America, including fragmented dc- cisioumaking with respec't to Federal aid for various ur'ban facilities and projects, the absence of effective interagency coordinating machinery for such programs, and the failure to consider State, regional, and local comprehensive planning efforts that might relate to such projects. Regarding the planning problem, it might be noted `that of the many Federal programs relating to plan- ning, physical facilities and construction, a considerable number have no require- ment for conformance with areawide or local comprehensive planning. Total Federal aid to urban areas (using the standard metropolitan statistical area as the basis for `definition here) increased by nearly $6% billion or 16~S percent since 1961. Approximately $10.3 billion of the $17.4 billion total for fiscal 1968 will be spent in `SMSA's to help meet the mounting demand for increased services in these areas. If these funds are to be used wisely-especially PAGENO="0056" 50 those relating to physical deve1opment-~he mechanisms ~ provided in this t: will be needed. `I Section 402 of this title gives general units of local government preferenc as recipients of Federal grants and loans, in the absence of substantial reason to the centrary. It woruld not affect the authority of special districts to reeeiv such funds, however. This provision is in full accord with `the Oommi~s1on's position that the oral Government, like `the `States, has a `basic responsibility for `helping to the growing `fragmentation of `local governmental jurisdictions and that of this responsibility involves an unfreezing of the jurisdictional status quo. `Title V of 8. 698 provides for uniform policy and procedure for syst'~'~ Oongressional review of any grant program established subsequent to .1 actment of the legislation. In addition, it provides that new grant progra enacted `without a designated termination date shall expire on June 80 of I fifth calendar year which begins after the effective date of the Act, and tI each grant of three or more years, authorized in the 90th or any subsequen~ Congress, shall `be reviewed `by the Congress during the two years preceding ~ date upon `which the `program is to be terminated. As you know, Mr. Chairman] `the Advisory Commission has found that the grants-in-aid to State and l~ governments thus far have been and are the National Government's prineipa mechanism for securing intergovernmental collaboration in achieving nationa legislative dbjectives. Reliance on the grant-in~akl mechanism has increase significantly during the past three years, with the passage of more than 55 n programs covered by more than 165 separate authorizations. With this h~, come mounting problems of manageability, coordination and fragmentation In view of the paramount position of categorical grants In the American s~"~ of intergovernmental relations, the `Commission has adhered `to the position the efficacy, value and public acceptability of this mechanism must be s guarded and its usefulness as a collaborative device should be strengthe'nedj The Commission's 1901 report entitled "Periodic Congressional Reassessment r Federal Grants-in-Aid to State and Local Governments" spelled o'ut in depth t `Commission's recommendations for systematic review and these proposals ~ be implemented by enactment of this title. The Commission endorsed the s that there is a general need for providing systematic reassessment of grant programs, having found that the review and redirection of far has been treated on an irregular, uncoordinated basis.' The ~ Joint Committee on the oganization of the Congress in this area only confirm L~ Commission's `earlier recommendations. rjlhe Commission's position then is that the proposed title would be beneficla on a number of counts. It would stimulate development of more uniform c~'~' with which Congressional committees could critically assess the effectiveñes of grants-in-aid in important subject fields. Further, the provision for `systemati' committee review would give State and local governments a regular forum fo expressing their views concerning problems that have arisen in connection wit the administration of individual programs. Finally, the five-year terminatie provision relating to certain future grants is a salutory feature of the legislation although much confusion has arisen concerning this point. In this connection, it should be noted that this section obviously would in no way affect those grants that have a termination date or those that are specifically exempted from its application. This means `that the termination provision merely affects those few programs each session that Congress falls to designate as short-term or long-term joint undertakings. In such cases, this provision along with the review process that in most instances would result are needed safeguards of Congress' legisla- tive oversight role. With respect to Sections 504, 505, and 506, the Advisory Commission has not taken a formal position. These embody amendments which were adopted by the Senate Subcommittee on Intergovernmental Relations during its deliberations on S. 2114, 88th Congress, and which appeared in Title II of S. 561, 89th Congress, as enacted by the Senate. The Commission also has not had an opportunity to consider the new Title VI, relating to consolidation of grant-in-aid programs. Title `Vu amends the Federal Administrative Property Services Act of 1949 and provides a uniform policy and procedure for the General Services Adminis- tration relating to its acquisition, use and disposition of land within urban areas in conformance with local governments' land utilization programs. This title car- ries out specific resolutions of major organizations represenfiii~ fib municipali- ties, including the U.S. Conference of Mayors and the National League of Cities. PAGENO="0057" 51 Further, it is consistent with the findings and the recommendations of the Com- mission's report on the "Impact of Federal Urban Development on Local Govern- ment Organization and Planning." The language of this title is in large part based on legislation enacted by the 89th Congress establishing similar procedures for the sale and disposition of public lands by the Department of the Interior (78 Stat. 986). Further, it in- corporates suggestions of the Comptroller General regarding predecessor legisla- tion whereby Federal interests are protected in the acquisition and disposal by giving the Administrator the authority to shorten the period of advanced notice or to eliminate it entirely when in his judgment such action is needed to avoid such things as land speculation, payment by the Government of higher prices, or time consuming and costly condemnation proceedings. In short, this title would appear to strike a good balance between the administrative needs of GSA and the planning and development objectives of the localities affected. Title VIII of the proposed legislation establishes a uniform policy of relocation payments and assistance for all persons, businesses, nonprofit organizations, and farm operations displaced by direct Federal programs and by programs con- ducted through Federal grants-in-aid to State and local governments. It requires all such grant-in-aid programs to assure that standard housing is provided or is being provided for those displaced and provides for full Federal reimbursement of the first $25,000 of any relocation payment and Federal sharing of any costs beyond that amount on the basis of the regular cost-sharing formula of the in- dividual grant programs. During the latter part of 1964, the Advisory Commission probed the general topic of Federal relocation policies and the intergovernmental problems generated by their lack of consistency and equity. In its January 1965 report on "Reloca- tion: Unequal Treatment of People and Businesses Displaced by Governments" the Commission reached certain major conclusions: It found that governmental displacement of persons and businesses is substantial and that all indicators suggest that the pace of the displacement will accelerate with increased urbanization and the accompanying mounting k~en~andis for more m~ban services. It found that over the next four to eight years displacement under Fed- eral and federally aided programs will affect annually an average of 111,000~ families and Individuals and 18,000 business and nonprofit organizations. It discovered great inconsistencies among Federal and federally assisted programs with respect to the amount and scope of relocation payments, ad- visory assistance and assurance of standard housing. As your Subcommittee hearings on S. 1681 (89th Congress) again demon- strated, even a cursory examination of the existing programs indicates that the quality and quantity of relocation assistance and payments, both figuratively and literally, depend on what development program hits the displacee. The Commission report documented the fact that the adverse effects of reloca- tion hit most severely those families and individuals least able to withstand it. The worst problem in relocating families and individuals is the shortage of standard housing for low income groups. Minority groups have the greatest re- location problems in terms of population classifications. Large families and the elderly present other special housing problems ahd among business displacees~ small businesses, particularly those owned and operated by the elderly, are the main relocation casualties. On the basis of these findings the Commission made 14 recommendations for State, local, and Federal action to meet the problems of those displaced by government. Title VIII of this legislation carries out most of those recom- mendations for remedial action at the Federal level. It provides that Congress establish a uniform policy of relocation payments arid advisory assistance for persons and businesses displaced by Federal and federally aided programs. Hence, under Section 802, heads of Federal agencies are required to make reloca- tion payments in direct Federal programs causing displacement, such as those of the Post Office Department, GSA, or the Defense Department, in accordance with regulations established by the President. Section 804 requires the same agencies to provide advisory assistance pro- grams and specifies that these include determining the needs for assistance assisting businesses and farm operators in relocating; supplying information re- garding Federal Housing Administration, Small Business Administration arid other assistance programs; helping to minimize readjustment problems; and coordinating relocation with other project activities and governmental efforts in. the community or nearby areas. PAGENO="0058" 52 Se~tion 807 extends the requirements of Sections 802 and 803 covering pay ments and advisory assistance to federally assisted programs conducted by State and local governments. Section 805(c) carries out the Commission recommenda- tion that the Executive Branch encourage Federal agencies causing displacement in urban areas to establish in each major urban jurisdiction a focal point of responsibility for relocation administration; it provides that the President may require any Federal agency to make relocation payments or provide other reloca- tion services by entering into contracts or agreements with an~ State or local agency for use of its relocation facilities, personnel, and services. Section 807(a) (4) carries out the ACIR recommendation that Congress apply to all federally aided programs a requirement as strict as that in the urban renewal and public housing programs that States and local governments ad- ministering Federal grant programs assure the availability of standard housing before proceeding with any property acquisition that displaces people. The language here is comparable to that presently contained in Federal urban re- newal legislation. Section 807(b) provides that the Federal Government fully reimburse State and local governments for relocation payments up to $25,000 in federally aided programs and on a formula cost-sharing basis for any portion above $25,000 per displacement. The Federal reimbursement would be contingent on the State or local agency's agreeing to provide relocation payments and ad- visory assistance as prescribed by Federal law and regulation. The Housing and Urban Development Act of 1965 and the administrative practices of the De- partment of Housing and Urban Development, covering such programs as urban renewal, public housing, mass transit, community facilities, and open space, along with the relocation provisions of the Model Cities legislation, now utilize the cost-sharing formula for relocation payments up to and above $25,000 as provided in this title. This title, then, merely extends these standards to other Federal grant-in-aid programs. The various provisions of Title VIII constitute a meaningful answer to those who call for a more uniform, fair, and equitable treatment of owners, tenants and others displaced by the government's acquisition of real property. Equally important, they will not necessitate huge outlays of Federal dollars. Based on the annual displacement figures cited earlier, the total cost would come to approxi- mately $136 million annually or only $63 million more than the relocation pay- ments authorized under present legislation-a small price to pay for the benefits of this title. Like other provisions of S. 698, this relocation title is a good management measure. It clarifies a confusing condition, simplifies the administration of existing relocation programs, and promulgates rules that can be easily applied. Equally important, it humanizes government at a stage when it appears most cold and calculating. Title IX which establishes a uniform land acquisition policy for Federal and federally assisted programs is a new feature in the legislation, and the Commis- sion has not yet had an opportunity to develop a formal position on the subject. S. 698 is designed to correct obvious weaknesses in our federal system and to round out our national policies as they relate to regional and local planning, urban development, and relocation. The legislation seeks these objectives, because the largest unit of government in our federal system has a prime responsibility for assisting and strengthening the smaller units and for instituting needed xeforins in the area of intergovernmental administration. Simplified and more flexible administration of Federal grants to the States, strengthening th~ traditional services-in~aid device, promulgation ocI~ a co~ ordinated intergovernmental urban assistance policy, systematic review by Congress of new federal grant programs, establishment of a uniform GSA policy and procedure for urban land transactions and use, and provision for a uniform relocation assistance policy-these are among the critical concerns of this legislation. These implement concrete recommendations of the Advisory Com- mission. When viewed separately, each appears to be a modest attempt to cope with some of the difficulties facing us in certain conflict areas. But when com- bined, as they are in this omnibus bill, they constitute a meaningful move towards achieving greater productivity and rationality in intergovernmental relation- ships, better administrative use of Federal grants-in-aid, more meaningful metro- politan and local planning, and a more equitable relocation program. These are basic needs that must be met now if the vitality of our federal sys- tem is to be sustained. These are goals that have been endorsed by the National League of Cities, the National Association of Oounties, the Council of State 4~overnment5, U.S. Conference of Mayors, the Governors' Conference, and the PAGENO="0059" 53 rarious individual spokesmen for State and locral governments. Finally, enact- lent of this legislation, in the opinion of the Commission, will implement the ~resident's request, stated in his Budget Message of last January, that Congress `take favorable action on general legislation to impr~ve and strengthen inter- overnmental cooperation." Reserving its position regarding the two new titles of the bill, the Advisory ommission on Intergovernmental Relations urges enactment of S. 698, the reposed Intergovernmental Cooperation Act of 1967, as a vital means of devel- ping more constructive relationships between the levels of government and of urbing some of the confusion that characterizes the administration of certain oint action programs. The Commission hopes these comments will assist the Subcommittee on Inter- overnmental Relations in its deliberations on the proposed legislation. I should ike to make it clear that in the submission of these comments, I am speaking lily for the Advisory Commission and not for the Pr~sident or the Admin- stration. Sincerely yours, FARms BRYANT, Chairman. COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C. April 20, 1967. Hon. EDMUND S. MusKIa, haArman, ~9aboommittee on Intergovernmental Relations, Committee on Govern- ment Operations, (1.8. $enate. PEAR Mn. CHAIRMAN: By letter dated February 28, 1967, you requested our omments on S. 698, 90th clongress, the proposed Intergovernmental Cooperation Act of 1967. The growing size and complexity of Federal grants to State and local govern- ments have presented to an increasing degree difficult problems of administra- tion. The general objective of the bill, designed to simplify and improve the administration of gran:t-in-aid programs, is one which we fully support. While we `do not express `a substantive opinion with respect to all of the provision's in the bill, we strongly `support the idea of a periodic congressional review of the effectiveness of the grant programs. Section 102 of the bill includes "any agency or instrumentality of a State" in the definition `of the term "State." It `is possible that the proposed legislation could be construed as applying to any new authorizations, or changes in existing authoriza:tions, for Federal payments to the National Guard enacted `by the 91st or subsequent Congresses, since the National Guard is an inrdruinentality of the various States. However, hearings on similar bills do not indicate that such legislation is intended `to apply to Federal funds appropriated for the National Guard. Moreover, since the National Guard has been in existence since the forma- tion of our country and apparently will continue in `existence for the foreseeable future, we do not believe that Federal aid in support thereof will be terminated, or that the Congress intends~to require the authority for such Federal supporb to terminate automatically every five years~as providedhy title V an~l hence~ require new study and authorization periodically, Hence, it is our opinion that S. 698 is not intend'ed to apply to Federal payments to the National Guard. It would be preferable, however, if the bill itself or its legislative history would clearly so indicate. Section 203 requires Federal agencies administering grant-in-aid programs to schedule the transfer o'f fund's to the recipients so as to minimize the length of time elapsing between such transfer and the disbursement o'f such funds by the State. Thia is desirable. However, the last `sentence of section 203 would free the States of accountability for interest earned on grant-in-aid funds pending their disbursement for program purposes. This is a bro'adening of the principle set out in section 205 of the Department of Health, Educ~tion, an'd Welfare Appropria- tion Act, 1965, approved September 19, 1964, Pub. L. 88-605, 78 Stat. 979, which relieved recipien'ts of certain types of grants of liability to pay to the United States interest earned on payments of such grants made before July 1, 1964. The legislative history of that section is not very extensive. However, it would appear that at `least part of the reason for enacting the cited section wars the ~aet that the Department of H~al'th, Educatiron, and Welfare had for yeai~s breen making excessive advances to grantees without requiring payment of the interest or other income earned thereon, and it Was considered unfair to the grantee to PAGENO="0060" 54 retroactively require such payment. We believe consideration should be given t deleting the last sentence of section 203 since there appear to be no valid reason for extending this principle for future application. Section 303 provides that payments received by Federal departments or agencie for furnishing specialized or technical services to a State or political subdivisio under section 302 shall be deposited to' the credit of the principal appropriatio from which the cost of providing such services has been paid or is to `be charged or to the current appropriation available for the `cost of similar servioes~ W question such procedure on the grounds that appropriations may thereby be aug mented without congressional review and approval. We suggest that congres si'o'nal control would be strengthened if `the reimbursements were required t be deposited as miscellaneous receipts of the Treasury and the costs of soc services are included in the various budgets and appropriations. Title V of S. 698 provIdes for congressional review of Federal grants-in-aid an for the automatic expiration of such grants-in-aid. We are in accord with th objectives of this title, which would appear to be beneficial not only as an addi tional device for strengthening congressional control over Federal grant-in-ni funds but also as an additional requirement for acquiring current information a a basis for legislation in the complex and fast-changing area of Federal-State local relationships. Section 504 of title V would require the Comptroller General to make con tinning studies of present and future grant-in-aid programs concerning th extent to which conflict and duplication can be eliminated and improvement in the administration of such programs can be achieved by changing certain re quirements and procedures applicable thereto, and to make reports on such studies, with recommendations, to the Congress. The Comptroller General would be required, in making such studies, to consider, among other relevant matters, the equalization formulas and the budgetary, accounting, reporting, and admin- istrative procedures applicable to such programs. It is our view that section 504 neither grants any authority to nor imposes any requirements on our Office in addition to those we believe now exist for reviewing and reporting to' the Congress on Gove'rntaent programs, including Federal grant-in-aid programs. Reviews of grants-in-aid are presently made by our Office pursuant to the Budget and Accounting Act, 1921, and the Accounting aiM Auditing Aet of 1950. Under these statutes, we have been making reviews o' grant-in-aid programs and have been reporting to the Congress on the results of these reviews, `both as part of our regular audit work and pursuant to specific requests of congressional committees. Our existing reporting policy is to invite the atten'tion of the Congress to any significant information obtained during our work which we `believe or know to be `of interest to it. Inherent in this policy is, the inclusion In our reports' of recommendations and suggestions which are made to the Oongress or the executive departments for. consideration, on the basis of the information `in the reports, as to whether program changes of a substantive or policy n'ature should be made. We consider that reporting on substantive and policy matters is an existing responsibility of our Office, and we `believe that our reports on Federal programs, including grant-in-aid programs, clearly evi- dence that we have been carrying out this responsibility for many years How- ever, enactment of this section would emphasize congressional interest in achieving more effective, efficient, economical, and uniform administration of such programs through continuing reviews by the General Accounting Office~ There is enclosed a copy of our letter to' you, B-446285, January 24, 1964, which, in greater detail, explains our view that language along `the lines of section 504 would neither imipose nor gran't `any additional authority to' our Office. Our letter of January 24, 1964, wa's prompted by testimony of `officials of the Executive branch during `the hearings on a similar bill S. 2114, 88th Congress. The word "therefore" in line 14, page 19', should be "theretofore." With regard to section 506, the "records and audit" provision, we consistently have been calling attention in our rapo'rts to congressional committees on pro- posed new grant programs to the desirability of including in the authorizing legis- lation specific provisions requiring grantees to keep adequate cost record's of the projects or undertaking's receiving Federal financial contributions and `au,tlioriz- ing the administrative agencies involved and the Comptroller General to have access to the grantees' records fo'r the purpose of audit and examination, In view `of the increase in grant programs over the past several years, we feel that such requirement and authority are necessary in order to determine whether grants have `been applied or expended for the purpose for which the grant was made. We mo'st strongly urge that this provision (section 506) be included in PAGENO="0061" 55 hatever version of the "Intergovernmental Oooperation Act of 1967" that may e enacted. Title IX provides f~r the uniform acquisition of real property for Federal and ederally assisted programs. Under section 902, applicable to Federal programs, nd section 905, applicable to federaJly assisted programs, the acquisition of real roperty is to be made at not less than the fair value of such property as deter- med by the agency head, but there may be a question as to whether the provi- ions of section 901 offer sufficiently definite criteria for establishing the value f such property to be acquired. Section 903(c), applicable to Federal programs, rovides certain criteria for establishing fair value for buildings, structures, and improvements. Section 905(b) (2), applicable to federally assisted programs, rovides that decreases in value of the property attributable to the public im- rovenients will be disregarded, but is silent with respect to disregarding ncreases in value of the property attributable to the public improvement. Sincerely yours, ELMER B. STAAT5, Comptroller General of the UnLted State~. [Enclosure] COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., January 24, 1964. on. EDMUND 5. MU5IUE, hairman, Subcommittee on Intergovernmental Relations, Committee on Gov- ernment Operations, U.S. Senate. DEAR Mn. CHAIRMAN: This is in response to your letter of January 15, 1964, equesting detailed information on questions arising from conflicting testimony resented at your Subcommittee's hearings on Senate bill 2114. The conflicting estimony, presented by representatives of several executive departments, con- ems the impact on the General Accounting Office of Senator Karl E. Mundt's roposed amendment to Senate bill 2114. As stated by our Mr. Arthur Schoenhaut, in his testimony before the Sub- ommittee on January 14, 1964, except for certain time provisions for reporting, we do not view the proposed amendment as imposing any requirements on our Office in addition to those we believe now exist for reporting to the Congress on the results of our reviews of Government programs, including Federal grant-in- aid programs. Reviews of grant-in-aid programs by our Office are made pur- suant to the Budget and Accounting Act, 1921 (31 U.S.C. 53), and the Accounting and Aud:iting Act of 1950 (31 U.S.C. 67). Under these statutes, we have been making reviews of grant-in-aid programs and have been reporting to the Congress and its committees on the results of these reviews, both as part of our regular audit work and pursuant to specific requests from congressional committees. During his testimony, Mr. Schoenhaut invited the aUention of the Subcom- mittee to a listing, of 90 reports which have been made by this Office to the Congress over the last five years covering a wide variety of subjects concerning various grant-in-aid programs. In response to the question raised in your letter )f January 15, 1964, as to the extent to which studies, reports, and recommencia- ~ions of the General Accounting Office-under our existing autbority-have gone ~eyond financial, administrative, and management matters and have suggested ~hanges of a substantive or policy nature, we have compiled, and are enclosing ierewith, a summury of selected significant findings and recoinmendations neluded in these 90 reports on grant~in~aid progi~ams. These findings and recom- nendations deal with matters related to basic concepts of particular grant pro- [rams, which were called to the attention of the Congress and the Federal agen- ties involved for consideration as to whether these matters were consonant with he intended purpose and direction of the grant programs. We have reported indings and recommendations of a similar nature on many other Federal pro- [rams, but we have limited the enclosed compilation to those of particular nterest to your Subcommittee-that is, those involving grant-in-aid programs. Witnesses appearing before your Subcommittee on behalf of executive depart- rients of the Government presented testimony relating to Senator Mundt's amend- rient which indicated, generally, that the amendment would require the Comp~ roller General to (1) depart significantly *from his historical function and resent responsibilities, (2) make continuing reviews of grant-in-aid programs, vhich are unnecessary (particularly with respect to the Federal-aid highway rogram), (3) evaluate the effectivenes~, efficiency, and economical administra- PAGENO="0062" 56 tion of the grant programs, for which he does not have the professional am technical resources, and (4) submit reports to committees of the Congress wine would tend to duplicate those available from existing sources. As previousi stated, it is our view that the proposed amendment would not impose any re quirements on our Office that are not now contained in our basic legislatlo which is summarized below. Further, we have been making continuing review of many of the grant-in-aid programs for many years-the Federal-aid highwa program has been under review since 1953 and 37 reports thereon have bee issued to the Congress, the Bureau of Public Roads, and the Department o Commerce since 1955-and we consider that our reviews and reports must dea with the effectiveness, efficiency, and economical administration of the program to be of maximum use to the Congress and the executive departments. We d not beiieve that any of our reports to the Congress on grant programs have dupli cated those made by the executive departments. Auditing authority and responsibilities have been placed on the General Ac counting Office by a number of laws, the principal one being the Budget an Accounting Act, 1921. Section 305 of this act provides that: "All claims and demands whatever by the Government of the Unite States or against it, and all accounts whatever in which the Government o the United States is concerned, either as debtor or creditor, shall be settle and adjusted in the General Accounting Office." (31 U.S.C. 71) Section 312(a) provides that: "The Comptroller General shall investigate, at the seat of government o elsewhere, all matters relating to the receipt, disbursement, and applicatlo of public funds, and shall make to the President when requested by him, an to Congress at the beginning of each regular session, a report in wiltin of the work of the General Accounting Office, containing recommendation concerning the legislation he may deem necessary to facilitate the promp and accurate rendition and settlement of accounts and concerning such othe matters relating to the receipt, disbursement, and application of public fund as he may think advisable. In such regular report, or in special reports a any time when Congress is in session, he shall make recommendations look ing to greater economy or efficiency in public expenditures." (81 1J.S.O, 58) This latter provision directs the General Accounting Office to examine into an report to the Congress on matters of economy and efficiency as well as on th legality of public expenditures. In explanation of this section, particularly wit respect to the meaning of the term "application" (of public funds), which was added by amendment to the bill that became the Budget and Accounting Act, 1921, Congressman Luce of Massachusetts, who offered the amendment, stated "~ * * It is contemplated that the Comptroller General shall make it hi~ duty, his constant unremitting duty, to search for methods of economy * * * "It is in this particular section that we can make this clear. The sectior was worded, I fear, In a way that might have led some occupant of this offic to Imagine that his functions were purely clerical; that is, the functions im plied by the word `accountant.' The words used have the savor of the book keeper, of the cashier, of the treasurer, not of the investigator of the wa~ the money is spent, not of the man who goes out and looks for trouble, nol of the man who attempts of his own initiative to find places to save money. Therefore I make the suggestion that we add to the words of the cashier an the treasurer and the ac~un~ant, namely, `receipt and disbursement,' th w~ord ~application.' If there ever was presented on this floo~r a sing~e wor~ of amendment which might have a wider extent of usefulness to the peoples it has not come to my knowledge." Later Mr. Luce also made this statement: "The purpose, Mr. Chairman, is to make it sure that the Comptroller General shall concern himself not simply with taking in and paying out money from an accountant's point of view, but that he shall also concers himself with the question as to whether it is economically and efficientil applied." ImplicIt in the audit responsibilities of the General Accounting Office is thE responsibility to report information obtained as a result of its audit work. Thh responsibility is clearly indicated in the legislative history of the 1921 act whici states that: "The independent audit will, therefore, * * * serve to inform the Congren at all times as to the actual conditions surrounding the expenditure of puhlh funds in every department of the Government." PAGENO="0063" 57 Our audit policies recognize that each Government agency has a primary re- ponsibility to determine, with due regard to all applicable restrictions and re- uirements, the manner in which its activities and operations are carried out. ur Office is not empowered to direct changes in agency policies, procedures, and unctions. We do, however, observe opportunities for achieving greater economy, mproving efficiency, and attaining better results. Important deficiencies en- ountered are fully developed for presentation in our reports with appropriate ecommendations for corrective action by the Congress or executive departments. Senate bill 2114 has as its purpose a periodic congressional review of Federal rants-in-aid to States and to local units of government. Senator Mundt's pro- osed amendment to section 3 of Senate bill 2114 would require the legislative. ommittees of the House and of the Senate having jurisdiction over the pro- rams to consider whether any changes should be made in the purpose or di- ection of the program, or in the procedures and requirements of the progra~ o conform to the recommendations of the Comptroller GeneraL Several itnesses for the executive departments apparently interpreted the proposed mendment as requiring that the Comptroller General make recommendations as to whether or not any changes in purpose or direction of the original program should be made. We construe this section to require that the legislative com- ittees of the House and of the Senate having jurisdiction over the grant-in-aid rograms consider two things: (1) whether any changes should be made in the urpose or direction of the program and (2) whether any changes should be ade in the procedures and requirements of the program to conform to the recommendations of the Comptroller General. It. seems clear to us that section 3 of the proposed amendment would not require that the Comptroller General make recommendations concerning changes in purpose or direction of grant-in-aid programs. Our existing reporting policy, however, is to invite the attention of the Congress to any significant information obtained during our work which we believe or know to be of interest to it. Inherent in this policy is the inclusion in our reports of recommendations and suggestions which are made to the Congress or the executive departments for consideration, on the basis of the information in the reports, as to whether pro~ gram changes of a substantive or policy nature should be made. We consider that reporting on substantive and policy matters is an exis;ting responsibility of our Office, and we believe that our reports on Federal programs, including grant-in-aid programs, clearly evidence that we have been carrying out this responsibility for many years. Sincerely yours, JoSEPH CAMPBELL, Comptroller General of the United S~tate. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, May 23, 1968. Hon. EDMUND S. Mvsxas, Chairman, $ubeommittee on Intergovernmental Relations, Committee on Govern- ment Operations, U.s. ,S'enate, Washington, D.C. DEAR MR. CHAIRMAN: This letter is in response to your request of February 28, 1967, for a report on S. 698, a bill "Th achieve the fullest cooperation and coordi- nation of activities among the levels of government in order to improve the Dperation of our federal system in an increasingly complex society, to improve the administration of grants-in-aid to the States, to provide for periodic con- ~ressiona1 review of Federal grants-in-aid, to permit provision of reimbursable bechnical services to State and local government, to establish coordinated inter- lovernmental policy and administration of grants and loans for urban develop- nent, to authorize the consolidation of certain grant-in-aid programs, to provide ~or the acquisition, use, and disposition of land within urban areas by Federal ~gencies in conformity with local government programs, to establish a uniform Land acquisition policy for Federal and federally aided programs, and for other urposes." This Department agrees in principle with the objectives of the bill-to achieve )ptinlum cooperation and coordination of activities among the various levels of ~overnment. The President has strongly emphasized the necessity for increased ~ollaboration among Federal and State governments and communities, particu- .arly in areawide planning. We believe that the bill would be a step towards drengthening and Improving the effectiveness of Federal-State programs, but PAGENO="0064" 58 feel that the bill would better serve this objective if certain provisions ar modified or omitted. S. 698 consists of nine titles. An additional title X has recently been proposed and this report will include comments on that title. Because of the scope an complexity of S. 608, we will describe and comment on the bill on a title-by-titi ~basis. TITLE I Title I defines key terms used in the bill. A few technical questions wit respect to such definitions have come to our attention. The definItion oif "grant" or "grant-in~atd" in seiction 106 excludes "payment in lieu of taxes". Pu'blic Law 81-815 and title I of Public Law 81-874 are gen erally regarded as, at least in part, payments in lieu of taxes. It is not free fro doubt, however, whether they would be considered (in their entirety) as sue within the meaning of the bill. Considering the underlying philosophy of thes two laws, it would seem appropriate to classify them as payments in lieu of taxe for the purposes of the bill. The `definition of "comprehensive planning" in section 109 provides an exce tion with respect to title VI. We believe that this exception should apply to title VII rather than title VI. The definition of "displaced person" in section 113 would include a person (or individual) who moves from real property as a result of the "reasonable expec- 4ation of acquisition of such real property" by a Federal or State agency. It is not altogether clear to us what factual conditions would need to evist to bring the quoted phrase into operation. TITLE II `Title II would attempt to assist States in carrying out Federal grant-in-aid programs by requiring that the Governor of a State or his designee, or the State legislature be notified (upon request) of the purpose and amounts of grants-in- aid to the State (section 201) ; by providing that a Federal agency may not require that grant-in aid funds be deposited in a separate bank account of the State, but that the State agency concerned shall render authenticated reports to the granting agency of the status and application of the funds and such other facts as may be required by the Federal agency (section 202); by providing that grant- in-aid payments to a State be scheduled so as to minimize the period of time during which the funds are held by the State prior to disbursement by it; and by providing that States shall not be held accountable for interest earned on granted funds pending their disbursement for program purposes (section 203). Section 204 of title II would authorize the head of a Federal agency admin- `istering a grant-in-aid program, upon request of a State (i.e., the Governor or other authority responsible for determining or revising the organizational struc- ture of State government), to waive a statutory requirement that the program be administered by a single State agency or by a multimember board o~ commission and to approve a different administrative arrangement, if the Federal agency head determines that the objectives of the grant-in-aid program would not be endangered and that there has been an adequate showing that the Federal re- quirement prevents the establishment of the most effective and efficient organiza- tion arrangements within the State government. Doubtless some State governments do have problems with communication among State officials and with the timing of data on budgets. `Consequently, although, as chief executive of the State, the Governor should usually be able to obtain directly all available facts and data from his own State program agency promptly and in a form designed for his needs, we would not object to enactment of section 201. The sight-draft-account and letter of credit system of this Department for grants-in-aid is consonant with the first sentence of section 203 of the bill, which requires that Federal agency heads shall, consistent with program purposes and applicable Treasury regulations, schedule the transfer of grant-in-aid funds from the Treasury so as to niiniiflize the time lapse between such transfer and the dis- bursement `by a State (see section 6 of P.L. 89-105). While this would ordinarily prevent the earning of interest on our grant funds,' we question the second sen- tence of section 203, which would relieve the States from accountability for interest earned on grant funds pending disbursement, where this did occur. Such a provision might be an incentive to States to draw the funds sooner than actually needed, contrary to the objective of section 203. PAGENO="0065" 59 We believe that It would be desirable for the heads of Federal agencies to have the authority to waive the single State agency requirement with its related safe- guards as proposed in section 204 of the bill. However, we expect that waivers would be given quite sparingly. The most important consequence of the present requirement for a single State agency is the existence of a single, clearly identifiable unit within the structure of State government which must be accountable to the Federal agency for every aspect of the administration of the program at the State and local levels. Such a focal point is very important. The Federal agency, in order to discharge its re- ~sponsibility, must know with whom, at the State level, it shall deal, and who can be held accountable, not merely in a purely fiscal but in a substantive sense, for carrying out the federally assisted program. Therefore, even in cases where the single State agency requirement is waived, we would expect that there would be :a single point of accountability within the State government. The fact that an agency is designated by a State as the single agency to which this Departmenf will look for conformity with the conditions of a grant does not exclude use by it of other State agencies. In fact, we encourage utilization by the designated agency of the resources and services of other State agencies and we have required cooperative planning and working relationships in a number of programs-for example, in the planning of facilities for mental retardation programs. Nevertheless, we recognize that, in recent years, new domestic prc~blems have `arisen, for which not only new programs, but also fresh approaches and tech- niques in the administration of both new and established programs are needed. A significant trend among the States has been the creation of combined State Departments for health and welfare functions. Ten jurisdictions now have such ~departments. The creation of these combined health and welfare departments indicates a recognition of the interrelationship between the problems of poverty and ill-health, and a realization of the need for better coordinated administration `and services in these fields at the State level. We believe that the availability of the waiver authority under the conditions proposed in the bill would enable Federal agencies to cooperate in the search for more effective administration. This `position is consistent with the provisions of uection (3(c) of the proposed `~Joint Funding Simplification Act of 1988," on which we reported to this Committee on May 18, 1968. In general, that section would authorize Federal agency heads to waive the requirement that a single State agency administer (or supervise the administration of) Federal assistance which provides part of the support for a jointly funded project. This section (3(c) waiver would, thus, also be available to make possible new techniques in administration. As written, section 264 of S. 68 does not appear to authorize waiver of a statutory requirement that a partimlar State agency (such as the State health agency) must be designated as the single `State agenc~r. If such authority is intended we believe clarification is necessary. TITUS III Title III would authoHze Federal agencies which do not already have this authority to provide, under rules and regulations of the Director of the Bureau of th~ Bt~dget, specialized and technical services to State and local agencies on a reimbursable basis. Federal agencies would be required to provide such services, if based on the authority of section 30~, on a fee basis. This provision does not appear to supersede existing authority possessed by any Federal agency with respect to furnishing services, whether on a reimbursable or nonreiinbursable basis, to State and local units of Government; hence, we would not object to its Bnactment. Section 302 also provides that only such services may be provided as are author- ized under rules and regulations of the Budget Bureau and that such rules and regulations shall be consistent with and in furtherance of the policy of relying on the private sector to provide those services reasonably and expeditiously ~vailable through ordinary business channels. We should like to point out that the ELxecutive Branch has long-standing poll- ~ies and procedures designed to avoid needless competition with private business. ~vIoreover, in some instances, even though given types of services are available ;hrough ordinary business channels, they are nevertheless appropriately rendered ~y a Federal department or agency. For example, while there are, we understand, lirms which specialize in providing advice on how to apply for Federal grants, 95-626-68----5 PAGENO="0066" 60 we believe that it is properly within the province of the Federal agency adminis- tering a grant program to give such advice to potential applicants for grants. TITLE IV Title IV would establish a coordinated intergovernmental urban assistance policy. It Would require the President to establish Government-wide rules and regulations for use in formulating, evaluating, and reviewing, in the light of specific objectives listed in the bill, "urban development programs and projects for the provision of federally aided urban facilities, and Federal projects having a significant impact on the development of urban and urbanizing communities." In making loans or grants-in-aid for urban development, Federal agencies would be required, in the absence of substantial reasons to the contrary, to make the loan or grant to a unit of general local government rather than to a special- purpose unit of local government. The Department of Health, Education, and Welfare endorses the purposes of title TV and the guiding principles as stated in section 401. Within the Depart- ment, we have made specific organizational changes to improve our ability to work effectively with other Departments on urban problems. Early in 1967, the Secretary of Health, Education, and Welfare established the Center for Community Planning for the purpose of providing an urban focus for the Department and developing responsiveness to the needs of the city. The Center coordInates Departmental activity in connection with the Model Cities, Neighborhood Services Program, Parent Child Centers, the Youth Opportunity Campaign and other urban programs. It has built a "Technical Assistance Net- work" utilizing local Social Security District office managers and other Depart- ment personnel, through which requests for information and assistance in connection with urban problems ma~r be routed rapidly to that point-the State, the Region or the appropriate agency in Washington-where the most effective help can be given. One of the Center's major tasks is to develop new and more flexible mechanisms of funding comprehensive urban prograths such as the Model Cities. It has developed and is operating a system for prompt interagepcy evaluation of multi- purpose projects involving this Department and other Dopar~metnts. The Center represents the Department on interdepartmental task forces, and committees com cerned with urban programs and with semi-public associations such as the Con- ference of Mayors and the National League of Cities. The Center is currently working with the Council of State Governments and the Department of Housing and Urban Development to develop policy for the Federal Departments in working with thie States in the Model Cities and other urban programs, and to advise the States of the role they should be playing in this effort. The Center is also chairing an interdepartmental task force attempting to develop information materials aimed at Inner city residents to make known the objectiVes of the Model Cities program and the services available through it anl other urban facilities. While section 401 requires the President to establish rules and regulations to implement its objectives, section 403 would somewhat inconsistently vest the authority for prescribing rules and regulations for effective administration of title IV (which includes only one additional section besides sections 401 and 403) in the Budget Bureau or such other agency as may be designated by the PresIdent. TITLE V Title V would attempt to strengthen Congressional review of Federal grant-in aid programs by limiting to five years the duration of any grant-in-aid progran~ which is authorized by the ninety-first or any subsequent Congress and which b given no expiration date (section 502), and by requiring the appropriate Con gressional committees to review prior to Its expiration date any grant-in-aid program authorized for three or n~ore years (section 508). In addition, tilE Comptroller General would be directed to make continuing studies of all grant in-aid programs (section 504), and the Advisory Commission on Intergovern mental Relations would be required, upon the request of an appropriate Con gressiontal committee, to conduct studies of the intergovernmental relatiore aspects of programs and to report findings and recommendations to such corn mittee (section 505). Section 506 would require recipients of future granh (including those made pursuant to extension, modification, or alteration od existing agreements) to keep certain types of records, such as records diselosini PAGENO="0067" 61 the amount and disposition of grant funds. This section would also make such records and related documents subject to audit and examination by representa- tives of the head of each grant agency and of the Comptroller General. While the automatic termination provision of section 502 could easily be avoided by providing expiration dates for programs or by stating in legislation that the programs authorized are not subject to section 502, we are disturbed by the underlying philosophy of the provision. The mere existence of section 502 seems to suggest that, in the normal case, a Federal grant-in-aid program should not last for more than five years. Very few of the programs administered by this Department fit this generalization. At one extreme we have general support pro- grams, such as public assistance, which represent commitments to assist States for an indefinite period of time, and at the other extreme we have demonstration programs which in many instances should and do last less than five years. In between these extremes are programs of greatly varying periods of dura- tion. Each case represents a judgment based on the purpose of the program, its maturity, and the likelihood of changes in circumstances which would require review of the program. This program-by-program method is a far more rational apprOach to the matter of terminating and reviewing programs than would be the five-year generalization implicit in section 502. While we favor periodic review of programs-the objective of section 503-we believe that this objective can best be fulfilled through strengthening and ex- tending existing Congressional and Executive methods of EValuating grants and reaching decisions to terminate, modify or expand them. Department of Health, Education, and Welfare grants are, in effect, reviewed by Congress through several methods: the consideration of amendments to authorizing legislation frequently requires a fresh look at the basic laws; the budgeting and appropria- tion process provides an annual mechanism for the evaluation of the cost, effi- ciency, and performance of programs. Advisory councils charged with the com- prehensive evaluation of programs have been established by Congress for several major programs. A~ alternative to automatic termination of programs Which we recommend (and which is included in the Administration's higher education proposals) would be a provision that would authorize appropriations for one additional year if legislation to extend a limited program has neither been enaéted nor rejected by the beginning of the final year of the program's authorization. Such a prov~i- sion would encourage Congressional revie~v of grant-in-aid programs at least one year in advance of expiration of program authority. Such a review would be further encouraged by provisions like the new advance funding and lead-time provisions enacted by P.L. 90-247 for the Elementary and Secondary Education Act which require the Department to submit to the substantive and Appropriation Committees an annual evaluation report, and a comprehensive evaluation report in the penultimate year before expiration of the program. (Similar provisions are included in the pending Administration bill on higher education.) tn addi- tion, Congress not infrequently requires special studies and reports on programs. No single method and no single time table is adequate to review all the grant programs of the Department of Health, Education, and Welfare. This is so because of the persistency and complexity of the problems to be combated, the many different types of programs operated by the Department, the varying periods of time it takes new programs to get under way, the long-range commit- ments which must often be made by 50 State governnients and hundreds of their subdivisions in order to participate effectively in the programs, and the length of time it takes to acquire meaningful experience at local, State, and national levels with respect to complex programs and major projects. In addition, we should like to point out that the Comptroller General already appears to have adequate authority to review the legality of Federal e,tpenciitures. The amendment proposed by section 504 (and section 501) might inject him into questions of administration which are a fundamental responsibility of the Execu- tive branch, and vesting such a function in the Comptroller General may well duplicate responsibilities of the Congressional committees. We should also like to point out that there is an important distinction between technical studies by the Advisory COmmission on Intergoivernmenta~ Relations and recommendations The members of the Commission who are in the Execuljve branch cannot he committed through such recommendations to provisions inconsistent with the development of legislation and budgetary programs through the regular Executive channels. PAGENO="0068" 62 With respect to provisions on records and audit in section 506, we should like to point out the Department of Health, Education, a~nd Welfare has for decades required the keeping of pertinent records. We are not aware of the need for addi- tional legislation such as that proposed in section 506. In view of the above, we recommend that title V not be enacted. TITLE VI tinder title VI, the President would be required to examine the various pro- grams of grants-in-aid to determine what consolidations are necessary or desir- able to promote the better execution and efficient management of individual grant programs within the same functional area, to provide better coordination among Individunt grant programs within the same functional area, or to promote more efficient planning and use by the recipients of grants under programs within the same functional area. If the President finds a consolidation of individual grant-in- aid programs within the same functional area to be necessary or desirable, be Would be required to prepare a grant consolidation plan for the making of such consolidation and to transmit the plan to the Congress. The Congress would have 90 days to reject grant consolidation plans; if not so rejected, they would become effective. While this Department favors the objectives of title VI-to decrease the cur- rent multiplicity of grant programs with a view to achieving more effective and mere efficient use of Federal assistance-we believe that this objective can be better accomplished by other means. First, we should like to point out that the President already has the authority to propose plans which may transfer functions involving grant-in-aid programs, and this authority is in some respects broader than that provided in title VI. For example, under title VI each grant consolidation plan may provide for only one consolidation of individual grant programs (section 602(b)). On the other hand, under the Reorganization Act of 1949, the President has the authority to pro- pose plans which may transfer functions involving any number of grant programs. Second, it is not clear from the language of title VI to what extent a grant consolidation plan could change existing statutory requirements. Grant consolida- tions which go beyond questions of the internal organization of the Executive Branch may involve complex change's in existing substantive laws. Horwever, title VI only provides that the consolidation plan transmitted to Oongress "shall specify in detail the formula or formulas for the making of grants under the con- solidated program . . ." It does not deal with many other types of changes which may be required. All such changes, we believe, are best handled on the case-by-case basis of the regular statutory amendment process. As you know, steps have been taken to reduce some of the proliferation of categorical grant programs. Our experience has direct bearing on the provisions of title VI. The Department's most extensive efforts to date are incorporated in the Partnership for Health program authorized by Public Law 89-749 and ex- panded and extended by Public Law 90-174. Prior to passage of Public Law 89-749, most State health programs were supported through disease-oriented categories of health services. Tinder the Partnership for Health program, the categorical re- strictions were removed, thus affording the States new flexibility in dealing with the health needs which the States themselves determine to be most pressing and to which they assign high priorities in their health planning. As a result, a num- ber of States have begun to promote and `support health services in areas such as alcoholism and family planning that previously were not supportable under the categorical grant system. Even more' important, States are using the' planning money available under the Act to determine priorities among their health. needs and to' allocate State and Federal funds accordingly. As a supplement to the State formula grants, the Act authorizes project grants to support services to meet health needs of UmitOd geographical scope or of special regional or national significance. These grants provide a mechanism for directing funds where they are most urgently needed, where they will be used most effectively, and where they will develop new and innovative public health programs which promise the most far-reaching effects. The elimination of cate- gorical restrictions on the project grants has also encouraged the introductIon of a wide array of new methods for providing various kinds of health services. Among the new activities are family planning, comprehensive health services development, alcoholism programs, and encouragement of group practice. In addition to the broad programs mentioned above, project grants are playing an active role in the development of a number of special interest programs, PAGENO="0069" 63 including the Model Cities progra~n, neighborhood health centers, and other neighborhood services. The Department is coordinating its efforts with other Fed- eral agencies to assure that the planning and service programs in the Partner- ship for Health contribute to meeting national health needs as identified through comprehensive State and local planning. In summary, it is our judgment that the experience we have had with the Partnership for Health authority-formula and project grants-appears to be highly effective and, we believe, holds great promise for the strengthening of State and Federal relations and for the improvement of the Nation's health. A second step we are proposing to reduce the number of grant programs in the Department is the Administration's 1968 proposals now under Congressional review for amending the Higher Education Act to include the modification and consolidation of the college4~ased student financial aid programs into the Edu- cational Opportunity Act. Under these proposals there would be a single appro- priation item for Federal capital for the National Defense Student Loan fund and the College Work-Study Program, with a 90-10 Federal institutional match- ing ratio, and a single appropriation for the Educational Opportunity Grant Program which would not require program matching funds. The fund dis'- tiri'bution pattern would be altered from the three separate allotment formulas, which differ, to one not tied to a specific formula, subject only to the limitation that institutions within any one State could not receive more than 121/2 per- cent of available funds. This proposal, if enacted, would give institutions much greater flexibility in the use of the student aid programs and would eliminate unnecessary diversity among the requirements of the programs. Moreover, the advance funding and leacltinae amendments proposed in our bill would provide the Nation's colleges and universities with a firm, operating base for planning their programs. Title II of the Partnership for Learning and Earning Act of 1968 deals with the consolidation and improvement of existing vocational education programs. The proposed legislation would consolidate existitig authority for vocational education programs under the Smith-Hughes and George-Barden Acts, and Vocational Education Act of 1963. The consolidation is proposed in response to the first recommendation of the 1968 Advisory Council on Vocational Educa- tion which stated, "Administrative complexities should be reduced by com- bining all vocational education legislation into one act." Another significant provision of the Partnership for Learning and Darning Act of 1968 is t:he removal of the requirement for separate matching purpose-by- purpose under the Vocational Education Act of 1963. The bill would provide in- stead for overall statewide matching which would allow more flexibility in that varying proportions of Federal funds could be used in matching State and local funds. Under present law, (The Smith-Hughes Act, the George-Barden Act, and the Vocational Education Act of 1963) 23 purposes are specified, each requiring sep- arate accounting and matching. In addition, within those 23 categories, there are State percentage expenditure requirements for three of the six purposes in see- ion 4(a) of the Vocational Education Act of 1963. These would be abolished. Finally, we should like to refer again to S. 2981, the "Joint Funding Simpli- ication Act of 1968". This bill would provide for procedures which would ex- jedite consideration and approval of projects drawing upon more than one Fed- ~ral assistance program and would simplify requirements for the operation of those projects. We believe that 5. 2981 will make a significant contribution to he improvem6nt and simplification of our grant mechanism, and that S. ~2981 is more appropriate vehicle than title VI of S. 698 for administrative consolida- ions for the purpose of iinpirovinjg the use of Federal assistance by States, local ~overnments, and other public and private organizations and agencies. TITLE vii This title would amend the Federal Property and A4ministrative Services ~et of 1949 by adding a new title VIII, Urban Land Utilization. The Department ~f Health, Education, and Welfare agrees with the objective of this title, which s to facilitate coordination between the Federal Government and local govern- rients and planning bodies (including zoning authorities), in the acquisition, use, md disposition of land for Federal purposes. However, on the method and [etails of this title, we defer to the Administrator of General Services to whom he primary responsibility would be assigned by this title. PAGENO="0070" 64 TITLE VIII Title VIII would provide for relocation paynients and other assistance to dis- placed persons (defined, in section 113, to include owners of businesses, farmers, families, and others), on a uniform basis, in Federal and Fede'rally-assisited pro- grams under which real property is acquired. In the case of direct Federal acquisi- tion of real property for public use (part A of Title VIII), section 802 would require heads of Federal agencies to make fair and reasonable payments, pur- suant to regulationis established by the President, to reimburse displaced per- sons for their actual moving and related expenses or, if any displaced person so elects, to make optional fixed payments to such person according to a formula, Relocation assistance programs (i.e), counseling, information, planning, and coordinating activities) would also be made available. While we endorse the objectives of this part, on its details we defer to other agencies which would be more directly involved in the detailed program features. With respect to Federally-assisted programs (part B), section 807 would require, as a condition to the approval of any grant, contract, ~or agreement with a State agency for Federal financial assistance to pay the cost in connec- tion with the acquisition of real property, or of a public improvement for which real property is to be acquired or as the result of which displacement will otherwise occur, that the State agency has agreed to provide to displayed per~ sons for moves from such real property- (a) relocation payments on the same basis as those provided in the case of direct Federal acquisition of real property; (b) relocation assistance programs; and (c) a feasible method for the tem- porary relocation of displaced families and individuals, and an assurance that decent and sanitary dwellings are available and reasonably accessible to dis- placed families and individuals. Cost to State agencies providing relocation pay- ments and services would be included as part of the costs of the project for \\Thich Federal financial assistance is otherwise available. The State agencies would be eligible for Federal financial assistance with respect to such payments and services in the same manner and to the Same extent as with respect to other eligible project costs, except that the Federal agency providing assistance would contribute (up to) the first $25,000 of any relocation payment to a displaced person, and no State agency would be required to make a relocation paynmeut to any displaced person of more than $25,000 iii order to receive Federal assistance for relocation payments, or to meet requirements of section 807. (For purposes of Title VIII, the term "State" would include the political subdivisions of a state.) We agree with the Bureau of the Budget that insofar as real property acquisition is conceri~ed, the costs of displacement caused in whole or in part by Government action are, in a very real sense, costs of property acquisition and should be thianced in the same manner as the other costs of property acquisition. We also believe that, as' `a matter of policy, all these cos,ts and as- sis,tance should be as uniform as possible. It seems to us desirable that in all direct Fedei~al programs, as well as in State or local programs carried on with the assistance of Federal funds, this principle should be applied. The Depart uvent of Health, Education, and Welfare fully supports the principle of (1) making fair anid r~asonable relocation payments to persons displaced by th~ acquisition of real property under direc't Federal programs, (2) p'rovis'ior of a complete range of relocation services and dth~er assistance for program dis placees consistent with need, (3) requiring State and local governments to as sume responsibility for relodation payments and services as a condition ol participation in federally a~sisted programs, and (4) contributing to the cosb of relocation payments' a Federal share proportionate to the percentage of Fed eral participation in other eligible project costs. Title VIII, in our view, woulc meet these overall objectives if it were amended to provide (as the Bureau of th( Budget has suggested), in the case of federally assisted programs, that the Fed eral Government shere in the cost of relocation payments made by State agencie~ only to the same extent as other project costs. In reaching the above conclusion, we are not unmindful of the fact that ii certain federally assisted programs, e.g., urban renewal, the Federal Govern ment now assumes a higher sha,re of relocation costs than its percentage 0: participation in the project. On balance, however, recognizing that u'niformit~ is desirable in relocation assistance programs, and on the bas:is of our experienc in the many and varied grant4n-aid programs of this Department, we believ that through the utilization of the particular project formula in relocation costs the common program goals at the Federal, State, and local levels can be reache PAGENO="0071" 65 while at the same time strengthening what we regard as a basically effective and purposeful working relationship. TITLE IX Part A of this title (Federal Programs) sets forth certain policies vis-a-vis property owners that are to be followed by Federal agencies in acquiring real property from such owners by purchase or condemnation. For the most part, these policies seem designed to assure fair treatment to the owner and to others in poesession of the real property. Part B would provide that financial assistance to a State agency, or to an agency of a political subdivision of a State, shall not be available to pay for the cost of acquisition of real property, or the cost of a public improvement for which real property is to be acquired, unles~ such agency agrees to follow certain rules (set forth in part B) that, as in the case of part A, seem designed to assure fair treatment to the owner (and others in possession) of the property to be acquired by such agency by purchase or condemnation. Some of these rules would take ef- fect on January 1, 1970. In part, these provisions are patterned after the land acquisition policy provisions contained in Section 402 of the Housing and Urban Development Act of 1965 (P.L. 89-117) which applies to certain programs ad- ministered by the Department of Housing and Urban Development. That section, together with certain related sections (Sections 401, 403) of P.L. 89-117, would be repealed effective January 1, 1970. While we endorse the objectives of this title, on its details we defer, particu- larly in the case of direct acquisitions, to the General Services Administration and other agencies more frequently involved in such acquisitions. TITLE X The purpose of title X is to encourage simplification and improve coordination of accounting, auditing, and financial reporting requirements of Federal assist- ance programs, and to provide for a survey of the adequacy and effectiveness of the accounting and auditing systems of recipient jurisdictions. This title would authorize the Comptroller General to prescribe rules and regulations for using State and political subdivision accounting and auditing in meeting financial man- agement requirements of such programs, The Comptroller General, the Secretary of the Treasury, and the Director of the Bureau of the Budget would be required to conduct a joint study of the principles, standards, and related requirements of Executive agencies for accounting and auditing of Federal assistance programs, with a view to developing improved Government-wide accounting and auditing procedures. Within the last month the Comptroller General, the Secretary of the Treasury, and the Director of the Bureau of the Budget have agreed to initiate an inter- agency study in this area. Consequently, we recommend deferral of legislative action of title X pending completion of this study. We are advised by the Bureau of the Budget that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely, WILBUR J. CoHEN, Secretary. OFFICE OF THE SECRETARY or TRANSPORTATION, Washington, D.C., June 15, 1968. Hon. EDMUND S. MUSICIE, Chairman, Subcommittee on Iatergovernmental Relations, Committee on Govern- ment Operations, U_S. Senate, Washington, D.C. DEAR Ma. CHAIRMAN: This is in response to your request for our views on S. 698, a bill "To achieve the fullest cooperation and coordination of activities among the levels of government in order to improve the operation of our federal system in an increasingly complex society, to improve the administration of grants- in-aid to the States, to provide for periodic congressional review of Federal grants-in-aid, to permit provision of reimbursable technical services to State and local government, to establish coordinated intergovernmental policy and admin- istration of grants and loans for urban development, to authorize the consolida- tion of certain grant-In-aid programs, to provide for the acquisition, use, and dis- position of land within urban areas by Federal agencies in conformity with local government programs, to establish a uniform relocation assistance policy, to establish a uniform land acquisition policy for Federal and federally aided pro- grams, and for other purposes." PAGENO="0072" 66 The substance of Title V of this bill, relating to periodic Congressional review of grants4n~aid programs, is also treated in S. 458 and S. 735. We have sent a separate letter on those bills and those comments constitute our comments on Title V of S. 698. Title XIII of S. 698 relates to relocation assistance to displacees of Federal and federally-assisted programs. We want to make a special plea for enactment of legislation to provide this assistance. We have in the past been unable to ade- quately and meaningfully assure that persons displaced by our highway programs are treated justly. The truth is that inadequate provision of relocation assistance has worked a severe hardship on many families and businesses displaced, particu- larly on the poor. Our detailed views on Title XIII have been submitted in testimony. Subject to the above views, the Department of Transportation favors enact- ment of this legislation. The Bureau of the Budget advises that from the standpoint of the Administra-' tion's program, there is no objection to the submission of this report for the con-' sideration of the Committee. Sincerely, JOHN L. SWEENEY, Assistant $ecretary for Public Affairs. GENERAL SERvIcEs ADMINISTRATION, Washington~, D.C. Jnne 14,1968. Hon. EDMUND S. MU5KIE, Chairman, ~8ubcommittee on Intergovernmental Relations, Committee on Gou- ernment Operations, U.E~1. senate, Washington, D.C. DEAR SENATOR MU5KIE: Your letter of February 28, 1967, requested the views of the General Services Administration on 5. 698, 90th Congress, the short title of which is the "Intergovernmental Cooperation Act of 1967." The bill is subdivided into nine titles. GSA's comments are confined to the pro- visions of titles VII, VIII, and IX, which relate to the acquisition, use, and disposal of land by Federal agencies, as these are the only portions of the bill which would appreciably affect the responsibilities of GSA. We are in accord with the over-all purposes of these titles. Title VII amends the Federal Property and Administrative Services Act, 63 Stat. 377, as amended, by adding at the end thereof a new title VIII which woulct require the Administrator of General Services to give advance notice to local governments prior to offering for sale any Federal real property located within an urban area. The Administrator also would be required to provide availabl& zoning information to prospective purchasers. In connection with the acquisition' or change in use of real property, the Administrator would be required to com~ ply to the extent practicable with local zoning requirements, give advance notice' of plans to acquire additional property, and to consider objections by local gov- ernments to proposed Federal acq~isition or use of real property in urban areas. The primary objectives of title VII are consistent with GSA's policy to give ad- vance consideration of local comprehensive planning and land-use regulations in' formulating specific acquisition and disposal plans. We would recommend, however, that the last sentence of the proposed section 804 (a) of the Property Act, which begins on line 7 and ends on line 12, page 30 of S. 698, be deleted. The sentence implies that potential adverse impact resulting from advance notice of proposed land acquisitions is the exception rather than the rule. Our experience shows that this is not the case, but that advance public' notice of proposed acquisitions of real property by the Federal Government more often than not precipitates land speculation and inflationary real estate prices in the vicinity. With this recommended change, GSA would have no objection to' the enactment of title VII. The purpose of `title VIII is to establish a uniform policy for the fair and' equitable treatment of owners, tenants, and other persons displaced by the" acquisition of real property in Federal and federally assisted programs. This policy is to be as uniform as practicable as to (1) relocation payments, (2) advisory assistance, (3) assurance of availability of standard housing, and (4) Federal reimbursements for relocation payments under federally assisted programs. . . GSA has long recognized the need for uniform and equitable practIces 111 the treatment of persons displaced by the acquisition of real property by the Federal PAGENO="0073" 67 Government. Except for the acquisition by the Department of Defense or any military department thereof, the Department of the Interior, the National Aeronautics and Space Administration, the Tennessee Valley Authority, and the Department of Housing and Urban Development, displaced owners or tenants of federally acquired property may be paid only the fair market value of the prop- erty acquired, Expenses, losses and damages incurred by owners or tenants as a direct result of moving themselves, their families and possessions are not ~compensable. Reports issued by the Select Subcommittee on Real Property Acquisition of the House Committee on Public Works and the Advisory Commission on Intergovern- mental Relations clearly indicate that the Federal, State, and local governments are falling far short of equity in their treatment of those persons who are dis- placed as a result of the programs of such governments. GSA has long advocated the enactment of legislation which would minimize inequities existing in the present state of law when property is acquired in Federal programs. Generally, we believe that enactment of title VIII of S. 698 would establish a workable, uniform system for fair and equitable treatment of individuals dis- placed by Federal land acquisitions. However, in the interest of clarifying some of its provisions we offer the following comments and amendments for consid- eration by your Committee. Section 803 (a) provides for a relocation assistance program for individuals who occupy property adjacent to the acquired property and to those displaced from the acquired property. We recommend that the bill not provide assistance to occupants of adjacent property on the grounds of `impracticability, the im- possibility of factually ascribing claimed losses to the Federal acquisition, `and the availability of aid in such situations from other Federal sources such as the Small Business Administration. We are in accord with the objectives of section 803(c) (2) which would require Federal agencies to assure the availability of adequate substitute dwellings within a reasonable period of time prior to displacement. However, the effect of this provision on GSA's pUblic buildings program is U matter of some concern. This program requires the acquisition of sites generally located in highly popu- lated areas~ The mandatory requirement that the acquiring agency he required to obtain assurance o'f substitute dwellings for the displaced prior to displace- ment would in many cases cause interminable delay in the construction of the project. Further, the delays encountered would not be controllable by GSA since the availability of adequate substitute housing is dependent upon local housing conditions. The question whether the Federal Government should assure ade- ~quate substitute housing prior to displacement must of course be resolved in the light of the over-all Federal program. However, your Committee should be aware of the effect of section 803(c) (2) on the Uetivities of acquiring agencies whose programs are confined largely to urban areas. We would suggest that the Committee give serious consideration to amending section 803(c) (2) by granting broader authority to Executive agencies to waive The requirements in unusual situations such as where immediate action might be required to protect individuals or property because of natural or unnatural disasters,. The present waiver provision of the bill is applicable only during a period of national emergency proclaimed `by the President. We recommend that The section `be amended to provide that the President by regulation may prescribe situations when such assurances may be waived. The suggested amendment will not greatly affect the operations of our site acquisition program although it will permit expeditious action when emergency situations warrant. However, the additional costs which will be incurred in `other acquisitions as a result of the assurance provision of section 803(c) (2) will be substantial because of anticipated de1ay~ in commencement of construe- tion `and increases in other administrative expenses. Because o'f the many un- known factors, it is not possible to estimate the extent of the additional costs. With respect to section 805(a) (2) (A), which limits entitlement to actual and reasonable expenses of s'earching fo'r replacement locations to farm operations, we suggett that the Committee consider, in furtherance of the stated purpose of uniformity of treatment of all persons displaced by Federal acquisitions, whether entitlement to such expenses should also be extended to' dwellings and businesses, taking into account also the administrative burden incident to deter- mining the nature and reasonableness of such items of expenses which should be reimbursed. We suggest that the Committee also consider whether the payment provided for in section 805 (a) (2) (B), which section authorizes t'he payment of an ex- PAGENO="0074" 68 pense not actually incurred by displaced persons as a result of Federal acquisi- tions, is inconsistent with the general purpose of section 802(a) of the bill, and, if the provision is retained in the `bill, also consider, again in the interest of uniformity of treatment, whether such provisions should be broadened to include displaced persons who move from a dwelling. If the provision is retained, we recommend that the following be substituted for "B": "(B) If be disposes of personal property on moving his dwelling, or business or farm operation and replaces such property with comparable property at the new location at a price exceeding the sale price, the amount of the difference of such prices, not to exceed, however, the estimated cost of moving the property or its market value, whichever is less." Title IX of S. G98 would bring about major changes in Federal land acquisition laws, policies, practices, and procedure's, Our comments are directed to certain specific provisions which we believe could be clarified or revised to good effect. Section 901(a) (3) provides that the head of an acquiring agency establish a fair and reasonable price for the property and make a prompt offer to the owner for the full amount so established. If it is the intent of this provision to require agencies to offer realistic prices which if refused, could be subject to good faith bargaining, the provision would not be in conflict with GSA's present policy. GSA does not pay less than fair and reasonable prices for acquired prop- erty. On the other hand, if the provision was interpreted as establishing a ones price policy which price could not be appropriately increased by the acquiring agency should the owner refuse to accept the fixed `amount, the result would be to significantly increase the number of condemnation actions, a result clearly not intended by the bilL The flexibility afforded by our present policy has proven to `be in the interest of both the Government and the landowner, and GSA would not favor the more restricted one-price policy. With respect to section 901 as a whole, we do not believe it is intended that the procedures and safeguards set forth therein `are necessary or appropriate to voluntary leases obtained by the Government. In order, however, to clarify this point and provide for uniform interpretation by the various agencies concerned, it is recommended that there `be inserted at the end of the section a subsection (c) to read as follows: `(c) As used in this section, the term `interest in real property' shall not include any leasehold inte:res't, `acquired by the Government, except where such interest is acquired by condemnation." Section 904 would require the head of a Federal agency to reimburse owners for incidental expenses incurred in conveying their real property to the United States. Included is the payment of penalty costs for prepayment of a mortgage incident to such real property. GSA recommends that language be incorporated to require that the mortgage be in effect at or prior to the time public announce- ment is made of the project. This could be done `by the insertion of a provision to that effect before the semicolon on line 14, page 55, of the bill. The Bureau of the Budget has advised that, from the standpoint of the Ad- ministration's program, there is no objection to the submission of this report to your Committee. Sincerely yours, LAWSON B. KNOTT, Jr., Administrator. AGENCY REPORTS ON AMENDMENT 748 COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C. May 8, 1968. Hon. EDMUND S. MUSKIE, Chairman, 2~ubcomnvittee on Intergovernmental Relations, Committee on Gov- ernment Operations, U.S. Senate. DEAR MR. CHAIRMAN: Your letter of May 2, 1968, requests our views on a proposed amendment in the form of Title X-Accounting, Auditing, and Report- ing of Federal Assistance Fundn-to 5. 698, the Intergovernmental Cooperation Act. Our views presented below `are preliminary comments as shggested in your letter in order that you may `have the reaction of our Office before the hearings which begin on May 9. Our Office and other interested governmental agencies have long recognized the growing complexity and serious problems in grant administration, including the areas of accounting, aud'itisg and financial reporting. In recognition of this PAGENO="0075" 69 situation, a project somewhat similar in purpose to that stated in section 1003 (a) will be undertaken as an activity of the Joint Financial Management Improve- ment Program. An agreement to undertake such a project was reached at a meeting of the principals of this program, that is, the Secretary of the Treasury, the Director of the Bureau of the Budget, the Comptroller General, and the Chairman of the Civil Service Commission on April 29, 1968. The project agreed upon, while not of the breadth contemplated in section 1003 (a), involves a review of the requirements and procedures in effect for accounting, auditing, and reporting under grant programs and development of recommendations leading to simplification and better coordination of the financial aspects of these programs. The project team will be staffed by representatives from the three fiscal agencies-the Bureau of the Budget, the Treasury Department, and the General Accounting Office and by representatives from the four largest agencies involved in grants to States and local governments. These agencies are the Department of Health, Education, and Welfare, the Department of Housing and Urban Develop- ment, the Department of Labor, and the Office of Economic Opportunity. The Assistant Secretary-Comptroller, Department of Health, Education, and Welfare, has strongly endorsed this project. Because of another pressing priority in this field, the project will iiot be started until probably sometime in June. In the meantime, we plan to have members of the project team visit with members of your subcommittee staff to explain in more detail the features of this project. Having niade the decision to go ahead with such a project, we believe that a statutory requirement for such a joint study as outlined in section 1003 (a) is not needed at this time. Section 1003 (b) and (c) would lay upon the Comptroller General functions of management involving financial relationships between executive agencies and States and political subdivisions, which are the primary responsibility of the executive agencies in the admin'i'stralion of their programs. The assumption of th~se functions by the Comptroller General would, in addition, tend to negate the independence and detachment from operational responsibility which the Congress intended for him in the review and evaluation of agency performance. Thus in our view the concept of subsections (b) and (c) is inconsistent with the statutory role of the General Accounting Office. In a practical sense the requirement of subsection (b) to study and review the acooun'ting and auditing systems of the many States and political subdivisions which are the recipi'en'ts of Federal aid programs would be an undertaking beyond the resources of our Office, considering our other resj~onscibilitie's. In addition, sub- sections (b) and (c) imply `that the Comptroller General has prescribed princi- pies, standards, and related `requirements concerning accounting and auditing by the States and political subdivisions with respect to the expenditure of Federal aid fund's. Such is not the case, and we do no't believe that it would be appropri- ate for the Comptroller General to prescribe such standards and procedures fo'r adoption by State and local agencies. These are matters which should be worked out by `the executive agencies and the S'tate and local bodies and made a part of the grant agreements entered into under individual programs. It is not clear what is intended in subsection 1003(c) by the provision that executive agencies, upon certain determinations specified in the subsection, may substitute for their accounting and auditing the accounting and auditing per- formed by States and political subdivisions. Regardless of the acceptability of the accounting of the State's and ~o'litical subdivisions, each Federal agency must account separately to its management aild to the Congress' for its financial opera- tions of which aid programs with State's and political subdivisions are only a J*rt. Moroover, in most if not all Federal agencies the accounts maintained for Federal aid programs are in summary form based on reports and documentation taken from the more detailed accounts of the States and subdivisions. As to auditing, it is doubtful that Federal agencies would or should accept auditing d~ne by States an'd political subdivisions without periodic tes'ts to pro- vide reasonable assurance that the prescribed rules and regulations were being adequately followed. At the present time there is some movement in certain Fed- eral agencies toward placing considerable reliance on audits performed by others, but with teats as to the adequacy of such audits. Also, to rtduce the total manpower necessary to perform the audit function and to lessen the impact of Federal auditing on non-Federal organizations', many Federal `agencies have entered into eros's-servicing arrangements un'der which the agency having a predo'mina~t financial in'terest in Federal programs at an individ- u'al non-Federal entity, performs the audit function, particularly as to o'verhead PAGENO="0076" 70 rates, for the Federal agencies having a financial interest at that entity. Insofar as the term "auditing" a's used in the proposed Title X relatels to financial audits, the expanded use of such cross-servicing arrangements could serve to further reduce the audit problem, and would enhance the feasibility of developing model audit manuals in particular areas and determining the degree to which reliance might reasonably be placed on the grantee's system of tate'rnal control, including auditing. With regard to management-type audits, it is less likely that the Federal agencies would accept audits by States and political subdivisions since manage- ment-type audlts go beyond the verific'ation of expenditures aud are concerned with matters of administration about which audits by State's and political sub- divisions might not be considered sufficiently objective. We shall be pleased to discuss the above views in further detail if you desire. Sincerely yours, FRANK II. WEITZEL, Assistant Comptroller General of the United States. COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., June 3, 1968. Hon. EDMUND S. MUSKIE, Chairman, Subcommittee on Intergovernmental Relations, Committee on Gov- ernment Operations, U.S. Senate DEAR Mn. CHAIRMAN: Subsequent to the issuance of our letter of May 8, 1968, presenting our views on the proposed amendment to S. 698 pursuant to your request of May 2, 1968, members of our staff spoke with Mr. Charles Smith, Staff Director of your Subcommittee, on the advisability of having an oral discussion of our view's. Mr. Smith advised that there is no necessity for having a further discussion of this matter, but did request that we furnish the Subcommittee, for inclusion in the record, further details concerning the project mentioned in our May 8 letter to review the financial administratio~i of grant programs. This letter is in response to Mr. Smith's request. As we explained in our earlier letter, the project to review the financial man- agement of grants-in-aid was approved by the principals of the Joint Financial Management Improvement Program at their annual meeting on April 29, 1968. A copy of the project proposal considered by the principals is enclosed. After some discussion as to the objectives of the project, the principals approved going ahead with it with some limitations on the stated scope. The principals agreed that the project team should concentrate on financial matters and that after the team had obtained sufficient information to do so, it would develop a work plan defining in more detail the scope of the study and the priority of coverage, This plan would be subject to further review ançl approval. As mentioned in our May 8 letter, other priorities have required that the organization of the project team be delayed for several weeks. When the team is organized, I am sure that one of its first contacts will be with the staff of your Subcommittee to obtain such information and advice on problem matters and areas of concern as your staff may be able to offer. The project team will keep your staff advised of its progress and consult with them on its tentative conclusions. We believe this to be a very impor'tai* undertaking but because of our inability to obtain specific information about the kinds and degrees of the problems, we are unable to even conjecture as to the detailed operations which would be involved in this study. The General Accounting Office will probably be assuming the lead in this project and we will arrange for you to receive periodic progress reports. Sincerely yours, FRANK H. WEITZEL, Assistant Comptroller General of the United States. [Enclosurej PROPOSED PROJECT ON REVIEW OF FEDERAL GRANT-IN-AID PROGRAMS 1. Project Title.-It is proposed that a project be initiated to be titled Joint Agency Study of Federal Granit-in-aid programs to State and local governments. 2. Background.-A large segment of public expenditures' is represented by Fed- eral grant-in-aid programs to State and local governments. BOB Special Analysis K estimates these expenditures for fiscal 1968 at $18.4 billion and for 1969 at PAGENO="0077" 71 ~20.3 biI,llon. In 1955 expendItures were only $3.3 billion. It is estimated that there are statutory authorizations for over 400 separate programa It is further esti- mated that the programs are administered by 21 departments and agencies, and 150 bureaus and divisions. Many administrative problems have arisen from the fact that the programs have so proliferated and have originated from such various sources that the state and local governments are presented with multiple administrative and financial reporting pro'b'1eins~ On March 17, 1967, the President sent a message to the Congress entitled "Quality of American Government" in which be called specific attention to the adminis'tra~ive problem of managing grants and in which he directed that steps be taken to remedy the situation. A task force was formed to develop a plan to do this. As a result of the work of this task force a bill was introduced into the 1st session of the 90th Congress on August 28, 1967, (H.R, 12631) to provide temporary authority to expedite procedures fo'r pooling of grants at the State and local levels. Work on the bill was' not completed in the 1st session. A similar bill has been introduced also in the second session on February 16, 1968, (S. 2981). The bill is en~ti'tled to "Joint Funding Simplification Act of 1968," and provides enabling legislation to permit pooling of funds from grants of more than one Federal agency. The bills currently are in the respective Committee's on Government Operati'ons ocf the Senate and House, However, these bills deal with only a small part of the problem, Over the past several years, the Intergovernmental Relations Subcommittee, of the Senate Government Operations Committee, has studied the problem of Fed~ era'l-local relations. This committee has called attention to the n~any problems existing in the Federal Grant system. The Advisory Commission on Intergovern- mental Relations has also highlighted the needs for some simplification of the Federal grant program. 3. Project Objective.-The objective of the project would be to develop recoin- mendations for improvement and simplification of the general administration `and financial management of Federal grants-in-aid to State and local governments, This would include efforts to `develop recommendations for grantee `accounting procedures common to all granting agencies, `single audit by a cognizant agency, and a reduction in reporting requirements through `simplification, combination or elimination of existing reports. 4, scope of the ~tudy.-The study will cover the following eight agencies Department of Interior Department of Labor Department of Agriculture Department of Commerce Department of Health, E'ducation, and Welfare Department of Housing and Urban Development Department of Tra'n'sportatioi~ Office of Economic Opportunity These agencies have the preponderance of the programs with grants-in-aid. The study will `also c'over a representative number of State and local govern- ments to ascertain their problems as recipients `of the grants. 5. Project Orgaui~ation.-The preject will be conducted under the sponsorship of the Joint Financial Management Improvement Program `Steering Committee. The study team should probably `include representatives from the following agencies: General Accounting Office Office of Policy and Special S,tudies 1 Civil Divisicn 1 Bureau `of the Budget 1 Department of the Treasury 1 Department of Health, Education, and Welfare 1 Department of Housing and Urban Development 1 Department of Labor 1 Office `of Economic Opportunity 1 8 PAGENO="0078" 72 AGENCY REPORTS ox S. 735 AND 5. 458 COMPTROLLER GENERAL OF THE UNITED SPATES, Washington, D.C., March 13, 1~9ifl. Hon. EDMIXND S. MUSKIE, (ihairman, Subcommittee on Intergovermental Relations, Committee on Govern meat Operations, U.S. Senate. DEAR Mn. CHAIRMAN: Your letter of February 28, 1967, transmitted a copy 0 S. 458, 00th Congress which has as its stated purpose "To provide for periodi congressional review `of Federal grants-in-aid to States and to local units 0 government." This measure is identical with S. 2114, 88th Congress, as that bill was passed by the Senate on June 19, 1964. As indicated in the report of `the General Account- ing Office on 5. 2114, `as originally introduced, and the testimony `of its repre- sentatives which appears at page 56 of the published Hearings before your Sub- committee on `S. 2114, January 14, 15 a'nd 16, 1964, the General Accounti'ng Office was strongly in accord With the objective's of the bill and recommended that it be given favorable consideration with certain suggested changes which wer adopted. These changes are incorporated in S. 458. We `are strongly in accord with the objectives `of 5. 458, which would appear to be beneficial not only a's an additional device for strengthiflg congressional control over Federal grants-in-aid but also as an additional mean's for acquiring `current information `as a basis for `legislation in `the complex `and fast changing area of Federal~State-local relati'onshi~ps. We recommend that S. 458 be given favorable consideration. Sincerely yours, ELMER B. STAATS, Comptroller General of the United States. ADvISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS, Washington, D.C., March 14, 1967. Hon. EDMOND S. MUSKIE, Chairman, Senate Subcommittee on Intergovernmental Relations, U.S. Senate, Wçi~skingtOn, D.C. DEAR MR. CHATRMAN This is in response to your request of February 28 for the viewS and recommendations `of the CommiSSiOn with respect to S. 458, a bill "to provide for periodic congressional review `of Federal grants-in-aid to State's and `to local units of government," and S. 735, the proposed "Federal Grant-in-Aid Rev*i~w Act of 1967." These `bills, as well as Title V of the proposed Intergovernmental Cooperation Act `of 1967 (5. 698), would provide for a uniform policy and procedure for Sys- tematic Congressional review of any grant program established subsequent to eniactment oif the legislation. In addition, `both provide that each such grant-in-aid program enacted without a designated termination date shall expire on June 30 of the fifth calendar year which begins after the effective date of the Act. Finally, both stipulate that each grant-in~aid program of three years `or more, authorized in the 90th (`S. 4.~8 cites the 89th, bu't we assume `this is a clerical error) or any subsequent Congress, shall be reviewed `by the Congress during th~ two yeam preceding the date upon which `such program is to `be terminated. S. 458 differs from `S. 735 essentially `by its inclusion `of Sections 4, 5, `and C which, respectively, would provide (a) for studies of existing and future grant in~aid programs `by the Comptroller General, (b) for studies by `the Advisor3 Commission `Oil Intergovernmental Relations of the intergovernmental aspect of programs subject to provisions of section 3 on request of Congressional Corn mittees, and (c) that State and local units of government would be required t( keep financial reCords of programs receiving support from Federal grants-in-ai( and that `these records be open for inspection `and audited by the heads of Federa agencies administering the grants and by the Comptroller General. S. 458 i nearly identical `to S. 2114, Which was passed by the Senate in the 88th Congress and to Title II of S. 561, `as `it passed the Senate in the 89th Congress. S. 735 does not include the three titles discussed above. In addition, it differ from 5. 458 and Title V of 5. 698 in two other respects. First. Section 4(b) (2 authorizes each standing committee of the Senate and lloum of Representative to employ a review specialist to assist in carrying out the purposes of the legb lation. This provision further implements the recommendations of the Join PAGENO="0079" 73 Committee On the Organization of the Congress and closely resembles the pro- posed amendment (Section 136 (b) and (c)) to the Legislative Reorganization Act of 1946 (2 U.S.C. 190 d) contained in Section 105(a) of 5. 355 (90th Con- gress). Second, Section 4(b) (3) requires that each standing committee of the Senate and House of Representatives submit not later than March 31 of each year reports on their review activities of the preceding calendar year. This section parallels the proposed amendment to the Legislative Reorganization Act of 1946 (Section 136(d)) appearing under Section 105 (a) of S. 355. The Advisory Commission on Intergovernmental Relations has found that grants-in-aid to State and local governments have been and are the National government's principal mechanism for securing intergovernmental collaboration in accomplishing national legislative objectives. As you know, reliance on the grant device has increased significantly during the past few years. With this have come mounting problems of fragmentation, manageability, and coordination. In view of the paramount position of Federal grants in the American system of intergovernmental relations, the Advisory Commission believes that the effi- cacy, value and public acceptability of this mechanism must be safeguarded and that its usefulness as a collaborative device be strengthened. More than six years ago the Commission was struck by the widespread concern over the deficiencies in existing legislative procedures pertaining to grants, especially as related to determining those grants that had achieved their initial objectives and to re- directing others to reflect developments subsequent to their enactment. On May ~5, 1960, the ACIR placed the subject of periodic review of Federal grants-in-aid on its work program and subsequently at its June 15, 1961 meeting the Commission adopted a report entitled Periodic Congressional Reassessment of Federal Grants-In-Aid To State and Local Governments. This report was made part of the record of the hearings on 5. 2114 in the 88th Congress. It spells out in depth the Commission's recommendation for systematic review. This recom- mendation would be implemented by the enactment of S. 458, S. 735, or Title V of S. 698. The Commission position has consistently been that there is a need for general legislation providing for systematic review and assessment of grants-in-aid. This should not be interpreted to mean that Federal grnnt-in-aid programs under current congressional and administrative processes go unreviewed. The execu- tive agencies involved are giving closer and closer attention to the operation of their programs and requests for grant funds are subject to the usual scrutiny of the appropriation processes in Congress. Moreover, the legislative oversight corn- inittees exercise surveillance with respect to grants coming within their juris- diction. In general, however, the review and redirection of grants are treated unsystematically and on an uncoordinated basis. The findings of the Joint Com- mittee On the Organization of the Congress in this area only confirms these earlier ACIR recommendations. The Commission position is, therefore, that the proposed legislation would be beneficial on a number of counts. It would stimulate development of more uni- form criteria with which Congressional committees could critically assess the effectiveness of grants-in-aid in important subject matter fields. Equally signifi- cant is the provision for systematic committee review since it would give State and local governments a regular forum for voicing their views concerning the problems that have arisen in connection with the administration of individual grant programs. Further, the five year termination provision relating to certain future grants is a salutory feature of the legislation. Much confusion has arisen concerning this issue, but it should be pointed out that this section obviously would in no way affect those grants that have a termination date or those that have been specifically exempted from its application. In short, the termination provision merely affects those few programs each session that Congress fails to designate as short-term or long-term undertakings. In such instances, the Com- mission feels that the five year termination provision, along with the review process that in most instances would result from it, would be helpful. With reference to Sections 4, 5, and 6 of 5. 458, and to Sections 504 and 505 of S. 698, the Advisory Commission has taken no formal position. The first three embody amendments which were adopted by the Senate Subcommittee on Intergovernmental Relations during its deliberations on S. 2114, in the 88th Congress and which appeared in Title II of S. 561 in the 89th Congress as it was enacted by the Senate. As in the case of the above, the Commission has taken no formal position with reference to the review specialist and annual report provisions of S. 735. These subsections do not appear to conflict with the Commission's basic recommenda- PAGENO="0080" 74 tions in this area, and tend to further implement those of the Joint Committee~ on the Organizatiton of the Congress. We hope these comments will assist the Subcommittee in its deliberations on. this proposed legislation. I should like to make clear that in the submission of these comments, I am speaking only for the Advisory Commission and not for the President or the Administration. Sincerely yours, FARRI5 BRYANT, Chairman. COUNCIL OF ECONOMIC ADVIsERs, Washington, April 6, 1967. HOfl. EDMUND S. MusKm, Chairman, Subconvnvitte'e on Intergovermental Relations, Committee on Go~ve'rn- ment Operations, U.S. Senate, Washington, D.C. DEAR SENATOR MU5Km: As you requested we have reviewed 5. 458 and S. 735, bills "to provide for periodic congressional review of Federal grants-in-aid to~ States and to local units of government." We find ourselves in sympathy with the proposal calling for evaluation of~ grant-in-aid programs after several years of experience. But we hesitate to sup~ port an arbitrary review and termination date for each program no't otherwise covered by a termination date. The Bureau of the Budget has advised that there is no objection to the presen-~ tation of this report from the standpoint of the Administration's program. Sincerely, GARDNER ACKLEY. GENERAL SERVICES ADMINISTRATION, Washington, April 6, 1967~ Hon. EDMUND S. MUSKIE, Cha'irman, Subcommittee on Intergovernmental Relations, Convmittee on Govern-~ ment Operations, U.S. Senate, Washingten, D.C. DEAR SENATOR MUSKIE: Your letters of February 28, 1967, requested the views of the General Services Administration on 5. 458 and S. 735 of the 90th Con- gress, similar bills to provide for periodic congressional review of Federal grants- in-aid to States and to local units of government. These bills relate to programs to be enacted by future Congresses for grant-in- aid assistance by the Federal Government to States or their political subdivi- sions; provide expiration dates for the authorization of such grants; and re- quire the review of such programs by appropriate committees of the House andy the Senate on or before June 30 of the calendar year preceding the year in which such programs will expire. Committee reports covering such studies would show the extent to which the purpose for which each grant was authorized has been met, whether the recipient can carry on without further Federal assistance, and whether changes in purpose or direction should be made. S. 458 would also vest centralized responsibility In the Comptroller General to review presently existing and all fu'ture programs for such grant-in-aid assistance and submit to the Con- gress reports and recommendations concerning the effectiveness of the programs. With the enactment `of Public Law 88-383, GSA has' at this time one program for grant assistance to States and local agencies and to nonprofit organizations and institutions. These grants, which will terminate on June 30, lOOP, are to assist in the financing of recipients in the collecting, describing, preserving and compiling ,~nd publishing of documentary `sources significant to the history of the United States. However, we do not believe that payments under this program would be determined to be "grants-in-aid" under these bills in that section 7(3) (ii) (6) of S. 458 and section 4(c) (B) (vi) of 5. 735 exclude "payments under reseamb and development contracts or grants which are awarded directly and on similar terms to all qualifying organizations, whether public or private." Inasmuch as we do not expect that the enactment of either S.458 or 5. 735 would substantially affect any programs of the General Services Administration, we defer to the views of the interested Federal departments and agencies as to~ the merits of the proposed legislation. PAGENO="0081" 75 The Bureau of the Budget has advised that, from the standpoint of the dministration's program, there is no objection to the submission of this report ) your Committee. Sincerely yours, J. B. 1\~oODY, Acting Administrator. COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., April 30, 1967. [on. EDMUND S. MUSKIE, kairma,n, ~S'abcomenittee on Intergovernmeatal Relations, Committee on Govern- ment Operations, UJS~. E,1enate. DEAR Mn. CHAIRMAN: By letter dated February 28, 1967, you requested our omments on 5. 735, 90th Congress. The stated purpose of this measure is "Po rovide for periodic review of Federal programs of grant~iu-ei'd `assistance to he States." We note that section 5 of the bill erroneously listed as `section 4 includes "any gency or instrumentality of a State" in the delin.ition of the term "State." It is ossible `that the proposed legislation could be construed as applying to any new uthorizations, or changes in existing authorizations for Federal payments to lie National Guard enacted by the 90th or siubsequent Congresnes, since the ~ati'onal Guard is an instrumentality of the various States. HoWever, hearings on imilar bills do not indicate that such legislation is intended to apply to Federal unds appropriated for the National Guard. Moreover, since the National Guard ats been in existence since `the `formation of our country mid apparently will ontin'ue in existence for the fores~ea'hle future, we do not believe that Federal id in nupport thereof will be `terminated,, or that the Congress intends to require he authority for each Federal support to terminate `automatically every five `ears `as provided in 5. 735 and hen'c'e require new study and authorization eriodically. Hence, it is our opinion that 5. 735 is not intended to apply `to 1ederal payments to the National Guard. It would be preferable, however, if the ill itself or its legislative history would clearly so indicate. We note that thisi measure, in large part, would provide for the same type of ~ongres'sional review of grant-in~aid assistance as would be provided by title V f S. 698, 90th Congress'. The primary difference between the provisions of this dll and title V of S. 698 `is that in this bill no specific provision, is made ~ter tudi'es by the Comptroller General of Federal grant-in-aid programs as provided n sectIon 504 of S. 698. As pointed out in our report of today's `date on S. 698, we bo not feel that such requteement in S. 698 imposes any requirements on our office n addition `to those we believe now exist for reporting to the Congress on the `esults of our reviews of Government programs, including Federal gra'nt-in~aid )rograms. Consequently, we do not feel that-so far as our office is concerned- here is `any substantial difference `between S. 735 and title V of 5.698. We recognize that any provision for specific review by the Comptroller General )f such programs will perhaps change the frequency of our review of such rogramns `and of course, such provision would serve to emphasize congressional nterest in a continuing overall review of grant-in-aid programs. In any event, he question of whether specific provision should be made for review of grant-In- tid by our office is viewed `as fundamentally a question `of `policy for the sole letermination of the Congress. We are of course strongly in accord with the objectives of this bill and title V )f S. 698. Legislation along the lines of these measures would appear to be )eneficial not only as an additional device for strengthening congressional control ver Federal grants-in-aid but also as an additional means for acquiring current ,nformiation as `a basis for legislation in the complex and changing area of E'ederal-Sta'te-local relationships. Sincerely yours, ELMER B. STAATS, Comptroller General of the United gtates. 05-626-68----6 PAGENO="0082" 76 DEPARTMENT OF THE ARMY, Washington, D.C., September 28, 1967. Hon. JOHN L. MCCLELLAN, U/va irman, Committee on Government Operations, U.S. Senate. DEAR MR. CHAIRMAN: Reference is made to your request to the Secretary Defense for the views of the Departmei~t of Defense with respect to S. 735, 90t Congress, a bill "To provide for periodic review of Federal program's of grant-li aid assistance to the States." The Department of the Army has been assigne responsibility for expressing the views of the Department of Defense. This bill, which if enacted,, would he cited as the "Federal Grant-in-Aid Revie~ Act of 1967," would establish procedures for review of grant-in-aid program authorizing assistance from the Federal Government to two `or more States a their political subdivisions. All future programs, unless the enacting statu' specifically provides otherwise, `shall expire on June 30 of `the fifth calendar ye'a which begin's after the effective date of the enactment of such program. The bil provide's fo'r a specific review by th'e Congress for suc'h pro'graiins a's are authorize over a period of three o'r more years'. This review would be `conducted during th period beginning not later that twelve months immediately preceding `the dat on which such authority i's to expire and t'he results of committee investigatio and study would `be reported not later `than one hun'dred and twenty days bef or such authority is due to expire. In the case of existing statutes authorizing th establishment `of `programs for grant-in~aid `as;sistancie over a period of three ~ more years to two or more States or their political subsdivisions, each ~tandin committee of the Senate and House of Representatives which exercise's legisl:ativ jurisdiction and oversight over such programs would revi'ew an'd study, on continuing basis, the application, operation, administration, and execution of sue program, and would submit,, n'ot later than March 31 of each year, a report on it activities during the immediately preceding calendar year. Th'e studies both Ic fu'ture and `existing programs shall be conducted to ascertain whether the purposE for which such future grants-in-aid would be authorized have been met, th extent to which such program's can be earr'ie'd on without further Federal financir assistance, the extent to which such program is' adequate to meet any growin and changing needs related to the purposes for which it was originally designe and whether any changes' in purpose, direction, or administration o'f the o'riginr program should be made. The Department of the Army, on behalf of the Department of Defense, ha no objection to S. 735. With respect to the details of this bill, this Departmer defers to other agencies more directly concerned, that is, those administerin grant programs, for exaniple, the Departments of Health, Education, `and W~ fare, Housing and Urban Development and Transportation. The fiscal effects of this legislation are not kno'wn to the Department a Defense. This report `has been coordinated within the Department of Defense in `accord ance with procedures prescribed by the Secretary of Defense. The Bureau of the Budget advises that, from the stand'point `of the Adaninh tration's program, there is no `ohjection to the presentation o'f this report fo the consideration of the Committee. Sincerely, STANLEY R. RESOR, Secretary of the Army. DEPARTMENT OF THE ARMY, Washington, D.C., December 7, 1967. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, U.S. Senate. DEAR MR. CHAIRMAN: Reference is made to your request to the Secretary a Defense for the views of the Department of Defense with respect to S. 458, 90t Congress, a `bill "To provide for periodic congressional review of Federal grant~ in-aid to States and to local units of government." The Department of the Arm has been assigned responsibility for expressing the views of the Department a Defense. This bill would provide that all programs of grants-in-aid (authorized by t1~ Eighty-ninth or `any subsequent Congress) from the Federal Government to tw PAGENO="0083" 77 or more States or their political subdivisions, unless the enacting statute spe- cifically provides otherwise, shall expire on June 30 of the fifth calendar year which begins after the effective date of the enactment of such program. Con- currently, the bill provides for a specific revinw by the Congress for such grants- in~aid programs as are authorized over a period of three or more years to ascertain whether the purposes for which such grants-in-aid would be authorized have been met, the extent to which such programs can be carried on without further Federal financial ass~tance, ~n'd w~aether any changes in purpose, direction, or `adminis- tration of the `original program should be made to conform to recommendations of the Comptroller General under Section 4 of the bill or the Advisory Committee on Intergovernmental Relations (established by Public Law 86-380) under Sec- tion 5. The `bill provides that such Congressior~al review shall `be `conducted during the period beginning not less than twelve months or more th'an twenty-four months immediately preceding the date on which such authority is to expire and the results of committee investigation and study shall be reported not later than one hundred and twenty days before such authority is due to expire. The bill further provides that the Comptroller General `shall make continuing studies of presently existing as well as all future programs for grant-iu~aid `assistance from the Federal Government and furnish reports, together with recommenda- tions, to the Congress. Finally the bill provides that each recipient of assistance whether under any new Act of Congress enacted after the effective date of this Act or `any new grant-in-aid agreement, or extension, modification or `alteration of any existing grant-in-nid agreement pursuant to existing law shall keep records in nicc'ordance with the requirements of the Federal agency administer- ing the program. The majority of the grant-in-aid programs administered by the Department of Defense, which includes direct re~erach grants authorized b~y the Act of September 6, 1958, P.L. 85-934 (42 U.S.C. 1891), are excluded from periodic Congressional review by the language of this bill. Therefore, the Department of the Army, on behalf of the Department of Defense, defers to the views of other more directly affected Federal agencies. Enactment of this bill would have no foreseeable fiscal effect on the budgetary requirements of the Department of Defense. This report `has been coordinated within the Department of Defense in accord- ance with procedures prescribed by the Secretary of Defense. The Bureau of the Budget advises that, from the standpoint of the Adminis- tration's program, there is no objection to the presentation of this report for the consideration of the Committee. Sincerely, STANLEY B. RESOR, Secretary of the Army. OFFICE OF TuE SECRETARY OF TRANSPORTATION, Washington, D.C. June11, 1968. Hon. EDMUND S. MUSKIE, Chairman, Subcommittee on Intergovernmental Relations, Committee on Govern- mental Relations, U.S. Senate, Washington, D.C. DEAR Mr~ CHAIRMAN: This is in response to your request for our views on S. 458, a bill: "To provide for periodic Congressional reviews of Federal gr'ants~ in-aid to State and to local units of government." and S. 735, a bill: "To provide for periodic review of Federal programs `of grant-in-aid assistance to the States." The Department of Transportation administers several grant-in-aid programs. The Federal-Aid Airport Program under the Federal Airport Act provides 50 percent matching funds for airport construction. The Interstate Highway Program provides 90 percent federal funds, plus' `a bonus to States having large areas of public lands, for the construction `of the 41,000-mile system of Interstate and Defense Highways. The ABC Highway Program provides 50 percent federal money (plus some bonus) for `construction of primary, secondary and urban extension highways. The Highway Beautification Program provides 75 percent federal funds for billboard and junkyard co'ntrol an'd 100 percent funding for landscaping arid scenic enhancement. The Highway `Safety Program provides up to 50 percent federal money for assistance to States~in implemeiitin~g programs to `meet federal highway safety standards. PAGENO="0084" 78 All of these grant-in-aid programs are now subject to periodic review by legis- tative committees of Congress. lu the case of the Federal-Aid Airport Program, authorizations have been made for from two to five years, lately for three year periods. Thus, every three years the program is reviewed on its merits and in total by the Senate Commerce Committee and the House Interstate and Foreign Commerce Committee. The highway programs, with the exception of the Inter- state Highway Program, are subject to biennial review and authorizations are made for two years at a time. And while authorizations for the Interstate Program are made for more than two or three years, the program is subject to Congres- sional review when the Public Works Committees biennially consider the appor- tionment formula to be applied in that program. Thus, all of the grant-in-aid programs administered in this Department are subject to more frequent review than the five-year review contemplated in S. 458 and S. 735. Therefore, the under- lying purpose of these bills, to assure that grant-in-aid programs not go on in- definitely without a periodic reexamination of their justification, is already well served and in a manner involving a more frequent review than those bills propose. In addition, the termination of authority to make grants-in-aid at the expira- tion of five years would seriously restrict even programs with authorizations for under five years. For example, the Federal-Aid Airport Program was last extended in P.L. 89-647, October 13, 1966. The authorization was for FY 1968, 1969 and 1970. These funds are available until expended. Under the proposed S. 458 as applied to P.L. 89-647, the funds authorized for 1968 would be available only for four years. The funds for 1969 would be avail- able for three years and those for 1970 for two years. The authority to obligate any funds authorized under FL. 89-647 would expire June 30, 1971, under sec- tion 2 of S. 458. In this connection, funds apportioned among the states pursuant to section 6(a) of the Federal Airport Act remain available for projects in the respective states for two fiscal years. Any funds remaining unobligated at the expiration of the two-year period are added to the Discretionary Fund pursuant to section 6(c), and are then available for projects in all the states. Several of the less pop- ulous states are unable to utilize the full amount of funds apportioned to them under the state apportionment formula. The apportioned funds excess to these states' needs, therefore, lie idle and may not be used until the third year after they first become available. Under the five-year limitation as now written in section 2 of S. 458, unused State Apportionment Funds in the 1970 authorization could never be applied for needed projects. Unobligated State Apportioned Funds in the 1969 and 1968 authorizations would be available for needed projects only one year and two years, respectively. These limitations would seriously limit our ability to carry out the intended purposes of this program. Accordingly, the Department of Transportation opposes the enactment of legis- lation providing automatic termination dates for grant-in-aid programs generally. The Bureau of the Budget advises that from the standpoint of the Adminis- tration's program, there is no objection to the submission of this report for the consideration of the Committee. Sincerely, JonN L. SwEENEY, Assistant Secretary for Pnblic Affairs. AGENcY REPORTS ox S. 2981 OFFICE OF THE SECRRTARY OF TRANSPORTATION, Washington, J).C., March 1, 1968. Hon. Joux L. MOOLRLLAN, Chairman, Uon'unittee on Govern'inent Operations, U.S. Senate, Wa8hiagtov,, D.U. DEAR Mn. CHAIRMAN: This is in response to your request for the views of this Department concerning S. 2981, a bill "To provide temporary authority to ex- pedite procedures for consideration and approval of projects drawing upon more than one Federal assistance program, to simplify requirements for the operation of those projects, and for other purposes." Essentially the proposal would increase joint funding and simplify the admin- istration of grants and contracts where programs or projects are funded from PAGENO="0085" 79 two or more appropriations. The proposal delineates the scope, authority, require- ments, and procedures to be used when joint funding is undertaken. This Department believes the proposal, which is an Administration bill, Will facilitate and encourage the integrated development and execution of program proposals. We think this is a highly desirable result. Since the effective objectives of Government supported programs are multiple, the achievement of these objec- tives require the simultaneous and integrated implementation of a number of projects. The three principal programs of this Department that could be operated under this new authority are the Federal-aid to Airports, the Federal-aid to Highways, and the State and Community Safety grants. The FAA now cooperates, in providing airports, with the Economic Develop- ment Administration, Department of Commerce; the Department of Defense; and the National Park Service, Department of the Interior. In addition, the air- port grant-in-aid projects might be coordinated with urban renewal projects, mass transit projects, open-space grants, metropolitan planning grants, and with the Department's highway program. Similarly, the Federal-aid to highways and the State and Community Safety grant programs might, with the assistance of this bill, be utilized more frequently in a coordinated fashion with the grant-in-aid programs of other departments'. The multiple impact of joint planning and execution will be much greater if the project is originated and completed in tandem or multiples wherever this is pos- sible. A transportation system is a complex of many items, and a more comple- mentary installation of those items would lead to greater efficiency. We assume that the language in section 8 is sufficient in its requirement that an expenditure not be inconsistent with other Federal laws, to prevent the ex- penditure of money transferred from the airport grant-in-aid program or the highway trust fund for other than airport or highway projects respectively. The problem of segregation of the Highway Trust Fund isparticularly important since that fund is financed through highway user taxes and has been specifically held by Congress to be available only for that purpose. Subject to these comments the Department of Transportation favors the enact- ment of this legislation. The Bureau of the Budget has advised that enactment of this legislation would be iii accord with the President's program. Sincerely yours, JOHN L. SWEENEY, Assistant Secretary for Public Affa'irs. ExECUTIvE OFFICE or THE PRESIDENT, OFFICE or EMERGENCY PLANNING, Washington, D.C., March 4, 1968. Hon. JOHN L. MCCLELLAN, Cha4rman, Cosnmfltee on Go'vernment Operations, U.S. Senate, Washington, D.C. DEAR Mn. CHAIRMAN: This is in reply to your request for comments of this agency on S. 2981, 00th Congress, a bill, "To provide temporary authority to expe- dite procedures for consideration and approval of projects drawing upon more than one Federal assistance program, to simplify requirements for the operation of those projects, and for other purposes." In my capacity as the President's liaison with the Governors, I have a direct interest in this bill, and I recommend that it be enacted at an early date. The Bureau of the Budget advises that it has no objection to the submission of this report, and that enactment of this bill would be in accord with the President's program. Sincerely, MORDECAX M. MEEKER (For Price Daniel, Direstor). PAGENO="0086" 80 EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., March 5, 1l~68. Hon. JOHN L. MCILELLAN, Chairman, Com~nUttee on Government Operations, U.S. Senate, New Senate Office Building, Washington, D.C. DEAR MR. OHAIRMAN This is in response to your letter of February 20, 1968, requesting the views of the Bureau of the Budget on S. 2981, the "Joint Funding Simplification Act of 1968." S. 2981 was developed in response to the President's request-in his March 17 Message on the Quality of American Government-for legislation that would make it possible ". . . for Federal agencies to combine related grants into a single financial package, thus simplifying the financial and administrative pro- cedures-without disturbing, however, the separate authorizations, appropria- tions, and substantive requirements for each grant-in-aid program." Separate Federal assistance programs should be amenable to joint utilization in single projects within which the several programs are melded to achieve mutual objectives. Such combinations of related programs would enable State and local governments and other grantees to use the wide variety of Federal assistance programs more effectively and efficiently. However, such combinations cannot be "packaged" and administered easily under existing laws and regulations. Each Federal grant program may have different requirements in such matters as application forms, accounting pro- cedures, advisory panels, reporting dates, etc. Further, the grantees must often work with several Federal agencies (or constituent elements of a single agency) - each with its own distinct administrative practices. As a result, considerable effort is required and significant delays are encountered. The purpose of 5. 2981 is to remove or simplify certain administrative and tech- nical impediments which hamper or prevent the consideration, processing, approval and administration of projects which draw upon resources available from more than one Federal agency, program or appropriation. The bill would enable State and local governments and other public or private agencies to use Federal financial assistance under two or more programs ill support of multi- purpose projects. Under the bill: Federal agency heads would be authorized to establish uniform require- ments respecting technical or administrative provisions of law so that jointly funded projects would not have to be subject to varying or conflict- ing rules or procedures; In appropriate cases, Federal agencies would have authority to delegate to other agencies power to approve portions of projects on their behalf; Federal agency heads could establish joint management funds in their agencies to finance multi-purpose projects drawing upon appropriations from several different accounts; The President would prescribe appropriate regulations for, and approve agency delegations of power and functions under the bill. He would make reports to the Congress on actions taken, and make recommendations for additional legislative action, including proposals for consolidation, simpli- fication or coordination of grant programs. The authority contained in the bill would expire after three years. The Joint Funding Simplification Act of 1968 would not affect substantive provisions of law relating to Federal assistance programs such as eligibility cri- teria, maintenance of effort, matching ratios, authorization levels, program availability, etc. Problems presented by the diversity in such provisions as these would be studied in connection with proposals for grant consolidation which the President also requested the Director of the Bureau of the Budget to explore in the Message on the Quality of American Government. That effort is now under- way. Experience gained under the Joint Funding Simplification Act will be of great assistance in the development of a workable grant consolidation program. Accordingly, the Bureau of the Budget recommends enactment of S. 2981. Sincerely yours, WILFRED El. ROMMEL, Assist ant Director for Legislative Reference. PAGENO="0087" 81 THE GENERAL COUNSEL OF THE TREASURY, Washington, D.C., March 6, 1968. On. JOHN T~. MCCLELLAN, ha(irman, Committee on Government Operations, .2. $enctte, Washington, D.C. DEi~a Mn. CHAIRMAN: Reference is made to your request for the views of this epartment on S. 2981, "To provide temporary authority to expedite procedures or consideration and approval of projects drawing upon more than one Federal ssistance program, to simplify requirements for the operation of those projects, nd for other purposes." The proposed legislation is designed to implement the recommendations of the resident to provide for the simplification of Federal assistance programs con- ained in his March 17, 1967 message on the Quality of American Government. he bill would provide authorities for the establishment of uniform technical or dministrative requirements, the delegation of powers and responsibilities, and he establishment of joint management funds with respect to projects assisted nder more than one Federal assistance program. The authorities would expire fter three years. Federal assistance programs would be defined to include loan, oan guarantee, and loan insurance as well as grant programs. For some time the Department has been encouraging the use of letters of credit or a wide range of domestic and international grant programs to achieve better ash management. The proposed legislation, by consolidating funds from several ppropriations, would reduce the number of letters of credit for all grant pro- rams, thereby simplifying funding procedures for the grantee, the agencies, the reasury, and the Federal Reserve banks. It may achieve further benefits if elatively small grants now paid by check are brought under the letter-of-credit ethod by virtue of the pooling arrangements. Consequently, the Treasury supports the objective of the bill. The Department has been advised by the Bureau of the Budget that there is no bjection to the submission of this report to your Committee and that enactment f the proposed legislation would be in accord with the program of the President. Sincerely yours, FRED B. SMITH, General Counsel. THE POSTMASTER GENERAL, Washington, D.C., March 8, 1968. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, TJ.$. $enate, Washington, D.C. DEAR Ma. CHAIRMAN: This Department has been requested to report on S. 2981, a bill "to provide temporary authority to expedite procedures for consideration and approv~I of projec~ drawing upon more than one Federal assistance pro~ gram, to simplify requirements for the operation of those projects, and for other purposes." The purpose of the bill is to enable States, local governments, and other public or private organi~ations to use Federal assistance more effectively and effi- ciently. Subject to regulations to be prescribed by the President the bill would authorize agen'cy heads to cooperate in the identification of programs, develop- ment of guidelines, review of pr&gram requirements, establishment of common rules, mId creation of comnten application processing and project supervision procedures. The bill wiould also require Federal agencies to assure that, in the processing of applications, reviews and approvals are expeditious, questions of timing affecting feasibility are considered, the number of Federal representatives involved is kept to a minimum, decisions on applications are communicated promptly to `a~ppli~antu, and applicants are not required by one agency to obtain assurance of the requirements of another agency where such requirements could better be determined throi~gh direct interagency communication. Shlce the Post Office Department does not administer any Federal assistance programs, the bill would have no effect on the Department. Accordingly, we have rio redominendations concerning the bill. In advising with respect to ll.R. 12631, an identical bill, the Bureau of the Budget has stated that there is no objection to the submission of that report to the Committee. Sincerely yours, LAWRENCE F. O'BRIEN. PAGENO="0088" 82 U.S. DEPARTMENT OF LABOR, OFFICE OF THE SECRETARY, Washington, March 14, 1968. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, U.~'1. senate, Washington, D.C. DEAR Mil. CHAIRMAN: This is in further reSponse to your letter of February 20, 1908 requesting a report on S. 2981, the "Joint Funding Simplification Act o This bill creates authority which will constitute a first and important step i the simplification of grant-in-aid programs. Permitting substantive authority t be delegatctl from one agency to another, permitting the waiving of technical and administrative requirements and permitting the establishment of unifor ma1x~hing requirements and single accounting procedures are valuable simplifi cations of administrative and financial procedures. The Department of Labo therefore strongly supports the bill. The President recognized last year in his message on The Quality of American Government that simplification of procedures is but one part of the problem o bringing order out of the confusing multiplicity of grant-in-aid programs. Th President in his Message described program simplification as even more funda mental than the simplification of procedure, and directed a broad study of thi problem and development of solutions. Program simplification--as distinguishet from procedural simplification-will require the consolidation of specific pieces o legislation into broad program legislation accompanied by single appropriations without categorical dollar limitations. This bill is a necessary first step in achiev- ing this broader objective. The Bureau of the Budget advises that there is no objection to the suh~nissioiI of this report and enhctment of S. 2981 would be in accord with the President' program. Sincerely, WILLARD Wiwrz, ~Secretary of Labor. DEPARTMENT OF AGRICULTIJRE, OFFICE OF THE SECRETARY, Washington, March 15, 1968. Hon. JOHN J. MCCLELLAN, (Yhairman, Committee on Government Operations, TJJ~. $enate, Washington, D.C. DEAR MR. CHAIRMAN: This is in response to your request for a report on 5. 2981, a bill "to provide temporary authority to expedite procedures for consideration and approval of projects drawing upon more than one FederRi assistance pro~ gram, to simplify requirements for the operation of those projects, and for other purposes." The bill proposes that heads of Federal agencies be authorized to: 1. Identify related programs appropriate for providing joint support for specific kinds of projects; 2. Develop and promulgate guidelines and materials to assist in the plan- ning and development of projects drawing support from different programs; 3. Identify administratively established program requirements which m~y impede joint support of projects and make modifications as appropriate; 4. Establish common and technical rules among related programs; and 5. Create joint project application procedures and projects supervision procedures. The head of each agency would be responsible for taking actions to the maximum extent possible under applicable law which would further the purpose of the act with respect to programs administered by this agency. Each Federal agency head would also consult and cooperate with heads of other Federal agencies to promote the purposes of this act. Actions taken by Federal agencies pursuant to this act relating to the process~ ing of applications must be designed to assure: That required reviews and approvals are handled expeditiously~ That full account be taken of special considerations of timing made known by the app1icai~t that affoet the fea~ibility cXL' the project; That the applicant be required to deal with a minimum number ol1~ Ped- eral representatives, acting separately or as a board or panel; PAGENO="0089" 83 That applicants be promptly informed as to decisions for or against. applications'; and That applicants not be required by any one Federal agency to obtain in- formation or assurances regarding another Federal agency which could bet- ter be secured directly. Where appropriate, to further the purposes of this act, beads of agencies may use the authorities included in the act to establish uniform technical or admin- istrative requirements, to delegate powers and responsibilities, and to establish joint management funds. The act provides that (a) appropriations available to any Federal assistance program for technical assistance or training may be used to provide technical assistance or training in connection with projects approved for joint funding in- volving that program and any other Federal assistance program; and (b) per- sonnel of any Federal agency may be detailed from time to time to other agencies as appropriate to facilitate the processing of applications under this act or the administration of approved projects. Subject to such regulations as the President may prescribe, Federal agencies may enter into agreements with States or State agencies, as appropriate, to extend the benefits of this act to projects involving assistance from one or more Federal agency and one or more State agency. The act provides that in addition to powers and authorities otherwise conferred upon him by the act or other law, the President may take such action and pre- scribe such procedures as may be necessary or appropriate to assure that the act is applied by all Federkl agencies in a consistent manner and in accordance with its purpose. The Department strongly recommends enactment of this bill. In his March 21, 1967, Message to the Congress, containing recommendations to improve the quality of government, the President recommended general legis- lation that would authorize Federal agencies to simplify the financial and ad- ministrative procedures without disturbing the separate authorizations, appro- priations, and substantive requirements for each grant-in-aid program. This legislation broadens this concept to include all Federal assistance, including loans, grants and technical assistance. We are presently implementing these concepts in three specific areas: (1) coordination of functional planning covering multi-jurisdictional areas; (2) coordination of assistance in metropolitan areas; and (3) specific procedures for consultation with heads of State and local government. It is this Department's position that the proposed bill will strengthen these efforts by providing needed authority to develop more direct lines of communi- cation with State and local governments and reduce confusion and delay in evaluating and funding programs of local assistance. We believe this bill will enable substantially increased inter-Departmental level cooperation at the Federal level. This is a key factor to a more effective and efficient relationship with State and local governments, a goal to which we strongly subscribe. The bill clearly states that the authorities it contains be exercised only pursuant to regulations prescribed by the President. We believe it to be con- sistent with the President's and our own efforts to improve the effectiveness of the programs administered by this Department. The Bureau of the Budget advises that there is no objection to the presenta- tion of this report, and that enactment of S. 2981 would be in accord with the President's program. Sincerely yours, ORVILLE L. FREEMAN. EXECUTIVE OFFICE OF THE PRESIDENT, OFFICE OF SCIENCE AND TECHNOLOGY, Washington, March 18, 1968. HON. JOHN L. MCCLELLAN, Chairman, S'enate Government Operations Committee, U.$. senate, Washington, D.C. DEAR SENATOR MCCLELLAN: This is in response to your request for comment on 5. 2981, "To provide temporary authority to expedite procedures for con- sideration and approval of projects drawing upon more than one Federal as- sistance program, to simplify requirements for the operation of these projects~ and for other purposes." PAGENO="0090" 84 The purposes of this bill are highly desirable and in accord with the President's program for consolidation of grant-in-aid programs as expressed in his March 17, 1967, message to Congress on "The Quality of American Government." I am therefore happy to endorse the bill. The regulations implementing the bill will have to be developed carefully to assure that undue or inappropriate restrictions on educational or research grants do not result. There are, of course, good reasons for variation in the ex- tent of controls and restrictions imposed in the administration of assistance programs which are directed at differing purposes. I do not anticipate that any seriuus problems of this nature will arise, and hope that the Congress will see fit to enact this measure. Sincerely, DONALD F. HORNIG, Director. CIvIL AERONAUTICS BOARD, Washington, D.C., March 20, 1968. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, 17.2. $enate, Washington, D.C. DEAR Mn. CHAIRMAN: This is in reply to your letter of February 20, 1968, requesting the Board's views on 5. 2981, a bill "To provide temporary authority to expedite procedures for consideration and approval of projects drawing upon more than one Federal assistance program, to simplify requirements for the nperation of those projects, and for other purposes." One of the purposes of the bill, as stated therein, is to enable States, local governments, and other public or private organizations and agencies to use Federal assistance more effectively and efficiently. Although the Board provides subsidy assistance to certain air carriers, it does not administer any programs of Federal assistance to State and local gov- ernments or other public or private agencies. The Board does not, therefore, have any comments to offer with respect to the bill. Sincerely, JOHN H. CROOKER, Jr., Chairman. OFFICE OF ECONOMIC OPPORTUNITY, Washington, D.C., March 22, 1968. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, 17.2. $enate, Washington, D.C. DEAR MR. CHAIRMAN: Thank you for requesting our views on S. 2981, the "Joint Funding Simplification Act of 1968". The Office of Economic Opportunity strongly favors the enactment of this legislation which carries out the President's commitment in his Message of March 17, 1967, on "The Quality of American Government" to submit to the Congress necessary legislation to simplify our grant-in-aid procedures. Today ther are some 459 Federal domestic assistance programs of which more than 200 are grant-in-aid programs providing financial assistance to State and local governments, private organizations, and individuals. These programs are administered through 25 Federal agencies. With such a large number of programs in existence, the task of ascertaining what assistance is available for various purposes is in itself a most difficult one. Recognizing that the success of the War on Poverty would to a great extent depend on eligible recipients knowing of the availability of assistance under various laws, the Congress, in enacting the original Economic Opportunity Act of 1964, required this agency to establish an Information Center to insure that information concerning programs related to the Act's purposes is made "readily available in one place to public officials and other interested persons." Two years ago the Oongress broadened this mandate by requiring that the Di- rector "publish and maintain on a current basis, a catalog of Federal programs relating to individual and community improvement." On July 1, 1967, the sec- ond edition of OEO's "Catalog of Federal Assistance Programs" was pub- lished, including in its contents an explanation of the nature and purpose of all current grant-in-aid programs, descriptions of their major eligibility require- ments, information concerning places to apply, and lists of available printed materials. PAGENO="0091" 85 As helpful as this service has proved to be, lit still does not resolve the many problems involved when a small community, for example, seeks to put together a "package" of Federal assistance drawn from several sources. Such an appli- cant must go through the laborious process of filling out widely differing, some- times complex, application forms and must meet the diverse procedural and other special requirements of the 25 Federal agencies administering grant-in- aid programs. We believe that the simplification of procedures for grant appli- cation, administration and financial accounting provided for in this bill would go far toward alleviating these problems and should be enacted int'o law. It should be noted, in this connection, that the Congress has previously approved the use of joint funding in its enactment of the Economic Opportunity Amend- ments of 1967. The Amendments add a new section 612 to the Economic Oippor- tunity Act authorizing joint Federal agency funding of programs whereby any one Federal agency may he designated to act for all in administering funds advanced to a community action or other agency assisted under the Act. The Bureau of the Budget has advised that there is no objection to the submission of this report and that enactment of S. 2981 would be in accord with the program of the President. Sincerely, BERTRAND M. HARDING (For Sargent Shriver, Director). DEPARTMENT OF THE ARMY, Washington, D.C., March 26, 1968. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, U~. ~en ate. DEAR Mn. CHAIRMAN: Reference is made to your request to the Secretary of Defense for the views of the Department of Defense with respect to S. 2981, ~Qth Congress, a bill "To provide temporary authority to expedite procedures for consideration and approval of projects drawing upon more than one Federal assistance program, to simplify requirements for the operation of those projects, and for other purposes". The Secretary of Defense has delegated to the Depart- ment of the Army the responsibility for expressing the views of the Department of Ded~ense on this bill. The purpose of the bill is to set up procedures under which more effective use of funds may be made by States, local governments, and other public or private agencies receiving Federal assistance for a project from more than one Federal program, or one or more Federal and one or more State programs. It is designed to encourage Federal-state arrangements under which local governments and other public or private agencies may more effectively com- bine State and Federal resources in support of projects of common interest to the agencies concerned. Under the bill each Federal agency head would be required to review its programs and identify those appropriate for joint support, as well as establishing guidelines, model projects, and forms to assist in de- veloping such joint projects. Federal agency actions would be designed to assure expeditious handling of reviews and approvals, dealing with a minimum number of Federal representatives, consideration of timing problems affecting feasibility of a joint project, and prompt notication of decisions. The bill would ~equire the establishment of uniform technical or administra- tive requirements for federally assisted projects, to eliminate unnecessary bur- dens on local agencies as to accounting, reporting, auditing, contracting, per- sonnel systems, and accountability for property and structures. To permit better administration of funds drawn from more than one Federal program or appro- priation. the bill would authorize establishment of joint management funds into which would be deposited the amounts from various sources financing the project, with payments to grantees being made from the management fund. Proper provision would be made for disposition of excess amounts in such funds, and the keeping of appropriate records by recipients. with audit powers vested in the Comptroller General. Appropriations available for tech- nical assistance or training of personnel would `be made available for such purposes in projects approved for joint or common funding, and detailing of Federal personnel to other agencies to administer the programs would be authorized. The bill would permit the completion of agreements with States or State agencies to extend the provisions of the bill to projects involving assistance from one or more Federal agencies and one or more State agencies. PAGENO="0092" 86 Section 12 of 5. 2981 defines "Federal assistance programs" as programs which provide assistance through grant or contractual arrangements, including technical assistance programs or programs providing assistance in the form of loans, lean guarantees, or insurance. It also defines "project" as any under- taking, however characterized and whether of a temporary or continuing na- ture, which includes components proposed or approved for assistance under more than one Federal program, or one or more Federal and one or more State programs, if each of those components contribute's materially to the `accomplish- ment of a single `purpose or closely related `purposes. While the Department of Defense, particularly the Office of Civil Defense, is engaged in some assistance activities which might fall within the scope of the relevant definitions, the Dc- partnient is not extensively engaged in the type of assistance programs `appar- ently contemplated under `the provisions of the bill. Accordingly, this depart- ment defers to `the views of Federal agencies `which a~e mo're affected by 5. 2981. The enactment of this legislation will cause no apparent increase in the budgetary requirements for the Department of Defense. This `report `has been coordinated within the Department `of Defense in accordance with procedures pi~esc'rib'ed by the Secretary of Defense. The Bureau of the Budget advises that, from the standpoint of the Adminis- tration's program, there is no o,b~ection to the presentation of this report for the consideration of the Committee. Sincerely yours, DAVID E. McGIFFEIIT, Aeting Secretary of the Army. DEPARTMENT o~ STATE, Washington, D.C., March 27, 1968. Hon. JOHN L. MCOLELLAN, Chairman, (Jomm~ittee on Government Operations, U.S. Senate, Washingtofl~, D.C. DEAR Mn. CHAIRMAN: The Secretary has aisked me to reply to your letter of February 20, 1968 concerning 5. 2081, a bill to provide temporary authority to expedite procedure's for consideration and approval of projects drawing upon more th'an one Federal assistance program, to simplify requirements for the operation of those projects, and for othe'r purposes. 5. 2981 would increase joint funding and simplify the administration of grants and contracts where `programs or `projects are funded from two or more appropriations. Th'e proposed `bill delineates the scope, authority, reqidrements, an'd `prochdures `to be used when joint funding is undertaken. In some case's of grants under our cultural affairs programs, joint funding may prove to be appropriate. Accordingly, the Department of State recommend's enactment of 5. 2081. The Bureau of the Budget advises that there i's no objection to the `submis- sion of this report and that enactment `of S. 2981 would be in accord with the President's program. Sincerely yours, WILLIAM B. MACeMBER, Jr., Assistant Secretary for Congressional Relations. TIlE SECRETARY OF HousING AND URBAN DEVELOPMENT, Washington, D.C., Mwrch27, 1968. Subject: 5. 2981, 90th Congress (Sen. McClellaii). Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in further reply to your request for the views of this Department on 5. 2981, a bill "To provide temporary authority to expedite procedures for consiOeratiofl and approval of projects drawing upon more than than one Federal assistance program, to simplify requirements for the operation of those projects, and for other purposes." This measure, to be cited as the "Joint Simplification Funding Act of 1967," would authorize Federal agencies over a three year period to take various actions designed to promote coordination of financial assistance which is drawn from several Federal, or Federal and State sources and used for support of PAGENO="0093" 87 a single project. Subject to Presidential regulation, Federal agencies could identify programs suitable for joint funding, review and modify administratively established program requirements which impede joint funding, and set up common application and supervision procedures including procedures to designate lead agencies. Also, with the approval of the President, a Federal agency could delegate to other Federal agencies powers relating to the approval and supervision of proj- ects or classes of projects under a joint program. The bill further provides for joint management funds with accounting procedures structured as though the assistance were received from a single agency, and for establishment, pursuant to Presidential regulations, of common technical or administrative standards where necessary to avoid subjecting a project to requirements based on incon- sistent or conflicting provisions of law. In addition, arrangements similar in many respects to those authorized among Federal agencies could be included between Federal and State agencies where appropriate to facilitate projects involving assistance from both Federal and State sources. The Department supports S. 2981. In our view it will encourage needed cooperation and innovation in program development at the State and local level. It should contribute substantially to efforts to improve coordination among Federal programs, help make those programs more responsive to State and local needs, and assist in eliminating unnecessary administrative burdens and paper work that may now be involved in developing and carrying out projects drawing upon more than one source of assistance. At present, even a community or agency with considerable capacity for com- plex project planning may hesitate to undertake development of a project involving a novel combination or use of assistance from several Federal or Federal and State sources. Such a project may encounter significant delays, while the individual applications for each component of the project are processed by the responsible agencies pursuant to the frequently different technical require- ments and priorities of each agency. Because of such delays, the project may have to be abandoned or substantially modified after a good deal of time and effort has been invested. Once approved, the terms and conditions prescribed by each agency for its component of the project may differ to such a degree as to make effective and efficient local administration quite difficult. In the case of rural or smaller communities the problems are, of course, even more difficult. There, too often~ even a relatively simple effort at combining assistance from different sources is likely to be considered too burdensome, assuming that the opportunity for using such a combination in meeting local problems is seen and appreciated. We think that the bill would encourage communities to make much greater use of their capacity for structuring projects to meet local needs as they see them. In the case of States and larger communities, we would hope this might include a good deal of innovative effort to make more effective use of a variety of programs in dealing with relatively complex problems. Smaller communities may not be able to do so much on their own. But they can be helped to take advantage of the bill through technical assistance, including technical assistance through State agencies funded under title IX of the Demonstration Cities and Metropolitan Development Act of 1966, Further, small communities could benefit greatly from the opportunity which the bill would afford to Federal and State agencies for designing standard program packages or combinations tailored to meet needs or problems known to be common to a number of communities. There are, we believe, many cases~ 4~n ~which programs of this Department might be effectively employed in connection with projects developed under the bill. The bill could, for example, be employed to simplify the securing or administration of assistance in connection with the wide variety of projects that might be included within a Model Cities program. It could be used by appli- cants seeking to design air pollution or water pollution projects which might [nvolve public facilities programs of this Department and programs of the Department of Health, Education, and Welfare and the Economic Development administration. It might be used in connection with neighborhood conservation )r improvement projects that combine, for example, code enforcement and rehabilitation loan and grant assistance from this Department together with such things as funds from the Department of Labor to assist in training of residents to do some of the work involved or funds to expand a legal services rogram capable of providing tenants with legal advice and assistance relating ~o code enforcement activities. PAGENO="0094" 88 It may, however, be worth noting that the bill may be less important in terms of combinations which the Federal agencies themselves now see as feasible or possible than in connection with combinations that might be seen as desirable by State or local agencies. One of the advantages of the bill iS that it should make it easier for State and local agencies to exercise influence on the ways in which Federal agencies view their own programs and the relationships among them. The Federal agencies, in short, may have as much to learn as to teach when it comes to the imaginative and effective use of their programs in dealing with the wide range of needs and problems which exist at the State and local level. To the extent that this is so, and to the extent that the bill comitributes to the learning process, it ought to provide the Federal government with a good deal of information relevant to its own organization and coordination decisions. We would recommend two technical amendments to 5. 2981. On page 7, line 24 of the bill, the word "upon" should be placed after "(1)". On page 2, line 19, the requirement might better be described by the word "action" instead of the word "order". We make this latter recommendation because there are cir- cunistances in which a formal Agency order might not be necessary to effect a desirable result. We have been informed by the Bureau of the Budget that the enactment of this legislation would be in accord with the program of the President. Sincerely yours, ROBERT C. WEAvER. OFFICE OF THE DEPUTY ATTORNEY GENERAL, Washington, D.C., March 28, 1968. Hon. JOHN L. MCCLELLAN, Chairma/i~, Govermnent Operations Committee, U.2. $enate, Washington, D.C. DEAR 5ENATOR: This is in response to your request for the views of the Department of Justice on S. 2981, the "Joint Funding Simplification Act of 1968." The purpose of the bill is to enable states and public or private organizations and agencies to obtain more effectively and efficiently the use of resources avail- able to them from more than one federal agency, and to combine state and federal resources in support of projects of common interest. To effect these purposes the bill would authorize agency heads to adopt uniform provisions respecting certain statutory requirements, to provide for the delegation of certain powers and responsibilities and to provide for the establishment of joint manage- ment funds under conditions prescribed. Federal agencies would be authorized to enter into agreements with states or state agencies as appropriate to extend the benefits of the act. The proposed bill is an important step in implementing the President's request, in his 1967 message on "The Quality of American Government", for a workable plan for grant simplification. The Department of Justice recom- mends enactment of S. 2981. The Bureau of the Budget has advised that there is no objection to the sub- mission of this report from the standpoint of the Administration's program. Sincerely, WAIumN CHRISTOPHER, Deputy Attornet, General. U.S. ATOMIC ENERGY CoMMIssION, Washington, D.C., March 2.9, 1968. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, U.s. senate. DEAR SENATOR MCCLELLAN: The Atomic Energy Commission is pleased to reply to your letter of February 20, 1968, whIch asked for our views on S. 2981, "a Bill to provide temporary authority to expedite procedures for consideration and approval of projects drawing upon more than one Federal assistance pro- gram, to simplify requirements for the operation of those projects, and for other purposes." 1~ee~t fo~ two minor ehallge~,~' S. 2981 appears to be !aentical with ll.R~ 12631 which was introduced in the House on August 28, 1907. ~Section 3(a) (page 2, lInes 16-17) and Section 3(a) (4) (page 3, line 12). PAGENO="0095" 89 The proposed legislation is designed to help siniplify and coordinate Federal assiStance programs, jointly funded by two or niore agencies, in support of projects conducted by local governments and other public or private organiza- tions and agencies. For this purpose, Federal agencies would be authorized to take various appropriate measures through internal orders or interagency agreements. ABC has had considerable experience with jointly funded projects, a note- worthy example of which is our current joint program with the Office of Saline Water of the Department of Interior for participation in a large nuclear- desalting project to be carried out by the Metropolitan Water District of Southern California and private and public utility entities in Southern Cali- fornia. To the full extent of applicable law, we have had occasion usefully to employ various measures similar to those provided for in S. 2981. Accordingly, the Commission is in favor of legislation such as S. 2981 which could serve to provide additional authority to facilitate useftl joiii~t measures to aid in the administration of jointly funded projects. The Bureau of the Budget has advised that there is no objection to the presentation of this report and that enactment of S. 2981 would be in accord with the President's program. Sincerely yours, H. B. HOLLJNGSWORTH, General Manager. COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., May 4, 1968. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, ?7.S. ~S'enate, Washington, D.C. DEAR Mn. CHAIRMAN: This is in reference to your reçpieat of February 19, 1968, for our views on S. 2981, the proposed "Joint Funding Simplification Act of 1968." We fully support the general objective of simplifying and. improving the admintstrahion of related grant-imaid programs. Today's large number of in- dividual grant4n-aid programs, each with its own set of complex special require- ments, separate authorizations and appropriations, cost sharing ratios, alloca- tion formulas, a'nd financial procedures, makes it increasingly difficult to manage and administer those programs in a comprehensive or efficient manner. It is our opinion that there is presently much, in the way of coordinating and standardizing current Federal grantrin-aid programs, which could be done on an administrative level without additional legislation. But, if administering grant programs on a consolidated basis is desirable, we believe that the real key to significantly improved adminisitration lies in the legislative consolidation of programs into broader categories of assistance, and the placement of like program~s in a single agency, rather than establishing an administrative ap- riaratus to deal with conitinuing proliferation of single nkrrow purpose progtaxus. The bill S. 2981, although limited to three years, would permit the inauguration of the program on a Government-wide basis without provision for going through an experimental and testing period. We would prefer first having a limited application to eliminate any problem areas prior to full-scale implementation, If legislation is enacted we believe that it should be carefully and gradually implemented under the required Presidential guidelines with provision for thorough evaluations of results achieved, and that a specific provision should be included in the legislation for limiting its application to geographical areas or perhaps to programs. Our concern is that there could exist pressures whioh might force too rapid an adoption of untested concepts and procedures, and make difficult the reversal of procedures found to be unworkable. We underStand also that it is contemplated that further recommendations will be made by the Executive Branch with respect to the consolidation of existing categorical grants. A determination as to the extent to which this. could be accomplished, with appropriate recommendations, should be made in advance of any extension of the legislation. We would indorse legislation limited in its application as indicated above. This would not oniy serve to more specifically delineate the advisability of full implementation of the proposals, but would also provide valuable information relating to programs which might be more efficiently administered if consolidated PAGENO="0096" 90 as contemplated by title VI of S. 698, title VI of H.R. 5770, title III of HR. 8194, and similar bills now pending in the Congress. With respect to specific provisions of the bill, section 8 authorizes the estab- lishment of joint management funds to account for projects financed from more than one Federal program or appropriation with any excess funds therein being returned to the participating Federal agencies in accordance with a formula mutually acceptable as providing an equitable distribution, and for effecting returns accordingly to the applicable appropriations~ Consideration should be given to the extent to which this procedure might reduce congresisiioual control over the appropriations for the individual programs. Also, section 9(a) would have the effect of permitting any appropriation that is available for training or technical assistance purposes to be used for any other Federal assistance program that becomes involved in joint funding, although the latter program may not have funds approved for training and technical assistance purposes. This could result in significant amounts of training and technical assistance funds being used for purposes beyond those for which they were originally authorized and appropriated. Sincerely yours, ELMER B. STAATS, Comptroller General of the United states. TIrE SECRETARY or HEALTH, EI)UCATI0N, AND WELFARE, Washington, D.C., May 16, 1968. HorL JOHN L. MCCLELLAN, Cha4rmain~, Committee on Government Operations, UJ~. senate. DEAR Mn. CHAIRMAN: This letter is in response to your request of Febi-nary 20, 1968, for a report on S. 2981, a bill "To provide temporary authority to expedite procedures for consideration and approval of projects drawing upon more than one Federal assistance program., to simplify requirements for the operation of those projects, and for other purposes." The proposed joint funding simplification bill offers a basis for needed improve- ment in our methods of supporting activities whièh cut across program and agency lines. Our Department continues to strite toward improving and simpli- fying our support mechanisms. We believe that S. 2981 will make a significant contribuition to our pursuit of this goal by permitting a simplified, better co- ordinated and more expeditious review, approval and post award administration of jointly funded projects. Specifically Section 6(b), provides an important new means by which Federal agency heads may arrange for joint review of proposals by a single panel, board, or committee in lieu of separate reviews. Moreover, Section 6(c) authorizes th~ waiver, in certain circumstances, of single state agency requirements, thereby permitting a more responsive and effective use of aid funds in meeting State, local, and other grantee needs and affording States needed flexibility in recog- nition of the comprehensive nature of some of our new programsL In authorizing the eStablishment of joint management funds, the accounting and administration will be streamlined and simplified both for recipient insti- tutions and awarding agencies. In addition, the establishment of uniform admin- istrative and technical requirements encouraged by Section 6(a) will go far in reducing the administrative complexities which often stand in the way of responsive program administration. In summary this Department strongly endorses the concepts of grant simpli- fication reflected in the proposed bill, and we feel that the temporary authority requested in 5. 2981 will permit an application of these concepts to help solve the mounting problems associated with the increasing complexity of Federal aid administration. We are advised by the Bureau of the Budget that there is no objection to the presentation of this report and that enactment of this legislative proposal would be in accord with the Administration's program. Sincerely, WILBUR J. Corrnx, ~eeretary. PAGENO="0097" VJ~TERA~$ AimttwTs!rnArIOr~, S Orric~ or TuE AnMtNI~mi,~To1t oit Van~im~s' APFAIn~, S S S Wa~Iaingto~ii~D.O1, June1~, 1968.. [Ion. JOHN L. MCCLE~4&N, S S Uhairman, Committee on Government Operation$, S fJ.$. ~Senat~, Washingtoa, DU. S DEAn i~1n. CHAIRMAN': This will respo~id to your request for a report from the Veterans Administration on ~. 2981, 90th Congress, a bill "To provide temporary iuthority to expedite procedures for consideratiOn and approval of projects irawing upon more than one Federal assistance program, to simplify requirements for the operation of those projects, and for other purposes." The purpose of this bill is to remove or simplify certain administrative and technical impediments which hamper or prevent the consideration, processing, approval, and admini~tra'tiou of projects which draw upon resoUrces available Erom more than one Federal agency, program, or appropriation. This would enable State and local governments and other public or private agcnciea to use I~'edera1 financial asSistance under two or more programs in support or multi- purpose projects. S The impact of this leg1isiation on Vetorans A'dmirMti~ation progi~in~s' would ap~ pear to `be slight. However, we believe that the bill would `have a beneficial effect on the administration of grants-in-aid progi~ams by other Federal agencies and would be of great assistance to State and `1oc~l governments `and other public and private agencies. For these reasons we would have nO objection to the favorable consideration of S. 2981 by your Committee. We are advised by the Bureau of the Budget `that there is no objection to' the presentation of this report to your CUmmittee, and that enactment of this legisla- tion would be in accord wi'th the program of the President. Sincerely, W. J. Diaivnia, A~,n'inistritor. Senator MUsKIE. Our witness this morning is Mr. Phillip S. Hughes, Deputy Director, Bureau of the Budget. Why don't you proceed? TESTIMONY OP PHILLIP S. HUGHES, DEPUTY DIRECTOR, flUREAUS OP THE BUDGET; ACCOMPANIED BY JAMES IVI. PREY, DEPUTY DIRECTOR, O~TICE OP LEGISLATIVE REPE~ENCE Mr. HUGHES. Thank you, Mr. Chairman. We are very pleased `to be here, `and we share your hope that the people in the room, even though they may find the subject matter com- plex, will not find it too dry. We agree with you `that it is the substance of governmental problems and of intergovernmental relations. Since these are complex, the legi~lation dealing with these problems is correspondingly complex. We hope, too, that our testimony is no more incomprehensible than complexity of the subject matter requires. We will try in the statement to deal with the substantive issues and essential questions and will be pleased to work with you and the staff on `the "fine print" of amend- ments and of the details of changes Or amendments which prove desirable. S S Senator MUSKIE. Thank you very much. Mr. }-IUGHES. Mr. Chairman and members of the committee, we are here to discuss S. 698, the Intergovernmental Cooperation Act, which was introduced by the chairman of the subcommittee, and other related measures which have as their purpose the enhancement of our system of federalism and `the improvement of the quality of American G~overnmen't. 9~-626-68---7 PAGENO="0098" 92 The purpose of S. 698 is to make more workable the machinery of our Government through achieving the fullest possible cooperatio and coordination of activities at the Federal, State, and local levels in, as the bill phrases it, "an increasingly complex society." To achieve this purpose the bill as introduced is designed to: (a) improve the administration of grants-in-aid to the States, title II; (b) permit provision of reimbursable technical services by the Federal Government to State and local governments, title III; (c) establish coordinated intergovernmental policy and administration of grants and loans for urban development, title IV; (d) Title V, provide for periodic congressional review of grant-in-aid programs; (e) title Vi, authorizc the consolidation of certain grant programs; (f) title Vii, provide for the acquisition, use, and disposition of land within urban areas by Federal agencies in conformity with local government pro- grams; (g) title VIII, establish a uniform relocation assistance pro- gram, and (Ii) title IX, establish a uniform land acquisition policy for direct Federal and federally aided programs. Finally, the measure as recently amended by Senator Muskie would aim at improving the accounting, auditing, and financial reporting requirements associated with Federal assistance funds. The present legislation before this subcommittee is the direct lineal descendant of pi~evious congressional consideration over the last sev- eral years of intergovernmental cooperation acts, all of which have been sponsored by the chairman of this subcommittee. Last year the Advisory Commission on Intergovernmental Rela- tioris requested our assistance in developing an intergovernmental cooperation act. After discussions with the various affected Federal agencies and with the Advisory Commission, agreement was reached on a measure transmitted by the ACIR containing five titles which are identical or substantially similar to corresponding titles of 5. 698. My testimony today will also take into account this measure as it relates to the relevant titles of S. 698. Previous Bureau testimony in 1965 and 1966 emphasized the grow- ing importance of cooperative federalism reflected in the significant enlargement of Federal aid to State and local governmneiits to deal with problems of national concern. In the fiscal year 1969, the total pf Federal grant programs dealing with national goals in a joint endeavor by Federal, State, and local units of government will exceed $20 billion. In that fiscal period, such Federal financial assistance to State and local governments un- der existing and proposed programs will total an estimated $20.3 billion, of which there will be net expenditures of $15.5 billion from regular budget accounts and $4.8 billion from the highway and unem- ployment trust funds. Senatoi MUSKIE. I would like to ask a question at this point, Mr. Hughes. Do you have any idea of the amount of State and local match- ing funds which are added to the $20 billion of Federal funds under these programs? Mr. HUGHES. We do have estimates, Mr. Chairman. We may have some fairly precise figures. I know we have data on this. I would be very happy to furnish it for the record. I don't believe we have data on the States' share with us. Senator MUSKIE. I think we have made some rather wild guesses PAGENO="0099" 93 here, but we see an opportunity to pin this down and I would appreci- ate getting that. Mr. HUOHES. We will get the best data that we can. (The material follows:) EXCERPT FEOM SPECIAL ANALYSES, BUDGET OF THE UNITED STATES, 1969 TABLE K-4.-FEDERAL-AID EXPENDITURES IN RELATION TO TOTAL FEDERAL EXPENDITURES AND TO STATE- LOCAL REVENUE Fede ral aId Amount (millions) As a percent of- - State-local revenue2 - Total Federal expenditures Domestic Federal expenditures I l9~8 1959 $4,935 6.669 6.1 7.4 14.6 16.6 l2Ji 14.6 1963 7,040 7.8 17.2 13.8 1961 1962 1963 1964 1965 1966 1967 1968 estimate 1969 estimate 7,112 7,893 8,634 10,141 10,904 12,960 15,240 18,362 20,296 7.4 7.5 7.7 8.6 9.3 9.9 9.9 10.8 11. 1 15.7 16.4 i&~ 18.2 18.8 20.3 20.7 21.8 21.6 13.2 13.5 ~ 14.8 14.8 15.6 16.9 (3) (3) 1 E cluding expenditures for national defense, space, and international affairs and finance. 2 Based on compilations published by Governments Division, Bureau of the Census. Excludes State-local revenue from publicly operated utilities, liquor stores. and insurance trust systems. 3 Not available. Mr. HUGhES. In 10 years, total Federal aid will have more than tripled, rising from $6.7 billion in 1959 to an anticipated $20.3 billion in 1969. It is estimated that, in the same decade, State and local ex- penditures will have more than doubled. The fastest growing grants are those to advance the war on poverty, to provide decent medical care for the needy, to improve the facilities and services in our urban centers, and to upgrade the elementary and secondary educational opportunities available to children of low-in- come families. Between 1965 and 1969, grants administered by the Office of Eco~oini~ Opportunity will show an increase of $1.~3 billion, and those for the new elementary and secondary education program will rise by $1.4 billion. Durii'ig the 1967-4969 period alone expenditures for medicaid will grow some $949 million, and those f-oi housing and com- munity development will rise $1 billion. Total aids for metropolitan or urbafl areas have risen from $4 bil- lion in 1961. to an estimated $12 billion in 1969. Thus, Federal aids benefiting urban areas have grown by about $8 billion-nearly tripling in less than a decade. Senator MusluE. In the budget there is a statement to the effect that Federal spending for poverty programs has risen from $9.5 bijlion to something like $27 billion. Now, I assume that that needs some clarifi- cation to be accurate. Are you in a position this morning or could you for the record spell that out? Mr. HUGHES. I would be glad to do it for the record in more detail, Mr. Chairman. Generally speaking, the expenditures for poverty that are so classi- fied in the budget document and the related documents are those which are either specifically directed toward the reduction of poverty in the country, or those portions of expenditures for other soeial programs-- perhaps social security is the classic example-which go to people who PAGENO="0100" 94 are below the poverty level in economic status. But we èan furnish considerable detail in support of the data which you referred to, and indicate the derivation of the figures. Senator MUSKIE. It would be very helpful not only for this record but it would be helpful to those of us who undertake to `discu~s these issues with the pu~blic. I take it that an accurate label would be that these are programs that are directed~ either to causes or to the effects of poverty. Mr. HUGHES. That is correct, Mr. Chairman. Senator MusilE. And they jnclude presumably some portions of our educatiOn programs, social security programs, housing programs, manpower training ~programs and so on. Mr. HUGHES. That is correct. Senator MUSKIE. We would appreciate that detail. Mr. HUGHES. We will be g~lad `to provide it. (The material referred to follows:) ESTIMATED FEDERAL FUNDS FOR PROGRAMS ASSISTING THE POOR, FISCAL YEARS 1960-69 (Billions of dollars) Category and program 1960 1961 1963 1964 1966 1967 1968 1969 actual attual actual actual actual actual estimate estimate Education: HEW-ESEA Actof 1965,title I 1.0 1.1 1.2 1.2 Other (1) (1) (1) (1) 3 .4 .6 .7 OEO-Headstart Followthrough, et cetera . 4 . 4 * 4 . 5 Interior-Indian education 0.1 0. 1 0.1 0. 1 . 1 . 1 . 1 . Subtotal .1 .1 .1 .1 1.7 2.0 2.3 2.5 Working and training: HEW-Work incentive activities (1) OEO - .6 .8 .8 1.1 Labor-MDTA, et cetera (1) (~) (1) (1) . 2 . 2 . 3 . 4 Subtotal (1) (1) (1) (1) .8 1.01.11.6 Health: HEW-Health insurancefortheaged5 (1) 1.3 1.7 2.0 Public assistance medical care . 2 * 2 . 4 . 5' . 7 . 9 1. 4 1.7 Other .1 .1 .1 .2 .3 .3 .3 .3 VA-Hospital and domiciliary care . 3 . 3 . 4 . 3 . 4 . 5 . 6 . 6 OEO .1 .1 .1 .2 Subtotal - .6 .7 - .9 1.0 1.5 3.2 4.1 4.7 Cash benefit payments: H EW-OASDI 4. 0 4.4 ~.3 5. 8 6.6 6.7 7. 9 8.9 Public assistance 1. 8 1. 9 2. 3 2. 5 2. 8 3. 0 3. 5 3. 6 Railroad retirement3 . 4 . 3 .3 .3 . 4 . 3 * 4 . 4 VA-Compensation and pensions 1. 6 1. 8 2. 0 2. 0 2. 3 2. 3 2. 4 2. 5 Labor-UI .5 1.0 .6 .7 .4 .4 .5 .5 SubtotaL 8.3 9.5 10.4 11.4 12.5 12.8 14.6 15.9 Other social, welfare, and economic services: Agriculture-Food programs .2 .2 .3 .2 .4 Other (1) . 1 . 1 . 1 . 1 Commerce-EDA .1 .1 .2 OEO - - - .5 HEW .1 .1 .1 .2 .2 ~lJD_Publichousingand rent supplements- .1 .1 * 1 .1 .1 Other interior-Servicesto lndians,et cetera2---- .1 .2 .2 .2 .2 Labor (1) (1) (1) SBA-Economic opportuntity loans (1) Appalachian progiam (FAP) -~----- _----- (1) Subtotal .5 .6 1.0 .9 1.8 2.0 .3 .4 .5 .1 .2 .2 .2 .2 .2 .3 .4 .5 .4 .4 .5 .2 .2 .3 (1) .1 .3 .4 .3 .3 (1) (1) (1) (1) (1) (1) Total 9.5 10.9 12.5 13,4 18.3 21.1 24,6 1 Less than $50,000,000. 2 Includes some trust funds. 3 All trust funds. Notes: (1) Total may not add due to rounding. (2) T~e amounts shown in this table are (3) NOA's for regular budget accounts except where program level is the more meaningful concept, (2) expenditures for trtgst funds. 2.4 2.9 27.7 PAGENO="0101" 95 Nouz.-The tabulation prepared by the Bureau of the Buc~get does not encom- pass all~~rograms which affect the ~oor, but only those that have special impact on them qua poor. The followi~g are the criteria used In selecting the programs for inclusion in the tabulation. 1. Programs which are aimed at the poor in generaL or at a specific group of the population who are poor (example, Indians) or at a particular region which is considered poor (example, Appalachia). Major programs in this category include: Title I of ESEA. Economic Opportunity grants. Work study. Adult basic education. Head Start. Indian health, education, and welfare. Job Corps. Work incentive activities. Neighborhood Youth Corps. Concentrated Employment Program. Public assistance. Food stamp program. Appalachian program. Aid to depressed areas and regions. Comprehensive health centers. Day care centers. All other OEO programs. 2. Programs which are aimed principally at low income groups of which the poor constitute a significant proportion. Major programs in this category include: NDEA student loans. Health insurance for the aged. Medicaid. Veterans disability pensions. Veterans survivor pensions. Direct distribution and removal of surplus agricultural commodities. Minimum wage enforcement. Grants for maternal and child health and welfare. Low rent public housing. Comprehensive city demonstration program. 10-year housing prOgram. 3, Programs which are open to all regardless of income but which are taken advantage of most by low income groups. Major programs in this category include; V~cationa1 education. MDTA. Selective Service System rejectee program. VA hospital, nursing, domiciliaryand outpatient care. `Grants for voch'tiO'nal rehabilitation service. Grants for neighborhood facilities. 4. Programs which are open to all regardless of income but which contain specific benefits to the poor or to the very low income groups. Major programs in this category incltLde: OASDI. Railroad retirement program. Unemployment insutance. Veterans survivor compensation. School lunch and special milk programs. Rural housing loan program. Programs in the first category are included in the tabulation mostly at 100%. For the remaining categories only that portion of a program which is estimated to relate to poor beneficiaries is included. It should be emphasized that this tabn~ lation relates to outlays of the Federal Government assisting the poor and should not be taken to rneasnre the beaeflts that the poor derive from these programs. The above criteria are somewhat narrower than those applied to last year's tabulation. All years appearing in the tabulation have been prepared on the asis of the new set of criteria. As an indication of the effect the new criteria dave bad, for 1909 the difference in the totals would be between $1 and $1.5 )illlOfl.. PAGENO="0102" Mr. ITrIGHES. The effective administration of Federal aid programs h~is received increasing attention in the last several years. The Bureau's concern has been both with the budgetary impact of grant expendi- tures, and with the means of coordinating the growing number of grant programs as well as devising measures for the more efiective management of cooperatively financed Federal programs. The Bureau of the Budget has consistently supported the purposes of an Intergovernmental Cooperation Act. My testimony will be di- rected almost entirely toward those portions of S. 698 where signifi- cant problems or issues arise. I intend now to turn to discussion of the individual titles of the bill. Title I deals solely with definitions, and we continue to support title II, designed to improve the administration of grants-in-aid to the States. We also favor the provisions of title 111 which would authorize all Federal departments and agencies to provide specialized or technical services on a reimbursable basis to State and local governments. We are fully in accord with the proviso that such services shall include only those which are not reasonably and expeditiously available through ordinary business channels. Title IV of S. 698, dealing with coordinated intergovernmental pol- icy and administration of grants for urban development, differs slightly in language from the provisions of title IV of the Advisory Commis- sion intergovernmental relations bill. It would be our suggestion here that the provisions of 5. 698 be conformed to the Commission's bill. The Bureau is in accord with the aim of assuring periodic congres- sional review of Federal grant-in-aid programs, as is provided for in title V, and in S. 458 and 5. 735. We doubt, however, either the feasi- bility or desirability of an arbitrary 5-year termination date for such programs. Senator MTJSKTE. Does it disturb you to be interrupted? Mr. HUGHEs. Not at all, Mr. Chairman. Proceed any way you would like. Senator MUSKIE. Those questions which might generate an extended discussion I would postpone until the end, but from time to time it is helpful to interrupt with questions on relatively minor points. First of all, what is your count of grant-in-aid programs now? Our staff uses different figures. I never know which one is firm. Mr. HUGHES. ~Mr. Chairman, there are several hundred. I think the count depends on the subclassification and what we decide is the pro- grain versus component of a program. It is of the magnitude of 300 or 400. Senator MUSKIE. I think my staff is now using or did in the opening statement, the figure of over 500. That is 500 authorizations, I believe. Tt is the Library of Congress figure. Mr. HUGHES. We would accept Mr. Labovitz as an authority on this subject and we would be pleased to agree in general terms at least with your staff. (A memorandum on this subject, furnished by Mr. I. M. Labovitz, sethor specialist in social welfare, the Library of Congress, follows:) NUMBER AND SCOPE or FEDERAL AID AUTHORIZATIONS Any count of Federal aid programs is necessarily somewhat arbitrary and imprecise-and its preparation is a complicated job, because the authorizations PAGENO="0103" 97 are diverse and there are difficulties in defining the unit, the "program" or "authorization," that is to be counted. Our last detailed enumeration was pre- pared two years ago, following publication of the Second Supplement to the Catalog of Federal Aids to State and Local Governments, issued by the Subcom- mittee on Intergovernmental Relatiofis. Two years ago, there were authorizations on the statute books for something like 162 programs or groups of closely related programs of Federal aid to State and local governments. When the total of 162 was subdivided to identify separately the formula grants, project grants, loans and loan guarantees, shared revenues, technical assistance, and other types of intergovernmental aid, the list indicated that there was then a grOss total of 479 separate authorizations or subcategories of programs. This included instances of multiple classification of the same authorization (in cases where the same provision of law authorized a formula grant and a project grant, or a grant and technical assistance, or a grant and a loan). Subtracting 80 instances of multiple classification, we had a net count of 399 separate authorizations or subcategories at the beginning of 1966. We do not yet have a comparable up-to-date count-mainly because preparation of the new edition of the Catalog of Federal Aids to State and Local Government~ is still in process and the Catalog may not be ready for several months. We hope to compile a new summary when the document is issued. It is clear, nevertheless, that the number of Federal aid authorizations has increased significantly as a result of Congressional enactments in the last two years. By now there are statutory authorizations for perhaps 200 programs or groups of closely related programs, compared with 162 in 1966; aiid we now have probably 500 or more separate authorizations or subcategories of programs, compared with 399 in 1966. The earlier enumeration indicated that there were 91 authorizations for apportioned formula grants and 226 for project grants. In 1968, the number of apportioned formula grants is surely above 100, and the number of project grants probably has approached or passed 300. All these authorizations are for specific categorical programs-but the scope of the categories varies greatly. Examples of this diversity are the broad authorizations for large grants for highway construction; the subdivided and complex authorizations for large public assistance grants; the new broadened category of partnership-for-health grants; and dozens of specialized programs, each providing relatively small sums for selected projects in narrowly defined fields. Senator MUSKIE. It is my impression that more and more of these programs, especially the new ones, have termination dates now. Mr. Huouns.. That is correct, some of them quite short. Senator MUSKIE. They could not exceed 5 years and many of them are less than that. Mr. HUGHES. That is correct. Senator MTJSKIE. If we could get in the record some documentation on that point, this might become a moot point. Mr. HUGHES. Perhaps so, Mr. ~Jhairman. I think our concern is with any fixed figure, simply because the circumstances under which pro- grams arise and the corresponding circumstances under whièh they should be reexamined seem to us to differ widely from case to case. We certainly suport the concept of periodic review of grant programs and feel that this should be a continuing part of both the legislative and the executive process. Senator MUSKIE. I think I will withhold any further questions on this. Do you think you can get us any idea of how many programs or what proportion of them have termination dates of 5 years or less ~ Mr. HUGHES. The count is not a difficult thing. The definitions that lead up to the count must be spelled out fairly carefully, but the count itself is feasible. The tabulation of expiration dates should be possible, and we would be pleased to work with your staff and with Mr. Labovitz md get some data for the record. (A table showing Federal grants-in-aid to State and local govern- nents, with limitations of authorization in programs enacted since PAGENO="0104" 98 1961, was submitted as part of the testimony of the Advisory Commis- sion on Intergovernmental Relations, and appears on pages 158-162.) Mr. Huonj~s. Also we wish to reaffirm our earlier views that th Congress itself should conduct the periodic reviews. We believe tha periodic review of grant programs by the Comptroller General o other bodies could not be as effective or serve the same purpose as a review by the relevant congressional committee, and that any revie of grant programs should be initially limited to new.programs. Title VI of the bili would authorize the President to follow a pro- cedure based on the Reorganization Act of 1949 to consolidate grant- in-aid programs. Thus, it attempts to deal with one of the mos si~niflcant problems effecting intergovernmental relations-the multi- plicity of narrow categorical grants. Under title VI, the President would be authorized to prepare plaii to consolidate individual grant-in-aid programs within the same func- tional area when he finds consolidation to be desirable or. necessary. Each plan could provide for a single consolidation and would have to place responsibility in a single agency and specify the grant formula for the consolidated program. Such plans, like reorganization plans, would be transmitted to the Congress by the President. Congressional action would be governed by a procedure similar to that under the reorganization statute, except that the Congress would have 90 days to reject grant consolidation plans rather than the 60 days provided for disapproval of a reorganization plan. If title VI is narrowly interpreted, it adds very little to the authority which the President already has under the reorganization statute and might conceivably be construed as a limitation on that authority. Under the reorganization statute, the President has the authority to propose plans which may transfer functions involving any number of grant- in-aid programs. For example, reorganization plan No. 2 of 1968 trans- fers authority for a series of urban mass transportation grant pro- grams from the Department of Housing and Urban Development to the Department of Transportation. Under title VI each plan may deal with "only one consolidation of individual grant programs," and that must be within the same functional area. Section 602(a) (2) of title VI appears to be the only specific addition to the President's existing authority. It states that each grant consoli- dation plan "shall specify in detail the formula or formuh~s for the making of grants under the consolidated program * * ~." If that lan- guage is intended to authorize the President to include changes in matching and apportionment formulas in a grant consolidation plan, it goes beyond the authority contained in the reorganization statute. However, that authority by itself may not be useful since program consolidation would generally also require changes in eligibility, plan- ning, and other requirements as well. In addition, we believe the committee should carefully consider the use of the type of procedure set forth in title VI to deal with matters which go beyond questions of the internal organization of existing executive branch functions with which the President may deal under the reorganization statute. Grant consolidations, in most cases, would liav-e to involve ehanges in existing functions and substantive law which are of major concern outside the executive branch. PAGENO="0105" 99 While we have reservations about the apprQach used in. title VT, we share your concern about the current multiplicity of narrow grant programs. We believe some consolidation intQ broader program grants is desirable and have been working with various agencies to explore the ppssiblity of developing such consolidated grants. Senator Musi~IE. With respect to title VI, I take it your position is neither affirmative nor negative at this point? Mr. HUGH~E5. That is correct, Mr. Chairman. First, we are somewhat uncertain as to the impact of title VI, for the reasons that we have mentioned. Secondly, and we are somewhat embarrassed by this, I am frank to say, we are not certain of the impact of a provision such as title VI on the general and continuing problem of executive-legislative relations. You may he aware that questions continually arise of the constitu- tionality and validity of the Reorganization Act procedure, and at least one of the arguments in support of that procedure has centered around the fact that it deals with essentially executive matters; namely, the organization of agencies. This fact gives us some concern in con- sidering whether it is appropriate and constitutional to deal with the amendment of substantive legislation by this kind of a procedure. Certainly this kind of authority would give the President a very useful tool in accomplishing purposes that you and we agree are desirable. Senator MU5KIE. May I make two or three observations at this point? I think you are undoubtedly correct that with some and maybe n~iany Members of this Congress with this proposal you touch a sensitive nerve about the proposition of legislative authority, between the legis- lative and executive branches. Second, I think you are also correct in suggesting in your prepared statement that the executive reorganization authority gives some authority to us. And yet I suspect that it has been little used because of the first reason that you just touched upon. It is used in the case cf the Department of Housing and Urban Development transfer tO the Department of Transportation, I think with the advance approval of the Congress. I think it was understood that there would be some transfer of this kind, because it wasn't possible to, work it *out legislatively. Mr. HUGHES. The problem was dealt with in the creation of the Department of Transportation itself, and there was the expectation that there would be a follow-on action of some sort. Senator MUSKIE. In other words, my feeling is that without addi- tional mandate from the Congress, perhaps in the form we have in this bill, the President is not likely t~ use the reorganization authority he now has to accomplish this purpose, even though the authority may exist to some degree. Is that an accurate assessment; do, you thihk? Mr. HUGHES. We certainly would proceed very cautiously, Mr, Chairman. I don't think there is any question about that, Senator MU5KIE. So the question then w'hich we seek to raise in this legislation, is whether or not this is the time for Congress to con- sider it positively, and to give a positive mandate or reject it. PAGENO="0106" 100 Mr. HUGHEs. Yes. Part of our concern here is that if the Congress in considering this elects to reject it, that rejection may carry with i implications with respect to the Reorganization Act authority, whic is generally accepted. Senator MUSKIE. Let me make one further point or suggestion. You have indicated, at least this is the implication of what you have said, that if this provision is retained in the bill, it ought to be modified in some respects. Mr. HUGHES. Yes, sir. Senator MUSKIE. Would you be willing to work with the staff in developing these modifications? Mr. HUGHES. We certainly would, Mr. Chairman. Senator MUsKIE. Thank you. Mr. HUGHES. Title VII amends the Federal Property and Adminis- tratwe Services Act by adding at the end thereof a new title VIII- urban land utilization. This title would require the Administrator of General Services to give advance and reasonable notice to a respon- sible official of local governments `before offering for sale any Federal real property located within an m~ban area as defined in the act. The Administrator also would be required to' provide available zon- ing information to prospective purchasers of such property. He would additionally be required to the extent practicable to comply with lo- cal zoning requirements, to give advance notice of plans to' acquire additional Federal property, and to consider objectio'ns by local gov- ernments to proposed Federal acquisition and use of reial property in uthan areas. The Bureau of the Budget generally supports provisions o'f title VII of this bill but believes that the provisions should he conformed to those contained in the Advisory Commission's bill. `Title VIII of 5. 698 is to establish a uniform policy for the fair and equitable treatment of owners, tenants, and other ~pe'rso'ns displaced by the acquisition of real property by Federal and federally assisted programs. This policy would be as uniform as practicable as to (1) re- locatiun payments, (2) advisory assistance, (3) assurance o'f avail- ability of standard housing, and (4) Federal reimbursement for relo- cation payments under federally assisted programs. Generally, we believe that title VIII would establish a workable, uniform system for fair and `equitable treatment of those displaced by such land acquisitions. However, we believe that it could be substan- tially improved in a number of respects to meet more adequately its objectives. If it is agreeable to the committee, I would like to present for inclusion in the record at an appropriate' point a statement contain- ing detailed comments on title VIII and at this time address our more significant recommendations. Senator MUSKIE. The statement will be included in the record at the close of your statement. Mr. HUGHES. Thank you, Mr. Chairman. First is the question o'f the method of financing the cost of reloca- tion expenses for federally assisted programs and fo'r programs which require State agencies to furnish land incident to a Federal public improvement project. This subject is covered in sections 804 and 807 (b). The net effect of both provisions is to require the Federal Gov- ernment to pay 100 percent of the cost of relocation in most case's. PAGENO="0107" 101 We agree that under these programs the same type of relocation payments, services and assurances as are required for Federal pro- grams should be furnished. However, we believe that the cost of relo- cation should be considered as a part of the cost ~of the acquisition of land and should be borne by the party responsible for land acquisi- tion. Where acquisition of land is a prerequisite to a project and the State agency normally would pay for the cost of land, we believe that the cost of relocation should be the responsibility of the State agency. Where the cost `of the land is shared on some type of a previously agreed-upon basis, or prescribed `by law, we believe that the costs of relocation should be shared on the sam&hasis. Second, section 803(c) (2) require's assurance of the availability of adequate substitute dwellings within a reasonable period of time prior to displacement for all individuals displaced by the Federal Govern- ment. This assurance may be waived in periods of national emergency proclaimed by the President. We believe that there may be other; cases when it will be in the national interest to proceed urgently with a land acquisition and that, therefore, the Government must have some addi- tional flexibility in this regard. For example, we have been advised by the Department of Defense that there have been a number of times when it has been necessary to acquire property for urgent national defense purposes `when the President has not proclaimed a period of national emergency. There may well be other situations in addition to the national de- fense when the Government must move swiftly to protect individuals or a community. We recommend revision of section 803 (c) (2) to' pro- vide that the President may prescribe by regulations those situations when such assurances may be waived. Third, title VIII does not recognize the problem of the owner- occupant of real property which is acquired, but for which the fair market value paid is not sufficient to enable the previous owner to ob- tain a decent, safe, and sanitary dwelling adequate in size to meet his needs. This most frequently occurs as a result of the private market no longer producing a significant volume of new housing in the price ranges comparable to that `being acquired under Federal and federally assisted programs. We believe this problem should be dealt with in title VIII by providing for a payment of up to $5,000 which would represent an amount which, when added to the acquisition payment, equals the average price required for a decent, safe, and sanitary dwelling of modest standards available on the private market. Fourth, section 802(b) provides that a displaced person who moves or discon:tinues his business may elect to accept an optional payment of up to $5,000. If, as we understand it, the intent of this provision is to recognize both the cost of moving and the economic impact of displacement, we recommend that it be clarified by authorizing the payment of (a) actual moving expenses plus (b) a payment equal to the average annual net earnings of the business of $2,500, whichever is the lesser. Fifth, section 803(d) would make three changes in section 7(b) (3) of the Small Business Act. Under the current law some businesses are eligible for long term low-interest loans, if they have suffered sub- stantial economic injuries as a result of displacement by a federally- aided urban renewal, or highway construction program, or by `any PAGENO="0108" 102 other construction conducted by or with funds provided by the Federal Government. Title VIII would extend this loan program (1) to cover not only small bi~sinesses displaced, but also nondisplaced small busi- riesses which suffer economic injury, (2) to cover businesses injured not only by urban renewal and highway or other construction pro- grams, but, by also ". . . any other public improvement program * . ." and (3) to cover not only businesses injured by Federal or federally-aided programs, but also businesses injured by wholly State or local programs. We are opposed to these amendments to the Small Business Act. We believe it is impractical to provide assistance to other than those who are actually displaced, and we believe it inappropriate for the Federal Government to assume responsibility for relocation for dis- placees from other than Federal or federally-aided programs. Title IX of the bill would establish a uniform policy on land acquisi- tion practices. We concur in the objectives of `title IX; but believe that certain amendments are desirable for purposes of clarification, per- mitting greater flexibility and more fully protecting the Government~s interests. Section 901 (a) (3) concerns the establishment of a fair and reason- able price to be paid for property acquired. We interpret this provision as assuring `that the Government will reimburse landowners in an amount which is fair and reasonable, commensurate with the appraised value of the land, and arrived at through mutual negotiation. We do not believe that the provision is intended to preclude effective nego- tiation or to establish a "one-price" policy. Since some of the adminis- tering agencies so interpret `the section, we recommend that the legis- lative history make it clear that a hard and fast "one-price" policy is not intended. Section 902 provides that when real property is acquired, the fair market value for such property should be paid therefore unless it is the intention of the seller to convey the property for less than fair market value. We concur in this provision. Section 903(c) provides that in determining the extent of real property to be acquired and the evaluation thereof, we should pay for tenants' improvements even though the tenant may be required to remove the improvements by a contract with the owner of the land. The Department of Justice and some of the major land-owning agencies point out that `the present language might cause the Federal Govern- ment to pay both the property owner and the tenant for the improve- ments. We will be glad to provide language to assure that the interest of the United S'tates will be protected and the objectives of the provision accomplished. Section 904 provides that an acquiring agency shall reimburse the seller for all reasonable expenses incidental to the transfer of title to the Government. We favor the objective of this provision, but recommend certain minor amendments concerning the timing of the payment and limitations on reimbursement to seller for mortgage penalty costs. We will provide language to improve this `section. Section 905 (b) details those land acquisition policies that State agencies will be required to follow after January 1, 1970 to obtain approval of grants, agreements, or contraot~ for Federal financial assistance where acquisition of land or of any public improvement is PAGENO="0109" 103 part of the cost. We rec~ommend that this provision be amended to defer the effective date of the requirement for `3 years after enactment to allow State and local governments sufficient time to make necessary change$ in their laws. Section 905(b) (3) provides for the acquisition of tenants' improve- ments in federally assisted programs. The purpose of this section is identical to the pu~pose of section 903(c) which is applicable to Federal programs. We have already recommended certain revisions to section 903(c). We believe that the two sections should be identical. Section 906 provides that effective January 1, 1970, certain specified sections of the Housing and TJrban Development Act of 1965 are re- pealed. We have already recommended that the effectiye date for the requirements of Federal aid specified in section 905(b) be changed to 3 years after enactment. We would make the same recommendation concerning repeal of the specified sections of the Housing and Urban Development Act of 1965. The purpose of title X is to encourage simplification and improve coordination of accounting, auditing, and financial reporting require- ments of Federal assistance programs, and to provide for a survey of the adequacy and effectiveness of the' accounting and auditing sys1tems of recipient jurisdictions. Additionally, this title of the bill places new responsibilities upon *the Comptroller General of the United States in respect to the financial administration of grant programs at the State `and local levels, including the promulgation of rules and reg- ulations for using State and political subdivision accounting and audit- ing in meeting financial management requirements of such programs. This title of the bill would also require a joint study by the Comp- troller General of the United States, the Secretary of the Treasury, and the Director of the Bureau of the Budget, looking towards mm- provemen't of the financial administration `~f grant programs at the Federal and local levels. We agree `that there is need for improving the financial management of grant programs through more simplification and better coordina- tion of accounting, auditing, and reporting activities. The committee may be interested to know that in 1965 the Bureau of the Budget is- sued circular No. A-73, the purpose of which is to promote improved audit practices and to achieve more efficient use of manpower through improved coordination of `the efforts of Federal, State, and local gov- ernment audit staff. In this regard the committee may also be interested to know that just last week the Comptroller General, the Secretary of the Treasury, and the Director of the Bureau of the Budget agreed to launch, under the auspices of the joint financial management improvement program, an interagency study in this area. We recommend deferral of legisla- tive action on this title of the bill pending completion of the inter- agency study. In conclusion, Mr. Chairman, I simply reiterate that the Bureau of the Budget believes the objectives of the Intergovernmental Coopera- tion Act are most meritorious and will make a positive contribution o a stronger and more effective American federalism. Mr. Chairman, that is the end of my prepared statement, but yester- lay's `action referring `the Joint Fund Simplification Act to this sub- ~ommittee suggested to us perhaps the desirability of making some nention of that in our presentation at these hearings. PAGENO="0110" 104 The bill was transmitted by the then Director of the Bureau of the Budget to the Congress, Mr. Charles Sohultze, on August 11, 1967, and you may wish to include in the record, the letter, the bill and at- tachments in the form of an explanatory ~tatememt and some examples of the kinds of actions which might be possible under the act. Senator MU5KIE. It will be included in the record, and before I forget it~ circular No. A-73 to which you referted in your prepared statement will also be included in the record. (The materials referred to follow:) EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDOET, Wa8hington, D.C., Augu8t 11, 1967. Hon. HUBERT H. HUMPHREY, Pre$ident of the ~Ien~&te, Waehington, D.C. DEAR Mit. PRESIDENT: We are transmitting herewith for appropriate considera- tion the proposed "Joint Funding Simplification Act of 1967." This proposal was drafted in response to the President's request-in his March 17 Message on the Quality of American Government-for legislation that would make it possible ". . . for Federal agencies to combine related grants into a single financial package, thus simplifying the financial and administrative procedures-without disturbing, however, the separate authorizations, appro- priations, and substantive requirements for each grant-in-aid program." A number of Federal assistance programs which finance different activities can often be brought together in a single project to support similar or directly related purposes. Such combinations of related programs would enable State and local governments and other grantees to use the wide variety of Federal assistance programs more effectively and efficiently. However, such combinations cannot be "packaged" and administered easily under existing laws and regulations. Each Federal grant program may have different requirements in such matters as application forms, accounting pro- cedures, advisory panels, reporting dates, etc. Further, the grantees must often work with several Federal agencies (or constituent elements of a single agency) - each with its own distinct administrative practices. As a result, considerable effort is required and significant delays are encountered. The purpose of this proposal is to remove or simplify certain administrative and technical impediments which hamper or prevent the consideration, processing, approval and administration of projects which draw upon resources available from more than one Federal agency, program or appropriation. The Act would enable State and local governments and other public or private agencies to use Federal financial assistance under two or more programs in support of multi- purpose projects. Under the bill: Federal agency heads would be authorized to establish uniform require- inents respecting technical or administrative provisions of law so that jointly funded projects would not have to be subject to varying or conflicting rules or procedures; In appropriate cases, Federal agencies would have authority to delegate to other agencies power to approve portions of projects on their behalf; Federal agency heads could establish joint management funds in their agencies to finance multi-purpose projects drawing upon appropriations from several different accounts; The President would prescribe appropriate regulations for, and approve agency delegations of power and functions under the Act. He would make reports to the Congress on actions taken, and make recommendations for additional legislative action, including proposals for consolidation, simpli- fication or coordination of grant programs. The Act would expire after three years. The Joint Funding Simplification Act of 1967 would not, except as specifically provided, affect substantive provisions of law relating to Federal assistance programs such as eligibility criteria, maintenance of effort~ matching ratios, authorization levels, program availability, etc. Problems presented by the diver~ity in such provision~~ as these would be studied in connection with pro- posals for grant consolidation. Tn the Message on the Quality of American Government, the President also requested the Director of the Bureau of the PAGENO="0111" 105 Budget "to review the range of Federal grant-in-aid programs to determine reas in which a basic consolidation of grant-in-aid authorizations, appropria- ions, and statutory requirements should be carried out." That effort is now underway. Experience gained under the Joint Funding Simplification Act will be of great assistance in the development of a workable grant consolidation program. Sincerely, CHARLES L. SCHULTZE, Director. [Circular No. A-73j Exucuvivu Orrien or THE PRESIDENT, BUREAU OF THE BUDGET, TVashingtou, D.C., August 4, 1965. To the heads of Executive Departments and establishments. Subject: Audit of Federal grants-in-aid to State and local governments. 1. Purpose. This Circular sets forth policies to be followed in the audit of Federal grants-in-aid to State and local governments. The primary objectives of this Circular are to promote improved audit practices, and to achieve niore efficient use of manpower through improved coordination of the efforts of Federal, State, and local government audit staff. `To the extent appropriate, the policies should also be applied to contracts with, and loans to, State and local governments. 2. Coverage. This Circular applies to all Federal agencies responsible for administering programs that involve grants-in-aid to State and local governments. 3. A udit policies. Federal agencies are responsible for providing adequate audit coverage of grant programs, as a constructive aid in determining whether Federal funds have been applied effectively and in a manner that is consistent with re- lated Federal laws, program objectives, and underlying agreements. a. Dete.rniination of audit requirements. Each Federal agency conducting grant programs will establish audit policies for guidance of its internal or independent auditors. For this purpose, the agency will review its individual grant programs to determine the coverage, frequency, and priority of audit required for each program. Such review should include consideration of the following factors: (1) The dollar magnitude and duration of `the grant program. (2) The extent of Federal matching requirements. (3) The Federal management needs to be met, as developed in consultation with the responsible program officials. (4) Prior experience in auditing the program, including the adequacy of the financial management systeni and controls. The audit policies of Federal agencies will provide for relying, to the maximum extent feasible, on internal or independent audits performed at the State and local levels and for appropriate use of the principles of statistical sampling. b. Scope of individual audits. To assist in deciding on the scope of Federal audit required `for each grant program, determinations will be made of the adequacy of the internal management control system employed by the grantee-including consideration of whether the accounting records are maintained, and reports are prepared, in accordance with generally accepted accounting principles, and whether audits are carried out in accordance with generally accepted auditing standards. This involves an evaluation of the grantee's organizational arrange- ments, financial systems, and facilities for audit and other reviews. The aim is to determine whether the management controls provide an effective system that promotes efficient administration and satisfies governing laws and regulations, the audit service is provided on a timely basis by qualified staff, and the auditors have sufficient independence of operations to permit a comprehensive and objec- bive service to management. Where grantee practices are considered to be acceptable under such standards, B~ederal audits will be oriented toward establishing the adequacy of the system md controls in operation, supported by a testing of transactions to verify the reliability of the system. Where the grantee's internal management control system does not meet these standards, Federal agencies will encourage the grantee to review existing prac- ;ices and bring about necessary improvements, and will cooperate by lending such issistance as may be feasible in developing an appropriate system and orienting ~rantee staff. Each Federal agency will make available-on request from another Federal tgency-the results and findings of previous audits that identify the adequacy of PAGENO="0112" 106 a grantee's system of financial management and control as well as such other in- formation as will assist in establishing audit requirements and the scope of audit. c. A,i'ongcmcnts for conduct of audits. In order to conserve manpower, promote efilcieticy, and minimize the impact of required audits on the operatl~ns of grantee organizations, the audit of all grant programs administered under the juris(hetion of a single Federal department should be coordinated in all cases where related authorities and responsibilities are delegated to constituent olga flizOtiolls. In addition, each grantor agency will give full consideration to establishing cross-servicing arangenients under which one Federal agency would conduct audits for another-whenever such arrangements are in the best interests of the Federal Government and the grantee. This is particularly applicable where two or more Federal agencies are auditing programs in the same State agency or local unit, or in offices located within the same geographical area, Under such circumstances, it will be the responsibility of the Federal agencies involved to collaborate in determining the feaslbility of one of the agencies conducting audits for others, and to work out mutually agreeable arrangements for carrying out the required audits on the most efficient basis. To the extent that problems are encountered which cannot be resolved through such collaboration, the Bureau of the Budget will lend assistance as required. d. Coordi/nation of Federal, ~tate, and local asul its. Federal agencies responsible for conducting audits of grant operations will foster close cooperation and coor- dination among the auditors of the respective jurisdictions. Continuous liaison, including the exchange of audit standards and objectives, should be maintained among the Federal, State, and local audit groups involved. As a minimum, these groups will collaborate in the development of audit schedules to minimize the amount of effort required, as well as the impact on operations of the grantee offices. While the Federal Government cannot automatically accept audits per- formed by a representative of the grantee, maximum use should be made of audits performed by the grantee's internal or independent auditors, so as to avoid unnecessary duplicetion by Federal auditors. 4. Implementation action. Federal agencies administering grants to State and local governments are requested to make a critical review of policies and prac- tices eurrentl3t followed in the audit of grant programs', and to take such action as is necessary to comply with the' policies set forth in this Circular. For this pur- pose, the head of each agency should designate a central point in the' agency to be responsible for seeing that this is done expeditiously. Each Federal agency subject to this Circular will submit a report (original and one copy) to `the Bureau of the Budget by March 31, 196q, as to the actions taken and progress made toward: (a) establishing and puhlisbing statements of audit requirements; (b) coordination of audits within the agency; (c) estab- lishing cross-servicing arrangements; and (d) coord'inating Federal audit work with that of the State and local governments concerned. CHARLES L. SCHIJLTZE, Director. Mr. HUGHES. Thank you, Mr. Chairman. I can, i~ you wish, corn- merit on the joint funding bill or I will be pleased to stop. Senator Musiun. Why don't you go ahead. Mr. HUGHES. All right, sir. The August 11 letter points out that the proposal was drafted in response to the President's request, in his March 17 message on the quality of American Government, for legislation that would make it possible "for Federal agencies to combine related grants into a single financial package, thus simplifying the financial and administrative procedures without disturbing, however, the separate authorizations, appropriations and substantive requirements for each graiit-in-aid program." Under the bill a number of Federal assistance programs which finance different activities can be brought together in a single project to support similar or directly related purposes. Such combinations of related programs would enable States and local governments and other PAGENO="0113" 107 grantees to use the wide variety of Federal assistance programs more efFectively and efficiently. However, such combinations cannot be packaged and administered easily under existing laws and regulations. Each Federal grant pro- gram may have different requirements in such matters ~s application forms, accounting procedures, advisory panels, reporting dates, et cetera. Further, the grantees must often work with several Federal agencies or constituent elem~nts of a single agency, each with its own distinct administrative practice. As a result, considerable effort is required and significant delays are encountered. The purpose of this proposal is to remove or simplify certain ad- ministrative and technical impediments which hamper or prevent the consideration, processing, approval and administration of projects which draw upon resources available and for more than one Federal agency, program or appropriation. The act would enable State and local governments and other p.ublic and private agencies to use Fed- eral financial a~sistance under two or more programs in support of multipurpose projects. Under the bill, Federal agency heads would be authorized to estab- lish uniform requirements respecting technical or administrative pro- visions of law, so that jointly funded projects would not have to be subject to varying or conflicting rules or procedures. In appropriate cases Federal agencies would have the authority to delegate to other agencies power to approve portions of projects On their behalf. Federal agency heads could also establish joint management funds in their agencies, to finance multipurpose projects drawing upon appropria- tions from several different accounts. The President would prescribe appropriate regulations for and~ approve agency delegations of power and functions under the act. He would make reports to the Congress o~ actions taken and make recommefidations for additional legislative action, including proposals for consolidation, simplification, or coordination of grant programs. The act would expire after three years. I think those are the essential points, Mr. Chairman. Again I just emphasize that the act is not intended to alter substan- tive program requirements, but rather to facilitate the administrative procedures and practices that are required to carry out those program purposes. Senator MUsKri~. In a limited way it works at the same problem as the proposed consolidation of grants authority. Mr. HUGHES. That is quite correct, Mr. Chairman. Senator MUSKIE. I wonder if you might, Mr. Hughes, refer to re- cent developments in the executi~e branch to promote improved inter- governmental relations, especially as it relates to the present role of the Bureau of the Budget interagency arrangements. Mr. HUGHEs. I will be glad to do that, Mr. Chairman. We can also provide for the committee's more complete review some material for the record which would spell this out in more detail. A number of things are going on. Some of them have produced spe- cific results. Others have not, but we are hopeful about them. One, of course, is the grant-in-aid simplification legislation to which I just referred. 95-626-6S-----~S PAGENO="0114" 108 I referred in my statement also to efforts that we are engaged in with the agencies to consolidate grants-in-aid by legislative action. The health services legislation I believe you are aware of and have referred to in some of your comments. There are two other similar actions in the legislative mill this year. One of them deals, I believe, with vocational education, and the other is with student aids in the field of higher education. These measures would consolidate existing separate programs into a single entity which would be both more flexible and more easily manageable. We haye, in addition, we are carrying on a dialogue with a number of agencies. HEW is the most obvious candidate for this kind of `action, I think, but a number of other agencies as well, to explore, identify and carry forward plans to do `the same kind of thing in other pro- gram areas. The President of May of last year instructed the Secretaries of Hous- ing and Urban Development, Labor, and HEW and the Director of the Office of Economic Opportunity to revise and improve their pro- cedures for processing grant-in-aid applications in their areas. As a consequence of this effort, an interagency task force, under the leader- ship of the Department of Housing and Urban Development, has carried on a very intensive program which has produced identifiable results approximating a 50-percent reduction in application handling time. The time required is still more than those agencies or we wish it were, but `the effort has produced significant results, and more are in the works. We are carrying forward this same kind of effort in other agencies as well-in the Department of Interior, which has a number of grant programs, the Department of Transportation and `so on. Then in 1966 the President directed increased consultation by the Federal agencies with State and local chief executives in the develop- ment and execution of programs, and the Bureau of the Budget, after a series of meetings with State and local associations issued circu- lar A-85, of 1967. We would be glad to provide a copy for the record if you don't have it. The circular carries out the objectives of the direc- tive with respect to one particular area of Federal activity-tfr ~ssu- ance of regulations and other administrative instructions. The circular establishes a procedure under which instructions affecting State and local governments are transmitted in draft `by agencies to the ACIR for its consideration and review. In January of last year Bureau of the Budget circular A-80 was is- sued on `the coordination of development planning, an effort in a sense to have the planners plan a little better and in a more coherent fashion, particularly in programs that are based on multijurisdictional areas. The circular implements a Presidential message. The Bureau itself is engaged in a couple of major efforts that I think are worth mentioning. They are also spelled out in more detail in the material which we can provide. The first of these that I will mention is an effort to improve the Government's management information system and statistics. It is an effort based upon the utilization of mod- erii APP computer techniques and technology to bring together for the use of all more effective, more complete, and more revealing in- formation than we have ever been able to get together before about Federal programs and their impact both nationwide and on specific areas of the country. This effort is only beginning to get underway,~and PAGENO="0115" 109 it is inherently complicated and difficult, because of the multiplicity of progranis, the multiplicity of jurisdictions, and the need for a capacity to produce the information on any of a wide variety of classifications and cross-cutting categories. But we are making progress and do ex- pact both in the short run and long run to make some substantial improvements. The other area that is an internal Bureau effort involves increased emphasis on administrative policies, philosophy, and management. As 1 see it many of the old management doctrines are inadbquate for our current day needs. The old concepts of nice, clear, and precise lines of responsibility and authority certainly have been useful, and within particular areas of administration they provide concepts that we must adhere to. But most programs nowadays, and most Goveri~ment and I think for that matter private businesses nowadays, are by their na- ture interrelated, hence there is no way to organize the Government so that the Department of Housing and TJrban Development can oper- ate independently of the Department of Health, Education, and Wel- fare or of the Office of E~onornic Opportunity or of the Department of Labor. We need to work with the agencies and with the Congress on a new set of concepts which will cut across traditional categorical lines, committee jurisdictions, agency and bureaucratic jurisdictions, and so on, recognizing that manpower problems are, to an extent, health problems and education problems and training problems, and so on. Senator MUSKIE. I understand that the detail on this is now being reviewed and when the review is completed we may have it for the record. Mi. HUGHES. That is correct. (The materials referred to follow:) [From the Bureau of the Budget, Office of Executive Management, June 21, 1968] SUMMARY OF RECENT ACTIVITIES To PROMOTE IMPROVED INTERGOVERNMENTAL RELATIONS The Bureau of the Budget and other Federal agencies are making progress On a number of actions designed to improve the administration of grant-in-aid pro- grams and Federal-State-local relations. A brief st~mmary of the more important activities follows: GRANT-IN-AID SIMPLIFICATION In the President's message to the Congress concerning the Quality of American Government last year, the Director of the Bureau of the Budget was assigned the task of developing a plan and implementing legislation which would simplify the procedures for grant-in-aid application, administration and financial accounting. Legislation was accordingly developed to facilitate the combination of related categorical grants into single packages by applicants without disturbing the sub- stantive requirements of each program. State and local government associations were specifically consulted at several steps during the preparation of this legisla- tion inasmuch as their clients will benefit most directly. The legislation has now been introduced as the "Joint Funding Simplification Act of 1967" (HR. 12631 and S. 2981). Bureau staff are now studying with the Federal agencies the pro- cedures that must be developed to implement the provisions of the bill. CONSOLIDATION OF GRANTS-IN-AID The President's message on the Quality of American Government also directed the Director of the Bureau of the Budget to undertake a study of basic con- solidations of similar and related grant programs into broader purpose program grants. Bureau staff are already working with a Department of Health, Educa- PAGENO="0116" 110 tion, and Welfare study group which is exploring alternative proposals for the consolidation of HEW grants in a manüer similar to the example set by the Com- prehensive Health Planning Act of 1966. A proposal for consolidation of aids to students in institutions of higher learning has been developed and put before the Congress (H.R. 15067, Title 4). In addition, limited authority is being sought to permit recipient institutions to transfer funds between Economic Opportunity Grants and the proposed consolidated student aid programs as needed. Authority will also be sought for consolidation of vocational education grant programs by abolishing past practices of earmarking vocational education funds into heavily structured separate program channels. This improvement has been a key change requested by the States in 1967. A proposal developed by HEW for consolidation of numerous State plans re- quired by the several grant programs for education has been discussed with the State educatiOn agencies. Questions and problems raised by the State agencies are being evaluated by a survey group on which Bureau staff are participating. PROBLEMS CAUSED BY DELAYS IN FUNDING GRANP PROGRAMS A Bureau of the Budget team has studied the difficulties States experience because Federal funds for grant-in-aid programs are delayed by late congres- sional authorizations and appropriations. A report to the Director was made indicating the costs the States incur because of these delays, existing funding techniques for Federal grants, and recommendations for action to ease the prob- lem. The study also covered the feasibility from the Federal point of view of the "pre-financing" of Federal grants by State and local governments. A pre-fthancthg propos'a~, advanced by Governor Rockefeller of New York in 1967, envisages State financing of the Federal share of grant project costs prior to Federal grant ap~ proval, with the expectation that the Federal Government would make reim- bursement at a later date. The Clean Water Restoration Act of 1966 now makes provision for a limited program of eligibility for later Federal funding of previ- ously constructed sewage works. Bureau staff also participated in a special study of the special problems caused by delayed funding of Federal grants for education programs which was cai~ried out jointly with the Department of Health, Education, and Welfare. Bureau field visits to the States were coordinated with HEW data collection needs, and a joint HEW-Bureau team visited New York State and Colorado. The HEW survey report and recommendations were submitted to Secretary Gardner in September as "A Model Authorization and Funding System for Elementary and Secondary Education." The major proposals involved alleviating problems caused by delayed appropriations by (1) requesting Congress to appropriate funds one year in ad- vance, and (2) seeking longer-term authorizations. The Elementary and Sec- ondary Education Amendments of 1907 did adopt one-year advance funding and two-year authorization of the progam. The President is seeking one-year "advance funding" for college student aid programs in HR. 15067, the Higher Education Amendments for 1968. ShORTENING PROCESSING TIME The President, in May 1967, instructed the Secretaries of Housing and Urban Development; Labor; and Health, Education, and Welfare, and the Director of the Office of Economic Opportunity to review `their procedure,s for `the development and processing of grant-in.~aid applications and to recommend steps for reducing the time involved by 50 percent. An interagency task force under HUD's direction was created to implement that instruction, and made a progress report dated ,Tune 30, 1967. A report on "Reducing Federal Grant-in-Aid Processing Time" was forwarded to the President in late September. It reported that decisions already implemented or in the planning stage of implementation will achieve the following estimated reductions in Federal processing time in each multi-purpose area: Model Cities-~50 percent; Neighborhood Centeris~-50 percent; Manp'ower-47 percent; Water and Sewer~s-57 percent. The President subsequently instructed th~s'e agencies `to implement their proposals by December 31, 1967, and further insti-ucted those agencies and others to cut processing time similarly on other critical programs. The President requested reports on these efforts by March 31, 1968. Phese reports, covering time `analyses of 16 Federal agencies, reflect a net reduction of `over 50 percent in the processing time of 66 grant-in-aid programs or major program com:ponents. Including the initial report of the Joint Adminis~. ~rativ'e Task Force, 108 program's or major components, comprising the great PAGENO="0117" - 111 majority of Great Society grants-in-aid to State and loeal governments, have 110W been analyzed, with significant improvements madein nearly all. INCREASED CONSULTATION WITh STATE AND LOCAL GOVERNMENTS In 1966, the President direcited agencies to `conanit with State and local chief executives in the development and execution of p'rograms directly affecting State and local: affairs. Pb~ Bureau of the ~udget, after a series `of meetings with State and local associations and Federal `agencies, issued Circular ~o. A-85 in 1967, to iuiiplcm'en(t `the Presideath direetite with respect to one major area of Federal activit~-the issuance of regulations and other administrative instruction's. The Circular establishes a procedure under which instructions affecting State and local governments are transmitted in draft by the agencies to the Advisory Commission on Intergovernmental Relations. The Commission staff, acting as a geimral secretariat, distributes those draft,s or summaries thereof to the major State and local government associations which, in turn, are responsible for securing and presenting the views of `their clients on the drafts. In the first eleven months of operation, the ACIR has received from the Federal agencies and transmitted to the public ~nteres't groups 61 draft regulations. Evidence indicates that the procedures required by Circular A-85 are workin~g well and that substantiye comments by the State and local governments are considerable help to the Federal agencies. Federal agencies making the most use of the procedures have been HUD, OEO, and Interior. HEW, DOT, OEP, USDA and the Bureau of the Budget have also transmitted regulations to ACIR for A-85 review procedure. PLANNING COORDINATION In January 1967, Bureau of the Budget Circular No. A-80 was issued on the coordination of development planning for programs based on multi-jurisdictional areas. The Circular implements the President's Memorandum of September 2, 1966, on the c'oordin,ation of Federal development planning. Agency procedure's for carrying out the instructions have been reviewed to assure maximum consistency among the m'any Federal agencies and programs concerned. Under the Circular, Federal agencies are required to consult with Governors before designating planning and development districts or regions in their States. Wh'ere the State has established such districts, the boundaries of new districts designated by Federal agencies will conform to them unless there is a clear justification for not doing so. At this time, ~ Federal programs of planning assistance are coordinated under Circular A-80 procedures. The Director of the Bureau has taken recent action to further Implement the purposes of Circular A-80. In a memorandum to head~s of agencies on June 1sf, the Director has asked for developed procedures for 14 Federal planning assistance programs which have not yet been coordinated under the C'irc'ul'ar. Agency issu- aiice of `the procedures is targeted for August 1st. In a'd'di'tion, the agencies are being asked to report to the Bureau the experience gathered under A-80 in all the covered programs by the end of 1968. PLANNING COORDINATING COMMITTEE Bureau staff are also participating in a Planning Assistance and Requirements Coordinating Committee, established by the Department of Housing and Urban Development and representing the several Federal agencies which have grant program's which aid or require development planning. Three early tasks outlined for the committee are: To act `as clearing house for information on grants-in-aid awarded to State and local governments for various types of development planning, and to make such information available to the States as well. To survey comprehensively the many Federal requirements for planning in order `to ease the burden of the applicant State and local governments in supplying data, progress reports, and other types of justifications of planning activity. To monitor the numerous planning research efforts which the agencies are conducting in-house by contract in order to prevent duplication of effort and to propose areas for further relevant study. COORDINATION OF FEDERAL AIDS IN METROPOLITAN AREAS In accordance with the provisions of Section 204 of the Demonstration Cities ~ot of 1966, the Bureau of the Budget has issued Circular No. A-82 (Revised) PAGENO="0118" 112 providing procedures for review of local and State applications for Federal construction leans and grants by metropolitan or regional planning agencies. Section 204 required that an operative program for the review of the major physical development grant program applications by metropolitan or regional planning agnncies must be established by July 1, 1067. The Bureau of the Budget has the responsibility of designating the applicable planning agencies. Review agencies have now been designated in all 233 Standard Metropolitan Statistical Areas of the United States. A review of the first six months' experience in implementing the requirement indicates a general satisfaction with its develop- meat, an awareness of problem areas, and willingness to improve the review process. GRANT-IN-AID CATALOGS In February 1967, the Director of the Bureau of the Budget requested the Secretaries of Commerce, Labor, Interior. Agriculture, Housing and Urban Development, and Health, Education, and Welfare, and the Directors of the Office of Economic Opportunity and the Office of Emergency Planning to avoid unnecessary duplication in the production of general catalogs of Federal grants- in~aid. Several agencies were producing or contemplating the production of different catalogs which contained information on their own grant program's as well as information on programs of other agencies. Response to the Director's letter was favorable; a single revised catalog listing all Federal programs of the agencies which bear on individual `and community development was published under `the leadership of the Office of Economic Opportunity. The new OEO Catalog of Federal Assistance Programs, which became generally available in July, contains information on 458 Federal assistance programs. A companion document to the Catalog, the Vice President's Handbook for Local Officials, was recently issued by the Office of the Vice President and ha's been distributed to over 50,000 State and local `officials. The Director has established an interagency task force to further integrate these efforts and build upon the concept of a single authoritative catalog for Federal domestic assistance programs. The task f~'rce is `to advise `the Director on matters such as the assignment of organizational responsibility for publication and maintenance of such a catalog, additional matters to be covered, and methods to insure periodic updating. Task force members include representative's of the Departments of Labor, Oommerce, Interior, Agriculture, Transportation, Housing and Urban Development, and Health, Education, and Welfare, and the Office of Economic Opportunity, Office of Emergency Planning, Library of Oongress (Legislative Reference Service), and the Office of the Vice President. A final rep4oI~t has been submitted to the Director. Bureau of the Budget staff are now considering action's which should be taken in response to this report. UNIFORM DETERMINATIONS OF ALLOWARLE COSTS FOR FEDERAL GRANT PROGRAMS The Bureau of the Budget has recently issued Circular No. A-87 which sets uniform standards for determination of allowable costs for administrative and other program-related expenses under all Federal grant-in-aid programs. One major thrust of the circular would be to have State and local indirect overhead costs recognized as allowable costs in connection with administration of aid programs. The objective is to `achieve greater uniformity and to eliminate so far a's possible present differences in agency practices. GRANTS MANAGEMENT IMPROVEMENT STUDIES Several projecgts are currently underway which will improve the management of Federal grants and contracts, particularly for the grantee. A Federal team comprised of the Bureau, NSF, DOD, GAO and HEW/NIH has completed a review of the problems which universities experience because of Federal requirements for time and effort reporting on grant and contract projects. The findings of the team resulted in an amendment to Circular A~-21 which has just been issued. Another project having to do with Federal-university relationships ha's recently been completed. Budget Circular No. A-88 has been issued calling for a single Federal agency to negotiate indirect cast rates with an individual university, with all other Federal agencies following that guideline. The circular also requires that one Federal agency do the auditing of all Federal grants and contracts at the university. PAGENO="0119" 113 The letter-of-credit mechanism for orderly and timely flow of grant monies to recipients, designed to achieve Federal savings on interest, is being reviewed by an interagency group composed of the Bureau, Treasury, HEW, and the GAO. Recent experience indicates tMt grantees have been drawing funds down too fast, without corresponding expenditures. Procedures to tighten the timing of funds are being studied. The interagency group is also exploring other programs in which the introduction of the letter-of-credit might be beneficial. INFORMATION SYSTEMS AND STATISTICS Bureau staff have participated in a task force representing State and local government associations and the ACIR which has identified intergovernmental problems in the efficient use and management of information systems. A final report of the task force proposes, among other things, a Budget circular setting out guidelines for Federal agency cooperation in the intergovernmental use and management of information systems and statistics. A draft of the proposed circular is already being considered by Federal agencies, and has been sent to States and local governments under A-85 consultation. 1. Compatibility of data which the levels of government collect and use. 2. Coordinated development of common inforniation systems. 3. Joint utilization of automatic data processing facilities. 4. Federal agency criteria for considering grant applications for information system assistance. The Bureau, together with the ACIR and the State and local government associations, sponsored a National Conference on Comparative Statistics on April 4-5, 1968 in Washington. The Conference considered the final report of the task force noted above, and examined problems and progress in intergovern- mental statistical cooperation. Additionally, Bureau staff have worked with the Census Bureau in the develop- ment of seminars for State and municipal officials acquainting them with Federal statistical series and services. The first cycle of seminars, concentrating on State officials, has been completed, and a second cycle-for municipal officers-was begun this Spring. One result of the Census Bureau work with the States is the inauguration of a joint cooperative program with 30 States to develop annual population estimates by county using common procedures and methods. The States will prepare the figures and the Census Bureau will publish them. The Bureau of the Budget has established a system for the reporting of Federal outlays by geographic location. The Office of Economic Opportunity Information Center, which had previously developed the "Summary of Federal Social and Economic Programs," operates the system for the Bureau, with ilata being provided to OEO by all departments and agencies. The Federal outlay information which is being developed will add greatly to the abilities of State Ind local jurisdictions to plan adequately with knowledge of specific Federal tunds and programs working in their areas. Under procedures set forth in Bureau Circular A-84, figures by county and by municipality of 25,000 and above will be published on a quarterly basis. The first report is expected in June 1968. (It should be cautioned, however, that this system is still in a developmental stage and that methods are being developed to improve the accuracy, reliability md usefulness of the data.) The Information Center has also been working with several States in the Ievelopment of State systems for reporting State financial outlays by govern- amental subunit. OEO provides limited technical assistance (a small team) and ;he States provide all other resources. Assistance has been provided in 11 States so far, and several others are anxious to initiate such systems with OEO ~ssistance. NEIOHBORIXOOD CENTERS DEMONSTRATION PROJECTS Under the leadership of the Department of Housing and Urban Development, ~ederal interagency field teams worked with 14 municipalities to develop pilot meighborhood centers. A key aspect of the effort is the integration into the center )f eaistin,g programs and activities now being carried on in the neighborhood-or ~eing carried on in the city and susceptible to being decentralized into the meighborhood. Bureau staff have been active team members in Washington on he Interagency Review Committee (WIRC) and in the field in each of the 14 nunicipalities. Initial planning grants were made to seven cities, and combined ~rants for planning and early "core services" organizations were made to the PAGENO="0120" 114 remaining seven cities. Attempts have been made in every case to link the neighborhood centers with target areas of proposed Model Cities projects, the Concentrated Employment Programs, and the Comprehensive Area Manpower Planning System. The municipalities then submitted secon~-pbase applications ("Neighborhood Services Program-IT") for construction and operation of the centers which indicate the programming of all Federal, State, and local resources for the pilot projects. Those applications were reviewed and, to date, 13 have been approved by WIRC. Action on the remaining application is pending. INTERGOVERNMENTAL MANPOWER In 1967, a White House task force, surveying the manpower needs of State and local governments over the next decade, recommended Federal legislation to provide assistance to the States and local jurisdictions. Projections of manpower requirements clearly indicated that (1) heavy manpower replacement and new recruitment would be a critical problem for State and local governments, and (2) the quality and training levels of the new manpower must be significantly higher than previously in order to meet the more sophisticated tasks these governments are now undertaking. Accordingly, Bureau staff worked with the Civil Service Commission and HEW in the development of two legislative pro- posals to help meet these needs: The Intergovernmental Manpower Act (5. 1485 and H.R. 8233) which provided for in-service training assistance, intergovernmental personnel transfers, and aids to augment State and local personnel systems. In October 1967, the Senate passed an amended version, the Intergovernmental Personnel Act (S. 699). House hearings on HR. 8233 have been held in February 1968. Further hearings are expected. Education for the Public Service Act (HR. 8175) which provides for pre-service training for students desirous of entering the public service. The bill has been incorporated in HR. 15067, the Higher Education Amendments of 1968. OPERATIONAL COORDINATION STAFF To help identify and put into motion solutions to specific problems occurring in the field, the Bureau of the Budget, as part of its reorganization in 1967, has created an Operational Coordination Staff. The staff has been engaged in a continuing program of on-site visits to States, counties and municipalities, with particular emphasis being placed on the coordination of Federal assistance programs at the applicant level. INTERGOVERNMENTAL MEETINGS Under the leadership of the Director of the Office of Emergency Planning, a series of direct consultations with Governors and their staffs have been held in a program of visits to State capitals. Top4evel representatives from the Federa] grant program agencies and the Bureau of the Budget accompanied the Director on the trips in order to discuss State problems in administering grant programs A number of the trips also included meetings with State legislative leaders. Forty State capitals were visited. The new Director of the Office of Emergency Plan- ning has also instituted a program of State visits to Washington and meetings of Federal regional people in State capitals. A number of these "State Days" in Washington have been held, and several more were scheduled in the Spring of 1968. The Vice President continues to hold meetings with mayors, city and county managers, and other local officials to discuss common interests and problems in the field of intergovernmental relations In the past year, he has held over 2~ meetings with organizations of local officials and many local and metropolitar groups as well as the leadership of national organizations such as the National League of Cities, the U.S. Conference of Mayors, the International City Managem Association, the National Association of Counties, and the National Scboo] Boards Association. Many of these meetings represent the first time such group~ have had a chance to consult with top-level government officials. Several of then pinpointed problems in intergovernmental relations and resulted in furthei problem solving sessions with the Bureau of the Budget and other executiv agencies. The Bureau of the Budget recently held its annual Spring liaison meeting witi the National Association of State Budget Officers in Washington. Federal an~ PAGENO="0121" 115 State budget officials have been meeting on common problems for more than seven years now. PLANNING-PROGRAMING-BUDGETING SYSTEM Application of PPBS to improve the analytic base for public decisions by the Federal Government has stimulated similar activity in States and localities. In support of these activities, the Ford Foundation has granted the George Wash- ington University State and Local Finances Project funds to conduct a pilot program of the feasibility of PPBS in five States, five counties, and five cities. The Bureau of the Budget has also contracted with the Project for a study of actions the Federal Government might take to facilitate an intergovernmental PPB System related to grant-in-aid programs~ Additionally, the Bureau has contracted with the Management Analysis Center, Inc., of Cambridge, Massachusetts, for the development of ten cases on various aspects of planning-programing-budgeting activities in `the Federal Government. The cases will be constructed primarily for use in Government training courses, but also will be made available to colleges and universities for instructional purposes. It is expected that the cases will be particularly useful in training students for State and local government posts where a knowledge of the PPB System will be increasingly important. FEDERAL AID INDICATORS Special Analysis K of the Budget for 1969, which is the Bureau's indicator of "Federal Aid `to State and Local Governments", presents the following relevant trends in Federal aid: Total Federal grants to State and local governments in fiscal year 1969 are estimated to increase by $1.9 billion over 1968 estimates to $20.3 billion. Total aids for metropolitan areas i~i FY 1969 will rise to an estimated $12 billion, compared with an estimate of $8.9 billion just two years earlier, up by roughly $3 billion. The largest Federal aid programs continue to be public assistance ($5.8 billion including Medicaid) and highways ($4.3 billion) of the total aid payments. The fastest growing aid programs have been Office of Economic Oppor- tunity grants ($1.4 billion estimated for 1969), Elementary and Secondary Education ($1.4 billion estimated), and Medicaid ($2.1 billion estimated). Administrative expenses as a percentage of Federal aid expenditures, including indirect costs, have remained consistehtly less than 2% over the past decade. [Circular No. A-SO] EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BTJLGEP, TVashington, D.C., January 31, 1967. To' the heads of executive departments and establishments. Subject: Coordination of development planning foi~ programs based on multi- jurisdictional areas. 1.Purpose Efficient accomplishment of many Federal program missions depends in large measure on the quality, comprehensiveness, and degree of coordination of phys- ical, economic, and human resources plannipg efforts. The multiplicity of un- related planning jurisdictions and activities now existing under various Federal programs inhibits their most effective operation. To help correct this situation, President Johnson, on September 2, 1966, addressed a memorapdum to certain agencies which may assist compre~ensivê or fupctional planning covering multi- jurisdictional areas or require such planning as a condition to development as- sistance in such areas. Specifically, the President called for procedures which would encourage- State and local planning agencies to work together in using common or consistent planning bases' (i.e., statistical and economic estimates), and in sharing planning facilities and resources, and utilization of common boundaries for planning and development districts or regions assisted by the Federal Government and consistency of such dis- tricts with established State planning and development districts and regions. PAGENO="0122" 116 The President requested the heads of the departments and agencies involved to work with the Director of the Bureau of the Budget in achieving these objectives. This Circular provides general guidelines to the agencies in meeting these objectives. 2. Definitions a. Development planndng.-Planning covering the whole or components of the physical, economic, or human resources development of a geographic area. b. Comprehensive development planning.-Tbe process of (1) assessing the needs and resources of an area; (2) formulating goals, objectives, policies, and standards to guide its long-range physical, economic, and human resource de- velopment; and (3) preparing plans and. programs therefor which (a) identify alternative courses of action and the spatial and functional relationships among the activities to be carried out thereunder, (b) specify the appropriate ordering in time of such activities, (c) take into account other relevant factors affecting the achievement of `the desired development of the area, and (d) provide an overall framework and guide for the preparation of functional and project development plans. c. Functional development planning-The preparation of plans and programs for generalized but limited development objectives such as the establishment or improvement of systems of transportation, education, pollution control, man- vower development, and the like, which systems are integral compenents of the overall development of an area. d. Project planning.-Planning of a set of short-range, specific, closely related actions that together will constitute one step in the achievement of broader, longer-range functional and comprehensive development objectives (e.g., the development of a highway, an urban renewal project, a headstart program, or construction of a waste treatment plant). e. 1Ifvdtijurisdietionai area.-Aiiy geographical ares extending inth more than one unit of general local government. f. Planning and development district or region.-A designated multijurisdic- tional area which covers a standard metropolitan statistical area or the major urbanized part thereof, or extends into more than one county or State. 3. Policies and objectives a. To encourage and facilitate State and local initiative and responsibility in (leveloping organizational and procedural arrangements for coordinating com- prehensive and functional planning activities. b. To discourage overlap, duplication, and competition in State and local plan- fling activities assisted or required under Federal programs and to maximize State and local resources available for development planning (leadership, man- power, and money). c. To minimize inconsistency among Federal administrative and approval re- quirements placed on State, regional, and metropolitan development planning activities. d. To encourage the States to exercise leadership in delineating and estab- lishing a system of planning and development districts or regions in each State, which can provide a consistent geographic base for the coordination of Federal, State, and local development programs. 4. steps to achieve common or consistent planning and development districts or regions a. Prior to the designation (or approval of the designation) of any planning and development district or region, agency procedures will provide a period of thirty days for the Governor(s) of the State(s) in which the district or region will be located to review the boundaries thereof and comment upon its relation- ship to planning and development districts or regions established by the State. Where the State has established such planning and development districts, the boundaries of designated areas will conform to them unless there is clear justi- fication for not doing so. Where the State has not established planning and development districtu or regions which provide a basis for evaluation of the boundaries of the area proposed for designation, major units of general local government in such area should also be consulted prior to designation of the area. PAGENO="0123" 117 b. l'rior to designation (or approval of a designation) of a planning and de- velopment district or region, the agency will establish, through checkpoint pro- cedures developed therefor, that (1) related programs or activities being carried on within the district or region have been identified by the applicant; (2) such related programs are being planned on the same geographic basis; or (3) where the designated area will have boundaries different than those with- in which related programs are being planned, there are compelling reasons for such differences. c. Prior to making any designation, the administering agency will notify other Federal agencies administering related programs of the proposed designation. Such agencies will submit their comments, if any, within 15 days after receiving the notice. d. Each agency will review existing planning and development districts or regions designated in connection with appropriate programs which it administers for their consistency with the purposes of the President's Memorandum of September 2, 1966. 5. Common and consistent planning bases and activities in multijurisdictional areas Each agency will develop checkpoint procedures and requirements for appli- cations for planning and development assistance under appropriate programs to assure the fullest consistency and coordination among planning activities thereunder and related planning being carried on under other Federal programs or tinder State and local programs in any multijurisdictional area. The checkpoint procedures will incorporate the following; a. identification by the applicant of planning activities being carried on for related programs within the multijurisdictional area, including thase covering a larger area within which such multijurisdictional area is located, sub-areas of the area, and areas overlapping the multijurisclictional area; b. evidence of explicit organizational or procedural arrangements that have been or are being established by the applicant to assure maximum coordination of planning for such related functions, programs, projects and activities within the multijurisclictional area. Such arrangements might include joint or common boards of directors or planning staffs, umbrella organizations, common referral or review procedures, information exchanges, etc.; c. evidence or cooperative arrangements that have been or are being made by the applicant respecting joint or common use of planning resources (funds, per- ~onnel, facilities and services, etc.) among related programs within the area; and d. evidence that planning being assisted will proceed from base data, statistics, and projections (social, economic, demographic, etc.) that are common to or consistent with those being employed for planning related activities within the area. G. Joint fund4ng Where it will enhance the quality, ëomprehensive scope, and coordination of planning in multijurisdictional areas, agencies will to the extent practicable, provide for joint funding of planning activities being carried on therein. 7. Coordination of agency procedures an~J requir~ments With respect to the steps called for in paragraphs 4 and 5 of this Circular, departments and agencies will develop for relevant programs appropriate draft procedures and requirements by March 1, 1967. Copies of such drafts will be furnished to the Director of the Bureau of the Budget and to the heads of the departments and agencies administering related programs. The Bureau, in con- sultatiomi with the agencies, will review the draft procedures to assure the maxi- mum obtainable consistency among them. 8. Inquiries Inquiries as to scope and coverage of the Circular may be directed to the Office of Management and Organization, Bureau of the Budget (Code 103, Ex- tension 3031). CHARLEs L. ScnuLTzE, Director. PAGENO="0124" 118 [Attachment: Circular No. A-SO] MEMORANDUM FIOM THE PRESIDENT REQUESTING COORDINATION AT THE FEDERAL LEvEL, SEPTEMBER 2, 1966 Subject: Coordination for Development Planning The Federal Government, through a number of departments and agencie~, is now authorized to require and assist State and local governments and specialized agencies to formulate and carry out development plans. Comprehensive planning covering wide areas is a promising and extremely important beginning to the solution of critical State, metropolitan, and regional problencis. It is essential that it be done welL At the Federal level, we must coordinate our efforts to prevent conflict and duplication among federally-assisted comprehensive planning efforts. This should have two aspects: State and local development planning agencies should be encouraged to work together in using common or consistent planning bases (i.e., statistical and economic estimates), and in sharing facilities and resources. Boundaries for planning and development districts assisted by the Federal Government should be the same and should be consistent with established State planning districts and regions. Exceptions should be made only where there is clear justification. I am requesting the heiad of each of the departments and agencies concerned with these matters. to work with the Director of the Bureau of the Budget to insure the fullest coordination in fixing the boundaries of multijurisdictioflal planning units assisted by the Federal Government. [Circular No. A-~82, revised] EXECUTIVE Orricu OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., December 18, 1967. To: The heads of executive departments and establishments. Subject: Coordination of Federal aids in metropolitan areas under section 204 of the Demonstration Cities and Metropolitan Development Act of 1966. 1. Pnrpose._This revised Circular replaces and rescinds Circular No. A-82, dated April 11, 1967. The principal changes are as follows: a. Responsibility for general administrative oversight and coordination of section 204 is withdrawn from the Department of Housing and Urban Develop- ment because of a provision of the 1968 HUD appropriations act which prohibits expenditure of ITUD funds for such purposes. b. Certain of the programs listed for coverage in the original Circular have been dropped. Generally, these have been planning assistance programs which are of such scale that they do not result in proposals for specific projects which would be covered by section 204 or, where they do, applications for specific assistance to such projects would themselves be submitted for comment under this Circular. c. Instead of a HUD review and evaluation of the implementation of sec- tion 204, provision is made for such review and evaluation by the agencies having programs covered by section 204 and this Circular. 2. Bosis.-Section 204 of the Demonstration Cities and Metropolitan Develop- ment Act of 1966 (P.L. 89-754; 80 Stat. 1263) provides that- "(a) All applications made after June 30, 1967, for Federal ]oans or grants to assist in carrying out open-space land projects or for the planning or construction of hospitals, airports, libraries, water supply and distribu- tion facilities, sewerage facilities and waste treatment works, highways, transportation facilities, and water development and land conservation projects within any metropolitan area shall be submitted for review- "(1) to any areawide agency which is designated to perform metropolitan or regional planning for the area within which the assistance is to be used, and which is, to the greatest practicable extent, composed of or responsible to the elected officials of a unit of areawide government or of the units of general local government within whose jurisdiction such agency is author- ized to engage in such planning, and "(2) if made by a special purpose unit of local government, to the unit or units of general local government with authority to operate in the area within which the project is to be located. PAGENO="0125" 119 "(b) (1) E~tceDt a~ provided in paragraph (2') of tI~ subs~ction, each application shall be accompanied (A) by the conrtaents and recomflienda- ti~ns with respect to the project Involved by the~ fireawide agency arid governing bodies of the units of general local government to which the application has been submitted for review, and (B) by a Statement by the applicant that such cormuents and recommendations have been considered prior to formal submission of the application: Such co'nuliep'tsi shall include information concerning the extent to which the project is consistent with comprehensive planning developed or in the process of development for the metropolitan area or the unit of general local, government, as the case may be, and the extent to which such project contributes to the fulfillment of such planning. The comments and recommendations and the statement referred to in this paragraph `shall, except in the ease referred to in para- graph (2) of this subsection, be reviewed by the agency of the Federal Government to which such application is Submitted for the sole purpose of assisting it in determining whether the application is in accordance with the provisions of Federal law which govern the making of the loans or grants. "(2) An application for a Federal loafl or grant need not be accompanied by the comments and recommendations and the statement's referred to in paragraph (1) o'f this ~uhsection, if the applicant certifies `that a plan or des'crip'tion of the project, meeting the requirements of Such rules and regulations as may be prescribed under subsection (c'), or such application, has lain before an appropriate areawide agency or instrmnentality or unit of general local government for a period of sixty days without comments or recommendations thereon being made by such agency `or instrumentality. "(3) The requirements of paragraphs (1) and* .(2) shall also apply to any amendment of the application which, in light of the purposes of this title, involves a major change In the project covered by the application prior to such amendment. "(c) The Bureau of `the Budget, or such other agency as may be desig- nated by the President, is hereby authorized to prescribe such rules and regulations as are deemed appropriate for the effective administration of this section." This Circular has been prepared pursuant to subsection (c) of section 204. 3. Deflnitions.-Tertos used in this Circular will have the following meanings': a. "State" means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of any of the foregoing. b. "Metropolitan area" means a standard metropolitan statistical area as established by the Bureau of the Budget, subject however to such modifications and extensions as the l3ureau of the Budget may determine to be appropriate. c. "Comprehensive' planning" includes the following, `to the extent directly related to area needs or needs of a unit of general local government: (1). prepa~ ration, as a guide for long-range development, of general physical plans with respect to the pattern and intensity of land' use and the provision of public facilities, including transportation facilities; (2) programming of capital im- provements based on a determination of relative urgency; (3) long-range fiscal plans for implementing such plans and programs; and (4) proposed regulatory and administrative measures which aid in achieving coordination of all related plans of the departments or subdivisions of the governments concerned and intergovernmental coordination of related planned activities among the State and local governmental agencies concerned. d. "Hospitals" means any public health center or general, tuberculosis, mental, chronic disease, or other type of hospital and related facilities, such as labora- tories, outpatient departments, nurses' homes and training facilities', and central service facilities normally operated in connection with hospitals, but does not include any hospital furnishing primarily domiciliary care. e. "Areawide agency" means an official State or metropolitan or regional agency empowered under State or local laws or under an interstate compact or agreement to perform comprehensive planning in an area; an organization of the type referred to in section 701(g) of the Housing Adt of li~54; or such `other agency or instrumentality as may be designated by the Governor (or, in the case of metropolitan areas crossing State lines, any one or more of ~u.ch agencies ~r instrumentalities as may be designated by the Governors o'f the States iii- ~rolved) to perform such planning. f. "Special purpose unit of local government" means any special district, PAGENO="0126" 120 public-purpose corporation, or other limited-purpose political subdivision of a State, but will not include a school district. g. "Unit of general local government" means any city, county, town, parish, village, or other general-purpose political subdivision of a State. 4. Coverage of Circular.- a. This Circular will have applicability to- (1) All applications for assistance to those categories of land acquisition and construction projects and related planning in metropolitan areas, which an agency adniiniistering a program listed in Attachment A, in consultation with the Bureau of the Budget, determines are of the types set forth under subsection (a) of section 204 of the Act. (2) Amendments to applications which, in light of the purposes of section 204 and thi~ Circular, the administering agency determines would involve a major change in a project covered by an application previously submitted and reviewed. b. The Bureau of the Budget will extend the coverage under the Circular to such new or additional programs as may be appropriate from time to time. 5. Procedare&- a. The heads of departments and agencies administering programs covered by section 204 and this Circular, in consultation with the Bureau of the Budget, will develop and put into effect procedures for obtaining the comments of areawide agencies and units of general local government. b. Procedures will provide for- (1) Such arrangements for the handling and disposition of applications and comments as the heads of departments and agencies and the Bureau may agree to be desirable and feasible. (2) An enumeration of types of projects that will be covered under each program and of the materials that will be submitted by the applicants to an areawicle agency (and, in the case of applications made by a special purpose unit of government, to a general purpose unit of local government) for comment. Such materials will include- (a) a copy of the application, or (b) a description of the project for which an application is being made, in sufficient detail to permit the reviewing agency to make mean- ingful comments and recommendations and provide information of the type contemplated under section 204(b) (1) of the Act. (c) such additional or supplementary materials or information as the applicant and the reviewing agency may agree upon as necessary or useful. 0. Eaisting reqnirernents for application review.-The requirements of section 204 and this Circular do not supplant existing statutory or administrative re- quirements for review by metropolitan planning agencies and units of general local government of applications or development plans for projects under the above programs. Whenever, and to the extent that the Bureau of the Budget, in consultation with the head of any department or agency administering a covered program with such existing requirements, determines that they adequately mect the requirements of section 204, the separate review, certifications and reports required by this Circular and section 204 will not be required. 7. Metropolttan review agenoies.-An areawide agency for every metropolitan area has been federally designated except iii those cases where an Sreaw:ide agency could not be identified. In such cases, the Governors of the States in which such areas are located have designated State government or other agenciea to serve the purposes of section 204 until such time as areawide agencies are estthlished. All initial Federal designations were made on an interim basis because of the limit~d time available for thoroughly evaluating the appropriate- ness of the designation, particularly in the case of agencies formed or reorga- nized in response to the requirements of section 204. In the event of changes in the designation of areawide agencies or of the boundaries of metropolitan areas, the Federal agencies having covered programs will be so notified. 8. Reports an4 evaluations-Each Federal agency having programs covered by section 204 and this Circular will submit to the Director of the Bureau of the Budget by February 1, 1908, and periodically thereafter as the Director may request, a report on agency experience in administering this requirement. The reports will include the following information for each covered program for the period July 1, 19077 to January 1, 1908: a. By metropolitan area: (1) The number of projects submitted for comment to an areawide agency PAGENO="0127" 121 and, in the case of applications made by a special purpose unit of local government, to a general purpose unit of local government, (2) Nature of eomlnents-nmnber: (a) No response received. (b) "No comment" response. (c) Supportive of projects~ (d) Oritical of projects. (3) Disposition of project applications carrying critical comments: (a) Resulted in project modification. (b) Resulted in project disapproval. (c) Project approved with no modifications due to comments. (4) Evaluation of general quality and utility of comments. b. Identification of problems encountered in the administration and implemen- tation of section 204 and this Circular. 9. Contact-Inquiries respecting section 204 and this Circular may be ad- dressed to Office of Executive Management, Bureau of the Budget, or telephone 395 (Code 103)-3031. PHILLIP S. Huorn~s, Acting Director. [Attachment A: Circular No. A-82, revIsed) COVERAGE Q~' OXEOULAB This Circular will cover those categories of land acquisition and construction projects and related planning in metropolitan areas, under the following pro- grams, which the head of the administering department or agency determines, in consultation with the Bureau of the Budget, are of the types set forth under subsection (a) of section 204. A. Open space land 1. Department of Housing and Urban Development (HUD) -Open space program (42 USC l500-1500e) 2. Department of the Interior/Bureau of Outdoor Recreation-Outdoor recrea- tion (16 USC 4601-4601-11) 3. Department of Transportation (DOT) `Federal Highway Administratioii__ Landscaping and scenic enhancement (23 USC 319(b)) 4. Department of Agricultu~ (USDA) /Soil Conservation Service-"Greeii- span" program (7 USC 1838(1) (j)) B. Hospitals 1. Department of Health, Education, and Welfare/Public Health Service (HEW/PHS)-Hjll-Burton hospital and health facilities construction program (42 USC 291-291j) 2. HEW/PHS-Health research facilities construction (42 USC 292-292(i) as amended by P.L. 89-115) 3. HE~W/PHS-Community mental retardation facilities and mental health centers construction (42 USC 291k, 295-295e, 2661-2665, 2671-2677, 2691-2690) 4. HEW/Vocational Rehabilitation Administratjon_yocationai rehabilitation facilities construction (P.L. 89-333) 5. HEW/PHS-Narcotic treatment center construction (P.L. 89-793, Title IV, Section 402) 6. Appalachian Regio~ial Commission (ARC)-~Hea1th facilities construction (multi-county demonstrations) (40 USC App 202) 7. HUD-Hospjtal housing and other hospital facility loans (12 USC 1749) 1. Airports DOT/Federal Aviation Agency-Airport planning and construction (49 U.S.C. [101-1120) ~. Libraries HEW/PHS-Construction of regional medical libraries (42 USC 280b-3) if. Water supply and distribution 1. I-1UD-~Basjc water facilities' construction (42 USC 3101-3108) 2. USDA/Farmers Home Administration_Rural water facilities construction (7 USC 1926(a) ~. Sewerage facilities and waste treatment 1. ARO-Sewage treatment works construction (40 USC App 212) PAGENO="0128" 122 2. HEW/PHS-Silid waste diSposal facilities construction (P.14 89-r272) 3. Department of the interior/Federal Water Pollution Control Administra- tion (FWPCA)-Waste treatment works construction (33 USC 466c-1) 4. USDA/Farmers Home Administration-Rural waste disposal facilities con- struction (7USC1926(a)) 5. HTJ1)-Basic sewer facilities construction (42 USC 3101-3108) U. Highways 1. ARC-Appalachian development highway system (40 USC App 201) 2. DOT/Federal Highway Administration-Highway planning and develop- merit (23 USC:) H. Other transportation fiwilities HUD-Urhan mass transportation facilities construction (49 USC 1801-1604, 1607-1611) I. Water development and land conservation 1. ARC-Mining area restoration (40 USC App 205) 2. Department of Defense/Army Corps of Engineers-Beach erosion control and flood prevention (33 IJSCt 426-426h) 3. Department of the Interior/Bureau of Iteclamation-Irrigation and recla- mation (43 USC 421b, 421c, and 42~~). 4. Department of the Interior/FWPCA-River basin pollution control and abatement planning (P.L. 89-753; 80 Stat. 1246-1254) 5. USDA/Soil Conservation Service-Watershed protection and flood pre- vention (16 USC 1001-100~; 58 Stat. 887), excluding investigations and surveys under the provisions of 16USO 1006 6. USDA/Farmers Home Administration-Loans for soil and water conserva- tion and shifts in land use (7 USC 608c) J. Miseeiianeous 1. HUI)-Public facility loan program (42 USC 1491-14~7) ~. 1TU1)-Public works planning (40 USC 482) 3. FIUD-Urban planning assistance (40 USC 461) 4. HUD-Advance acquisitIon of land (42 USC 3101-3108) 5. Department of Commerce/Economic Development Administration-Public works and development facilities loans and grants (42 USC 3131-3136, 3141- 3143) 6. USDA/Farmers Home Administration and Soil Conservation Service-Rt~ral renewal and resource conservation and development (7 USC 1010, 1011, 1013a~ 7. USDA/Farmers Home Administration-Sewer and water planning (7 USC 1926(a) (6) [Attachment B: Circular No. A-82, revisedi PROGRAMS COVERED BY SECTION 204 BY AGENCY A. Department of Housing and Urban Development 1. Open space program. 2. Basic water and sewer facilities. 3. Urban mass transportation. 4. Public facility loans. 5. Public works planning. 6. Urban planning assistance. 7. Advance acquisition of land. 8. Hospital housing and other hospital facility loans. B. Department of the Interior 1. Outdoor recreation. 2. Waste treatment facilities. 3. Irrigation and reclamation. 4. River basin pollution control and abatement. U. Department of Transportation 1. Highway landscaping and scenic enhancement. 2. Highway development. 3. Airport planning and construction. PAGENO="0129" 123 Department of Health, Education, and Welfare 1. Hill-Burton hospital and health facilities. 2. Health research facilities. 3. Community mental health facilities and centers. 4. Vocational rehabilitation facilities. 5. Regional medical libraries, 6. Solid waste disposal. 7. Narcotic treatment c&nters. Department of Agriculture 1. "Greenspan" program. 2. Rural water and waste disposal facilities and planning. 3. Watershed protection and flood prevention. 4. Soil and water conservation loans. ~. Rural renewal and resource conservation and development. Department of Commerce Public works and economic development facilities. Department of Defense Beach erosion control and flood prevention. Appalachian Regional Commission 1. Health facilities construction. 2. Sewage treatment works. 3. Appalachian development highway system. 4. Mining area restoration. [Circular No. A-851 EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU or THE BUDGET, Washington, D.C., June 28, 1967. o: The heads of executive departments and establishments. ubject: Consultation with heads of State and local governments in development of Federal rules, regulations, standards, procedures, and guidelines. 1. Purpose.-In accordance with the Memorandum of the President dated ovember 11, 1966, on "Advice and Consultation with State and Local Officials" ~opy attached), the purpose of this Circular is to afford chief executives of late and local governments a reasonable opportijnity to comment on significant ~oposed Federal rules, regulations, standards, procedures, and guidelines (here- ~ter called regulation) applicable to Federal assistance programs. As an alter- Eitive to direct consultations, the Circular provides for assistance by the Ad- Lsory Commission on Intergovernment Relations (ACIR) in arranging to obtain Utte and local advice and comment on such matters, in cooperation with State ad local general government associations. 2. Background.-Federal ag~'ncies administering programs of assistance to :ate and local governments normally issue regulations under which the pro- rams are administered. These regulations affect the conduct of State and local Tairs, including management and organization, planning, program adjustments, ad fiscal and administrative systems. Federal requirements may not be consist- it among Federal agencies nor permit needed flexibility for State and local vernments. To meet the President's objective of making certain that vital ~deral assistance programs are made workable at the point of impact, heads State and local governments should be afforded an opportunity to comment i Federal regulations prior to their issuance. 3. Policies.-~Agencies will be guided, to the fullest practical extent con- stent with Federal laws, by the following policies in developing regulations for Iministering programs of assistance to State and local governments. a. The central coordinating role of heads of State and local governments, in- uding their role of initiating and developing State and local programs, will supported and strengthened. b. Federal regulations should not encumber the heads of State and local vernments in providing effective organizational and administrative arrange- ents and in developing planning, budgetary, and fiscal procedures responsive needs. 95-626-68-----9 PAGENO="0130" 124 c. Duplication of reporting requirements and controls which are established by State and local governments will be avoided, and Federal agencies should rely wherever possible on internal or independent audits performed at the State or local level as provided in Budget Circular No. A-73, dated August 4, 1965. d. Except as may be required by law or special circumstances, agency regu- lations dealing with like matters (e.g., allowable costs, definitions of like terms, and procedures and information needed for determining eligibility in like cases) will be consistent both internally and with practices of other agencies. 4. Go verage.-This Circular applies to regulations and revisions thereof which implement a Federal assistance program that includes among its eligible recipi- ents State or local governments or quasi-public agencies (e.g., public housing or urban renewal agencies) and directly affect- a. Interstate relationships; b. Intergovernmental relationships (e.g., State-local and interlocal) c. Types of eligible recipients; d. Designations of agencies within State or local government; e. Requirements affecting State or local personnel; f. Organizational, planning, or fiscal activities of State and other gov- ernments; or g. Roles and functions of heads of State or local governments. 5. Procedures for informing ~State and local government associations of pro- posed new or revised regulations.- a. The issuing agency will provide to the ACIR a copy and a summary of the proposed regulation. As a norm, this should be done not less than 45 days before the intended date of promulgation. If special legal or other circumstances do not permit sufficient time for such notice and comment, the agency will advise the ACIR of the time available and provide at least a summary or ab- stract in lieu of the full draft text of the regulation. b. The AOIR will promptly transmit copies of the agency materials to each of the following State and local governmen't associations: National Governors' Con- ference, Council of State Governments, International City Managers' Association, National Association of Counties, National League of Cities, and United States Conference of Mayors. c Unless an earlier response is required, the State and local government associations desiring to comment will transmit their views within three weeks after receiving the summary, addressing comments to the Federal agency con- cerned through the ACIR. d. If requested by either the Federal agency concerned or by a State or local government association, the ACIR will arrange a meeting between representa- tives of the agency and the association (along with State or local chief execu- tives or their representatives, where desirable) to consider modifications of the proposed regulation. e. The agency will supply a copy of the regulation, when published, to the ACIR. f. To see that these provision's are carried ont, each agency ~houid promptly designate one responsible official, and inform the Bureau of the Budget and the AC1R as `to the name of the official. 6. Additional functions of the AWl?.- a. The ACIR is pre~ared to `assist agencies in developing new regulations covered by this Circular and will assist in `assuring that regulations dealing with like matters are consistent, as provMed in paragraph 3(d). b. By Jan'uary 31 of ela'ch yehr, the ACIR will make `a report to' the Director of the Bur~au of the Budget concerning operation's under this' Circular. Copies of the report will be furnished *to each agency and to the associations repre- senting general units of State and loCal government. 7. General considerations-This circular deals with only one aspect of the President's p'olicy on intergovernmental consultation: the development of reg- ulations relating to Fedeiral assistance programs. T'he Circular is not intended to limit the consultation process to this aspect of the intergovernmental p'rohlern. Well in advance of `the stage of promulgating formal regulations, consultation should be pursued `actively with heads of State and local governments; and to this extent the burden of consultation requirements will be spread instead of concentrated at the stage of is'suing regulations. It is not intended that all proposed regulations or revisions will be automati- cally channeled through the procedure called for in this Circular; no purpose would be served by creating congestion and delay. Judgment must be exercised by the agencies and by the State and local governments in applying the Circular; PAGENO="0131" 125 ~lectivity will be needed in determining which substantive and administrative ~guIations are significant enough to be put through the consultation arrange- ients. As experience is gained, Federal agencies and State and local govermnents an be expected `to work out a mutually productive system of consultation, with [exibility and room for judgment as to what is important. The Circular is addressed primarily to new regulations or revisions of existing rederal regulations. However, agencies will give constructive consideration to equests from heads of State and local governments to review and revise regula- ions already in effect, and to consult with suuh officials on request. 8. Effective date. The provisions of this Circular become effective 30 days from he date of issuance. CHARLES L. SCHIJLTZE, Director. [Attachment: Circular No. A-85] THE PRESIDENT'S MEMORANDUM TO HEADS OF CERTAIN FEDERAL AGENCIES NOvEMBER 11, 1966 ~/1emoranduin from the President to: Secretary of Defense, Acting Attorney Gen- eral, Secretary of the Interior, Secretary of Agriculture, Secretary of Com- merce, Secretary of Labor, Secretary of Health, Education, and Welfare, Secretary of Housing and Urban Development, Director, Office of Economic Opportunity, Director, Office of Emergency Planning. Subject: Advice and Consultation with State and local officials. The basis of creative federalism is cooperation. If Federal assistance programs to State and local governments are to achieve their goals, more is needed than money alone. Effective organization, manage- ment and administration are required at each level of government. These pro- grams must be carried out jointly; therefore, they should be worked out and planned in a cooperative Spirit with those chief officials of State, county and local governments who are answerable to their citizens. To the fullest practical extent I want you to take steps to afford representatives of the Chief Executives of State and local government the opportunity to advise and consult in the development and execution of programs which directly affect the conduct of State and local affairs. I believe these arrangements will greatly strengthen the Federal system at all levels. Our objective is to make certain that vital new Federal assistance pro- grams are made workable at the point of impact. I am asking the Director of the Bureau of the Budget to work with you, with the Advisory Commission on Intergovernmental Relations, and with the public interest groups representing State and local government in developing useful and productive arrangements to help carry out this policy. Mr. HUGHES. Mr. Chairman, I would like to introduce Mr. James Frey, the Deputy J)irector of our Office of Legislative iReference. I should have done that earlier. He is here to share the burden with me. Senator MU5KIE. We are delighted to have you with us, Mr. Frey. Mr. FREY. Thank you. Senator MUSKIE. There is a request I would like to make, Mr. Hughes. I suspect that after we have heard other testimony, we may waut to check with you on certain points of the legislation. Mr. HUGHES. I would be delighted. Senator MUSKIE. I think many of those questions would be directed toward your statement on uniform relocation assistance. We have not really had an adequate opportunity to study that one. Mr. 1-IUGHES. Yes. I understand. It is a detailed matter and quite complicated. (The statement follows:) STATEMENT OF PHILLIP S. HUGHES, DEPUTY DIRECTION, BUREAU OF THE BUDGET ON TITLE VIII, UNIFORM RELOCATION ASSISTANCE Title VIII of the bill would establish a uniform policy for the fair and equita- ble treatment of owners, tenants, and other persons displaced by the acquisition of real property by Federal and federally assisted programs or by related activity PAGENO="0132" 126 in public improvement programs. Title VIII states that this policy would be as uniform as practicable as to (1) relocation payments, (2) advisory assistance, (3) assurance of availability of standard housing, and (4) Federal reimburse- inent for relocation payments under federally assisted programs. The House Public Works Committee's Select Subcommittee on Real Property Acquisition issued a staff report in 1065 which clearly documents the case that the Federal, State and local governments are falling far short of equity in treat- ment of those displaced by governmental programs. The Bureau of the Budget favors enactment of legislation which would minimize inequities which exist when land is acquired for use in a Federal or federally assisted program. Generally, Title VIII would establish a workable, uniform system for fair and equitable treatment of individuals displaced by acquisition of real property in Federal and federally assisted programs. However, in an effort to improve the bill, we have a number of recommendations and also offer some technical suggestions. Seotion 802 ( b) provides that under certain circumstances, a displaced person who mov~es or discontinues his business inlay elect to accept an optional payment of up to $5,000. We understand that the intent of this optional payment its to cover both (1) the cost of moving and (2) a readjustment allowance payment to assist small businesses in making up for the economic impact of displacement. If this is in fact the intent, we recommend that Section 802(b) `be revised to treat these two purposes more clearly by providing for two separate payments; one for actual moving expenses and one for economic readjustment. Accord- ingly, Section 802(b) should be amended as follows: Delete (the first sentence in Section 802(b) beginning on line 19, page 33 "If" and ending on line 2, page 34 with "lesser." Substitute the following for this sentence: "In addition to the payment authorized by Subsection (a) of this section an additional payment its authorized for (any displaced person who moves or di'scontinu~es his busi- ness provided the (average annual net earnings of the business are less than $10,000 (per year. This payment shall be in an `amount `equal to the average annual net (earnings of the business or $2,500, whichever is the lesser." Section 802 (e) (3) provides that should a displaced person who move's from a dwelling select `an optional payment in lieu of reimbursement (for fair and reasonable expenses `as provided by 802 ((a), be would receive $300 in addition to the allowances provided by 802(c) (1) and 802(c) (2) if he purchases a dwell- ing for purpose of residence within one year from the date of actual displace- inent. This payment would be made only if the displaced person selects the optional payment. We `would like to (invi(te the Committee's consideration of whether or not this payment should also `be made to a displaced person who elects (to (receive fair and `reasonable relocation payments as provided by Section 802(a). `The provisions of Title VIII fail to recognize the pro'blem of the o'wner-occu- pant of real property which is acquired, (but for which `the fair market value paid its not sufficient to enable the `previous owner `to obtain a decent, safe an'd sanitary dWelling adequate in `size to meet his needs. This most frequently occurs as a result `of the private market no longer producing `a significant volume of new housing in the price ranges comparable to `that being acquired under Federal and `federally-assis'ted program's. Accordingly, we invite the CommIttees consideration of the following amendment to be inserted as ~u'b- section 802(f), wi'th the present `subsection (f) `redesignated (g). "(f) (1) In `addition to amounts o'therwi~e authorized, `the hea'd of such Federal agency may make a payment to th(e owner of real property which is acquired. for the project and which ~s i'mtproved by a single- or two-family dwell- ing occupied by the owner for a period `of not less `th'an one yea(r prior `to the initiation of negotiations for the acquisition of `such property. Such payment, not to exceed $5,000, shall be an amount which, when added to the acquisition payment, equals the average price required for a decent, safe and sanitary dwelling of modest standards adequate in size to accommodate the displaced owner, reasonably accessible to public services and places of employment and available on the private market: Provided, that such payment shall be m'ade only to a displaced owner who purchases and occupies a dwelling within one year subsequent to the date on which he is required to move from the dwelling acquired for the project. "(2) The Secretary of Housing `and Urban Development `shall make the `defer- minaition's under this `subsection on the prices prevailing in the locality for dwellings meeting the requirements o~ ]~ragraph (1) above for all `agencies m'aking such `payments." PAGENO="0133" 127 &~ction 802 (f) of the bill would make all functions performed under Section 802 `sub~eot to the provisions of the Act of June 11, 1946 and jucUcial review. The Department of Justice and the major real property acquiring agencies advise that this provision would unnecessarily burden prqperty acquiring agencies with the expense of making a record upon which defense of their determinations may be based and will add to the litigation load of the Depart- ment of Justice. Furthermore, it appears that under Section 80~ (f) only the publication, public inspection, and judicial review provisions of the Administra- tive Procedure Act would be applicable, although the "all functions performed under this section language carries the implication that administrative deter- minations must be made in accordance with all the requirements of the Ad- ministrative Procedure Act. In the latter circumstance the expense to agencies would be considerable, and delays in making payments would detract from some of the intended benefits of the bill. The primary purpose of Suction 802(f) is to give recognition to the prin- ciple that the payments authorized by Section 802 should be viewed as rightful compensation of persons displaced by Federal programs. The need for this provision would appear to be more theoretical than practical. The Department of Defense advises that during 15 years it has administered thousands of applications for payments for relocation costs under its broad authority (10 U.S.C. 2680) with a negligible number of appeals from displaced individuals to the Department. We believe that the objective of this provision can be achieved by making clear thait the provisions of Section 84Y2 as regards relocation pay- ments would represent congressional policy and that the heads of agencies would be responsible for its faithful execution. For the language now in Section 802(f) we recommend substituting: "Any person aggrieved by a determination as to eligibility for a payment authorized by this section, or the amount of a payment, may have hi~ application reviewed by the head of the agency, whose determination shall be final, and no provision of this section shall be construed to give any person a cause of action in any court." S'ectiou 803 (a) of the bill provides for a relocation assistance program not only to individuals actually displaced from the acquired property but also to those who occupy property adjacent to the acquired property and who are caused substantial economic injury by the acquisition. We believe it is impractical to determine where to stop Government assistance if indirect effects of Government acquisition are to be considered. For exa~np~e, a business operating one block (or farther) from the property taken might he affected more than one adjacent *to it. Suppliers or customers of businesses adjacent to such property may also be adversely affected if those businesses move or cease operations. Moreover, it would often be impossible to determine whether the decreased profits or losses suffered by an adjacent business were actually caused by the property acquisition or by other factors. We are con- vinced that aid to those ind:irectly affected should be confined to that generally available, such as loans and advisory services from the Small Business Admin- istration or assistance under the Manpower Development Training Act. We therefore recommend that the balance of Section 803(a) beginning with "If the head of such agency" on line 18, page 38, be deleted. F~ection 803(c) (2) would require Federal agencies to assure the availability of adequate substitute dwellings within a reasonable period of time prior to dis- placement. The last clause of section 803 (c) (2) provides for waiver of the assur- ance requirement in periods of national emergency proclaimed by the President. We believe that there may be other cases when it will be in the national interest to proceed with a land acquisition project even though the Government cannot assure comparable housing within an individual's financial means. For example, we have been advised by the Department of Defense that there have been a num- ber of times when it has been necessary to acquire real property for urgent national defense purposes when the President has not formally proclaimed a period of national emergency. This situation arose during the Cuban crisis when it was necessary to obtain certain properties and thousands of eableline ease- ments were urgently required for the installation of Minute Man Launching Sites and easements for the control of such launching for the protection of this Nation. Under the then existing world situation, any delay which would have resulted to enable assurance of housing could have resulted in incalculable dangers or risks. There are other situations in addition to the national defense of the country when the Government must move swiftly to protect individuals or a community. PAGENO="0134" 128 Some of these may be caused by natural disasters such as floods or earthquakes, or sometimea it has been our experience when excavations are made for the base- iiient and piles are driven for the new building, large timber supporting footings of adjacent buildings are endangered. Such is the case surrounding the new Foley Square Courthouse, an office building in New York City, New York. We believe it is desirable to provide sufficient flexibility in the relocation require- ments of the bill to enable a distinction to be made when circumstances similar to those described above may arise. Therefore, we recommend revision of this section to provide that the President may irovide by regulations situations when such assurances may be waived. This can be accomplished by deleting the balance of Section 803(c) (2) beginning with "such assurance" on line 18, page 30, and substituting the following: "the President may prescribe by regulation situations when such assurances may be waived 8ection 803id) would make three changes in Section 7(b) (3) of the Small Business Act. Under the current law, small businesses are eligible for long term, low interest loans if they have suffered suhstantial economic injury as a result of displacement by a federally aided urban renewal or highway construction program or by any other construction conducted by or with funds provided by the Federal Government. Title VIII would extend this loan program (1) to cover not only small businesses displaced, but also non-displaced small businesses which suffer economic injury, (2) to cover businesses injured not only by urban renewal and highway or other construction programs but also by ". . . any other public improvement program . . ." and (3) to cover not Only businesses injured by Federal or federally aided programs butt also businesses injured by wholly State-run programs. The Bureau of the Budget is opposed to these amendments to the Small Business Act. As noted in our comments on Section 803 (a), we believe it is impractical to provide assistance to other than those who are actually displaced. Further, we do not believe it is appropriate for the Federal Government to assume responsibility for relocation for displacees from other than Federal or federally assisted programs. Accordingly, we recommend that Section 803 d) be deleted. ~eetion 804 provides that when lands are acquired by a State agency for a Federal public improvement project, such acquisition shall be deemed to be an acquisition by the Federal agency having authority over the project for purposes of providing relocation payments, assistance and assurances. The staff report of the 1-louse Public Works Committee's Select Subcommittee on Real Property Acquisition included a bill with such a provision. That report states that the reason for this provision is to assure relocation assistance for individuals dis- placed when local interests provide the necessary lands' for Federal projects, as in the case of flood control projects. The Corps of Engineers requires localities to furnish lands, easements, rights of way, and relocation of utilities in these and certain other water resource projects. We agree with the intent of Section 804 to provide relocation assistance for displaced individuals in public improvement projects, as in the case of acquisi- tions of property by a Federal agency. However, when land is furnished incident to a Federal public improvement project, relocation should be `the responsibility of the State agency as a prerequisite to the acceptance of the properties for proj- ect purposes. Relocation expenses should be considered an essential cost of the acquisition and borne by the party responsible for land acquisition. In addition, we do not believe that the present arrangements for cost sharing should be disturbed because the study of the Water Resources Council (estab- lished by P.L. 89-80) on `this subject is not complete. Pending the outcome of the Council study, present cost sharing arrangements should not be disturbed and the relocation expense should be considered part of the land acquisition cost for Federal public improvement projects and be borne by the local agencies. Accordingly, we recommend that the following be substituted for Section 804: "Sec. 804. Whenever real property is acquired by a State agency for a Federal public improvement project, the Federal agency having authority over such project may only accept such property in those cases in which the acquiring State agency has made relocation payments, provided relocation assistance, and provide assurance of availability of housing as required in the case of acquisitions of real property by a Federal agency, such payments and assistance to be considered a part of the real property acquisition cost." ~S'eetion 805 would authorize the President to make such rules and regulations determined necessary to carry out the provisions of the Act and also would pre- PAGENO="0135" 129 scribe minimum legislative guidelines. Section 805(a) (2) (A) would limit re- imbursement to actual and reasonable expenses in searching for a replacement farm to those individuals who are displaced from a farm operation. The Depart- iiient of Defense advises that it has followed the policy of reimbursing persons in locating all types of replacement property and can find no reason to limit the reimbursement to farms. The General Services Administration also recommends reimbursement for searching for all types of replacement property. Accordingly, we recommend that this provision be amended on page 42, lines 5 and 6 by delet- ing "in the case of a farm operation," and on page 42, line 7 by substituting "property" for "farm". Section 805(a) (2) (B) would authorize a payment to businesses and farm operations which dispose of their personal property and replace such at the new location. This payment would be made whether or not any expense is actually incurred by displaced persons. The Department of Defense, under its present authority to make relocation payments, only authorizes the payment of the difference between the sale price and the cost of comparable replacement prop- erty, but not in excess of the cost of moving the property, or its market value, whichever is less. Under the present language, the owner would be entitled to an amount equivalent to the full cost of moving irrespective of any difference between the disposal and replacement amounts. A displaced person who would dispose and replace personal property of a very low value, which is very bulky, heavy and costly to move might receive an unintended "windfall" if the present language remains in the bill. We believe that the present practice of the Depart- ment of Defense should be made applicable to all programs and we recommend that this provision be amended to read as follows: "(B) if he disposes of personal property on moving his business or farm operation and replaces such property with comparable property at the new location at a price exceding the sale price, the amount of the difference of such prices, not to exceed, however, the estimated cost of moving the property or its market value, whichever is less." Section 807 details the requirements for approval of contracts or agreements State agencies must meet for F~deral financial assistance, the type of relocation payments and assistance to be provided, and how the program is to be financed. Section 807(a) (2) requires State agencies to make fixed relocation payments in the same amount and under the same terms and condition.s as are required to be made by a Federal agency by subsection 802 (b), (c), (d), and (e) of this title. We b0hie~sre there should a1s~ be authorized for federally assisted projects the payment for owner-occupants which we recommended as a new subsection 802(f). However, we understand that several States are considering legislation which would permit such payments as a part of the acquisition price under eminent domain rather than as a separately determined relocation payment. We believe this bill should prevent the possibility of double payment without, however, eliminating an area of experimentation. This can be accomplished by a provision prohibiting Federal assistance for a payment under this section if the owner- occupant receives a payment under state law which the head of the Federal agency determines to have the same purpose and effect and for which Federal assistance is available. Accordingly, we recommend the following language be inserted as subsection 807(a) (5) "(5) A payment for owner-occupants under the same terms and conditions as are required to be made by Federal agencies by subsection 802 (f) of this Act: Provided, That no such payment shall be required or included as a project cost under subsection 807 (b) if the owner-occupant receives a pay- ment required by the State law of eminent domain which is determined by the head of the Federal agency to have substantially the same purpose and effect as subsection 802(f) and to be part of the cost of the project for which Federal financial assistance is available." Section 807 (b) provides in the case of federally assisted projects that costs of relocation would be included in project costs and Federal financial assistance would be provided to the same extent as other project costs, except that the Federal agency would contribute the first $25,000 of the cost of providing a relo- cation payment to any displaced person. The effect of the propoSal would be to have the Federal Government assume almost all relocation payments. We believe that relocation payments are an essential element of project cost and see no reason to exempt the first $25,000 from the usual sharing requirements. l\foreover, these relocation provisions will be administered by local agencies. They can be expected to administer the provisions more economically and efficiently if they are also required to bear the same portion of these costs as of other project PAGENO="0136" 130 costs involved. We believe strongly that relocation payments should be shared a~ other project costs. Accordingly, we recommend that the comma after "project costs" on line 24, page 45, be changed to a period and the balance of the sentencE on lines 24 and 25 of page 45 and 1 of page 46 be deleted. We believe that a new section should be added to this title to provide for the effective date of this title. This amendment is necessary to provide sufficient time for the assignment of responsibility and for drafting of regulations for direci Federal programs and to allow State and local governments sufficient time t make necessary changels in their laws and possibly their constituitions to permit the agreements required as a condition of Federal aid. We recommend the ne~ S~otion 811 should read as follows: "This Act shall become effective 180 days after enactment, except thai Sections 807, 808, and 810(a) (4), (5), (6), (7), (8), (9), and (10) shal become effedtve three years after enaetment; Provided That, commencing 18( days after enactment, the pro'vision~ of Sections 807 and 808 shall be appli cable with respect to any contract, grant to, or agreement with a Stat agency, where such State agency is able under State law or local o'rdinaiic to agree to the requirements set out in Section 807 (a) and the provision~ of law governing relocation payments and assistance otherwise applicabh to the provisions of Federal financial assistance to such State agency shal be superseded by this Act." BUREAU OF THE BUDGET PROPOSED AMENDMENTS `TO SECTIONS 903 (C) AND 904 $ectiol4 903(c) -Change the period at the end of the section to a comma am add as follow's: "which determination of fair value and method used by th~ agency head shall be final and conclusive. PROVIDED, (1) that payment here under will not result in duplicaton of any payments otherwise authorized b~ law; (2) that the fee owner of the land involved disclaims any interest in the improvements of the lessee: and (3) the lessee in consideration for such pay menit shall assign, transfer and release to the United States all his right, title and interest in and to such improvements; PROVIDED FURTHER, that no provi sion of this section shall be construed to deprive the lessee of his right to reject the payments hereunder and to obtain payment for his property interests of just compensation as otherwise defined by law." ~eetion 904.-(1) On linei 1 of Section 904(a) after "agency," delete "not later than" and substitute "as soon as pr'ac'tic1al after." (2) On line 14 of subsection 904(a) (2), after "property" delete "; and" and add as follows :" provided that such mortgage shall be of record as required by law on the date the official announcement of the project is made by the authorized Federal agency; and" "Senator MUSKIE. The relocation provisions of this bill would be aimed at achieving uniformity. Mr. HUGHEs. Yes. Senator MU5KIE. Across the board. Mr. }iuGHus. Yes. Senator MUSKIE. I think as the problem is emerging, we ought tc be considering whether or not, and I guess you do' to some extent, the present level of assistance is adequate. Mr. HUGHES. We have certainly considered that, and I think botl~ the statement submitted for the re'cord and the one which I presented do reflect some of that concern. As your comment indicated, the practice among the agencies varie~ tremendously, because of differences in their own statutes and in thei1 own traditions really. The evolution of a uniform policy and practiCE is probably at least as painful within the executive branch a's it is ir Congress. But we fully agree as to the desirability of that, and W believe the executive branch by and large agrees. Part of the problem `here, of course, is that `magic numbers are ver~ difficult to come by. What is adequate recognition of relocation costs I am certain that the committee will wish to consider v~ery carefufl~ PAGENO="0137" 131 whether we have underdone, or for tha~t matter overdone our efforts to meet need in various areas. By and large I think the proposals that we have made involve a very substantial liberalization of relocation arrangements for the great majority of agencies involved. Senator MUSKIE. I notice especially your recommendation that a lump sum of up to $5,000 be added to the fair market; value for homes, et cetera, in certain price categories. This is a move in that direction. Mr. HUGHES. Yes. Senator MUSKIE. I think it has been our attitude too much in the past as we buy up land for public purposes to try to get it as cheaply a.s we can at the expense of the people who are being displaced by this action. I think it really is unconscionable to expect them to bear the lion's share or a major share of the burden of public programs. Mr. HUGHES. This has been a problem, I think, both in the reloca- tion area, Mr. Chairman, and in the property acquisition area. Senator MusKIi~. Yes. Mr. HUGHES. The traditional posture of the Government in many ways has not been the posture of the sovereign. It has been a business posture, a hard bargaining posture. Obviously the Government needs to protect its own interests and the interests of the public at large. But it seemed to us as we dealt both with the problem of relocation and with the pr~blem of acquisition of property, that the Government also has a responsibility to be fair and not to take advantage. Senator MUSKIE. Or even to drive a hard bargain. Mr. HUGHES. To drive a fair bargain. Senator MUSKIE. To drive a fair bargain. Mr. HUGHES. But not a hard bargain, that is correct. The Bureau of the Budget has a somewhat split personality on this matter. Senator MUSKIE. I am sure you do. Mr. HUGHES. The "one-price" comment which I made in the state- ment I think reflects some traditional agency concern in this area, and some of the agencies feel they are in kind of a logical dilemma. If they have started out negotiating at a fair price, why isn't that the price, and what is the use of bargaining, and so on. You can under- stand the difficulty. Senator MUSKIE. Is there likely to be a problem of coordination among the departments and agencies with respect to their relocation activities? If so, how do you propose to handle it? Mr. HUGHES. There have been some problems, Mr. Chairman, but we think we have it reasonably well in hand at this point. We have worked extensively with the agencies on this as well as on the property acquisition problem. They, too, understand the reasons why the Govern- ment should buy land for highways and pay relocation costs on the same terms and on the same set of principles as it busy areas for urban renewal or airports or Corps of Engineers project. Senator MUSKIE. To summarize your position on, this bill, your reservations and objections include: one, the consolidation of pro- grams; two, the 5-year termination provision and the review of grants- in-aid section; and three, your recommendation as to the relocation section. That is about it, is it? Other than that, you support the bill? Mr. HUGHES. I think that is substantially it, Mr. Chairman, yes, and even in those areas_relocation, and in the grant consolidation area, for example~we would like to work with you and the staff to see PAGENO="0138" 132 if we can evolve techniques that would facilitate the processes. If we can do so, we certainly would be delighted. Senator MU5KIE. We would be glad to work with you. The ideas embodied in the bill are in a sense over-simplificiations that are at- tractive. But I think as we have worked with this we have learned that the oversimplified formula doesn't necessarily work. I think there is enough in the bill to commend itself to further effort on our part and yours to try to work this out. Mr. HUGHES. I certainly agree, Mr. Chairman. Senator MTJSKIE. I think, then, that is all for this morning, Mr. Hughes. Mr. HUGHES. Thank you, Mr. Chairman. Senator MUSKIE. Thank you both very much. We will be back to you, I am sure. Mr. HUGHES. Thank you. Senator MUSKIE. The committee will be recessed until 10 o'clock tomorrow morning. (Whereupon, at 11 :40 a.m. the subcommittee recessed to reconvene at 10 a.m., Friday, May 10, 1968.) PAGENO="0139" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION FRIDAY, MAY 10, 1968 U.S. SENATE, SuBcoMMIrn~n ON INTERGOVERNMENTAL RELATIONS OF THE COMMITTEE ON GOVERNMENT OPERATIONS, TVash~ngton, D.C. The subcommittee met, pursuant to notice, at 10:10 a.m., in room 3302, New Senate Office Building, Senator Edmund S. Muskie (chair- man) presiding. Present: Senators Miiskie and Mundt. Staff members present: Charles M. Smith, staff director; Robert E. Berry, minority counsel; E. Winslow Turner, general counsel; Lucinda T. Dennis, administrative secretary. Senator MIJSKIE. The subcommittee will be in order. Before we begin with our witnesses, without obj&~tion, we will in- clude in the record a statement by Senator Jack Miller, of Iowa, who has been most interested in this legislation, first when he was a member of this subcommittee, and subsequently. We are happy to have his statement which will be included in the record. (The statement follows:) STATEMENT OF HON. JACK MILLER, A U.S. SENATOR FROM THE STATE OF IOWA Mr. Chairman and members of the subcommittee, as a co-sponsor of the bill on which these hearings are being held, I wish to express a few viewpoints which may be helpful towards favorable consideration of this proposed legislation by the Subcommittee. The main thrust of the bill as a whole is to provide for greater efficiency and effectiveness of the operation of the federal government in carrying out the mandates of Congress, particularly when other levels of government are involved. One of the principal targets for improvenient in environmental conditions for our people has to do with urban areas. rfhere are many federal programs affect- ing urban areas and the people living there, but there is, as yet, no unified policy and guidelines for these programs; nor is there a mechanism to insure full coordination of these programs within the interested agencies of the federal government and between the various levels of government. We believe this legislation will fill this gap. Our system of grants in aid from the federal government to the states and other levels of government has mushroomed without any particular attention to the need for consolidation and coordination to preven:t duplication, over- lapping, and obsolesence. Criticism that old programs never die, nor do they even fade away, is justifiable. Now, with our federal government in its worst financial stress since the 1930's how could there be a more appropriate time to establish a basis for review and consolidation of these many programs of grants in aid? The mechanisms for doing so are contained in this bill, and the decisions are left with the Congress-but in a manner which will help insure that Congress knows what it is doing. There isn't a Member of Congress who Isn't concerned about the grants-in-aid thicket in which those we represent find themselves- (133) PAGENO="0140" 134 because we find ourselves in the thicket too. It is long past time to break out into the open and put order, priorities, and efficiency in what we have been doing. No one in Congress intended hardship to result to individuals and businesses from our programs for redevelopment and renewal, but that is what has hap- pened. Due to lack of uniform policy and procedures, not all individuals and businesses have been treated alike, and this is manifestly unfair. Not only should hardships be avoided or, at least, alleviated; but the treatment should be uniform. For the first time, adoption of this legislation will establish uniform- ity for the various federal and federally-assisted programs involving relocation of individuals and businesses. It is too late to rectify past mistakes, but it is not too late to prevent future mistakes-and there will be many with our ongoing programs unless a~otion is taken now. Whether one has supported some of these federal programs or not, each of us must be concerned that the people who are paying the bill receive maximum value for their tax money. Each of us must be concerned that maximum benefit goes to those for whom the legislation was intended. In its partnership with other levels of government, the federal government has a responsibility to serve as a model of efficiency, effectiveness, progress, and fairness. S. 698 will be most helpful in enabling us to meet that responsibility. Senator Mrrsicin. We shall proceed with this morning's witnesses. First, it is a pleasure to welcome the executive director of the Advisory Commission on Intergovernmental Relations, Mr. Colman, and his as- sistant, Mr. Walker. `Mr. Walker, having been a member of this sub- committee staff in the past, should be in a position to enlighten us. We are delighted to have you both with us this morning. TESTIMONY OF WILLILM G. COLMAN, EXECUTIVE DIRECTOR, AD- VISORY COMMISSION ON INTERiGOVERNMENTAL RELATIONS; ACCOMPANIED BY DAVID B. WALKER, ASSISTANT DIRECTOR (GOVERNMENTAL STRUCTURE AND FUNCTIONS), AND ALBERT J. RICHTER, SENIOR ANALYST Mr. COLMAN. Mr. `Chairman, we have with us this morning Mr. Richter. Senator Musxin. It is a pleasure to have you with us. At this point, the record of the hearing will begin to acquire real meaning. Mr. COLMAN. Thank you, Mr. Chairman. It is a pleasure to be here. We have prepared for the use of the subcommittee a lengthy back- ground statement. We have underlined the highlights of the statement. If it is your pleasure, Sir, I can read the highlights. I am appearing on behalf of the chairman, Farris Bryant, and members of the Advisory Commission in support of the proposed "Intergovernmental Cooperation Act" and two related measures. The "Intergovernmental Cooperation Act" is based on several of the most significant findings and recommendations for Federal action advanced by the Commission during the past 8 years. The measure, as a whole, was specifically endorsed by the Commission at its April 14, 1967, meeting. Enactment of this legislation is of critical significance, since it comes to grips with several of the major management problems that plague effective Federal-State-local relations. Improved public administration is a prime prerequisite for improved intergovernmental relations and this legislation-in all of its titles-is geared to achiev- ing this. I shall skip title I, Mr. Chairman, since it deals with definitions. PAGENO="0141" 135 Title II: title II seeks to coordinate and make more flexible certain standards and procedures governing financial, organizational, and other activities of State executive and other State officials, insofar as these activities are affected by Federal grant programs. The specific language of this title reflects the considerable attention given to it and amending action taken in 1966 by the House Subcommittee on Executive and Legislative Reorganization with respect to predecessor provisions. The present title effects a number of basic changes in the admimstra- tion of grants-in-aid to the States. Section 201 provides that Governors or State legislatures would, on request, be informed by Federal depart-~ ments and agencies of the purposes and amounts of grants being received. This procedural innovation would assist Governors in pre- paring a more adequate budget and enable him to niaintain more effec- tive coordination over his executive departments and agencies. In a similar fashion, State legislatures would be assisted in their adminis- trative oversight and fiscal functions. Coordination of grant-in-aid programs is as critical a problem at the State level as it is at the Federal, and Governors have a major responsibility in this area. Yet many State chief executives are not in a position to assume this role. As of the beginning of this year, 46 States had established some form of liaison unit to coordinate Fed- eral aid programs, but these units vary greatly in structure and power. Clearly, progress has been made in overcoming the problem of agency bypassing of the Governor and much of this can be attributed to the impact of the conferences on Federal-State relations conducted by the Office of Emergency Planning in more than 40 States through- out 196~7 and to the initiative of the Washington office of the National Governors' Conference. Nonetheless, the provisions of section 201 would formalize certain procedures which are now informal and establish as rights what now are privileges unknown to many State officials. Section 202 of the measure rests on the assumption that there can be a proper accounting of Federal grant funds without the use of separate~ bank accounts. A few of the older grant statutes and some grant regulations stipulate that Federal moneys must be kept in sepa- `rate bank accounts by State governments. To clarify the intent of this section, we recommend insertion of the phrase "or administrative regulation" after the word "law" on line 15, page 10, of the bill. Section 203 establishes a procedure designed to discourage the advancement of Federal grant-in-aid funds for longer time periods than are necessary. Section 203 recognizes the merits of the letter-of-credit mechanism and seeks to give them the full force of law. It is geared to assuring that Staites will not draw on grant funds in advance of their program needs. At the same time, it does not seek to hold them accountable for interest or other income earned on any grant funds advanced, prior to their disbursement for program purposes. Effective, gov- ernmentwide implementation of this device should save the Federal Government considerable amounts of interest costs. Section 204 stipulates that Federal departments and agencies may waive legislation requirements for a "single State agency," multi- member board or commission. One of the most critical needs in con- PAGENO="0142" 136 temporary intergovernmental administration is recognition by all concerned that the States have varying administrative needs and capacities. This provision, namely section 204, in title II, clearly recognizes this fact and gives Federal and State administrators the kind of discretionary authority to cope with this hard fact of inter- governmental managerial life. Title III: Title III of 5. 698 seeks to strengthen the role of the traditional "services-in-aid" function in contemporary Federal-State- local relations. It permits Federal departments and agencies to pro- vide specialized and technical services to State and local jurisdictions on a reimbursable basis. During the 1965 hearings on the predecessor title, the question arose as to whether this authorization coiistituted a threat to various busi- nesses in the private sector. It is our position that the language of section 302 provides ample safeguards against this potentiality. The hearings on S. 561 also raised the issue as to whether the Federal Government could ascertain accurately the "salaries and all comput- able overhead and indirect costs of performing such services"-as is stipulated in section 302. The point here, of course, is whether the Federal Government has\ an adequate procedure to assure fair, adequate, and complete assignment of costs. In this connection, we understand that the Bureau of the Budget, after having consulted with State and local officials, is about to issue a circular promulgating principles and standards for determining costs applicable to grants and contracts with State and local governments. If this is feasible in the grant-in-aid context, we believe that there is no reason that the same rules cannot be applied to the reverse situation contemplated by section 302, that is, to the provision of Federal technical services to State and local governments. Title IV: This title establishes a coordinated intergovernmental policy for the planning and administration of Federal grants for urban development. A special feature of our Federal system is that most types of domes- tic public services are administered by general local governments~- cities, counties, and towns. Yet, special districts in the United States are growing at a rapid rate. From 1962 to 1967, these units experienced a 16-percent increase, reaching a total of more than 21,000. It is the Commission's belief that where Federal grant-in-aid legislation makes both special-purpose local governments and units of general local gov- ernments eligible to receive urban development loans and grants, Fed- eral agencies should favor the latter, in absence of substantial reasons to the contrary. Section 402 of this title implements this goal. Title V: Title V of S. 698 has a lengthy legislative history dating back to the 87th Congress. Strangely enough, there is stil'l considerable confusion concerning the purposes and provisions of this title. Its basic purpose is to assure that new grant-in-aid programs will be re- vised and redirected, as necessary, to meet growing and changing needs which they were originally designed to support. * `With reference to the 5-year termination provision in this title which has occasioned so much debate and little agreement, the follow- ing should be noted: It obviously does not apply to those future grant-in-aid programs that would have a termination date. PAGENO="0143" 137 It would not apply to grants wherein Congress had waived applica- tion of this termination provision. It would apply oniy to those grants which Congress-for some rea- son or other-failed to designate as ongoing or short run programs. As a technical matter and if the past is any guide, few grants-in-aid would be affected by this termination provision. Of the 30 major grant- in-aid enactments in 1966, only. four contained no expiration provision (air pollution control maintenance, the nonfood assistance program under the Child Nutrition Act of 1966, the national trust historical preservation legislation, and assistance for housing in Alaska). Of the 17 enacted during the first session of the 90th Congress (1967), oniy one had no expiration provision (Meat Inspection Act). Finally, of the four passed thus far in this session, only one, (child welfare services under the social security amendments) lacks such a. provision. We would like to submit for the record a list of grant-in-aid pro- grams enacted during the period 1961-April 1968, showing the ex- tent to which specific expiration dates have been provided. This table should allay the fears of those who view section 502 of S. 698 with alarm. Title VI: This title constitutes an entirely new departure from the previous legislation and is designed to overcome the proliferation of Federal grant programs by authorizing the President to submit to Congress plans for the consolidation of individual categories within broad functional areas. Such authority would be subject to the type of congressional ve.to that presently applies to executive reorganization plans. It is almost superfluous, Mr. Chairman, to declare to this sub- committee that the proliferation of Federal grants has created serious fiscal and adminh~tration problems at all levels of government.. Some opponents of this "reorganizational plan approach" have con- tended that it involves an unconstitutional delegation of legislative au- thority to the executive branch. We are convinced-and various author- ities support usL~~~~,that the issues involved in this argument differ in no respect from those that apply to the Reorganization Act of 1949, as amended. Thus, far, the latter has been voted by Congress on seven different `occasions and renewal is again pending. Congress' action then, along with court cases upholding the validity of the act, clearly demonstrates the constitutionality of this device. Title VII: Title VII amends the Federal Property and Administra- t.ive Services Act by stipulating a uniform procedure for the acquisi- tion, use and disposition of land within urban areas by the General Services Administration in conformance, to the extent possible, with local governments' planning and land use goals. Federal land acquisition disposal practices in urban areas clearly have a significant impact on local schools, water and sewage services, highways and streets and other local governmental functions. At pres- ent, there is no formal Federal policy with respect to these practices, in contrast `to the planning requirements in several grant programs that seek to strengthen local and areawide planning and land-use regulations. Furthermore, the testimony on March 8, 1967 of Mr. Boyd L. Ras- mussen, Director of Interior's Bureau of Land Management, before the U.S. Senate Subcommittee on Public Lands of the Interior and Insu- lar Affairs Committee would indicate that Bureau of Land Manage- PAGENO="0144" 138 ment has found that the local land use planning requirements of the Public Sale Act of 1964 have produced salutary changes in Interior's land disposition program and afforded the Department major oppor- tunities to strengthen intergovernmental relations in this functional area-an opportunity, it would seem, that the Department and the States and counties involved are using to good ~dvantage. Title VIII: This title establishes a uniform policy for the fair and equitable relocation of persons and businesses forced to move by Fed- eral or federally assisted programs. With the exception of those pro- visions relating to land acquisition which are now covered by Title IX, Title VIII in this bill is identical to a separate bill which passed the Senate on July 22, 1966, but died in House committee. The Advisory Commission considered the issue of Federal reloca- tion policy in a report, approved in January 1965, on relocation: TJn- equal treatment of people and businesses displaced by governments. This report resulted in the subsequent introduction by you, Mr. Chair- man, of S. 1681. As already noted, the Commission's 1965 study found that the most serious inequities in Federal relocation policies arose because highway programs cause about one-third of the relocation problem and the level of highway assistance and payments is substantially below that of the major Federal displacing program-urban renewal. It is therefore significant that a special 1967 study on highway relocation assistance undertaken by the Department of Transportation pursuant to con- gressional mandate in Public Law 89-574 strongly corroborates the principal findings of the ACIR study. Summing up the Commission's recommendations, they are precisely in accord with those in title VIII with respect to (a) uniformity among Federal and federally assisted programs concerning relocation pay- ments and advisory assistance, (b) assurance of provision of a supply of standard housing for those displaced, (c) Federal reimbursement for relocation expenses in federally aided programs, and (d) Federal encouragement of coordination of relocation administration in major urban areas. A relevant question is: What would be the cost to the Federal Gov- ernment of the proposed provisions for relocation payments compared to the cost of present provisions? It is our very rough estimate that the cost to the Federal Government for fiscal year 1967 under title VIII of S. 698 would have been about $79 million, compared to an estimated $40 million cost under the relocation payments provisions existing at that time. Of the total increase of about $39 million, about $29 million is attributable to the highway program, resulting from ex- tension of coverage from 33 (in fiscal year 1967) to 50 States, liberali- zation of relocation payments, and the proposed increase in the Federal share of relocation payments from 90 percent of interstate roads and 50 percent on primary and secondary roads up to 100 percent for all payments of $25,000 or less. Another $8 million of the total increase would be for the HUD programs, again reflecting liberalization of re- location payments provisions. The remainder of the estimated in- crease is accounted for by liberalized payments by the Army Corps of Engineers, and initiation of payments by four Federal agencies not now reimbursing for relocation expenses: GSA, the International Boi~ndary and Water Commission, the Post Office Department, and TVA. PAGENO="0145" 139 Title IX: This title of S. 698 establishes a uniform policy on land acquisition practices used in Federal and federally assisted develop- ment programs, and complements the previous relocation title. Title IX of S. 698 incorporates the three land acquisition proposals that formerly appeared as section 10 of S. 1681, plus other land acquis~- tion provisions adapted from sections 101-106 and 112 of S. 1201. (89th Congress.) In effect, this title represents the first attempt by the Fed- eral Government to establish a uniform policy on land acquisition practices covering both Federal and federally assisted development programs. The next portion of our statement deals, Mr. Chairman, with amendment No. 748 to S. 698, which recently was introduced by you, Mr. Chairman, dealing with "Accounting auditing, and reporting of grant-in-aid funds." This proposed new title would carry out a specific recommendation adopted by the Advisory Commission in its report on "Fiscal balance in the American Federal system" and we strongly urge its enactmeiit. A recent study by the State budget officers (NASBO) of Federal grant-in-aid requirements which impede State administration showed considerable dissatisfaction with the detailed, burdensome, and slow auditing and reporting procedures required by Federal grant pro- grams. The variation between Federal and State requirements and among Federal requirements regarding frequency, classification sys- tems, and methods of accounting were cited as creating particular problems. The excessively detailed reports on subprograms were men- tioned by one State official who indicated that 54 individual fiscal re- ports must be prepared and filed regarding expenditures of funds under the Vocational Education Act at both State and local levels, taking weeks of staff time. Although the difference in Federal program objectives, magnitude, and administrative arrangements can hardly be expected to yield com- pletely to uniform reporting and accounting requirements, there re- mains the question of whether existing requirements are reasonable in their demands. Most State and local officials feel they are not and at least some Federal aid administrators agree. In its recent report on "Fiscal balance in the American Federal system," the Advisory Commission adopted a three-pronged recom- mendation urging enactment of general legislation by the Congress applicable to grants-in-aid to the States whereby: (1) the Comptroller General would study and review the accounting and auditing systems of State Governments receiving Federal grants-in-aid and ascertain their general adequacy .and integrity; (2) for those States meeting certified standards, the results of State audits of the expenditure of Federal grant funds would be accepted by Federal administrators in lieu of their own fiscal audits as long as the State accounting and auditing system continued to meet the prescribed standards; and (3) this authorization would be extended at the discretion of the Comp- troller General to units of local government receiving sizeable grants directly from Federal agencies. Concluding the discussion of the proposed new title, this new title seeks to develop new intergovernmental arrangements in the account- ing and auditing field which would lead to a significant saving in time and energy and provide the basis for significant improvements in inter- governmental fiscal management without in any way shortcutting the 95-G26-68---i,O PAGENO="0146" 140 exercise of fiscal prudence and accountability at all levels of govern- ment. `We turn flow to S. 2981, the final major topic that is covered in your hearings, Mr. Chairman. It is our understanding that S. 2981, The Joint Funding Simplification Act of 1968, has been referred to your subcommittee and that this measure is to be considered in these hear- ings. The Advisory Commission, in its fiscal balance report, recoin- mended enactment by the Congress of this administration bill as an important means of modernizing the management of Federal assist- ance programs. States and localities more and more are adopting a multifunctional, packaging approach to meet varying social and physical develop- mental needs. Yet presently, a State or local government in putting together an integrated program must apply separately, for example, for the educational component, welfare component, job training com- poneiit, urban renewal component, and so on. Keeping the separate ap- plications moving along in tandem frequently nearly becomes an exer- cise in administrative futility. This bill seeks to remove or simplify administrative or technical re- q~uirements to permit a more flexible packaging approach to considera- tion, processing, approval, and administration of Federal assistance programs. The Advisory Commission believes this joint funding approach is workable assuming it is reinforced with strong direction at the high- est administrative levels in the executive branch and at the same time receives the dedication to cooperation from functional program ad- iiiinistrators. We are convinced that initial implementing efforts-as- suming the bill's enactment-should focus on the intradepartmental phase of this packaging problem, since the management hurdles in this area are far less difficult than those involving interdepartmental collaboration. To conclude, Mr. Chairman, the Advisory Commission strongly sup- ports passage of 5. 698, the proposed Intergovernmental Cooperation Act including amendment No. 748, and we support the enactment of S. 2981. These bills constitute a viable, vigorous, first response to many of the management muddles that plague contemporary intergovernmen- tal relations. We support them. We urge their early enactment. And we offer the services of our staff to assist the subcommittee in whatever way is deemed appropriate to facilitate your deliberations. Thank you, Mr. Chairman. That concludes our statement. Senator MUSKIE. rllhank you very much, Mr. Colman, for your ex- cellent statement. I know the committee will be interested in studying not only that portion which you read, but the remainder of the statement. (The complete statement follows:) STATEMENT OF WM. G. COLMAN, EXECUTIVE DIRECTOR, ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS Mr. Chairman and members of the committee, I am appearing on behalf of the Chairman, Farris Bryant, and members of the Advisory Commission in support of the proposed "intergovermnental Cooperation Act" and two related measures. In 1959, as you well know, Mr. Chairman, the Congress established the Advisory Commission on Intergovernmental Relations and stipulated that in performing its primary function of developing and considering "ways and means of fostering PAGENO="0147" 141 etter relations between the l~~e1s of government" the Commission-among other hings-should "provide a forum for discussing the administration and coordina- ion of Federal grant and other programs requiring intergovernmental relations ooperation" and "give critical attention to the conditions and controls involving tdmiiiistration of Federal grant programs." The "Intergovernmental Cooperation Act" is based on several of the most sig- mificant findings and recommendations for Federal action advanced by the Corn- nission during the past eight years. The measure, as a whole, was specifically mdorsed by the Commission at its April 14, 1967 meeting. Enactment of this legislation is of critical significance, since it comes to grip cvith several of the major management problems that plague effective Federal- state-local relations. Improved public administration is a prime prerequisite for .mproved intergoverrnnental relations and this legislation-in all of its titles-is ~eared to achieving this. To put this legislation in its proper perspective, certain asic features of the contemporary grant-in-aid system should be noted: The twin pressures of population growth and rapid urbanization have generated greater demands for more and better services traditionally pro- vided by State and local governments. These, in turn, have triggered an expansion of Federal involvement in several domestic program areas-largely by means of the grant-in-aid device and quite heavily in recent years. From 1963 through the end of the last session of Congress, some 240 new grant-in- aid programs were enacted, bringing the total to over 400 separate categorical authorizations. Grant-in-aid expenditures thus far have increased more than two and one- half times in this decade, rising from $7 billion in fiscal year 1660 to an estimated $18.3 billion for this fiscal year. All told, some $98.3 billion in Federal aid has been dispersed to State and local jurisdictions during this nine year period. This extraordinary expansion in the number and dollar amounts of grants- in-aid clearly signifies a greater acceptance of the partnership principle which undergirds this intergovernmental device. It also signifies a rejection of the centralizing, direc.t Federal Government-citizen relationship. The extraordinary number and variety of grant programs, however, have led to serious problems of overlapping, fragmentation, information, and dif- ficult management at all levels. We know now that management is' as important as legislative enactment. We also know that while executive orders, Budget Bureau circulars, and depart- mental changes in procedure can correct some of the difficulties in intergovern- mental administration, other management headaches stem from statutory provi- sions, from uncertainty as to power of the E'xecutive Braach in certain areas, and from the fact that the President needs extta authority to discharge his tough assignment as chief manager of the grant-in-aid system. We feel the pro- posed legislation advances sensible solutions to several of the pressing problems impeding improved intergovernmental administration. r1~h.e bill, as introduced, seeks reform in eight basic areas. In the subsequent discussion of its eight substantive titles, efforts will be made concerning those provisions that appeared in predecessor legislation (S. 561, the proposed "Inter- governmental Cooperation Act of 1966" and 5. 1681, the proposed "Uniform Re- location Act of 1966-89th Congress) to provide up-to-date background informa- tion regarding their relevance. The new titles iii S. 698 (Titles VI and IX dealing with Presidential authority to submit consolidation proposals to Congress and with establishment of a uniform policy on land acquisition practices respectively) receive more extensive treatment. Title I: Title I of the proposed legislation contains definitions of terms that are used frequently throughout the other titles and appears to be inadequate in all major respects, but one. The definition of "grant" or "grant-in-aid" in Section 106 was carefully drawn with particular reference to the needs of Title II, "Im- proved Administration of Grants-in-Aid to the States," and Title V, "Congres- sional Review of Federal Grants-in-Aid tot States' and to Local Un'its of Govern- ment" and specifically excludes certain types of Federal assistance, such as loans and loan guarantees that are relevant to the broader scope of Federal as- sistanee involved in tho'se titles that have been added to the original legisla- tion: Title VI, "Consolidation of Grants-in-Aid Programs," Title VIII, "Uni- form Relocation Assistance," and Title 1X, "Uniform Land Acquisition Policy." To fill this definition gap, we suggest revising Section 107 to include a definition of the terms "Federal assistance," "Federal financial assistance," "Federal as- sistance programs," and "federally assisted programs," while at the same time PAGENO="0148" 142 preserving the present Section 107's intent with respect to District of Columbia financial payments. The following language would implement this suggestion.: "FEDERAL ASSISTANCE, FEDERAL FINANCIAL ASSISTANCE, FEDRBAL ASSISTANCE PROGRAMS, OR FEDERALLY ASSISTED PROGRAMS "Snc. 107. The term `Federal assistance,' `Federal financial assistance, `Federal assistance programs,' or `federally assisted programs,' means pro- grams that provide assistance through grant or contractual arrangements, and includes technical assistance programs or programs providing assistance in the form of loans, loan guarantees or insurance. The term does not include any annual payment by the United States to the District of Columbia authorized by Article VI of the District of Columbia Revenue Act of 1947 (D.C. Code, secs~ 47-2501a and 47-~2501b)." Appropriate revisions would be needed in Title VI to make this broader defini- tion apply to consolidations authorized under this title, rather than the more narrow definition of grants-in-aid which appears in Section 100. Title II: Title If seeks to coordinate and make more flexible certain stand- ards and procedures governing financial, organizational, and other activities of State executives and other State officials, insofar as these activities are affected by Federal grant programs. The specific language of this title reflects the con- siderable attention given to it and amendatory action taken in 1966 by the House Subcommittee on Executive and Legislative Reorganization with respect to predecessor provisions. The present title effects a number of basic changes in the administration of grants-in-aid to the States. Section 201 provides that governors or State legis- latures would, on request, be informed by Federal departments and agencies of the purposes and amounts of grants being received. This procedural innova- tion would assist governors in preparing a more adequate budget and enable him to maintain more effective coordination over his executive departments and agen- des. In a similar fashion, State legislatures would be assisted in their adminis- trative oversight and fiscal functions. Coordination of grant-in-aid programs is as critical a problem at the State level as it is at the Federal, and governors have a major responsibility in this area. Yet many State chief executives are not in a position to assume this role. Not all State~s, for example, require agencies to obtain the approval of the gov- ernor before entering into negotiations with Federal departments for grant programs. A 1965 survey indicated that in 18 States gubernatorial approval is required, while in 18 other States it was not. The situation varied in ten States, it was found, where approval was required in some instances but not in others. In the four remaining States, some other form of approval was stipulated. As of the beginning of this year, 46 States had established some form of liaison unit to coordinate Federal aid programs, but these units vary greatly in struc- ture and power. In Delaware, Georgia, and North Carolina, State planning agencies have been assigned this responsibility. In New York and Rhode Island, an interdepartmental committee has been established on a continuing basis to make studies and recommendations to the governor and legislature. In other States, including Connecticut, Illinois, Louisiana, Vermont, and Maine, the gov- ernors have designated an official in hi's office or in tIme Department of Adminis- tration to coordinate grant-in-aid activities. To complement these efforts, at least 13 States have established a Washington office. Clearly, progress has been made in overcoming the problems of agency by- passing of the governor and much of this can be attributed to the impact of the conferences on Federal-State relations conducted by the Office of Emergency Planning in more than 40 States throughout 1967 and to the initiative of the Washington office of the National Governors' Conference. Nonetheless, the pro- visions of Section 201 would formalize certain procedures which are nOw in- formal and establish as rights what now are privileges unknown to many State officials. Section 202 of the measure rests on the assumption that there can be a prop- er accounting of Federal grant funds without the use of separate bank accounts. A few of `the older grant statutes and some grant `regulations stipulate that Federal monies must be kept in separate bank accounts by State governments'. Some States as a consequence maintain intricate systems `of bank accounts for various Federal aid programs. With th~ development of miodern accounting techniques, it is only necessary that the State maintain appropriate fund ac~ counts which distinguish the balance that the State has received but not yet PAGENO="0149" 143 earned. This section of S. 698 provides for the application of these principles to grants to States, while preserving the Federal Government's legitimate con- cern in seeing that all such grants are applied as intended and in receiving certain elementary facts with respect to the financial status of grant programs. To clarify the intent of this section, we recommend insertion of the phrase "or administrative regulation" after the word "law" on line 15, page 10, of the bill. Section 203 establishes a procedure designed to discourage the advancement of Federal grant-in~aid funds for longer time periods than are necessary. As was noted in the prior hearings on 5. 561, the Department of the Treasury has already sought administratively to achieve this objective through its Depart- mental Oircular No. 1075, issued on May 28, 1964. This circular was and is geared to establishing a letter-of-credit procedure which maintains funds in Treasury until needed by recipient jurisdictions and thus reducing interest costs. Advances for three to six months formerly made in several programs and still permitted in some have resulted in expenditures of money from the Federal Treasury before they were actually needed-with no concomitant advantage accruing to the Federal or State agencies concerned or to effective program implem5ntation. Lump sum advances at specified intervals now constitute a rather outmoded way of transmitting money from one jurisdiction to another-given the emer- gence of telegraphic transfers, sight drafts, and the letter-of-credit procedure. The Treasury circular recognizes this fact and pursuant to its procedures ad- van'ees are limited to the minimum allowances that are necessary and are timed :o coincide with the actual cost requirements of the recipient jurisdiction in mrrying out the purposes of a grant program. This letter-of-credit device in and by itself does not insure against excessive withdrawals, as Treasury has recently discovered in its monitoring of the system. Yet it can and does provide a simple, uncomplicated way of getting payments for readily ascertainable short- term needs. It also precludes the necessity of trying to anticipate the require~ nents of longer time periods with the consequent tendency to overestimate. Two problems, however, seeni to have arisen thus far in administering this tetter-of-cre'dit procedures. First certain States, including among others Alabama, arizona, California, Indiana, Kansas, Ohio, Oklahoma, Tennessee, and Mas- mchusetts, appear to have legal fiscal requirements that impede application of the procedure to these jurisdictions. Second, certain of `the Federal agencies t~sing the device have not been fully aware of its basic purpose and have failed to institute an effective monitoring system. A special Federal Task Force on Let'ter~of-credit procedure spearheaded by Treasury is now reviewing `these and ther related problems with a view toward overcoming these deficiencies. In short, the letter-of-credit procedure per se is no `better than those using it, but with effective implementation it could become a vitally significant financial c~rocedure for eliminating a continuing tension point in intergovernmental fiscal relations. Section 203 recognizes the merits of this mechanism and seeks to give them bhe full `force of law. It is geared to assuring that States' will not `draw on grant ~unds in advance of their program needs. At the same time, it does not seek to ~iold them accountable for interest or other income earned on any grant funds sdvanee'd, prior to their disbursement for program purposes. Effective, govern,- nent-wide implementation of this device should save the Federal Government onsidera'ble amounts of interest costs. Section 204 stipulates that Federal departments and agencies may waive Legislative requirements for a "single State agency," multimember board, or ~ommission. In 1965, we testified that "about one-third of the Federal grant- u-aid programs are governed by single State agency provisions" and "almost ;h.ree-fourth,s of total Federal grant funds are disbursed under these provisions" ~. cursory examination of grant programs enacted since that time reveals that ti least four of the newer programs, including the Narcotic Addiction and Alco~ Tiolism amendments', Regulation of Surface Mining Operations legislation~, the Jleari Air Act amendments, and the Meat Inspection Act, contain "single agency" )rovisionis. The merits of the single State agency requirement now appear to be largely ds'torical. In the formative years of the public assistance, for example, the ~equi'rem'ent was essential to bring order out of chaos in the existing, as well ~s newly emerging public assistance programs in the States. It was necessary then that the Federal agency have one and only `one State agency to deal with ,n matters regarding public assistance and that this agency be held responsible PAGENO="0150" 144 for administering these programs. With improved State administration of Fed- eral aid programs however and the pressing contemporary need of the States to restructure their governmental organization in order to keep a~breast `of their added functions and responsibilities, the kind of flexibility permitted by Sec- tion 204 is of the utmost significance. Rigid application of single agency requirements can tie up governors as well as State legislatures in their reorganization efforts. Moreover, given the increasing number of grant-in-aid pi~ograms which require "multidisciplinary" packaging approaches, a doctrinnaire adherence to this requirement appears wholly archaic. Under `this section, the head of the administering Federal `department or agency is authorized to waive the requirement on request of a r~cipie:n't State, if the department or agency is convinced that the proposed alternative administrative arrangement will not undermine the program objectives sought through the grant. One of the most critical needs in contemporary intergovernmental adininis- tration is recognition ~y all concerned that the States have varying adminis- trative needs and capacities. This provision, namely. section 204 in Title 11 clearly recognizes this fact and gives Federal and State administrators the kind of discretionary authority required `to cope with this hard fact o'f intergovern- mental managerial life. Title III: Title III of S. 698 seeks to strengthen the role of the traditional "services-in-aid" function in contemporary Federal-State-local relations. It permits Federal departments `and agenries to provi'de specialized and technical services to State `and local jurisdictions on a reimbursable t~asis. A number of Federal departments and agencies already provide such services gratuitously or at cost as a consequence of specific Congressional authorization. The increas- ingly complex and technical nature of State and local governmental activities, along with the soaring cos'ts of providing technical personnel and equipment, highlight the pressing need for this permissive provision. During the 1965 bearings on the predecessor title; the question arose as to whether this authorizatio'n constituted a threat to various businesses' in the private sector. It is our opinion that the language of Section 302 provides ample safeguards against this potentiality. The hearings on S. 561 also raised the issue a's `to whether the Federal Government could ascertain accurately the "salaries and all computa~de overhead and indirect costs of performing such services"- as is `stipulated in Section 302. T'he point here, of Course, is whether the Federal Government has an adequate procedure to assure fair, adequate, and complete assignment of costs. In this connection, we understand that the Bureau of the Budget, after having consulted with StaThe and local officials, is about to issue a circular promulgating principles and standards for determining costs applicable to grants and contracts with State and local governments. If this is feasible in the grant-in-aid context, we believe that there is no reason that the same rules cannot be applied to the reverse situation contemplated by Section 302, that is to the provision of Federal technical s'ervices `to State and local governments. The discretionary po'wer provided in this title would not affect the programs of those Federal agencies that have ~een authorized to provide special technical assistance, facilities, `or consultation services without reimbursement. The "services-in-aid" policy stipulated is wholly permissive and requesting S'tate or local agencies and the Federal agency involved would have to agree on the scope and costs of the services to be performed. Title IV: This title establishes a coordinated intergovernmental policy for the planning and administration of Federal grants for urban development. With increasing urbanization, there has ~een a rapid gr'owth in Federal funds and programs available for such development. The Commission, in its January 1964 report, Impact of Federal Urban Development Progr'ams on Local Government Organization and Plans, identified some 43 separate Federal urban development grant and loan programs administered by 13 separate departments `and agencies. An early 1966 survey put the figures at over 80 and the present figure proba~dy falls somewhere in the v'acinity of 120 (using DHUD estimates). During the next fiscal year, approximately $12 billion of the more than $20 billion of `total estimated Federal `aid will be spent in standard metropolitan statistical areas, ac'cording to the Bureau of the Budget calculations. This rep- resents a hike of about $8 billion-or nearly 205 percent-over the ciompar'a~le 1961 figure and a $3 billion increase for the past thr'ee years. Acc'ording to Department of Housing and Urban Development estimates, the total Federal financial commitment for FY 1969 for urban community and social development PAGENO="0151" 145 ssistan.ce may well exceed the $37 billion mark--or twice the 1061 level. These gures, it should ~e noted, are based on the projected extent of Federal financial b'ligations or commitments to communities of 2500 or more and include insurance nd guaranteed loans. The greatest growth in urban-oriented grants have occurred in the areas of iLucation, housing and community development, and programs to better the osition of the disadvantaged. They include grants that go directly to the local mmunities involved as well as those to State's which subsequently are channeled or benefit urban communities. The need for coordination and improved intergovernmental relations is clearly reatest in our metropolitan areas where, according to the 1967 Census of Govern- i.ents, the fragmentation and overlapping of governmental jurisdictions is ac- ~leratin'g. Title IV offers some procedures for assisting the various levels'. of overnment operating directly or indirectly in such areas to work .tog8ther to lve common pro~lems. It authorizes the President to establish government-wide uides for the formulation, evaluation, and review of Federal urban development rograins and projects (Section 401). It also provides as a matter of Congressional olicy, that agencies-to the maximum extent possible-will take into account 11 viewpoints-national, State, regional, and local-in the formulation and valuation of such programs and projects (S'edtion 401). Moreover, systematic lanning required by several individual Federal-urban programs shall-again, ) the extent possible-be coordinated with and made part of comprehensive cal and areawide uiiban development planning (Section 401). A special feature of our federal system is that most `type's of domestic public ~rvices are administered by general local governments-cities, counties, and wns. Yet, special dis'tricts in the United States are growing at a rapid rate. `rom 1962 to 1967, these units experienced a 16 percent increase, reaching a tal o'f more than 21,000. It is `the Commission's belief that whe're Federal grant- i-aid legislation makes both special purpose local governments and units of eneral local governments eligible to rec'eive urban development loans and grants, `ederal agencies should favor the latter, in a~bsence of substantial reasons `to the ontrary. Section 402 of this title implements this goal. Title V: Title V of S. 698 has a lenthy legislative history dating back to the 7th Congress. It provides a uniform policy and procedure for Congressional eview of future grants-in-aid to State's and local units. of government. In those ases whe're n,o expiration date for grant authority is specified by law and where uch grants are not specifically exempted from the provisions of Section 502, five-year termination date is' stipulated. Strangely enough, there is still considerable confusion concerning the purposes nd provisions of this title. Its basic purpose is to assure that new grant-in-aid `r-ograms will be revised and redirected, as necessary, to meet growing and hanging needs which they were originally designed to support. Grants-in-aid, as was noted at the outset, constitute the Federal Government's `rincipal weapon for accomplishing national legislative goals in `the domestic rena, while at the same time maximizing intergovernmental cooperation and elian'ce on grassroots of governmental administration. Yet, one perennial criti- ism made of Federal grant programs is that once established they tend to con- inue of their own accord without substantial modification, even when the ircumstances that prompted their establishment have changed or disappeared. 1he need for systematic reassessment of grant-in-aid programs is es'pecially im- ortant in a period of rapid urbanization and technological change, such as we re now experiencing. The Advisory Commission in its report on Periodic Congres'sional Reassessment f Grants-in-Aid to State and Local Governments (1961), and the Joint Committee ii Congressional Reorganization in one of its major findings clearly underscored he need for this title. As a matter of fact, it serves as excellent complementary ~gis'lation to Section 105 of the proposed Congressional Reorganization Act S. 355 and hR. 2595) which authorizes "review analysts" for each of the aajor standing committees of Congress. With reference `to the five-year termination provision in this title which has ecasioned so much debate and little agreement, the following points should be bo'ted: It obviously does not `apply to those future grant-in-aid programs that would have a termination date; It would not apply to grants wherein Congress had waived application of this termination provision; and PAGENO="0152" 146 It would apply only to those grants which Oongress-for some reason o other-failed to designate as ongoing or short-run programs. As a practical matter and if the past is any guide, few grants-in-eid wouk be affected by this termination provision. Our staff analysis of recently enacte grant programs indicates that Congress as a matter of course now provide'~ expiration dates for almost all grant programs. Of the 41 enactments of new or cx panded grant programs in 1905, all but three contained expiration or othe limiting provisions (the three include: TYSDA's program for Water Works anc Sewage Plants in Rural Areas, and two programs authorized by the Soetia Security Amendments of 1965). Of the 30 major grant-in-aid enactments in 1966 only four contained no expiration provision (Air Pollution Control 1!daititenance the Nonfood Assistance program under the Child Nutrition Act of 1066, th National Trust Historical Preservation legislation, and Assistance for Housing ii Alaska). Of the 17 enacted during the first session of the 90th Congress (1967) only one had no expiration provision (Meat Inspection Act). Finally, of the foui passed thus far in this session, only one (Child Welfare Services under the Socia Security Amendments) lacks such a provision. We would like to submit fw the record a list of gran't-in~aid programs enacted during the period 1961-Apri 1968, showing the extent to which Specific expiration dates have been provided This table should allay the fears of those who view Section 502 of S. 698 witi alarm. With reference to the final three sections of Title V we agree with the positior taken earlier by the Bureau of the Budget and others that Section 504, which calle for studies by the Comptroller General of Federal grant-In-aid programs, would simply give greater focus to the efforts of GAO and would result in a bettei servicing of the needs of the reviewing committees. It is our belief that the Comp troller General now has the authority to undertake the mission assigned t him by this section. Similarly, the role assigned to the Advisory Commission or Intergovernmental Relations under Section 505, while creating possible budgetarr~ problems, certainly is within the Commission's present mandate "to make avail able technical assistance to executive and legislative branches of the Federal Government in their review of proposed legislation to determine its overall effect on the federal system." The question raised in the 1965 hearings as to a possible conflict regarding the role of Federal executive members on the Commission appears to lack much substance, since any member of the Commission is aiwayc at liberty to dissent to or abstain from recommendations adopted by the majority. Finally, the GAO records and audit autherit~ stipulated in Section 50~ is simply in accord with good fiscal management practices. Most grant-in-aid legislation contains such provisions, but the general authority provided would remove any ambiguities concerning GAO's power in those few instances where it is lacking. Title VI: This title constitutes an entirely new departure from the previous legislation and is designed to overcome the prollfera't'ion of Federal grant pro grams by au'thor'izing the President to submit to Oon'greiss plan's for the consoli dation of individual categories' within broad functional areas. Such authority would be subject to the type of Congressional veto that presently applies to executive reorganization plans. It is almOst superfluous, Mr. Oh(aIrman, to declare to this Subco'mrn'ittee that the proliferation of Federal grants has created serious fiscal and administrative problems at all levels of government. Your "Creative Federalism" hearings as well as those of the Subcommittee on Executive and Legislative Reorganization clearly reveal the detrimental impact `of such factors as the lack of information concern- ing sources of available funds, the overlapping and duplication among functional program's, and the inflexibility of many separate funds and requirements on capac- ity of bOth administrators `and elected officials to effectively execute, c'o'ordinate and evaluate grant-in-aid programs. Consolidation then is a top priority item on practically everybody's check list on how to strengthen the grant-in-aid system. Unfortunately, consolidation is far easier to orate about, than to achieve. Oertain encouraging steps, however, have been taken at the Federal level to achieve greater rationality in the maze of programs by grai~t consolidations. First, under the leadership of `the Department of Health, Education, and Welfare, which administers approximately half of the grant programs, the Oomprehensive Puhlic Health Planning and Public Health Services amend- ments (Partnership in Health Act) were developed and subsequently enacted by Congress. This Act consolidates several previously separate categorical pro- PAGENO="0153" 147 grams and established a single authorization, appropriation and set of re- quirements. Tinder it, the States are given considerable discretion in devel- `oping their own health services in light of their own special needs. Second, President Johnson in his Mamh 1967 message on "The Quality of Government" announced that he requested the Director of the Bureau of the Budget to review the range of Federal grant-in-aid programs to determine additional areas where consolidation should be taken. Pursuant to this Presidential directive, top level HEW officials have been working with the Bureau of the Budget in analyzing possibilities of further consolidations in HEW administered programs. Third, this year two additional consolidating measures were introduced by the Administration for Congressional consideration: the proposed Part- nership in Earning and Learning Act (5. 3099 and H.R. 15066) and the proposed Consolidation of the Educational Opportunity Grant, National Defense Student Loan, and Work Study Programs (Section 402 of 5. 3068 and H.R. 15067). To date then, grant consolidation has followed the normal course of the legislative process. A major rationale for this approach is that combining grants involves changing varying legislative requirements concerning allocation for- mulas, matching ratios, as well as the basic responsibility of Congress for deter- mining the direction of Federal funds to achieve special and national objectives. The principal defects of this method are of a political and more practical nature. First, middle management administrators at both the State and Federal levels frequently are unfriendly to departmental efforts to consolidate programs which they adtainteter. Second, special interests which usually aitta~ch themselves' to the grant aided functions frequently set up political obstacles to Congressional efforts which threaten to upset the grant-in-aid status quo. Third, the practical problems imposed by the comple~city and divergent program goals of the existing grant structure hinder the formulation and effective implementation of workable consolidations. These factors combine to hinder both departmental and Con- gressional endeavors to achieve grant consolidations through the normal legis- lative process. The approach embodied in Title VI is geared to overcoming some of these obstacles. Under it, the President would submit grant consolidation plans to Congress under procedures similar to those used for administrative reorganization plans and this would place primary responsibility for this effort in the Executive Office of the President. A plan would become effective at the end of ninety (90) calendar days of continuous session of Congress following its transmittal, unless either House passed a resolution disapproving the proposed consolidation. Each plan would involve a consolidation of individual programs within the same functional area and would focus administrative responsibility in one Federal agency, specify the formula or formulas for making the grant, and describe the differences between the new formula and those under each of the previous individual programs. Some opponents of this "reorganizational plan approach" have contended that it involves an unconstitutional delegation of legislative authority to the executive branch. We are convinced-and various authorities support us-that the issues involved in this argument differ in n~ respect from those that apply to the Reorganization Act of 1$t9, as amended. Thus far, the latter has been voted by Congress on seven different occasions and renewal is again pending. Congress' action then, along with court cases upholding the validity of the Act, clearly dem- onstrate the constitutionality of this device. The Advisory Commission in its massive study of Fiscal Balance in the Amer- ican Federal System recommended a drastic decrease in the number of separate authorizations for Federal grants and specifically sanctioned the method set forth in this title as a means of furthering this objective. Title VII: Title VII amends the Federal Property and Administrative Services Act by stipulating a uniform procedure for acquisition, use and disposition of land within urban areas by the General Services Administration in conformance, to the extent possible, with local governments' planning and land use goals. The U.S. Conference of Mayors and the National League of Cities have adopted spe- cific resolutions calling for this title and it is wholly consistent with the findings and recommendations in the Commission's report on the Impact of Federal Urban Development Programs on Local Government Organization and Planning. Under the provisions of this title, the GSA Administrator in disposing of Fed- eral urban land holdings, shall, to the extent practicable, give advance notice to PAGENO="0154" 148 the general local government having zoning and land use jurisdiction over the land involved in the proposed transaction. The Administrator is also directed to comply, to the extent possible, with the zoning and land-use regulations of the local governmneiit affected when acquiring or changing the use of any real prop- erty in urban areas. Federal land acquisition disposal practices in urban areas clearly have a sig- nificant impact on local schools, water and sewage services, highways and streets and other local governmental functions. At present there is no formal Federal policy with respect to these practices, in contrast to the planning requirements in several grant programs that seek to strengthen local and areawide planning and land-use regulations. The notice required in disposition proceedings would give local governments an opportunity to zone the use of such land in accordance with local comprehensive planning objectives. Moreover, the GSA Administrator in such proceedings, to the extent feasible, would furnish any prospective purchases with local planning information relating to zoning, land use, and other regula- tions which would be applicable to the use and development of the property offered for sale. In acquiring or changing the use of real property in urban areas, the Administrator, to the extent practicable, would consider all objections made by the affected local government relating to possible conflicts with its zoning regulations or planning objectives and GSA is required to comply with such regulations and objectives-to the extent he determines feasible. The lan- guage of this title clearly protects the Federal interest in these various proceed- ings. At the same time, due consideration is given to protecting the legitimate planning and land use objectives of urban local governments. The thrust and even some of the language of this title closely resemble legisla- tion enacted in the 88th Congress establishing similar procedures for sale or disposition of public lands by the Department of Interior (78 Stat. 986). The following excerpt from the regulations issued by the Department of Interior on this Act (Federal Register, February 20, 1965) demonstrate that the procedures established in Title VII of 5. 698 are both practical and desirable: "Disposal programs will be scheduled in a manner to make all actions consistent with established or proposed State or local governmental programs and with State, county, and other local governmental master and detailed plans. Disposals w-ithin the area of influence of growing communities will be deferred until local governmental master plans have been adopted and zoning regulations are in effect. However, in the absence of master plans, critical needs in such areas or influence may be met if such action appears proper to the authorized officer after consultation with the appropriate local planning and governing officials. "No less than 90 days before offering for sale lands which have been classified for disposal under the act in accordance with the procedures in part 2410, the authorized officer will notify the head of the governing body of the political sub- division of the State having jurisdiction over zoning in the geographic area within which the lands are located, to afford that body an opportunity to zone the land for use in accordance with local planning and development." Furthermore, the testimony on March 8, 1967 of Mr. Boyd L. Rasmussen, Director of Interior's Bureau of Land Management, before the U.S. Senate Sub- committee on Public Lands of the Interior and Insular Affairs Committee would indicate that Bureau of Land Management has found that the local land use planning requirements of the Public Sale Act of 1964 have produced salutary changes in Interior's land disposition program and afforded the Department major opportunities to strengthen intergovernmental relations in this functional ar~a-an opportunity, Ft wduld seem, thrit the Deparknent and the Sta~tes and counties involved are using to good advantage. Title VIII: This title establishes a uniform policy for the fair and equitable relocation of persons and businesses forced to move by Federal or federally assisted programs. With the exception of those provisions relating to land acqul- si~tion which are now ciovered `by Title IX, Title VIII in this bill is identical to a separate bill which passed the Senate on July 22, 1966 but died in the House committee. The Adviso'i-y Commission considered the issue of Federal relocation policy in a report, approved in January 1965, on Relocation: Unequal Treatment of People and Businesses Displaced by Governments. This report resulted in the subsequent introduction by you, Mr. Chairman, of 5. 1681. The Commission undertook the study of relocation when it became concerned over the reported lack of uniformity in relocation policies among and within the three levels of government and the resultant inequitable and inconsistent treat- nient of those displaced. It felt that the problem had clear intergovermnental PAGENO="0155" 149 mplications, particularly because the federally assisted urban renewal and high- ~ray programs cause most of the displacement nationwide, and the displacement ccurs niainly in urban areas where intergovernmeiifial relations are most critical. The heart of the Commission's Relocation report was an analysis of govern- aental policies and practices in relocation current at that time at all three levels. ~ fundamental source of information was a questionnaire survey of the practices nd policies of cities over 100,000 population conducted jointly in the summer f 1964 by the Commission and the U.S. Conference of Mayors. In addition, Com- nission staff worked closely with the staff of the Select Subcommittee on Real ~roperty Acquisition of the House Committee on Public Works. The Commission fouiid that governmental responsibility for helping displacees o relocate stems from two sources: (1) government's exercise of eminent domain II acquiring real property; and (2) its concern for the economic and social velfare of its citizens. Under the Constitutional doctrine of eminent domain in *he United States, government can force people to sell their property. The prop- ~rty owner thus cannot refuse to sell if he believes the price offered is insuffi- ~ient to compensate for all costs of reestablishing himself. Since the courts gen- ~rally have limited conipensation to the fair market value of the real property ~cquired, property owners and tenants must look to the legislature to be corn- iensated for incidental costs not covered by the value of the real property taken. Unlike property owners displaced by public acquisition, owners displaced by private acquisition can hold out for a sales price which will assure them com- pensation for the cost of resettling, as well as the value of their real property. Penants in either case-public or private-have little protection. Lower income groups are usually renters and find it most difficult to rehouse and readjust. Government for immany years has had a policy of concern for the economic ~tnd social opportunities of its citizens. This concern logically should include the social and economic effects of forcible displacement, particularly at this juncture in time. As a general principle, therefore, the Commission concluded that persons and businesses displaced by local, State, or Federal public works and other programs are entitled to assistance in relocating, and this entitlement extends to lessees and tenants as well as to owners of homes and business establishments. Nine major findings arose from the Commission study: It found that governmental displacement of persons and businesses is sub- stantial, particularly with respect to the federally aided urban renewal, highway programs, and local code enforcement. Moreover, all indications are that the rate of displacement will continue to grow. Thus, it is noteworthy that while the House Select Subcommittee in 1964 estimated future annual displacement of families and individuals by highway departments at 36,770 and businesses and nonprofit organizations at 3,876, a 1967 study by the De- partment of Transportation estimated these annual figures for the period July 1967 through June 1970 would be 48,983 and 5,559 respectively. The Commission discovered great inconsistencies in present provisions for relocation assistance. These inconsistencies are among different programs within the same level of government--local, State, and Federal-and among levels of government. They concern the amount and scope of relocation pay- mnents, advisory assistance, and assurance with respect to availability of standard housing. Nationwide, federally aided urban renewal and highway programs cause the most displacement. The urban renewal program makes the most comprehensive provision for relocation assistance, but relocation provisions of the highway program are appreciably less equitable. The effect of the inconsistencies is felt most keenly in urban areas where programs of all kinds at all three levels of government most frequently come together-where different Federal and federally aided programs dis- place neighboring properties. A homeowner whose property is taken for a federally aided urban renewal project is entitled to moving costs up to $200. his neighbor, whose property is taken for a federally aided highway pro- gram, is entitled to $200, but only if the State has authorized it. As of April this year, 14 States had not authorized such payments, and even among the States that have, an appreciable number have not authorized payments up to the Federal limit, or not for tenants and lessees. A third homneowner in the same neighborhood may receive nothing at all if his property is taken by General Services Administration for an office building. Inconsistency in payment of business moving expenseS is even greater since the Federal Aid Highway Act allows business moving expenses only up to $3,000, whereas displacement by a federally aided urban renewal project entitles a business PAGENO="0156" 150 owner to as much as $25,000 for moving expenses. Displacement by GS would be without compensation for moving costs. The worst problem in relocating families and individuals is the shortai of standard substitute housing for low income groups. Nonwhites have the most difficult relocation problem of all populatic groups. This comes from their generally lower economic and educatioiu status; the impact of urban renewal and code enforcement programs o neighborhoods where they are concentrated; and public and private practic that restrict their access to housing. Large families and the elderly present other special housing problems. Among business displacees, small businesses, particularly those owne and operated by the elderly, are the main dislocation problem. The typic~ displaced small business is an independent commercial establishment, partnership, or a proprietorship rather than a corporation. The elderl generally have less capital and find it more difficult to secure outside finan ing. They have little energy or spirit to resume business in a new locatior Their problem is most serious when they operate their own business and dE pend on it for their livelihood. Their businesses are usually retail or pei sonal service stores, dependent on long-developed neighborhood patronag( `Advisory as~isitance is of grbwing `importance in the relocation process. The relocation process often discloses the social and economic needs o displaced persons, and thereby offers a unique opportunity for helping les privileged social and economic groups. Three years have elapsed since the Commission adopted this Report, but then has been little change in the basic conditions it criticized then. The co'ns'equ~ence', of inconsistency and inequity in relocation policies and practices have `becom~ worse, if anything, `because of the continuing rise in displacements caused b~ governmental programs. As already noted, the Commission's 1~65 study found that the most s'e'riou~ inequities in Federal relocation policies arose because highway programs eaus `about one4hird of the relocation problem and the level of highway a'ssisltanc( and payments is `substantially belo'w that of `the major Federal di's'p1acin~ program-urban renewal. It is therefore significant that a special 1967 study oi highway relocation `assistance undertaken by the Department of Prans'porta. tio'n pursuant `to C'ongr~sis'ion'a1 mandate in PuIbli'c Law 89-574 `strongly c'orrob orates `the prin!c'i'p~al findings of the AC1IR study. The DOT `s~udy state's, fo] example: "A's the highway program has moved forward with a desirable `acceleration, the `problem of relocation has become more and more aggravated and ha~ affected more an'd `more individuals and businesses. There is an urgent need to fashion a better solution to the urban relocation problem `than ha's existed heretofore. "This l's not a `problem peculiar `to the highway program alone. It `l's equ'ally as acute in urban renewal, public building, construction, reclamation projects, and other public improvement programs. In fact, to the extent possible, a gen- erally uniform approach to the `solution of the `relocation assistance `problem seems indicated." In `summarizing the results of consultations wi'th urban officials throughout the country, the DOT report state's: "The problem most frequently mentioned at oter 80 percent of `the meetings was the `disparity of moving cost payments allowed under urban renewal policy, Federal-aid highway policy, and `State legislative `policies. "The second `problem most frequently referred to was `the lack of uniformity of the many relocation assIstance procedures within the large urbanized area's. There were differences in payments, time element, administrative `practices, planning, eligibility rules, etc. "S'till another `problem mentioned was `the low income o'f the minority grou'ps displaced, which in turn created `difficulty or in `many cases ina'bility to relocate to decent, ssfe, and sanitary housing units without welfare-type assistance "Uniformity in relocation pro'cedure's anid moving `payment was the most emphasized recommendation `at the majority of the meetings. Th'e lack of uni- formity of the many governmental agencies created some bitterness and dis- illusionment in the large urban areas where several different programs were in operation at the `same time." The findings of the Commission's 1965 report are confirmed al'mcst daily by reports in the news media of public confusion `and outrage at inequitable reloca- tion policies. In the Portland Oregonian of July 7, 1967, for example, there PAGENO="0157" 151 ~ppeared a ~s'tory under the title "Businessmen Object to Sacrifice Freeways )emand," from which the following is a direct quote: ". . just as the Oregon State Highway Department has started buying up ight-of-way, a new problem has `arisen: "Who will recompense the hundreds of small `business establishments in its ~atb? "Homeowners, of cours'e, can simply sell out and find another home with sore or less degree of inconvenience or emotional impact. "But what about a small business, with a clientele built up slowly over th'e `ears, and with little or no reserve capital `stashed away? "And what about the lost income this little `business i's hound to suffer hrough `relocation? "Even if the business could be moved-where to? A strictly zoned metropolitan ity such as Portland offers few opportuni~Ies to find a `suitable substitute loca- ion. "These were the questions flung at State `and federal politicians and bureau- rats alike by a small group of husinessmen in `Southeast Portland at a public meting called `to seek support for relocation compensation. "`A. freeway project costing millions in tax money should not be allowed o bankrupt small businesses in i'ts path,' s'aid Jack Jensen, owner of a dry leaning establishment at 9543 SE Division St. "The state and federal agencies `which finance `and `build the freeway's pay nly for the `costs of moving the equipment to another location-and not very iuch a~t that, in most cases. "The buttnesamen were told `by state and federal representativ~s that this eimbursement for moving varied b'y `statute from $200 to $3,000 maximum-no iatter wh'at the move `cost. "State Rep. Howard D. Wilts, who was chairman of the meeting, commented hat the politician frequently described the small business man as the backbone f `the economy, `especially during political campaigns, but when it caine to rotecting his interests in `such cases of inequitable dislocations, `h'e is woefully eglected. "Adolph E. Susan, regional appraiser for the Federal `Highway Aidministra- on (formerly Bureau of Public Ro'ads) said it was indeed a `deplorable `s'itua- on and blamed it on the lawmakers who wrote the `statutes `allowing only eas'onable and necessary moving expenses.' "He `s'aid he was sympathetic and he thought members of Congress were, hut n'til the law `was changed nothing but `sympathy could be `dispensed in the matter f compensation." On the basis of its findings, the Advisory Commission on Intergovernmental :elations made 14 recommendations for local, State, and Federal action to meet ie problems of persons displaced by governments. The recommendations fell nder six major headings: (a) uniformity of relocation advisory `assistance and ayments; (b) assignment of responsibility `for determining relocation pay- tents; (c) ~ssurance of the `availability of stan'dard housing for displaced peo- to; (d) financing of relocation costs'; (e) modification of related Federal rograms to ease the relocation prOcess; and (f) local organization, technical ssistance, and planning for relocation. For Federal action, it recommended: "1. That the Congress establish a uniform policy of relocation payments `and civisory assistance for persons and businesses displaced by direct Federal pro- rams and by Federal grant-in~aid programs, and that the President direct mt the necessary steps be taken, to formulate regulations for carrying out ich a policy. "2. The Congress should require that State and local governments adniinis- bring Federal grant programs assure the availability of standard housing before roceeding with any property acquisition that displaces people. This requirement mould be at least comparable to that in Federal urban renewal legislation, ssuring tha't (a) there is a feasible method for temporary relocation of displaced Linilies and individuals, and that (b) there arc o'r are being provided standard ousing units within their financial means an'd in areas reasonably accessible to meir places of employment. "3. Wi'th respect to financing relocation payments under federally assisted rograins, the full costs of payments to any person for relocating a family, and ie costs of payments up to $25,000 to any person relocating a business', should completely reimbursed by the Federal Government; and the costs of business 4ocation payments in excess of that amount should be shared on the' basis the cost-sharing formula governing the particular program. PAGENO="0158" 152 "4. The Small Business Administration Act should be broadened to authorize disaster loans to small business concerns (a) that suffer substantial economic injury as a result of a construction program conducted by State and local govern- ment, as well as one conducted by a Federal or federally aided program; or (b) that are adversely affected but not actually displaced by government property takings. "5. The executive branch should: (a) authorize and encourage all Federal agencies causing displacements in urban areas to centralize in a single local agency in each major urban jurisdiction, through formal or informal agree- ment, responsibility for administering relocation planning, payments, and serv- ices; and (b) require all displacing agencies to give advance notice at the earliest practicable time to local units of general government of any construction programs which will cause displacemeift." Title Viii of S. 698 would car~i out these recommendations. Basically, it would establish a uniform policy of relocation payments and advisory assistance for persons and businesses displaced by Federal direct and grant-in-aid programs. Thus, under Section 802, beads of Federal agencies are required to make reloca- tion payments in direct Federal programs causing displacement, such as GSA, the Post Office Department, or the Defense Department, in accordance with regulations established by the President. Section 803 requires the same agencies to provide relocation assistance programs and specifies that these include (a) determining needs for assistance, (b) assuring the availability of standard housing within a reasonable period of time prior to displacement, (c) assisting businesses' and farm operators in relocating, (d) supplying information regard- ing FHA, SBA, and other assistance programs, (e) helping in minimizing re- adjustment problems, and (f) coordinating relocation with other project activi- ties and governmental activities in the community or nearby areas. This section also broadens the Small Business Administration Act to authorize disaster loans to small concerns that suffer. substanial economic injury from construction con- ducted by State and local government or that are adversely affected but not actually displaced by government property takings. Section 807 extends the requirements' of Sections 802 and 803 with respect to payments and advisory assistance to federally assisted programs conducted by State and local governments. Section 807(b) is in accord with the Commission recommendation that the Federal Government fully reimburse State and local governments for reloca- tion payments up to $25,000 in federally aided programs and on a formula cost-sharing basis for any portion above $25,000 per displacement. The Federal reimbursement would be contingent on the State or local agency's agreeing to provide relocation payments and advisory assistance as prescribed by Federal law and regulations. Finally, Section 805(c) follows the Commission recommendation that the executive branch encourage Federal agencies causing displacements in urban areas to centralize in each major urban jurisdiction responsibility for relocation administration. It provides that the President may require any Federal agency to cJarry out its relocation functions by entering into contracts or agreelments with any State or local agency for use of its relocation facilities, personnel, and services. To sum up, the Commission's recommendations are precisely in accord with those in Title Viii with respect to (a) uniformity among Federal and federally assisted programs concerning relocation payments and advisory assistance, (b) assurance of provision of a supply of standard housing for those displaced, (c) Federal reimbursement for relocation expenses in federally aided programs, and (d) Federal encouragement of coordination of relocation administration in major urban areas. A relevant question is: What would be the cost to the Federal Government of the proposed provisions for relocation payments compared to the cost of present provisions? it is extremely difficult to make `an estimate `because of the lack of re- cent data on displacement of people and businesses by programs other than the H1JD and highway programs, and on the number of displacees likely to be eligible for the $1,000 `adjustment payments for families and the $1,000 and $5,000 relo- cation payments for farmers and businesses, respectively. Within these limita- tions, it is' our very rough e~tim'ate that the cost to the Federal Government for FY 1967 under Title Viii of S. 698 would have be'en about $79 million, compared to an estimated $40 million cost under t'he relocation payments provisions existing at that time. Of the total increase of about $39 million, about $29 million is PAGENO="0159" 153 ttributahle to the highway program, resulting from extension of coverage from 3 (in FY 1967) to 50 States, liberalization of relocation payments, and the pro- osed increase in the Federal share of relocation payments from 90 perceiit of aterstate roads and 50 percent on primary and secondary roads up to 100 per- ent for all payments of $25,000 or less. Another $8 million of the total increase ~ould be for the H1JD programs, again reflecting liberalization of relocation layments provisions. The remainder of the estimated increase is accounted for by iberalized payments by the Army Corps of Engineers, and initiation of pay- mnts by four Federal agencies not now reimbursing for relocation expenses: iSA, the International Boundary and Water Commission, the Posit Office Depart- ient, and PVA. In conclusion, we should note that in its report the Advisory Commission iso urged States to adopt uniform relocation policies to govern strictly State- ocal activities. An increasing number of States in recent years have acted to stablisli consistent relocation practices within their borders, including the ayment of relocation cosits. As early as June 1964, the Pennsylvania legislature uthorized payments of relocation moving costs as part of the State's first omprehensive eminent domain act applicable to all property takings by State nd local agencies (Laws of Pennsylvania, Act No. 6, 1964). The Pennsylvania iw provides that "just compensation" shall consist of the fair market value f the real property taken, plus such other damages as provided in the law. The atter include the following and are payable to both owners and tenants of real roperty: (1) reasonable expenses of removal, transportation, and installation f machinery, equipment, or fixtures, not to exceed $25,000 and in no case to xceed the market value; (2) business dislocation damages, where it is shown hat the business cannot be relocated without substantial loss of patronage- payments may be no more than $5,000 and no less than $250; (3) moving ex- enses for personal property other than machinery, equipment, or fixtures, not o exceed the market value of `the personal property. In 1965 the General Court of Massachusetts passed a law requiring payment f moving expenses of up to $200 to families and individuals and up to $3000 o businesises when displaced by agencies that exercise the power of eminent omain (Acts 1965, C. 790). Any proposed acquisition involving displacement of ccupants of more than five dwelling units or more than five business units aay not proceed until the central bureau of relocation in the State Department f Commerce and Development has approved a relocation agency and a relocation lan for the project. The relocation plan must include evidence of "the avail- bility of safe, decent, sanitary housing and commercial buildings within the neans of occupants to be displaced," and a program for relocation of the ecupants. In 1967, the New Jersey legislature passed an act (Public Laws 1967, C. 79) equiring any State agency or local government causing displacement to pay elocaition oos'ts of up to $200 for individuals and families, $3,000 for businesses nd nonprofit organizations, and $4,000 for farm operations. It assigned to the )ommissioner of the Department of Community Affairs responsibility for certi- ying that displacing agencies have workable relocation assistance programs in if ect before forcing anyone to move. Last year, the Connecticut legislature created a Department of Community ~ffairs and assigned it important relocation responsibilities, including the ad- ainistration of grants-in-aid for relocation payments made by localities (Public ~ct 522, Laws 1967, Sec. 24). The commi~sioner of the Department is authorized o give such aid Ito municipalities for relocation payments up to $250 for any adividual or family and up to $250100 for any business concern or farm. Federal and federally assisted programs, however, cause the great bulk of elocation traceable to governmental action. It ill becomes the Federal Govern- aent theim to lag behind time States in treating fairly those en whom it inflicts arlisihip by its many property taking activities. This is one more reason the 3ommission believes a uniform and ~quitahle policy of relocation assistance as provided in Title VIII of 5. 698 is long overdue. Title IX: This title of 5. 698 establishes a uniform policy on land acqisition ractices used in Federal and federally assisted development programs, and omplements the previous relocation title. In recent years, there have been growing complaints concerning the equity f government agency land acquisition practices, the adequacy of traditional tandards of compensation, and the sufficiency of assistance to persons adversely Iffected by Federal direct or federally assisted public improvement programs. ~hese problems have been largely treated on a piecemeal basis, with consequent PAGENO="0160" 154 inconsistency among areas covered and inequity for those not covered. As a result, bills were introduced in Congress as early as the 8~Sth Congress proposing an independent commis'sion to make a comprehensive Study of all aspects of the land acquisition and relocation problems. One bill to establish such a commission was introduced in the 86th and 87th Congresses by Senator John Sparkman, then Chairman of the Housing Subcommittee of the Senate Banking and Currency Committee. The Bureau of the Budget supported the objective of the commission but suggested that the study be conducted within the legislative branch. This proposal was adopted when the House Committee on Public Works established the Select Subcommittee on Real Property Acquisition in 1061. After three years of intensive study, the Subcommittee in December 1964 filed its report, ~S'tudy of Compensation and Assistance for Persons Affected by Real Property Acqui- sition in Federal and Federally Assisted Programs. Its recommendations were introduced in the 89th Congress as 5. 1201 by Senator Sparkman and in the House as HR. 3421 (Johnson of California), H.R. 6559 (Bingham), and HR. 6580 (St Germarin). Because of its provisions on relocation, 5. 1201 was linked with 5. 1681 and referred to this Subcommittee on Intergovernmental Relations, which held hearings on both bills in early summer, 1965. At the suggestion of the Bureau of the Budget, nearly every Federal agency which testified or submitted a statement requested more time to study the land acquisition provisions of S. 1201, so that attention was focused on the relocation provisions. 5. 1681 eventually passed the Senate and included three land acquisition provisions paralleling subsections 402(1), 402(2), and 402(3) of the Housing Act of 1965, which also conformed to three provisions of Title I of S. 1201. Following Senate action on 5. 1681, the Subcommittee on Intergovernmental Relations received detailed reports from the Bureau of the Budget and other agencies on the land acquisition provisions of 5. 1201. Title IX of 5. 698 incorporates the three land acquisition proposals that for- merly appeared as Section 10 of 5. 1681, plus other land acquisition provisions adapted from Sections 101-106 and 112 of 5. 1201. In effect, this title represents the first attempt by the Federal Government to establish a uniform policy on land acquisition practices covering both Federal and federally assisted development programs. Section 901 establishes uniform standards to guide the land acquisition prac- tices of Federal agencies. It requires that: every land acquisition agency make every reasonable effort to acquire prop- erty by negotiation rather than condemnation; appraisals be made before initiation of negotiations; the Federal agency establish a fair and reasonable purchase price before the Start of negotiations and make a prompt offer to acquire at that price; no owner be required to surrender possession of his property before the Federal agency `pays the agreed pur~ehase price or deposits with the court an amount not less than the appraised fair value or the amount of the con- demnation award; no occupant be required to move wi.thout at least 90 days' written notice; the Federal agency permit a property owner to remove an improvement if it is not required by the agency; tenants of property acquired by the government not be charged rent above a fair rental value; Federal agencies not ath~ance the time of condemnation or defer the con- demnation or deposit of funds in order to pressure the owner to agree on a price for his property; if property is to be acquired by eminent domain, the Federal agency insti- *tute formal condemnation proceedings; if the acquisition of `only part of a property would leave the owner with an uneconomic remnant, the Federal `agency acquire the entire property; and the Federal agency take into account human considerations in setting the boundaries of a proposed public improvement. In brief, this section makes it clear that the Congress desires that public agency policies `and procedures for the `acquisition of real property should be fair and consisteiit, `and should be directed to giving the property owner `the full measure of compensation authorized by `law promptly, with a minimum of inconvenience, and without forcing him to prolong negotiations or to costly litigation. Many Federal agencies adhere to some or most of those procedures and their reports on S. 1201 (89th Congress) indicated they could abide by all of the above. PAGENO="0161" 155 Section 902 directs that "fair market value" be paid as compensation for pur- iase or condemnation. Section 903 requires that a Federal agency Which takes tnd or an interest in land must take a similar interest in any improvement that part of th'e real property. It `also provides a uniform standard for determining rhether a structure or other improvement is a part of the real property. Section )3 further provides for equal treatment of property owners and tenants with sspect to buildings and structures on land taken. Section 904 `authorizes Federal agencies to reimburse property owners for sasonable and necessary expenses incidental to transferring title to real prop- rty to the Uni'ted States. This recognizes the inequity in taking private property or public use and requiring the owner, who may be unwilling to sell, to incur xpense in order to transfer title. Section 905 applies to federally assisted programs key elements of the property cquisition policies `and procedures for direct Federal programs set forth in ections 901 through 904. Specifically, it states that State or local agencies may ot receive Federal aid for acquisition of real preperty unless they agree t'o: ac- uire by negotiated purchase rather than condemnation when reasonably easible; give ninety days' advance written notice to vacate; and establish a price efore beginning negotiation and make a prompt offer to acquire the property at hat full price. Further, beginning in 1970 such agreements must also include rovision that the State agency: will pay the agreed purchase price, make avail- ble to the owner 75 percent of the appraised fair value of the property, or de- osit or pay the final amount of the condemnation award; will disregard any [ecreases in market value caused by preliminary administrative actions or public nnouncements of a proposed public improvement; and will assure equal treat- nent of property owners and tenants in regard to improvements owned by the enant. The latter effective da'te of this provision is in recognition of the fact hat some State and local government agencies canno't legally or practicably omply without first obtaining appropriate authorizing legislation. The requirements under Section 905 for preferring negotiation to condemna- ion, for ninety days' notice, and for prompt payment of the negotiated appraised )r condemnation price, already apply to certain acquisitions financed by the De- )artment of Housing and Urban Development pursuant to 1965 legislation, as ioted earlier. To grasp the significance of achieving a more uniform and fair property acqui- ~ition policy, one need only examine the anticipated annual scale of future prop- ~rty acquisitions under direct Federal and federally assisted programs, as ~stimated by the House Select Subcommittee on Real Property Acquisition in its ~964 report: MAGNITUDE OF FUTURE PROPERTY ACQUISITIONS, ANNUAL BASIS (ESTIMATE) Acreage Compensation Ownerships payments )irect Federal 1,204,700 $214,400,000 30,660 ederally assisted 523, 100 1,403, 900, 000 152,340 Total 1,727,800 1,618, 300, 000 183,000 The Advisory Commission `on Intergovernmental Relations believes these figures argue eloquently for a serious effort by the Federal Government to bring o'rder and equity to its property acquisition policies, and `that Title IX, largely b'ased on the exhaustive study of the House Select Subcommittee on Real Property Acquisition, is just such an effort. Not to be overlooked is the fact th'i's title's provision's are essentially in `accord with the reports `of the Bureau of the Budget, Department of Defense, Department of Interior, and the General Services Administration on S. 1201 (89th Oo'ngre'ss). Amendment No. 748 to S. 698: Our testimony shift's at this point from S. G98 as introduced, to the pr'oposed Amendment No. 748 just introduced by you, Mr. Chairman, which deals with "Accounting, Auditing, `and Reporting of Grant- in-Aid Funds." This proposed new `title would carry out a specific recommenda- tion adopte'd by the Advisory Commission in its report `on Fiscal Balance in the American Federal System and we sttongly urge its enactment. Federal agencies administering assistance programs are charged by Congress and by regulation's ~f the Com~3troller General with assuring the proper and 95_626-68----11 PAGENO="0162" 156 legal use of grant funds distributed to States and local governments. Furthermore, the General Accounting Office a's part of its "spot" audit to ascertain the effective- ness of agency audits of Federal expenditures, also audits grant-in-aid expendi- tures at the State and local levels. Adequate fiscal and program controls are an essential part of any assistance program. The government providing the assistance must be able to assure itse]i that funds are being legally spent for the purposes intended. Auditing procedures and financial reporting requirements are essential for this purpose. However, while meeting the necessities of adequate reporting and review, every effort should be made to avoid placing undue and time-consuming burdens on State and local program administrators. Surveys indicate that this latter goal is frequently not achieved. A recent study by the State budget officers (NASBO) of Federal grant-in-aid requirements which imj~ede State administration showed considerable dissatis- faction with the detailed, burdensome, and slow auditing and reporting procedures required by Federal grant programs. The variation between Federal and State requirements and among Federal requirements regarding frequency, classifica- tion systems, and methodis of accounting were cited as creating particular prob- loins. The excessively detailed reports on subprograms were mentioned by one State official who indicated that 54 individual fiscal reports must be prepared and filed regarding expenditures of funds under the Vocational Education Act at both State and local levels, taking weeks of `staff `time. Another official complained that `the breakdowns requested are almost endless. In the earlier survey of The Federal System as Seen by State and Local Officials, your Subcommittee, Mr. Ohairman, found that half of the respondent's indicated that variations among the Federal agencies reporting and accounting require- ments and differences bctween Federal and State requirements had caused diffi- culties in administering grants-in~aid. As one Governor stated it: "Many Fe'deral agencies ignore the States' basic accounting system and the controls therein, making it necessary for State operating agencies to keep double sets of books for Federal audit purposes. Some Federal agencies go to the extent of aimost c'omple'te voucher-by-voucher audit an'd at times demand that accounting be done by a "Federal" standard which in es'sence is not Federal as such but peculiar to the needs of the specific agency concerned. Overall, an overwhelming number of the State and local `officials indicated that legislation was needed to achieve more uniform accounting and auditing procedure's among Federal grant programs." On the other hand in the `subsequent Subcommittee report entitled The Federal System as Seen by Federal Aid Officials, it was reported `that a majority of Federal program administrators responding felt that th'e variations in auditing requirements cause no difficulties in the State and local administration of their respective programs. A sizeable majority rejedted the proposal that the post-audit of aid programs might be dispensed with where a State's post-audit system met standards the Comptroller General set down. In addition a comparable proportion disputed the need for more uniform auditing and `accounting procedures for all gran't-in~aid programs. Although the difference in Federal program objectives, magnitude, and adminis- trative arrangements can hardly be expected to yield completely to t~niform reporting `and accounting requirements, there remains the question of whether existing requirements are reasonable in their demand's. Moist State and local officials feel `they a're not and at least `some Federal aid administrators agree. In its recent report on Fiscal Balance in the American Federal System the Advisory Commission adopted `a three-pronged recommendation urging enactment of general legislation by the Congress applicable to grants-in-aid to the States whereby: (1) the Comptroller General wocLld study and review the accounting and auditing systems of State governments `receiving Federal grants-in-aid and asceirtain their general adequacy and integrity; (2) for those States meeting certified standards, the results of State audits of the expenditure of Federal grant funds would be accepted by Federal administrators in lieu of their own fiscal audits as long as the State accounting and auditing system continued to meet the prescribed standards; and (3) thi~ authorization would be extended at the discretion of the Comptroller General to units of local government receiv- ing `sizeable grants directly from Federal agencies. The proposed new title includes provisions designed to facilitate th'e simplifica- tion and standardization of financial auditing and reporting requirements in Federal gran't-in~aid programs. Its second section provides the President with sufficient authority to achieve greater con'si'stency, `simplicity and order in an PAGENO="0163" 157 rea of grants-in-aid financial reporting-~an area only beginning to be recognized a serious intergovermnen~al fiscal mai~agemenct problem. It authorizes the resident to promulgate rules and regulations simplifying financial reporting ~quirements of Federal grants-in-aid and, to the extent feasible, making them icre nniform. The new title's third section provides the basis for constructive efforts to void unnecessary duplication and time-consuming fiscal management procedures the Federal level and establishes a basis for accepting State and local account- ig and auditing systems that meet acceptable standards. The Comptroller *eneral, the Secretary of the Treasury, and the Director of the Bureau of the udget are directed to conduct a joint study of the principles, standards, and ~lated requirements of executive agencies governing the accounting and auditing Federal grants-in-aid. They are to identify ways and means of developing overnment-wide accounting and auditing procedures to foster greater coopera- on and coordination among the financial management officials of all levels government. This assignment, in effect, is already theirs under the Budget ad Accounting Act of 1950 and we understand a Task Force is being established look into these issues. The Comptroller General under this third section is directed to study and eview the accounting and auditing systems of the States and their political ~tbdivisions in order to determine their adequacy and effectiveness in light of ie principles and standards prescribed by him. After consulting with the ecretary of Treasury and the Director of the Budget and considering statutory ~quirements and the needs of administering Federal agencies, the Comptroller *eneral is authorized to prescribe rules and regulations permitting such agencies substitute the accounting and auditing systems of State and local governments rhen they meet proscribed standards. This proposed new title seeks to develop new intergovernmental arrange- ients in the accounting and auditing field which would lead to a significant iving in time and energy and provide the basis for significant improvements i intergovernmental fiscal management-without in any way shortcutting the rercise of fiscal prudence and accountability at all levels of government. We turn now to S. 2981, the final major topic that is covered in your hearings, Er. Chairman. It is our understanding that S. 2981, "The foint Funding Simplification ct of 1968," has been referred to your Subcommittee and that this measure is to e considered in these hearings. The Advisory Commission, in its Fiscal Balance eport, recommended enactment by the Congress of this Administration bill as an nportant means of modernizing the management of Federal assistance rograms. States and localities more and more are adopting a "multifunctional," "pack- ging" approach to meet varying social and physical developmental needs~ Yet resently, a State or local government in putting together an integrated program Lust apply separately, for example, for the educational component, welfare rmponent, job training component, urban renewal component, and so on. :eeping the separate applications moving along in tandem frequently nearly Bcomes an exercise in administrative futility. The applicant State or local ommunity may find part of itsi components approved and other suspended in a iorass of administrative and fiscal uncertainty, because of competition within ~rtain funding sectors. This bill seeks to remove or simplify administrative technical requirements to permit a more flexible "package" approach to jnsideration, processing, approval, and administration of Federal Assistance rograms. S. 2981 would accomplish this by (1) authorizing waiver or modification of ?rtain statutory procedural requirements; (2) permitting agency heads to elegate the approval and administration of Federal assistance programs to ~her agencies; (3) providing for a special fund in each agency tO finance joint rojects; (4) describing ways Federal agency heads can foster joint projects: rid (5) authorizing the President to establish implementing standards and rocedures. The proposal would not change, with certain exceptions, substantive rovisions of law governing assistance programs, such as eligibility criteria, Latching ratios, and apportionment formulas. The Advisory Commission believes this joint funding approach is workable ssuming it is reinforced with strong direction at the highest administrative ~vels in the Executive Branch and at the same time receives the dedication cooperate from functional program administrators. We are convinced that PAGENO="0164" 158 initial implementing efforts-assuming the bill's enactment-should focus or the intradepartmental phase of this "packaging problem," since the manage ment hurdles in this area are far less difficult than those involving interdepart mental collaboration. To conclude, Mr. Chairman, the Advisory Commission strongly supports passage of S. 698, the proposed "Intergovernmental Cooperation Act" includini Amendment No. 748 and we support the enactment of S. 2981. We endorse these measures, because we accept the intrinsic worth of the existing grant-in-aid system. But we know that it is in desperate need of modern- ization. The underlying thrust of all the legislation before you is geared to achieving much of this needed reform. Improved intergovernmental management is as critical a factor today in improving Federal-State-local relations as any other. Yet, better intergovernmental administration is as difficult a subject to dramatize and to achieve action on-as any we know. Prompt, decisive and meaningful action must be taken, however, if American Federalism is to survive the many public service burdens now thrust upon it. These bills constitute a viable, vigorous, first response to many of the manage- ment muddles that plague contemporary intergovernmental relations. We support them. We urge their early enactment. And we offer the services of our staff to assist the Subcommittee in whatever way is deemed appropriate to facilitate your ~deliberations. Mr. COLMAN. We have this table, Mr. Chairman, that I mentioned to submit for the record. Senator MUSKIE. It will be included in the record. How many programs in all over this period did not have a termina- tion date? Mr. COLMAN. Well, over the entire period, it would appear that only eight out of about 60 enactments did not have a termination date. Senator MU5KIE. I asked the Bureau of the Budget yesterday for this information, and you provide the answer today. That is quick service. Mr. COLMAN. Thank you. (The table referred to follows:) FEDERAL GRANTS-IN-AID TO STATE AND LOCAL GOVERNMENTS (LI MITATIONS OF AUTHORIZATION N PROGRAMS ENACTED SINCE 1961) Program (established during period Year es- Federal department or agency Limiting provision 1961-68) tablished currently administering program Area redevelopment 1961 Commerce All authority under the Area Redevelopment Act expired June 30, 1965 (enacted for 5 years). Community health services particularly 1961 Health, Education, and Welfare - 1967 (for both formula grants for the chronically ill and aged. and project grants). Mass transportation demonstration 1961 Housing and Urban An expiration date is not projects. Development, specified but the aggregate of grants may not exceed $25,000,000 (included within the limit on urban renewal capital grants). Open space land preservation 1961 do An expiration date is not specified but the aggregate of grants may not exceed $21,000,000. Public works acceleration 1962 Commerce An expiration date is not specified but the appro- priation is for an aggregate sum not to exceed $900,000,000. Services for agricultural migratory 1962 Health, Education, and Welfare~ 1968 (the last appropriation workers. was for fiscal 1965). Intensive community vaccination pro- 1962 do 1963. Ed~cational television broadcasting 1962 do 1967 (enacted for 5 years). facilities. PAGENO="0165" aternal and child health services, special project. ental retardation planning lental retardation facilities (community facilities). ocational education orginally enacted in 1917. Program expanded and im- proved in 1963. onstruction of teaching facilities for 1963 medical, dental, and other health personnel. gricultural experimental station re- 1963 search facilities. ligher Education Facilities Act 1963 ir pollution control 1963 Vater Resources Research Center 1964 ~ass transportation systems ibrary construction (new) and library services (extension to urban areas). Eommercial fishery research lospital and medical facilities amend- ment (construction and moderniza- tion). Economic Opportunity Act iraduate public health training project grants. :ood Stamp Act `ousing Act amendments: (a) Urban renewal code enforce- ment. (b) Rural housing low-rent domes- tic farm labor housing. (c) Training and fellowship pro- gram. _and and Water Conservation Fund Act. - ~lurses Training: (a) Construction (b) Scholarships Ustoric documents \ppalachian Regional Development Act.. 1962 Labor Authorization to mate agree- ments with States will expire June 30, 1969; and authority to disburse Federal grants will expire Dec. 30, 1969. 1963 Health, Education, and Welfare.. 1968 (for special projects for maternity and infant care only). 1963 do A 1-time grant for fiscal years 1964, 1965. 1963 do 1968, Community facilities (enacted for 4 years beginning with fiscal year 1965). 1963 ... .do No limitation on authorization. However, the 1963 act re- quires appointment of an advisory council to review the program and its administra- tion and to make recom- mendations to the President and Congress not later than Jan. 1, 1968. Similar councils are required thereafter at intervals of not more than 5 years. Occupational training in redevelopment areas- autherity under the Area Redevelopment Act (in which this provision is included) expires June 30, 1965. Residential vocational educa- tion schools-1968 work- study programs-1968. do 1969. Agriculture No expiration. Health, Education, and Welfare.. 5 years. do 1967. Interior 1974. 10-year limitation on title II. Additional water re- sources research programs only. 1964 Housing and Urban Develop- 1968. Appropriations remain ment. available until they are ex- pended (enacted for 3 years). 1964 Health, Education, and Welfare.. 1966. 1964 Interior 1969. 1964 Health, Education, and Welfare__ 1969. 1964 1964 1964 1964 1964 1964 1964 1964 1964 1964 1965 do 3years. Interior No expiration. Health, Education, and Welfare.. 4 years. do 5 years. General Services Administra- Do. tion. Appalachian Regional Develop- 6 years. ment Commission. 159 DERAL GRANTS-I N-AID TO STATE AN~ LOCAL GOVERNMENTS (LI MITATIONS OF AUTHORIZATION IN PROGRAMS ENACTED SINCE 1961)-Continued anpower development and training... - Program (established during period 1961-68) Year es- tablished Federal department or agency Limiting provision currently administering program OEC 4 years. Health, Education, and Welfare_. 6 years. Agriculture 3 years. Housing and Urban Develop- 1965. ment. do 1965. PAGENO="0166" 160 FEDERAL GRANTS-IN-AID TO STATE AND LOCAL GOVERNMENTS (LIMITATIONS OF AUTHORIZATION IN PROGRAI ENACTED SINCE 1961)-Continued Program (established during period Year es- Federal department or agency Limiting provision 1961-68) tablished currently administering program Elementary and secondary education: (a) Education of children of low- 1965 Health, Education, and Welfare__ 1968. income families. (b) School library resources, text- 1965 do 5 years. books, and other instructional materials. (c) Supplementary educational 1965 do Do. centers. (d) Regional facilities for educa- 1965 do 1970, tional research and related purposes. (e) Strengthening of State depart- 1965 do 5 years. meets of eduction. Older American's Act 1965 do Do. Water resources planning 1965 Water Resources Council 1976. Health of school and preschool children - 1965 Health, Education, and Welfare~ 1970. Communty mental health centers- mi- 1965 do 1972 (grants made after June 3 tial personnel costs. 1968 will be available only for centers or services for which a grant was made before that date). Housing and Urban Development Act of 1965: (a) Basic water and sewer facilities 1965 Housing and Urban Develop- 1969. meet. (b) Neighborhood facilities 1965 do 1969. (c) Advance acquisition of land 1965 do 1969. (d) Open space land buildup urban 1965 - - - do An expiration date is not areas, specified but the aggregate of grants may not exceed $64,000,000. do An expiration date is not specified but the aggregate of grants may not exceed $36,000,000. Public Works and Economic Development Act: (a) Public works and development 1965 facilities. (b) Technical assistance, research, 1965 and information. (c) Economic development districts 1965 (d) Regional action planning corn- 1965 missions. State technical assistance to commerce 1965 and industry. Law enforcement assistance 1965 Arts and humanities 1965 Water pollution research and develop- 1965 ment. Heart disease, cancer, and stroke 1965 Construction of waterworks and sewage 1965 disposal plants in rural areas. Solid waste disposal 1965 Highway beautification 1965 Improvement of training facilities for 1965 medical, dental, and other health personnel. Medical libraries 1965 Higher Education Act of 1965: (a) Community service and con- 1965 tinuing education. (b) College libraries 1965 (c) Strengthening developing insti- 1965 lotions. (d) Improvement of undergraduate 1965 instruction. Vocational rehabilitation originally enacted in 1920. Program expanded and improved in 1965: (a) Vocational rehabilitation serv- ices generally. (b) Planning comprehensive pro- grams. (c) Planning and initiating special programs. (d) Rehabilitation facilities and workshops. (e) Workshop improvement and training services. (e) Urban beautification and im- 1965 provement. Commerce 1969. do 1970. do 1969. do 1969. do 1968. Justice 3 years. National Foundation on Arts 1968. and Humanities. Health, Education, and Wel- 1969. fare. do 1968. Agriculture No expiration. Health, Education, and WeIfare~ 1969. Commerce 1967. Health, Education, and Welfare__ 1969. do 1970. do 5 years. do Do. do 1966. do 5 years. 1965 do 1968. 1965 do 3 years. 1965 do 6 years. 1965 do 5 years. 1965 do 6 years. PAGENO="0167" Vlanpower Act of 1965: (a) Labor mobil- ity demonstration projects ocial Security Amendments of 1965: (a) Medicaid (b) Training of professional per- sonnel for health and related care of crippled children. lealth Professions Educational Assist- ance Amendments. ~istoricaI properties preservation Water research projects )omprehensive Health Planning and Public Health Service Amendments, 1966: (a) Comprehensive State health planning. (b) Areawide health planning (c) Project grants for training, studies, and demonstrations. (d) Comprehensive public health services. (e) Project grants for health serv- ices development ~llied Health Professions Training Act of 1966: (a) Construction of teaching facili- ties. (b) Improve quality of training centers. (c) Traineeships (d) Nursing educational opportunity Clean Air Act Amendments of 1966; air pollution control maintenance. Economic Opportunity Amendments of 1966: (a) Special impact programs (b) Comprehensive health services_ Child Nutrition Act of 1966: (a) Special milk program (b) School breakfast program (c) Nonfood assistance Elementary and Secondary Education Amendments of 1966; education of handicapped children. Library Services and Construction Act Amendments of 1966: (a) lnterlibrary cooperation (b) State institutional library serv- ices. (c) Library services to the physi- cally handicapped. Demonstration Cities and Metropolitan Development Act of 1966: (a) Comprehensive city demonstra- tion: (1) planning, technical as- sistance. (2) administration, reloca- tion. (b) Supplementary grants for metro- politan development. (c) National Trust for Historic Pres- ervation. (d) Urban information and technical assistance. (e) Assistance for housing in Alaska Urban Mass Transportation Act of 1964, Amendment: (a) Technical studies (b) Managerial training programs. - - (c) Research and training in urban transportation problems. Health, Education, and Welfare__ No expiration. do Do. 1966 Office of Economic Opportunity__ 1970. 1966 do 1970. 1966 Agriculture 1970. 1966 do 1968. 1966 do No expiration. 1966 Health, Education ,and Welfare_ - 1968. 1966 do 1971. 1966 do 1971. 1966 do 1971. 161 ED ERAL GRANTS-I N-AID TO STATE AND LOCAL GOVERNMENTS (LI MITATIONS OF AUTHORIZATION IN PROGRAMS ENACTED SINCE 1961)-Continued Program (established during period Year es- Federal department or agency 1961-68) tablished currently administering program Limiting provision 1965 Labor 1967. 1965 1965 1965 do 1969. 1966 Interior 1970. 1966 do 1976 1966 Health, Education, and Welfare_ - 1968. 1966 do 1968. 1966 do 1968. 1966 do 1968. 1966 do 1968. 1966 do 1969. 1966 do 1969. 1966 do 1969. 1966 do 1969. 1966 do No expiration. 1966 Housing and Urban Develop- 1968. ment. 1966 do 1969. 1966 do 1968. 1966 do No expiration. 1966 -- -- do 1968. 1966 - do No expiration date specified but aggregate of grants may not exceed $10,000,000. 1966 do 1969. 1966 do 1969. 1966 do 1969. PAGENO="0168" 162 FEDERAL GRANTS-IN-Al D TO STATE AND LOCAL GOVERNMENTS (LIMITATIONS OF AUTHORIZATION IN PROGRAM~ ENACTED SINCE 1961)-Continued Program (established during period Year es- Federal department or agency Limiting provision 1961-68) tablished currently administering program Mental Retardation Amendments of 1967: (a) Cost of professional and techni- cal personnel of community mental retardation facilities: (1) initial grants 1967 Health, Education, and Welfare_ 1970. (2) renewal grants 1967 dn 196974. (b) Training of physical educators 1967 do 1970. and recreation personnel. (c) Research and demonstration 1967 do 1970. projects in physical education and recreation. Meat inspection 1967 do No expiration. Elementary and Secondary Education Act Amendments of 1967: (a) Incentive grants 1967 do 1969. (b) Regional resource centers for 1967 do 1970. improvement of education of handicapped children. (c) Centers for deaf-blind children 1967 do 1970. (d) Recruitment of personnel and 1967 do 1970. information on education of handicapped. (e) Bilingual education pregrams_ 1967 do 1970. Appalachian Regional Development Amendments of 1967: (a) Planning and other preliminary 1967 Housing and Urban Develop- 1969. expenses of proposed housing ment. projects. (h) Supplements to Federal grants - 1967 Commerce 1969. Air Quality Act of 1967: (a) Research relating to fuels and 1967 Health, Education, and Welfare - 1969. vehicles. (b) Developing uniform motor ye- 1967 do 1970. hide emission device inspec- tion program. Education Professions Development: (a) Attracting qualified people to 1967 do 1970. education. (b) Attracting and qualifying 1967 do 1970. teachers to meet critical teacher shortages. (c) Improving trainingopportunities 1967 do 1970. for personnel in education programs other than higher education. Fire Research and Safety Act of 1968_~ - 1968 Commerce 1970. Social Security Amendments of 1967: (a) Training nursing home ad- 1968 Health, Education, and Welfare_ 1972. ministrators. (b) Child-welfare services 1968 do No expiration. (c) Expansion and development of 1968 do 1972. undergraduate and graduate social work programs. Senator MUSKIE. On page 5 you point out that section 201 pro- vides that Governors or State legislatures would, on request, be in- formed by Federal departments and agencies of the purposes and amounts of grants being received. Should this information be given only on request, or should it be a routine submission? Mr. COLMAN. In our opinion, Mr. Chairman, and I think this opin- ion is `shared by the Bureau of the Budget, it should be on request, because the amount of informaton about these grants-in-aid involves a terrific amount of paper. Just where you stop in providing this or where the Governor would want to stop would vary from State to State-for example, the grants that go to universities from Federal agencies, or individual detailed and minor project grants of one kind or another that are made by the Federal agency. So we believe that rather than deluging the Governor or legislature with this complete mass of information, it should be worked out with the States. If more PAGENO="0169" 163 nformation is desired by a particular government, it should be pro- rided, but it should await his request. Senator MUsKIE. Will he know what to ask for before he knows vhat is available? Mr. COLMAN. Of course, that always is a difficult question. The in- ;ent of this section, with its proviso, "on request," is that basic infor- mation would be provided to all Governors as a matter of course. But ~xtensions beyond that, going beneath the general and moving to the particular, would need to come at the initiative of the Governor. Senator MUSKIE. In other words, he will be advised as to what pro- grams are being used? Mr. COLMAN. Yes. Senator MUSKIE. Then it is up to him to decide how much detail he wants? Mr. COLMAN. Yes, sir. Senator MTJSKIE. With respect to amendment 748, which you discuss I think, on page 46, I understand that the Comptroller General would have some responsibility for this and he is almost totally negative with respect to this proposal. Mr. COLMAN. I missed the first part of your comment. Senator MTJSKIE. I understand that the Comptroller General is com- pletely negative. Mr. COI~MAN. This is news to me. He may very w~ll be negative, but I think that Mr. Staats understands pretty fully the basic rationale of the proposal. He and I have discussed it. He has had copies of it for a long time. It may very well be that his staff and he, in finally deciding whether to support or oppose this provision, may very well have decided that the balance is in the negative rather than the positive. Senator MTY5KIE. For instance, he says: Sections 1003 (b) and (c) wonid lay upon the Comptroller General functions of management involving financial relationships between executive agencies and states and political subdivisions which are the primary responsibility of the executive agencies in the administration of their programs. The assumption of these functions by the Comptrtller General would, in addition, tend to negate the independence and detachment from operational responsibility which the Congress intended for him in a review and evaluation of agency performance. Thus in our view, the concept of subsections (b) and (c) is inconsistent with the statutory roie of the General Accounting Office. Mr. COLMAN. That sounds, Mr. Chairman, as though he were com- menting on some provisions dealing with the periodic review of grant- in-aid programs. Because what you have just read has been the type of objection that has often been made by the Bureau of the Budget and by Federal agencies to the role of the Comptroller General with regard to the review of the grants. Now, there may be a difficulty, Mr. Chairman, with regard to the language here in amendment No. 748, but it is certainly not the intent o~f the Commission's recommendation to involve the Comptroller Gen- eral in management responsibilities. The Comptroller General now conducts audits on a spot basis of grant-in-aid programs, and he and his staff are very much concerned about the audit of Federal expendi- tures in these programs. The Comptroller General's staff is already in the State governments looking at their books on a spot basis. This proposal of the Commis- PAGENO="0170" 164 sion says, in effect, that the Comptroller General would take a look al the overall adequacy of the auditing system of each State and come tc a conclusion as to whether that system is adequate and meets propei accounting standards. After such a finding of adequacy under this proposal, Federal agencies would then be obliged to accept the State audits as being responsible without having to r~ly on a duplicating agency audit. That is the purpose of the amendment. Senator MtrsKIE. His comments are clearly directed to amendment No. 748. It may be that you would like to discuss his comments with him to see whether or not his opposition is based upon a misconception of the legislation or whether the legislation clearly defines what you had in mind for it. He also had a second paragraph of comment in his letter which I shall refer to now. He says: In a practical sense, the requirement of subsection (b) to study and review the accounting and auditing systems of the many states and political subdivLsions which are the recipients of Federal programs would be an undertaking beyond the resources of our office, considering our responsibilities. In addition, sub- sections (b) and (c) imply that the Comptroller General has prescribed prin- ciples, standards and related requirements concerning accounting and auditing by the states and political subdivisions with respect to the expenditure of Federal aid funds. Such is not the case. We do not believe it would be appro- priate for the Comptroller General to prescribe such standards and procedures for adoption by state and local agencies. These are matters which should be worked out by the executive agencies and the state and local bodies and made a part of the grant agreements centered on individual programs. We would be happy to make available to you a copy of the Comp- troller General's comments dated May 8. Perhaps it might be helpful to all concerned if you were to discuss it with him to see whether or not the difficulties he sees can be resolved in any way. Mr. COLMAN. It does not surprise me at all, Mr. Chairman, that concern is expressed with regard to subsection (b) - This would involve an increase, a significant increase in the staff of the Comptroller General. The question I think the Congress has to consider is whether by making a modest increase in the staff of the Comptroller General for purposes of examining the auditing systems of the States on more than a spot basis, but on a rather general basis, will mean a consequent elimination of the necessity of literally hundreds and thousands of Federal agency auditors going into those States to duplicate audits already made by the State auditors. So I think in a way, that question is comparable in terms of money and resources to the one that fre- quently comes up in connection with the Internal Revenue Service. You can spend some more money to put more agents on the payroll, but if you put them on the payroll, they bring in additional revenues to the Federal Government. I think the same kind of possible economies face the Congress with respect to the provisions of this amendment. Senator MUSKIE. I think we ought to have some estimate in the record of what additional staff resources the Comptroller General would require in order to perform this function and the estimated cost. Then, as I say, it seems to suggest that some of the proposed responsi- bilities are inconsistent with the congressional concept of the Comp- troller General's `office. I think that perhaps it would be helpful if we have some consideration at this point between the two of you. PAGENO="0171" 165 If you cannot resolve it, fine. At that point, we have to decide to what degree this did or did not represent a departure from the tradi- ~ional concept of the Comptroller General's office. Mr. COLMAN. We will consult with the Comptroller General and his staff, Mr. Chairman, and be in touch with the staff of the sub- committee about this. Senator MUSKIE. I have some questions that arise out of the testi- mony yesterday of Mr. Hughes of the Bureau of the Budget. He pointed out that title VI, providing a method for grant consoli- dation, gives the President authority to specify the formula or for- mulas for making grants under the consolidated programs, but does not give him authority to propose changes in eligibility, planning, and other requirements that may be needed. Do you see the need to give the President this additional authority? If so, would it raise any serious legal questions? Mr. COLMAN. Yes, sir, we think that the provisions of the title should make clear, if they do not now make clear, that the types of considera- tions that could enter into a grant consolidation plan might involve such things as planning requirements, eligibility requirements, classes of recipients, and so forth. But I see no legal problem. The Reorganization Act deals with matters of statutory law, as do the grant programs. Now, at the risk of analogy, sir, which is always risky, let me ad- vance one that seems to us to be fairly close to the concept proposed here. That is the way that `a committee of conference of Congress works. When a committee of conference has two versions of the bill. before it, there are the parameters within which the committee ham- mers out the final version `of `the legislation. Under `this proposed title, the President would have the statutory language of the two, three, or more grant-in-aid programs being considered for consolidation. Those various statutory provisions would be the parameters beyond which he could not go but within which he could operate freely as to formula, as to planning requirements, as to eligibility, and so on. It is like the banks of a river, the banks being fixed, but the par- ticular course of the channel being flexible. We would certainly believe that the items Mr. Hughes referred to in his testimony should be within the scope of the President's powers under the bill. Senator MusKm. Mr. Hughes suggested that the authority which title VI would give the President is already contained in large part in the President's Reorganization Act authority. Do you have any view on that? Mr. COLMAN. Well, if one wants to forget about the word, "formu- la," and the associated words in the text now, well, certainly, a num- ber of the effects of grant-in-aid consolidation are covered by the Reorganization Act, but only those parts having to do with what agency or unit of an agency shall administer the program. There is no authority, as we understand it, and I think this was implicit in what Mr. Hughes said, there is no' authority in the Reorganization Act to take two grant programs and merge the formulas, merge the rules for eligibility, merge the planning requirements, operating within the parameters of the different statutes but not going beyond them. I do not think that is at all permitted under the Reorganization Act of 1949, as amended. PAGENO="0172" 166 Senator Musim~. With respect to amendment 748, Mr. Hughes also had a comment. He proposed that action `be deferred on this new title in view of the fact that a joint study has just been undertaken by the Comptroller General, the Secretary of the Treasury, and the Director of the Bureau of the Budget, looking toward improvement in the financial administration of the grant programs at Federal and local levels. In view of this development, do you agree that legislative action should be deferred? If not, would you give us the reasons why you think the action should proceed before that study is completed? Mr. COLMAN. With all due respect to Mr. Hughes and to the Comptroller General, it would be the Commission's view that this ought to proceed, because a joint task force effort which is being launched by the joint working group of the Secretary of `the Treasury, Director of the Budget Bureau, and Comptroller General on grants- in-aid in effect is a continuation of a long series of joint endeavors in this and other fields. I think the present task force will give more concentrated attention to grants-in-aid than other of their joint efforts in the past. But here is a basic departure, really, in the posture of the Federal Government with regard to the audit of grant-in-aid funds. So it would be our belief, with all due respect to the other two agencies in- volved, that the Congress should proceed with the perfecting of this legislation and the full consideration of it. Senator MUSKIE. With respect to title VIII, the relocation title, I have a series of questions based upon Mr. Hughes' testimony yester- day and on ~ther things. Sedtion 805(a). The title describes the payments to be made to various groups dislocated. Mr. COLMAN. What was the citation again, Mr. Chairman? Senator MU5KIE. Section 805 (a) on page 41. Tn your relocation report, you also list the source of costs that are incurred by displaced people, businesses, and so on. In your judgment, are all fair and rea- sonable relocation payments to persons, businesses, and farm opera- tors fully covered by paragraph 805 (a) in the light of your considera- tion of the costs that are incurred? Have you made a comparison of the two? We have assumed, I think, that the legislation covered everything, all types of costs, that a displaced person or business or farm operator might expect. You have gone into some consideration of the costs, and we simply want to know if the legislation covered everything that it ought. Mr. COLMAN. That is hard to answer, Mr. Chairman. It covers nearly all of the contingencies that we could conceive. Maybe some new ones have been uncovered. Senator MTJSKIE. Do you think your report is complete in that respect as of the time it was written? Mr. COLMAN. Yes, sir. Senator MUSKIE. Maybe it would be well to include in the record of the hearings appendix 3 of the table of your report that bears upon this point. I know that Senator Mundt has been interested particularly in the past with the farm operators' probl~ms in this respect. PAGENO="0173" 167 (The table follows:) APPENDIX \BLE 3.-SAMPLE OF VARIATIONS IN ITEMS OF LOSS AND EXPENSE COMPENSABLE UNDER ADMINISTRATIVE REGULATIONS APPLICABLE TO FEDERAL AND FEDERALLY AIDED PROGRAMS Urban Bureau of Corps of Item Renewal Public Engineers Navy Roads Department of Interior osts during search for replacement property: Transportation X X Lodging X X xpenses in obtaining replacement property: Appraisal X X Title examination X X . X X X X Credit reports X Closing costs-recording fees X X loving costs: Disconnecting and dismantling fixtures, ma- chinery, equipment, etc. (not compensated as part of realty) - X Xl X X Loading and unloading personal prcrperty X X 1 X X Cost of transporting displaced party and family X X to new dwelling. Reassembling and reinstalling fixtures, machin- X X 1 X X ery, equipment, etc. (not compensated as part of realty). Inspection fees for reinstalled property X 1 X X Taxes incident to moving personal property X X ime lost from employment because of moving (not X 2 X including labor performed in accomplishing move). oss in value of personal property disposed of be- X cause of displacement: fixtures, machinery, equip- ment, etc. (not paid for as part of realty). losing and related costs to convey property to Gov- X 1 ernment. X X X X X X I The Bureau of Public Roads will participate but it is entirely up to the State whether to pay at all or whether to pay for specific item. 2 Supervision only. Source: Select Subcommittee on Real Property Acquisition, Study, op cit., p. 102. Senator MusluE. Just one or two more questions. The Bureau of the Budget has suggested that the owner of real property taken under a Federal or federally assisted program who purchases another home withii~ a year be paid an amount of up to ~5,000 which, when added to the ~cquisition payment, equals the av- ~rage price for standard dwellings adequate to ac'com~nodate the dis- placed owner. In other words, it was their feeling that the fair market value does not really represent what it is likely to cost the displaced wner to get into comparable housing on the current market, that he )ught to be allowed up to $5,000 more. Now, do you agree with this idea as an addition to the relocation benefits available under the act, and do you feel that the figure he ;uggested is adequate in the light of present-day costs in the housing market? Mr. COLMAN. We think there is much to be sai*d forthat point, Mr. Chairman. I do not think ~ would be dispo~ed,to cI~al1enge the figure; Senator Mus~IE. ilave you had a chance to cOnsider that concept? Mr. C0LMAN. Yes, we haye. This seems to us tO b~ reasonable. The Duly reservation that I would entQr i~ with regard to the precise ~mount. We have no basis however to say that the amount is not a proper one. Senator MUsKIE. I think I neglected to pursue that point yester- ~ay with the Bureau Of the Budget. I think I ought to ask the staff to PAGENO="0174" 168 inquire of the Bureau of the Budget what the basis for that $5,000 figure is. Is it simply one picked ~ut of `the air, or does it have some basas? Mr. COLMAN. It is our understanding, Mr. Chairman, that this figure was developed through some special relocation studies con- ducted by the Department of housing and Urban development and supplied by the HUD staff to the Bureau of the Budget. Senator MtTSKIE. I think we ought to have a piece of paper at least describing the process by which the figure was arrived at. With respect to section 807(b) in federally assisted programs, urban renewal, highways, and `others, the Bureau has suggested that relocation payments be made in accord with the usual cost sharing re- quirements, half of the worth of the project. They propose this instead of the provision in the act which follow's urban renewal practice in providing for the Federal agency to contribute the first $25,000 of the relocation payment, with higher `costs being shared in accordance with the formula governing the program. In the light of what we know about State and local laws and finan- cial capabilities at this time, would this not place obstacles in the way of what we are attempting to accomplish and defer the time when relocation payments would be available under many of the new pro- grams intended to be covered by this act? Mr. COLMAN. It certaintly will, Mr. Chairman, in our opinion. To go further, this particular point has been one of the most troublesome between the subcommittee on `the one hand, and the Budget Bureau. on the other, with regard to relocation. I think we would all agree that if one were starting all over and if there were no relocation provisions now on the statute books, the posture of the Budget Bureau would be the proper one and you should tie the cost-sharing arrangements within ceilings to the project cost formula that happened to govern the particular program-_SO-So, for example, in the case of primary and secondary roads; 90-10 in the case of interstate highways, and so forth. But the fact of the matter is that in the housing area, in the urban renewal area, in the model cities area, the Congress on repeated occa- sions-I guess `three or four times now-has broadened and extended the relocation policies in those programs to provide for 100 percent Federal reimbursement up to certain ceilings. So the Commission does not see it as a practical alternative to try to turn the clock back and roll back the formulas with regard to these other programs. I think if you tried to do that, you would have the whole thing tied up. So on `tactical grounds as well as the general problem of fiscal, State and local fiscal capability, we would not favor this approach. Now, there is another problem. The way the relocation title of S. 698 is drawn, it will become obligatory upon State and local governments to enact legislation to provide machinery for these payments. If a siz- able cost sharing were required, we would have a lot of States coming into this room and opposing this legislation on the ground that they just did not have the money to pick up the tab or part of the tab as far as highway displacees are concerned. And again, we would be in a bind as far as moving ahead here with some Government-wide uniformity. Now, one might say, let bygones be bygones and let these housing people and the urban renewal people enjoy their 100 percent arrange- PAGENO="0175" 169 nent, but apply the Bureau's formula to the highway program and in the new ones to be covered. Well, here we would be defeating what we tarted out in the first place to achieve, namely, Government-wldO iniformity of treatment of individuals and businesses regardless of which particular authorization or which particular statute happens to ~ause them to become displaced. Senator MU5KIE. Two more questions. Then I yield to Senator ~`1undt. Present law and the provisions of this bill provide that relocation )ayments and assistance begin only when an agreement is reached )etween either the Federal Government and the localities to proceed with the project. As far as I know, no assistance is available during the )lanmng stages that precede such an agreement. Yet this is a period when displacement begins under the threa4 of compulsory removal when the project is actually undertaken. There have been many, many nstances of hardships attributable to this point. Now, what can be done to provide for relocation assistance at an ~.arlier stage than is presently provided for, assistance at the stage when the planning and surveying of the proposed project is announced? What can be done to relieve people of the fear of removal and smooth the road to orderly relocation in this period? Mr. COLMAN. Well, one possibility might be, Mr. Chairman, re- 7amped operations of the Department of Housing and Urban Devel- )pmeflt. Greater planning work could be undertaken to assist the ~ominunities in providing interim relocation housing, which is being increasingly done in a number of places, with trailer homes, mobile homes, and that type of thing. Where the final project has not been worked out, and where the bulldozers may finally start to operate and where they may not, but where there is ,a kind of upheaval and unrest caused because of the planning activities, perhaps some type of housing ~vailabilities might be- Senator MUSKIE. The problem, I suspect, affects homeowners and landowners who begin to find tenants disappearing or rental prop- Brties impossible to rent during this period when it is clear in the whole community that the area is going to be cleared and yet nobody is in a positk~n to buy their property or to reimbuse them or to make it possible for them to reinvest elsewhere, and they have to continue to pay taxes. So there is a period of great hardship and considerable Loss, not so much for tenants, perhaps, although they may incur some ilifficulties here, but for the property owners. Mr. COLMAN. As far as the owners are concerned, Mr. Chairman, would it not be the case that this type of loss of rental income, de- dining market value, and that sort of thing would all be legitimate considerations, legally, within the acquisition processes as they operate under the condemnation or taking laws of most States? In other words, an owner of rental property who lost his tenants a year in advance of the actual taking would be able to include this loss along with other factors that the Court or the appraisers would take into consideration. Senator MUsKIE. These costs are not now covered, I do not think, are they? Mr. COLMAN. It was my impression-I could be wrong on this-that as far as owners are concerned, this type of thing was admissible evi- dence in terms of losses being suffered by owners. PAGENO="0176" 170 Mr. Chairman, Mr. Richter has some additional comments. Mr. RICHTER. I believe under title TX, the uniform land acquisition title, the thrust of the legislation is to speed up the period of taking of property and, in addition, to make available to the property owner as quickly as possible the estimated fair value which the Federal agency sets on the land to be acquired. I think this gets somewhat to the problem. Senator MIJSKIE. By speeding up the process, you may reduce it, but the question put to Mr. Colman is whether or not actual loss can now be compensated under present law. Do you have any answer to that? Mr. COLMAN. I think there is also in here a declaration of legislative intent that in the price finally set, the Federal agency shall take account of any decrease in value which shall take place between the time of an- n~uncement of the intent to take property and the actual closing of the negotiations. Senator M~JSKIEL That is decrease of vaiue. It is not loss of rental. There is none? Mr. RICHTER. I think that is right. Senator MUSKIE. Would you supply a different answer if a different answer is appropriate? Mr. COLMAN. Yes, Mr. Chairman, and it might be that we will want to suggest some additional language to try to meet this problem. Senator MUSKIE, One final question. It i.s a long one, but it is one question. Section 803(d) would extend the long-term, low-interest loan pro- gram of SBA to cover, one, not only small businesses displaced but also nondisplaced small businesses which suffer economic injury as a re- sult of federally aidedprograms; two, businesses injured not only by urban renewal, highway, and other construction programs, but also by any other public improvement programs; and three, not only busi- nesses injured by Federal or federally aid~d programs, but aiso*bu~i- ness~s injured by State programs. The Bureau opposes these amendments, on the grounds, first, that it is impractical tO provide assistai~ee to other than those actually dis- platced; and second, that it i~ inappropriate for the Federal Govern- ment to assume responsibility f~r relocation of~ displacees from other than Federal or federally assisted programs. Now, what would you ~ to those objections? Mr. COLMAN, I am going to ask Mr. Richter to respond to part of the question. I think that with regard to displacements caused by other programs in which the Federal Government is not involved, it is, I think; difficult to debate or rebut the Bureau's point on that one. In other words, strictly a State program or strictly a local program that causes displacement-I think to get SBA involved in a special financial relief operation for those people perhaps is carrying Federal responsibility too far. Mr. RICHTER. Mr. Chairman, on the other part of it, my recollection is that this provision was proposed in the report of the House Select Subcommittee when S. 181 was up before you, and it came out of S. 1201. I think that that committee's staff had found that this was a real problem, the problem of these people not actually displaced but affected. PAGENO="0177" 171 I believe that at your hearings on S. 1681, the representative of SBA it that time indicated that it might be a problem in determining the legree to which these nondisplaced affected businesses should be or ~ould be helped. But he did not say it was an insuperable problem. He recognized that there were some administrative difficulties involved. Senator MiJSKIE. Of course, what we are talking about here is not ~ompensation for displacees, but simply the availability of a loan pro- gram in connection with natural disasters, or Federal displacement, and other reasons that are beyond the control of the Federal Govern- inent, the State government, or the businessman involved. So I think it is a little different consideration than the question of whether or not the Federal Government ought to provide these other compensa- tions. It is a question mainly of a Federal loan program which is not matched by a State loan program for another class of people hit by adversity not of their own making. Mr. WALKER. There is just one historical footnote to add, Mr. Chair- man; that is, the original SBA title, as it appeared in 5. 1681, did not include the specific provision which we have been talking about. It was incorporated during the hearings, largely at the behest of Sermator Sparkman and members of the Housing Subcommittee of the Banking and Currency Committee. I gathered at that time that they had ex- plored this in some depth and felt it merited consideration by this subcommittee. For this reason, it isin this title. Senator MUSKT1~. All right. I guess we have the issue before us. Senator Mundt ~ Senator MTJNDT. Thank you, Mr. Chairman. I iust want to go into two different aspects of the discussion. First of all, Mr. Colman, I was happy to read on page 16 of your statement your continued support of the 5-year termination provision. You point out that it appears Congress provides expiration dates as a matter of course for almost all grant programs. That seems to be very significant and very well grounded. I certainly am one who believed in stronger reviewing authority at the time you wrote this provision. I believe that these periodic reviews are very essential, very important. I thought that we were going to do something through the Congress- sional Reorganization Act, Mr. Chairman. I was optimistic that we were going to provide Congress with additional tnui'ned personnel, guidelines, `and other new authorities. But the House apparently has' driven a knife into the back of that legislation. Nothing has hap- pened. It took some little time in the Senate, but `we finally got it through. For a while', it looked like there was an agreement in the House, but the session is nearing `its busiest period, prior to adjourn-' ment, and I am pretty pessimistic that the House will aot on the bill. It seems to me rthat what we have set out here for the function of thefl General Accounting Office is very essential, and even more essential in view of the `lack of action in the House, to modernize the procedures of the Congress. ` As you point out, and as I have observed, most of them now provide for some kind of payment. I was at the Appropriations Comm~.i~ttee earlier this morning where the same question about tei~mination dates, 95-626--68-12 ` PAGENO="0178" 172 review periods, and contracts came up. There was a very illuminating discussion as to its validity. We have lived as we have learned `and we have learned as we have lived. Here you come to a situation in a rapidly changing world where we ought to be taking a look at these things to see whether they are up to date, whether there are new problems, and whether mistakes have been made which can `be corrected legislatively, whether omissions oc- curred at the time the legislation was passed. The attitude of some of the people `in the administrative agencies, that all of the creative think- ing and all new ideas terminated when we wrote the bill, seems to me to `be utterly indefensible. I cannot understand why they persist. I am glad you poin'ted out so effectively that that attitude is not a defensible one. Now, `a question or two on the testimony of Mr. Hughes, which you have studied and read. The one part about this legislation which con- cerns me, though I am a cosponsor, is the use of the Reorganization Act technique in title VI. I think Mr. Hughes makes a perfectly valid point when he implied that restricting the reorganization procedure re- garding consolidations involves changes in formula and other substan- tive law which are naturally the function of the legislative body. It seems to me we might `have to give this pretty serious thought, Mr. Chairman, and figure out how `these changes can be made in the normal legislative procedures, rather than running the clock back- wards and utilizing the reorganization process and procedure to virtually write new legislation. I would like to have your comments on that. Mr. COLMAN. Well, Senator Mundt, I think it depends upon the dis- tinction between the end and the means. If the Congress wants grant consolidation, if the Congress wants these 400' or more separate grant programs reduced, if you want to bring that situation under control, an effective tool for doing that is provided in the title `suggested here. Admittedly, just as in the case of the Reorganization Act, there is some delegation of the initiative from the Congress to the Executive. But I think that the Congress, in its action on the Reorganization Act back in 1949, felt that the end justified the means, that you would get more reorganization and that you would get a more effective grouping of agencies by lessening the legislative hurdles and roadblocks that these programs would have to encounter in order to become effective. Now, we all know of and you referred a minute ago, Senator, to `the number of advocates of these individual grant-in-aid programs. They are numerous, and they are powerful, and they will not be moved. When you bring up a consolidation proposal that has to run through the regular legislative gamut-if they are able to achieve in action at any one spot along the line, just as the folks have over in the House about the legislative reorganization bill-they have it made. They have stopped the consolidation. This approah admittedly assigns initiative to the Executive, but the Congress retains the veto power, and the proponents of grant frag- mentation could no longer be victorious though achieving legislative inaction. They would have to muster a majority of votes in one House or the other of the Congress in order to block a grant consolidation plan. So those are the very compelling reasons that the members of the PAGENO="0179" 173 kdvisory Commission considered on two separate occasions. They did aot approach this proposal lightly. They debated it. I remember, and I think you were present, Senator, when Governor Daniel stated that he did not like certain parts of tl~iis in terms of its philosophy, but in order to get the job done, he thought it was essential ~nd he was therefore going to support it. Several other members of the Commission made some comments. Senator MuNm'. I do not think we can conclude, ~iowever, that that is the only way to do it. It is true that Congress is willing to delegate the initiative of the formulas of this type in certain circumstances, and probably widen the scope to the Executive. But here we delegate a little bit more than the initiative, coming up with a proposal to be studied and amended and approved by the Congress. Here we come with a reversal of the status of the veto, whereby Congress assumes the role of the vetoing agency and the legislative aspect goes on at the other end of the avenue, a reversal of the normal constitutional legis- lative process. We do that in the reorganization of agencies and de- partments and personnel, because that is the reorganization of the functions of the executive branch, where they determine where per- sonnel should be, how such changes should be handled, how you streamline an executive agency for greater efficiency. But I think what you do is amend by Executive suggestion legislative proposals which have been written out for the various formulas for grants. I think you are going to have a very difficult time selling it to Congress. I am not sure it is a wise precedent to establish, because it might be used in other places. In this great struggle for maintenance of the balance of power, Congress is always at a disadvantage because it, operates more slowly. It does not have the homogeneous concepts that you have in the executive branch. We toss away a little bit like this, we toss away a little bit and go for the item of veto, and the first thing you know, we change the status. Our reorganization plan is not amended by that. Mr. C0LMAN. No. Senator MUNDT. So you see, you tie your hands, you take this or nothing. We take the bitter with the sweet, the good with the bad. We ~try to do things which we would not do if we legislate. I think we ought to give it serious thought; if you people are inter- `ested in the maintenance of our system of government, you ought to give a little thought `to it. Here we are saying, this will work, so let us take it. It will work, but I think `other systems will work. I think `if we give the initiative to the Executive and they come up with a formal legislative package which will provide this whole concept of (consolidation and so forth of the grants, I think it should be subject to hearing, should be subject to possible amendment. The majority posi- `tion in Congress will prevail. It seems to me you run just as much chance of killing the whole ~package through the reorganization action, because you cannot amend it. You have' to deal with offensive aspects just as much that way as you would by submitting the whole package through the legislative `mill. TMr. `OOLMAN. Let me say this Senator. Oertainly this is a very impor- tant and very difficult question. The Congress might wish, if it decided PAGENO="0180" 174 to travel this road or part of the way down the road as proposed here, to introduce some element of amendment or some elements of nar- rowing of scope, but still departing from the status quo. At the present time, the President can't come up here with a bill to consolidate a num- ber of grant programs and have an easy time of it. It gets referred to committees in each House and it goes the usual way, and because of the things that we have mentioned here this morning-the great tenacity which these interests, once developed under a grant program, tend to d~emonstrate-~-the prospects for such a proposal become very dim indeed. So I am not implying or suggesting here, Senator Mundt, that this is the only way. I am suggesting very strongly that something differ- ent from the status quo needs to be adopted with regard to the execu- tive-legislative process on grants-in-aid if we are going to make significant progress in the consolidation of this ridiculously large number of grants. And it is growing each session. There are in this Congress about 15 or 20 new grant programs that have been added to this list. And you have some in process now. So this number just keeps building up and it is becoming a managerial nightmare. Senator MUNDT. Here is what I am proposing: I am prepared to agree that our present status quo operation is not the best. It does not attain the objective we seek and is not an effective method at all. I am also prepared to believe that the reorganization concept will get the job done, but that the price you pay is too great in terms of the rela- tionship between the executive and the legislative, in terms of the precedents you establish, in terms of the failure to give Congress any flexibility of action. Tourists come to town and say, Mr. Colman, how do you get to New York ~ You can say, you can walk and get there. But that is not the only way. You can take the train or other modes of transportation. The same is true with consolidating grants. I think we are going to have to exercise some imagination and come up with new ideas, maybe a new reorganization concept which is amend- able, or which you do not have to take or leave in its entirety, or which is not under pressure of time, so if Congress were unable to meet, every- thing goes through. I think we have to recognize that simply because the end is desirable, the means are not necessarily desirable. I think the end is desirable, but I think we have to fashion a means which is compatible with the concept of balance of powers which recognizes the right of the legislators who originally created the programs to have something to say about the manner in which they are going to be consolidated. I do not think it is analogous, really, to the reorganization authority we gave the President to rearrange the chairs in his own house, This is a little different. This is the Executive. We have a question, after all, of the amounts we want to provide, the ways we want to provide them, whether we want to have an existing formula, a consistent formula for everything or a varying formula growing out of a legislative proposal that has been enacted PAGENO="0181" 175 by Congress. We have so many they certainly ought to be consolidated. But I think you brain trusters down in your shop ought to give a little thought to coming up with something new. I refuse to believe you can just get to New York by walking or riding the train. There are other ways you can contrive. There are other ways we can contrive, 1 think, of achieving this objective. I do not think we ought to destroy the goal and cease reaching for the objective simply because there are things that are pretty largely anathema in terms of utilizing the concept of the reorganization pro- gram to meet the objectives. Senator MTJSKIE. Thank you very much, Mr. Colman, Mr. Walker, and Mr. Richter. We appreciate your excellent testimony. I think we have exposed the issues involved. Our next witness, to present the statement of Gov. John Con- nally of Texas, is the vice chairman of the National Governors' Con- ference, Mr. Wayne Gibbens, Texas director of State-Federal relations, and Mr. David Hill, liaison officer of the National Governors' Con- ference. STATEMENT OF HON. JOHN CONNALLY, GOVERNOR OF TEXAS, VICE CHAIRMAN OF THE NATIONAL GOVERNORS' CONFERE1~CE, AS PRESENTED BY WAYNE GIBBENS, TEXAS DIRECTOR, STATE- FEDERAL RELATIONS, STATE OF TEXAS, ACCOMPANIED BY DAVID HILL, LIAISON OFFICER, NATIONAL GOVERNORS' CON- FERENCE Mr. GIBBENS. Mr. Chairman, Senator Mundt, I represent Governor Connally, who is vice chairman of the Governors' committee which considered this proposed legislation at the National Governors' Con- ference midwinter meeting. It is my pleasure to present to you his statement. It is a pleasure for me to express pn behalf of the National Gover- nors' Conference and the Council of State Governments, our support for S. 698, the proposed "Intergovernmental Cooperation Act of 1967." Testimony from representatives of the National Governors' Confer- ence and the Council of State Governments was heard by this subcom- mittee in 1965 when a similar piece of legislation was being considered. At that time, the Governors expressed enthusiastic support for the Intergovernmental Cooperation Act of 1965. Therefore, I will not belabor the issues discussed at that time, but I would like to briefly reiterate the position taken by the National Governors' Conference on the provisions of the 1965 bill which are still part of the proposal now being considered. The title providing for improved administration of grants-in-aid to the States would arm the States' chief executives with sufficient means to bring about a greater degree of regularity and financial planning and budgeting for all the funds expended in State govern- ment operations. The section providing for full information on grants- in-aid to the Governors of the States is essential if the Governor is to function as an efficient chief executive. This proposal would insure the State's Governor of timely information on grants-in-aid to his State. The "single State agency" concept is oftentimes a significant deter- rent to effective State organization and reorganization. This require- PAGENO="0182" 176 ment, and the manner in which it has been defined by regulation, has created some problems in the States. The section authorizing Federal departments and agencies to waive this requirement and approve other forms of administrative organization is heartily endorsed. The title permitting Federal departments and agencies to provide specialized or technical services to State and local units of government properly reflects the partnership needed in strengthening the service features of all levels of government, and the Governors again lend their support to this concept. The National Governors' Conference has in the past gone on record supporting the general provisions in the act calling for develop- ment of a national urban systems policy for coordinating machinery among Federal departments and between the Federal Government and other levels of government. Also with the increased pace of State planning activities in the last few years, the section calling for full consideration of "all view- poin'ts~miJtional, regional, State, and local" in planning urban de- velopment programs is even more significant and necessary. The provision of this section of the act favoring units of general local government as recipients for Federal grants-in~aid is wise, and, as a matter of good governmental policy, general-purpose governments rather than existing or proposed special districts should be encouraged to undertake those tasks which they can perform. While generally supporting the philosophy underlying the title dealing with acquisition, use, and disposition of land within urban areas by Federal agencies, it was urged by the Governors in their 1965 testimony that the provisions of this title be extended to rural areas where they are or might be practical. The Governors are also on record in support of the periodic con- gressional review of Federal grants-in-aid to the States and to local units of government. We believe it to be a matter of simple prudence to provide for periodic congressiona] review and examination of grants-in-aid as well as other types of legislation. An excellent first step in this area would provide for congressional review in new pro- grams every 5 years, unless the program had a termination date. If the program were limited, then it could be reexamined before extension. Turning now to the new titles found in S. 698, I and the conference endorse the concept `of consolidation of grants-in-aid programs. Con- solidation, on the scale required, will not be easy. There will be pres- sures from both within and without Government to maintain the present proliferation and categorization of grants-in-aid programs. The conference, in a study by the State TJi~ban Relations Committee, published in October 196'?, addresses itself to this problem, and I quote A basic consolidation in the number of categorical grants-in-aid must be undertaken by the Federal Government. To the maximum extent possible, cate- gorical grants within the same functional area should be consolidated into a single program, with a single set of statutory requirements and a single authorization and appropriation `and be administered by a single Federal agency. It is quite feasible that the number of separate grant authorizations can be reduced by half the present number without sacrifice of essential national priorities in the provision of financial assistance to the States and localities. In order *to facilitate meaningful consolidation of grants-in-aid, Congress should pass enabling legislation to allow the President to submit consolidation plans. After due consideration in Congress and without negative resolution, the proposed consolidation would become effective. PAGENO="0183" 177 Furthermore, consolidation would greatly facilitate State planning ~fforts. Some States have repeatedly sought `to submit comprehensive plans, that would interrelate the various programs within broad functional areas. The distortion effect in State budgetary decisions would also be reduced. At present, for example, the scattering of ~ategorical programs tends to induce states and localities to concen- trate their own financial resources in those programs which are matched by Federal funds and to leave their own nonaided programs underfunded. Closely related to the grant consolidation concept, is the idea of joint funding of Federal grants-in-aid. At the 1967 annual meeting of the National Governors' Conference, a resolution was adopted by the conference supporting the Joint Funding Simplification Act now pending before the Congress. A questionnaire concerning the Joint Funding Act has been sent r)ut to the various Governors by the National Governor's Conference, and as soon as that information is compiled, we will be pleased to forward our findings to this subcommittee. I might add that there has been some experimentation in this area. A. significant example is the unified application procedure for assist- ance to fund a State urban affairs program being considered by the Department of Housing and Urban Development. Presently, there are three programs `that the Governor may use to strengthen State participation `and executive capability in urban affairs. They are: (1) the local planning assistance program author- ized by section 701 of the Housing Act of 1954; (2) the community development training and research program authorized by title VIII of the Housing Act of 1964; and (3) the urban information and; ~echnical assistance program authorized by title IX of the Demon- stration Cities and Metropolitan Development Act of 1966. The parallel and similar purposes of each of these Federal assist- ance programs lends weight to consideration of using a unified. application procedure for program grant-in-aid funds. With this in mind, the Department of Housing and Urban Development early this year developed a guide outlining procedures for submission of a single grant application covering these three programs. The draft guide was~ sent to the Governors for their comment and review, and the Governors overwhelmingly endorsed this approach to Federal grants-in-aid, and in `addition urged that this approach be extended to other Federal programs at a minimum on a department-by-department basis. While such simplification is welcomed, it cannot be left to piecemeal procedural reorganizations within executive departments, and it would appear that the Intergovernmental Cooperation Act is a promising mechanism for facilitating such consolidation and simplification. The Governors are aware of the many complex problems of reloca- tion and land acquisition, and they recognize the need for uniformity of treatment oi the many businesses and businessmen dislocated by Federal or federally assisted programs. The Governors are also aware of the amendment submitted this week regarding accounting and reporting procedures. However, the Governors have not had an opportunity, to consider this, and the conference will submit a supplementary statement on this at a later date. PAGENO="0184" 178 In conclusion, I feel that S. 698 is a far-sighted proposal. It recog- nizes that our system of cooperative federalism is strengthened b~ strong governments at every level. It properly acknowledges that thc Federal grants-in-aid devices underlie most functional and operating intergovernmental relationships. Since this area is currently under- going rapid evolution in both form and focus, it is today more essential than ever before that our partnership system work at its greatest potential efficiency. The Intergovernmental Cooperation Act represents a significant step toward harmonizing and improving important aspects of Federal-State-local relations. The National Governors' Con- ference welcomes this measure, but it sincerely hopes that it will be but the first of a series of needed proposals designed to keep our continually evolving Federal system viable. Senator MTJSKIE. Thank you very much, Mr. Gibbens. I have three questions that I would like to put, perhaps to Mr. Hill, for the purpose of getting information into the record. First of all, could the Governors' Conference provide for the record of this hearing the degree to which the States are reorganizing their executive departments and strengthening the role of the Governor over his budgeting, planning, and programing so as to take advantage of the many sections proposed in 5.698? Mr. HILL. Yes; we will be glad to do that. The Governors' Com- mittee on Constitutional Revision last year developed an appendix or summary of reorganization developments in the States over the period from 1963 to 1967 on a State-by-State basis. We shall be glad to fur- nish that for the record. Senator MUSKIE. Is it your impression that there is movement fol- lowing in this field? Mr. HILL. Yes, very active movement in the area. Senator MUsKIE. The staff study for the Committee on State-TJrban Relations recommended the creation of State relocation agencies to coordinate relocation assistance and minimize problems. How many States are doing this? Can you supply that for the record? Mr. HILL. Yes. I know that Connecticut has a law in effect and there are a few other States moving in this direction, and we shall be glad to update and furnish that for the record. Senator MUSKIE. Would you also indicate how such agencies are financed? Mr. HILL. Yes, I will. I think the best thing to do would be to fur- nish a copy of the Connecticut law and those of other States that have laws on the books. Senator MUSKIE. Would It be a good idea for States to assist the creation of local relocation agencies to coordinate local assistance on projects where urban renewal, highways, and other programs are involved at the same time? I think some States have done this, but to what extent do you think that sort of thing ought to be encouraged and stimulated? Mr. HILL. It would be very difficult to answer that. I know some States have moved in this area, but I am aware that there are State laws that would prohibit or encumber such activities. But there has been some activity in that area of providing for coordination of reloca- tion assistance and other assistance. PAGENO="0185" 179 Senator Mijsiuu. Are Federal agencies presently assisting the States and localities in developing overall relocation agencies? Mr. HILL. I am not aware of any activities. Senator MTJSKIE. I am not, either. Again in recommendation 13 of the conference study, it was pro- posed that States take up the option of sharing in payments to those displaced by highway and other programs. Could the Conference pro- vide us with up-to-date information as to the degree the States are moving in this direction? Mr. HILL. Certainly. Senator MusKin. Thank you very much. We appreciate your testi- mony and your support. I hope you will convey to the Governor our appreciation for his interest and attention. Mr. GIBBENS. I will; thank you. (The material previously referred to follows:) NATIONAL GovERNoRS' CONFERENON, Washington, D.C., May 21, L968. HON. EDMUND S. MUSKIE, Chairman, Subcoiwinittee on Intergovernmental Relations, Committee on Govern- ment Operations, U.S. Senate Office Building, Washington, D.C. DEAR SENATOR MTJ5KIE: In our testimony before your subcommittee on May 10, 1968, on the Intergovernmental Cooperation Act, you asked that we supply you with additional information on the degree to which the states are reorganiz- ing their executive departments and stregthening the role of the Governor over his budgeting, planning, and programming so as to take advantage of the many sections proposed in 5. 698. In this regard, we are enclosing a "Summary of Reorganization Developments in the States, 1963-67" which was prepared for the Governors' Committee on Constitutional Revision and Governmental Re- organization by the staff of the political science department of the University of Washington. This summary notes the significant reorganization activities in the states in the four year period between 1963-67. In Maine, for example, the Governor appointed in 1967 a Task Force to study the reorganization of the Maine state government. In addition, the Governor, by executive order, directed that all applications for non-state funds be reported both to `the Office Qf the Governor and to the state budget office. These are but two examples in one state of vigorous activity in most states in reorganizing state government. You also requested that information be furnished to the Subcommittee on state activities in the field of relocation assistance. The states have just begun to assume a significant role in relocation efforts. Governor Hughes of New Jersey in his "The States and Urban Problems" estimated that ten states currrently offer ruiooation payments or services for displacements caused by state activities, in- cluding non-federal aid highways. The 1962 Federal Aid Highway Act gave the states the option to share in moving cost payments, and at the end of 1967 approximately half of the states were sharing the costs of `these payments. Several states have moved very rapidly. In Connecticut, for example, a law was passed in 1907 (Connecticut, PA 552, law 1967 (Section 24) which authorized state grants- in-aid equal to the cost of relocating individuals, families, and businesses dis- placed by government action who have not been reimbursed for moving cost in a condemnation proceeding and who are not otherwise reimbursed by the federal government or the state. In Maryland, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, Tennessee and Wisconsin general statutes require relocation payments in cases where requirements differ from those in federal renewal programs. In several other states, state law requires relocation efforts be made for specific projects. In Rhode Island payments for displacements arising from reservoir construction are required by state law. States are beginning to realize their responsibility for coordinating relocation efforts. Massachusetts and New Jersey have both authorized specific departments to oversee the total relocation process. These departments have `the responsibility PAGENO="0186" 180 for reviewing and approving the relocation plans and programs of agencies en gaged in activities which displace individuals and businesses. This review author ity in both states extends to federally-aided projects, and the agencies can require projects to halt if relocation programs prove to be inadequate. The California legislature is now considering a bill which would provide re- location assistance for low income families. This is an example of state action aimed at alleviating the economic hardship caused to certain segments of the population when public projects such as highways require the acquisition of a large nuniiber of homes owned by low income families. A copy of this bill is enclosed for your information. To adequately meet the demands placed upon our society by extensive urban renewal and other public activities, the states must become significant members of the federal-state-local partnership. The states can perform valuable services in the relocation field by plugging gaps, providing additional assistance to dislocated families and businesses, and stimulate coordination of relocation efforts. The National Governors' Conference has gone on record supporting the Intergovern- mental Cooperation Act as a means of enhancing the efficiency of this partner- ship. We trust that the information outlined in this letter has adequately described the current efforts of the states in reorganization and relocation. However, if you should have any additional questions or further instructions concerning this matter, please do not hesitate to contact us. Very truly yours, DAVID L. HILL, Liaison Officer. SUMMARY OF REORGANIzAPION DEVELOPMENTS IN THE STATEs, 190&-67 Alabama.-Our study uncovered no information of major administrative re- organization in Alabama during this five year period. Alaslca.-The legislature created a Department of Highways (1963) advancing that function from Its previous divisional status in the Department of Public Works. The Commissioner of Highways is appointed by the Governor and is one of 14 Commissioners who comprise the Governor's cabinet. A new Planning and Research Division was established by statute in the Office of the Governor (1966). This function was formerly assigned to the Department of l~)conomic Development and Planning. The legislature also established a new Alaska State Council on the Arts (1966). Arizona.-Ari executive budget system was established by statute and assigned functionally to a new Department of Finance (1906). The commissioner of the Department serves at the Governor's pleasure. Other activities of the Department include state planning (1966) and purchasing (1967) each of which has divisional status. Arkansas.-A new Planning Commission was created to assume certain func- tions of the Arkansas Geological and Conservation Commission (1963). The Commission is involved in state and local planning and it coordinates state and local applications for federal grants and loans. The executive director is ap- pointed by and serves at the pleasure of the Governor. An addition to the Governor's staff resulted from creation of the post of Economic Advisor (1905). Calif ornici~.-Phe legislature established a new Department of Social Welfare with a director appointed by the Governor (1963). The Department assumed the regulatory and appellate functions of the State Social Welfare Board which became purely an advisory body. Also created by law was a Department of General Services which was given activities formerly performed by the Department of Finance and the Department of Public Works (1963). Those activities include accounting, budgeting, data processing, architectural and building services, printing, purchasing, managemen~ planning and others. The director is appointed by the Governor. An Intergovernmen~l Goimcil on Urban Growth was made an adjunct of the Governor's office, by statute (1966). Procedures for removing a disabled Governor from office were added to the constitution by amendment (1966). By executive order all departments and agencies in California state govern- ment were directed to report to the Governor through three "executive secre- taries"-for Human Relations, Resources and Development, and Business and PAGENO="0187" 181 Transportation (1967). The director of the Department of Agriculture was subsequently added to the group of executive secretaries and all four comprise the Governor's cabinet. This arrangement replaced the previous structure by which all departments and other units were grouped into eight "agencies" headed by "administrators." Uo~orado.-Tbe Department of Parks and Recreation and the Department of 4~ame and Fish were merged into a new Department of Game, Fish and Parks by statute (1963). A constitutional amendment transferred the State Auditor from the execu- tive to the legislative department (1964). Another amendment (1966) provides that instrumentalities of the executive ~lepartment with certain exceptions must be grouped into not more than 20 ~lepartments. By statute the legislature created separate air and water pollution control commissions (1966). Gortnecticut.-The Connecticut legislature consolidated functions affecting youth in a Commission on Youth Services which is administratively attached to the Department of Education (1963). By executive order the Governor es- tablished a Commission on Federal Aid to Higher Education (1963). The Governor created an Office of Economic Opportunity in the Department of Finance and Control by executive order (1964). A "Federal Program Coordinator" was designated by the commissioner of the Department of Finance and Control (1965). The legislature by statutory action transferred the Data Processing Center from the Budget Division to the Office of the State Comptroller (1965). By legislative action all state institutions of higher learning except state technical colleges were integrated into a Single state system of highor education headed by a commissioner (1965). A group of occupational licensing boards was assigned administratively to the Department of Education by statute (1965). The legislature established (a State Personnel Department headed by a com- missioner to replace the previous Personnel Department, Civil Service Com- mission, and Personnel Board (1967). A new Department of Community Affairs was created by statute and was given some functions formerly performed by the Development Commission, Public Works Department, and the Office of Economic Opportunity (1967). The Connecticut Historical Commissilon was separated from the Department of Education and given independent status, by statute (1967). The legislature added the state technical colleges to the consolidated higher education s~s~tem, thus removing an exception allowed by the 1965 act which organized the system (1967). Statutory action also consolidated the Connecti- cut State PriSon, State Farm and Pris'on for Women, Connecticut Reformatory, the State Jails, and the Board of Parole in a new Department of Corrections (1967). The Commission on Federal Aid to Higher Education was attached to the Department of Finance and Control by statue (1967). DeIaware.-~The legislature reorganized fiscal administration in state gov- ernment (1963). The position of Budget Director made appointive by the Gov- ernor, Was created to replace the Budget Commission which became purely an advis'ory body. In a transfer of functions pre-auditin.g was reassigned from the State Auditor to the Budget Director and post-auditing was moved from the Budget Director to the State Auditor (who was and remains independently elected). New agencies created were a Department of Mental Health, a Department of Correction, and a Higher Education Advisory Commission (1964). The latter agency was assigned the administration of the federal Higher Education Fa~ilitie's Act of 1963. The legislature ~ombined air and water pollution control efforts in a Water and Air Pollution Resources Commission (1966). F~orida.-The legislature created a Revenue Commission to take over cer- tain revenue activities of the State Comptroller and Secretary of State (1963). The Commission, which is composed of seven elective officials, appoints the Di- rector of Revenue. Also established were an Outdoor Recreational Develop- ment Council and an Outdoor Recreational Planning Committee (1963). A conStitutional amendment Was adopted which provided that the Governor and cabinet officials would henceforth be elected for four-year terms in the even- numbered years bel~ween presidential elections and further, that the Governor could not succeed himself (1963). PAGENO="0188" 182 A Committee on Government Reorganization and Efficiency was established by the legislature (1964). The Outdoor Reb'reational Planning Committee was abolished but the Out- door Recreational Development Council was retained and its basic statute amended (1967). The C~uncil is composed of the Governor as chairman, plus the other six independently elected cabinet officials. A Sta'te Personnel Board under the cabinet was established by law (1967). Other stat~te~ created an Office of Sftate Planning and a Data Processing Dej~artrnent (1967). Georgia_-A statute was enacted which provided that the Governor-elect be given certain information and facilities during the period between his elec- tion and inauguration (1963). The legislature authorized the Governor to con- solidate, siilbject to its ratification, state agencies and departments (1963). The three-member State Highway Board was reorganized into an eleven-member Board with a fulitime director (1963). Statutory action created a Division for Children and Youth in the Department of Family and Children Services (1963). The Divtsion is "autonomous" with its own Beard for Children and Youth With the director of the Department serving as chairman of the Board. A constitutional `amendment brouglht about recomposition of the State Board of Eduda~i'on to include eight members appointed by the Governor and the elec- tive Superh~tendent of Public Instruction (1964). A State Planning Bureau to coordinate state, regional, and local planning was created by the legislature (10~7). llawaii.-A constitutional amendment providing for the Governor and Lieu- tenant Governor to be elected jointly was approved (1963). The legislature formed a new Dephrtment of Planning and Economic Development by merging the Department of Planning and Research and the Department of Economic Developmei* (1963). The director of the Department is appointed by the Governor. The new department became the seventeenth in Hawaii's executive branch. The Department of Budget and Revenue was renamed the Department of Budget and Finance and the Department of Treasury and Regulation became the Department of Regulatory Agencies by statutory action (1963~. Funds to establish the office of ConOumer Counsel under the Attorney General were approved~ by the legislature (1964). Constitutional amendments changed the State Board of Education from appointive to elective, changed the title of' the Superintendent of Public Instruction to Superintendent of Education, removed the Superintendent from voting membership on the Board of Education, and made him its secretary (1964). Idaho-The legislature appropriated funds for a staff position of coordinator of federal-state programs in the Office of the Governor (1965). A State Commission on Arts and Humanities was established by executive order of the Governor (1966). A Water Resources Agency was created pursuant to a constitutional amendment approved by the voters (1966). Legislation was approved establishing a new Department of Administrative Services with divisions of Budget, Data Processing, 1\Ianagement Services, Build- ing Services and Communications (1967). The director is appointed by the Governor. IWnois.-A new Department of Children and Family Services was set up by law to assume certain functions formerly in the Department of Mental Health (1963). The director is an appointee of the Governor. Statutory action also resulted in abolition of the Illinois Public Aid Commission and its replacement by a new Department of Public Aid headed by a director appointed by the Governor (1063). Indicou&.-A Construction Projects Study Committee was established by law to coordinate the construction activities of state agencies (1963). A Recreation Council was added to the State Board of Health and authorized to advise coin- munities on recreation programs by law (1963). Statutory action created a Youth Council, designed to coordinate state services aimed toward preventing juvenile delinquency (1963). Another statute provided that a Governor-elect be given office space, an operating budget, and information on state activities in the interim between his election and inauguration (1963). The legislature created a Department of Natural Resources which absorbed the functions of the former Department of Conservation, the Flood Control and Water Resources Commission, the State Soil Conservation Committee, and the Recreation Council (1965). The Department is headed by a director appointed by the Governor and by a Natural Resources Commission. The budget adopted PAGENO="0189" 183 by the legislature included funds for a member of the Governor's staff to be located in Washington, D.C., as a federal-state-local relations coordinator (1965). An Economic Development Authority was established by iaw for the purpose of aiding the industrial development efforts of local governments (1965). A statute abbreviated the name of the Department of Commerce', Industry, Agri- culti~re, and Public Relations to "Department of Commerce" and redefined its duties `to include industrial development, tourism, and state planning (1965). The director of the Department is `the Lieutenant Governor who serves ccc officio with no additional compensation. The Budget Agency was assigned the function of coordinating federal aid programs in the state, by statu'te (1967). Federal aid applications of state agencies must be reviewed by the Budget Agency before they are submitted to the appropriate federal agencies. The legislature directed the Governor to examine "from time to time" the organization of state government and to submit reorganization plans as necessary (1967). To be effected such plans require affirmative enactment into law by the legislature. Iowa.-The Governor established a Traffic Safety Coordinating Committee by executive order (1964). Kansas.-Phe legislature created a new Department of Economic Development and assigned it industrial development, tourist promotion, and state and local planning functions (1963). The former Industrial Development Commission was abolished. The new agency is headed by a commission appointed by the Governor; the commission appoints the director of the Department. Kentucky.-Three new divisions were established in the Department of Finance: Investment Management, Planning, and Organization and Methods Examination (1964). The Tax Comm:ission was removed from the Department of Revenue and made a separate agency by statu'te (1964). A Board of Tax Appeals was also established (1964). The legislature authorized the Governor to appoint a Commission on Economy and Efficiency `to investigate cost reduction in state government (1964). Legislative action created a Mining Council, Traffic Safety Coordinating Committee, and State Air Pollution Committee (1966). Also established was a cabinet-level position assigned responsibilities in housing and urban development (1966). Louisiana-The Louisiana legislature allocated $10,000 for the office expenses of the Governor-elect (1963). State purchasing was centralized in a new Central Purchasing Agency in the Division of Administration by statute (1964). Another law established the State Commission for the Higher Education Facilities Act; this agency administers the federal higher educa'tion acts of 1963 and 1965 in Louisiana (1964). A Council on Governmental Reorganization was created by the legislature to recommend improvements in the executive brapch (1965). A constitutional amendment to allow the Governor to be elected to a second consecutive term was adopted (1966). Maine.-A Recreation Authority was created by the legislature (1965). The Authority consists of nine members appoin'ted by the Governor; the Authori'ty appoints the manager of the agency. Another statute established a State Museum and commission to administer it (1965). The Governor appointed a task force to study `the reorganization of Maine state government (1967). Coordinated data processing was given a start with the Governor's appointment of an Interdepartmental Committee on Cen'tral Data Processing to be directed by `the State Controller by executive order (1967). The Governor by executive order directed that all applications for nonstate funds be reported both to the Office of the Governor and to the Budget Office (1967). Maryland.-A commission to advance educational and cultural television was established by statute (1966). Also established by statutory action was a new Department of Juvenile Services (1966). The planning and controlling of data processing in state government was assigned to the Budget Bu'reau In the De- partment of Budget and Procurement by statute (1966). Massachusetts.-A Consumer's Council of 13 members was created and attached to the Office of the Governor by statute (1963). Also by statutory action the Public Works Commission was abolished and replaced by a new Department of Public Works (1963). The Department is headed by a commission of five members appointed by the Governor, one of five is designated by the Governor to be chairman of the commission and "Commissioner of Public Works"-the ad- ministrator of the Department. PAGENO="0190" 184 The Legislature created a Higher Education Facilities Commission to ad- minister in the state the federal Higher Education Facilities Act of 1963 (1964). The State Board of Education assumed the functions of the State Board of Control for Vocational Education which was abolished by statute (1964). Community colleges in the state were brought under the jurisdiction of a new state board for public two-year colleges by statute (1964), A new Department of Commerce and Development was established by law consoli- dating the former Department of Commerce, State Housing Board, Atomic Energy Commission, Mass Transportation Commission, and Division of Urban and Industrial Renewal (1964). The executive head of the agency is the Commissioner who is appointed by the Governor. A constitutional amendment changing the terms of the Governor and other elected officials to four years was approved (1964). The Governor's staff was augmented with the addition of a Secretary for Intergroup Relations to assist in solving civil rights and employment problems. The function of approving receipt and expenditure of federal funds is vested in the Commissioner of Administration under the terms of the annual appropriation act. Statutory action reorganized the state's public education system abolishing a number of agencies and creating three new ones (1965). The new agencies are a Board of Educa- tion, a Board of Higher Education, and an Advisory Council on Education. All three boards are appointed by the Governor, the boards in turn appoint the executive heads of their respective organizations. The Governor was given the power to initiate reorganization plans affecting the executive department under the terms of an amendment to the constitution (1966). The plans are submitted to the legislature which must accept or reject them in toto within 60 days after submission. A Council on Arts and Humanities was established by statute (1966). Decentralization of mental health services was accomplished by legislation providing for an area admin- istrative structure in the Department of Mental Health (1966). Michigan.-The legislature created a new Department of EConomic Expansion' and assigned to it state planning and other functions (1963). Michigan's 1958 law giving the Governor power to initiate reorganization plans was amended to provide that the legislature can amend or repeal such plans by law (1963). Data processing was centralized as a Division in the Department of Administra~ tion. (1903). Michigan's new constitution included such features as joint election of the Governor and Lieutenant Governor, extension of their terms to four years, and a reduction in the number of elective executive officials (1964). Statutory action brought about creation of a new state building authority (1964). Pursuant to Michigan's new state constitution the legislature passed a far- reaching executive reorganization act (1965). It consolidated all agencies outside the legislature and ji*iieiary and certain other exceptions into 19 administrative departments. Certain of the new departments are headed by single appointees of the Governor and others are headed by commissions which select their executive officers. Among numerous changes was the transfer of the Budget Division from the Department of Administration to the Office of the Governor. Minnesota.-The Governor established a Traffic Safety Coordinating Committee (1964). Mississippi.-The legislature designated the Building Commission as the agency to administer the federal Higher Education Facilities Act of 1963 (1964). A constitutional amendment was approved which increased to four years the terms of the Auditor and Treasurer and prohibited the latter from succeeding himself in office (1966), Missouri.-Legislation was enacted creating a commission to study govern- mental organization and to make recommendations to the 1965 legislature (1963). The Governor appointed a Committee on the Arts to explore ways of making the state's cultural institutions more effective (1963). A constitutionaj amendment was adopted to allow Governors to succeed themselves in office (1905). State, regional and local planning services were consolidated in a new Office of State and Regional Planning and Community Development attached to the Office of the Governor by statute (1966). The agency is headed by a director appointed by the Governor. The legislature has since upgraded the Office to a Department of Community Affairs (1967). Montana-The legislature created a new Department of Administration made up of Divisions of Accounting, Purchasing, Architecture and Engineering, and PAGENO="0191" 185 ~eneral Services (1963). The Department is headed by the State Controller ~ho is appointed by the Governor. Nebraska.-The term of Nebraska's Governor was extended to four years 1963). Four year terms were also approved for the Secretary of State, Auditor f Public Accounts, Treasurer, and Attorney General (1964). The legislature established a new Department of Administrative Services nd assigned to it the functions of budgeting, accounting, purchasing, building, nd data processing (1965). The electorate approved constitutional amendments limiting the Governor to wo consecutive four year terms and eliminating the Ineligibility of elected xecutive officials from seeking state offices while serving in state offices (1966). Nevada.-A new Department of Administration was created by the legislature 7hich included in it the functions of budgeting, personnel, purchasing, and nildings and grounds (1963). The director is appointed by the Governor. Also stablished by law was a Department of Commerce with a director appointed by te Governor and with Divisions of Banking, Insur'ance, Real Estta~te, and Sa~ings nd Loan (1963). Functions relating to health, welfare, institutions, and youth ervices were consolidated in a new Department of Health and Welfare by law 1963). The director serves at the pleasure of the Governor. Further legislative Lction placed the state park system in the existing Department of Conservation nd Natural Resources (1963). The legislature transferred vocational rehabilitation activities from the De- artmen't of Education to an expanded and renamed Department of Health, Velfare, and Rehabilitation (1967). New Hampshire.-The position of Coordinator of Federal Funds was estab- ished in the Attorney General's office by statute (1965). The Coordinator ad- ises state agencies on federal grant programs and reviews their applications or the same. The legislature transferred the Coordinator of Federal Funds to the Gov- rnor's office, and expanded his functions to include rendering assistance to ocal governments concerning federal grant programs (1967). New Jersey-The legislature consolidated the various state agencies involved n transportation in a new Department of Transportation (1965). Statutory action resulted in the establishment of a council on the Arts, an )ffice of Economic Policy in the Department of Treasury, an Educational Facili- ies Authority, and a Department of Community Affairs (1966). New Movico.-A new Department of Aviation was established by the legis- ature (1963). The Department is headed by a board appointed by the Governor, he board in turn appoints the director of the agency. Also created by law were Probation and Parole Board, a Department of Motor Vehicles, and a New ~fexico State Authority, with the latter enabled to issue revenue bonds for im- )roving recreational areas (1963). The coordination of federal programs was assigned by the Governor to one of us staff agencies-the State Planning Office (1965). The legislature established he new position of legislative auditor in pla'ce of an elective state auditor (1965). Centralized administration of data processing was advanced with the .egislature's creation of a new Department of Automated Data Processing (1966). New York.-A constitutional amendment was approved which drew the line d succession to the Governorship from the Governor to the Liei*enanh Governor :o the Speaker of the House of Representatives (1963). A central computer ~ystem for state agencies was created in the Office of General Services (1963). A comprehensive planning agency came into being with the legislature's ~stablishment of the Office of Planning Coordination (1966). North Uarolina.-A Department of Mental Health was created and given the ~unctions of the State Hospitals Board of Control and certain powers of the state Board of Health and State Board of Public Welfare by statute (1963). Fhe Department is headed by a commissioner chosen by the State Board of Mental Elealtb, itself appointed by the Governor. To provide for coordination of federal-state programs affecting more than me state agency the Governor appointed a State Planning Task Force within the Department of Administration (1965). Representatives of selected agencies are nembers of the Task Force. North Dakota-The legislature designated the Department of Accounts and Purchases as the coordinating agency for federal grant programs (1965). State agencies must report grant applications to the Department. The Department was PAGENO="0192" 186 also named as the state budget agency in a statute creating an executive budg& system for North Dakota (1965). Executive action brought about implementation of a 1959 law which provided for a centralized data processing operation in the Department of Accounts and Purch~sas (1966). The position of State Planning Coordinator was created by executive order of the Governor in an effort to integrate the planning efforts of a number of state agencies (1967). The Coordinator is selected by the Governor. Ohio-A new Youth Commission was set up by the legislature to assume functions formerly performed by the Division of Juvenile Research, Classiftea- tion, and Training of the Department of Mental Hygiene and Correction (1963). The chairman of the Youth Commission has cabinet rank. Another statute pro- vided that all appointive department heads and certain other agency officers would have terms coinciding with the appointing Governor's, subject to earlier removal at his pleasure (1963). The Department of Industrial and Economic Development was renamed the Department of Development and its function~ were redefined by statute (1963). Further statutory action created the Ohio Development Financing Commission which was authorized to issue revenue bonds for industrial development (1963). By executive order the Governor ap- pointed a Council for Reorganization of Ohio State Government with a mandate to search for ways of improving efficiency and economy (1963). The Department of Natural Resources was assigned forestry and reclamation functions by statute (1964). Legislative action also resulted in designation of the Department of Development as the state planning agency (1964). The functions of the Pardon and Parole Commission which was abolished by the legislature were given to a new Adult Parole Authority in the Division of Correction, Department of Mental Hygiene and Correction (1965). Oklahoma-The legislature transferred aviation functions from the Industrial Development and Park Department to a new Aeronautics Commission (1963). The Governor appoints the Commission, which selects a director for the agency. A position for a Washington, D.C. federal-state relations representative was authorized in the Industrial Development and Park Department by the legisla- ture (1965). The position was subsequently eliminated (1967). A constitutional amendment was approved which allows the Governor to serve two consecutive terms and permits the State Auditor, Secretary of State, and Treasurer to succeed themselves indefinitely (1966). Oregon-Statutory action resulted in grouping 16 agencies and boards into a new Department of Commerce, headed by a director appointed by the Governor (1964). Pennsylvania-The legislature abolished the State Council of Education and assigned its functions along with certain policy responsibilities of the Depart- ment of Public Instruction to a new State Board of Education (1963). The 17 members of the Board are appointed by the Governor, the Superintendent of Public Instruction or his designee is chief executive officer of the Board. Also accomplished by statute was an authorization of funds to provide staff and office space to the Governor-elect in the period between his election and inauguration (1963). A cabinet-level Department of Community Affairs was created by law (1965). And a new Bureau of Consumer Protection was established (1966). A constitutional amendment provided for the joint election of the Governor and Lieutenant Governor and authorized both to succeed themselves in office for one additional term (1967). Rhode Island-The legislature established a Public Transit Authority em- powered to acquire and operate local bus companies in financial difficulties (1964). A Department of Natural Resources was established by law to supersede the former Departments of Agriculture and Conservation and to assume certain functions of the Department of Public Works (1965). The Governor took steps to coordinate federally-assisted programs by appointing an interdepartmental committee composed of selected department heads (1965). Statutory action resulted in creation of a Consumer Council, a Cultural Arts Commission, and a Division of Air Pollution in the Department of Health (1966). south Carolina.-A Special Services Division was created to provide cen- tralized printing, data processing and other services to state agencies (1964). The State Superintendent of Education was made appointive by the State Board of Education by constitutional amendment (1964). PAGENO="0193" 187 The Governor's staff was augmented by appointment of a State~Federal Co- rdinator (1965). $outh Dakota.-The legislature established a new Office of the Budget in the ~iovernor's office (1963). The agency is beaded by the State Budget Officer who is tppointed by the Governor for a term of four years subject to earlier removal ~or cause. A Commission on Higher Education Facilities was created by law as the ye- iicle for state participation in the federal Higher Education Facilities Act of [963 (1964). Centralized data processing for state agencies was provided for when the egislature assigned that function to a new division in the Office of the Budget (1966). The legislature also established a new State Planning Agency in the Illovernor's office to provide planning services for the state and local governments (1966). A State Commission on Mental Health and Retardation was set up by law (1966). Tennessee.-Tbe Division of Industrial Development was attached to the Of- lice of the Governor and the director made a member of the Governor's staff by law (1963). Legislation also transferred to the office of the Governor the industrial research and promotion and nuclear energy development functions of the Department of Conservation (1903). The legislature established a new Office of Local Government under the Comptroller of the Treasury who appoints the director with approval of the Governor (1963). The Governor appointed a special assistant to coordinate federal programs (1965). Te~ras.-The legislature formed a new Parks and Wildlife Department involv- ing a merger of the State Parks Board and the Game and Fish Commission (1963). A Division of Federal-State Relations was added to the Office of the Governor by law (1965). The Division is located in Washington, D.C. and is headed by a ~director appointed by the Governor. Utah-The Utah legislature created a Department of Finance which is headed by a director appointed by the Governor (1963). This arrangement replaced the i~ormer CommIssion of Finance, a three-member group which reported to a beard composed of the state's three highest elected officials. Under the law the director is the principal officer of state government for budgeting, personnel, purchasing and accounting. Statutory action also created the neW post of State Planning Coordinator in the Office of the Governor (1963). The Coordinator was made responsible for state planning and local planning assistance. A plan for centralized data processing services was approved by the Governor (1965). Taking advantage of momentum supplied by the state's "Little Hoover Com- mission," the Utah legislature consolidated a number of agencies, boards, and commissions into three departments: Health and Welfare, Development Serv- ices, and Natural Resources. The Governor appoints a coordinating council of seven members for each department, the coordinating councils in turn appoint the respective department directors (1967). An executive order recognized the federal liaison role of the State Planning CoordinatOr who had been acting in this capacity since 1964 (1967). The Coordi- nator by another executive order was directed to establish standards for the collection and reporting of information concerning state activities. Vermont.-The Governor sought to achieve coordination in the natural Tesources field through an executive order creating an inter-agency comthittee including representation from five dIfferent agencies (1903). This mechanism was subsequentlY given statutOry statuS (1964). The Governor serves as chair- man of the committee. A. legislative authorization of ~2,5O0 was made for use by a Governor-elect in Vermont (1963). The .legi~latlir6 ~ate~tbe Vermont Education~i Building Finance Agency tc assist colleges and secondary schools hi financing building construction (1966). Virginia~.-~rhe poslUon of Comniis~ieper of AUmi1l~i5tration was created In the office of the Governor by statute (1966) The COmmissioner was ass9med superViSIQU over the existing DivisIons of Budget and Personnel and over new Divisions of planning, and Engineeti~flg and Bu~ldlngs. The Commissioner is ~ppointedhy the Governor. The Division of Planning was given responsibilities ut the state, reg~onfi~ án4 lOcal levels. 95_626_6813 PAGENO="0194" 188 Washi~gton.-phe legislature esta'blisb'ed a new Local Affairs Division in the Department of Commerce and Economic Development (1963). Local planning assistance was designated as the Division's chief function. An office of Nuclear Energy D'e~elopment was added to the Department of Commerce and Economic Development by statute (1965). Statutory action also resulted in redesignation of the Department of Licenses as the Department of Motor Vehicles (1965). New funding agencies `created by the legislature were `the Inter-Agency Commission for Outdoor Recreation and the High~r Education Facilities Commission (1965). The former `was designed to administer certain state funds available for recreation as well as federal allocations, the latter is the `state's instrument for participation in the federal Higher Education Facilities Act. Administrative action resulted in the `design'ation of a Coordinator of State- Federal Program's in the Central Budget Agency (1966). The Tax Commission wais a~bolishhd and its function's reassigned by the leg'is- latu're to a new Department o'f Revenue and Board of Tax Appeal's (1967). State and local planning activities were relocated in a new Planning and Oom- munity Affairs Agency in th'e Office of the Governor (1967). The legislation providing for the new agency also eliminated the Local Aftairs Division in the Department of Commerce and Economic Development where th'e planning function had been assigned since 1963. Statutory action resulted in abolition of the Department of Conservation, certain of its functions were transferred to the Department of Natural Resources and others were `a's'signed to a new Department of Wate'r Resource's (1967). The legislature realigned agency responsibilities in the field of prison terms and parole i'n an attempt to concentrate administrative aspects in the Depart- mont of Institutions and quasi-judicial function's in the Bo'ard of Prison Terms and Paroles (1967). Legislation also established a State Building Authority to assist in financing the construction projects of puibl'ic universities and colleges and a new Office of Foreign Trade in the Department of Commerce and Economic Development (1967). West Virginia.-~A Department of Personnel was established by the legisla- ture (1965). The legislature also enacted a statute providing that the terms of department heads he concurrent with that of the Governor subject to earlier removal at the Governor's pleasure (1965). An office of Public Information was created in the Office of the Governor by law (1966). The function of the n'e'w agency is to coordin'ate and disseminate news from virtually all departments of `s'tat'e governme'nt. Continuing studies of executive agencie's are `being undertaken by legislative interim committees. Wiseonsin.-Wisconsin',s centralized data `processing `system was established as a separate major unit within the Department of Administration (1963). The legislature established the Commission on the Reorganization of the Administrative Branch to study the need for possible reforms and to make recommendatjon,s to the 1967 legislature (1965). A W'a~er Rctources Division was added to the Department of Resour'ce Developmenit (1966). By administrative action the Commissioner of Adminis- traition provided for a statewide policy planning unit in the Department of Administration (1966). The same Department was further augmented w'hen the legislature estahlished within it a new federal aids `management service to perform coordination of fe'derally~assisted programs (1966). Constitutional amendments were adopted providing for join't election of the Governor and Lieutenant Governor and lengthening the terms of these `two officials plus the Secretary of State, Attorney General, arid State Treasurer from `two to four years (1967). After receiving the report of the Commission on `the Reorganization of the Administrative Branch the legislature enacted into law a major reorganiza- tion of executive agencies (1967). Thider its terms 35 `separate agencies were grouped into 32 departments, offices `and agencies. Among the `specific changes were merger of the Department of Conservation with the Department of Resource Development, merger of the Board of Health with the Public Welfare Depart- ment, consolidation of transportation functions into a single agency, creation of a Department of Local Affairs and De~elopm'emt, and establishment of a Department of Justice headed by `the Attorney General, Wyorning.-Phe legislature designated the State Department of Education as the agency for state4ederal liaison in progr'a'ms of federal aid to education PAGENO="0195" 189 (1965). By action of the Governor a coordinator for economic opportunity programs in Wyoming was appointed (1965). The Governor, as the state's chief budget officer, initiated c~ntralization of the data processing activities of state agencies (19(36). The press secretary to the Governor was given the responsibilities of con- ducting research and coMinati'ng public information emanating from agencies under the Governor's supervision (1967). The Wyoming Recreation Commis- sion was created by stattite and assigned the functions of the State Land and Water Conservation Commission, the State Parks Commission, and the Histori- cal Sites Commission, all of which were aibolished (1967). The position of Highway Safety Coordinator was established by the legislature to coordinate state highway safety activities and to provide state-federal liaison in this field (1967). ______ [Assembly bill No. 1072, California Legislature-1968 regular session] Introduced by Assemblymen Ralph, Priolo, Brown, and Bill Greene, March 19, 1968. Referred to Committee on Goveriimental Efficiency and Economy. AN ACT to add Sections 135.3, 135.3, 135.5, and 135.6 to the Streets and Highways Code, and to add Section 37 110.5 to the Health and Safety Code, relating to replacement housing The people of the $tate of California do enact as follows: SECTIoN 1. Section 135.3 is added to the Streets and Highways Code, to read: "135.3. As used in Sections 135.4, 135.5, and 135.6: "(a) `Low-income individuals and families' means those perSons who lack the financial `ability and income necessary to obtain replacement housing. "(b) `Economically `depressed area' means an area which the commission by resolution determines to meet all of the following criteria: "(1) The state highway project is located in an area consisting principally of housing occupied by low-income individuals and families. "(2) An adequate number of replacement housing unit's for low-income mdi- vidua]s `and families is not available in the immediate area `of the state highway project. "(3) Relocation advisory assistance will be insufficient to place a majority of such individuals an'd families in replacement housing in the immediate area of the state `highway project. "c) `Replacement housing' means comparable single or multiple dwelling units which are decent, safe, and `sanitary for low-income individuals and families." Sue. 2. Section 135.4 is added to `the Streets `and Highways Code, to read: "135.4. (a) As used in this stotlon, `relocation assistance' means, `and shall be limited to, that assistance reasonably necessary to place low-income individuals and families who lack the financial `ability and Income to obtain replacement housing Without relocation assistance, and who own and reside in housing in `an economically depressed `area and who are displace'd because of the acquisition or clearance `of right-of-way for a project on the state highway system, in replacement housing in the same relative economic `ownership position as before displacement by transferring sr exchanging their right, title, and Interest in property required for state highway purposes for the right, title, and interest in replacement housing. "(b) The department is authorized to provide relocation assistance to low- income individuals and families who own and reside in housing in an economically depressed area `and who are displaced because of the acquisition or clearance of rights-of-way for a project on the state highway system, which project is located in an economically depressed area. "(c) The department is authorized to ad'opt rules and regulations to implement this section. Such rules and regulations shall include provisions relating to: "(1) The methods and priorities for placing such low-income individuals and families in replacement housing. "(2) The standards for determining the relative economic ownership position of such low-income individuals and families before displacement. "(3) The standards for determining which of `such low-income individuals and families `lack the financial ability and income necessary to obtain replacement housing without relocation assistance. "(4) The procedure for transferring or exchanging right, title, and interest in property required for state highway purposes for the right, title, and interest in replacement housing." PAGENO="0196" 190 Sac. 3. Section 135.5 is added to the Streets and Highways Code, to read: 135.5. The department may acquire, eIther in fee or in any lesser estate or~ interest, `any unimproved or unoccupied real property,, or real property not devoted primarily to residential use, to provide repl'a'ceLment housing for low-income individuals and families who reside in economically `depressed areas and are displaced because of the acquisition or eleax~ance of rights-of-way for a project on the state highway s'ysitem, in order to enable them to live in decent, safe, and sanitary dwellings. All other property acquired for `such purpose shall be acquired by means `other than condemnation. The acquisition of such property is declared to be a public purpose and use." SEC. 4. Section 135.6 is added to the Streets and Highways Code, to read: 135.6. The department may contract with other public agencies, private mdi- viduals, and corporations for the financing, planning, development, construction, management, sale, exchange, or lease of replacement housing. Low-income indi- viduals and families displaced because of the acquisition or clearance of rights~ of-way for a project on the state highway system shall be given priority in buying, leasing, transferring, or exchanging property for replacement housing." SEc. 4. Section 37110.5 is added to the Health and Safety Code, to read: "37110.5. The department `may provide assistance to the Department of Public Works in the undertaking,, construction, maintenance, operation, or financing of replacement housing designed for persons displaced because of the acquisition or clearance of rights-of-way for a project on the state highway system. The depart- ment may advise the California Highway Commission of `its recommendation whether or not an area traversed by an adopted highway location is an area that is economically depressed before the California Higihway Commission makes its determination thereon." SEC. 6. If any provision of this act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable. LEGISLATIVE COUNSEL'S DIGEST AB 1072, as introduced, Ralph (G.E.&E.). Replacement housing. Adds various secs., S,&H.C., and H.&S.C. Authorizes Department of Public Works to provide relocation assistance to low income individuals and families whto own and reside in housing located in an economically depressed area who are displaced as a result of the acquisition or clearance of rights-of-way for a project on the state highway system, by the acqui~ition of replacement housing for such individuals and families. Defines term's. Authorizes the department to adopt rules and regulations providing standards and procedures for such relocation assistance. Authorizes the department to condemn unimproved or unoccupied real property, or real property not devoted primarily to residential use, to provide replacement housing for `low income individuals and families who reside in economically depressed areas and are so displaced; provides that acquisition of all other property for such pur~otse must be by means other `than condemnation. Authorizes the department to contract with public and private entities for the financing, planning, development, construction, management, stale, exchange, or lease of replacement housing; and gives low income individuals and families so displaced priority in buying, leasing, transferring, or exchanging property for replacement housing. Authorizes the Department of Housing `and Community Development to! render assistance to the `department in `the undertaking, constructtion, maintenance, operation, or financing of replacement housing, and to advise the California Highway Commission regarding whether or not an are'a `traversed by an adopted highway location `is an economically depressed area. REI~OCATION PROGRAM FOR Low TacoMa FAMILIES California has been working toward solution of the serious economic hardship caused when public projects such as highways require the acquisition of large number of homes owned by low income families. At present time, our Divi~1on of Highways can legally assist these families three ways: (1) pay fair market value, (2) help find them another house, (3) re- imburse their moving costs. However, in depressed areas a $10,000 home may PAGENO="0197" 191 provide housing for a large family, but the $10,000 fair market value payment may not be sufficient to purchase a replacement home. The problem is particularly acute when a project places a large number of families in limited housing market at the same time. For example, two future freeways (Century, Industrial) in Watts will require 1100 low income home owners to seek replacement housing which is practically non-existent. RECOMMENDATION.~ In California, legislation has been drafted at our re- quest which has a potential for solving this problem. The enabling statute would: 1. Authorize expenditure of highway funds to provide exchange housing for low income families in depressed areas whose homes are acquired during highway con~truc'tion. 2. Give low income families option during negotiations of accepting ew- change housing or fair market value. Court basis for compensation will remain fair market value. The important feature is that family would be assured of being in "same relative economic ownership position" (i.e. wouldn't be burdened with higher payments or lower equity). This replacement program is triggered by a finding of our Highway Commis- sion that the proposed route lies in a depressed area containing a large number of low income families and adequate replacement housing is unavailable (Ad- ministrative Regulations will define standards). The exchange housing would be provided variety of ways: (1) Houses acquired in other right of way transactions will be moved into individual lots or larger parcels purchased by State. Houses would be renovated and landscaping added prior to transfer; (2) New homes will be built or; (3) Existing houses & lots will be purchased (not condemned by State). In all cases, we would transfer ownership to family making up monetary difference so that equity and payments are equivalent to their original home. Implementation will be accomplished by a special right of way team which will develop an inventory of housing alternatives. After these replacement al- ternatives are available then owners will be contacted. For example, the owner occupant may have a three bedroom house wotth $10,000, owe $5,000 and pay $50.00 per month. The ideal would be complete dupli- cation, but under current market conditions this will be difficult. In this instance, the owner might be offered a three bedroom house of equal utility, owe $5,000 payable at $50.00 per month. But, the replacement house may be valued at $12,000 instead of $10,000. This proposal is unique because it maintains incentive of private ownership, upgrades housing in depressed area, offers workable standards to limit fiscal implication and allows opportunity for cooperation with private sector and community groups. Approach has potential for use on all public projects. HUD is now looking at idea as solution nationally and may ask to join with us in making Watts a model project. NATIONAL GovERNoRs' CONFERENCE, Washington, D.C., June 6, 1968. HON. EDMUND S. Musi~In, Chairman, subcommittee on Interiiovernmental Relations, Committee on Gov- ernment Operations, tTfl. ~enctte, Old $enate Of/tee Building, Washington, D.C. DEAR SENATOR MTJSKIE: On May 10, 1968, testimony was presented on behalf of the National Governors' Conference and the Council of State Governments on the Intergovernmental Cooperation Act (S. 698). At that time, it was indicated that additional comments would be forthcoming on the recently proposed amend- ment to the Act which provided for a new title covering accounting, auditing, and reporting of federal assistance funds. In that regard, it is respectfully re- quested that this letter expressing our views on the new title be made part of the hearing record on the Intergovernmental Cooperation Act. While recognizing that federal agencies are charged by Congress with the responsibility of insuring the proper use of grant funds distributed to the states and local governments, we urge that every effort be made to avoid placing undue and time-consuming burdens on state and local administrators. In the National Association of Budget Officers' report entitled "Federal Grant- In-Aid Requirements Impeding State Administration" it was noted by one state officia)l that some 54 individuial fiscal reports were required under the Vocation~ai PAGENO="0198" 192 Education Act of 1963. While funds were appropriated for only 6 major purposes under this Act, federal reports were required for all sub-programs conducted under the Vocational Education Act. This can take weeks of staff time in pre- paring the various reports. In addition to the reporting procedure, slow auditing procedures require that ntate and local governments keep records for excessive lengths of time. This requirement creates storage and personnel problems for state agencies. These are two examples which underscore the need to seek consolidation of programs and uniformity of procedures. In this regard, we feel that the new title proposed under Amendment No. 748 to the Intergovernmental Cooperation Act will go a long way in providing for uniformity of procedures while not thwarting the basic tenents of the Intergovernmental Cooperation Act. The reporting and auditing title should be considered, however, as a stop-gap proposal. Every effort must be made to implement the provisions of the Intergovernmental Cooperation Act and the Joint Funding Act. These two proposals are aimed at correcting basic problems now impeding the efficiency and potential of federal grants-in-aid to state and local governments. In summary, we do not object to the proposals outlined in Amendment No. 748. But we do hope that this proposal, which is aimed at correcting symptoms, will not be substituted for action on the fundamental concepts outlined in the Inter- governmental Cooperation Act and the Joint Funding Act. We trust that you will find these comments responsive. However, should you have any additional questions concerning this matter, please feel free to contact us. Sincerely, CuAnnus A. BYRLEY. Senator MUSKIE. The last witness for the morning is Mr. Nathaniel S. Keith, President of the National Housing Conference, Inc. Mr. Keith, it is a pleasure to welcome you. STATEMENT OP NATHANIEL S. KEITH, PRESIDENT, NATIONAL HOUSING CONFERENCE, INC. Mr. KEITH. Thank you, Mr. Chairman. I have a prepared statement. If it is agreeable to you, I shall read it. Senator MUSKIE. Proceed. Mr. KEITH. Mr. Chairman and members of the subcommittee, I ap- preciate this opportunity to present the views of the National Hous- ing Conference on S. 698, the proposed Intergovernmental Coopera- tion Act. The National Housing Conference, founded in 1931, is a nonprofit organization representing the coalition of representatives of public interest organizations, professionals, leaders in labor and religious groups, businessmen, and other citizens who share an active interest in supporting effective legislation in the field of housing and community development. While traditionally our focus has been on housing pro- grams to meet the needs of families and individuals of low and mod- erate income, our interests at the same time encompass the entire field of urban development problems for communities of all sizes. Over the years, the National Housing Conference, therefore, has been deeply concerned with the problems of effective coordination of Federal aid programs in this particular field with the State and local agencies di- rectly involved in the execution of such programs. We are, therefore, in general agreement with the objectives of title II, title III, and title IV of S. 698. The establishment of such new Federal programs as the Model Cities program and the Metropolitan Development provisions of the Demonstration Cities and Metropolitan Development Act of 1966, which will require close coordination among PAGENO="0199" 193 Federal departments and agencies and their State and local oounter- parts, makes this objective all the more essential. The National Housing Conference strongly supported for many years the establishment of the Department of Housing and Urban Development. The legislation which led to the establishment of this Department in 1965 was recommended to the Senate by the Committee on Governmental Operations in that year. As the members of the sub- committee well know, section 3(b) of the act establishing this Depart- ment set forth the following charter for the Secretary of Housing and Urban Development from the standpoint of coordination of Federal programs and activities relating to housing and urban development: The Secretary shall, among his responsibilities, advise the President with re- spect to Federal programs and activities relating to housing and urban develop- ment; develop and recommend to the President policies for fostering the orderly growth and development of the Nation's urban areas; exercise leadership at the direction of the President in coordinating Federal activities affecting housing and urban development; provide technical assistance and information, including a clearinghouse service to aid State, county, town, village, or ether local govern- ments in developing solutions to community and metropolitan development prob- lems; consult and cooperate with State Governors and State agencies, including, when appropriate, holding informal public hearings, with respect to Federal and State programs for assisting communities in developing solutions to community and metropolitan development problems and for encouraging effective regional cooperation in the planning and conduct of community and metropolitan develop- ment programs and projects; encourage comprehensive planning by the State and local governments with a view to coordinating Federal, State, and local ur- ban and community development activities I cite this existing statutory authority, not from the standpoint of disagreeing with the general objectives of the above titles of S. 698, but rather to raise the question as to whether additional statutory authority is necessary in order to accomplish these objectives. From the standpoint of the experience of our membership with local programs, the main deficiency in carrying out the above charter for the Secretary of Housing and Urban Development has been the inability to secure funding for the clearinghouse service for State and local governments in utilizing efficiently and effectively the multi- plicity of Federal aid programs which are available. As the subcom- mittee knows, appropriations for this function have not been approved by the Congress. The National Housing Conference stron~-ly supports the provisions of title VIII of S. 698 with respect to uniform relocation assistance for families, individuals, and businesses displaced by direct or fed- erally assisted public action. Our organization has long supported the establishment of programs for financial assistance and standards for such relocation assistance comparable to that existing for the urban renewal program and more recently for the federally assisted low-rent housing program. The provisions of title VIII would liberalize some- what the existing provisions under the urban renewal program and the low-rent housing program and we support this liberalization. In our opinion, the most urgent aspect of this problem is to apply these mandatory requirements to the federally aided highway program which is currently the largest source of the family and business dis- placement. We also support the provisions of title IX of S. 698 to establish a uniform land acquisition policy both for direct Federal programs and PAGENO="0200" 194 for federally assisted programs. The provisions of this title would bring other Federal programs generally in line with the provisions established by title IV of the Housing and Urban Development Act of 1965 covering the principal activities of the Department of Housing and Urban Development in its assistance programs to the land acquisi- tion activities of local agencies. I appreciate this opportunity to present our views to the sub- committee. Senator MUSKIE. Thank you very much, Mr. Keith. We appreciate your testimony. Mr. KEITH. Thank you, Senator. Senator MUSKIE. The committee will be in recess until next Tuesday at 10 o'clock. (Thereupon, at 11:55 a.m., the subcommittee recessed until the following Tuesday, May 14, 1968, at 10 a.m.) PAGENO="0201" s. 698.-INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION TUESDAY, MAY 14, 1968 U.S. SENATE, SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS OF THE COMMITTEE ON GOVERNMENTAL OPERATIONS, Wa&hington, D.C. The subcommitee met, pursuant to notice, at 10:15 a.m., in room 457, Old Senate Office Building, Senator Edmund S. Muskie (chair- man) presiding. Present: Senators Muskie and Baker. Staff members present: Charles M. Smith, staff director; Robert E. Berry, minority counsel; E. Winslow Turner, general counsel; Lucinda T. Dennis, administrative secretary. Senator MUSKIE. The committee will be in order. Unfortunately, we do not have a public address system. The corn- :mittee rooms are so filled with hearings these days that it is hard to get a room to be heard. I trust we will have microphones tomorrow, but today we will have to get along without them, which ought not to be too difficult. Our first witness this morning is an old friend and colleague from the Advisory Conunission on Intergovernmental Relations, Mrs. Gladys Speilman, Commissioner of Prince Georges County. I know that your testimony will be most worthwhile as I have listened to the contributions you have made in public forums. Mrs. Speliman, it is ~a pleasure to welcome you this morning. TESTIMONY OP MRS. GLADYS SPELLMAN, COUNTY COMMISSIONER, PRINCE GEORGES COUNTY, MD. Mrs. SPELLMAN. Thank you, sir. When you say you have listened to me in other forums, you are not kidding, are you? But, it has been such a real pleasure working with you, and I mean this sincerely. It has been an inspiration. You are just, I will say publicly, great, You really are. Senator MUSKIE. Thank you. Mrs. SPELLMAN. I am here today serving as a representative of the TNational Association of County Officials. Can I be heard up there? Senator MUSKIE. Yes. Senator Baker is younger than I am, so I am ~sure he can hear. Mrs. SPELLMAN. I was just, as a matter oLf act, telling the story that Senator Baker had told up in Detroit on how his father-in-law had pointed out to everyone that he was not politically inclined and would get nowhere in politics. (195) PAGENO="0202" 196 Senator BAKER. Well, I still have some hope. Mrs. SPELLMAN. You will have to develop your voice just a little bit more. You are doing quite will, but a little more and you will be there. At the outset today, the National Association of Counties would like once again to express its wholehearted support for the Intergovern- mental Cooperation Act of 1968. This is the fourth year that NACO has come before you to endorse this important and necessary legisla- tion. It is disappointing that such fundamental correctional legisla- tion, embodying concrete and desirable alterations in the administra- tion of our Federal Government's massive grant-in-aid program, has not already been enacted and implemented. We would like to commend this committee for holding hearings again this year. In an era of inter- governmental relations, creative federalism, if you will, this bill almost cries out for action. The problems with which this legislation concerns itself are myriad. They involve the effective and efficient operation of our grant-in-aid system. They concern the viability of local-State-Federal relations. Federal aid funds have quadrupled since 1955. And so, unfortunately, have the problems of all levels of government, both with regard to the implementation of programs to meet the crisis of public service to our citizens, and with regard to the procuring and administering of funds to meet the increasing demands. The Intergovernmental Co- operation Act would give impetus to the huge task of coordinating at all levels of government. It would make more effective and equitable the Federal Government's $17 billion grant-in-aid programs, its use and acquisition of land in urban areas, and its relocation assistance policies. We are all familiar with the problems which our State and local governments encounter with regard to obtaining the administering Federal grant-in-aid funds. Briefly, they are: (1) Long delays and continued uncertainty from application to final funding. (2) Lack of adequate priority ranking systems. (3) The enormous local machinery and capacity to coordinate the 359 grant programs at the point of impact. Many counties just cannot tackle this problem adequately. (4) Lack, in many Federal programs, of a requirement involving the active and continuing participation of local elected officials. And to me this is a most serious oversight. (5) Overlap of comprehensive planning requirements for each pro- gram, and the lack of coordination of required functional plans. (6) Confusion at the point of impact as to the duplication of Fed- eral efforts. And I cannot begin to tell you how much confusion really exists. Our one Federal agency does not understand the programs or the problems of the other, and the State and local government are enmeshed in this mass. Well, that seems to paint a pretty bleak picture, but I am happy to say there is a positive side. NACO is extremely pleased with the cooperative steps which have been taken by many departments and agencies to deal with the above problems that I have outlined. The Department of Housing and Urban Development has recently published a priority system for its grants PAGENO="0203" 197 under the open space program. The FHA recently in our county agreed to keep us advised of low-rent projects approved within our ju- risdiction so that our community development department can be pre- pared to take by the hand people living in substandard housing to guide them into new projects. Until now we would learn of such projects only by reading about them in the newspa~pers. Unfortunately, many departments are not cooperating as well. Many are not utilizing the A-80 and A-85 procedures to the extent which could maximize their efficiency. The proposed legislation, we feel, will contribute greatly to the progress underway, individually and between agencies, to coordinate better and make more effective our Federal grant-in-aid programs. Grants-in-aid have played and will continue to play a crucial role in serving the national interest. They have helped facilitate change- change in perspective and priorities, in thinking, and in action to combat major social and economic problems. They have promoted innovation and breakthrough in getting to the roots of those problems, although too many programs today are still merely hacking away at the branches. But the Federal aid program needs more than a con- siderable shaking up if it is to make any more than a dent in the accelerating problems which threaten to overwhelm all local govern- ments in the 1970's. Federal aid programs must be designed and administered to provide greater flexibility and discretion at the local level and they must be administered in such a way to avoid the chaotic effect which present grant-in-aid programs have on budgeting procedures. The Federal agencies at present do not sign contracts in conformity with their fiscal year, our fiscal year, or anyone else's fiscal year. We feel that Congress, throu~h the proposed legislation, can effectively guide and improve the impact of our present Federal aid programs. Some of the proposed changes are indeed simple in concept but they will go far to enhance the future of creative federalism. Title II, for instance, improves administration of grants-in-aid to the States, and title III, permits Federal departments and agencies to provide special and technical services to State and local governments. It seems to us axiomatic that the Governor of a State should have access to information relating to the purpose and amounts of Federal aid coming into his State. It has always seemed to us that excessive redtape is created when a State is required to deposit Federal money in a separate bank account. Counties, too, are often victims of continuing obsolescent admin- istrative practices. Not all are as fortunate as my county of Prince Georges. Often counties do not possess the talent and the financial resources to modernize. Specialized and technical services developed through the use of Federal tax dollars should be made available to local governments so that they may benefit from this expertise. We find it within the desirable goals of intergovernmental relations that local government should be allowed to contract for special and technical services with Federal agencies who developed the requisite know-how and abilities. Because of their areawide and regional character, counties are often the unit of government best equipped to carry the ball with such regional programs as air, water, waste control, area traffic and road PAGENO="0204" 198 programs, mass transit, open space, and so forth. Consequently, the Nation's 3,000 counties are experiencing new surges of life. Opening up Federal and technical assistance to these local governments, coupled with the extensive provision of the Intergovernmental Personnel Act which passed the Senate last year, will do much to assure continued progress at the county level in these vital areas. We wish to emphasize particularly the vital necessity of title IV of this bill, providing for coordinated intergovernmental administration of grants for urban development. For years the Federal Government, by impact of certain grant-in-aid programs, has been hindering the development of viable, responsible, general-purpose, local government. We refer to the large amounts of Federal moneys which are not channeled through the units of general local government, but rather through private individuals or special-purpose units. This, in many cases, further fragments local government's ability to coordinate the impact of Federal assistance. A Federal policy minimizing this practice to the greatest extent practicable would go a long way in developing the capacity of general-purpose units of government to exercise responsibility for public needs. * Sections 401 and 402 are vital if we are to discontinue the errors of the past. Prince Georges County has made a great effort in time, energy, money, and yes, in heart, to study in depth, our housing prob- lems and the needs of our underprivileged citizens. We know what we must do, we know what we must have built, we know where we should encourage such building projects, and we are making a real effort to solve the problems utilizing both public and private capital. But, and this "but" is an enormous but, developers are being granted financing by the Federal Government in very, very large sums to build 221 (d) (3) low- and middle-income projects in our county, not where they would help us, but in many instances where they may do consider- able harm. Instead of placing a little of this housing here, another project there, fitting them into the community so that they do not down- grade their surroundings, but instead serve to upgrade their old ten- ants, we find huge developments about to be built in such a manner that we can predict that they will become the tenement slums of tomorrow. All our planning, all of our know-how, all of our hopes for the future are just being set aside. For the Acting Director of the FHA, a most cooperative gentleman, sees and understands our problems. But he knows that we have good intentions and that we have been working to carry them out, and he has made every attempt to cooperate to the best of his agency's ability, but Congress neglected to insert one important factor in its enabling legislation for these housing programs. It neglected to allow the local government a voice in determining, first, how much low-income hous- ing it needs, the size of the projects to be built, and their placement for maximum benefit and minimum adverse effects. And so you see, it is ironic that on the one hand, Congress, through the model cities program, encouraged us to take a comprehensive approach to our problems, but on the other hand, Congress did not permit a Federal agency to respect our local government's attempt to utilize the com- prehensive approach. Section 401 recognizes the need for cranking the local go~vernment into the deoisionm'aking process, and it will greatly assist our counties PAGENO="0205" 199 in their efforts to grow into the viable units they are capable of becoming. Section 402 recognizes the need for granting funds through the general-purpose unit of government rather than the special-purpose unit in order to promote the coordinated approach to problem solving, and we feel the sections are vital to the future success of any consolida- tion program. Another area we would like again to add our endorsement to is title VI, consolidation of grant-in-aid programs. NACO has continually supported the consolidation of categorical grant-in-aid programs into broader, functional, grant programs wiiich can be more effectively related to State and local planning processes. We have endorsed the "bloc-grant" approach in the administration of comprehensive health partnership relations. Our American county platform, for example, urges the creation of a new Federal category of public assistance based upon the single criteria of need, and with a single Federal formula as contrasted to the categorical, all with separate formulas, separate eligi- bility requirements, separate recordkeeping requirements. We believe that consolidation of aid to the aged, the blind, the children, and the disabled, would be a good example of what might be done. There are many other exan~p1es. The water-sewer programs, presently adminis- tered by four Federal departments, deserve further attention with regard to possible consolidation. By virtue of the overlapping jurisdiction of the various depart- ments, and the consequential myriad of authorizations for these pro- grams, we approve of the provision enabling the Executive Office of `the President to initiate these consolidations, with congressional con- sideration as provided in section 603. We would hope that the purposes of any consolidation as listed in section 601 would thus blossom into the bloc-grant approach so much discussed these days, but so often misunder~stood. We should like to make clear our understanding of what we envision a consolidation into a bloc-gi~ant approach as achieving. Although bloc grants are defined in a variety of ways, we view them as an `allocation process by which State and local governments receive Federal funds to be used for one general area of need; for example, health. Furthermore, the recipients have broad discretion and flexibil- ity in their use, in order to best meet their own individual needs and requirements. All too often today governments are skirting their indi- vidual needs by patterning their programs to fit the grant criteria rather than to fit `their own actual situations. The bloc grant would have an immediate impact on developing local management capacity for the coordination of their own activities as well as Federal grant programs. Regardless of coordination progress at the Federal and State level, confusion will continue until coordina- tion takes place at the city and county levels. As you know, in previous testimony, NACO has endorsed titles IV, V, and VII of the bill. I `should like to reiterate our policy on these important areas by quoting from portions of our American county platform, the entire relevant sections of which are reprinted in the appendix to our testimony. 1 quote: `Federal aid for urban c1evelopmei~t administered by numerous Federal depart- ments and agencies are of vital importance to the Nation's counties. Such pro- PAGENO="0206" 200 grams, however, musl be coordinated with each other and with local planning and decisionmiaking and administered through effective and responsible local governments Few Federal programs have the stated objective of implementing locally adopted plans for development. To remedy these conditions which have an adverse offect on local government, NACO recommends: (1) that Congress remove from Federal aid programs for urban development all limitations which require or promote special districts to the disadvantage of counties and other general units of local government, (2) that effective functional and comprehensive planning be encouraged at the local level to the extent appropriate in all Federal urban development aid programs, (3) that `both Federal and State programs encourage joint pai~ticipation in cooperative projects by local governments thr'ough removal of population and dollar limitations and through the use of financial incen- tives . . . (5) that Congress and the executive branch establish the principle and implement the practice of Federal interagency coordination in the full range of programs affecting lo~cal government Title VIII, uniform relocation assistance, will attack one of the most glaring problems relating to our various grant programs, that is, inconsistent and inequitable relocation policies. Again, the American county platform spells out our endorsement of this title: The National Association of Counties supports enactment of the proposed legislation which would establish a uniform and consistent Federal policy for protection of all persons and businesses displaced by direct Federal and federally assisted programs: (1) by compensating for the full costs of such displacements; (2) by requiring provision of a program of advisory assistance and service; (3) by assuring availabiUty of adequate hou's'ing as a condition of Federal grants-in- aid, similar to the requirements in the Federal urban renewal program; and (4) by advancing 100 percent of funds for the prompt acquisition of highway rights-of-way for Federal-aid highways and by authorizing State governments to reimburse their State share over the period of the actual construction schedule. Title VII, urban land utilization. The acquisition, use, and disposition of real property by the Federal Government vitally affect the local governments where such property is located. Local government must often stand by and see transactions entered into by the Federal Government which are just not consistent with the local government's zoning and land-use practices. Our American county platform recommends that "no such acquisition or disposition of property be made except upon advance consultation with officials of State and local governments sharing jurisdiction where the particular property is situated. What results in many cases where local government is not consulted, is a use not in con- formity with local comprehensive planning. Again, here you see it is ironic that our Federal Government should be the cause and catalyst of uses which violate local zoning and land-use planning, while at the same time requiring so many "comprehensive plans" of its own. We feel that the Federal Government, as a partner, should be made to be more cognizant of the desires and plans of local govern- ment when it acquires, changes the use of, or disposes of its own lands. TITLE Ix-UNIFORM LAND ACQUISITION POLICY The need for a uniform Federal policy on land acquisition prac- tices has become increasingly apparent in recent years. Effective im- plementation of the principles of negotiation purchase, appraisal before negotiation, and providing an opportunity for the owner to accompany the appraiser, will do much to relieve the present conges- tion of the courts and to assure consistent treatment for landowners. PAGENO="0207" 201 The many varying procedures caused by the vast increase in Federal programs has resulted in a lack of public confidence in Federal land acquisition practices. Political subdivisions, as owners, are also affected. Local government should be compensated in full for land and facilities condemned by the Federal Government. TITLE X NACO endorses and urges the enactment of the recently added title X of the bill relating to accounting, auditing, and reporting of Federal assistance funds. With the terrific increase in Federal grants-in-aid programs, has come a complex of Federal auditin and accounting procedures for local government to adhere to, base upon the various enabling legislation, appropriation acts, depart- mental regulations, and so forth. A serious question, we feel, exists as to whether the existing financial reporting, accounting, and auditing procedures are reasonable in their demands upon local government. We feel they are not. This is one important area where overall remedial legislation could serve to coordinate the many com- plex procedures and make it easier for everyone concerned. We are aware that each Federal agency is charged by Congress and by the Comptroller General to insure proper use of Federal funds. We do, however, see the immense usefulness of a system which would foster greater interdepartmental coordination among the various financial management officials administering grant programs. This legisla- tion would permit the Comptroller General to study and review the accounting and auditing systems of the States and upon his approval of their system, would allow the results of State audits to be accepted by a Federal agency in lieu of their own fiscal audits. This discre- tion of the Comptroller General could also be extended to local governments receiving sizable Federal grants. Adequate safeguards are provided. We feel this is an area of our grant-in-aid system which has been ignored to date in any efforts to coordinate and make more effective our grant-in-aid programs. It is an area which would save Federal, State, and local administrators a great deal of duplicated and expen- sive effort. And so you can see from this testimony that NACO once again wants to express its wholehearted support for this Intergovern- mental Cooperation Act of 1968. We are with it all the way. Senator MUSKIE. Thank you very much. Mrs. SPELLMAN. I do want to say it has been a pleasure to have the opportunity to come before you. Senator MUSKIE. The appendix of your statement will be in- cluded in the record. (The material referred to follows:) AMERICAN Oouxrv PLATFORM TITLEs IV, V, VI OF THE INTEROOVERNMRNTAL 000PERATIVE ACT 2-4. Federal impact on local government structure and planniag.---The federal aids for urban development administered by numerous federal depart- ments and agencies are of vital importance to the Nation's counties. Such programs, however, to be most effective, must be coordinated with each other and w~ith local planning and decision-making, and administered through effective and responsible local governments. PAGENO="0208" 202 Currently, almost all such urban development aids to local government are~ available to special districts and, in many cases, private associations, as well as counties. Overly restrictive population and dollar ceilings on certain grants and loans often discourage more economical joint projects among counties and' between a county and municipalities within its borders. Finally, few federal aid programs have the stated objective of implementing locally adopted plans for development. To remedy these conditions which have an adverse effect on local government, the National Association .of Counties recommends: (1) that the Congress remove~ from federal aid programs for urban development all limitations which require or promote special districts to the disadvantage of the counties and other gen- eral units of local government; (2) that effective functional and comprehensive planning be encouraged at the local level to the extent appropriate in all federal. urban development aid programs; (3) that both federal and state programs en- courage joint participation in cooperative projects by local governments through removal of population and dollar limitations and through the use of financiaL iiicentives; (4) that the states more fully assume their responsibility for assist- ing urban development in the counties by establishing state programs to supple-- meat federal matching grants to local governments for urban development, in- cluding adequate organizational machinery for appropriate state channeling or review of such jointly supported programs and for rendering technical assistance to the local governments concerned; and (5) that Congress and the Executive' Branch establish the principle and implement the practice of federal inter- agency coordination in the full range of programs affecting urban development. 2-10. Incentives in state and Federal grant programs to encourage joint efforts to resolve common problems-Numerous services performed by local government are best provided when undertaken on a territorial basis broader than the individual unit of local government. Experience in such fields as open space* land acquisition, public health, urban planning, and airports has shown that grant programs can be designed to achieve more effective local services through joint undertakings by more than one unit of local government. The National Association of Counties believes that state and federal grant programs, where- appropriate, should contain provisions to encourage joint undertakings among' local units of government. 2-il. state and Federal legisl4tion needed.-We recommend that in order to~ strengthen county and regional planning that applications from local govern-. ments within a metropolitan area for federal grants-in-aid for airport construc- tion, waste treatment works, urban renewal, public housing, hospital construction,, and urban highways be reviewed and commented on by a legally constituted planning agency with responsibility for comprehensive planning for the metro- politan area or region and that such planning agencies be composed of or responsible to the elected local government officials of the metropolitan area. 7-6. Btate and Federal legislation needed.-We endorse adequate state and fecl~ eral legislation which permits and encourages county and regional planning. When state legislation is inadequate we recommend that state associations take- such steps as are necessary to obtain adequate statutory authority. We recom- mend that federal and state highway programs include appropriate provisions for' insuring that highways are located with due regard for good local land planning' principles, and that federal and state highway agencies include land planners in, their design sections. We further recommend the enforcement of provisions which would assure the local jurisdictions that problems of drainage, access, etc., which are created as the result of a highway program, would be taken care of by the state or federal agency that was responsible for the construction of the road. 7-10. Comprehensive planning and consolidation of Federal assistance pro- grams.-Tbe National Association of Counties endorses the establishment of a~ federal grant program for comprehensive planning, including physical, economic~ and human resources planning, on the local level, and urges that all local func- tional planning be done in conjunction with the comprehensive planning of a general purpose unit of government reponsible to elected officials. NACO urges the federal government through the Bureau of the Budget or some other agency' in the Office of the President to review carefully all planning requirements of federal programs for consistency. NACO supports the consolidation of special' purpose aid programs into broader functional grant programs which can be more effectively related to state and local planning processes. In order that these comprehensive and functional plans can be carried out, it is necessary that federal assistance funds for complex projects (such as PAGENO="0209" 203 regional sewerage programs) be committed for the length of the project, perhaps several years. NACO urges the establishment of mechanisms within the federal government to assure funds for the completion of long term projects. 9-18. Equalization in Federal grants.-Federal grants provide essential finan- cial support to state and local governmental programs by helping to bridge the gap between revenue needs and fiscal resources in support of vital national policy objectives. Their distribution should reflect, therefore, relative inequalities among recipient governments in program needs and in the fiscal capacities to meet these needs. A. In view of the uneven pace of economic development in different parts of the country, the National Association of Counties recommends that the President require the several departments and agencies administering federal grant programs to review periodically: (1) the adequacy of the need indexes employed in the respective grant programs; and (2) the appropriateness of their equaliza- tion provisions. B. In recognition of the wide interlocal disparities between needs and resources, we urge the appropriate agencies of the national government to examine those grant programs which distribute funds directly to local governments or support local projects in order to: (1) assess the extent to which variations in local fiscal capacities should be recognized in their distribution; and (2) appraise the feasibility of administering effective and equitable equalization provisions in such grants. C. In view of the wide interlocal variations, we urge the states to recognize, to the extent practicable, disparities in fiscal needs and resources among local governments in the redistribution of federal grant funds. D. To facilitate these objectives, we recommend further that the Executive Office of the President expedite the development of plans and procedures for assembling the data required for improving measures of state (including local) relative fiscal capacity and tax effort for government-wide use. AMERICAN COUNTY PLATFORM TITLE VIII INTERGOVERNMENTAL COOPERATION ACT 2-6. Government relocation policy.-Relocatjon is a serious and growing Prob- lem in the United States. Thousands of people and businesses are forced to move because of government projects, and all indications are that this pace of dis- placement will accelerate. It has been estimated that from 1964 to 1972 the federally aided urban renewal and highway programs alone will dislocate 825,000 families and individuals and 136,000 businesses. Yet in the fact of this large and expanding impact of displacement by government, federal, state and local relocation policies are inconsistent and inequitable. Neighbors displaced by dif- ferent programs of even the same government are not treated equally. More- over, those having the most difficulty in adjusting satisfactorily to a forced move are those most often displaced-low income families, the elderly, minority groups, and owners and operators of small neighborhood stores. The National Association of Counties supports enactment of the proposed legis- lation which would establish a uniform and consistent federal policy for pro~ tection of all persons and businesses displaced by direct federal and federally assisted programs: (1) by compensating for the full costs of such displacements; (2) by requiring provision of a program of advisory assistance and service; (3) by assuring availability of adequate housing as a condition of federal gratits-in- aid, similar to the requirement in the federal urban renewal program; and (4) by advancing 100% of funds for the prompt acquisition of highway rights-of-way for federal aid highways and by authorizing state governments to reimburse their state share over the period of the actual construction schedule. The National Association of Counties urges each state to enact comparable legislation providing a uniform relocation policy for protection of all persons and businesses displaced by state and local programs. Such uniform state policy should also provide for state sharing in local governments' costs of relocation payments in all state-aided projects. * In the interest of economy and the convenience of those displaced, the National Association of Counties further urges federal, state and local governmen~~, to cooperate in centralizing responsibilities for relocation, housing, administering 95-626---68------14 PAGENO="0210" 204 payments and counseling services, to the extent praet~cable, in a single agency in each major urban jurisdiction. Senator MUsKIE. I would like to make one point which I think is valid. You referred to the difficulty which you think is being imposed in Prince Georges County by FHA 2~1 (d) (3) housing and other projects that bypass local government. This bill, I am afraid, would not help in that kind of a situation. The FHA program is a loan and not a grant program. And also we address ourselves in this bill to aids to governments and not aids to private sponsors. Whether or not we ought to consider broadening it is a perfectly appropriate question. I do not know what my reaction to that would be, but I thought it would be well to indicate clearly that I think that the bill as written would not touch that problem. I certainly appreciate the great disruption. Mrs. SPELLMAN. But you would not be making that kind of a mis- take in your bill. That was a mistake that was made in the past; you are avoiding that. Senator MUSKIE. Has that point ever been made ~ I suppose I ought to know because I am a member of the Subcommittee on Housing, but I cannot recall that that point has ever been made in that subcommitee in connection with hearings on housing legislation. Mrs. SPELLMAN. I do not believe it has been made. I have just re- cently come across this and have asked our Congressmen and our Senators to see what can be done to make further changes, because, as you can see, when you are doing a good job of planning, and when you are fully aware because you have gotten a professional staff to do a superb study, and you are now fully aware of what is needed you see a complete misapplication being made. It is pretty disastrous to stand by and Watch it. Senator MU5KIE. It makes a lot of sense, it really does. Well, we will give consideration to this as a possible amendment to this bill. This bill may be carrying about all we can carry. I do not know. Mrs. SPELLMAN. We might try that on another level. Senator MU5KIE. Housing Mrs. SPELLMAN. Right. Senator MU5KIE. I was interested in your endorsement on page 5, consolidation of grant-in-aid programs. I wish Senator Mundt were here because he raised an objection to that provision the other day, but I think it was deserving of consideration. I would like to get your re- action. His objection to this provision is that it may be shifting legis- lative initiative to the executive and even delegating legislative author- ity to the executive branch, that we ought not to delegate. In a sense, I suppose, the discussions have all this legislation within the Reorgan- ization Act. That really is, 1 suppose, in the narrowest sense at least, a transfer of the reorganization housekeeping, whereas this could have a lot to do with substantive legislative provisions. I have no difficulty with it, but I can see that there co~i1d be. Do you have any response to that at all? Mrs. SPELLMAN. Yes. I would not have any concern that this was shifting the responsibilities. I think that unless there is full under- standing on the administrative level, and unless this work has been done there that we are still going to continue to have confusion. I think it needs to be done there. I think it needs to be done in the local areas, too. PAGENO="0211" 205 Senator MUSKIE. It may be that we could work out some formula which would make it possible to amend these consolidation plans as presently set up in Congress. That is not possible in the reorganiza- tion plan. You cannot amend them. You take them as they are or you reject them. I have not thought it through, but it is possible that we might be able to incorporate a provision for an amendment. If you wanted to address yourself to that question, you might be able to develop some interesting suggestions for us. There have been a number of suggestions made and observations made at the hearings up to this point. I think before I get to them I would like to ask Senator Baker if he has any special questions he would like to put to you. Senator BAKER. Mr. Chairman, I have no special questions of Mrs. Speilman at this point, except once again to draw attention to page 5 of your prepared testimony where you point out that NACO has consistently supported the consolidated grant and the bloc grant approach. I would like to hear your view on a very general proposi- tion, if I may, and that is whether or not in your view or NACO's view, the concepts of rather specific or specialized ca'tego~ical grants-in-aid or special purpose or any purpose might not exist effectively with a full-blown system of bloc grants or for more generalized purposes, and even Federal revenue sharing for general governmental purposes, if all three might not work and prosper together? Mrs. SPELLMAN. I `think all three would be an excellent idea because each one has its advantages. There is a great deal to be said for the bloc in a program, as it existed in the past. There is a great deal that has been good, along with a great deal that has been unfortunate, really. It has forced communities to pick themselves up by their boot- straps in order to conform. Unfortunately, as I have said here, it also forced them to take a less meaningful approach to meeting their own problems, because they were so busy gearing to getting `the money that they were having to sidestep some of their own real needs. Senator BAKER. I think the rationale of those of us who support Federal revenue sharing, is that it is not a panacea for or a solution for all problems. It is frequently misunderstood that categorical pro- grams, bloc grants, and Federal revenue sharing solve separate prob- lems and may exist together. And, it would be my hope, and I am sure it is your hope and the chairman's hope that whatever measures are finally adopted would produce a more economical cost of government, yet retain Federal initiative and pinpoint the accelerated progress in specific areas where obviously the national goals should exist. That generally, according to you, is your overall view? Mrs. SPELLMAN. Very definitely. I think that the tax-sharing pro- gram would be an indication of a recognition that the local communi- ties have grown up and that they really are able to make decisions and spend their money wisely. I would, of course, like to be very sure that the Federal Government puts such provisions on this tax-sharing program so that local governments will not be tempted to just decrease taxes and become very popular there, that they will really spend this money that is given to them through this program for upgrading their communities. Senator BAKER. I `thoroughly agree. This is not the time or place to have a full discourse on the various points of that. In my own pro- posal for Federal revenue sharing a year ago, we included what we PAGENO="0212" 206 call the incentive factor; that is, the amount of participation in Fed-~ eral funds available for Federal revenue sharing related to the effective efforts of the local governments take care of their own needs by local taxation. Senator MU5KIE. I would like to ask two or three questions. There could be more, but we do have other witnesses. They are about the relocation provisions of this bill. Could you give us some special insights on your experiences and problems in Prince Georges County? Section 807(b) provides for full Federal reimbursement to State and local governments for relocations up to $25,000 for each person dis- placed, the cost sharing according to the formula governing the partic- ular program for costs above that. With respect to the first $25,000, the Bureau of the Budget proposed cost sharing for the full amount. What would be the impact of the Bureau of the Budget's position or its recommendation in attempting future Federal assistance programs in your area? Mrs. SPELLMAN. `Well, I would say, speaking for counties generally, that it would be catastrophic, really. And this $25,000 is probably very cheap if we look at it in terms of the fact that it provides the real incentive for getting things started. Once a program is underway it is going to continue, but that $25,000 will get it underway. I would say that that would be a false economy. Senator MU5KIE. The Bureau of the Budget goes in the other direc~ tion with another recommendation. Mrs. SPEIJLMAN. If they are giving, the answer is "Yes," we will take it. Senator MU5KIE. It is suggested that the owner of real property taken under a federally assisted program who purchases another home within a year be paid up to $5,000. This $5,000 would be added to the acquisition payment and would equal the average price for the standard dwelling adequate to accommodate the displaced owner. In other words, it is the theory that the fair market price would not be met in many instances when you step into new housing of comparable standard. In addition, we ought to have something more. Mrs. SPELLMAN. I think that they are absolutely right. As a matter of fact, our county itself has done something very similar to this. We needed some land for a hospital, we needed to expand, and the land we were taking was going to wipe out some very, very substandard homes. These places were built out of packing crates. They were un- believable, yet interestingly enough, not one of those families in that area had ever been on welfare. So, here are people who really were trying to make their own way, and if we paid them for their homes, the actual price, the actual appraised value, they could not have gotten anywhere, and they just would have landed on public assistance rolls. They would have had no choice. And so what we did was pay them for a relocation price for their homes, and each one of the families is established and they are able to function as families. So, this makes read good sense. It ought to be done. Senator MUSKIE. Would you say the $5,000 limitation is realistic? Mrs. SPELLMAN. That is a little hard to say. In the market today in our county that would be a pittance really, but it would be a start. It would be a start. It would be far better if we could just leave it broad enough to say relocation value rather than a given sum. PAGENO="0213" 207 Senator BAKER. Mr. Chairman, if you would yield for just a minute. Mrs. Speliman, I wonder really if in this matter of relocation costs generally we are not adressing ourselves to an element of existing law within the law of eminent domain. Theoretically, it seems to me, ~there ought to be consideration of incidental damages instead of actual damages to the value of property. It seems to me that is the concept of law, the common law and statutory concept, and our function here may be to clarify and elaborate on the intention, that somebody could be made whole if they were unwilling to buy their property. Senator MUSKIE. I agree. I do not think that the people whose property is taken ought to be made to bear the lion's share of the burden of the public improvement. If the public improvement cannot stand the cost of making them whole, then it is not justifiable. The difficulty is to find formulas for implementing this concept. There is also the difficulty that you cannot change the built-in concept of fair market value without a positive assertion of new law. You have to be careful when you make that positive assertion of law that you do not open a great big door that leads to worsening things. I think this perhaps has a lot of merit. Here is another point that is concerned with the same problem. The present law provides for relocation payment assistance beginning only when agreement has been reached between either the Federal Government and the locality which will proceed with the project. As far as I know no assistance is available during the planning stages of the proceedings. Yet this is the period when displacements begin under the threat of compulsory removal when the project is actually undertaken. During this period tenants move out long before an agreement or even any definite commitment to a project has been reached. Property values decline, tenants move out. Should their be Bomething in the public policy to deal with this period when many people panic? Mrs. SPELLMAN. I think that is a very, very valid point, really, be- ~ause that is where the impact is felt. At that point, that is where the money is needed. It would also help speed up the process, too, so that we know that once this matter has gotten to that stage that there will e approval, and so we just ought to start working on this a little ;ooner and the funds very definitely are needed at that point. Senator MUSKIE. I guess it is one of the costs of our democratic system that we have sometimes a prolonged period of discussions in- Tolving public referendums and city council mt~etings and discussion ~roups. When we prolong this period, it certainly creates very real ~ardships for a lot of people. Mrs. SPELLMAN. I might point out that Baltimore City is having just his kind of problem. There is an area which is in transition, and vhich could almost hit the point of bankruptcy because of the delay here in providing the funds that are necessary to keep going. Senator MUSKIE. One other question and then we had better get to ~ur next witness. The Committee on State and Urban Relations of the National Gov- rnors' Conference and various other State and local organizations rave recommended the establishment of State and local central reloca- ion agencies with which the various agencies would contract to han- Ile State relocation problems. Is this a workable idea? Have you had PAGENO="0214" 208 any experience, you personnally or NACO, in developing or working with such a relocation agency? Mrs. SPELTJMAN. We personally have not yet had such experience, although I daresay that our community development department could very well serve that kind of function. But, it does make very good sense to be able to coordinate all of this into one agency so that everybody knows what is being done and you do have one central outfit guiding this whole thing. Probably C. D. here has some knowledge of how it worked in other areas. Mr. WARD. We have considered this same proposal and we feel that we are one agency where the county has developed some kind of ex- pertise and some other ones then start coming in and having a reloca- tion program, and that it could make sense to combine them under one jurisdiction and use their background and their technical skills. Senator MUSKIE. Possibly in a State as small as mine, a State re- location agency would serve the purpose of the entire area, and in a city like Baltimore, a metropolitanwide relocation agency. Thank you very much. Mrs. SPELLMAN. I thank you very much for giving me the oppor- tunity to come. I enjoyed it. Senator MU5KIE. Our next witness is Mayor Beverly Briley of the Metropolitan Nashville-Davidson County, Tenn. Mayor Briley, it is a pleasure to welcome you again. Our last meeting was before another subcommittee of this same full committee. TESTIMONY OP MAYOR BEVERLY BRILEY, METROPOLITAN NASHVILLE-DAVIDSON COUNTY, TENN. Senator BAKER. Mr. Chairman, may I take this opportunity to say that I look forward to the mayor's testimony. It is my feeling that Nashville-Davidson County `have been pioneers in the area of rede- signing and reconstructing more active and effective local self-govern- ment. Mayor BRILEY. I have appeared before Senator Muskie on many occasions previously representing the National Association of Coun- ties, of which I was formerly president, and I am now on their board. I come today as the mayor of Metropolitan Nashville-Davidson- County, and vice president of the National League of Cities, and a member of the advisory board of the U.S. Conference of Mayors. I am representing these two organizations today in support of 5. 698, S. 458, S. 735, and S. 2981, which would make an important contribu- tion to the improvement of intergovernmental relations among the Federal, State and local governments. Senator MT5KIE. I would certainly like to commend you for your continuous efforts on S. 698 through Congress, and I hope that it will enable the Senate to respond to this bill as it has in the past. The federal system that was conceived by our forefathers is still a great one. But today the intergovernmental relationships envi- sioned by the founders are being strained by the sheer complexity of today's modern urban age. In this century, the Federal Govern- ment sensed that it had a role to play in meeting the national social and economic problems brought on by rapid urbanization and technologi- cal advances and undertook programs of substantial direct and in- PAGENO="0215" 209 direct assistance to States and local governments to meet their prob- hems. I speak as a mayor who has had a good working experience with the Federal grant-in-aid programs. On the basis of this experience, I hope the committee will accept our comments as constructive criticism and positive suggestions. I personally feel this bill will meaningfully con- tribute to lessening some of the frustration mayors of cities such as my own endure in dealing with these grant programs. Let me make it clear that we cannot deny the substantial relief the grant programs have brought to cities. But unfortunately, there are now just far too many individual programs each with their own set of objectives and operating rules. On top of this, we find a general lack of uniformity and of priority. But most of all, we find a general lack of understand- ing of individual city needs by the administrators of these programs and of the programs themselves, we find that they are not being de- signed and administered so as `to be responsive to local needs and I might say especially to local priorities. We have testified on many of the provisions of S. 698 in the 196~ creative federalism hearings and on earlier legislation considered by this subcommittee. I will therefore not belabor you with detailed com- ments on each section of the bill. Instead, we will be glad to discuss them in the question period and may I request that we be permitted to submit such additional supplemental statements as may be necessary on any of the bills' provisions and also note that our staff stands ready to provide additional assistance and consultation as you and the com- mittee staff may require. Let me therefore concentrate on S. 698's three "new" titles which in many respects are the most significant elements of the legislation, the Joint Funding Simplification Act, and the amendment to S. 698 in- troduced last week by you, Senator Muskie. Title VI Grant Consolidation. By anybody's count, there are over 400 individual Federal grant programs to State and local governments in existence today. We might note before proceeding further that we are glad the committee is also considering the Joint Funding Simpli- fication Act, a bill which I had the privilege of helping to formulate in extensive discussions with the Bureau of the Budget. We think this bill is a necessary companion measure to the grant consolidation provisions of S. 698. I will comment of S. 2981 later. The present narrow and independent project approach of Federal grant programs, compounded by the sheer number of such grant pro- grams, is disruptive of comprehensive planning designed to develop and program broad community attacks on urban needs. Cities, because they urgently need funds, are encouraged by the present system to abandon well developed priorities to enter competition for Federal funds where they are available. Local planning is often hampered be- cause cities must concentrate on applying for individual Federal pro- grams. If cities are to acquire the capability to plan and act on total programs, they must not be thwarted by large numbers of individual orograms which must be fitted together (often unsuccessfully) like pieces of a jigsaw puzzle. We strongly urge that the emphasis of E~ederal assistance management must be on combination and consoli- lation of the myriad of grant programs. The emphasis must be on ~stablishing packages of broad programs which complement each PAGENO="0216" 210 other and local comprehensive planning rather than as now occurs, splintering a well intentioned comprehensive attack by a city govern- ment on its problems. What specifically would grant consolidation mean to cities? First, since few city problems are isolated from other related problems it would enable a city to deal broadly w~th the entire malady rather than have to attack individual symptoms piecemeal. Second, cities would have to have perhaps as few as one-fifth or one-sixth as many programs as they now do. Third, city officials would have to deal with far fewer agencies and become entangled in far less redtape and delay. Fourth, increasingly, Federal programs require applicants to de- velop a comprehensive plan for a grant project. Therefore, the ob- jective of the Federal grant-in-aid programs should be to encourage the utilization of federally aided programs which match the compre- hensiveness of the local plan and which are responsive to local needs and priorities, not to fragmeutize and disrupt these priorities. JOINT FUNDING SIMPLIFICATION ACT As I mentioned earlier, one of the difficulties of the present system occurs when a city puts together a broad program but then is unable to obtain funding for individual elements of the program from the Federal Government. Likewise, at considerable expense of time and personnel, administrators must now prepare individual applications for each program rather than a single packaged application. The poten- tial benefits of such packaging and the use of single broad applications are numerous and rather fascinating in some respects. Under a code enforcement program, the distinct needs of individ- ual cities will differ as to what makes up this pr'ogram~. But once a code enforcement program is begun, it must be carried through to its logical end. We tried to list the elements of a typical code enforce- ment program for which Federal assistance is available in separate grants-in-aid and I wish you would note the number. Technical assistance programs for problem definition. Code enforcement assistance. New community facilities. Need for standardized, uniform relocation policy and assistance. Welfare, social service, and educational assistance in varying degrees. Manpower development and retraining. Rat control. Mass transit assistance. The assemblage of a package code enforcement program with even some of these elements, timed to allow implementation in their proper sequence as the code enforcement program progresses, would, under present available grants-in-aid, permit a city to put together a program tantamount to model cities. But, under actual present ad- ministrative and funding conditions, this is impossible. The whole area environmental pollution control is another area which could substantially benefit from the provisions of this act. Fortunately, there is a recent precedent upon which to more precisely foretell the potential benefits from enactment of this bill. Four agetn- cies, HUD, OEO, HEW, and the Labor Department, have jointly PAGENO="0217" 211 launched a poverty-area, neighborhood centers pilot program, acting under respective current legislation for each of the agencies and the authority of an Executive order of the President. Drawmg upon avail- able funds7 the demonstration project now underway in 14 cities, en- ables the cities to develop multipurpose neighborhood centers to serve people in low-income neighborhoods responsively. The stated objectives of the program are to: Develop better methods of linking existing and new programs into a comprthensive and integrated neighborhood system for delivery of health, social manpower, educational, recreational, legal, and other community services to families and individuals:; Initiate a cooperative intergovernmental effort to pooi th~ re- sources and knowledge of city, State, and Federal agencies in assisting neighborhoods; and Develop procedures for combining the efforts of four Federal operating agencies in assisting neighborhoods. Each of the 14 cities has already received funds or planning author- ity from the four agencies to proceed with establishment of their centers. There are, however, problems in 5. 2981 which must be noted. First, general units of local government are faced with the constant growth of special districts. Special districts are frequently neither representa- tive of nor responsive to local constituencies or elected officials. More- over, without authority or coordination being exercised over these districts, they often act independently of and even to the detriment of, public policies of general units of local government. Nothing in this legislation should encourage this situation. Thus, we would oppose any interpretation of S. 2981 which would permit special districts to package programs to the disadvantage of a general unit of local government. This flow of S. 2981, I might note, is contrary to a pro- vision of S. 698 which encourages favoring of general units of local government. At the very least, special districts should be permitted to be a party to an application only with the consent of appropriate units of general government. Secondly, the most important factor in the successful achievement of the bill's objectives is availability of funds for packaged programs. Under present arrangements, cities are often frustrated by a lack of tunds for some of the individual programs. If approval of a city's package application under the terms of S. 2981 were delayed or re- jected because funds from any one component of the joint program were not available, it would also be discouraged from utilizing this mechanism, therefore negating the value of the bill. This problem might be practically overcome through proper estaiblishment of a sepa- rate joint management fund referred to in the act or, even better, a type of m~ban development fund separate although from any single combination of programs from which funds could be drawn, by the city, upon certification of its application by appropriate agencies. NLC has developed a proposal for such a fund which we will discuss. Executive responsibility and coordination: In the case of both the grant consolidation provisions of 5. 698 and in the Joint Funding Simplification Act, we strongly endorse the responsibility and author- ity given to the President. The coordination and administration of grant programs is wholly a responsibility of the Executive. Congress PAGENO="0218" 212 concern is that these programs are administered efficiently and that the congressional intent is fulfilled. The Executive should be expected to consolidate and simplify wherever possible to assure greatest effec- tiveness of the programs. Granting the Executive this power in the manner enumerated by these bills does not remove legislation prerogatives. Dwelling a moment on the `subject of coordination, we feel this most necessary of executive responsibilities is given too little direct atten- tion. It is implied strongly and spoken to in title IV of S. 698, and I would certainly agree that consolidation and simplification connote greater coordination. Nevertheless, this remains one of the gTeatest needs in the administration of the grants-in-aid. One of the prime objectives of the model cities program is to help bring about local coordination of Federal resources available and to provide a definite mecthanism for this coordination. Yet, from the 75 cities already involved in model cities planning, including my own, we are finding definite evidence that the achievement of this goal may be in serious doubt. If we are experiencing this sort of difficulty in a pro- gram specifically intended to achieve greater coordination of Federal resources, I need not dwell on the grim problems faced in coordina- tion of the over 400 separate grant programs. We must learn from the experiences being gained in model cities and apply them elsewhere. Of course, the main lesson to be learned is that we must have an ef- fective, responsive, flexible system such as S. 698 and the other bills will help thtain. We therefore feel the President must clearly be given the responsi- bility as well as all the tools necessary to vigorously pursue achieve- ment of greater interagency coordination in the case of all grant programs. Urban development fund: Ultimately, however, grant consolida- tion and greater coordination cannot alone achieve a workable solu- tion to the massive physical, social, and economic problems confronting cities. The need for adequate available resources to attack such prob- lems becomes more critical each day. We, therefore, urge that Con- gress establish an urban development fund to represent its massive commitment to fulfilling the national resiponsibility in urban and social renewal than is now available through the present categorical grant- in-aid system. Under the ui~ban development fund concept, a city, upon completion of a comprehensive plan utilizing a number of categorical aids as- seniibled in a fashion similar to a model cities plan, would be author- ized to secure certification of technical compliance with the require- ments of the several Federal programs included in the plan, including the approval of State agencies where required. The city would then waive its rights to the specific categorical aid funds and enter into an agreement with the Federal urban development fund for the release of equivalent moneys to implement its plan over the period of years specified in its budget. Funding would be provided by an appropriation to the fund yearly to maintain a reasonable level of payments. The Federal outlay would be expected to `be consistent with the amount paid out under the cate- gorical aids so that eventually the appropriations to' categorical aids might be reduced. The important factor here is that the fund must be PAGENO="0219" 213 large enough to encourage units to make comprehensive plans and programs based on assurance of availability of the Federal Govern- ment's financing commitment. The fund would involve programs crossing present departmental lines. The application would be multipurpose and comprehensive in nature and would be very similar to a city's budget request document. Communities would have the option to use but would never be re- quired, to make use of the funds so provided in lieu of existing cate- gorical programis. This is not really a block grant or revenue sharing. It would leave undisturbed the processing system for technical compliance. It could include a much greater role for State government. It would assure the maximum benefits from fiscal planning, construction, timing, pro- gram scale, and program management. It would, moreover, and per- haps most importantly, give maximum consideration to the diversity of local needs and local innovation, priorities, control, and flexibility. Now, I would like to speak of title VIII, uniform relocation assistance. In any discussion of relocation of displaced persons, we must start from the premise that it costs no more or no less to move a family or a business because the family or business was displaced by an urban renewal project rather than an interstate highway or local code en- forcement program or any other kind of project. Yet the amount of financial and nonfinancial assistance available from the Federal Gov- ernment to assist families or businesses to relocate in the face of a federally supported project varies astonishingly from program to program. The Advisory Commission on Intergovernmental Relations in its 1965 report, "Relocation: Unequal Treatment of People `and Busi- nesses Displaced by Governments," stated: Thousands of people and businesses are forced to move every year because of governmental acquisition of property or enforcement of housing and building codes. All indications are that this place of displacement will accelerate with increased urbanization and the consequent mounting demands for urban serv- ices and growith of federal, state, and local programs for the renewal of cities. It has been estimated, for example, that from 1904 to 1972 the federally aided urban renew~tl and highway programs alone will have caused dislocation of a total of 825,000 families and individuals and 136,000 business and nonprofit orga- nizations. As the magnitude of displacement has increased in recent years, there has' been growing concern over the impact on those forced to move-concern over whether these "displacees" are having to bear a disproportionate share of the cost of the benefit created by the public works program necessitating their move. The concern is vOiced particularly regarding the poor and the elderly, and marginal and submarginal small businesses; these individuals and businesses seem most often to be in the way of property-taking programs and are least capable of coping with the adjustments of a $~orc'ed move. In 1968, Nashville expects to relocate 900 families and 200 businesses, many of them small marginal operations. In the next 10 years, we fore- see displacing as many as 3,505 families. Most of this displacement will occur from federally aided projects such as Interstate 40 and urban renewal. To our city as well as all the others facing similar tasks; it is imperative that relocation policy and assistance be made uniform at all levels of government. We feel that title VIII of S. 698 is an im- portant building block in the achievement of this goal. PAGENO="0220" 214 It must be remembered that we are dealing with individual human needs. It seems so simple looking at a plan to say that if a house or a small store is in the way, move it or destroy it. But what is so often. overlooked or at least given insufficient attention is the fact that when a person or `a `businessman is displaced and relocated elsewhere, there is a tremendous social cost paid often unmeasurable in dollars and cents, not just by the individual but also his neighbors and his community. Relocation policies must focus on and consolidate response to in- dividual needs and to the social needs of the total community. Reloca- tion policies affecting businesses must be flexible enough to respond to the complexities of the economic area. Sometimes in relocation, the operation is a success but the patient dies. In sum, our relocation poli- cies must be such as to enable us to say to the displaced citizen that you, too, will gain and benefit from the public improvement which forces your location and I am obviously referring here to a gain or benefit not simply limited to what a hig~hway or public building will provide, for this indeed to him might be slight. There are a few other points I want to make. First, we feel it highly important that all relocation, for no matter what project, be carried ou't by one city agency which has at its com- mand the tools and resources to do a thorough job. Where cities have established effective agencies to' undertake relocation, `the Federal Government should contract with that agency for this purpose. Second, we want to emphasize the need in the development and unification of policy, for postrelocation followup. The first 6 months are critical to a person or business newly relocated. Families and busi- nesses are confronted by a whole new set of problems in their new loca- tion. Relocation responsibility therefore does not stop once a family is in a new home. They must also be given every assistance in adjusting to their new environment. In conclusion, it is particularly fitting that this bill now attempts to bring uniformity but more importantly a higher degree of equality to the troubled relocation issue. We can no more eloquently state the importance of this provision `than to quote the Senate Committee on Government Operations reporting on 5. 1681, the Uniform Relocation Act of 1966. The Committee said: This policy is necessary to eliminate the great Ineonsistencies `that exist among federal and federally assisted `pro'gram~s with respect to the a~uount and' scope of such payments, and the advisory assistance and `assurance of housing offered. It recognizes that `relocation is a serious and growing problem in the United States and that the pace of displacement will `accelerate in the years immediately ahead. It recognizes that advisory assistance is of growing importance in the relocation process especially for the poor, the nonwhites, the elderly, and smail business people. It recognizes the need for more equitable land acquisition practices in connection withthe procurement of real property by eminent domain. In short, this legislation recognizes th'at the Federal Government has' `a primary responsibility to provide uniform treatment of those forced to relocate by federal and federally aided public improvement programs and to ease the impact of such forced moves. Title IX. The confusion, delay, uncertainty and misunderstanding which exists today in the field of acquisition of real property `by governmental entities for public use is notorious. On the basis alone that there is n'o justification for differences between the taking of one man's property as opposed to another, we fully endorse the pro- PAGENO="0221" 215 visions of title IX. This title contributes measurably toward elimi- nating the disparities in Federal land acquisition policies. We particu- larly feel that it `is important that `the propertyowner be fully advised of the method `by which value of the property is ascertained by the Government. We trust that in section 901 (a) (3), `the term fair and reasonable consideration means "fair market value." Many cities now use fair market value as the starting point for their negotiations in property acquisition. It is the fairest as well as most practical value to be obtained. Turning to title X on the subject of auditing, we most heartily welcome and endorse the objectives of this amendment. Yearly, cities receiving substantial amounts of Federal assistance must submit to time-consuming detailed audits, often by two or three or more Federal agencies, for the purpose of accounting for Federal funds. Oftentimes these "audits" exceed the scope of checking accounting procedures and lap over substantially into the questioning of local policies. Under the provisions of title X, all this extra effort could be eliminated. Moreover, once standards are established by the Comptroller General, cities would know with certainty what the rules of the games are and could insure that their own accounting procedures meet these stand- ards. Again t'he greatest benefit to be gained by the cities as well as the Federal Government is uniformity of practice and simplification of procedures. In summary, we feel that assistance for tod'ay's urban needs cannot be met `by simply the Federal dollar without there being a major effort through effective administrative procedures to make the programs flexible, simple to use, efficient to operate and utilize-and most of all- responsive to the problems they are designed to meet and responsive to the priorities of those who are directly responsible for solving these problems, the officials of our cities. This bill may catalize then the emergence of a new urban federalism. `Senator MUSKIE. Thank you very much, Mayor Briley, for your excellent statement. I. have one or two questions that I would like to ask. I understand that Nashville has `had a serious problem of reloca- tion for Interstate Highway 40. Mayor BRILEY. Highway 40; yes, sir. Senator MUSKIE. The city has gone far iii trying to solve th~ prob- lem, `bu't `I `have a question based upon `that problem. Do you feel that the `relocation `assistance section of 5. 698 would have helped in `dealing with that problem? Mayor BRILEY. Yes. This perhaps also would require some State Legislation, which I am sure would follow the provisions of this bill. We have this problem. `There are about 600 families in the next leg, ~hat"s the `leg that was under litigation. Four hundred of tho'se families ire on `oral `leases, not a written `lease. Under our State law, if `they are ~ot un'der a written lease there `is n'o relocation cost paid at `all. Now~ ~ur `city will d'o the best we `can and `it will cost us `to `do the best we can. But we cannot do the things, of course, we could do under uniform Lssistance policies for reloc~ition at the Stateand Federal Government evel, `so I `think it would substantially help and lead the State to im- rove its assistance. ` ` Incidentally, that would also apply `to some businesses. Some of he relocation prdblem's of the `businesses `are not funded adequately., ~nd I think this woul'd lead to a better funding of that problem. PAGENO="0222" 216 Senator Mnsi~m. I was going to raise that question. Do you think that you are going to be able to put together a satisfactory relocation program in connection with `that highway ~ Mayor BRIL1~y. We are approaching it in two different ways, one dealing with business and one dealing with housing. Several years ago when `the metropolitan government first came into existence in 1963 we developed `a relocation agency and we contracted with the State government with reference to their highway program, and we contracted with the housing authority of our area that handles both urban renewal and public housing to do all of their relocation through this `agency. It was a contract between the welfare commission of our local government `and `the `housing authority in `the State govern- ment. This worked very satisfactorily, but was not funded adequately,. and the State withdrew from it about 2 years ago. We are now in the process, and our new budget is now under consideration, of setting up a bureau of relocation which will `be headed `by a director' that will be under the directi'on of our welfare department. This agency will `have an advisory committee `of codes people, public works people, water-sewer people, highway people. We are also developing a contract and have meetings leading to thi's with the State highway department. We think that we have a much better plan on reloca- tion of these people presently. We have done an experimental program' in this manner, on `the worst slum areas we had in our city, and we were very successful in about. 4 m'on'ths in getting these people housing. Incidentally, this was not a pi~blic improvements area, this was a codes enforcement area, and our experience has taught us `better how to do this. With reference to `the business community, there are multiple problem's. We have negotiated and we have arranged with our local banks to put up a fund of $1 million to supplement and assist in loans `to these marginal, principally Negro, businesses. The fund is being administered by `a local bank, that is, primarily a Negro institution of m'any years' reputation. S'ome of these businesses have been oper- ated for a number of years by people who have `been successful, not in any great way, but `successful to sustain life and a business. These people probably will be successful. There are a number of `these marginal businesses that have been there a year or two which are relying upon a localized neighborhood custom or local economy. When they relocate it is doubtful if they can redo what they have done there. Now, even where the business would have been satisfactory 5 years from now if it stayed t'here under `another change would `be a question. So, I think that we have done things that will `help those that are competent and capable of maintaining a `business. Senator MrisKIE. Senator Baker. Senator BAKER. Mayor, you touched on the nature of eminent do- main statutes in Tennessee, which you agree are many and varied. Most condemning `authorities have at least a choice of three or four different sets of statutes they might proceed under. Would you agree with me, however, t'hat elaboration of the definition of incidental damages as distinguished from actual damages might have `an effect on alleviating much of the aôtual 1o@~ of ~eonomic ~ufferrng that frequently occurs in relocation projects? PAGENO="0223" 217 Mayor BRILEY. Yes. As you recall, we have had two, maybe t.hree statutes introduced and adopted that the court's have held unconstitu- tional that dealt with this problem, and I think very much of it would. Senator BAKER. And also the fact that under Tennessee statutes, and under some others, under some Federal provisions, there is a specific allowance for moving costs. Not under all Tennessee statutes, but one in particular that I `think of was enacted to accommodate requirements of interstate highways, and frequently these are limited to specific amounts. In the case of urban renewal, it is my understand- ing t'he limit is $200 on moving costs. I wonder if you feel `that that arbitrary limitation or any arbitrary limitation can really do equity in certain circumstance's? Mayor BRILEY. There are many, many instances, and we are talking now principally, as I stated in my statement, about most of these relocations coming to an economically disadvantaged group, and in many cases it doe's not take an awful lot of money to actually pay their relocation expense. Bu:t, there are instances where it is very expensive because you have to move them completely away and you have an environmental problem that you have to follow up. Now, we are locally financing that `ourselves `by local government. If the relocation assistance costs w'as a larger amount we could solve a great many problems of this nature. Senator BAKER. it was pointed out to me `by `the chairman that in a situation the actual damages involved can exceed the $200, the allowance stated in `the provision, as I understand it, the $200 moving cost. Senator MU5KIE. If you want to go through `the redtape and take action. Mayor BRILEY. It is different under urban renewal and under `the highway program. There are `two different standards put in there, and this is one of the hardest things in the world to explain. We have a number of urban renewal projects on the way and they are more liberal, much more liberal, and we do a lot of relocation with this. And `then a friend over here who lives where the highway is going to be, he does not get any benefit out o'f it. He cannot understand that. He thinks he has been treated differently. Senator BAKER. Do you find this disparity and treatment, as a prac- bical matter, is the cause of friction within the community and a source )f difficulty? Mayor BRILEY. It is; and I think one of our problems originated eight here because the highway goes through an area that is not in the irban renewal area. It is now in the model cities program, and we are ~ttempting to go into that area and heal over the wounds that have ~ome out of it. But, I think, it was a basic part of the problem. Senator BAKER. Of course, in the 1-40 situation, according to the iewspaper accounts and the conversations and correspondence I had )fl the matter, and you had on the matter, the whole situation develop- d into a broad sociological concern as well as an economic one, and hat would tie back into some of the provisions of this proposal. I am ~fraid in the 1-40 situation the pending plan of development had the ifect of deadening the whole area long before it was utilized for the mprovement that was involved. PAGENO="0224" 218 Mayor BRILEY. Well, there were two sides to this. As usual, the mayor gets caught in the middle of it. There were a group of people, a substantial number, about 45 percent of them were Negro businesses. that had bought properties knowing they were going to relocate and were held up because the highway didn't go through. Then there was the other group who were there and knew nothing about it, and were having to move what they called rather hastily, al- though this had been published as an existing or proposed road with the general alinement for at least 10 years, and I would say probably once a month, but no one said anything until the actual taking began to operate. `So, we had one group of people who were hung up in their relo- cation and had large sums of money committed, and they were just like the mayor, they were caught in the middle of the argument between the two groups. Senator BAKER. I find, Mayor, that is not a situation left entirely to mayors. Mayor, you made reference, and I have asked you about, uni- formity of procedures on condemnation of land and acquisitions. There is one other aspect of that general situation that I would like to ask you about. Do you feel that we would be better served to ap- proach this problem, the elaboration of the value of incidental dam- ages in Tennessee, by appropriate amendments to the various statutes, or a consolidation of them, or the promulgation of a new statute, or by the implementation of that objective through usual Federal control? Do you feel it could be done more `effectively one way or another, or do you prefer that it be done both ways? Mayor BRILEY. With my limited knowledge, I think you will find that the eminent domain and the statutes in many States differ consid- erably, and it could be possible that there could be some provision of a Federal statute that would require, where Federal funds were in- volved, a certain standard that should be applied by State statutes in acquisition. You will find not only Tennessee, but there are other States that have this similar problem. Senator BAKER. If I may, just for a moment, Mr. Chairman. Mayor, I would like to ask you a question substantially the same as I asked Mrs. Speliman. Do you foresee that consolidation of present systems of categorical grants-in-aid by the Federal Government in any way would diminish the desirability or impact of the desirability of elaborating a plan of bloc grants on a less restrictive basis, or a system of Federal revenue sharing? Mayor BRILI~Y. We take a view that there ought to be some degree of standards if Federal funds are being expended, that are being met in the comprehensive plan. You get into the difficulty with a block grant of turning it loose, and there are officials, unfortunately, that would not rely upon their own local resources to the extent that they ought to, to operate their own government. I think that we ought to have the re- sponsible responsiveness to the problems of the community along with the assistance that we can get. ` ` Let me give you just one iflustr~tion of what I mean. We have under- taken,' as' you know, in' Nashville, a very comprehensive sewer pro- gram on a system which has been neglected ,for about 40 years, and in PAGENO="0225" 219 ss than 10 years we expect to sewer an area the equivalent of the city f~ San Francisco, costing about $1~0 million. We are a little better than half through now. Some features of the ederal grants apply to certain parts of this project. There are certain arts of the project that we do not get any Federal assistance from, ~id yet each one is dependent upon the other. So, the local funds have to come in in any event. If you do not have ie smaller collecter system going into the larger areas that qualify, ~ in the treatment plant, or the enlargement of the treatment plant, qualify, then you have no point in enlarging your treatment plant. So, the whole thing is one comprehensive program. If we have a )mprehensive program that is approved as to engineering specifica- ons and we kept the engineers and architects from building monu- tents, then that program as such should be approved and we should be igible for grants without trying to take some factors out of it and taking part of it available and part of it not available. Senator BAKER. Strictly speaking, this next question is not related irectly to the bill or bills you ht~ve testified about before this commit- ~e hearing. On this question of local funds, do you have any view~ oint on the desirability or lack of desirability of changing the method f raising funds at the local level? I would refer specifically at this point to the question of the tax- ~ee status of interest income on local securities. Mayor BRILEY. This is something that has bothered me a great deal. ~s you know, I have testified for many committees up here on this, au~d have had some real running fights with the Treasury Department on us. If we are going to maintain our system of the levels of goverrnnent uat we have traditionally held to, which I think has been a good sys- ~m, I think we must preserve the integrity of tax exemptions to ioc~U onds. Senator BAKER, I gather you take it that this is once of, the effective ~rnaining municipal tools that local governments still have? Mayor BRILEY. That is correct. I was at the Brookings Institute bout 5 years ago and spent `3 or 4 days with the economists from many niversities and with one `particular individual in the Treasury Depart- tent who has been whole-hog on tax municipal securities. We had a tajor debate on it, and when the final conclusion arose that we would ave to have in. many, many areas a complete Federal grant because ~te people would not be t~ble to finance their programs, a good many f the economists who `had. favored the idea that `we have taxation re- ~rsed" their pos~tion'at the conclusion of those 4o~5 days `of d~btvte. There are published volumes at the Brookings Institute. Senator BAKER. In this hearing on this point, I have `written a letter the chairman raising the question whether we should have hearings ithis committee, hearings not just on peuding legislation dealing with ue trèatmënt of the local securities, but on the general impact on the hole range of issues `which affect local fluancing. Do you feel that this subject is sufficient for us to bear such an camination? Mayor BRILEY. ~ just do not believe we `ought to ever open the door f the, Federal Government taxing municipal securitIes. Senator BAKER. Mayor, T would like to ask you one more question iat you have referred to on page 5 of your statement, in the middle 95-626-68------15 PAGENO="0226" 220 of the page, where it says, "At the very least, special districts shoub be permitted to be a party to an application only with the consent o appropriate units of general government." I take it that the special districts you refer to are such things as util ity districts, school districts- Mayor BRILEY. Sanitary districts. There are a multitude of t~her and they are single-purpose districts that do not take into consideratio the capability of the total economy of the community. J can show yoi some districts that the Federal Government has given grants for wate under the agricultural program. They will never survi~re., But, the people were interested in one thing, they were not intere5te'4 in the total program, so they planned it in a manner that dealt with single purpose and did not deal with the total purpose of the whol area. Senator BAKER. I think we both agree that in some areas, utility dis tricts especially, in the absence of municipal governments, many hair served a specialized purpose. Mayor BRILEY. That is correct. We have several in our area that w' have not acquired as yet, as you know. Senator BAKER. Do I understand the thrust of your proposal, then to be that the efforts of these more specialized units should be coor dinated? Mayor BRUJEY. Right, and the local government there ought to.b called into the planning of it and at least have the value of its criticisn or its approval. Senator BAKER. So that I should not read this into this statemeni the proposal we have, the abolition of special purpose, districts, bu rather that their efforts be coordinated. Mayor BRILEY. Right, with the unit of local government tha't i involved. Senator MUSKIE. `Thank you very much, Mayor Briley. 1 appreciat your getting that subject into the hearings, and I think it is es~eciall: interesting m exploring the problem of taxation of municipal bond~ We are all concerned in one way or another with the increasing nurn bers of pieces of legislation. Thank you very munk. Mayor BRILEY. Thank you, Senator. Senator MUSKIEI. We are getting pressed for time and wO have tw more witnesses. First is Mr. Edward PotthOff, city manager of Sagi naw, Mich., representing the International City Managers Associatior T~STIMONY OP EDWARD POTTHOPP, CITY MA~TAG~, SAOINA1~ MIOK, REPRrISE~?TI1~G THE INTERNATIONAL `CITy MA}lAGER~ ASSOCIATION, Mr. Porrnorr. Senator Muskie, Senator Baker, I `was ~iot able t provide the committee with prepared, advance text. This was corn pleted late last night. I have been tied up with an open-housin~ election. Would you prefer me to present you with a couple of copies now? Senator MUSKIE. Yes, if you have them now, that would be fine. Mr. PorriloFF. I can report that our `open-housing e1ec~tiO22 was SUC cessful by overwhelming vote. PAGENO="0227" 221 Gentlemen, I am Edward Potthoff, city manager of Saginaw, Mich., serving in that position since 1961. Before that time, I served as city manager of Niagara Falls, N.Y. I have had over 18 years' experience working with local government or serving it directly. As a career local government executive, I truly appreciate the opportunity and invita- tion to testify this morning. You are going to note a very definite similarity between the remarks I have to make and those fine remarks of Mayor Briley of Nashville- Davidson. I guess it merely points out that the problems and the atti- tude toward the grant-in-aid programs are quite similar in cities many hundred miles removed from one another. Your committee over the past several years has heard statements about the problems of intergovernmental relations. There is no doubt that the problems of our urban society will not be solved without all levels of government working together. This is a truism to anyone who has given thought to these problems. As a professional city manager, I can testify for the need to estab- lish reasonable, and as much as possible, flexible policie.s to facilitate the relationships between and among levels of government in order that the work of strengthening our American democracy can continue. This is why I am particularly pleased to support the provisions of Senate bills 698 and 2981, because they do set such policy. Ten years ago, perhaps even five, the professional city manager did not spend much of his time on intergovernmental relations. Today, in conjunction with Saginaw's mayor, council and city employees, the problems of intergovernmental relations directly and indirectly occupy considerable time. Senator Muskie, your efforts, and those of other committee members are to be commended for your interest and efforts to facilitate the work of local government, State government, and the. Federal Government by previously obtaining passage by the Senate of many of the provi- sions of S. 698. It is hoped that the provisions of S. 698 and S. 2981 can be c4yntained in a bill that does become law. As a professional city manager, I am concerned that programs devel- oped at all levels of government are not only good policy, but that their implementation results in achieving their objectives. The city man- ager's expertise is in the area of not only problem analysis, but in the processes of getting things accomplished. Saginaw has a number of Federal grants, including being a model city. We have these programs because we want to make our city a better place to live for all citizens, no matter what their problems, economic status, or race may be. These bills are aimed at improving ~niplementation of much-needed Federal programs and hopefully reducing the time between application and completion. Virtually~ all Federal-city programs suffer from excessive time delay from inception to completion. I would consider the time factor to be the single greatest problem existing in our Federal-city relationship. Excessive delay frequently results in changes in membership of our city councils; it results in accusations of promises not kept; it results in extraordinary costs; it completely disrupts local fiscal planning; it makes the allocation and assignment of local staff to programs virtu- ~lly impossible and generally results in frustration and waste. PAGENO="0228" 222 I want to concentrate my remarks this morning on the two new pro- visions in S. 698-title VI, consolidation of grants-in-aid, title IX, uniform land acquisition; and to Senate bill 2981. In addition, I will stress the importance of title VIII, uniform relocation assistanec. I will be glad to discuss other provisions of the bill during the question period. This provision is a must as far as I am concerned. Senator Muskie, your statement introducing S. 698 makes this abundantly clear. The. number of Federal grant programs to State and local govermne*nt is in the hundreds. Each program was developed to meet specific needs of State and local government, but naturally such programs enacted at different times now cause duplications, confusion, and make planning by local government most difficult. The problems at the local level become one of trying to couple together specific programs in an area. Often this "coupling" cannot effectively be done, or if it can, it takes an unusually long period of time to mesh all requirements of each specific program involved. On February 6, 1967, Graham Watt, city manager of Dayton, Ohio, testified before your committee on creative federalism. At that time as part of his testimony, he submitted a survey of city managers done by the International City Managers' Association on the problems of Federal-local administrative problems. This survey shows that city managers would support this title because it would enable them to do a better job of planning and imple- menting programs involving Federal grants. More important, the programs themselves could be more effective because the coupling of similar programs would have already largely been done. The IOMA. survey sth~ted: The multiplicity of programs makes it extremely dIfficult to place one program in context with others, and it is equally difficult to determine among four of five programs, which one is most appropriate for the city. City managers expressed the idea that programs would be more effective if aimed at community activities instead of specific projects. At present, local programs are often shaped by Federal requirements, rather than the particular community needs. Saginaw is indeed fortunate for it is able to afford a young man with a master's in public administration that works virtually full time on Federal aid programs. He feels that~~. of the 128 direct Federal aid city programs, he is able to be knowledgeable about 15 to 20 of these pro- grams. Thus, it is most difficult for us to know what programs might be helpful and, as important, if funds are available. I cannot help but think, parenthetically, of the smaller cities who are not able to afford this luxury of a man well trained and able to specialize in this type of thing, entirely on Federal programs, and we do consider ita luxury. Senate 2981, Joint Funding Simplification: The Joint Funding Simplification Act is a supplement to the Con- solidatiOn of Grants. This act is important because where consolidatior is not feasible, it provides a means to provide coordination of related programs. More important, it allows the administrators of variow related programs to remove inconsistencies as spelled out in section 6 It appears to allow the city to make one contact point---not several. PAGENO="0229" 223 Again, the ICMA sur~rey pointed o~ut that there were inconsistencies among the plans required by Federal agencies that worked against each other's objectives. It was felt by the managers surveyed that a compre- hensive plan might be required that could fit the needs of most of the Federal programs. The simple matter of having one basic application form would permit us at the local level to do a better job of meeting our needs and carrying out national objectives of Federal programs. One of the most important provisions of Senate 2981 is the authority to establish joint management funds. It is obvious, from the local viewpoint, that being able to receive money for several related proj- ects at `the same time from the same fund simplifies our ability to effectively carry our related programs without spending excess energy on coordinating the Federal establishment, It is hoped that future legislation can be developed that overcomes what appears to be a weakness of the joint management fund, of an overall local program being held up because one of the specific Federal programs involved does not have the money to place in the fund. At present, the processes of obtaining much-needed Federal assistance does not allow for effective long-range financial planning. Thought must be given to providing some way to overcome the uncertainties of Federal funding. The proposal of the National League of Cities for an urban development fund warrants serious attention. One ex'ample will illustrate the problem of financial and physical planning. Saginaw has created a metropolitan water supply system in partnership with 11 adjacent townships. We finally applied for a grant to help construct the system. However, because of artificial fiscal ceilings on the ~ran't, we have not received approval. `The total project is $6 million and the grant request is for $3 million. Arbitrarily, the Federal has a ceiling of $1.5 million per application. If each governmeiital jurisdiction had applied separat~ly, as entitled, the money granted would, as you can well imagine, have far exceeded the limi't of $1.5 million. Finally, it is hoped that this bill will relate to local governments of general jurisdictions, not special districts. Enough has been said about the problem of special districts. Suffice it to say that in most cases, local governments of general jurisdictions are more responsive to and cognizant of local needs. I would like to see a provi'sion in Senate bill 2981 similar `to section 402 of S. 698. TITLE IX-UNIPORM LAND ACQUISITION This title will do much to remove the confusion that noW exists over Federal purchase `of land. It sets equitable policies and clearly pro- vides information to property owners who must sell to the Federal Government. It protects `the property owner, and if the term "fair and reasonable" consideration-Section 91(a) (3)-means fair market value, it sets an acceptable basis for negotiations. At this point, I would like to say that title VII, Urban Land U'tiliza- tion, also in conjunction with title IX, is important. It at least recog- nizes `that `the Federal Government should be cognizant and "to the extent a Federal administrator considers practical" follow local planning and zoning laws. I would like `to see the language stronger for at least all nondefense PAGENO="0230" 224 property. I would like to see that unless Federal agencies could show cause why not, local regulations should be followed. At present, we in Saginaw are involved with the General Service Administration on a new Federal building. The Federal building will be located in `a downtown urban renewal area planned by outstanding planners `and designers. The plan i's based on vertical development, separating vehicular and pedestrian conflict. The General Service Administration has been most cooperative in working with us. However, their attitude towards vehicular access and parking are in conflict with the overall design. If the Federal Government, who on one hand is encouraging comprehensive planning, decides to violate the plan, how can the city logically ask private business to conform to the plan ~ TITLE 17111-UNIFORM RELOCATION ASSISTANCE Here again, the provision sets a policy, stressing equitable treatment to people no matter if they are displaced because of highway construc- tion or an urban renewal program. The treatment of people being dis- placed is `highly important in our society. When cities are directly involved in a program, they can do much to mitigate the forced move of people or small independent business. Often the persons forced to move are the poor and elderly-those least able to absorb the financial e~ects-aiid disruption-of a move. Further, it is this group for which housing is often most difficult to find. Saginaw has been most concerned about inconsistencies in reloca- tion as early as 1963. The construction of Interstate 675 business loop through the city of Saginaw contemplated that the relocation of 707 families and business establishments would be required. At the time of preliminary planning, `the State had no resources or plans for relocating these families `or for staff assistance, and the State Highway Department, in fact, opposed becoming involved. In October of 1963, the city of Saginaw by resolution-and I would like to read just two resolve portions, which are brief, because it states the position of the city very clearly: Resolved, that the City of Saginaw requests of its State representatives the introduction and enactment of State legislation to provide for the assistance to families and business in relocating in standard housing or p1~ces of business and payment~s for relocation costs, such costs to be included as part of the total project costs, and be it further Resolved, that if such efforts to obtain State legislation are unsuccessful, the City Co'uncfl of the City of Saginaw will provide in the appropriate year's budget necessary funds for trained personnel to be added to `the present relocation staff for the specific purpose of aiding `those persons displaced by 1-675 in obtaining housing accommodations in standard units in other areas of the city, and for moving costs if not included and itemized in the purchase price. I might point out that this would `have been done `at an estimated cost of approximately $50,000 a year, which is a lot to a city of our size. In 1965, as a result of pressures from the city of Saginaw and others, the State of Michigan passed act 40, which provides for relocation pay- ments and assistance similar to urban renewal. Early in the planning stage, `the city opened negotiations with the State for providing a uniform relocation assistance, utilizing the PAGENO="0231" 225 already established and functionin~ city urban renewal relocation office. We convinced the State that this would give much more uniform service, that all of the families and businesses would be afforded th~ same level of services, which would avoid confusion, and also that the relocation office was better equipped to find available housing resources. Such a contract between the city and State would eliminate the need for the State hiring and training a relocation staff. After much negotiation the city of Saginaw became the first city in the State of Michigan to enter into such a relocation agreement with a State government. The city was reimbursed at the rate of $50 per family relocated, which approximately compensated the city for its costs. The success of this agreement is evidenced by the fact that the 707 families were relocated within the time schedule with little disruption, plus the adoption of this technique and contact form by the State for work in Flint and Detroit. This was attributable to the skill and experience of the city relocation staff and also to a comprehensive 10- year planning schedule for relocatin~ families from all governmental programs. so that the burden did not fall in a short period of time. This experience of the city of Saginaw showed us that efforts, not only financial, but of assistance, are highly important. Citizens should not be expected to differentiate between programs supported under one Federal act as opposed to another. And in any case he looks to city hail for fair and uniform treatment. Senator Muskie, I want to emphasize in conclusion that we, although trying to be constructively critical of some of the provisions of the bills, do feel that the Federal aid programs have been instrumental and a vast improvement in the general living conditions and the development of our cities. We are grateful, and I stand ready to answer questions. Senator MuSKID. Thank you very much, Mr. Potthoff. This is a very useful and helpful statement. I am sorry we do not have the time to hear any more, because I have another appointment at 12 that I must keep. But I think that your statement has anticipated most of the ç~uestions that I might be likely to ask, and if other questions occur to as we will submit them to you, and trust that you may find the oppor.. ~unity to respond. Mr. POTTHO]~P. I will be most happy to do so. Senator MusKI1~. Thank you very much. I appreciate the cooperation of our next and last witness of the normng, Mr. William L. Rafsky, president of NAHRO, and execu.. ;ive vice president of the Old Philadeiphis Development Corp. I inderstand that because of the pressure of the Committee's time he is villing to come on Thursday morning at 9:45 to be our first witness. Mr. RAFSKY. Yes. Senator MUSKIE. We will be delighted to receive your statement this aorning. Mr. RArsKY. I would like to enter it into the record if I may, then. Senator MuSKIE. It will be included this morning, and perhaps on rhursday you might summarize it briefly, as a preface to a question )eriod. PAGENO="0232" 226 (The complete prepared statement of William L. Rafsky, above referred to, follows:) STATEMENT OF WILLIAM L. RAr5I~Y, PRESIDENT, NATIONAL ASSOCIATION OF HOUsING AND REDEVELOPMENT OFFICIALS Mr. Chairman and members of the Subcommittee', I am William L. Rafsky, executive vice president, Old Philadelphia Development Corporation and presi- dent of the National As~ociation of Housing and Redevelopment Officials. It is a privilege to appear before you today as spokesman for the members of NAHRO who are, as you know, the administrators of the programs in which the sub- committee has particular interest-the agencies and individuals responsible for executing the nation's low-income ~ouslng, renewal and housing codes programs. Our Association has been in existence for 35 years; it currently represents about 6,000 local, state ~nd federal officials In some 2,500 localities. Mr. Chairman, NAHRO is pleased to have the opportunity to present its views on the two bills pending before you-S. 698, the Intei~governmental Cooperation Act of 1968 and S. 2981, the Joint Funding Simplification Act of 1968. We recog- nize that 5. 698 is the result of the intensive and lm~ortant work which this Subcommittee has undertaken in the past two years. We comnlend both the chair- man and the subcommittee for the attention which it has given in the hearings on Creative Federalism and !ts other deliberations on the important iss~es in- volved In the administration of federally-aided assistance programs; and in particular, important Intergoverfimental questions. NAHRO is in general support of both of the ujeasures pending before you. We intend to give more detailed comment in regard to some of the provisions, in particular on two titles of S. 698 (Title VIII, the Uniform' Relocation Amendment, and title I~, the Uniform Land AcqtiisitiOn Policy). At the same time, Mr. Chairman, because this is the first opportunity ~vhich NAHRO has had to testify personally before this subcommittee in some time, I would like to bring attention to a concern which our Assoelation raised recently before the Subcommittee on Housing and Urban Affairs of the ~Onate. Phi~ i~ the issue of local responsibility ahd Initiative in carrying-out federally-asti~ted pro- grams and the need to strengthen .the capacity of all local agencies to undertake effectively the important urban functions which are their true responsibility. We believe that it is an integral part of the' intergovernmental realtions question to recognize fully the looal role iii federal assistance programs. In this connection, and without taking muore `of the subcommittee's time, I wotild like to file for the record a copy of the recent remarks which I made on this subject before the Subcommittee on Housing and~ Urban 4~ffairs, We hope that we will have a further opportunity to present our views on this' question to the Subcommittee~ Now, I would like to present some general views oh t'he titles contained in th~ bills pending before you. First, let me say that while most of the provisions of this Act relate to inter governmental relations between the Federal government, States and localities there is need to recognize the growing relationships between State governments particularly in concentrated urban ~reCs. This trend is recognized in section 401(b) of S. 698, but we would hope that the subcommittee might conSider th interstate relationship In response to other titles of `S. 698-hi order to facilitat.~ the effective use of federal assistance. A leadership role in this area by th( Federal government could dO much to prevent potential cooperation becomin~ bogged down in constitutional difficulties by encouraging flexible action b~ metropolitan entities. Title II.-NAHRO is in general support of title II, because it recognizes th important role of the State governments in the area of urban assistance and w hope to work cooperatively in a more intensive manner with state government' in terms of developing the state-local relationships which are essential to th effective use of all grant-in-aid programs. Title III.-NAHRO also strongly supports title III whirh would permi't Federa departments t'o provide technical assistance to State and local units of govern mont. Certainly we recognize that the specialized and technical capacities a federal agencies are an important asset to state and local governments i carrying-out assistance programs; we welcome such assistance. At the same tim we hope that it will be fully recognized that appropriate as'sistance must b provided to enable state and local agencies to extend and expand their ow technical and specialized competence. PAGENO="0233" 227 Title IV.-Our Association is in support of the objectives of title IV which )rovide that llnporUu~t urban development programs, Including those programs ~ost related to urban growth (such as open space land, hospitals, libraries, Lirports, water and sewer facilities, land conservatiob, and other important )ubhc works) will be effectively related to local programs and comprehensive Lrban planning. This title is complementary to the planning assistance programs `urrently before the Congress and in S. 3029, the I]~ousiug and Urban Develop- cent Act qf 1968. The provisions under title VI of S. 3029 provide for extending danning assistance into urbanized districts. Certainly, both of these are im- ortant steps toward a c~orrection of urban sprawl and toward the development f well-balanced communities in total metropolitan settings. Title V.-NAHRO supports the concept that there should be a systematic review of federally-assisted programs by the Congress, with the view of ipdating these grant-in-aid programs, eliminating duplication and making hem more effective. At the same time, we would like to make one specific uggestion. Under section 503, we suggest that in the studies of grant-in-aid rograms, conducted by the substantive committees in the Senate and the louse, specific indication be given in the statute that these studies will include onsultation with and recommendations by state and local agencies which are he recipients of this assistance. Title T~I.-This title of 5. 698 and S. 2981, the Joint Funding and Simplification ~ct, both address themselves to the important question of how the present xtensive number of grant-in-aid programs can be consolidated and better ad- ainistered. We recognize the need and applaud this objective. In approaching his question, we recognize, that the Department of Housing and Urban Develop- cent already has important powers, under the direction of the President, to oo:rdinate federal activities affecting housing an~1 urban devlopment. We see be present bills before the subcommittee as further extending these powers, inder the President's direction. We also recognize that there will be a period f adjustment to any new administrative arrangement at federal, state, and ocal levels. In fact, we see 5. 2981 as an important bill in that it would provide n "interim method" to move into better coordination, without the necessity to ump to the full consolidation of grant-in-aid programs which is indicated in itle VI. At the same time, we would support the title Vi provision to accommo- Late those programs and areas which are ready to move to a full con~olidation. Ve would suggest a possible alteration in language in connection with section 02 (a) (1)-it may be too restrictive to expect that all consolidation can take lace in a single agency. It may be appropriate and necessary in some instances o recognize that joint administration by wore than one agency is the best dwinistrative solution. The subcommittee may wish to consider some easing I this requirement. Mr. Chairman, as we approve the efforts at the federal level to provide for more coordinated approach to the administration of federally-assisted pro- `rams, we recognize that there is a complementary development in the coordi- Lation of urban dev~lopment programs at the local level. While the Association s not prepared at this time to spell out in full how we see the intermeshing of onsolidated grant programs at the federal and state levels with the adininistra- ion at the local level, it is our Intention to use the instrument of the proposed ntergovernmental Cooperation Act as a basis to explore thIs relationship. t is our hope that this can be accomplished within the basic understanding hat the responsibility and initiative for these programs resides at the local ~vel. Title VII.-NAHRO supports this title which would provide for giving reason- No notice to general local governments of the Federal government's intent o acquire, use or dispose of land. There have been instances in the past where he failure to work cooperatively in such matters has perpetuated land uses riconsistent with local efforts to carry out comprehensive planning. This Title an important tool to prevent such occurrences. Title VIII.-NAHRO reaffirms its strong support for uniform relocation assist- nce and the objectives of title VIII of this bill. We make this statement ased on the direct experience of the local relocation personnel who are aembers of our Association and charged with the day-to-day operation of elocation assistance programs covering urban renewal, public housing and ousing codes enforcement, as well as the growing number of centralized local elcoation operations covering all public displacement activity. Their experience learly indicates a strong need to make uniform payments and assistance PAGENO="0234" 228 avaliable for all public displacement. Daily, they encounter situations of "unequal treatment" because families are displaced by different public programs and receive different levels of assistance. It is difficult to explain to a displaced family why it must receive fewer benefits because the public program causing the displacement is different. We commend the sponsors of this bill in seeking to end this unfair treatment. Mr. Chairman, we are at a new stage in the evolution of knowledge and experience about the impact and approach to relocation-because of the leadership role in the urban renewal program since 1949. NAHRO is in the process of studying and evaluating this experience, with the view of presenting detailed recommendations to the Congress and to the Administration on changes and adjustments which should be made in relocation policy and administration to meet relocation needs as we see them at the local level. In our study effort, we will shortly Complete a four-year study aimed at estimating the impact of relocation on the elderly, ~n cooperation with the University of Pennsylvania. We will also shortly complete two additional studies-one on the 10-year relocation experience in New Haven, Connecticut and another, a survey of current centralized relocation operations in 11 cities. A full listing of these study reports is attached to our testimony and we request that it be included in the record. In addition to our study effort, we are convening a workshop of relocation practioners from throughout the nation in Washington at the end of this week (May 16-47) to provide an opportunity to assemble their cumulative advice and counsel on the present status of relocation practice and ways to improve it. Pending completion and evaluation of these studies and meetings, we would like to `respond to the specific provisions of title 17111 from the viewpoint of our present experience. At the same time, we request that if any additional re~ommendations on title VIII should result from the May 16-17 meeting of relocation personnel, we may file them for the record before the close of the hearings. NAHRO would also like to make very clear that it strongly supports the move toward a uniform relocation system, and we would not want any of the specific recommendations which follow to detract from this central goal. Here are our specific recommendations on title VIII. $ection 802(c) (3) and 807(a) (2) We do not believe that under item (3) of section 802(c), providing an addi- tional payment of $300 if the displaced person purchases a dwelling within one year after displacement, is adequate. We favor a provision that any displaced homeowner who cannot afford to pttrchase comparable housing in a new location (utilizing the sale price from his property as a down payment and `spending 20 percent of his income for housing) be eligible to receive a flat additional payment to supplement his down payment and bring monthly housing costs within his reach. In consideration of this additional grant, the public agency would hold a lien on his property payable when the ownership of the property is transferred. More details on this amendment are attached to this testimony. We further propose that any displaced renter household wishing to purchase a home be given special priority treatment under the home ownership assistance programs of the Federal government. Under our comments on title IX, we have a further suggestion about compensa- tion to home owners displaced by public action-a concept based on "hardship," rather than "market value." section 805(a) (2) (B) and 807(a) (1) Phe moving expense allowance provided under this section does not provide for direct loss of property by either an individual family or a business. We believe that such a loss should be compensated as is now provided under Section 114 of the Housing Act of 1949. $ection 802(e) and 807(a) (2) We do not favor the continuation of the relocation adjustment payment (RAP) as it is currently constituted under the Housing Act, or as it is contained under title VIII of `this pending bill. Nor, do we believe that the dislocation allowance up to $100, as provided under section 802(c) (2) is adequate. Our experience with the RAP in practice is that it is administratively cumbersome and that it is inequitable. As an indication of the experience with RAP payment, we would like to file for the Record an article from the Journal of Housing (JOH No. 10, PAGENO="0235" 229 1967). We would favor the replacement of the relocation adjustment payment as it is currently constituted and the substitution ~f a flat relocation adjustment payment by size of household (in addition to moving costs) which would be available to all those displaced and which would compensate for all the extra expenses atid personal adjustments which result from any move in location. We would recommend also that any displaced family be given priority for any of the housing assistance programs of the federal government; and that his priority be spelled out in the Statute. We further suggest that additional funding be provided for the Section 23 Leasing Program administered by the Housing Assistance Administration to accommodate a supplementation of rents for dis- placed families in existing housing. We believe that the Section 23 Leasing Program is a much more adequate vehicle for rent assistance than the relocation adjustment payment; and this assistance can continue as long as the housing need continues. The use of the section 23 program might be further enhanced if the lease term was extended from 5 to 10 years, permitting the higher degree of rehabilitation. (Detail on the proposed RAP payment is attached.) We. will have additional recommendation relating to the payments for home owners and businessmen displaced by urban renewal or public housing in our comments on title IX. Title IX.-NAIIRO strongly supports a uniform land acquisition policy for all federal and federally-aided programs. We are in general accord with the pro- visions of this Title. As in the case of relocation, however, we believe there is a need for a complete review of land acquisition experience under federally-aided programs and in particular, the administrative regulations based on the statutory requirements. During the last month, our Association has made a specific recom- mendation to the Secretary of Housing and Urban Development relative to the payment for properties taken from low-income families for urban renewal and public housing. We have recommended that when properties owned by home owners and small businessmen are acquired for urban renewal or public housing, that the top appraisal figure, of the two independently made appraisals required, be given automatically. In many local instances, such a practice is already fol- lowed and NAHRO believes it is only equitable that such a practice be extended to cover all such displacement. Since there is some question as to the authority of the Secretary to issue such an administrative regulation, we request that consideration be given to adding such a provision to either title VIII or title IX of S. 698, or indicating approval for such an administrative determination, in the Committee report. We would al~ suggest that the subcommittee consider the feasibility of apply- ing nationally a procedure recently adopted by the Maryland legislature which provides for payment of additional compensation, above "fair market" value, for certain owner-occupants of properties acquired by eminent domain. We are attaching `to our testimony a copy of this Act of the State of Maryland. As in the case of our detailed recommendations on title VIII (Uniform Relocation), we hope that these recommendations on title IX (Uniform Land Acquisition), will not be interpreted as detracting from `the central goal of achieving uniform policies and procedures in these areas-a goal which we strongly support. Mr. Chairman, we greatly appreciate the opportunity to present our views to this subcommittee. EXHIBIT 1 NAHRO TESTIMONY BEFORE THE SUBCOMMITTEE ON HOUSING AND URBAN AFFAIRS OF THE U.S. SENATE, MARCH 12, 1968 NAHRO sees the need for a new concept and mechanism that will make local initiative and responsibility truly possible, and asks for joint deliberations by the Association, the Department of HUD, and the Congress to develop such a new approach. In `the meantime, it specifically requests the Congress to reaffirm the principle of local initiative and responsibility. My full statement is perhaps the most detailed public response NAHRO has ever made to a housing and urban development bill. We are firmly in support of the proposed Housing and Urban Development Act of 1968. Yet, at the specific direction of `the NAHRO Board of Governors, which met `in Washington just two weeks ago, I must express to you our belief that none of this promising activity can be effectively moved forward unless there is a new PAGENO="0236" 230 understanding abo~it the placing of initiative and responsibility at the local level. Over the past year, the members of our AssOciation have been increasingly concerned about the number of important national policies and procedures relat- ing to our programs that have been issued without prior opportunity for local officials to make suggestions and comments. These omissions have covered a wide range cxf issues, including the "urban goals" policy; property management and land negotiation procedures in the urban renewal program; and the site selection, tenant assignment, and priority production procedures in the public housing program. This matter is of such serious concern that our Program Policy Resolution for 1967-69, adopted by the full membership of our Association last October, expressed ". . . dismay and frustration . . . over the fact that a full measure of responsibility is not vested in local agencies . . ." and suggested that a first order of business for HUD should be ". . . the granting to local communities of a full measure of initiative and responsibility, in accordance with the declaration of purpose of the Rousing Act of 1959." N~HRO recognizes that there are important, critical matters related to national policy that are the proper concern of the Department of Housing and Urban Development at the federal level. But the full impact of national policy decisions can only be measured accurately at the local level. The difficulty concerns no indjviduals or officials at either the federal or local level-the fault lies in the present method under which national and local goals are established, and the inadequate mechanism that we now use to join them in a common program effort. The present system of detailed federal reviews of local operations breeds delays and frustrations. We need a new concept and a new mechanism that will make local initiative and responsibility truly possible, while recognizing the proper interest of federal government in program goals and the allocation of national resources. Mr. Chairman, NAHRO realizes that it has an important responsibility in making recommendations that will help to establish the new concept and mecha- nism for the federal-local relationship. We are presently preparing a report that defines more fully our concept of local housing and urban development goals and a balanced local community development program. We hope we will have an opportunity to present this report to the Congress, as well as to undertake intensive discussions with the Department of HUD. In the meantime, we specifi- cally request that the subcommittee include in its report a reaffirmation of the principle of local initiative and responsibility. ExHIBIT 2 NAHRO Psoposun AMENDMENTS ON RELOCATION: 1968 TEsTIMONY 1. Change of relocation adjustment payment to a fiat payment for all displaced families-The system of relocation adjustment payments authorized by section 114 of the Housing Act of 1964 provides for payments of up to $500 to assist a displaced family in paying for the first 12-month period in its new housing, providing it c:annot afford standard housing by expend~ing 20 percent of its income for rent. In practice, this provision bias proven c,ormplex, as well as dif- ficult to administer in a complete equitable manner. In addition, it covers reim- bursemenit for housing expenses only and thea only for a 12-month period. NAHRO recommends that the local public agency be authorized to use, as an option, a Relocation Adjusiment Payment as a fiat paymept, based on' family size, and available to all displaced families to cover the unavoidable expense and distress involved in shifting housing location, in addition to moving ex- penses. We Would recommend the following fiat payments: 1-3 persons-$200; 4-~6 persons-$300; 7 or more personn-$500. 2. Assistance to displaced homeowners where the price paid for their piroperty does not permit them to purchase comparable housing in a new location-Ex- perience in reloication of families displaced by public activity has shown that there are many hardship cases which concern home owners, many of them eld- erly, who cannot afford to purchase comparable housing in a new location. The inequity occurs because the sum which they are paid for their property in the clearance area is not sufficient for a down-payment on comparable housing, with the resulting monthly cost still within their incomes. NAHRO propose~s that in all cases where displaced home owners cannot purchase comparable housing PAGENO="0237" ~31 in a new location (utilizing the sale price from his property as a down payment and meeting resulting monthly housing costs within 20 percent of his income) that a flat additional grant be made to supplement his down payment to a point sufficient to bring the monthly housing costs within his' reach. in consideration of this additional grant, the local public agency would hold a lien on his property, payable when `the ownership of the property is transferred. EXHIBIT 3 NAHRO STualus ON RIrLOCATION: 1964-68 I. The University of Pennsylvania in cooperation with NAHRO (1964-68.) Relocation of Elderly Persons Demonstrations and Research under a grant from the Ford Foundation. a. Essays on the Problems Faced in the Relocation of Elderly Persons, NAHRO and the Institute for Urban Studies, University of Penn- sylvania, 137 pp., June, 196~, Second Edition, Jaiiuiary, 1964. b. The Elderly in Older Urban Areas, Problems of Ada~ption and the Effects of Relocation, by Paul L. Niebatiwk with the assistance of John B. Pope, Institute for Environment Studies, University of Pennsylvania, 174 pp., 1965. c. Reports on Local Demonstrations 1. Relocating the Dispossessed Elderly-A Study of Mevican- Americans (San Antonio, Texas) by Julie M. Reich, Michael A. Stegman and Nancy W. Stegman, 136 pp., February, 1966. 2. Preparing the Elderly for Relocation, A Study of Isolated Person (San Francisco, Oalifornia) `by Wallace F. Smith, 104, pp., September, 1966. 3. The Social Functioning of the Dislodged Elderly, A Study of Post-Relocation Assistance by David Joyce, Robert R. Mayer and Mary K. Nenno, 89 pp., December, 1966, Provi- dence, Rhode Island. 4. Operation Janus, Serving the Elderly in the Process of Re- location (New York Oity), 1968 (in final stage of publi- cation). d. Relocation: From Obstacle to Opportunity in Urban Planning, Uni- versity of Penn~ylvania Press, 150 pp., July, 1968. [I. NAHRO Studies Under a Section 314(b) Grant from the Department of Housing and Urban Development (1967-68) 1. Relocation Becomes a Progra'm in New Haven, A History and Analysis of Enloc'ation Experience from 1956-67, by Alvin A. Mer- mm (in final review stage). 2. The Moving Picture: A Survey of Centralized Municipal Relocation Services, by Robert P. Groberg (in final review stage). EXHIBIT 4 RELOCATION ADJUSTMENT PAYMENTS (A case-study of why local operating experience is needed in drafting legislation and formulating regulations) By Emanuel Gorland, Director, Office of Community Improvement. Department of Urban Renewal and Lincoln Park Housing Commission, LincOln Park, Michigan. By taking a particular piece of legislation-in this case Section 114(e) (2) of the Housteg Act of 1949 as amended~Mr. Gorland shows bow the intent of a law can be thwarted when the law is drafted and implemented by persons who are often unfamiliar with the problems of the local public agencies that must administer it. A relocated site occupant, whom we shall call Mrs. Smith, recently visited the Office of C~mmunity Improvement to find out when she would be receiving her $500 relocation payment. Upon checking her case records, we advised that PAGENO="0238" 232 nothing further was due and that all eligible moving expenses had been paid. She then complained that a former neighbor couple (we will call them the Browns) received, in addition to moving expenses, a check for $500. We tried to explain to Mrs. Smith that, because the Browns were now pri- marily supported by social security, while her husband was still employed, and, because of the difference in their respective incomes, the Browns were entitled to the relocation adjustment payment but she was not. Mrs. Smith protested, however, that the Browns were far better off financially than she and her husband. The Browns bad money in the bank, lived well, and had previously owned th~ir home free and clear. Furthermore, when the city purchased their home, they bought a better one, also free `and clear of any mortgage. "On the other hand," protested Mrs. Smith, "we were never able to afford ev~u the down- payment on a home. If the purpose of the relocation adjustment payment was to help meet the motithly payments for decent housing, we need it a lot more. The Browns have practically nothing to pay each month, yet they r~ceivod a large cash amount and we get nothing. It's not fair." We feebly explained that we were only administering the laws and regulations as they were written. This was not our first complaint concerning relocation ad- justment payments. And administrators and relocation personnel in many other communi't&es~ report slmilar problems. THE LEGISLATION Relocation adjustment payments were authorized by Section 114(c) (2) of a 1964 amendment to the Housing Act of 1949. The original purpose of the pay- ment, as proposed by President Johnson, was to provide a rent supplement to low-income families and elderly individuals who were unable to obtain facilities in public housing and who were unable to relocate into decent, safe, and sanitary housing at a price they could afford. It was based on the concept that such persons could generally afford 20 percent of their income for rent, leaving them in need of some financial assistance to obtain the desired housing. The intent of the payment was commendable * * * but the resulting legislation was so poorly drawn that it constantly plagues local administrators. Each year, various individuals, organizations, government agencies, and Con- gress study and p~opose `amendments to the 1949 Housing Act. Prior to adoption, there are lengthy hearings by Senate and House committees, which are followed by legislative haggling and compromise. Oftimes, the resulting law that emerges from these processes is vastly different from that originally proposed. Section 114(c) (2) of the act provides that: "A local public agency may pay [in addition to reasonable moving expenses], on behalf of any displaced family or any displaced individual sixty4wo 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 sani- tary 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 stand~ ards 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 pay- ment 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 Adminis- trator 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 sixty-two years of age or over, dis- placed on or after January 27, 1964." FORMULATINO REGULATIONS Although the amendment was signed by the President on September 3, 1964, it took almost five months for the Housing and Home Finance Agency to formu- late the necessary policies and requirements, released as Local Public Agency Letter 321 on January 13, 1965. The issuance of this LPA Letter, titled "Relocation Adjustment Payments and Small Business Displacement Payments," followed regional conferences held by HHFA. with local administrators and technicians in order to obtain their view- points and recommendations. This was one of the few instances that local agency personnel were asked for their opinions concerning pending regulations. PAGENO="0239" 233 Several supplementary LPA Letters have been issued concerning relocation adjustment payments. In addition to LPA. Letter 321, still in effect are LPA Letters 323, 326, 331, 350, 362, and 363, Although IIHFA generally did a com- mendable job of formulating procedures, some of the regulations it adopted have compounded the problem. The major objection to Section 114(c) (2) is the provision that a local public agency may pay "during the first five months [emphasis added] after displace- ment, a relocation adjustment payment, not to exceed $500 * * ~" In the very next sentence, however, the section provides that the "payment shall be an amount which when added to 20 per centum of the annual income of the displaced indi- vidual or family, at the time of displacement, equals the average rental required for a "12-month period" [emphasis added]. Because the time periods in the two sentences quoted above differ, HHFA, in formulating its regulations, required that, instead of a supplement payment, the full amoun't of the displacee's rent be paid each month up to five months. If any further amount was due, a cash payment of the balance would be made to the displacee. If, however, the amount due the displacee was less than adequate to cover the rent for the entire five month period, then the full rent would be paid each month until the total amount of the readjustment payment was used up. For example, if a displacee was entitled to the maximum $500 payment and was paying a contract rent of $70 per month, his full rent would be paid by the local public agency for five months. Thereafter, he would be entitled to a single cash payment of $150. If another displacee was entitled to $400 and was paying a eontract `rent of $100 per month, the full rent would be paid only f~r four month's and he would receive `nothing thereafter. As a result of this regulation, the displacees are not required to use any of their own money for rent while relocation adjustment payments are being made. In many cases, they utilize `the money they would normally use for rent, together with any cash payments due them after the five month period, to indulge in un- accustomed luxuries or to purchase such things as a new color TV set. Thus the regulation defeats the intent of the act, i.e., that the money be used "to assist these people to accommodate themselves to their greater housing costs." During the period these payments are made, few save the 20 percent of their income they are presumed to afford for rent. After the payments cease, the full contract rent often becomes a heavy burden on the tenant. How I~ HAPPENED Rent supplementation was bitterly opposed by certain forces inside and out- side of Congress. The new phrase "relocation adjustment payment" was born, in fact, to neutralize the bitter attitudes towards rent supplement payments. It was one of several terms considered. On page 3 of LPA Letter 307, dated September 16, 1964, explaining what the 1964 housing act provided, the term "rehousing assist- ance payment" was used-then, in LPA Letter 321, dated January 13, 1965, the payments became "relocation adjustments." Using a different term to convey the same meaning is' not an unusual legisla- tive tactic. The Wall street Journal has noted that picking a "right title can smooth a bill's path in Congress. * * * Picking a righteous sounding name like `truth-in-lending' for a controversial bill * * * can be an effective ploy * * * Last year's Demonstration Citk~s Act for `rehabilitating slums won grudging Congressional approval, but some lawmakers complained the name made voters think the Government wanted to encourage riots. Now the name has been changed to `Model Cities.' * * ~ The terminology notwithstanding, certain elements in Congress were still opposed to what amounted to a rent supplement. In any case, by whatever name, there were differences of opinion as to the period over which payments were to be made. The President recommended a two-year period. The Senate substantially adopted the President's recommendations on read- justment payments for relocatees but reduced the time period of the benefits from two years to one year. The bill, as originally adopted by the House of Representatives, provided for payment "to or on behalf of any indiivciual or family the monthly rental (or mortgage payment) required for the dwelling accommodation in which such individual or family is relocated during the first three mouths (after displacement) fo'r which such rental or payment is due. * * *" A $200 limit on the total amount of the payments was also contained in the House version. Due to the differences in the Senate and House provisions, the bill was referred back to a Senate-House conference committee. The conference report recom- PAGENO="0240" 234 mended, and Congress adopted, the Senate's one-year provision and the Ad- ministration's recommended payment formuia, based upon 20 percent of the recipient's income, but provided that the full amount be paid in five months, with a $500 limit in the total payment. Although both bills contained major defects or omiSsions, the Senate version had the advantage of providing a true rent supplement, based on need, whereas the House version provided merely a bonus for moving to everyone, irrespective of need. Nevertheless, if either version, rather than the compromise, had been adopted, the administration of the payments would have been greately simplified. ShORTCOMINGS Among the shortcomings in Section 114(c) (2), as adopted, is the fact that no provision is made for asset limitation in determining the eligibility of a clisplacee. Theoretically, a person or family could have extensive property or assets, such as jewelry, real estate, or even a million dollars cash in a bank vault. Yet if their actual verified income is low, they would qualify for the relocation adjust- ment payment. Another provision of the section requires that in order to qualify for such payment, the displacee shall be unable to secure a dwelling unit in a low-rent housing project. Such projects have asset limitatioti pOlièies that muy disqualify otherwise eligible persons if their assets exceed a ~e~rtain sum. B~ being rejected for public housing, such persons would immediately qualify for the relocation ad- justment payment. Another fallacy of Section 114 (c) (2) is that it fails to take cognizance of the a~tual rent that the displacee pays in the computation of the amount due him. It requires that the local public agency determine the average rental required in the community for the size of unit necessary to house the elderly individual or a family consisting of a certain number of persons. For example, if the local public agency determined the average rental for a two-bedroom apartment of modest standards to be $100 per month in the particular community, but the eligible displacer obtained an apartment to meet all requirements at $80 per month, his payment would still be determined on the $100 basis. Another apparent oversight in this section is the failure to differentiate be- tween the eligibility of an owner or tenant. If a family or an elderly person has adequate assets to buy a good standard home free and clear of a mortgage, with sufficient income to afford the necssary payments for taxes and other expenses within the 20 percent of income criteria, they would still qualify for the reloca- tion adjustment payment. The payment would also be determined by the average rental criteria, except that they would recive the full amount in a lump sum. In many instances elderly persons choose to move in with children or other family members who are financially able to care for them. Under such (ondi- tions, even if the eligible relocatee is not required to pay a cent for his care, he would still be entitled to the full relocation adjustment payment, in a lump sum. Section 114(c) (2) states "a local public agency may pay * * * a relocation payment * * * to assist such displaced individual and family to acquire a decent, safe, and sanitary dtvelling." In interpreting this section, HHFA and its successor, the Departmentof Housing and Urban Development, seem to have ignored the fact that the section says "may" rather than "shall" and that its purpose is to "assist" in acquiring decent facilities. In the two preceding in- stances, it is questionable whether such lump slim payments were intelided within the meaning of the act or in any way "assist" in relocating the recipients in decent housing. The detailed regulations adopted by HHFA leave little, if any discretion to the local pilhlie agency in determining eligibility. It is interesting to note that according to the rules and regulations promul- gated by the HHFA, every eligible low-income family and elderly individual who move from a renewal project area any time after the signing of a loan and grant contract or HUD concurrence in project `execution activities are entitled to a relocation adjustment payment. There is no requirement for length of prior tenancy within the project area. A low-income family could purposely move into the project area just before this period with full knowledge that they would have to move shortly thereafter and with full knowledge that they would receive these benefits. An elderly dere- lict, for instance, could move into a $1 a day fiophouse jlist before this period and then relocate shortly the1~eafter to an efficiency apartment `with all stand~ird housekeeping facilities. He would have his full rent paid for five mouths and also receive a cash payment. Furthermore, the local public agency would be PAGENO="0241" 235 obliged to attempt to locate such persons if they m&ved without knowledge of the local agency and without claiming such benefits. It is also interesting to note that at the same time the 1964 housing act was providing a relocation adjustment payment for eligible low-income faniilie~ and individuals 62 years of age and over, Congress also revised Section 105 (c) of the 1949 housing act by ~dacing upon the local public agency the burden and respansibility of relocating all individuals as ~vell as `families. However, no pro- vision was made for such financial assistance to individuals under 62 years of age, who because of physical disability or other factors, were equally in need of such help. CONCLTJ5ION The foregoing is a ç~ritical analysis of but one subsection of the 1949 housing act. At the same time that HUD studies and recommends the enactment o,f the new amendments to the act and other pertinent legislation, it `should also recommend correction of past legislation that has created unforeseen inequities or adminis- trative problems. Coupled with such review of existing laws, HUD should undertake a sys- tematic review of its regulations and procedures. These are presently contained in the three volumes of the Urban Renewal Manual, local public agency letters, re- gional agency letters, technical guides, etc. Any local administrator can attest to the many problems created by the lack of a central index for such material. The apparent purpose of the LPA Letters was that they be used as an ad- vance notice of changes in regulations or procedures, until such time as they could be printed and incorporated into the Urban Renewal Manual. Many of the LPA Letters are drafted by HUD technicians, who may have little or no ex- perience at the local agency level. Very often, other LPA Letters are required to revise, supplement, or replace previously issued letters. This only adds to the confusion. To minimize this problem, drafts of proposed LPA Letters should be sent to selected local agencies and/or NAHRO liaison committees for review and com- ments prior to official release. Another constructive measure on the part of HUD would he the establishment of a target period, not to exceed six months, for the incorporation of any new LPA Letters into the Urban Renewal Manual or the development of new manuals similar to those utilized for the public housing program. Because the administration of an urban renewal program is a complex under- taking, the sooner necessary measures are taken to simplify the procedures and improve adnilnistration of the program, the sooner the program will be accepted by the affected people as a vital necessity in our cities and towns. ExIT IBIT 5, SENATE or MARYLAND, No. 365 BY SENATOR BERTORELLI, FINANCE (By Request) BY TIlE SENATE, PEBRTJAiIY 16, 1968. INTRODUcED, READ FIRST TIME AND REFERRED TO TIlE COMMITTEE ON FINANcE-~BY ORDER, J. WATERS PARRISH, SECRETARY Senate Bill No. 365 AN ACT to add new Section 6A to Article 33A of the Annotated Code of Maryland (1967 Replacement Volume), title "Eminent Domain," to follow immediately after Section 6 thereof, requiring a condemner in certain specified situations to pay to owner-occuipants of single and two-family dwellings, in addition to fair market value, additional compenisation not exceeding five' thousand dollars ($5,000.00) Whereas, the undertaking of public projects in residential areas has forced numerous owner-occupants to relocate; and Whereas, studies have revealed that in acquiring comparable decent, safe and sanitary dwellings, displaced persons, particularly persons of low and mod- erate income, have often been required to' expend considerably more money than received from the condemning authority for their condemned property; and Whereas, such owner-occupants have thereby sustained serious financial loss; and Whereas, the financial loss suffered by such owner-occupants often has been due to the progressive deterioration of the neighborhoods in which they reside, rather than the condition of their own dwellings; and Whereas, such owner-occupants have thus been hindered in acquiring decent, safe and sanitary dwellings; and 95-626-68----46 PAGENO="0242" 236 Whereas, it is in the public interest to facilitate owner-occupants of dwellings taken for public purposes to relocate themselves as owner-occupants of decent, safe and sanitary dwellings; and Whereas, the payment of additional compensation to owner-occupants of dwell- ings taken for public purposes would facilitate the relocation of such persons as owner-occupants of decent, safe and sanitary dwellings. SECTION 1. Be it enacted by the General Assembly of Maryland, That new Section 6A be and it is hereby added to Article 33A of the Annotated Code of Maryland (1967 Replacement Volume), title "Eminent Domain," to follow im- mediately after Section 6 thereof and to read as follows: (1) In the taking of any property which is improved by a single or two family dwelling occupied by its owner, in addition to fair market value of his property, the owner-occupant shall be entitled to receive additional compensation equal to the difference, if any, between the average costs, within the same political subdivision, of a decent, safe and sanitary dwelling generally comparable in size to the dwelling being taken, and the fair market value of the dwelling being taken; provided that such~ additional compensation shall not ea,eeed five thousand dollars ($5,000,000) for any such property; and provided, further, that such additional compensation shall not be paid unless the owner of said building was the owner and occupant thereof for not less than one (1) year immediately prior to the effective date of legislative authority for the acquisition of such dwelling and conti~med as an owner-occupant until commencement of negotia- tions for the acquisition of properties in the project area and moved beuanse of the threatened acquisition of said dwelling. For the purposes of this section, the leasehold owner of a `property subject to a redeemable or irredeemable ground rent shall be considered to be the owner of the property. (~) The appropriate condemning authority shall adopt rules and regulations for the implementation of the provisions of this section. such rules and regula-~ tions may include a schedule containing a sliding scale correlating fair market values of dwellings to be acquired with specific amounts reasonably necessary to allow owner-occupants to acquire decent, safe and sanitary dwellings gen- erally comparable in size to the dwellings being taken, as provided in this section. Sac. 2. And be it further enacted, That this Act shall take effect June 1, 1968. Mr. RAFSKY. I will be delighted to do that, and if we could have the opportunity to submit other statements at a later time, we would `appreciate that as well. Senator MtrsluE. That will be `agreeable to the committee, and may I say I do appreciate your cooperation. I have just run out of my time this morning. Mr. RAF5KY. Very happy to do so. Senator MusKIJ~. Thank you. The committee i's adjourned until tomorrow morning `at 10 `o'clock. (Whereupon, at 12:05 p.m., the committee adjourned, to recon- vene on Wednesday, May 15, 1968, at 10 a.m.) PAGENO="0243" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION WEDNESDAY, NAY 15, 1968 U.S. SENATE, SUCOMMITTEE ON INTERGOVERNMENTAL RELATIONS OF THE COMMITTEE ON GOVERNMENT OrEi~&TIoNs, Washington, D.C. The subcommittee met, pursuant to recess, at 10:05 a.m., in room 457, Old Senate Office Building, Senator Edmund S. Muskie (chair- man), presiding. Present: Senators Muskie, Democrat, of Maine, Baker, Republican, of Tennessee. Mr. REUTTER. Thank you, Senator. Staff members present: Charles M. Smith, ~taff director; Rcthert E. Berry, minority counsel; E. Winslow Turner, general counsel; Lucind'a T. Dennis, administrative secretary. Senator MUSKIE. The committee will be in order. Our first witness this morning is Mr. John G. Reutter, president of the National Society of Professional Engineers. It is a pleasure to welcome you here again this morning. TESTIMONY OP JOHN G. BEUTTER, PRESIDENT, NATIONAL SOCIETY OP PROFESSIONAL ENGINEERS, CONSULTING ENGII~EERS COUN- CIL; ACCOMPANIED BY BILLY T. SUMNER, REGIONAL VICE CHAIRMAN, PROFESSIONAL ENGINEERS IN PRIVATE PRACTICE, NATIONAL SOCIETY OP PROFESSIONAL ENGINEERS; AND JOHN PISHLR-SMIT~EI, CBAIRMAN, URBAN DESIGN COMMITTEE, AlA Senator MtTSKIE. I have to apologize for the condition of my voice; I have to `apologize for my spring cold. Mr. REUTTER. We are `appearing here as a panel, three organizations. I represent `a consulting council. The gentleman to my right, Mr. Sumner, represents the National Society of the Professional Engi- neers. And the architect on my left is John Fisher-Smith, ch'airrnan of the Urban Design thmmittee, American Institute of Architects. Senator MUSKIE. And you each have prepared statements ~ Mr. REUTTER. We each have separate testimony, that i's correct. My statement will `be first. Mr. Chairman and members of the subcommittee: My name in John Reutter. I am president of John G. Reutter Associates, a civil-munic- ipal-sanitary engineering firm located in `Camden, N.J. I am regis- tered both as a professional enginer and as a planner `and I `appear (237) PAGENO="0244" 238 before you today as president of the Consulting Engineers Council of the United States. Until this year, our council has been in an awkward position with re- gard to intergovernmental cooperation legislation. The owners, prin- cipals, and associates of our more than 2,000 member firms have long felt the need for better identification and coordination of the many and complex programs being conducted by Federal agencies in cooperation with local governrxiental bodies. At the same time, our members have been concerned that the technical assistance sections of such proposals might open the door for Federal agencies to provide special or tech- nical services in direct competition with private firms. Thus, we have generally endorsed the intent and objectives of the intergovernmental cooperation philosophy, but have opposed the sug- gestion that Federal agencies be authorized to render services of a com- peti~tiwe nature t~ local governmental units which are oftentimes our clients. We are pleased to note, however, that title III, section 302, of S. 698 attempts to assuage the concern of consulting engineers and others over the possibility of Federal competition. We particularly support the stipulation under `this title, that recipients of special or technical assistance will be required to reimburse the Federal Government for all computable direct and overhead costs in connection with the' performance of such services. Our members believe that communities, given the choice of purchasing services from public or private sources, will prefer to use local firms who are reasonably and expeditiously' available through ordinary business channels. We are, of course, assuming that the reference to "direct and over- head costs" includes all of the items set forth as costs in Bureau of the Budget Policy Memorandum A-46. In other words, local govern- ments ~vould reimburse the Federal Government for salaries, fringe benefits, materials, insurance, rent, Federal taxes, depreciation, utili- ties and similar standard expenses of any business operation. We be- lieve that incorporation of all such costs is just and proper and that collection of same is in the interest of both the Congress and the American taxpayer. We are further pleased by the proviso in title III, section 302, that the only special or technical services which may be provided to State and local units of government are those which have been approved by the Director of the Bureau of the Budget. While there is no indication of how such approval is to be obtained, we assume that the Bureau will issue guidelines which private industry will be given an opportii- nity to review and comment upon prior to adoption. This is implied in the reference to "rules and regulations (~vhich) shall be consistent with and in furtherance of the Government's policy of relying upon the private enterprise system." We hope this statement of intent will serve to prevent any activity such as we have experienced in the past, wherein Federal agency engineering staffs have competed directly with private firms for both private and public engineering assignments. Contradiction of the private enterprise philosophy is only one of several reasons why Government agency personnel should have no in- terest in duplicating services available from private sources. For ex- ample, there is pressing need for staff personnel to develop guidelines and procedures for improving administration and coordination of the various programs over which they have direct or related responsibility. PAGENO="0245" 239 Even President Johnson has pointed out the need for eliminating un- necessary red tape in Federal grant-in-aid, programs.. As recentiy as last October, the President publicly noted that many Federal agencies are taking much too long to process applications filed by state and local governments. Our council agrees. We think it is time that something be done to bring some order to the conduct of the various assistance programs, some of which are so ineptly handled that they have been cited by local public health officials as doing more harm than good. Legislation which once raised aspirations and aroused hopes of many citizens is now the source of grave disappointment. In just the water-sewer field alone, hundreds (perhaps even thou- sands) of applications have been in process for periods in excess of half a year. Rules and procedures for handling applications are still being finalized and standardized more than 2 years after the pro- grams have been implemented. Despite the knowledge that appropri- ated funds cannot possibly meet existing requests, local offices of some agencies continue to promote their respective programs and to solicit applications. Mayors and other local officials have termed the delays and constant procedural changes a "break of faith which produces frus- tration and impatience on the part of the very people the Government is trying to aid." The Intergovernmental Cooperation Act, with its proposed coordina- tion of policy in the administration of grants and loans for urban de- velopment, could be a valuable aid in correcting current difficulties. We particularly endorse the provisions of titles IV, V, and VI of S. 698 with regard to (1) establishment of rules and regulations for uniform evaluation and review of nrban development programs, (2) regular congressional review of the process of ongoing or expiring programs, and (3) Presidential authority to consolidate overlapping and dupli- cative programs within the same functional areas. In endorsing such review, however, we would like to suggest that the Congress and the executive branch establish a channel by which the comments and recomm~ndations of applicants and their agents may be included as an integral part of program studies. This sug- gestion is prompted by the misleading content of the September 1967 interagency report to the President. That report, entitled "Reducing Federal Grant-in-Aid Processing Time," was prepared by a joint administrative task force comprised of representatives of various par- ticipating Federal agencies. In our opinion, the report is more a reflection of desired improvements which agencies hope to achieve, than it is a summary of specific accomplishments. The President, on October 31, 1967, directed that certain of the im- provements stipulated in the task force report be carried through. There is real question as to whether the President's directive has, in fact, received total compliance. As an example, the report calls for standard guide documents for engineers. These have not been forth- coming and, in view of the complexities of individual projects, prob- ably should not be adopted except in a general form. In another in- stance, the report discusses elimination of repetitious information and requests for more data during preliminary review and rating processes. Yet communities which have already received gran.t clearance still suffer through time delays caused by Federal reinvestigation of certi- PAGENO="0246" 240 fication of previously approved local finance officers who are bonded custodians of public funds and are subject to State audit. Even city or county attorneys need to be recertified on each and every application. The interagency task report, under the section on "Results," notes that agencies are "revising internal processing procedures by eliminat- ing technical review in Washington." The facts of the matter are that a number of agencies still insist upon review of contract forms, appli- cations, or even construction plans by overloaded national staffs. So as to insure a completely objecthie review of the extent to which the purposes and activities of the Federal grant-in-aid programs are being carried out, we would recommend that the proposed (in S. 698) reports by the special congressional committees, General Accounting Office and Advisory Commission on Intergovernmental Relations, be supplemented with reports from local officials and their representatives regarding administration and impact of programs as viewed by re- cipients. We believe a far more accurate picture may result. In this connection, our council has been instrumental in bringing together construction, financing, engineering, planning, administra- *tive, and other interests concerned with improving the various water- sewer grant-in-aid programs to States and municipalities. This group of 28 associations, now known as the "Advisory Council on Federal Water-Sewer Programs," has maintained close and continued liaison with an interagency committee comprised of representatives of the De- partment of Housing and Urban Development, the Economic Develop- ment Administration, the Farmers Home Administration, and the Federal Water Pollution Control Administration. Together, these two groups-one representing the public, the other representing the agencies-have been striving to develop new forms, standardize plan- ning requirements, establish time limitations in processing, better define financial arrangements, tie down priority systems, speed up availability of accurate statistical information, and broaden systems compatibility. The success of this cooperation is reflected in a new standard form 101 as well as generalized terms and scope of services to be covered in three out of the four agencies' engineering agreements~ We believe this relationship could very well serve as a guide for in- corporating similar outside participation in reviews and studies which are recommended in 5.698. Finally, our council is pleased to support section 203 of title II of the Intergovernmental Cooperation Act calling for State handling of Federal grant-in-aid funds. We believe that Federal aid can be better managed at the State level for no other reason than the fact that it eliminates an unnecessary, and generally remote, step in the sequence of events which must occur in the evaluation and approval of any ap- plication. Certainly it makes sense that Federal aid be channeled through the States, rather than direct to localities, when the States (1) are providing at least half of the non-Federal share of the funds, and (2) possess the appropriate administrative machinery, as they do in State departments of public health or departments of urban re- development, to handle such programs. In summary, Consulting Engineers Council believes that a searching review of present Federal aid to local governments is badly needed and that further escalation of current methods and procedures can PAGENO="0247" 241 oniy result in further waste of public funds, growth of bureaucracy, and a weakening of the importance of local government. S. 698 and related bills represent a comprehensive and sincere plan for reducing and overcoming such problems, and we are, therefore, pleased to ex- tend to it our support and to recommend its adoption. We greatly appreciate this opportunity to present our views on this very important subject. We thank you. TESTIMONY OP BILLY T. SUMNER, REGIONAL VICE CHAIRMAN, PROFESSIONAL ENGINEERS IN PRIVATh PRACTICE, NATIONAL SOCIETY OF PROFESSIONAL ENGINEERS Mr. SUMNER. Mr. Chairman and members of the subcommittee, I greatly appreciate this opportunity to present the views of the Na- tional Society of Professional Engineers on 5. 698, the proposed Intergovernmental Cooperation Act. As Mr. Reutter, my colleague, stated, my name is Billy T. Sumner. I am a professional engineer, registered in six States, and a partner in the consulting engineering and planning firm of Barge, Waggoner & Sumner, of Nashville, Tenn. I am vice chairman of the Professional Engineers in Private Practice Section of the National Society of Pro- fessional Engineers for the Southeastern region and also serve as chair- man of the section's Government Relations Committee. The National Society of Professional Engineers is a nonprofit or- ganization composed of 53 State and territorial professional engineer- ing societies with more than 500 chapters and over 66,000 members, all of whom are qualified under applicable State engineering registra- tion laws. Our membership includes professional engineers engaged in virtually every specialized branch of engineering practice and type of employment-&overnment, education, industry, and private practice. I `would like to comment today on behalf of NSPE on the provisions of title III of S. 698 relating to specialized or technical services to state and local governments, upon request, on a reimbursable basis. "Specialized or technical services" are defined in section 108 of the bill to cover such a broad range of services that in the absence of clear language in the bill to the contrary, coupled with a clear expression of congressional intent in the legislative history, we would be seriously concerned that title III might be interpreted and applied to put Federal departments and agencies in direct competition with private firms and consultants already providing such services to state and local governments. Happily, when this committee was considering similar provisions in the predecessor bill to S. 698 (S. 561 in the 89th Cong.) it was agreed by all concerned that the intent was not to place the Federal Government in competition with private firms and consultants, but simply to make available to state and local governments services which they otherwise would not be able to obtain. As stated in the report of this committee on S. 561 (S. Rept. No. 538, 89th Cong., first sess.): * * * in light of recommendations made by the Budget Bureau, the Advisory Commission, and Mr. Paul H. Robbins, Bxecutive Director of the National PAGENO="0248" 242~ society of Professional Engineers, the Committee agreed to remove any ambi- guities concerning the kind of services that would he provided * * * this was done in order to avoid the unfair competitive practices which consulting engineering, mapmaking, and photogrammetry firms have criticized. Extensive discussions with staff members of the Budget Bureau familiar with this problem produced the following clarifying language, which was added at the end of new Section 402: Provided, however, That such services shall include only those which the head of the Federal agency concerned determines are not reasonably or ex- peditiously available through ordinary business channels. The Committee believes that this amendment, along with the definition of such services found in section 106, Title I of the revised bill should correct any misconceptions concerning this section's scope and purpose. (Report, p. 17). Later in the report (p. 32), the committee elaborated further on the purpose of the provisions relating to "specialized or technical services" by stating, and again I quote: The services authorized by this title * * * shall include only those which the head of the Federal agency concerned determines are not reasonably and ex- peditiously availablge through ordinary business channels. The purpose of this title is to make available to State and local governments ony those services which agencies and departments * * * are uniquely able to perform * * * The language of this section makes it clear that the Federal Government by the au~thorization of this title, and unless clearly authorized by statute, should not be placed in direct conipetition with private businesses which are normally capable of performing the needed services. * ~ * Title III of S. 698, the pending bill, contains new language clarify- ing the intent that the authority to provide specialized or technical services is not to be tised to provide services available from private firms and consultants. We believe this language should be effective in preventing unintended competition, and in some respects is better than the amendment added to S. 561, the original bill. We are particularly pleased with the addition of new language explicitly referring to the Government's policy on relying on the private enterprise system. We do urge, however, that language similar to that already quoted from the Committee's report on S. 561, the predecessor bill, be incorporated in any report on 5. 698, the pending bill, to assure that it is crystal clear the basic intent of title III re- mains unchanged, even though some changes have been made in the language of the bill itself. Regarding title IV of 5. 698, we support the policy declarations and requirements set forth in section 401 relating to the sound and orderly development of urban communities-particularly the require- ment that rules and regulations established by the President govern- ing the formulation, evaluation and review of federally aided urban facilities and projects shall provide for full consideration of the concurrent achievement of the eight objectives set forth in subsection 401(a). We believe it is highly important, however, that the intent behind this requirement be spelled out and clarified in any committee report on the bill, to assure that its purposes will be accomplished. Practically all members of the various design professions, we feel certain, would readily agree that effective accomplishment of the eight objectives enumerated in subsection 401 (a) -ranging from appropriate and use to high standards of design- necessarily involves engineering and engineering decisions. Thus, implicit in subsection 401 (a) is the requirement that ehgineers, as well as other design pro- PAGENO="0249" 243 fessions and other appropriate disciplines, be brought into the urban planning process at the outset, to take part in the formulation, as well as the implementation, of programs and plans relating to federally aided urban development. Since in all too many cases, in the past, consideration of the engineering aspecth of urban projedts has been overlooked or ignored in the formulation of programs and plans, we ask the Congress intent that all appropriate disciplines, including engineering, be brought itito the urban planning process at the outset be spelled out as clearly as possible throughout the legislative history of 5. 698. In this regard, I would like to submit for the record a "Guide to Professional Collaboration in Environmental Design," which has been jointly developed and adopted by the three societies represented here today-NSPE, the Consulting Engineers Council and the American Institute of Architects, together with the American Institute of Con- sulting Engineers, the American Institute of Planners, the American Society of Civil Engineers, and the American Society of Landscape Architects. The guide emphasizes the need and desirability for collab- oration among all environmental design professionals, and sets forth guidelines and tenets aimed at promoting and facilitating cooperation and teamwork among professionals who deal with research, planning, design and construction of man's living environment. We believe the guide will be useful to the committee in the course of its current hear- ings, and in developing a report on the comprehensive planning provi- sions of S. 698. Mr. Chairman, we sincerely appreciate this opportunity to present our views, and will be happy to cooperate with the committee in every way possible. (The attachment to Mr. Sumner's statement follows:) PROFESSIONAL COLLABORATION IN ENVIRONMENTAL DESIGN (This Guide has been approved and adopted by the American Institute of Archi- tecLs, the American Institute of Consulting Engineers, the American Institute of Planners, the American Society of Civil Engineers, the American Society of Landscape Architects, the Consulting Engineers Council of `the United States and the National Sociely of Professional Engineers) PREFACE In the interest of, promoting the public health, safety and general welfare, national organizations representing members of the design professions who deal with research, planning, design and construction of man's living environment have jointly prepared this guide to professional collaboration in environmental design. There is a continuing need for a better understanding of the services offered by those professions concerned with the conception, analysis and design of planning and construction projects. Uncertainty often exists in the minds of both the public and the design professions as to `the functions performed and the areas of service provided by these professions. All of them entail exhausive study and research, demonstrated talent in planning and design, and devotion and integrity in guard- ing the public welfare and the client's interest. To delineate the various design functions and areas of practice precisely is impractical, as they mity overlap to a degree. ITowever~ with the complexity and magnitude of present-day buildings and man's living environment, the merging of design services through collaboration among all environmental design professionals is required to meet advancing ~nvironmenta1 standards, to solve the complicated design problems of contem- porary projects, and to produce unified and harmonious results. Such collaboration PAGENO="0250" 244 and teamwork throughout the planning and design cycle are supported whole- heartedly by environmental design professionals in the interest of their clients and the public. It should be noted that, since registration is not presently required of all design professionals in all states, the references to professional licensing, regis- tration, registration laws or legal qualifications made in this statement are applicable to professionals whose registration is required in state laws. TENETS OF THE COLLABORATING DESIGN PROFESSIONS The environmental design professions include Architects, Engineers, Landscape Architects and Planners. Members of these professions adhere to the following tenets: (1) They uphold `the dignity and advance the progress of other design profes- sions by exchanging information and experience. (2) They familiarize themselves with the registration laws of the other design professions and adhere to the spirit as well as the letter of those laws. (3) They recognize, whenever a project involves skills practiced by several professions, that close collaboration is desirable between them and should begin at the very earliest stage of research, analysis and design, and at that time the responsibilities of `the collaborating professions should be clarified and established. (4) They perform their services in accordance with the standards of conduct and code of ethics of their individual professions, and each respects the standards and code of the other professions. (5) They respect the professIonal reputation, prospects or business of all their colleagues in the design professions~ (6) They do not supplant another design professional after definite steps have been taken toward his employmefit whether as principal or as collaborator. (7) They do not engage in coxtipetitive bidding with another design professional on the basis of professional charges. (8) They 10 not accept a commission on a contingency basis as a device for obtaining work. (9) They will not accept a commission on which another design professional has been engaged, unless his connection with the work has been terminated. (10) They do not offer the services of another professional as a collaborator without his consent. (11) They do not review the work of another design professional except with his knowledge. (12) They do not alter or copy reports, drawings or specifications prepared and identified by another design professional, whether or not bearing his seal, without his knowledge and consent. (13) They give due public recognition to the work performed by collaborating design professionals. ColZaborative service contracts The combined talents of collaborating design professionals and their coordina- tion are required on many projects. Ordinarily the client's interests are best served in the research, analysis and design of a project when the client has a single contract with a prime profes- sional who is responsible for direction of the work and for providing through collaboration the specialized services that may be needed. This makes available to the client all the advantages of specialization and at the same time centralizes responsibility. It is then up to the prime professional to see that collaboration is initiated at the earliest possible stage and carried on throughout the life of the project. It is recognized that some long-range planning projects requiring continuity and some projects with a prolonged construction period may be better handled by separate contracts between the client and individual professionals under the general guidance of a coordinating professional. Selection of prime professional It is the responsibility of the client to select and designate the prime profes- sional and to approve the selection of the collaborating professionals for his project. When the major portion of a project is in the recognized category of a particular design profession, a member of that profession should be the prime professional. The prime professional's design ability, professional reputation, PAGENO="0251" 245 ~demonstrated competence, practical efficiency, business capacity and integrity, good judgment and ability to obtain the cooperation of those involved in a project will be the primary considerations in his appointment. Coordination of the work The prime professional is responsible for the design of the project. He will be the project coordinator and will have the responsibility for selecting the collab- ~orators with the consent of the client. The education, experience and registration ~as prescribed by state law) of each of the collaborators qualify him for design services of particular type and scope. Each design professional is cognizant of the training and experience required for competency in the design professions, and does not render his services in those areas in which his qualifications are not established. Contractaal responsibilities The allocation of professional responsibilities is determined in joint conference between the prime professional and the collaborating professionals prior to the ~design work to insure proper consideration of all elements, When the collaborative design services are performed under a single contract, the areas of responsibility and `the division of the fee between the collaborators are determined by negotiation between the prime professional and `the various ~ollaborators, and are agreed upon prior to the start of design work. When separate contracts between the ~llent and the various collaborators are executed, all such contracts should include a clear statement of areas of responsi- bility and work, should state which of the parties is to be the project coordinator and define his authority. Professional firms Many firms will include in their organizations more than one of the usual ~specializations of the environmental design professions. Such firms may perform more than one function, or may perform all design for an entire project, to the extent they are legally qualified. Two or more professionals or professional firms may form a "joint yenture" for the purpose of rendering the client a complete design service. SELEOTION AND COMPENSATION OP ENVIRONMENTAL DESIGN PROFESSIONALS Selection basis Environmental design professionals furnish the creative talent necessary to bring into realization the client's projects. The environmental design professions are learned professions requiring of their members sound technical training, broad experience, personal ability, honesty and integrity. The selection of design professionals by an evaluation of these qualities is the basis for compari- son of their services. Many projects require the teamwork of several collaborators. The design team provides management, research, planning, design, drafting, technical and nonprofessional personnel and the facilities needed. It is essential that the client understand that design professionals have expenses considerably greater than direct salaries. Adequate compensation is necessary for them to provide the scope and quality of services that the client desires and has a right to expect. Members of the design professions will not solicit or submit proposals for professional services, including supporting services, on the basis of competitive bidding. Such competition by design professionals for employment on the basis of professional fees or charges is defined as: the formal or informal submission, or receipt, of verbal or written estimates of cost or proposals in terms of dollars, man-days of work required, percentage of construction cost, or any other measures of compensation whereby the prospective client may compare services on a price basis prior to the time that one individual, firm or organization has been selected for negotiation. Selection policies The responsible member of the professional firm being considered by the client for a particular project, having established competency to perform the necessary services, must be legally qualified to practice as prescribed in the state in which the services are required, and must have adequate recent experi- ence in responsible charge of the professional disciplines involved. The client PAGENO="0252" 246 is referred to the appropriate professional society for a definition of "responsible charge" if he is not familiar with the requirements. Every firm being considered should be requested to provide complete informa- tion on its qualifications. The information should include the personal qualifica- tions of principals and key personnel, current work load and a record of recent projects. Similar information should be supplied for the collaborators. Selection procedures In selecting the prime professional, the client should proceed as follows: 1) Prepare a description of the proposed project, the purpose to be served and any other pertinent factors for transmittal to design professionals. 2) Request data on the qualifications of a reasonable number of professionals (and their proposed major collaborators) who appear capable of meeting the requirements of the project, and review their qualifications and experience. 3) Arrange personal interviews, preferably in the office of each professional, to assure mutual understanding of the contemplated project and the capabilities of the firm. 4) Investigate each professional's work, if desired, by requesting a visit to one or more of his projects, or an interview with the owners and possibly others associated with the projects. Where appropriate, this procedure may be extended to some or all of the major collaborators. 5) Select the preferred ~rlme p±ofessional and reach an agreement on mutually satisfactory contract terms, including compensation based on the value of the services to be performed. 6) If a satisfactory agreement canhot be concluded with the preferred prime professional, the client terminates the negotiation and repeats the process of review and negotiation with the next party of his choice. Compensation Compensation for professional services `may be established by a variety of methods. Professional societies have issued manua1~ describing these methods, and the client may wish to refer to tbes~ manuals for guidance. Among the more common methods, or combinations thereof, are the following: 1) Percentage of construction 2) Lump sum 3) Cost plus a fixed amofint or percentage 4) Salary cost times a factor 5) Per diem 6) Retainer fee The type and size of the I~roject, the scope of the professional services required,, the area in which the design professional is located, and the area in which the work is to be performed, all have a bearing on the cost of professional services. Quality Is the only true measure ol~ the services offered by the professional. Functions of the coordinator Where professional services are performed under a single contract between client and prime professional, the prime professional acts as coordinator. In addition to his usual services as a design professional, it is his duty and responsibility to: 1) Negotiate the scope of professional services, compensation and terms of payment with each independent collaborator. 2) Prepare a time schedule based upon the client's program for the project in agreement with the client and collaborators. 3) Obtain from the client, and furnish as needed to the collaborators, all surveys, subsurface and soil mechanics investigations and reports, and other necessary data. 4) Arrange for all project conferences between the client and design collab- orators, and maintain liaison continuity with them on all project matters. 5) Coordinate and transmit all recommendations received from and made to the client. 6) Assume final responsibility for all decisions required by the agreement with the client for the services to be rendered. 7) Establish and coordina~te design standards with concurrence of the collab- orators and, where pertinent, coordinate statements of probable construction cost prepared by them. PAGENO="0253" 247 8) Where construction is involved, it is also the duty and responsibility of the coordinator to: a) Coordinate the preparation and arrange for the printing, publication and distribution of the construction contract documents. b) Advise the client of the construction contract procedure, and with the advice of appropriate ~ollaborator~, assist in comrilhing a list of bidders or aid in negotiations with selected contractors. c) Coordinate the analysis of bids and submit to the client recommendations as to award. d) Coordinate the general administration of the construction contracts among the collaborators. e) Prepare a completion report with the assistance of the collaborators and recommend as to acceptance of the work. This document is subject to periodic review by the participating professional societies for the purpose of keeping it current with respect to professional practice. Suggested amendments will be considered collaboratively in connection with future revised editions of this guide. Senator MU5KIE. Thank you, Mr. Sumner. Now Mr. John Fisher- Smith. TESTIMONY OF JOHN FISHER~S~ITE, CHAIBMAN, URBAN DESIGN COMMITTEE, AMERICAN INSTITUTE OF ARCHITECTS Mr. FISHER-SMITH. Thank you, Mr. Chairman. Members of the subcommittee, my name is John Fisher-Smith. I am a practicing architect in San Francisco, Calif., and chairman of t~he American Institute of Architects' committee on Urban Design. Today it is my privilege to appear on behalf of the AlA-a professional society representing 2~,OOO licensed architects-to discuss certain provisions of 5. 698, the Intergovernmental Cooperation Act. SPECIALIZED OR TECHNICAL SERVICES In 1966, when legislation (H.R. 17955) similar to S. 698 was pending before the House Government Operations Committee, the institute, along with several national engineering societies, expressed its opposi~ tion to a~ provision authorizing Federal agencies to provide specialized or technical services to State or local governments. We recognized the objective intended to be accomplished, but we saw an unwelcome dividend in the anticipated infringement of the interests of private practitioners. Accordingly, we recommended that language be added to the legislation to permit the Government to supply such specialized or technical services only when the agency head determines such services are not reasonably and expeditiously available through ordinary business channels. We are pleased to note that the bill before this subcommittee reflects such language. In the opinion of the AlA, 5. 698 now offers satisfactory safeguards to private practitioners engaged in offering specialized or tedhnical services. To further clarify our position, We should like tO encourage high standards of professional conduct and expertise in government sinde only by having wise and talented advisers cait Government aspire to high standards of performance in the planning of its programs. We believe, however, that the specialized or tedhnical services of architects and other design professionals employed by the Government should be serving in the capacity of adviser, policymakers, and decision- makers to make Government a wise client. PAGENO="0254" 248 EVALUATING URBAN DEVELOPMENT PROGRAMS Title IV of the bill requires the President to establish rules and regulations to be applied in formulating, evaluating, and reviewing urban development programs. Such rules and regulations are to in- corporate eight specific objectives including appropriate land use, con- servation of natural resources, balanced transportation systems, and concern for high standards of design. We strongly endorse this section of the legislation. It is most im- portant that federally assisted urban development be formulated and administered in accordance with guidelines that relate to the overall goal of developing sound, healthy urban communities. Such a broad concern for community values is highly commendable. While the language of the bill is excellent, we wonder if a citizen can do anything about a transportation system that is not balanced, a highway that destroys a unique historical area, or a public housing project that is poorly designed. In our opinion clear, national urban and environmental goals must be developed. Without such goals, all value and judgment phrases are not as meaningful as they might be because there is no standard to measure accomplishment. Furthermore, it is one thing to consider developing a balanced transportation system and quite another to require it. As contemporary events indicate, wishful thinking about economic, social, and cultural development does not solve the problems of the poor or hOmeless. We advocate that the objectives stated in title IV be mandatory requirements. This type of commitment and resolve is necessary for sound urban development. In 1949 Congress established the national housing goal of a decent home and suitable living environment for every American. With nearly 20 years of experience with Federal programs ostensibly dé- signed to fulfill that goal it is possible to measure national perform- ance and to takecorrective action. Many other areas-such as land use, open* space in congested urban areas, urban development, to mention only a few-require similar explicit statements of national purpose. We do not suggest that this legislation be amended to state such goals. But we do believe that inter- governmental cooperation will be more meaningful if all levels of government were working together to accomplish specific objectives. Hopefully, the rules and regulations promulgated by the President will be a ~tep in this direction, and will provide the basis for further congressional inquiry. FEDERAL URBAN LAND USE Title VIII is designed to provide harmonious intergovernmental relations by requiring Federal land transactions in urban areas to be consistent with local planning, zoning and land use procedures. We believe that if this title is enacted it will, indeed, foster good relations between Federal and State or local governments. But we also believe the acquisifion, use and disposal of Federal land could serve another important purpose; namely, to promote sound planning, zoning, and land use policy. It should be the obligation of the Federal Government to make such transactions in accordance with the planning and land use objectives of local government only when PAGENO="0255" 249 those local objectives are compatible with the development of the whole area. If the objectives of the unit of local government are incompatible with the area development then the Federal Government should en- courage perpetuation o~ such policies. Accordingly, we suggest the language of section 802 be amended as follows: DECLARATION OF PIJEPOSJS AND POLICY SECTION 802. It is the purpose of this title to promote more harmonious inter- governmental relations and sound planning, zoning and land use practice's by prescribing uniform policies and proecdures whereby the Administration shall require, use, and dispose of land in urban areas in order `that urban land trans- actions entered into for the General Services Administration or on behalf of other Federal agencies shall be consistent with `and promote sound zoning and land-use practices and shall `be made to the greatest extent in accordance with' sound planning and development objectives of the local governments and local planning agencies concerned. Furthermore, we believe the Federal Government should require comprehensive planning as a condition precedent to the disposal of Federal real property, rather than leaving such planning to the dis- cretion of local government as provided by section 803. In our opinion, adding this requirement may spark planning activity where none was contemplated by local officials. CHANGING TIMES In conclusion, we wish to note our great respect for the Federal sys- tem, and for the autonomy of governmental bodies within their spheres of jurisdiction. But we think the changing times may require greater experimentation into specialized governmental units. Inter- state compacts, such as the one being worked out between California and.Nevada for the Lake Tahoe area, regional authorities, and the like might prove to. be more effective means of marshaling resources to combat pollution,' t~ accomplish highway planning, and to initiate effective land use policies than the elaborate structure of local govern- mental institutions now coping with such problems. We suggest that this is an area requiring study which might be generated by this distinguished subcommittee. We. appreciate very much the opportunity, afforded to appear be- fore this committee. If there are any questions we will do our best to answer them. Thank you. Senator MVSKIE. Thank you very much. I note that you all expressed in the opening portions of your state- ments the problem of competition raised by the issue of the specialized and technical services. I am happy that apparently we have overcome the. bulk of your objections, if not all of them, in the language of the bill. I gather `that you agree on that point. Mr. REUTTER. Yes, sir. Senator MUSKIE. Mr. Fisher-Smith, with respect to your proposed language for section 802, is it your intent that such language give the Federal Government veto power in properly planning the objectives which it did not consider sound? Mr. FISHER-S~~IITH. No, sir, I do not believe that is possible; rather I believe that there are instances where the Federal Government has been the custodian of lands and this custodianship has been beneficial PAGENO="0256" 250 to the development of the country or the area as a whole. For example, there are green headlands of the Golden Gate in San Francisco where Presidio is on thc~ north end of San Francisco Peninsula and has been an Army base ever since this country w~ taken over from the Spanish, and Fort Baker, Fort Concrite, anâ~ Fort Berry have been on the southern tip of Mann Peninsula for many years. And as a conservationist, I believe that this is a good thing. The Federal Government has served as a fine custodian. There has recently been talk of releasing some of these lands. At first there were many people who said we need these lands for private development, for houses, and for apartments and dwellings. Other say the areas should remain as green headlands because they serve the entire area. Finally ways were worked out so that the State could acquire one of these areas. I believe Concrite, has now become a State park. Due process was followed. There was a chance for debate before the Government undertook specific action. Senator MUSKIE. So what you are really urging there is a two-way dialog designed to aim at sounder policy and not a mandatory authority on the part of the Federal Government at all. Mr. FISHER-SMITH. Correct. Furthermore, I am urging that the Federal Government not release such lands until it is certain that the public interest has been satisfied. If there is sufficient dialog, I think that objectives can be fulfilled. Senator MUsKIE. Any questions? Senator BAKER. The question the chairman puts is basic to virtually every categorical grant-in-aid program or other Federal program that is undertaken; that is, how do we go about implementing the question of soundness. I wonder if you would agree that we are dealing here with the question that is more delicate than just the question of whether the Government can or cannot decide if a given project or given transaction is in the public interest. Rather~ we are dealing with the range of choice or criteria by which this is j'udged. I very much doubt, for example, that anyone would want to completely abdicate the concern of the Government from other public welfare, and on the other hand, I very much doubt if anyone wOuld want the professional engineers of this country to have their judgment overturned by administrative agencies. I wonder what suggestion you would have on the best policy in this situation for fairness. Mr. FISHER-SMITH. I believe it was the intent of our statement, that if the objectives of the unit of local government are incompatible with the objectives for the area of development, this would be a definition of unsound development. I am not satisfied, however, that the words "unsound development" are adequate. In answer to your question, I believe that sound planning aud zoning and other land use practices result from a comprehensive plan- ning process involving many disciplines, and these must cover a sufficient area or region to be pertinent. I think the problem that we are talking about in the disposition of public lands would be, for instance, a large base containing a great deal of area in a small rural community where the community lacks the technical expertise and sophistication to cope with such a problem and where the pressures for some development or Some industrial use may be very great anci may be backed by a great deal of technical expertise. PAGENO="0257" 251 One way to avoid this inequity would be to bring in the State or bring in an area form. of limited government (if there is one in the area) to assist in evaluating what would be sound development of the property. Senator BAKER. I think that is further insight on how you would emulate that concept. Senator MU5KIE. Gentlemen, you have made several other sugges- tions in your statements. Did you want to make a comment, Mr. Sumner? Mr. SIJMNER. Yes; please, on the matter that Mr. Fisher-Smith has pointed out. The staffing of these agencies by competent professionals of the widest possible experience and training, with adequate remuneration so `that they would be attracted to this kind of thing, will do a lot to implement. Of course, you cannot legislate taste, or like some of our law-s say, that `it `be one way. It is very difficult. But, by the language that has been suggested here, and I am sure other terms could be developed, an emphasis can be placed on quality of design and thoroughness of design and I think that agencies will pick up and `develop ways of implementing. I think the Congress makes it abundantly clear thuct they intend for much more attention to he given to good design. I think it will be implemented. I think there are other examples. I cannot recall any to mind now, where just a phrase has been picked out of law and developed into a whole field of endeavor. Senator BAKER. That reminds me of the traditional classic definition of a reasonably prudent man, which I am sure was a lion's choice of language and then just passed over in the system of jurisprudence and now occupies ful'ly 50 percent of the decision law of this country and its predecessor. So, you are right, it does grow out. It is a question of interpretation and thus the quality of taste and implementation of substantive matters cannot be dealt with accurately in legislative language. I want to thank both of you for telling me how you would view the actual implementation of a "sound" project under these circumstances without running the risk th.at "sound" might be substituted for "standard." Mr. FIsriER-S~rITT. I have `a remark, if I may. In cases where the stakes are very high, it may be necessary for.the Federal Government `to request that the State or area of government provide a comprehensive study. By comprehensive I mean a study which takes into account the various needs of the ~irea rather than the reeds for one specific purpose or use. Such study would dramatize what the `alternatives might b~ so that public dialog and discussion could be brought into the open `and possibly offset particular special-interest points of vieW which maybe have been expressed more fully at the time that `the proposed disposition was announced. Senator BAKER. Mr. Chairman, may I make thi's `additional remark in `this connection. I have what is not typically an unsen'atorial attitude in this respect. In other words, I have some predetermined idea `as to what the `answer to the question I just put might be, `and I felt that the essence of the problem is considerktion of new, fresh,' resourceful thouptht in this general field of planning and dedication of land use and facilities. And i[ think that wholly aside from the economic and profes- 95-626-68--i7 PAGENO="0258" 252 si'oual considerations, the assurance that there will be `a vigorous group of planning, design, and construction architects and engineers and planners outside of `the `scope of governmental activity on a private basis `and `the assurance that we do not staff up the administrative agency with their own in-house facilities to do this planning and this design and `this construction is probably the best assurance `that we can have that we do not end up with a "standard" instead of a "sound" approach to these problems. So, you see, I have found a way `to pay due tribute to the professionals as well. Senator MTJSKIE. Mr. Reu'tter, I note the criticism of the water and sewer grant-in-aid program on page 3 of your statement. The first full paragrap'h on that page refers to the fact that rules and procedures for handling application's are still being finalized and standardized more than 2 years after `the programs have been implemented, and that appropriated funds cannot possibly meet existing requests, while local offices of some agencies continue `to promote `their respective programs and to solicit applications. I th'ink that second criticism reflects the dilemma faced `by these agencies. If you do not have pipelines filled with `applications, then you reduce the pressure on the part of the Congress to provide the appropriations. Secondly, if the community doe's not get `their applications in `the pipeline, t'hen it is not in a position to compete for whatever fund's there are. It is a very unsatis- factory `situation, not only for the Federal agencies, `but also for the local communities. And I suppose that there is enough blame to pass around to `everyone, including Congress, or it is one of those `almost unavoidable.si'tu'ations `th'at you have got to live with as best you can. I think that a great deal of your criticism is attributable to this appropriations logrolling. But, I am `also interested in getting whatever specifics you have on this matter of rules an'd procedures. Mr. REtITTER. This is true. Various agencies have different rules and different procedures. My own firm has two project's which have been some 4 years in the mill. One of these is probably going to be another 3 `or 4 years, but the other is comring to a head and will be settled out within the next 30 days. One `of the reason's for `all `the delay is that rules `and procedures were changed continually by the agencies involved. As an example of changes, `the Farmers Home Administration has an engineering contract form which was pretty much defined, `and ye't some of the FHA regional offices `are now inserting ch'anges that were not in the previous document `and w'ere never agreed to by the societies wh'ich discussed it with the Farmers Home Administration admin'is- tra'tive heads `here in Washington. Senator MtfSKTE. Are you makin'g reference to the Aiken law here? Mr. RETJTTER. Yes; that i's correct. Senator MusitIE. The difficulty then goes back `again to Congress. We h'ave got five different Departments concerned in the water-sewer field, `and Agriculture is one of `them. Mr. REUrPER. That is correct. Senator MusKIE. And Interior is another. I think it is quite clear that we `have to move f'or consolidation of a lot o'f these programs, but what I was particularly concerned with was PAGENO="0259" 253 whe1~her you had something different than that in mind in criticizing the failure to standardize the rules of procedure? Mr. REUTTER. Well, the different agencies afl have different pro- cedures and different regulations. Senator MU5KIE. That was your point? Mr. REurrni. Yes; and sometimes the rules and regulations of pro- cedure change from the beginning of a pro'ject to the end because it takes some 2, 3, 4 years for a project to come to a culmination. Senator MU5KIE. Because of legislation that has been here in Congress, we have been bringing out new rules and regulations over the last few years. I suppose that has had some impact. Mr. REUTTER. Perhaps, but we believe there would be terrific im- provement `if related programs could he consolidated in oiie depart- ment responsible for handling funds for grants-in-aid for water-sewer projects. Senator MUSKIE. All we have to do is convince the Congress. Senator BAKER. Mr. Chairman, if 1 may add something to that dialog, I have generally agreed with the witness' observations and your implication that there is a great deal to be gained by the consolidation of agency functions for a specific field. However, I wonder if there is not something also to be said once again in this business about balancing for the techniques and the difference in requirements for different circumstances that are entailed. For instance, in a very high-density system, and in a very rural system, I wonder if we might not lose sight of the subtle requirements of each if there is not an effort to totally consolidate with consideration implementation of these programs among agencies. Mr. REUTTER. This is true, `but the State department of health in each State, which in most cases is the `agency handling the pollution problem, could-and do~-con'trol this. It is true that there are different procedures and different requirements for rural and for urban, but the department of health could control the situation as to what the r~quirements would be in a rural `and what they would be in an urban situation. Senator BAKER. I think we are really concerned more with estab- lishment of priorities for participation of available resources, rural versus urban, `than we are with, for instance, the form `of contract for the engineer or the quality of the pipe or the wall thickness in the construction. Mr. IREUTTER. This is true. But, is it not a fact that the State depart- ment of health, on the scene, has `the complete records of various com- munities and would be in a better position to determine what respective priorities would be? Senator BAKER. I am not sure, and that is why I inquire. But, as .1 say, there are mixed equities in these considerations'. I reiterate that I feel, as I believe the chairman feels, that there are economic ad- vantages `to consolidation, but I would hate to see that consolidation result in substantial elimination for the opportunity of either urban or rural or midpopulation areas to receive their particular attention and their requirements to meet their particular special circumstances. Senator MTJSKIE. Well, gentlemen, thank you very much for your testimony. ~Your profes~ions are very much a part `of our concern, and I hope that we have a `little marriage between `the private sector and the public sector. PAGENO="0260" 254 Mr. REUTTER Thank you, sir. Senator MU5KIE. Our next witness this morning is Mr. Malt Triggs, legislative director of the American Farm Bureau Federation. TESTI1~IONY OP MATT TRIGGS, ASSISTANT LEGISLATIVE DIRECTOR, AMERICAN FARM BUREAU FEDERATION Mr. TRIGGS. Good morning, Mr. Chairman, and Senator Baker. It is a pleasure to appear before the subcommittee once again. The American Farm Bureau Federation welcomes the opportunity to present our views to the bill. This bill contains many provisions of no direct significance to farmers or with respect to which we have no policy position. VSTe will limit our testimony to the. question of relocation payments in title VIII and to the uniform land acquisition policy in title IX. At the last annual meeting of the American Farm Bureau Federa- tion, the official voting delegates of the member State farm bureaus approved the following policy position: Federal land acquisition statutes should be revised to provide more equitable severance damage compensation and adequate resettlement costs. The appraised value * * * should be made available to the property owner during the initial phase of negotiation for purchase. Individual private parties * * * often find `that their efforts to seek relief in the Federal Courts seriously delay equitable settlement and are often ex- ceedingly expensive. We support establishment of a civilian Review Board, independent of government agencies, to which property owners could appeal condemnation decisions before proceeding in the Courts. TITLE VIII~ RELOCATION PAYMENTS We support the provisions of section 801-806 inclusive, relating to relocation allowances to landowners whose land is acquired for a Federal purpose. We `believe the amounts proposed are reasonable, and certainly not excessive and provide no more than equitable treatment to those re- quired to move as a result of Federal land ac~uis'ition. LEGISLATION TO SO PROVIDE IS LONG OVERDUE `We suggest for the consideration of the committee that `the follow- ing concept be added to the purpose of the act at line 6, section 801 (p. 33) and at line 22, section 805(a) (1), (p. 41): * * * and to so far as practical leave such persons no't worse off economically than they were before being displaced.. We understand that section 802 (`a) would be applicable to' farmers as to other landowners. We raise the question as to whether or not farmers would he eligible for a relocation allowance under section 802(b). For example, a farmer may own a `fruit or vegetable packing shed, or a cotton gin, or a grain dryer, or a livestock feeding yard, or storage or processing f a- cilitie~ which may be taken as a result of a Federal program. We under- stand that if he offers "services to the public" that under the definition of a business in section 114 that he would be eligible under section 802(b). But in many cases the farmer's costs associated with the taking PAGENO="0261" 255 of his property would not be substantially different whether he pro- vides `a service to the public or handles only his own produce. It would appear the treatment provided should be comparable. We understand that a farmer who discontinues a farm operation as the result of the taking is eligible for a relocation allowance under section 802 (d) if the remainder property is no longer an economic unit; and that if his dwelling is taken he is also eligible for a relocation allowance under section 802 (c). If this is not clear we would suggest that the matter be clarified by the legislative history. We should note in this connection that a farmer who is forced to discontinue a farm operation is frequently faced with substantial but difficult to' determine costs. He may have to sell his machinery and equipment at a loss because they are not adaptable to the farm he has acquired, or because he has not been able to locate another farm suit- able for his purposes and his finances. His new farm may be located at a considerable distance from the farm from which he is dispossessed, thus necessitating the development of new marketing outlets. lie may have to sell his stocks or grain, or breeding or feeding livestock at "forced sale." His operations for a year may be disrupted because he is unable to acquire a farm prior to planting time. In some cases he may lose a crop or not plant one on the farm from which he is being dispossessed, because negotiations are underway and the time of settlement uncertain. Since average prices of farmland have been increasing 6 to 8 percent in each of recent years, if the farmer is unable to locate a replacement farm promptly, the amount received for compensation may be inadequate to purchase a compara- ble farm. These costs are separate and distinct from those involved in moving from one dwelling to another. We understand that an elderly or handicapped farmer who decided not to continue farniing when his farm is taken would be eligible for the allowance provided by section 802(e). ON UNIFORM LAND ACQUISITION POLICY We strongly endorse the provisions of title IX relating to land acquisition proc~dures. Few activities of Federal agencies have created more ill-feeling among farmers than the land `acquisition practices of some agencies. The factual situation reported by the I-louse Committee on Public Works "Study of Compensation and Assistance for Persons Affected by Real Property Acquisition in Federal and Federally Assisted Pro- grams," Committee Print No. 31, 88th Congress, reflects an amazing and, in our view, intolerable situation. rfhe committee report indicates that in 34,422 purchases by De- fense Department agencies, the agency's initial offering was less than the agency-approved appraisal in 24,877 cases, and property was ac- tually purchased for less than the approved appraisal value in 7,897 caSes. The report further indicates that, in 10,296 purchases by Interior Department agencies, less than the appraised value was offered in 864 cases and less than the appraised value was paid in 653 cases. It appears to us that title IX has been drafted very carefully, and if enacted will accomplish the desired purposes as set forth in section 901(a). PAGENO="0262" 256 We recommend that there `be included in the guiding policies in sec- tion 901 (a) the following: The head of a Federal agency should so far as practical endeavor to so ad- minister thi~ Title that persons whose land is acquired shall not be worse off economi~a1ly than the~y were before the land is acquired. We also recommend for the consideration of the committee that at the end of line 2, page 50, the words "and shall be provided a copy of the appraiser's report" be added. In view of the tremendous disparity of bargaining power between the Federal Government and a small landowner, it does not appear to us that the Federal Government should deal with its citizens "at arms length" but should make such information available to citizen's as may assist them to reach a sound conclusion concerning the alterna- tives available to them. It would appear that this would help, that is, providing `the owner a copy of the report, to accomplish the objectives of title IX to further "amicable agreements with owners, to relieve congestion in the courts, to assure consistent treatment for owners in the many Federal agen- cies, and to promote public confidence in Federal land acquisition practices . . ." As indicated in our above quoted policy statement, we favor the establishment of an independent review hoard to give consideration to the amount of compensation to be awarded a landowner. No matter how carefully a statute or regulations to implement a statute are drawn, it is not possible to eliminate a substantial measure of personal judgment in applicatioii of such statute or regulations. It would `appear that sudh determinations may be made most objectively by an independent body not identified with the specific project. We believe that the creation of an independent review board would result in a substantial contribution to accomplishing the objectives of the Title that is to encourage the acquisition of real property by amical agreement with owners, (2) to assure consistent treatment, and (3) to promote pu'blic confidence in Federal land acquisition practices. We appreciate the fact that the committee is giving such careful consideration to this important issue and thank the committee for the opportunity to present our views. Senator MUSKIE. Thank you very much, Mr. Triggs, for your thoughtful and helpful statement. It contains no suggestions for the compensation of the displaced farmer in section 802(d). At least I do not recall `that you did. Mr. TRIGGS. We did in the fourth paragraph on page 2, 802 (d). We understand that a farmer who discontinues a farm operation as a result of the taking, is eligible for a relocation payment under section 802(d). Senator MUSKIE. And you think that section 802(d) is `adequate? Mr. TRIGGS. Well, let me say it would be a vast improvement. There would still be cases where, for reasons peculiar to the economic situ- ation of a particular farmer, that he still would be worse off as a result of the payment than before the land was t'aken, and, therefore, we would hope that the concept that the landowner should not be worse off than before the taking would be incorporated in the language of the bill; reeogni2illg that it will not correct every situation either, but that it will give a statutory guidance to the President in developing the regulations under section 802 (a) and to otherwise guide agencies in the administration of the act. PAGENO="0263" 257 Senator MUSKIE. You understand that the technique of the bill is represented by section 802(a) and section 802(d)? Mr. T~IGGS. Yes. Senator MUSKIE. He can get the full relocation cost to the extent that his claim is fair and reasonable, but in lieu of proving the actual cost he can accept $1,000 under section 802(d). You understand that? For that reason, did you suggest the language that you proposed; is that right? Mr. TRIGGS. Well, yes. We think that this concept to leave persons not worse off economically ought to be part of the statutory direction to the President, actually, the Bureau of the Budget, of course, in drafting the regulations under section 802(a). Senator MUSKIE. I think that neither Senator Baker nor I would quarrel with that concept. I think the way we phrase it is that anyone who is displaced by Government programs ought to be made whole. Mr. TRTGGS. The same principle. Senator MUSKIE. But, it is one thing to agree with a concept and another thing to implement it sometimes, and I do appreciate your suggestions this morning. Senator Baker? Senator BAKER. I have no questions, Mr. Chairman, and I think that it is a good statement, and well presented. Mr. TRmGS. Thank you, Senator. Senator MUSKIE. Our next witness this morning is Joseph L. Miller, legislative representative of the National Park Association. Mr. Miller. TESTIMONY OP JOSEPH L. MILLER, LEGISLATIVE REPRESENTA- TIVE, NATIONAL PARKING ASSOCIATION Mr. Mn~nn. Mr. Chairman, you are seeing me with a different coat on than usual this morning. My textile one is back in my office. Mr. Chairman, my name is Joseph L. Miller; I am legislative repre- sentative of the National Parking Association. My address is 815 17th Street, Washington, D.C. (20006). The private operators of offstreet parking facilities are extremely interested in title V of the bill before you since they feel that they have been victimized by a back door raid on the Federal Treasury that is costing the Government millions every year. Here is how it works: When the Congress approved the Housing and Urban Renewal Act of 1948, it was decided that the Federal Government should put up two-thirds of the cost of downtown urban renewal projects, while the municipalities involved should put up one-third. The act then per- mitted the municipalities to offset certain redevelopment costs against their one-third-costs of sewers, streets, and the like. But the act specifically forbade offsets for self-amortizing projects, public utilities, and municipal housing. Sometime before 1962, however, the Urban Renewal Administration (now part of HUD) began to allow municipal offsets for self- aniortizing public parking facilities. In that year, 1902, the Comp- troller General called the attention of Congress to this practice and suggested remedial legislation. Nothing has been done about it, and the practice has grown apace. PAGENO="0264" 258 Some municipalities have avoided any contribution to downtown re- newal projects by selling bonds to build a public parking facility at a cost equal to the entire municipal share. In other words, the Federal Government bears the entire cost of these downtown renewal projects, certainly contrary to the intent of the law. We have never been able to find out from HUD either how many of these so-called municipal grants-in-aid for parking facilities have been allowed or how much they amount to in money. We have gotten our information from local iiewspaper clippings. As we read title V, of the bill before you, this would have to be brought into the open by cOntinuing studies and reports, both by this committee and by the Comptroller General. We certainly are all for that. Also, we hope this is not to be construed as opposition to public parking, only as opposition to Federal subsidies for public parking. Public parking, we believe, is an issue that should be resolved by the various municipalities, and not promoted by HUD's generosity. With your permission, I would like to incorporate in this statement, by reference only, a longer statement on this subject by Louis E. Meyers, of Meyers Bros. Parking Systems, New York City. He is also vice president of our association. The statement can be found at page 847 of the Senate Banking Committee's hearings on current Housing and Urban Development legislation. And I would also like to say, Senator Muskie, that last year when you unfortunately could not be there, Mr. Abraham Leibowitz, one of your Portland, Maine, operators of private parking facilities, gave a very similar statement to Mr. Meyers last fall before the Banking and Cur- rency Committee. Nothing has come of either. If you have any questions I will be glad to attempt to answer them. Senator MUSKIE. Yes, I understand your concern about this prob- lem, but I do not think it has any relevance in this legislation. I think the Banking and Currency Committee is the appropriate committee. Mr. MILLER. Senator, only, as I say, Senator, only in title V it seems to require a continuing study and report on all of these grants-in-aid to this committee and to the Congress as a whole. Now, we have never been able to find out how many of these there are, where they are, or how much they amount to, which had it been available would have been a valuable addition to the case we would like to make. Senator MTJSKIE. Well, if title V of this bill is enacted in its present form, it would require the continuing review, but that review would not be done by this subcommittee. It would be done by the Comptroller General and by the appropriate legislative committee. So, the Banking and Currency Committee again would be trusted with that responsi- bility, and also the Comptroller General. Mr. MILLER. Wherever it comes from or to, we would just like the facts and figures. Thank you. Senator MUSKIE. We greatly appreciate your making the point, and it is most appropriate that it be in the record of this hearing. Mr. MILLER. Thank you, sir. Senator MUSKIE. I note that Mr. Benton Stalling, of the District of Columbia Chapter of the Federal Bar Association, and chairman of the PAGENO="0265" 259 Council on Community Affairs, is here and has offered to provide the committee at a later date with any assistance which it may desire affect- ing titles VII, VIII, and IX. We appreciate your offer and hope we may `takeadvantage of it. Our next witness, and I gather our last witness of the morning, is Mr. Harry L. Graham, legislative representative of the National Grange. Is Mr. Graham here? If Mr. Graham is nct here, that completes our witnesses for the morn- ing. We have tried to get our afternoon witnesses, but we have not been able to contact them. We hoped that they might be here this morning, but since we have not had success in that respect, the committee will stand in recess until 2:30 this afternoon. (Whereupon, at 11 :15 a.m., the subcommittee was recessed, to recon- vene at 2:30 p.m., this same day.) AFTERNOON SESSION Senator BAKER. The committee will come to order. Let me first apologize to the witnesses for being late in arrival. I hope it hasn't unduly inconvenienced you. We welcome you to the committee, Mr. Libby, Mr. Goralnick, and Mr. Akerson. Would you like to proceed? TESTIMONY OP THEODORE LIBBY, REPUBLIC PIPE & SUPPLY CO., AND JAMES GORALNICK, PREMIER PACKING CO., REPRESENT- ING THE CIIAMBER OP OOMM~iRCE, ROXBURY, MASS.; AND CHARLES AKERSON, NORDBLOM CO., BOSTO~'T, MASS. Mr. LIBBY. The order in which you just read them will be fine, sir. Senator BAKER. You may proceed. Mr. LIBBY. I am here representing the Roxbury, Mass., Chamber of Commerce, with Mr. Goralnick. Mr. Goralnick is president of the Pre- mier Packing Co. in Roxbury. We do not object to progress-we do object to the losses caused by that progress for which there is none, or inadequate compensation. These losses tuke several forms. First-when we, who are in business, are notified of a proposed taking, we take valuable time from our business and spend much money on the search for new quarters. We also incur additional expenses caused by the delay between conception and execution. For example, our firm held a plot of land for 2 years at a cost of $22,000 a year while waiting for a final taking. For this we cannot ask reim- bursement. M. Brown and Co., another Roxbury firm, held two build- ings similarly for over a year. They, too, get no redress for this double expense. Secondly, we, who are in the path of a highway, are allowed a maxi- mum of $3,000 by the department of public works for moving expenses. Yet, the Boston Redevelopment Authority who did allow a maximum of $25,000, now gives full reparation, while at the NASA site in Cam- bridge, Mass., full, and unlimited repayment of all relocation expenses" have been allowed from the beginning of the project. PAGENO="0266" 260 A perfect example of this inequity is Tremont Street in Roxbury, Mass. This street divides land being taken for highway from land being taken by the Boston Redevelopment Authority. West side of street evictees are allowed $3,000 for moving, those on the east side, $25,000. Yet, $25,000 is often not enough. Bills for our firm total $49,000 for moving material alone, not reerecting shelves, racks, et cetera. This is certainly as much a part of the cost of a highway, as is the cost of steel and concrete. If a highway is financed 90 percent by Federal funds, and 10 percent by State funds, then moving costs should be met in the same manner-90 percent by the Federal Government, and 10 percent by the State. This should be a specific part of the high- way grant. There is no limit put on the value of a building-how can there be a limit put on the value of a move? Thirdly-relocation assistance should include the replacement cost of a plant, rather than market value. Market value at best is an arbi- trary figure-since buildings are not up for sale. The only fair method is replacement costs, and this amount can be readily determined, either by the actual expenditure made for a new building, or by the known square foot constructions costs in the area. We who have been doing business from a specific location for many years, in our case 43, should be entitled to a like amount of space in a reasonably similar location where we can continue our business; in a retail section if we are retailers, in a wholesale section if we are whole- salers, or in a good labor section, if we are manufacturers-all without additional cost to ourselves. These expenses of acquiring like facilities are part of the highway cost. As a matter of fact, no new location can be equal to an old established one, and this is a loss for which there can be no reimbursement. As further assistance, those businesses displaced should be given first consideration to acquire Redevelopment Authority land, or other available land near their displaced businesses. For example, we, in Boston, victims of the Inner-Belt Highway and Interstate 95 acquisi- tions, should have been given first consideration for Boston Redevelop- ment Authority land. There is much talk about encouraging business to move into areas of high unemployment, we are leaving one. We would have preferred to stay in the Roxbury, South End area, but were. given no consideration for available land. Certainly our situation is one repeated hundreds of times throughout the urban areas of our country-just as many jobs are being removed from much needed areas in Los Angeles and Boston, as in Miami and Seattle, all for lack of coordination and cooperation. We are being as cooperative as possible. We appreciate the need for highway and redevelopment projects, but we should not be asked to bear more than our proportionate share of the burden. Each taxpayer pays a part; but we, who are not totally reimbursed for expenses and losses, are being ask to pay a disproportionate share of the project, beyond what our tax portion would be. Thank you for your courtesy. Mr. Goralnick and I, as representatives of the Roxbury, Mass. Cham- ber of Commerce, are deeply appreciative of your concern, not only for ourselves, but for all those affected by highway and redevelopment programs. Senator BAKER. Thank you very much, I wonder if it might be in order for the witnesses to continue with their statements before I start with a few questions that may occur tome? PAGENO="0267" 261 Mr. LIBBY. Yes. Mr. Goralnick. Mr. GORALNICK. I realize that you don't have much time so I won't try to prolong this. I am treasurer of the Roxbury Chamber of Commerce, and we have approximately 460 members consisting of industrial and business firms located in an underdeveloped area where unemployment is a great factor. Most of our firms employ a large percentage of these underprivileged people who are mainly colored. If these firms are not given sufficient consideration and help to remain in this area, the unemployment situa- tion will worsen. It is extremely important that business and industry remain in this area and even be helped to expand in order to create more jobs in an area that needs it very badly. By giving us the oppor- tunity to remain and to expand in this area, it is conceivable that it may attract other business firms to move here also, thereby helping to eliminate to a great extent the unemployment situation. C~rtain consideration should be given to all these businesses that are asked to relocate. That would be assistance in relocation, given suffi- cient time to move. We should be paid 100 percent for moving expenses and not be penalized because we are willing to relocate. Consideration should `be given for the time that we spend in looking for new areas and assistance in obtaining financiog. Property should be valued at replacement cost. Consideration should be given to owners of property who lose tenants when news of taking is first made known, and many times several years can pass before an actual taking takes place. It is certainly not the intent of the Government to create any hard- ships for any of us citizens, but rather to treat everyone fairly, and if some of these factors are included, I believe everyone would be treated fairly. Thank you very much, Senator. Senator BAKER. Thank you very much, Mr. Goralnick. Mr. Akerson. Mr. AKERSON. Senator Baker, I am here as an individual, as an in- dependent real estate counselor and appraiser at the request of Senator Brooke. I have prepared a statement which I would like to file with your committee. To save time I will summarize my position and volunteer to offer my services to your staff. Mr. AKERSON. Briefly, I am in favor of the Muskie bill as it is writ- ten. I have suggested three minor revisions which in my opinion would improve the `bill. I think that there are glaring inequities in the State of Massachusetts. I have just come back froni a meeting in Chicago with other reali estate people, and find that the same inequities exist across the country. I think the Muskie bill, as it is written, does a very good jc~b of being nearly perfect. The biggest problem that we are all .aware of in Massachusetts, and just waiting on the edges of our chairs for an answer is the difference in relocation payments. I helped to administer, as a consultant to the Cambridge Redevelopment Authority, the relocation payments pro- gram and the advice to `businesses in relocating. We have funds to work with. We have paid claims as high as a half million dollars, and yet PAGENO="0268" 262 at the same time I am retained by the Department of Public Works on appraisal contracts? and the displaced businesses that I appraise are allowed only a maximum of $3,000. These two gentlemen represent this group. This is one of the reasons why I must testify separately, `because I have been retained by public agencies. But I offer my services to your committee, and appreciate the opportunity to testify. Senator BAKER. Mr. Ake:rson, thank you very much. I would like to address these questions to the three of you and ask either or all of you to reply. There are one or two that I would like to especially clarify for my purposes and for the record. They occurred in the course of Mr. Lib- by's testimony and were taken up by each of you in sequence. To begin with, you feel, and I really believe most people may share your feeling, that fair cash market value directly does not approximate actual compensation or does not permit someone from being less than whole after the forceful taking. I wonder, however, if the replacement cost test as used by you, Mr. Libby, has worked and whether or not it might not entail some elements of enrichment, and whether or not it might not be better described as the cost of a comparable facility in a comparable location, rather than replacement cost, which implies the building of a new structure. Mr. LIBBY. Yes, Senator, I too had my reservations, and in the course of my remarks I think I clarified it when I said we should be entitled to a like amount of space in a reasonably similar location. Senator BAKER. Does this meet the requirements of replacement cost as you mean it to imply? Mr. LIBBY. Well, sir, it has been my experience that the offering of a fair market value for the property which we occupy now does not ena]ble us to acquire reasonably similar facilities in which to conduct our business. You see, perhaps we get complacent, having been in one space for 43 years, and we get a'ccustomed to the inefficiencies, et cetera, of it and we have learned to live with these buildings. But when we move, and we are given compensation on the basis of market value of that facility, we are not adequately enabled to acquire like facilities, Senator. Senator BAKER. Are you willing, then, for the interpretation of re- placement cost to imply replacement with a similar facility `of similar age and of similar quality? Mr. LIBBY. Yes, sir. We are not entitled to 1 cent more than that, sir. We don't want anything to `which we are not entitled. Senator BAKER. Together, of course, with reimbursement for the actual `cost of moving, I take it, without regard to the amount `of that cost? Mr. LIBBY. I think that that must `be limitless, sir. Mr. AKERSON. May Task a question, Senator Baker? Senator BAKER. By all means, Mr. Akerson. Mr. AKERSON. My interpretation of `the Mus'kie bill as it is written now is that if passed, relocation payments that would be contested by a claimant' could `be taken into a Federal District Court, and that hereto- fore in any grant type of relocation payment, this opportunity has been denied the claimant. Senator BAKER. Essentially, as I understand it, the thrust of the bill before the committee would be to make relocation cost a part of com- pensable damage as any other element. PAGENO="0269" 263 Mr. AKERSON. Right. This is an extremely far-reaching part of the bill, but I find that many people ar~ not aware of it. I have been in the position of being the final judge and authority on some of these reloca- tion payments, and it is not as pleasant a position as some people might think. I would welcome the avenue of going into district court. Senator BAKER. One further question, if I may. On page 2 of your statement, Mr. Libby, you make the proposal that the unlimited costs of moving "should he financed 90 percent by Federal funds and 10 percent by State funds." This is as in interstate highway cases. The proposal in the bill before the committee provides for the Fed- eral Government to bear the first $25,000 of these costs. Do you take issue with that? Do you feel that the 90_b formula is mor~ appropriate for the entire cost? Mr. LIBBY. Yes, sir. I say that that is just as much a cost of the highway as iS concrete and steel. And I take issue with my friends in the Massachusetts government administration who sit back compla- cently and wait for Washington to pick up the whole tab. Sir, I think you are being overly generous and unnecessarily so. I think if you have got a 50-50 highway bill or a two-thirds-one-third highway bill I say, sir, it should go from the first dollar in that proportion. Senator BAKER. Yes, sir. Mr. AKERSON. I will have to give another point of view, because I am familiar with what the public agencies in Massachusetts are antic- ipating. I am familiar with what the legislators in Massachusetts are anticipating. My forecast would be that if legislation comes about that would require a contribution or a sharing of the first $25,000, that this entire program will be delayed, slowed down. We will need new legislation. We have open-end legislation at the moment, which is simply waiting for Federal legislation. I am sure the legislators and the State of Massachusetts are ready to share beyond $25,000, but the general feeling is that the Federal Government has poured. the cement in the $25,000 grant for the first $25,000, in what they have done with hundreds and hundreds of busi- nesses, thousands I should say in the urban renewal program in Boston and in Cambridge, in Malden and in many other communities. I think this would be a step backward. I think it would be reneging on the part of the Federal Government. I think it is impractical and unrealistic. Senator BAKER. I thank you very much, Mr. Akerson, Mr. Goralnick and Mr. Libby. May I say this in the interest of time? I would like to invite you to elaborate any of these thoughts with the staff with permission that any additional comments in this respect may be included in the record. Thank you very much. Mr. LIBBY. Thank you, sir. (Mr. Akerson's complete statement follows:) STATEMENT BY OJIARLES B. AKERSON At the request of Senator Edward W. Brooke, I offer the following testimony regarding the proposed Muskie bill S. 698. I submit my opin~ions and comments as an individual and professional real estate counselor experienced in matters involving the relocation of business con- PAGENO="0270" 264 earns displaced by federally aided programs. Although I have been retained by both public agencies and private business for advice and assistance, I testify as an individual and not on behalf of past or present employers. The scope of my testimony will be limited to those portions of the Bill dealing with uniform relocation assistance to business concerns. An outline of my professional quali- fications and experience is attached to this statement. For the convenience of the subcommittee, my testimony will be presented In summary form. If the subcommittee desires further details, I am prepared to amplify my testimony with examples and explanations based on actual experience. SUMMARY In my opinion, the Muskie bill should be enacted as soon as possible in its present form or with minor revisions. I believe the Subcommittee should consider the following points: Unreasonable limitatioas.-Wlthout the Muskie bill, federally aided highway projects in Massachusetts and other sections of the country will continue with an unreasonable and artificial limit on relocation payments. A Massachusetts business displaced by a federally aided highway project now receives a maximum payment of $3,000 for moving, even if the actual moving costs are $100,000. The present $3,000 ceiling is not only unfair but illogical. Under the present system, the displaced businesses pay their share of taxes to support the highway programs and in addition they are forced to absorb a heavy share of the actual costs involved. Unfair treatmcet of business coneerns.-Without the Muskie bill hundreds of business concernS In the Greater Boston area, alone, will be displaced by new federally aided highway construction without full compensation for moving costs, while simultaneously, neighboring business concerns will be displaced by federally aided urban renewal with full reimbursement of moving costs. Unfair treatment of public servant&-Without the Muskie bill, the Massachu- setts Department of Public Works will be obliged to continue the unfair and distasteful practice of displacing businesses without full reimbursement of moving costs, while at the same time, local urban renewal agencies will be offering full reimbursement for moving costs to displaced business concerns. Unfair treatment of employees and the community at larye.-Without the Muskie bill, many workers will be forced to seek new employmenk because of business failures resulting from displacement of businestos without adequate compensation. Also, the community at large would suffer a general economic loss for every business failure that could otherwise have been prevented by fair, reasonable, and uniform relocation payments. Lack of a~venue of appeal in current pro grams.-Under current regulations covering relocation payments in either highway or urban renewal projects, a displaced business concern cannot contest the adequacy or the fairness of a business relocation payment in any court of law. As I interpret it, the Muskie bill would correct this inequity and allow an aggrieved claimant to take his case to a United States district court. Lack of fleceiliility in present programs.-Current regulations encourage dis- placed businesses to move obsolete equipment at extravagant cost to the Govern- ment in order to qualify for reimbursement of moving costs, whereas the Muskie bill will allow a displaced business to install new equipment at the new location and claim the reasonable expenses that would have been required to move the old equipment. Under present regulations, there is no provision for advance pay- ment for certain relo~ation costs, whereas the Muskie bill would allow the Presi- dent to authorize advance payments in case of hardship. Recommended revisions.-In my opinion, the Muskie bill should be subjected to three minor revisions. Section 805(a) (2) (A) provides that a farm operator may be reimbursed for reasonable expenses in searching for a replacement farm. I suggest that the displaced business concern be given the same benefits extended to the farm opera- tor. This is not a major item, but the distinction between the farm operator and the business concern does not seem consistent with the intent of the bill. Section 805(a) (2) (B) provides that a business may install new equipment at the new location and claim an amount equal to the reasonable expense that would have been required to move the old equipment. The cost of moving old equipment often actually exceeds the cost of a new installation and 1 suggest that in these cases reimbursement should not exceed the actual cost of the new installation. PAGENO="0271" 265 Title VIII, I do not find any specific language which would require a Federal or State agency to publish complete information regarding the availability of relocation assistance. It has been my experience that many business concerns are deprived of available benefits because of an inadequate public information program and I suggest that the bill be augmented to correct this weakness. Senator BAKER. Miss Bingham, we welcome you to the committee. I apologize to you as I did to the other gentlemen for being late. STATEMENT OP MISS ~O BINGHAM, ASSISTANT TO THE VICE PRESI- DENT OP TRE GOVERNMENT RELATIONS DIVISION OP THE NATIONAL ASSOCIATION OP MANUPACT1JRERS Miss BINGHAM. Thank you very much. My name is Jo Bingham. I am Assistant to the vice president of the Government Relations Division of the National Association of Manu- facturers and I am appearing here to represent the association. We appreciate this opportunity to testify before this Subcommittee on Intergovernmental Relations and present our views regarding S. 698 and related proposals, which we support with the reservations and modifications suggested in this statement. The National Association of Manufacturers is a voluntary organiza- tion of industrial and business firms, large and small, with members located in every State and representing the major part of manufactur- ing output in the country. Among the fundamental issues which concern NAM are central government policies and procedures which affect the character, work- ings, and future of the federal system as a union of States. We believe that Congress needs to reexamine the intergovernmental relationships it has created. We consider it indispensable to the effective functioning of the federal system that the role of the States should be strengthened; that national policy should encourage State-local initia- tive and responsibility; and that State and local governments, and their individual and corporate citizens, should make conscious efforts to assure a more positive role for the States, with less dependence on Na- tional Goverminent programing and financing. We believe that S. 698 can contribute to that broad goal of making the federal system more effective and strengthening the State's role in it. Business-supported interest in improving the strength, quality, and effectiveness of State and local government has widened in recent years and the subject itself has been given more pointed attention. It is with some pride that NAM points out it was the first business organization to undertake a major study and program on the federal system and the intergovernmental relationships involved in that system. Since that effort was published in 1950 under the title, "Bring Government Back Home," the association has been alert to changing e~rents and emphases in intergovernmental relations, and, whenever opportunity permitted, contributed to discussions on the subject and to the resolution of problems involved. NAM testified before the House Government Operations Committee's Subcommittee on Intergovernmental Relations in 1957, during the period that Congress was taking its first steps to appraise and imple- ment the report of the Commission on Intergovernmental Relations. In more recent years we have made statements on S. 2114 of the 88th Con- PAGENO="0272" 266 gress, which was limited to the grant-review proposal, and, in both Houses of Congress, on S. 561 of the 89th Congress and related bills which also included other proposals. SPECIFIC COMMENTS ON GRANT PROVISIONS OF S. 698 For convenience and clarity of discussion, we prefer to comment on two separate packages of similar content provisions in S. 698. The first covers titles II through VI with the pertinent definitions from title I, and involves grants-in-aid management mechanics. The second covers titles VII through IX with the pertinent parts of title I, and involves land-use and relocation practices and policies. The fact that these sections can be logically separated for discussion purposes suggests that they might also be separated into two bills if action on the somewhat cumbersome whole is going to be delayed. It is over 10 years since the first legislative proposal for review of grants was offered. Three years ago in testifying on S. 561 we referred to some 100 grants then in existence. In introducing the present bill, Senator Muskie reported there were over 220 grant-in-aid programs, involvtng nearly 400 separate appropriation accounts. The need to reappraise the grant-in-aid mechanism and to coordinate or consolidate or simplify, becomes greater as time moves on and more and larger grants, along with more and more stipulations about their use, are added to this battery of Federal fiscal artillery. Nearly all executive branch departments and agencies administer grant programs. They go to the 50 States, to many thousands of their political subdivisions and now, through Office of Economic op- portunity programs, to more than a thousand community action agencies which are predominantly private organizations. Senator Muskie has referred to 62 specific aid programs for com- munity facilities of one sort or another, 57 for work training, 50 for general education, 35 for housing, 32 for land-use, 28 for recreational and cultural facilities, and 27 for utilities and services. Since more than one Federal agency may be involved in a variety of programs of similar nature, any organization chart designed to show the whole framework of the relationships involved would look like a massive spilde?rweb- but without any orderly pattern. Charting the organizational and inter- governmental relationships of OEO programs alone is a dizzyii~g process. No single step, or combination of steps, which is able to bring some clarification and reevaluation to this patchwork of grants, should be delayed if it is possible to enact it promptly. For this reason we would welcome passage-each, of course, with appropriate definitions-in the following order of preference of (a) titles V and VI, or (b) either title V or VI alone, or (e) titles II through VI. In our opinion the two vital provisions of the whole bill are those for review and consolidation of grants and we favor separation of any other provisions which could cause postponement of the enactment of these key titles. TITLE I~ DEFINITIONS We are glad to see section 106 spell out the definition of the term "grant." There is, however, a serious omission in our opinion. This omission has been recognized in amendment No. 748 and in S. 2981. We PAGENO="0273" 267 ;ee no reason for excluding grants made to nonprofit agencies such as those given to community action agencies by OEO. This kind of grant-direct to local nongovernmental bodies-is relatively new, but if the history of Government action is any guide, ase of the technique will spread. As a matter of fact the budget for 1969 Joes indicate spread already in the Public Health Service grants. There is every reason for this kind of grant to be subject to the provisions Df titles II, \T, and VI. Therefore we suggest appropriate revision of section 106 (c), either by adding "or State-approved" after "State-administered," or by some- what different language. For example, it might read: To an instrumentality incorporated or chartered in a State to carry out a plan or program which is subject to approval by a Federal agency. There is, we believe, an inadvertent reference to title VI in section 109. Perhaps this was a carryover of language from an earlier bill. The correct reference is no doubt to present title VII, section 806(c). TITLE II~ IMPROVED ADMINISTRATION Section 201 of title II falls short of its real potential for improving the administration grants-in-aid, because, as we understand it, the responsibility of the Central Government to inform Governors, upon request, is limited to grants being made to States. We believe the provision should apply to all grants-in-aid-as we would revise their definition-made within a State. There is some room for confusion as to the actual intent of section 201 because section 106 defines grants to include political subdivisions, but section 102 defines State for the purposes of all titles except VIII and IX (reinforced by section 111) as excluding political subdivisions. We urge this subcommittee to clarify the language so that, section 201 will expressly include political subdivisions. And we hope that in doing this, the subcommttee will see fit also to make a~pplieable to section 201 our suggested revision of the grant definition in section 106(e).. Why should title II exclude the governments of political subdivi- sions of the State? More and more grants are being made directly to local governments and community organizations, for all practical purposes completely bypassing the States. This would seem a definite reason for the Central Government to recognize the right of the States to know the facts regarding any Central Government support of their own political subdivisions, particularly when an increasingly large part of the $18 billion in grants is going to those subdivisions. Fur- thermore, because the newest structural unit eligible for aid is the nonprofit corporation for community action, it, would seem necessary to make title II apply to this type of quasi-political unit also. Our own preference for tightening grant administration would differ from the section 201 provisions, even corrected as just suggested. We believe that grants from the Central Government should be given only to States and these funds, along with any state-participation funds, allocated to beneficiaries within the States by the States them- selves. We made this point in our testimony to this subcommittee on S. 561 in 1965, and we still believe it would be tackling the problem at its source. It may be possible, however, only in the longrun, after 95-626-68-18 PAGENO="0274" 268 consolidation of grants has been effected; and we would not wani consideration of this aspect flow to prevent prompt passage of th( beneficial provisions of S. 698. TITLE III~ TEChNIcAL AID TO STATES First, we would like to commend the sponsors of S. 698 for including in section 302 reference to "furtherance of the Government's policy of relying on the private enterprise system." This is a rare legislative reference, and a good one to see being specified. Advice, information and technical assistance to the States and lo- calities are among the ways NAM believes the Central Government can properly aid State and local governments. We believe such activi- ties constitute a means for the Central Government to promote the acceptance of fuller responsibilities by State and local governments for functions which can ultimately be handled without any outside aid. Furthermore, the availability of reimbursable "competence on call" should centribute to effective implementation of consolidated programs, and even to economy in government in the overall sense. The purpose of this title is to permit reimbursable technical serv- ices. To avoid misunderstanding we would like to see this word expressly used in section 301, as it is in the initial summary of pur- poses of 5. 698. TITLE IV, URBAN DEVELOPMENT POLICY We still have some concern with the language of section 401 on "Declaration of Urban Assistance Policy." In Senator Muskie's intro- ductory comment about original 5. 561, it was indicated that inter- agency coordination in the Central Government was the thrust of this title. That is, it was a uniform policy for application by Federal departments and agencies that was sought, not an imposition of policy obligations on State-local governments. We certainly support con- sistency and interagency coordination in Central Government man- agement. And we do not wish to impede improvement in intergovern- mental coordination or efficiency. But we are concerned that, in the absence of express language to the contrary, section 401(a) can be interpreted and applied as requiring three-level governmental ad- herence to "the concurrent achievement" of the eight enumerated "specific objectives of urban development," and also that section 401 (b) can require adjustment by each level of government to the view- points of every other level of government in planning urban develop- ment. The use of the passive tense in section 401(b) makes it quite unclear. If this section is not a requirement for Central Government only, it would seem almost impossible to implement. There should be a clarification in this regard. Sections 401 (c) and (d) are both quite explicit in limiting their application to the Central Government. Sections 401 (a) and (b) can be equally e~plicit, and in our view should be. We believe the strengthening of State responsibility in intergovern- mental relationships is the paramount consideration for improving the operation of our Federal system, and we do not like to see legislative language which would be open to the charge that the Central Govern- ment was establishing the objectives of urban development, and by- PAGENO="0275" 269 passing the States by laying down local government requirements for urban development. Accordingly, we suggest the substitution of "Federal" for "inter- governmental" in the name of title IV and the insertion of the word "Federal" in the first mandatory clause of section 401 (a). This would then read, " . . . The President shall establish rules and regulations for uniform Federal application." These charges would leave no doubt about the intention of title IV. TITLE V, REVIEW OF GRANTS We believe the congressional review of grants is necessary for a number of reasons: The natural "oversight" obligations of the Congress as rvationai policymakers; The need to adjust programs to the facts as times change and needs alter; Because the extensive variety of present grant patterns and formulas is difficult to justify; To check the actual effect of equalization formulas or other specific mechanisms; To evaluate the shifting emphasis to regional area recipients of grants-either among States or within States; To appraise the shift from State recipients to community recipients, bypassing the States; To weigh the significance of the shift from recipients who are local public bodies to private local-agency recipients; Because the response of State and local officials to the questionnaire study conducted by the Senate Committee on Government Operations in 1963 1 indicated that a large majority felt the functioning and pro- cedures of grant programs needed "continued reevaluation." Because the executive branch-the departments and agencies ad- ministering the grants-is not the appropriate source of review, and might not be able to undertake objective review. Title V has had the benefit of being 10 years in the making, and it reflects a composition of various views, including suggestions NAM itself has made in past hearings. We commend its inclusion of re- view of existing grants, retention of the expiration feature for grants which may be enacted in the future, potential termination of grants as a purpose of review, and studies by the General Accounting Office and the Advisory Commission on Intergovernmental Relations. We approve of title V, believe its implementation will be of great value, and urge its prompt passage-even if its separation from other provisions (except pertineut definitions) is necessary to do this. But we would hope that our suggested revision of the definition of grants in section 106 would be accepted; otherwise the review process of this title would not apply to grants to non-profit private instru- mentalities. And we think review necessary for these programs, as well as those carried out by public bodies. If the grant definition, as such, is not revised to cover private agency recipients, then we think all language in this title which refers to re- 1The Fedeiral System as Seen by State and L~ca~ Officials, p. 12. PAGENO="0276" 270 cipients should be revised to cover this omission. The addition of such a phrase as "and other instrumentalities" would serve, and should be made in every section of this title except section 505. rfllere is one other point we would make on title V, regarding section 501 (2). We feel that continuing this purpose of the title is essen- tially at conflict with the potential of title VI, and we would prefer to see it deleted. The use of the review technique to revise and redirect grant programs as new conditions arise will have less and less signif- icance, as consolidation of grants by broad purposes goes forward. Under functional consolidation it is the states, not the central govern- ment, that would be revising or redirecting specific aspects of pro- grams when conditions altered or needs had been met. TITLE VI~ CONSOLIDATION OF GRANTS The proliferation of grant programs and the intergovernmental cross hatching qf administrative arrangements and regulations have brought the grant system to a point where consolidations are the only immediately effective avenue to the efficient management of the many resources now applied to their purposes. Furthermore, consolidation could serve to reduce future central government resort to separate special-purpose grants. Blocking them by broad purpose could make for more responsible and responsive action at State-local levels to the particular needs government can best meet. This procedure would he a welcome precedent for greater reliance on the States as such. It is a logical step to congressional action which might ultimately shift most of the support of aided functions to the States themselves as they strengthen their legislatures, executive structure, and mechanics for coordinating State-local, regional, or interstate programs. Because of our special concern with invigorating the power and prestige of the States in the Federal system, we would like to see an emphasis of this kind specified in title VI. In section 6O1(a), for ex- ample, we offer the following text as a new item to precede the already listed purposes of consolidation: "To improve the operation of the Federal system by strengthening the role and responsibility of the states in that system." Language of this kind would spell out the key means for achieving the first purpose of 5. 698 as stated in the initial summary of intent. As we see it, improvement in the operations of the Federal system must come from the more vigorous role of the States-in relation first with the central government, and second with bodies within their jurisdictions__rather than from any further expansion of direct Federal-local structural or financial relations. For the same reason we would change the beginning part of section 601 (b) to read as follows: The Congress declares that the public interest and the effective operation of the Federal system demand the carrying out of the purposes of subsection (a) * * * * We would also like to ask this subcommittee to consider the ad- visability of requiring that the consolidation plan place responsibility in a single State agency for seeing that the consolidated program is implemented. We mean that some single State agency a~ desig- nated by the Governor or legislature should oversee, though not PAGENO="0277" 271 necessarily administer, the consolidated program. We know there are many grant programs properly and completely administered by units of general local government, and it is not our intention to alter this. But if the State role in the Federal system is to be strengthened, there should be some one focal point for what ever State activities or responsibilities exist with respect to programs administered locally. In education and welfare such State agencies exist. There is a growing need in the country, however, for such State-level focal points in con- nection with grants for urban development and community facilities. In fact, a number of states have already met this need by creating state departments of urban affairs. Title VI is a very forward-looking provision, and we urge its prompt passage-alone or with title V if further delay might `be cause by holding together all the present titles of 5. .698. LAND-USE AND RELOCATION PROVISIONS Titles VII, VIII, and IX are not essential or integral parts of an intergovernmental cooperation act. rfitle VII involves almost no more than matters of courtesy for the General Services Administration to follow with local government when it acquires, uses, or disposes of land in urban areas. Part A of title IX is related, and provides rules for the guidance of Federal departments and agencies when acquiring land. Part B of title IX does involve intergovernmental relationships, but it simply requires the States to follow similar guidelines as a condition for re- ceipt of funds from the central government which will be used by the States to acquire real property. Title VIII also involves intergovernmental structure, but its pur- pose is to establish uniform relocation procedures and payments for all programs administered or aided by the Central Government which dislocate people or businesses through the acquisition of real prop- erty. Title VIII was originally a separate bill in itself, 5. 1681 of the 89th Congress and passed by the Senate in July 1966. This title is primarily substantive in nature and concerned with coordinating inter- governmental relations mainly as the result of equating provisions in different programs. It could still very well be legislatively separated from the type of content in titles TI-VT-taking titles VII and TX along with it. If the passage of earlier titles (especially V and VI) would be delayed by keeping 5. 698 intact as one package, we think the last three titles should be separated. TITLE vii, FEDERAL AGENCY LAND-USE POLICY The intent of title VII is commendable; however, it may not neces- sarily be achieved by adding a title VIII to the Federal Property and Administrative Services Act of 1949. An Executive order might serve as well. Only section 803 provisions for disposal of urban property by the Central Government, would seem to be reasonably binding on a Fed- eral department or agency. Section 804, provisions regarding acquisition or change in use of urban property, are qualified. First they would be applicable only to the extent the Administration determines practicable. PAGENO="0278" 272 Second, the acquisition provisions would iiot be binding if the Ad- ministrator finds that advance notice would "have an adverse impact on the proposed purchase." Third, this latter circumstance would completely void the mandate of section 804(b) (1) to consider all objections of local government to a proposed acquisition or change of use. Thus, for reasons advantageous to Central Government purposes, GSA may not apply the provisions of section 804 rather than apply them. It would therefore. seem that the executive branth would have control over GSA practices in its own hands, with or without enacting legislative requirements. However, if the Congress determines that accommodation to local zoning, land-use, planning, and development objectives could be ad- vanced by Federal departments and agencies only through basic legis- lation, we have no objection to title VII. TITLE viii, UNIFORM RELOCATION POLICY This title deals with coordinating program content which is the result of different pieces of legislation enacted by different Congresses over the years. That is the practical source of the disparate policies, procedures, and payments which now exist. NAM itself has no specific policy with respect to Government relocation practices, so we have no formal theme on which to base support of or opposition to this title. However, we've been aware of the problems. In fact, I had par- ticipated in the informal "critics" session on the draft report of the Advisory Commission on Intergovernmental Relations on Relocation. We do know that Government displacement of people and businesses is substantial and has existed for a long time, especially through high- way, slum clearance, and code enforcement activities. We know that small businesses, particularly, have been seriously affected, and in- jured economically, that people have been dislocated without adequate rehousing and that there are inconsistencies of relocations practices and payment policies. The imposition of similar uniformity of policies at the State level as a condition of receipt of grants from the Central Government is a natural outgrowth of the grant system as it has developed and the logical consequence of the detailed "oversight" that Congress and the executive branch have incorporated into the mechanics of the grant system. We cannot condemn efforts to ameliorate injustices and the harmful effects of economic dislocations; nor can we criticize efforts to correct disparities in the policies of Central Government programs, grants- in-aid or otherwise, or in the practices of different Federal depart- ments and agencies. We therefore do not oppose title VIII. TITLE IX~ UNIFORM ACQUISITION POLICY This title seems almost a matter of internal management in the executive branch, except for the imposition on the States of similar uniform practices regarding land acquisition whenever Central Gov- ernment funds are used. Consistency of policy and procedure "in order to encourage the acquisition of real property by amicable agreements with owners," whether in programs administered or aided by the PAGENO="0279" 273 1entral Governments would seem a worthwhile effort, consistent with he general character of the two preceding titles; and we do not op- `ose it. There are a number of serious issues relating to land acquisition p01- c~ies which this title does not approach. Recommendations regarding hese issues hopefully will be made by the Public Land Law Review ~ommission which is currently pursuing intensive studies relating to )ublic lands. TECHNICAL PROPOSALS Chairman Muskie's amendment No. 748 and S. 2981-the account- ng, auditing, and joint funding proposals-themselves testify to the teed for title VI of S. 698. These technical proposals not only under- ~core the need to seek consolidation of programs and uniformity of rocedures but correct, in some degree, the complicated and confusing ~amifications resulting from hundreds of Federal aid programs. We do not object to these proposals as such. They have practical nerit. We would hope these efforts to correct symptoms will not irn- )ede the more basic proposal in title VI. Furthermore, these provi- dons may be more difficult to apply than is now contemplated. Pro- Dosed title X, section 1003 (b), for example, mandates a rather massive ;tudy-and-review job for the General Accounting Office-and espe- ~ially at this critical point in our fiscal circumstances, this might re- luire greater resources than the results would merit. However, my participation in the critics' sessions on the ACIR's Iraft report on fiscal balance in the American Federal System has ~onvinced me that the problems are real ones, and these technical aye- aues to their resolution-especially the joint funding-constitute ap- propriate efforts. There should be less need for them, however, as pro- gram consolidation goes forward. CONCLUSION NAM appreciates the privilege of presenting its views to the Senate subcommittee on Intergovernmental Relations. We hope our comments in regard to strengthening the responsible role of the states in the Federal system, and the several specific suggestions for revising lan- guage, will help th~ subcommittee perfect this legislation and con- tribute to its passage. We want to repeat our particular interest in titles V and VI and again urge that at least these be promptly enacted, even if to do so requires splitting them off into a separate bill. Senator BAKER. Miss Bingham, I thank you very much. Let me assure you that we are very interested in your viewpoints, in your analysis, and we are extremely anxious that you continue with the staff to elaborate on these points and to include such additional statements or ideas as you may have for record purposes. Thank you. Miss BINOHAM. We will be very happy to respond to any inquiries following this. Senator BAKER. Very good. Thank you very much. Senator BAKER. The hearing will be recessed. (Whereupon, at 4:45 p.m. the subcommittee adjourned to reconvene at 9:45 a.m., Thursday, May 16, 1968.) PAGENO="0280" / PAGENO="0281" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION THURSDAY, MAY 16, 1968 U.S. SENATE, SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to recess, at 10 :25 a.m., in room 457, Old Senate Office Building, Senator Edmund S. Muskie (Chairman), presiding. Present: Senator Muskie. Staff members present: Charles M. Smith, Staff director; Robert E. Berry, minority coun- sel; E. Winslow Turner, general counsel; Lucinda T. Dennis, admin- istratiVe secretary. Senator MIJSKIE. The committee will be in order. I am afraid this is going to be one of those bad days. We are going to have gun control legislation on the floor. Since the votes will come quite fast, we will not waste any time. Mr. Rafsky, you ha~ve really been put upon. Mr. RAFSKY. We do not mind. STATEMENT OF WILLIAM L. RAFSKY, PRESIDENT, NATIONAL ASSOCIATION OP HOUSING AND REDEVELOPMENT OFFICIALS; ACCOMPANIED BY JOHN D. LANGE, EXECUTIVE DIRECTOR, AND MARY K. NENNO, ASSOCIATE DIRECTOR FOR PROGRAM POLICY AND RESEARCH Mr. RAFSKY. Senator, my name is William L. Rafsky, and I am president of the National Association of Housing and Redevelop- ment Officials and in my private capacity, executive vice president of the old Philadelphia Development Corp. I have with me my associates in NAHRO; on my left Mr. John Lange, executive director, and on my right, Miss Mary Nenno of our staff. We certainly appreciate this opportunity. We understand your situation very well and do not feel imposed upon at all. We are very pleased to have a chance to summarize in view of your time schedule our statement which you permitted us to enter on the record on Tuesday. If I may, I would like to say a word about myself and my experience in terms of my qualifications as a witness. Prior to my present posi- tion I served for 11 years `as the housing and development coordinator (275) PAGENO="0282" 276 for the city of Philadelphia, and in that capacity as the mayor's top assistant in the field of long-range development for the city. I was also the director of the local Redevelopment Authority and, therefore, had direct supervision over some programs, including land acquisition and relocation, and a broader supervisory role for other programs, including public `ho'using, code enforcement, and so on, related to housing and development. During that period I served as a member of the Pennsylvania Advisory Commission which revised the eminent domain laws of the State of Pennsylvania and I note that many of the, or a number of the provisions in 5. 698, are not unlike those that we put into the present Pennsylvania eminent domain code. Our statement pretty well represents the NARRO point of view. We do want to express our appreciation to the subcommittee and to you, Mr. Chairman, on the hearings, on creative Federalism last year and the sponsorship of S. 698. We think that they are real milestones in trying to understand intergovernmental relations. We, of course, in NAHRO, who represent local government offi- cials, believe very strongly, and we think our experience backs us up, in local responsibility and initiative. These are words that appear in so many of the Federal programs for which Federal `assistance has been provided. And I have submitted, as part of the record on Tuesday, `a summary of a statement which I submitted to the Senate Subcommittee on Housing which emphasizes this point. We feel quite strongly that if the programs are to work, including `some of the wonderful ideas in S. 698 `and 5. 2981, that there has to be perhaps a more radical revision of the relation between Federal agencies and localities. And I might want to say just a word or two more `about that when we come to one of the other titles in 5. 698. Getting to the bill, itself, we certainly endorse the basic concepts and principles, such as those in title II for a more flexible adminis- tration of Federal grant-in-aid to the State's. I would like to note, by the way, that although th'at title talks about relations between Federal and State and local governments that there are some situations, such as those in Philadelphia, where the metropolitan areas go across State lines. We h'ave three States within the metropolitan `area. And in terms of trying to achieve efficiency and flexibility, the need for contracts and compacts and negotiations with three State legislatures gets to be very cumbersome; we are hopeful in terms of this flexible administration idea that a look will be taken at that specific problem as well. We endorse the technical assistance provision in title III by the Federal Government and to State and local agencies. `We endorse the title IV in terms of the provisions to relate fed- erally aided urban development `activities to comprehensive local planning. We believe that this is extremely important, particularly in terms of both local and regional planning, `and also that in regional planning, State governments can pl'ay `a very important role. It is in title V that we have `a very strong endorsement of the provisions of the bill to `have a systematic review of the Federal `aid programs by Congress. Specifically, we would like to see some lan- guage in section 503 that when substantive committees of t'he Congress PAGENO="0283" 277 get into these reviews and updating of the programs that they consult and take `advantage of the experience of State and local agencies, because we think that point of view will provide a very significant input. Title VI, again, to us i's `a very important provision which we hail in terms of a coordination `and consolidation of grant-in-aid programs at the Federal level. It is at this point where we believe that local responsibility and initiative have to be really tested and not be merely words th'at are merely implied. We have suggested before other con- gressional committees that there be a radical change in the system in terms of Federal-local relations. I am thinking in terms of my own experience in the city government of Philadelphia, where as a depart- ment official in m'aking requests for implementing programs, budget and otherwise, I appeared before city council committee once `a year with a budget for programs. I was given not all that I a'sked for but at least approval of a program, and then I was permitted to go on my own. In terms of Federal-local relations it does not work `that way. Every step of the way requires another documentation, other evi- dence; it is reviewed not only in terms of a local review, but every local official `has a parallel in the Federal scheme, whether he be a planner, appraiser, engineer, or a `sight acquisition man. We think this is wasteful and unproductive. We would, however, in term's of one `of the provisions in title VI, in section (302(a) (1), `suggest perhaps that there might be `some flexi- bility in that administration not always be consolidated in a single agency. We think that there are some special situations where it might be wise to have more than one `agency involved. We welcome and `aippl'aud the provisions in title VII about notice to general local government arid Federal Governments intent to ac- quire or dispose `of land. We know in Philadelphia we have had so many difficulties with the General Services Administration or the military departments as they quickly make decisions on acquisitions and disposition of land which are frequently contrary to the whole program of the city of Philadelphia. In one case, a proposal for sell- ing to the highest bidder, which would have greatly impaired our port, because someone bid for warehouses that were a port facility. So we think that this is a very helpful step. Title VIII, if I may spend just a little bit more time, is a subject where our organization has a great deal of experience-the question of relocation. It so happens that purely by coincidence, my ability to return today was the fact that we in NAHRO had convened a 2-day workshop of people who actually carry `out relocation in the Govern- ment agencies in the cities throughout the country. They are meeting at this very moment in Washington to try to face Ui) to some `of the problems that are encompassed in the bill before you now. I had occasion this morning to point out to them that as re- loc~tion officials they have attempted to call to the community's atten- tion the shortcomings of the program; that they as public officials have been in the vanguard of trying to reform it; and I go back to the 1930's in terms of low-rent public housing where these localities deliberately had programs partly on slum-cleared land, but also on vacant land, so that there might be room for the displaced low-income families. PAGENO="0284" 278 I recall how in the first program in the 1940~s under title I, where there were relocation plans and relocation staffs aiding people as well as moving expenses. In the 1950's we in Philadelphia were one of many who set up a centralized relocation bureau without any urging on the part of the Federal Gover~trnent because we saw the need as other programs were beginning to have an impact on dislocation. In the 1960's, our relocation agencies were the ones who were knock- ing on the doors of HAFA on having more social workers, more people who understood the minority problems in dislocation. But now we recognize that there is a kind of new frontier: the need to face up to compensation over and above market value because of the hardship; the need to recognize that displacement is a human problem of psy- chology and attitude toward neighborhoods and institutions in those neighborhoods; the need to have Government agencies, in a sense recognize that it is a fundamental cause of their program, and as much of a public service to take care of individuals being displaced for that public improvement. Perhaps most important of all, is to provide resources for relocation because it is in access to resources that reloca- tion programs will fall or stand up. If we do not have a housing supply for those displaced, we do not see how any improvement in procedure is going to do the job, and so there must be a parallel increase in housing supply. Nevertheless, all of us who have worked in this field recognize that there are many im- provements that can be made under the relocation bill. We endorse very much what you have in title VIII in terms of a uniform relocation provision, because we know that one person dis- placed by one agency as against another, just does n~t understand the need for the difference. We would like to go beyond that. We would like to see, for example, in urban renewal programs, and in public housing programs, the right to begin actual relocation work during the survey and planning period. There is a tremendous hardship on individuals who wait for the plan to be completed. If one family moves out, the people next door are subject to vandalized property, to the uncleanliness, to the rats that may be there. We feel that there ought to be a flexibility and a willingness to supply the funds to start early. It does not increase the cost, and in some ways it might reduce it, and certainly reduce the hardship on the individual. We have asked HUD on a number of occasions that this might be relaxed and they have been unable to do so, pointing to the legal re- quirements of having a formally-approved plan. But, once we have said that, we begin to recognize that the relocation problem cannot be confined to those who are formally displaced by~ Government programs. Those who are displaced get the kind of special help that we provide and take away from the housing market those units which are needed for families of low income who are not able to adjust well to an urban area. And perhaps the time has come to look at relocation in the terms of a continuing program, a program where a community aided with Federal funds, can have a standing operation studying the housing supply, making recommendations where that supply ought to be in- creased, and trying to fit the public programs that result in dislocation into what is happening in that community on a regular basis. PAGENO="0285" 279 I know in Philadelphia we have taken a step toward-that is, we iave added to our central relocation office a special housing supply mit that works with private builders to encourage them to come up with housing where the dislocation needs are greatest. We would also like to specifically comment on three other provisions in title VIII. In section 802(c) (3), we believe that the $300 payment for a potential purchaser is not adequate, and frankly, we would like ~o see a payment to supplement the downpayment of a homeowner so that he can purchase a home within 20 percent of his income. We be- lieve that unless you do it that way, you are only giving partial help and do not solve the problem. `We would like to suggest in terms of 802 (e) that we eliminate the relocation adjustment payment. We have submitted, as part of our statement for the record, an article that appeared in our journal that shows how inefficient and really ineffective that payment has been. We have already received this morning confirming opinions from the people who are working with the RAP, Relocation Adjustment Payment, to show that it does not work. Instead, we would suggest that there be a flat payment for all displaced persons to help tide them over some of the adjustments they have to make. But more im- portantly, we should enlarge the leasing program known as section 23 in the Public Housing Provisions, so that people who are renters will be able to afford housing within their income. We think a liberalization of the section 23 leasing program, to apply for all dislocated people would be far better than the relocation adjustment payment as now constituted. In this regard we have noted that there has been a holdback in some communities on the leasing programs; namely, because a lease for a maximum period of 5 years (with an option for another five) is not always sufficient to encourage private landlords to rehabilitate their property; the amortization or extensive rehabilitation requires some- times more than 10 years. We, therefore, would like to see the initial lease period go to 10 years, with an option for another 10 years. Finally, in terms of title IX, here again we strongly endorse the uniform land acquisition policy which is contained in title IX. I note with a great deal of interest and support these key provisions taking into account, in terms of the value payment, the impact of public activ- ities where it results in the decrease and value of the property. This happens to be one of the provisions, by the way, in the Pennsylvania eminent domain law that some of us were responsible -for. We also welcome something that we are unable to do in Phila- delphia because of the real estate laws of our State; namely, compensa- tion for tenants when they make improvements in the property, which is included in title IX of the bill. We think that that is long overdue, because we know of many hardships where improvements have been made by tenants, and under the lease by the landlord they are not able to collect any compensation for that improvement. We would also like to point out that many of our communities have adopted a policy which we have asked the Secretary of Housing and Urban Development to adopt nationwide. Where we are dealing with the homeowner or the small businessman to whom a real estate transaction may be a once in a lifetime thing, PAGENO="0286" 280 lie ought to receive the top appraisal of the two that are normally taken in these situations. We feel that the two appraisals are usually reasonably close one to another; but if there is a wide difference, a third appraisal could be made. That these people are entitled to the top price. More importantly, as we see reflected in title IX, we would like to go beyond the fair market value and we note, for example, and have submitted for the record, the recent law adopted by the State of Mary- land where for the first time it talks about paying compensation for hardships over and above fair market value. We think that this philosophy also ought to be in title IX. This represents a summary of our testimony, and we appreciate very much this opportunity to have this oral presentation as well. Senator MUSKIE. Thank you very much, Mr. Rafsky. We appreciate your patience and also the excellent and very constructive statement which you made. I know that each one of your suggestions will get serious considerations. Mr. RAFSKY. Thank you. (The supplementary statement follows:) SUPPLEMENTARY STATEMENT BY THE NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS TITLE VIII OF S. 698, UNIFORM RELOCATION-SECTION OF THE INTERGOVERNMENTAL COOPERATION ACT OF 1968 In testimony on May 14 and 16 before the Subcoinmitee on Intergovernmental Relations of the Senate Committee on Government Operations, NAHRO Pre'si- dent William L. Rafsky was given permission to file for the hearing record any additional comments or recommendations on title VIII which might result from the local relocation directors from throughout the country meeting in Wash- ington on May 16-17, under the sponsorship of NAHRO. The statement below is the result of that meeting. Attached is a listing of the local relocation directors who attended. Eiulo'rsement of NAFIRO testiinoay The local relocation directors endorsed the testimony which NAHRO gave to the Subcommittee on May 14 and 16 on title VIII of S. 698. They specifically endorsed these points: 1. That the proposed $300 payment for potential home purchasers, Section 802(c) (2), is not adequate and supported the NAHRO recommendations- that a fiat payment be made to supplement the down payment of a home owner up to the point necessary to enable him to purchase a suitable home within 20 percent of his income, and that potential home purchasers be given special priority f~r federally-assisted home ownership programs. 2. Elimination of the relocation adjustment payments (RAP), section 802(e) of 5. 698. The relocation directors agreed that the present system of RAP payments' is complex and inequitable. 3. In substitution for elimination of the RAP payments, the group recommended: a. Establishment of a fiat displacement payment based on household size as follows: 1 person-$200; 2-4 persons-$300; 5-6 per'sons-$400; and 7 or more persone-$500. This fiat displacement payment would go to alt households displaced by public action and would compensate for necessary costs involved in adjusting to a new location. b. Expansion and aditional flexibility in the Section 23 leasing pro- gram of the Housing Act of 1937. This would involve not only sufficient authorization in Section 23 to cover relocation housing needs, but also additional flexibility in making local agencies eligible to receive federal assistance under the section 23 leasing program. It would extend the eligibility now given directly to a local housing authority to include any other agencies designated by the governing body of the local' community. c. A special priority for the rental assistance programs of the Federal PAGENO="0287" 281 government for all displaced households, including rehabilitation loan and grant programs. These changes would cover both the immediate adjustment needs of dis- placed families and rental assistance on a continuing basis for those dis- placed households who need it. It should also be pointed out that in addition to more effective and ef- ficient assistance, the displacement allowances suggested are less thall the RAP payments provided in S. 698. 4. That the $200 maximum moving payment for displaced persons under S. 698, section 802(c) (1), is adequate in most instances at the present time. However, they did point out that there were individual hardship circum- stances where moving costs for a displaced household were over this figure. The relocation directors recommended that the law be made more flexible by providing that in the case of a hardship situation, documented by the local agency, a moving payment could be made in excess of $200, subject to review of the federal agency. 5. Phat compensation for property loss for displaced households be pro- vided under S. 698. Ii is currently provided under Section 114 of the Housing Act of 1949, but not under the proposed bill. It is recommended that com- pensation for property loss be separate from the moving payment, section 802(c) (1), and that it be up to $200 for any documented property loss. Additional recommendations on business displacement (Secs. 802, 805 and 807 of S. 698) NAHRO suggests the following provisions for business relocation: 1. For all displaced businesses which relocate.- a. Payment of full and documented moving expenses. b. Payment for documented direct loss of property, up to $5000. c. A flat displacement payment equal to the average net annual earnings of the displaced business or $5000, whichever is lesser. 2. An optional fhved payment for displaced businesses which relocate-As an option to the provisions of 1, a total fixed payment equal to the average net annual earnings of the business or $7500, whichever is lesser. 3. For businesses which go out of business.-A "going out of business" pay- ment, when this is a result of displacement, equal to the average net annual earnings for a two-year period, or $10,000, whichever is lesser. Congressional intent and flecuibility in relocation program administration In the two-day discussion on May 16-17, the relocation directors continuously came back to questions about the spirit and intent under which relocation as- sistance payments are administered. They reported, their local experience mdi- cated that because of the detailed requirements in the existing Federal law (and likely in the proposed 5. 698) auditing by federal agencies of local relocation practice often became over-detailed and negative. The group recommended that the Subcommittee on Intergovernmental Relations consider in any revision to 5. 698, the elimination of detailed provisions which can be handled through administration, with more flexibility, and the inclusion of the following points in its report on S. 698: 1. That the intent and spirit of title VIII, Uniform Relocation, is to make the statutory assistance available to displaced households or businesses with the least cumbersome administration; 2. That it is the intent of the Congress that displaced businesses and households receive assistance `and that the emphasis should be on qualifying (not disqualifying) eligible recipients; 3. That the local administration of relocation assistance be flexible in terms of providing assistance in the survey and planning period of public development activities, as well as making payments in advance of actual moving, if necessary to meet hardship situations; 4. That the auditing of relocation practice be made in the spirit of 1, 2, and 3 above. TITLE ix OF S. 698-UNIFORM LAND ACQUSITION POLICY The local relocation directors meeting in Washington on May 16-17, had the following suggestions and additions to NAHRO testimony. Section ¶~04 of S. 698 provides for reimbursement of settlement costs on federally acquired property, but not property acquired with Federal assistance. This same section should apply to properties acquired with Federal assistance. PAGENO="0288" 282 Correction in act of the State of Maryland (No. 365), which NAHRO filed with its testimony: The compensation included in this Act, as finally passed by the Maryland Legislature was $5,000, not $3,500 as contained in the original bill, as filed by NAHRO. LIST OF LOCAL PARTICIPANTS IN NAHRO RELOCATION WoRKshoP, MAY 16-17, 1968, WASHINGTON, D.C. Qswalda BadaL Director of Relocation, Chicago Department of Urban Renewal. John Baylor, Relocation Supervisor, Urban Renewal Agency of City of Austin, Texas. Ray Call, Director, Family Relocation, New Haven Redevelopment Agency. Ray Carrasco, Relocation Supervisor, Sacramento Redevelopment Agency. Arthur U. Christensen, Assistant Director of Relocation, Balthnore Urban Re- newal and Housing Agency. Frank Coopa, Jr., Cumberland, Maryland, Urban Renewal Agency. Charles L. Davis. Relocation Officer, Saginaw, Michigan, Urban Renewal Division. Charles M. Dunlap, Director of Relocation Louisville, Urban Renewal arid Com- munity Development Agency. Jerry Elsinger, Commercial Relocation Officer, Chicago Department of Urban Renewal. Ed Emerson, Des Moines Department of Urban Development. Charles W. Fairley, Director of Project Operations, Redevelopment Commission of Greensboro, NC. Joseph Howard Grigsby, Chief, Relocation Branch, Atlanta Housing Authority. Cliff Hardy, Director of Relocation. Miami-Dade County, Department of Housing, and Urban Development. Howard Heller, Executive Director, Portland, Maine, Redevelopment Authority. Luther W. Hemmons, Director, Relocation and Management Division, D.C. Re- development Land Agency. Francis Hickey, Relocation Officer, Brookline (Mass.), Redevelopment Authority. Dorothy Hoiltz, Director of Relocation, Minneapolis Housing and Redervclopment Authority. Mr. Kupper, Rehousing Bureau, Philadelphia Redevelopment Authority. Ted A. MacDonell, Chief, Relocation Community Relations Division, Fresno Re- development Authority. Lawrence Miller, New York City Housing and Development Administration. Joseph A. Miltrano, Jr., Chief of Relocation and Property Management, Rochester Department of Urban Renewal and Economic Development. Marvin Nesbitt, Director of Relocation and Property Management, Kansas City, Missouri Land Clearance for Redevelopment Authority. Francis O'Connor, Relocation Officer, Brookline, Mass., Redevelopment Authority. Peter Rierner, Deputy Executive Director, Redevelopment Land Agency, District of Columbia. Homer Saunders, Director of Relocation and Slum Site Management, Detroit Housing Commission. Joan Smith, Assistant Director, Family Relocation, Boston Redevelopment Au- thority. U. Ronald Smith, Family Relocation Planner, Cincinnati Department of Urban Development. Philip C. VanSoelen, Director of Relocation, Seattle Urban Renewal Division. Warren Swartzbeck, Rousing Specialist, Philadelphia, Office of the Mayor. Robert Tobin, Director of Family Relocation Services, St. Paul Housing and Redevelopment Authority. Marian Yankauer, Director of Relocation Divi~ion, Massachusetts Department of Commerce and Development. Senator MU5KIE. Our next witness is Prof. George Sternlieb, re- search director of the Graduate School of Business, Rutgers. It is a pleasure to welcome you, sir, this morning. PAGENO="0289" 283 I~ESTIMONY OP PROP. G~EQR~E STERNLIEB, RESEARCH DIRECTOR, GR4DUATE SCHOOL OP BUSINESS, EUTGERS-THE STATE UNI- VERSITY, NEWARK, N.y. Mr. STERNLIEB. Thank you. Given the time pressures and many other things which I know you have got to dQ today, let me be as brief as possible. I have already submitted a statement which summarizes my thinking and I would like to add to it a very few comments which are open to question. First of all, I think we have to view relocation as a constant, not a temporary, occurrence, and certainly not a response to some phenom- ena that is going to go away. It is incumbent tipon us to accept this fact, and I thilik this bill is. a very important first step in the direction of developing appropriate methodology in governmental relationships which bring us ready for the 21st century. We are going to have more relocation. We are going to have reloca- tion not merely as a result of urban renewal and highway programs, we are going to have relocation, I think increasingly, because of tech- nological shift, and right now we simply do not have the methodology appropriate to cope with this. We have had some experience, some which I know you are -familiar with. For example, an Armour meatpacking facility closed down. The company was willing to move some of its workers. There simply was no adequate governmental aid in terms of advisory services, know- how, and housing market analyses to facilitate this. In the area which I am from, New Jersey, we had the closing down of the Mack Truck facilities. We had 3,000 workers put out of a job. I do not think it is coincidental that Plainfield was one of the cities in which there were significant riot activities. Again, the company was willing to move a significant number of its workers, There was no facilitating matrix that the company unions could turn to to facili- tate this interstate move. I am perhaps casting a rather long net here, but I am reasonably sure that the know-how gained through this type of implementing legislation will have its greatest significance in the years to come not as a followup of urban problems and rural problems, but because of technological dislocation. This means that we cannot simply put the program into the mainstream and think of it as being a finished pro- gram. What is required is a continuous updating and auditing of our approaches (and in the area of auditing I must say that Government facilities in general have been lugubriously bad). We simply do not have adequate statistical information on what has happened as a function of relocation. This has permitted a variety of nonsense type appraisals of relocation, among them that all reloca- tion is bad. If we view this relocation challenge as a constant, I think the necessity of accompanying it with continuous auditing procedures is very clear cut. I have some comments which are specific, actually, to Mr. Hughes' suggestions on the bill. I have stated these in brief form at the tail end of my testimony. Let me leave those stand for the record and receive any questions which you might have. Senator MU5KIE. Thank you very much. I do have a few questions. PAGENO="0290" 284 If I may say, we do have more and more pressure of time, but I wani to be sure I give you at least a minimum. The Bureau of the Budget in its testimony last week objected to th full 100-percent Federal financing of relocation payment up to $25,000. You refer to that as a disastrous step. I wonder if you would want tc elaborate on that? Mr. STERNLIEB. Certainly. Senator MusiuE. The consequences of that in Newark and in other cities? Mr. STERNLIEIi. Yes. Our problem, it seems to me, is a problem of concept, of thinking through what is happening and what has hap- pened. We thought of urban renewal as a response to an essentially local phenomena. If the local area wanted to do something about urban blight, why, the Federal Government would extend some aid. But it was still, essentially, a local responsibility and a response to local prob- lems. I think the absolute frequency of these problems, the univer- sality of these problems, increasingly makes us aware that this is not the disease of a particular area, but rather a national problem. Relocation is merely the handmaiden of our response to this problem. The local facilities, the local governmental units, have as part of this problem the fact that they are going broke. One of the things that is impeding urban renewal efforts right now is the fact that generous Federal Government provisions still require these close-to-bankruptcy local facilities to share substantial parts of the cost of what is essen- tially now, I would repeat again, a national problem. And we ask the government unit that cannot repair its schools, that cannot collect its garbage, that cannot pay its teachers, that is basically going out of business, we say to it, yes, cure yourself, but you are going to have to pay. Now, if local govermnent units cannot cover their operating costs, much less increase their essential capital budgeting costs, it seems to me, it is a step in the wrong direction. Senator MUSKIE. Mr. Rafsky earlier this morning referred to the fact that relocation payment and assistance begin only when an agree- ment has been reached between the Federal Government and the localities to receive it. As far as I know, no assistance is available dur- ing the planning stages. What experience did you have in Newark with this kind of problem? Mr. STEENLIEB. Experience which I think confirms the importance and significance which Mr. Rafsky has placed on this point. For example, one of the basic causes of the Newark riots was a very significant area of dislocation which was projected as a function of this medical school dispute. We have had ads in the Newark newspapers saying, "Are you located in the Federal school site? Come to real estate agent X. We have apartments for you." "You better get out of the real estate in the medical school site, come to agent Y." We essentially have blasted about 40 percent of all the people out of-not merely the site which was ultimately decided on, but out of the 150 acres that was initially projected. In the actual area now de- cided on for the medical school site in 1960 there were approximately 5,500 people. By the time the Newark Housing Authority, which is the Newark Urban Renewal Administration Agency, took a head count, PAGENO="0291" 285 Rd this by the way was prior, once again, to there being an official eclaration that this was the site and that relocation payments would e made, there were approximately 3,300 people. Now, this is an area which has a relatively tight housing markeL ~hese were people who basically had been displaced as strongly and as Eioroughly as if their houses had been bulldozed. Our problem is that nce an area becomes known as an urban renewal area, and let me use ~iat term "known" in quotes, you begin to get a pattern of high vacancy ~tes, and as your vacancy rates go up, your landlords reduce their iaintenance because the building is going to be taken. We have had shocking experience here, verbatim testimony by land- Drds indicating that they had been approached by the State highway eople preliminary to a route clearance and told not to make any re- airs. Now, whether the landlord is excusing his misbehavior in this ashion, or whether this was actually indicated, is certainly open to ue~tion. But, certainly what we do have is a pattern of desertion. In urn this has a dynamism of its own. People are driven out. The drunks, he derelicts move into the empty apartments. You get a pattern of randalism, and the decent people simply cannot live near that. By the time we have our area declared an urban renewal area or an irea for clearance, and by the time we have implemented this most xcellent legislation we have here, a very substantial portion of the )eople most impacted by clearance have been forced out. This is a very erious problem. Senator MUSKIE. What is the solution? Mr. STEENLIEB. On several levels. First of all, I think we must stop ;omehow, some way, this mischievous propagandizing of the local re- iewal authorities on what is going to be renewed. We asked some 3~0 andlords, are you in an area of urban renewal. Let me suggest that a ~ood many of them were in urban renewal areas and did not know it, md a good many of them were not in urban renewal areas and thought hey were, and I can understand their lack of knowledge here. Secondly, I think once we have a serious degree of interest in an area, :.hat we set up some degree of facilitative mechanism, if nothing more bhan a centralized facility that the tenant or owner can turn to for information. "What is actually going on in my area? What is the ~alendar? What type of Government programs am IL entitled to now? What can I look forward to in the future? Who is going to buffer rue? This is not available now. Typically what we have now are two forms of alleviation. One form is no alleviation unless you know about it, and the other form is alleviation in case you do know about it. And unfortunately, many of the people who are most in need of help, are those people who are least sophisticated. We simply have all too frequently the Government in any of its manifestations taking a very passive role. If you come, if you qualify, if you know how to fill out the forms, we will take care of you, and if you are willing to wait. But, if you do not come, we are not going to go looking for you. I would suggest very strongly this is not an arm's- length transaction, but this is rather the type of thing that one would expect from a not too scrupulous merchant trading in goods whose quality he was not too sure of. PAGENO="0292" 286 Senator MUSKIE. From your experience in Newark, what has bee the effect of fair market value concept on these land takings? Mr. STERNLIEB. I think the fair market concept has a deceptive] sound ring to it. By the very definition of fair market, we all belies it is a market, and we all believe it is fair. I think, however, its realit is that there typically is no market. Technically, the concept of market refers to a willing buyer and a willing seller. Now, by the very definition of the fact that I am not in the marke this means that market prices, as far as I am concerned, do not mali a market which attracts me. That the sum of my feelings, affection~ inertia, desire, are such that I want to stay where I am rather tha sell to you. There is no one moment that all the properties in an are are for sale. Now, the Government comes in and says at a moment of time w are going to have a market, fellows, and do you know what is goin to determine that market? The fellows who did not want to stay, th last sales in the area. Now, by the very definition of these last comparable sales, thes were the people who wai~ited to sell, and by the very definition that was not one of the sellers, there are sales that have no relevance to me Now, this is perhaps overly logistic and conceptual, but let us tur to the owner. The fair market, at best, in concept, should be a fair market whic permits him to reproduce that which he has given up, and the mone: merely becomes a facilitating means of exchange. The basic fact o the market is that all too frequently this simply is not the case, tha in order to be a buyer on an open market rather than a seller on closed market, he must pay more. Now, there may simply not be available the same type of facility the same type of conveniences that he enjoyed before. In business we say "Well, that is his tough luck," but it seems t me that in the Government-person relationship, we cannot say that We have a unique responsibility over and above the general concept o fair market, to provide at least fair market to the individual. It i not the individual who is profited by this program, it is the individua who is paying a very substantial part of the price for the progran which has universal application, and it seems to me that the Govern- ment must bear the brunt of defending its payments. Senator MUSKIE. What standards of measurement can be used fo establishing the amount of thesepayments? Mr. STEENLIEB. I think here we have to look into the reality 01 where will this individual go, what will it actually take him to get there, to be reestablished, to be made whole. We have to accept the fact that we have cut, at the very least, significant days out of this individ- ual's enjoyment of his facilities, we have put him to considerable difficulty, not uncommonly, particularly amongst people who are not toO learned. We have forced him to go to an agent, whether it be a lawyer, a consultant, or a confidant, and pay significant fees beeaus of his own uncertainties. I think all of these have to be taken into account, and to the degree that we have distressed him, let me repeat again, we must make him whole. That is our basic responsibility. Senator MUSKIE. This could be a case-by-case test? PAGENO="0293" 287 Mr. STERNLIEB. Yes; and at the risk of being academic, which is a ~erogative of the academician, after all, I do not think that admin- ~rative difficulties can be permitted to intrude on the conceptual )proach to be utilized. If we do not know how to do something ~cause of some difficulties of administering, then it is the responsibility the administrator to find out how. That is what they get paid for. Senator MUSKIE. Just two more questions. We provide for optional ~ed payments in the bill, presumably to give poor people an oppor- inky to get compensation without going through the burden of Iministration and redtape. Do you feel that that technique as worked it in the urban renewal program is a good idea, the optional fixed ayment? Mr. STERNLIEB. Yes, sir. Senator MnsIuE. Are they adequate in the bill? Mr. STEENLIEB. There I have some reservations. I will not make ny criticism at this moment. I can appreciate the limitations that we re suffering under. I think, however, this is an area that the corn- iittee should continually reexamine. Senator MUSKIE. If we do not get titles VIII and IX enacted as rritten, do you think that we will experience any real difficulties m ie results? How critical are they, in other words? How important re they? Mr. STERNLIEB. I think they are very, very important. We simply annot stop the wheel, we cannot immobilize our society. We are ependent on mobility. If I can turn for a moment from governmental rograms which impact society and cause relocation, if we can just urn to our private business we can see the phenomenon. When we look t mobility patterns, for example, the most mobile people in our society ~o longer are the poor, they are the rich. The pattern of corporate elocation, corporate transfer, is a constant. In my own neighborhood, vhen one goes house hunting he sees Scott Paper houses, IBM houses, vhat-have-you houses. These houses are actually owned by corpora- ions because they have had to move their executives. Now, notice in those caSes, in order to avoid impacting the individ- rals, a corporation actually takes title to a property, not uncommonly noving the wife into a hotel in the new city so that she can survey he area before deciding on a house. A whole infrastructure is built up n private industry to complement the fact of mobility. When we look at Government action here~ I think we should be oniewhat embarrassed; that rather than viewing this bill as an act f generosity we should view it as a very long-overdue first step to- ard meeting a continual challenge. This challenge is here. We are not oing to be able to ~top it. I think the waving of urban turbulence as a red fLag, saying that if on do not do what we want, we~are~going-to-geit-You4YPe of thing, as been much overdone. What is much more significant, however, is he relationship between the Government and the individual, not the overnment and the protester, but the Government and the individual, nd the individual's rights. Society makes us impact those rights. We ave to. The roads have to go through for the good of everybody. learance of a slum area is required. It has to be. But, we must make hat individual whole, and I think that is the important part. PAGENO="0294" 288 Senator M1USKIE. We thank you very much, Professor S'ternliei and that bell indicates that we are going to be voting before lon~ Thank you very much. Mr. STERNLIEB. Thank you, sir. (The statements of Mr. Sternlieb follows:) STATEMENT OF Pa. GEORGE STERNLIEB ON THE ROLE OF RELOCATION IN AMERICAT SOCIETY INTRODUCTION The fact of relocation is a constant on the American scene. It is the essentia and faithful companion of the technological changes which are continually after ing our lifeways, and the relationship between man and his environment. Th necessity for relocation will not go away. There is every reason to believo that it~ necessity will, if anything, increase over time. Its present niagncUtud~, encompass ing more than 100,000 individuals and fam'il:i~s, to say nothing of its futur( prospective growth, means that every feasible tool of analysis should be applied GOVERNMENTAL VERSUS CORPORATE RELOCATION Little notice is presently taken of the executive transfer, though `the role ol many suburbs is increasingly to provide transient accommodations. This is ac- cepted as being an essential part of the growth of American corpOrate might from a local to a national and even international level. The individuals in ques- tion typically are buffered by substantial relocation payments by the'ir respective firms, not infrequently including guarantees against loss on the sale of their homes, travel money for their wives to aid in the selection of new facilities, and even the taking of title of their past homes by the parent corporation. The growth of highways, the changing role of our cities, generates an equally inexorable logic in the relocation of people who all too commonly are at the other end of the economic spectrum-the poor. Here the Federal Government has a relatioHship with `its citizenry not `too dissimilar from that of the majo~ cor- poration-~tfte I.B.M., The Scott Paper, T'he Union Oarbide with its work force. The contrast in `the execution of its responsibuitie~, however, is unmistakable. While the corporate transefepee typically has some freedom of choice-he can move or net move-stay with firm or change jobs as he will, the individual caught in the face of a highway route, or major urban rehaul, does not have this op- tion. He is faced-and quite properly-_wi'~b `the overwheiini~g competence of the government through the medium of eminent domain. This entails a far greater responsibility on the part of the government in treating with the citi- zens ~`o displaced, than is the case with the corporation. The contrast, however, between the treatment a'ecorded the individu'~J by the private enterprise, as contrasted with the government, is very sorry' indeed. According `to a recent Wall Street Journal article, the corporate transferee i's commonly securing as much as $2,000 in heneflts as a function of the shift to say nothing of the pay increases whic'h may attend transfers. The public transferee on the other hand, secures only a tenth of this at best. Not uncommonly as will be detailed below, he is not even aware of the bdnefits, iiiio'dest though they m'a,y be, and must expen,d his very limited means to mov. himself with all of the attendant expenses that are involved. All too frequently th'e officials inVolved in a program do not view it as their `affair to acquaint th individual with the limited benefits which the government does make available, but rather view the'ir role essentially as a pass'ive one, i.e., to handle calls fo relocation payments only upon request. Despite the strong wording of remedial legislation, there is still the gap be tween relocation aid as a right and obligation of the government as agains its' being `a privilege-even though at best a most modest one. Given the strain, in'herentt in our society, `this is an attitude whi'ch cannot be tolerated. Much im provement has been made in relocation procedures, but much still remains to b don'e. HOUSING AND URRAN ECOLOGY The concept of the city as being something more than an end in itself, i.e., a institution wh'ich must he reinforced in terms of its own life cycle, has bee beh'ind much renewal thinking in the United States. More and more, we realiz PAGENO="0295" 289 hat the city is far less important than the people who live in lit, that the advance- sent in life style of the latter is much more important than is the city per se. The city is a place where the bulk of our poor presently live and, while this say change in the long run, certainly for the next half-score years, this will be rue. Our efforts to bolster the city often are most costly to the poor, given their dative immobility, particularly in the face of housing restrictions both economic md social, coupled with the fact that there has been a substantial shift of employ- aent location outside the city. Relocation is in part the essential concomitant of efforts to bring jobs back tnd is frequently the essential price of proriding an environment which for the )verall group is substantially more satisfactory. The rapid obsolescence of much f the urban housing stock requires very substantial efforts at rectification. rhese too, involve massive clearance and/or rehabilitation efforts which involve mnlocation. This is a price which society as a whole must pay. Unfortunately, all Loo frequently, a very part of the personal burden is borne by those least able to support it-the poor urbanite. GOVERNMENT AND THE PEOPLE Government intervention is frequently called on in a role similar to that of the surgeon-cutting away the malignant, the disease provoking, in an effort to save the entity. But this relationship between the government and the people involved in the city is a most sensitive one. If the feeling arises that the government is a monolithic entity trampling over the desires and sensitivities of the individual, a remorseless juggernaut that cannot be intimidated through the weak political processes and organization of the poor, only despair and violence can result. In this very delicate relationship, relocation practices play a major role. We have not taken full cognizance of this role. Past practices, particularly with highway location, have been callous to an extreme. Survey teams have gone into areas, prior to any efforts at formalized relocation, and have literally scared half the inhabitants out. What surveys we have of former relocation practices largely have as their universe not the total number of people extant in an area prior to the actual inception of clearance, but rather the portion of those people who have stayed past the waves of forced exodus. As such, these studies are open to criticism. NATURE 01? THE CRITICISM All too frequently, however, the criticism of relocation procedures has been substantially fallacious. I would like to touch here on two schools. The first of these has been referred to as the "grief school." One of the basic research efforts at determining the mental outlook of people faced with relocation had as its lead question for example, the following, and I quote: "Many people have told us that just after they move they felt sad or depressed, did you feel this way ?" The scale which was used to grade this obviously leading question ran from minimal grief to maximum grief. There simply was no way to rate people who might have been happy at being moved. The second school of thoughtis the nesvradical group that feels that anything governmentally inspired must be wrong. When faeed with the results of a recent Bureau of the Census study of relocatees, their basic response to its positiVe elements was to accuse the census bureau of being obviously biased, i.e., one government agency rating another. I do not think that this argument needs to be criticized here. It does show, however, the depth of feeling and obtuseness which can be raised on this subject. THE DOLLARS AND CENTS OF RELOCATION The comments of relocatees are clear on dollar cost: "The linoleum didn't fit in the new place-it began to curl. It cost me $28 for new linoleum in the kitchen. The piece in the living room worked out alright but in the old place we bad an extra bedroom, now in the living room we need a daybed that cost $65 used." "The curtain rods when we came in were banging by a thread." "I think the first week my husb;and told me we spent $23 in the hardware store." "We had our own refrigerator but it didn't fit in the new kitchen." "You know you can't get any- thing for a used refrigerator, except when you want to buy one it costs a lot of money." PAGENO="0296" 2~O I could go on with these quotations at substantial length. I think if you recall your own experiences in moving, and add together all of those non-budgeted items: the cup hooks in the kitchen cabinet, the lining paper, the weather strip- ping for a leaky window, the new electric light bulbs and occasional fixture, the piece of furniture which doesn't work out and the new furniture which is required, the electric extension cords, and all of the other items that make a place appropriate for people to live in, that the sheer absolute inadequacy of the $200 payment-which as you know, must also cover the actual physical costs of moving, are all too clear. We have not incorporated into this balance sheet, the day away from work which not uncommonly is the concomitant of moving. Note many of the relocatees are paid hourly, their moving day wages are not absorbed by the employer. THE NECESSITY FOR PAYMENT REVISION The description above certainly does not make happy reading, hut notice that this prevails under the very best of circumstances. Under present highway pro- cedures, unless the state has opted for the government program in renewal, the actual payment may be far less. Again, let me point out that these payments currently are only made for those people who hold still until the actual process of renewal and relocation is undertaken. All too frequently, however, renewal is announced well in advance of its actu- ality, a neighborhood begins to empty out, landlord maintenance slips very rapjdly. As vacancies occur acts of vandalism take place, the street gangs and the derelicts move in, the family, even though it may desperately need financial aid for relocation simply may not be able to tolerate the environment long enough to be entitled to it under present regulation, The ultimate payment geii- erally may barely cover actual out-of-pocket moving costs, with nothing remain- ing to buffer relocation or repay personal labor. We presently have the opportunity to reconceptualize the relocation procedure, to make it not the horrendous penalty of being In the path of progress, but rather a handmaiden of progress, a corollary of progress. At best, there is always the feeling of dislocation. The difficulty of finding new accommodations_the increase in housing costs which are usual have not been touched on here. These factors do not rule out the necessity of relocation, they do, however, make it essential for it to be carefully structured. Certainly big govern- ment owes it to little citizen to treat him with all of the deference and considera- tion possible under the circumstances. STATEMENT OF Dn~ GEORGE STERNLIRB ON S. 698 The remarks which have already been circulated in my prepared statement are essentially in the nature of a preanible to the specifics of the bill S. 698 May I say first that I believe the Bill to be a very important and timely piece of legislation, fully in keeping with the nature of the challenge of the problem. I can add very little to the Bill which is so clearly the product of profound thought and care and preparation. There are, however, several points which, with some diffidence, I would like to touch on. They have to do both with de- tails of the Bill and also with the statement of Philip S. Hughes, Deputy Di- rector of the Bureau of the Budget, based on the release of Thursday, May 9. ON THE PRO-RATING OF THE COSTS OF RELOCATIoN Mr. Hughes suggests that the relocation costs be considered part of the land east and pro-rated under this definition, as is the case presently for other urban renewal costs. I think this is a disastrous step in the wrong direction. The fiscal crisis of local governmental units needs little elaboration here. Suf- fice it to say that it is precisely those jurisdictions which are most in need, which would be most impacted by this proposal. One of the major inhibitors of renewal efforts is, and sadly enough will be increasingly, the lack of where- withal by the local government to meet present funding requirements_rnu~h less meeting an increased burden as proposed by the Bureau of the Budget. PAGENO="0297" 291 SMALL BUSINESS DISPLACEMENT Title 8 `of the Bill seeks to alleviate the burden of those small businesses which are impacted by relocation. The Bureau of the Budget would limit this to those "actually displaced." The argument extended seems largely to be one of conven'ience-4t's hard to tell the degree of displacement except for those actually steam~rol1ered. While I would not minimize this stricture, we cannot limit our expression of justice solely to those areas where it is easily applied. All too frequently it is the fledgling minority group business man who is most impacted by the clearing away of the patronage upon which his small retail or service estab- lishment depends. In the course of a recent Newark survey, we secured ample evidence of this. I think it is up to HUD or another appropriate agency to define appropriate operating methodologies here with which to help administer this Act. I would not accept the Bureau of the Budget's criticisms. BUSINESS RELOCATION ALLOWANCES The Bill, as presented, calls for optional payments of up to $5,000. The Bureau ~f the Budget suggests the actual expenses of moving plus a maximum of $2,500. Both require inCome tax returns to establish the profitability of the business. Both maximum payments are related to this profitability. Let me suggest here that if we are to err, we should err `on the side of reasonable generosity. At the level of payment which we are speaking of here, we truly have reference `to small, small business. These businesses do not move easily. They `are frequently unique to `a particular `location, to a particular ethnic group, not uncommonly they have essentially grown in a fashion which makes them nontransferable. To use a, perhaps, overly pretentious term, the `small, small business of the older area of the city has a most delicate ecology. By pulling it out of its environment, we expose it to very substantial risk at best. The fact that so very many of the small `businesses are not re-established Is cited as proof of the fact that they didn't make economic sense and therefore, that their con- tinuance is irrelevant, their clearance merely advancing the time of their demise. While there may be some macro-ecen'omic logic to these conclusions, they have little relevance to the individual owner `and operator whose life style and inoome mean's are su'stained by this type of endeavor. The $5,000 payment suggested in the Bill is not a windfall, but rather an appropriate indication that government is talçing cognizance of this problem. Given this analysis I would seriously question the $2,500 figure suggested by the Bureau o'f the Budget. Let rue suggest here that in any case the typical small owner secures m'any benefits which are not shown on the income tax return. To the degree that the latter is the required documentation in `order to secure these payments, the latter will understate the degree `of hurt. RENT SUPPLEMENTS Title 8, ~ecti'on 802 (e) is, in my opinion, one of the most important con- tributions which could be made in the field of relocation. It `provides for filling the dollar ga'p between the dlsl'ocatee and the requirements of the `market for appropriate housing accommodation's. The one addendum I would make is to the clause providing that the supplement will be sufficient (within the $500 annual limit) to make up the difference between the new rent and twenty per- cent of `the income of the family distocated. I would suggest strongly that some type `o'f va~iable allowance based on the number of people in the household should be adopted here. Housing ex- penditures as a function of family size vary very substantially. Suhject to this stipulation, however, `may I take the opportunity `of com- mending the Committee on its resourcefulness and forward thinking. Senator Musiun. Our last witness of the morning, and I do not know how far we are going to get, is Harold F. Wise, legislative chairman of the American Institute of Planners. It is a pleasure to welcome you, sir. PAGENO="0298" 2~2 TESTIMONY OP HAROLD P. WISE, LEGISLATIVE CHAIRMAN, AMERICAN INSTITUTE OP PLANNERS Mr. WISE. Thank you, Senator. I have a very brief statement here. Members of the committee, my name is Harold F. Wise. I am legis- lative chairman of the American Institute of Planners, the profes- sional planning organization which now numbers some 5,000 mem- bers who are actively engaged in the professional practice of planning in the cities, counties, regions, and States of this country. I am here on behalf of the institute to most enthusiastically sup- port the principal measure before you: the Intergovernmental Co- operation Act of 1967. This is essential, creative, and basic legislation which seeks to knit together and make more meaningful the Federal Government's par- ticipation in intergovernmental affairs and in the continued develop- ment of the urban areas of this country. Title II of the bill, dealing with improved administration of Fed- eral grants-in-aid to the States, is a very simple, straightforward, and greatly needed additional tool to improve the administration of State government. Two years ago my office engaged ;jfl a study with the Director of the Budget and the Office of State Planning in the State of Georgia. We found that in 1966, outside of the university system, there were some 200 Federal grant-in-aid programs being used by the State of Georgia which brought $300 million into the State that year. One of the more interesting findings that we made in that study was that approximately 82 of the grant programs required some kind of a comprehensive plan or multiyeared programing as a condition to the receipt of the funds. The great magnitude of the coordinative job necessary there I'm sure you can appreciate from the fact that we found that no single filing cabinet in the State capitol or in the State office building contained more than one of these plans and yet in all cases the plans sent to the Federal Government expressed to Federal agencies the policy of the State. Subsequent to this study the legislature did adopt new State plan- ning legislation and reviews of Federal grant applications by the planning agencies in the Governor's office is now a matter of law and policy. Title II would vastly improve the flow of information from the Federal Establishment to the Governors' offices and in that regard help to underpin the planning efforts of the Governors of the various States. I am not unmindful of the flow of information to the legislature as well as to the Governor's office as being equally important. Title III is a sound proposal in this period of growing complexity in our governmental programs and a general shortage of trained manpower. Specialists working with the Federal Government should be available on an as-needed basis to State and local units of government. We fully endorse the provisions of title IV and believe that it would be a great step forward should this language become law. It establishes a Federal policy for sound and orderly development of urban communities and permits the President to establish rules and PAGENO="0299" `293 regulations for uniform application of urban development programs within the purview of this policy. The many, many programs scattered throughout the Federal Estab- lishment are sorely in need of this kind of common direction which title IV would permit. Title V, "Congressional Review of Federal Gran,t~in~Aids,~~ is a matter that has been before the Congress, as we all know, for quite some time. It is sound. Again, in the interests of coor'dinatiion and making similar programs work constructively together this review should occur and the passage of title V would assist in this regard. Title VI again, in our opinion, is a very necessary concept which would give to the President the `type of authority he now hais in reorganization matters but in this instance to the consolidation of sin~il;ar and complementary grant-in-aid programs. We all know, for example, the very large number of similar categorical grants for community water supply, sewage, and sewage treatment facilities. These are complementary and I am sure more effective use of the Federal dollar and more meaningful use locally can be made if several of these similar programs were to be consolidated under the authority granted by `title VI. Title VII, dealing with the acquisition, use and disposition of land within urban areas by Federal agencies is the kind of legislation that planners all over the country have been seeking fo~ many years. In short, this legislation would pro'vide that the Federal Government would have to behave in the same manner as any other citizen is expected to behave within a local jurisdiction and conform with all of `its planning requirements and the land use planning most psarticu~ `larly established by that locality. This is very sound legislation and should be adopted to assist the localities of the country in their orderly de~eloprnent. Title VIII, "The Uniform Relocation Assistance," in our opinion, is long, long overdue. For years there have been relocation assistance programs particularly in relation to Department of Housing and Urban Development assisted undertakings. This legislation would establish uniform provisions and assistance for the relocation of persons and businesses made necessary by any action of any federally assisted program. The urgent importance of this legislation can be realized in connection with `the unrest in our central cities areas today, where over the years almost ruthless actions of local, State, and Federal agencies have consistently continued to stir up the living patterns of people long established in older `and `decaying neighbor- hoods. This proposal is a humane and essential recommendation. Mr. Chairman, I also have with me, and we would request to insert into the record, a policy statement adopted on May the 5th on equalS opportunity, by the board of governors, American institute of `Planners. Paragraph C indicates the institute's support of efforts to measure the need for and increase the supply of housing for all, and especially people of lbw income, both within existing communities and elsewhere in rural and metropolitan areas and to minimize the negative impacts of population displacement `through the careful staging of projects. Now, I submit you cannot talk about the careful staging `of projects unless you have the essence of the spirit and detail of title VIII as PAGENO="0300" 294 a matter of law. With your permission I would like to have this in the record. Senator MU5KIE. Yes, the whole statement will be put in the record. Mr. WIsE. Thank you very much. Title TX, dealing with the uniform land acquisition policy estab- lishes guidelines and policies with regard to land acquisition pro- cedures of nil Federal agencies. Again, this is long overdue and the American `Institute of Planners supports this proposal. Gentlemen, we have been delighted to have had this opportunity of presenting to you our views on this very sound and important legislation and we urge your favorable action on the entire measure as it is before you. It will be of great assistance in the continuing difficult development job that is facing our States, our regions and the localities of the United States. Thank you very much. (The material referred to follows:) PLANNERS CALL FOR EQUAL OPPORTUNITY, ENDORSE RIOT COMMISSION REPORT The American Institute of Planners today strongly endorsed `the Report of the President~s `Commission on Civil Disorders and called on its 4800 members to work for maximnm equal opportunity for the poor and minority group members in planning programs. The Institute's Board of Governors,, meetin,g in San Francisco, adopted a new policy on equal opportunity which urges planners in AlP `to involve the poor and members of minorities in the planning process. The policy statement `calls for planning agencies, members of AlP and related professionals to work more closely with all who will be affected by their planning to democratize and decen- tralize planning. The statement also asks for a conscious effort by planners to distribute costs, hardships, benefits and opportunities in their plan's to eliminate po'verty and discrimination against the disadvantaged and increase their oppl~rtunit4es. On planning education, the new AlP policy `~ays that curricula of planning schools must be changed to give new members `of the profession the knowledge to achieve these eqnnl opportunity goals. The statement says that the entrance of minority group members into the planning profession must be encouraged and assisted by AlP. Finally, the AlP Policy Statement on Equal Opportunity calls for a reallocation of national resources by public and private agencies as suggested by the Freedom Budget and the Kerner Commission Report. RIOT REPORT ENDORSED The American Institute of Planners strongly endorses the Report of the President's Advisory Commission on Civil Disorders. We `commend the Report to all members of AlP `and urge that all planners in both the public an'd private sectors seriously consider `following its recommendations a's `a guide in `their professional practice. POLICY STATEMENT ON EQUAL OPPORTUNITY The American Institute of Planners `supports the goals of maximizing equality of opportunity and elimination of poverty among all those affected or potentially affected by the programs and plans in whose development an'd execution ATE members are involved; and is concerned that AlP members use their various talents in ways which help achieve these goals. The American Institute of Planners recognizes that planning activities and programs have not always supported achievement of these goals and that some- times, in some places, contrary goals have dominated. We reaffirm the `statement on The Professional Planner and Minorities adopted by the AlP Board of Gov- ernors on January 29, 1967, and further recognize that the Institute, as a PAGENO="0301" 295 national pr.ofe~s1onal organization, and its members have both the opportunity and the obligation to help achieve these goals through the following: 1. A. reallocation of national resources by public and private agencies as suggested by the "Freedom Budget" is necessary to eliminate poverty, inequality and discrimination, recognizing, as does the Report of the National Commisswn on Oivil Disorders, that "there can be no higher priority for national action and no higher claim on the Nation's `conscience," 2. The development and implementation of plans and programs must reflect a conscious and deliberate effort t~ distribute costs, hardships, benefits and opportunities tq eliminate poverty and discrimination against the poor and members of minority groups and increase equality of opportunity. 3. Planning agencies, members of AlP and related professionals must work more closely with all who will be affected by their planning, especially the poor and members of minority groups, to democratize and decentralize planning, and to increase public understanding of, involvement in, and ability to affect the community development process. 4. The curricula of planning schools must be changed where necessary to include educational experiences that will assure that new members of the profes- sion will be aware of and able effectively to influence the planning process to achieve these goals. 5. Entrance of members of minority groups into the planning profession must be encouraged and assisted. In order to achieve these goals and implement this policy,, the following actions by AJP staff and membership are required: A. Emphasize the achievement of these goals in all representations before legislaitive, policy and administrative bodies at all governmental levels, and private and non-public agencies and institutions. B. Hold Chapter and Section meetings to discuss these goals and develop local programs aimed at their achievement, joining where appropriate with other organizations, seeking thereby to build broader support for Institute programs. C. Support efforts to measure the need for and increase the supply of housing for all, especially people of low income, both within existing com- munities and elsewhere in rural and metropolitan areas; to minimize the negative impacts of population displacement through eareJal staging 01 projects; and to improve access to employment centers for low-income and less mobile population both by improving transportation facilities and reducing costs. D. Support efforts to incorporate manpower and employment training as part of the comprehensive planning at all levels, recommending the creation of new jobs and career opportunities for the under-employed if such are lacking, and the elimination of all forms of discrimination in job training, placement and upgrading. B. Seek funding for a demonstration project of a monitoring system of governmental programs and agencies to evaluate thei'r contribution to over- coming poverty and maximizing equality of opportunity and to report thereon. F. Provide the poor and minority groups with professional assistance, including knowle~ge and skills needed to initiate their own planning and community development programs. G. Make data, `studies, (and methods used in program and project develop- ment available and accessible to all; make public hearings an'd information relevant to such hearings accessible to the affected `and concerned citizenry with sufficient time for study `prior to such bearings; make resources avail- able to such persons or groups, enabling them to become adequately informed; and develop means for assuring that `all relevant planning documents evaluate the impact of plans on achieving equalization of benefits `and opportunities. H. Develop, through the Division of Planning Education, specific incentives for the participation `of planning schools in promotional efforts and the grant- ing of scholarships leading to study at such `schools by `members `of `minority groups. I. Supplement present Institute income from outside sources as necessary to undertake the above tasks. J. Support an expansion `of financial commitment adequate to enable pro- grams such as Model Cities `to eliminate poverty, unemployment and discrim- ination. PAGENO="0302" 296 K. Through the Committee on Reformulation of the 1od'e of Professional Conduct reflect the critical responsibilities of the planning profession for responding creatively and vigorously to the profession's responsibility for enhancing equality of opportunity. L. Insist that all governmental agencies, through practices, public staite- ments and directives, promote agency practices which directly encourage equal opportunity in housing, einployiuent, and all other areas with which they deal and secure full compliance with the laws,, orders ahd Constitutional provisions requiring non-discrimination in all federally-assisted programs. M. Direct all AlP Divisions and Committees to develop detailed policies and recommendations needed in order to achieve theSe goals. Senator MUSKIE. Thank you very much, Mr. Wise. Thank you all for your patience. The committee will be in recess until next Tuesday at 9 :30. (Thereupon, at 11:10 a.m. the hearing was recessed, to reconvene on Tuesday, May 21, 1968, at 9:30 a.m.) PAGENO="0303" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION TUESDAY, 1~TAY 21, 1968 U.S. SENATE, SUB00M1\iImE ON INTERGOVERNMENTAL RELATIONS OF THE COMMITTEE ON GOVERNMENT OPERATiONS, Washington, D.C. The subcommittee met, pursuant to recess, at 9:50 a.m., in room 5302, New State Office Building, Senator Edmund S. Muskie (chairman) presiding. Present: Senators Muskie and Baker. Staff members present: Charles M. Smith, staff director; E. Winslow Turner, general counsel; Robert E. Berry, minority counsel; and Lu- cinda T. Dennis, administrative secretary. Senator MUSKIE. This committee will be in order. We are meeting this morning to continue our hearings on 5. 698, the Intergovernmental Cooperation Act and related legislation. We are focusing particularly on title VIII of this bill, which deals with the displacement and relocation of people and businesses and projects that are financed in whole or in part with Federal funds. This legislation would establish the rule in all Federal or federally assisted programs but property may not be taken until there is assur- ance `of available standard housing for those displaced. Also it pro- vides for uniform relocation payments and services for those who must move their homes and businesses. Compliance with these requirements will be a condition for Federal grants to State and local governments to undertake such projects. We `have taken testimony on this bill in the administration from representatives of State and local government, and from various pri- vate organizations. Today we are taking testimony from those who can tell us first hand the effects of these public projects on the life of those living in the affected areas. These are the people who must give up their homes and businesses at the sake of benefits to the community as a whole. We are looking for ways to reduce the sacrifices they must make and help them achieve new and, hopefully, better ways of life as a result of this experience. This subcommittee can give no final answers today. The legislation before use has a long way to go before it becomes law. It is the task of the subcommittee to hear your testimony and to give it full consideration as we prepare this `bill for action by the Senate. I can assure you that this will be done. (297) PAGENO="0304" 298 All right. Our first witness this morning is Rev. Canon Donald A. Griesmann, director of the Episcopal Community Center in Camden, N.J. Father, I note that you have Some witnesses accompanying you. Would you identify them for the record and then proceed with your testimony. TESTIMONY OP THE REV. CANON DONALD A. GRIESMANN, DIREC- TOR OP THE EPISCOPAL COMMUNITY CENTER, CAMDEN, NJ. Reverend GRIESMANN. Surely. To my right is Mr. `Charles Sharp, who is chairman of the Black Peoples' Union Movement in Camden, and other members of the BPUM are to his right and just to the rear; and we have also brought with us from Camden members of the other citizens groups in `the city, persons who are in urban renewal projects, persons who are in the pathways of future highways, and members of the staff from the community center. Mr. Sharp will also give testimony if We have the available time, sir. Senator MUSKIE. Fine. Reverend GRIESMANN. I wish to thank you for allowing us to come and address you on title VIII of bill S. 6~8. We feel `that this is an extremely important bill and faces some of the critical problems in the matter of relocation for displaced individuals and families. We strongly support this bill, and in particular its provisions which will `bring federally assisted highway construction under the require- ments to provide relocation assistance contained in title VIII. The Significance of this provision can be seen in the fact that in the city of Camden during the past 2 years over 1,000 families and indi- viduals have been displaced by Interstate J-Iighway 76. These families did not receive meaningful relocation assistance by the New Jersey State Department of Transportation. We urge the congressional ap- proval of this bill and will make in the process of this report some 10 recommendations. We have mailed to you press clippings about the most racially tense period in Camden during the past decade and perhaps even further back than that; and essential to this period is the matter of relocation, urban renewal, highway development, and code enforcement. All of these issues confronted the citizens of Camden and the citizens took it upon themselves to handle them because relocation officers were not equipped to do it. Highway development has displaced more people in Camden than urban renewal ha~ thus far, hut we must pair off city code enforcement along with the urban renewal and thus we have some 3,000 people dis- placed in 5 years. Because of the lack of coordination of government agencies and the lack of a mandate from Congress that the Depart- ment of Housing and Urban Development get down to the business of building houses, the frustrations of the poor have grown to a serious and tragic proportion. From coast to coast, from `the gulf to `Canada, we have seen a great amount of urban development, but very few houses. The first recommendation we make is a matter `of conservation of low-income housing resources. The purpose of this amendment is to make it the official policy of Congress to maintain existing low-income housing resources which are decent, safe, and sanitary. PAGENO="0305" 299 The report of the National Advisory Commission on Civil Dis- orders clearly points out the severe shortage of low-income housing resources and documents the fact that government~ and in particular the Federal Government, is responsible for a decrease in the number of low-income housing units. In a report that our staff submitted to Mr. Weaver, Secretary of Housing and TJrban Development, it is approximated that 3,000 low- income families have been displaced in Camden; that another 3,000 low-income families are going to be displaced under present plans by Denember 31, 1972. During the past 5 years only 101 new units of low-income housing have been added to the housing supply, and these are for elderly people only. Congress must realiz~ that under present conditions the poor con- sider even bad housing preferable to no housing. In our. cities around the Nation Individuals and families are behig left homeless and there- by forced into overcrowded substandard housing or housing which is marginal and will rapidly deteriorate due to new overcrowding. Item 2 is a matter of grassroots representation in the planning process; and we are plea~ed to see some direction in this particular bill. This addition strikes at the heart of the crisis in our Nation which is a crisis in democracy. Government appears to have forgotten the people, and the tension tearing at our fabric is founded in the failure of Government to provide and require that the people directly affected by urban renewal or highway construction, code enforce- ment, and other governmental actions be intimately involved in the planning, in the deciSion making, in execution, and in monitoring of programs which determine their destiny. The law in theory requires citizen participation in the urban renewal process, but the Department of Housing and Urban Development does not enforce this requirement. The law provides for hearings on urban renewal, housing construction, and other public improvements, how- ever, the lack of professional assistance available to the poor makes it impossible for a community to negotiate successfully with the Govern- ment which has the ability to provide countless expert witnesses and detailed studies. These hearings are a mere formality. The poor must be given the power to enter the planning process at the stage where they can deci- sively affect the process; this means the poor must be involved from the beginning all the way through to the execution and construction. I want to depart from the text at this particular point and emphasize that in Camden we have what is required by the work of a program of the Citizens Advisory Committee. The Citizens Advisory Com- mittee are strictly members of industry and business, called the Greater Camden movement. There is no representation of the poor, no representation even of the citizens; only one member of this committee lives in the city. All the rest except one work in the city. One member is the president of ,John Wanamaker Co. in Philadel- phia, who neither lives in Camden, nor has business in Camden; and the citizens are not part of the advisory committee. We documented this in January 1967 through a coalition of civil rights, religious, and neighborhood groups~ We brought it to the attention of the regional office. We sent a letter to the President about it, and we have gotten no reaction whatsoever from HUD on this matter. We had to go 95-626-GS------20 PAGENO="0306" 300 further than that to document the problems the poor have in being part of the planning process, and so we produced a 209 page report which we have filed with this committee as well as others. We made legitimate demands in 1967, and these were never met by HUD, and all they did was say give us some more proof and we will set up some means of grievance. To this point, we have a task force in the city but no changes on the Citizens Advisory Committee. We requested that there be a minority housing subcommittee, and this was never set up in the city of Camden. We requested it of HUD, we requested it of the city officials, and all we got was a blind look. The basis of democracy is the Government with the advise and con- sent of the governed. Yet the experiences of Cleveland, Detroit, New- ark, Camden, and cities across this country all testify to the fact that the people are being dictated to by the Government-Federal, State, and local-and that Government is enforcing a set of policies and pro- grams which are premised on the economic interest of the white middle class. The poor pay the price of this economic interest. Their lives are destroyed, their families are uprooted three, four, five times in a decade. When housing is found for poor people it is normally in the pathway of another urban renewal project, or in the pathway of a hio~hway. I~riends are lost as neighborhoods are torn asunder. Children's education is interrupted as schools, teachers, and grades change with each move. Small businesses are destroyed. Homes are taken. mdi- viduals and families are left homeless and forced into substandard housing. New ghettos are created in the marginal housing which be- comes overcrowded. The elderly die. We followed the pathway of Route 76 in the city of Camden over a period of 3 years. The families were not given relocation assist- ance. They were directed to the board of realtors-for blacks and Puerto Ricans to be directed to the board of realtors is to direct them to prejudicial people. The Board of Realtors in Camden County sent out lists to their members of families being displaced-blacks and Puerto Ricans-on a mimeographed list. Together with that list was a red, white, and blue broadside presented on a national level saying, "Let us fight the President's open housing law. We did it last year. Let us do it again." What kind of treatment can be expected by the poor--the black and Puerto Ricans-when their names are presented by a bc~ard of realtors who are fighting the open housing law. The New Jersey State Department of Transportation referred people to a few agen- cies, and then the national group, the Federal Department of Trans- portation says all the families were referred to the relocation office of urban renewal when this~ in fact, was not done. We find that urban renewal and highway construction are displacing people without adequate relocation plans. The poor cannot live in the housing; the educational failures in our cities precludes the poor from going to `the. universities which urban renewal is building; the cultural horizon centers that urban renewal is building are of the white middle class; and the poor cannot get the jobs in the industry and the businesses that are being constructed by urban renewal funds. PAGENO="0307" 301 Iii Camden the first urban renewal project replaced homes with cleared land for indnstry. The Negro leaders of 1958 and 1959 were told to support the project because it was for homes~ but it is earmarked industry. After 10 years all we have is cleared land, no industry has been built there. We are told another 15 years would have to go by before the industrial use would disappear. No one has built a `thing on it. Another urban renewal project was a luxury apartment with rents over $100 a month. For several years taxes on that apartment building were reduced because occupancy was low. Next an office building was constructed. Now, the developer is bank- rupt, `and one of the biggest tenants of this `building is our own housing authority who is supposed to take care of public housing and urban renewal. Three new schools were constructed in our neighborhoods-the black, Puerto Rican neighborhoods-without blacks and Puerto Ricans be- ing involved in the planning. We, `the people, were told the old schools would `be torn down for the new ones, but `the projection of student population `was too low and some of the old schools are still standing and our children still go to them. This is in a city that has won an award for urban renewal. We would point out that the award was given by other planners. Rutgers University has displaced hundreds of Puerto Rican families in 1966 in the city of Camden. No Puerto Ricans could get into public housing. W'e had to go to the' streets and march `an entire summer in order to integrate public housing in 1966 in the city of Camden. It was only after all those marches and raising a lot of sand that integration occurred. The educational system of Camden does not prepare the Puerto Ri- cans who were displaced to attend Rutgers, nor is Rutgers involved with their neighbors. Now, we have got a Northgate II project which is displacing over 300 families for apartment units with 300 to 400 apartments which will rent over $100 `a month and up. Mr. Sharp will give you some testi- mony relative to the problems of the families in that area. The only new units created for `the poor have been in one apartment building for the elderly. Now, highways. Highways are the new conversion of the former low income housing, and they are for easy access of the white middle class to escape the city at 60 miles per hour back to the suburbs that the Federal Housing Administration has built since the Second World War. Highways are built to rush suburbanites into t'he cities for em- ployment, athletic events, and entertainment, and out of the city in order to live. Twenty years ago the New Jersey State Department of Transporta- tion bought houses in South Camden for a highway. Many of these houses were demolished. Just a few years ago the route was changed, so that today vacant land stands where, under existing FHA rules, no houses with off~treet parking can be `built without displacing more families. A street that could have been rdhabilitated is now a pock- mark in our community. This is not only an issue of poor planning and development, but it is also an act o'f civil disorder by the civil authori- PAGENO="0308" 302 ties; this is legalized looting of houses and vandalism of our neighborhoods. The history that we have seen in Camden is a history of broken prom- ises, of lies, of added disappointments, and frustrations to the black, to the poor, to the Puerto IRicans. Inherent in much city planning is the view that Government sup- ported programs are designed to revitalize the city, to build up a hew economic base; but that economic base is being built on the backs of Puerto Ricans, and blacks, and the poor. In Camden the blacks and Puerto Ricans have been denied the oppor- tunity to participate in the formulation of the city's redevelopment plans. The mayor of the city has refused and continu~s to refuse to rec- ognize community grol4ps, valid and alive, formed by the people for the purpose of improving their neighborhoods and rebuilding thMr city. The model cities application submitted on April 15 of this year to H1IJD was prepared without the participation of the black and Puerto Rican communities, the mayor did not give his planner permission even to speak to those community groups. Part three is a matter of the result of the displacement and housing relocation. At present there is not any mechanism to coordinate the various federally assisted programs and their effects on housing. The workable program of the U.S. Department of Housing and Urban Development is totally ineffective in reguhtting displacement in hous- ing resources for displacees. This is so first~ because HUD fails to enforce the legal requirements enacted by Congress for a workable program with respect to housing f or displaced persons. And second, because HUD has no control over displacement caused by programs assisted by the U.S. Department of Transportation. It must also be noted that the multiplicity of stages in the urban renewal process under title I confuses and clouds the relocation re- sources question. We have found that HUD requires a 100-percent sur- vey of an urban renewal area to have some clear understanding of who are going to be displaced and what kinds of resources are going to be available in the community in the city. We have found that these sur- veys are 3 years prior to the execution of a project. So a lOO-percent survey of a community today is not a 100~-perceiit survey of a community 3 years. from now when people are being dis- located, when they are being moved out of their homes. Once that survey comes into a community, it warns some families that it is time to move, and the whites find their excuse to move out immediately, and then to rent the property to blacks and Puerto Ricans without doing repairs. It warns housing inspectors to be lax in the enforcement of codes in the city. This is seen in our city time and time again. The chief housing inspector in our city said "We cannot go to that urban renewal project even to inspect the acquired properties. We do not have the staff to do it, and there is no sense forcing the landlords to fix it up because it is only going to be demolished in a year or two anyway." The resident turnover in 3 years is great and a totally inaccurate view of the needs and resources i5 the result. This is the case with respect to the Northgate II project in Camden, and this is true also in all other projects that we have seen. Urban renewal does not take PAGENO="0309" 303 into account what a highway does in the same city. The urban renewal project was OK'd by HTJD and then the highway department came in and this caused displacement of 1,000 families, totally disrupted the finding of houses in the city. We reached the saturation point where families could not find decent, safe, sanitary houses, and the urban renewal relocation office could not move them. No. 4. This is by title. We think that HUD ought to be the one to administer this last proposal of point three. Let us at least get it centralized so we know who in the world we have to fight if there are goofs. No. 5. The property adjacent to a redevelopment project is some- times an extremely important issue. Small businesses and neighbors next to a highway development face serious problems, and we feel that there should be-should be relocation offered to these families if they want it. The rubric under the present bill 698 is a "may" rubric. We would like to see that changed to a "shall" rubric. The offer will be there and the option will be left with the people rather than with the head of the agency. No. 6. In this part of our statement, our concern is for this matter of present and future displacement in relocation resulting from these programs, and it begins on page 13 with our testimony relative to it. This proposal is specifically designed to place responsibility for dis- placement in housing resources in one official, the Secretary of Housing and Urban Development; to provide ar~ effective mechanism for enforcement of the legislative requirements of this act; and to insure coordination of all Federal programs displacing individuals and families. As already indicated, there presently is no effective coordination in either the planning or the execution stages of governmental actions which cause displacement and decrease the supply of low-income housing. Neither HUD nor DOT can effectively control displacement caused by federally assisted highway construction, since both Depart- ments lack the power to cut off Federal assistance `for highway con- struction on the grounds of lack of replacement housing. The U.S. Department of Transportation is powerless under present Federal law, since highway departments are required to render only relocation advisory assistance. The New Jersey Department of Trans- portation is using Federal funds and did contract with the Camden Housing Authority to relocate some families, but the guidelines for the referral and ser~rices have been unclear. We think that relocation offered by highway departments should have the initiative in the highway department to seek out the families. What is done in New Jersey, at least, is that letters are sent to the owners and to the tenants saying that the relocation assistance is available and if t.he family takes `advantage of this~ they are shown the local newspaper which they can read for themselves. As I pointed out, agencies. We think the initiative should remain with the Department of Transportation to go from door to door in the service, not to set up a referral agency. The poor have agency fatigue. They are referred to death from welfare department to welfare department, from job placement to job placement, from training pro- PAGENO="0310" 304 gram to training program. And here comes another referral agency sponsored by the Federal Government on a matter of relocation, which seriously affects their lives. The letters that were sent out were not sent out in Spanish. The Puerto Rican neighbors had no idea what was happening. We feel that the psychological problems, that the malaise of poverty are serious enough that the Federal Government should use their resources and have the initiative to assist families in relocation. Only one out of six people were referred-displaced by the high- way-were referred for relocation assistance. This is bad news. One family who owned their own house, an elderly couple, bought it hack in the 1920's, they wanted to die in that house. A woman had a leg taken off. She could not hear, she could not see. She knew where to go in that house. The highway department came along and said you have. got to move. We are going to take over your house. You can get another mortgage. They ended up in an apartment building out in the suburbs where they did not want to be. This woman died a week later after moving. She was heartsick over this house. She wanted to die in it, but because of the need for a highway, Highway 76, with two exits in our city-that is all it is going to bring to us-two exits-and we have to have families separated,. people moved, people offered faulty prices for their houses; and this we have documented in that large book that we sent to you back in February. The bill before this committee goes part way to resolve the problem of bringing highway construction under Federal requirements to relocate highway displacees. The only time we have seen coordination is when we raised "sand" in the city of Camden over the past 3 weeks. When we picketed, when we marched, when we moved a family out of an urban renewal development and put them in a hotel, when a lobby of a Juxury apartment was damaged, then man, we saw action. HUD came in, started making recommendations, the Department of Transportation said we will not move any more people. We will hold it up for a month. We see now the Justice Department coming to Camden. We see community affairs from New Jersey coming through Camden. Health, Education, and Welfare coming into Camden. All because of things happening. But we had togo to the streets to produce that kind of result. We `screamed this way until ultimately, legiti- mately, `and in print with the pen and mimeograph machines in Jan- uary of 1967 and before that, but only when we demonstrated, could it be demonstrated the Federal Government can move. We saw redtape cut these past 3 weeks. Programs that the city has not even applied for are now funded-in `3 week's time. Now, how come? How come, when we raised "sand," we get these things done? We believe that the Federal Government can do almost anything it wants to do, but does it always want. to do it? The Department can do anything they want to do, but they do not want to do it. Camden is one of the fortunate cities. No rioting. We have not had one. We do not want one. But there are some people who could go through that change if that is what it needs to bring the Government to heel a little bit to the people and their needs. Congress has to mandate this coordination. We should not have to go to the changes we went through to produce a mandate of coo'rdma- PAGENO="0311" 305 tion between highway departments, HUD, the Justice Department, and the rest of them. To finish up-because you can read the rest of this testimony-dur- ing the past 5 years the fight in Camden to represent the poor has been met with derisive comments. The power structure has steadfastly main- tained that the progress they planned must be obtained even at the expense of human beings. We do not believe that progress can be ob- tained at the expense of people. To trample all over and to destroy people is not progress. Today we have asked you and this Nation to do some very difficult things. Pay attention to what the people are saying, pay attention to what those who are being displaced have to go through. They are suffering badly because of your programs. There are powerful eco- nomic interests aimed against these proposals. The head of the hous- ing authority in the city of Camden is a man named McComb, no big name here, but it is a big name back home, because he is the head of the Central Labor Union. So he heads up the housing authority and the Central Labor Union. We know where the contracts are going to go for urban renewal. They are going to go with the companies that his union are in. We cannot get this man off that housing authority. We have got two to resign this past week. The Governor changed one of his appointments for us, the city council is supporting our request to get rid of the other two. We would like to see the Federal Government maybe getting involved with the support of black construction com- panies, black labor unions. We would like to see black architects plan the poverty areas, because black people know what is happening. They know what is happening in their communities. The problem of urban renewal is that those who do not live there are planning it, are executing it, and are making the money at it. The talk in the inner city is either they stop doing this stuff or we will stop them our own way. Either ui~ban renewal comes our way or it does not come at all. We of the inner city do not trust urban renewal. We do not trust it be- cause we have never been allowed to participate in it. We do not trust it because we have seen it destroy people. We do not believe that you have a workable program. We do not believe that HUD enforces workable programs. We know it, because we have seen it in actioh. Across this country in Harlem, in Bedford-Stuyvesant, in Watts, South Philadelphia, and North Camden, people are willing to say and to back it up, "No renewal unless we do it." We believe that the Government must act to help all the people- all of them to live better and more meaningful lives in our coin- plex urban society. The Government is acting without the advice and consent of the poor, and without the advice and consent of those who are suffering because of their programs. The America of the poor is disenfranchised from our voice even in the advisory capacity, let alone in the dicisionmaking capacity. The distance between this disenfran- chisement an;d disenchantment is now indistinguishable. We of the inner city, white, blacks, Puerto Ricans, Mexican Americans, Indians- we need homes. We want to build. We want to build now. Set us free and include us in on all of this. We are getting some of our problems solved in Camden, but we have had to raise sand. We can get a lot more accomplished, though, PAGENO="0312" 306 if you the Congress start acting. This is a matter of survival to us and this is exactly what it is-the need to survive. The days of reminiscing for us are over. We can no longer talk about the old days. We cannot hold cocktail parties and card parties. We are trying to make it. We need a new module. We need a new value system, a new survival kit. We want the option of living in the city or moving out. Some of us love city life and we want to stay, and we want it right. At best, all of us are strangers in this land, and at icast help us live in safe, decent, sanitary houses. We have come to help you straighten out your programs. You are kind of messed up. Mr. Sharp? STATEMENT OP CHARLES SHARP, CHAIRMAN, BLACK PEOPLES' UNION MOVEMENT Mr. SHARP. Thank you. My name is Charles Sharp, chairman of the Black People's Union Movement in the city of Camden, N.J. The purpose of this organization is to see that black people receive adequate representa;tion, something in which we black people in the city of Camden have not received on all levels. Educationally we do not get representation, economically we do not have representation, politically we do not have representation. About this urban renewal- needless to say, there is no representation. TTrban renewal is a big problem in the city of Camden, N.J. Needless to say, it is a problem all over America, maybe because it deals with black people. The removal of black people. But I have to confine my comments to the city of Camden, because that is where I am from-my roots are there. And we, the black people of the city of Camden have been pushed into a pocket, a pocket that is filled with disease, It is a cancer and it is eating at us and it is going to destroy us unless we, the black people take the necessary steps to alleviate this problem or to alleviate this disease. We want to live. We have a need to live. We want to raise families. We want to educate our children. We want to be able to, on a sunny day, sit out in the park and enjoy the sunshine, the flowers. How can we do this in a white power structure in the city, in the state. And the national Government refuses to hear the plea of the black man; and by how, giving us some sort of attention, you are forcing the black man to do the only thing that is left to do, and that is to go into the streets and fight. Either free himself or kill himself. You, the Senator, this committee, these committees-you have a chance to free yourself as well as free black people. And the only way that you can do that is to pass the laws that you can pass. You wrote up this bill which you had to have a vote in which to pass it, and it was passed. But you will not write up a bill and have it voted upoli so that it will be a workable bill. This is not workable. I do not under- stand the legality or the technicalities of this bill. All I know is that black people are suffering; for instance, the Shields family-Mr. and Mrs. Shields, who lived in the city of Camden, who were asked to move from their home because the highway was coming through. They moved from one location to another location-from one dilapidated building PAGENO="0313" 307 to another dilapidated building with 10 little black babies who were innocent, who were unware of where they were going, or what was happening. We heard of this family and we knocked on their door one Wednesday mghit; and we went into their home, which was supposed to be a home-it is a hole in the wall. The electric was bad. The gas was bad. The children were crowded into one room. Roaches were from wail to wall. Rats were running around like fish in a pond. This was the home that they had been relocated into by the white power structure, because who was relocating them ~ The white power structure. We took it upon ourselves to remove this family from that house and pu:t them into one of the city's hotels-the Walt Whitman until we could send the bill to the city. It was from the movement of that family that created the chain of events which evidentally led to this meeting today. It is too had that the Shields' had to be sacrificed, but they were sacrificial lambs. They sacrificed themselves. The children do not know it, perhaps 10 years from now their mother will explain it to them, or perhaps they should read it in a book if you should write a book about the city of Camden. But before the Shields' could get a home the black people in the city of Camden, along with some white people in the city of Camden had to march down to Northgate One which is a luxury apartment, which is half empty. And it was then and only then, that the Shields' received a home. They were given a choice of three homes, and they accepted one in the section of the city called East Camden. They were to move in this house on Monday morning, but the white racist society that lived in East Camden burned their house down. They burned it down. So we had to go back into the streets and demand that the Shields' receive a home. This time a very beautiful and .a very livable home was found for the Shields' and now `they are stationed in a home. About Northgate One, the land which this building was built on was also the land of the poor, the poor people who have `to move from their homes in order that this luxurious apartment built for white people, because black poor people cannot afford to pay one hundred some odd dollars a month for apartments. There are people in my city that are struggling to pay $40 a month for rent. I do not really know what I can say to you because all the things that I have said have been said many times before by me, by the Reverend Dr. Martin Luther King and by all of the black leaders who are fighting for freedom, justice and equality for black people, even for poor people. You may be wondering why I use the term "black people" so much. It is because I am a black man and I am concerned about black people. I am very concerned about my people and my people must be free, and you are the ones that can lead them to the road of freedom, because if you as a race of people `here in America ever hope to remain free, you must in turn free the Nation's people that are not free. We are not free. We have never been free here in A merica. We have been slaves and we worked `and you did not pay us. We prayed to you and you did not hear our prayers. We begged you and you did not answer. We have fought for you `and you ignored us. Now you leave us no alternative but to fight you. We have to fight you, come what may, because we are determined as a people to free ourselves because we know what we PAGENO="0314" 308 can do. We want to create like the white race created, because we are creative people. We do not just want to be the bricklayer, we want to be the designer of the building, the `architect. We do not just want to be the pilot of the plane, we want to be the designer of the plane. Do you understand what I am trying to say? These are the things that we feel. These are the things that we know that we must have to do. `We have to do these things We have to `establish our identity. We have to regain back our culture. We have to get our stolen heritage. These things have been denied us too long as a people and we are hungry. We are starving. We are crying inside and wh1te America refuses to hear us. She only hears us when she gives us a demand and we reply. But when we give white America a plan, a demand, we `are shot down, like the Reverend Martin Luther King. He was a great man. He was a man the white people should have listened to, but he was shot down with a bullet from the white racist society. It was not only one white man that pulled that trigger; it was all white men, because all white men are part of the white racist society. You were born into it. Your foreparen'ts were the seed, were the bearer of the racism that has embraced America and the world over. You are making black people the victims of your ignorance, of your stupidity. And we have done nothing. We have done nothing and yet we receive nothing. Senator, I am not a begging man because I believe in fighting for what I want. I am like any other human being. I have fears and I want to live, but I will die for what I believe in. I will die for the liberation of black people. But you can save my life as well as 22 million black lives. Pass this bill. Take the old bill and tear it up, write a new one. Use your power and your influence along with your colleagues and make this Federal Government, the city government, the `State government enforce these bills and see how the `black man, once he is given the chance, can come and be a credit and helpful to America. Because we are nothing to ourselves and needless to say, we~re less than that to you, because you do not consider us to be men. Most of you consider us to be less `than human, an animal. They say we `are apes, monkeys, but I know that I am as great as any white man `that ever lived, any white man that will ever live. I know my bro'thers are just as great. And needless to say about my black sisters- they are also great. But they want to contribute; if not contribute `to white society, then allow them the opportunity to con'tribute to a `black society, because we were once creators. We come from a very lucrative and creative land. We come from the land of Pharaohs, the sphinx, the pyramids. These were our forefathers. But you do not tell us t'hat. We know they were our forefathers and they were great men. They have achieved great deeds whic'h no civilization has `been able to surpass. PAGENO="0315" 309 We are offspring of these people and we want to be able to create the work which they created. The only way they can do it is that white America has to give us the opportunity-give us the opportunity, because if we go one step, white America goes two steps. She cannot be a loser. She is a winner. As long as she refuses to harken to the supplication of the black man, she is a loser; she is done. She is the city of Babylon they speak of in the Bible and the cities of Babylon will fall and America will fall unless she takes heed of the black man's plea. Thank you. Senator MU5KIE. Thank you, Mr. Sharp. Thank you, Father Griesmann. May I say, this legislation has been developed in the past 2 or 3 years for the purpose of trying to deal with one area of injustice. It is not perfect legislation, but I think it has much in it to commend it. We will give serious consideration to the suggestions made by you, Father, this morning as we shape the legislation. We have known, of course, over the years that we have worked on this legislation, of the injustices that have been created under the programs of urban renewal, highway construction, and so on. The Senate passed this bill in the last Congress, but we did so without a record that was what I thought adequate of the injustices with which the bill was intended to deal. We had your report on the stituation in Camden. It was in our file. But we thought we ought to have public hearings in order that these injustices might be exposed to more complete public view. That is why, Mr. Sharp, we invited you to be here this morning. We did not need this public hearing to be aware ourselves of the situations which encumber you and your people. We needed the public hearing in order that others may be aware of thei~. Your full report which Father Griesmann has submitted to the record is part of our files. It is available for public view. I do not know to what extent we ought to get into further details, Father, this morning. I think there ought to be included in the record and we will included in the record without objection tables showing the schedule of families which have been displaced in Camden by governmental action over a 5-year period ending December 31, 1967; another table showing those families to be displaced by governmental action in the next 5 years; another table which is a review of the available housing in Camden and the physical conditions of houses in Camden; another table showing a schedule of houses planned for Camden in the immediate future. With that conclusion, this statistical information fully documents the story you have told us in more human terms here this morning. Some people are more impressed by statistics than by rhetoric, so the statistics will be included in the record. PAGENO="0316" 310 (The tables referred to follow:) rJ~ABLu A.-Sehednle of ft~milies displaced by governmental action in the 5-year period ending Dec. 31, 1967' North-South Freeway (Federal assisted highway) At least 963 families and as many as 1,200. Code Enforcement At least 625 families and as many as800. `The statistics in this tahie are based on information provided in Camden's last two Workable Programs and on information provided by City officlais (This figure is based on information provided by the Chief Housing Inspector of the City of Camden. He has indicated that his department has displaced approximately 125 families per year for the last several years. In April his department was operating at about a 25% increase over last year's rate of inspections due to the pressures for code enforcement generated by the grass roots. This was before the City of Camden received a grant of $300,000 from the Department of Housing and Urban Development for 18 new housing inspectors and before the enactment of a new, more stringent property rn~in- tenance code. The inspectors completed their training in September. An increase in displacement rate can be expected for the remainder of 1967 and 1968. These figures for code enforcement do not include displacement occurring as a con- sequence of action taken by the Department of Health, the Building Inspector, and for Fire Marshal, all of whom have the authority to declare property unfit for human habitation.) Camden Campus Area 71 families. Bergen Square No. 1 30 families. Cooper's Point No. 1 41 families. Northgate No 2 375 families. Lanning Square No. 1 80 families. Ceuterville Liberty Park 1 80 families. City Centre-Route 150 52 families. ~orthshore Estimate 36 familIes in 1967. 1967-68 total 72 families. Public Housing Turnover 320 families. (This figure is based on a turnover of 60 fa~nilies for each of the following years-1964, 1965, 1966 and a turnover of 200 fan~ilies for 1967.) Low total - ~____~-__ 2, 673 High totaL~. 3, 085 TAnLE B.-&,heduie of famiUes to be displaced by governmental action in the 5-year period ending Dee. 31, 197~l 2 N~orth-South Freeway - 300 families. Industrial Highway Approximately 300 families. Urban Renewal in Bergen-Lanning Square Area__ Approximately 700 families. Pyne Point, Cooper's Point and Center City No estimate. 2 The statistics in this table are based on Information provided in Camden's last two Workable Programs, Camden's Comprehensive Plan prepared in 1962, and on information provided by City officials. (The City of Camden has just received a planning and survey grant from the Dept. of Housing and Urban Development to do a study in one section of the Bergen-Lanning Square Area. The study is to cover from Fifth Street to Sixth Street and from Mickle Street to Atlantic Avenue. At this time, according to the plans included in the GNRP for the Bergen-Lanning Square Area, the City hopes to tear down all but 12 existing buildings in this strip and construct middle income apartment housing.) Northshore 36 families. Code Enforcement 1,000 families. (This estimate is based on 200 families for the next five years. It is probably a conservative estimate since it is less than twice the figure for the preceding five years although there will be three times as many inspectors for at least the next three years. Strong enforcement of the property maintenance code PAGENO="0317" 311 could result in much greater displacement. The Chief Housing Inspector esti- mates that at least 50% of the housing in Camden does not meet major require- ments of Camden's Property Maintenance Code. According to the Comprehensive Plan for Camden, prepared in 1962, 64.7% of Camden's housing was then dilapidated, or seriously deteriorated or deteriorating or obsolete. According to the 1960 census, one-third of Camden's housing was over sixty years old, and two-thirds over forty years old. It should also be noted that the rate of property owners abandoning their property is very high in Camden. This year over 1200 properties appeared on the City's Tax Sale List.~ Public Housing Turnover 200-500. Low total 2,536-plus ullies. High total 2,836-plus fiamilieu TABLE C.-Review of housing in Camden I. Physical Condition of HOuses in Camden Housing 60 years old or more in 1960 32%. Housing 40 years old or more in 1960 67%. Housing less than 20 years old in 1960 18%. Housing dilapidated, seriously deteriorated, de- 64.7%. teriorating or obsolete in 1962. A survey conducted in December, 1966 by staff members of the Camden Episcopal Community Center for the Camden Civil Rlghts-Ministerh~m~Neighbor- hood Groups Coalition revealed in one 19 by 7 block area in Central Camden bounded by Kaighns Avenue on the South, Mickel Street on the north, Second Street on the west, and Broadway on the east, over 300 vacant and/or abandoned properties. A survey conducted In 1966 by the Rev. Richard Whitham of the Camden Metropolitan Ministry covering the North Camden area of Camden excluding that section of North Camden to be included in urban renewal project Northgate II, revealed 100 vacant and/or abandoned properties in that area. The City Tax Sale List for delinquent property owners included over 1,200 properties this year. II. Goals of the Comprehensive Plan 1962 Housing which should be constructed during first 3,500 units (700 units per five years of Plan. year). Housing which should be constructed during the 5,000 units (1,000 units per second five years of plan. year). III. Housing Constructed in Camden, 1963 to Present 1963 34 units. (This includes two apartment buildings providing a total of 8 units and single family dwellings providIng 26 units.) 1964 214 units. (This includes 8 apartment buildings providing a total of 121 units, single family dwelling providing a total of 3 units, and John F. Kennedy Towers, a Public Housing Authority Project for the elderly providing 90 units.) 1965 30 units. (This includes two garden type apartment buildings providing 28 units and single family dwellipg~ prQviding a total of 2 units). 1966 336 units. (This includes three apartment buildings providing 29 units, single family dwelling units providing a total of 3 units, aud garden type apartments providing a total of 304 units). 1967 347 units. (This figure does not mean that all these units are built, but rather indicates the total number of units for which permits have been obtained from the Camden PAGENO="0318" 312 City Building Inspector's Office. This included single family dwelling units providing a total of ~ units and garden type apartments providing a total of 345 units.) Total of Low Income Housing Units Total of Middle Income Housing Units Total Number of Housing Units, 1963 to present IV. Schedule of housing planned for Camden in the Three rent supplement programs sponsored by three church groups. (Participation by 1 of the church groups is in doubt.) Housing for the elderly sponsored by a fourth religious group. Centerville Urban Renewal Project 200 units-high rise project- 150 apartments and 50 townhouses. (Upper in- come housing.) An unknown quantity of housing whose character in doubt; the best guess is that the housing will be upper, middle and low in- come. Approx. 4000 units of middle and upper income hous- ing. (This project is presently in grave doubt be- cause of the financial problems of Mr. J. Wol- man, owner of Philadelphia Eagles football club.) CHIP (CHIP, the Camden Housing Improvement Project, is the work of several business and in- dustries in Oamden including Campbell Soup, Camden Trust, First Camden National Bank & Trust Co., R.C.A. and others. It was formed in response to pressure generated at the grass roots level for action on the low-income hous- ing crisis. OTIIP is at a turning point. These 6 houses are its pilot project. If it succeeds, they hope to rehabilitate at least 100 houses a year.) Inter-Faith-Inter-Racial Council of Churches____ Public Housing (This is a second project for the elderly and should be completed by 1969.) Total of Low Income Housing Units Total of Housing Units for Middle and Upper Income Families. (This assumes that Jerry Wolman's "City Within A City" is constructed.) 90 units. 871 units. 961 units. immediate future. At most 180 units. Approx. 200 units. 425 units of sale housing priced at $12,000 per house. Each house ~ba1l have a carrying charge of $100/mo. 82 units. Centerville 221(d)3 ~ (This project is not a certainty~.) Nortbgate No. II Urban Renewal Project City Centre Project-Urban Renewal City Within a City Project 6 houses to be rehabilitated, for low income sale hous- ing with a hoped for carrying charge of $60/ mouth. 35 houses' to be rehabili- tated for sale housing- low income. 100 units. 521 units including 300 for the elderly. 4,707 units. PAGENO="0319" 313 Total of Housing units for middle and upper 707 units plus what private income families if "City Within A City" is not eonstruction not now constructed, known is built. Total Housing For Immediate Future Between 1,228 units and 5,228 units. Senator Musiun. In addition, there will be included in the record a letter dated July 18, 1967, to Secretary Weaver and Secretary Boyd, further documenting the situation in Camden. (The document referred to follows:) CAMDEN, N.J., July 18, 1967. Mr. ROBERT WEAVER, Secretary of the Department of Housing and Urban Development, Washington, D.C. DEAR. MR. WEAVER: Tn mid-February of this year the Camden Civil Rights- Mi~~ste~ium-NeighborhoOd Groups Coalition wrote to President Johnson. That letter (a copy of which is included) raised several crucial points relating to Camden's Workable Program required by the Department of Housing and Urban Development and problems created by federally assisted highway con- struction. The problems presented were: (1) failure of the Camden Oity Govern- ment to permit and provide an opportunity for grass roots participation on the flitizc'ns Advisory Committee; (2) no statistical breakdown in the Workable Program by races of individuals and families displaced by governmental action; (3) a severe shortage of decent low income housing in Camden to ehelte.r the low-income families who comprise a majority of the residents be~ng force~k to relocate due to urban renewal, highway construction, and code enforcement; (4) the failure of the New Jersey State Highway Department to provide meaningful relocation assistance for persons displaced by highway construction; and (5) the need for federal legislation and/or executive action to impose relocation standards for highway construction programs financed in whole or in part with federal funds similar to those enforced in urban renewal programs. In April, representatives of the Department of Housing and Urban Develop- ment, the Camden City Government, and the Coalition met in Camden. In his report of May 17, 1967, to Senator Case, Assistant Secretary Hummel stated that: " a more effective Citizens Advisory Committee is needed and in response to our request the Mayor has reactivated the Oamden Neighborhood Conservation and Rehabilitation Committee and has expanded its membership to include civil rights groups, civic associations, and neighborhood groups." Unfortunately, the Mayor's appointments to this committee have generally failed to give recognition to the leading members of the coalition who have been spearheading the struggle to help the deprived and the discriminated against. As of today the Mayor of Camden has failed to respond positively to the continuing requests of two neighborhood groups for grass roots participation on the Citizens Advisory Committee. To the contrary, the Mayor and the Business Administrator have said "No" to such requests at meetings with them. One group, the Neighbors for Community Action, has been instrumental in forcing the city to increase recreational facilities in their neighborhood and to take action against property owners who have "abandoned" their property. They are involved in community projects such as outings to Atlantic City. Next month they are taking over 300 youngsters to see a Philadelphia Phihies ballgame. The second group, the Camden Citizens For Action, is a community group in the adjoining neighborhood to that of the Neighbors for Community Action. It has been instrumental in forcing the city to take action against derelict landlords and in the formation of the Landlord-Tenant Association, a body which seeks to bring landlords and tenants to the same table to work together. This Association has received the editorial support of Camden's main newspaper, the Courier-Post, and the Association is beginning to have meaningful results in obtaining real cooperation to the benefit of tenants and landlords. These two neighborhood groups nre examples of real efforts by low-income people, who are also members of minority groups, to try to help themselves. These people are playing a significant role in their community and would deserve representation on the Citizens Advisory Committee even if the Workable Pro- gram did not require representation for such groups. PAGENO="0320" 314 We wish to make it clear that we do not believe that these are the only two grOups which should be represented on the committee. New groups are being formed as offsprings of the activities of these two' groups and in the future if they start to mature, they too will deserve recognition. In addition, there may presently be in this city other neighborhood group's which should be involved on the Citizens Advisory Committee. The significance and importance of representation for the grass root's is seen in the riots and violence of recent days in North Jersey. Lack of meaningful direct lines of communication between the poor and the city government helped cause Newark's explosion. Tensions are increasing in Camden. The frustrations, misunderstandings, and sense of alienation felt by the poor can only be eased by direct and responsive communication between the Mayor of Oamden and t~ie poor. We believe Mr. Hummel has been misled to believe that the Neighborhood Conservation and Rehabilitation Committee has expanded its membership to include "civic associations and neighborhood groups." From our examination of the list of persons' appointed to the Committee, only one, Mr. Charles Barberito of the Pyne Point Association in North Camden, can be said to represent a civic association or a neighborhood group. Mr. Hummel states: "There will also be a minority group subcomthittëe. We have asked that this organization be active before `we consider recertification of the Workable Program." Although Camden's Workable Program has been re- certified, no "minority group subcommittee" has been formed as part of the Citizens Advisory Committee. Lastly, with respect to the issue of the Citizens Advisory Committee, We' wish to point out that' although the Camden Metropolitan Ministry, the Camden Christian Center, the Methodist Deaconess Community Center, the Neighborhood Apostolate, and tbe'C'amden Episcopal Community Center have played a leading role along with the civil rights and neighborhood groups in, the coalition to h'elp the poor, no members of the clergy who have been active in this fight have been appointed to the Citzens Advisory Committee. This is so even though all these churches and centers are not only expressing great concern, about the actions of the city, state, and federal government which may be detrimental to the welfare of the people living in Camden, but when these churches and centers all assume importan,t roles in the lives of the community they serve by providing recreation for youngsters, counseling services, English, Spanish, and Typing classes, services' for the aged and a myriad of other social services. We believe that if the Camden Citizens Advisory Committee is to be a truly effective and meaningful body, it must contain as members the civil rights leaders, the grass roo'ts people `through their neighborhood groups, and the clergy, who have been and are ac'tivists in the struggle to help the poor and the dis- criminated against. While pleased that the Department of Housing and Urban Developmen't is requiring Camden to provide a statistical breakdown by race of persons dis- placed and `to be displaced by governmental action, we are unaware of any con- crete steps which have been taken or will be taken to s~cu're such a statistical breakdown. We wish to be informed as to what h'a's already been done and what will be done in the future to obtain this information. We are extremely dissatisfied that your Department ha's not demanded that Camden make low-income housing the number one priority of Camden's Work- able Program, ahead of transportation and commercial redevelopment. The de'sperate need fo'r low income housing Is seen not only in the deteriorating condition.s of `the ghetto's, but in Parkside, a moderate income, predominantly Negro section o'f Camden. People living in Parkeide are being forced to subdivide their apartments and houses in order `to house relatives and friends' from the ghetto areas who are being displaced by urban renewal programs, highway con- struction and code enforcement. Slumiords are beginning to operate in this area. If this process continue's, and it `will have to unless Camden obtains a sudden infusion o'f d~cent low income housing, this residential area of Camden will become a ~1um and if it becomes a slum, it will help to perpetuate the myth that Negroes and Puerto Ricans create ghettos. This can only provide fuel for the fires of a white power `structure which is basically bo'th racially prejudiced and unsympathetic to the human needs of peo'ple who have been "punished" in the past because of the color of their skin and who are presently being both "punished" and "pushed" around as a consequence of governmental action. The federal government must require the city government and the Camden PAGENO="0321" 315 Public Housing Authority to act immediately in the area of low income housing, for even if all urban renewal and highway construction and code enforcement were to stop today, there would be ~ desperate shortage of decent low income housing here. Nothing better illustrates the desperate need for decent, safe housing for the poor in Camden than the following two exchanges, the first between the Chair- man of Camden CORE and Camden's Chief Housing Inspector in the June 3 edition of the Courier-Post and the second between a civil rights worker and Camden's Chief Housing Inspector in the evening edition of the June 2nd Courier-Post. 1. Ronald Evans * * * told Paglione many families "have six, seven, or eight people in an apartment." "They will have to go," Paglione said, "but if the landlord chooses to close down his properties rather than make necessary repairs, you know these people will be out of homes." 2. "Do you mean to say that a lack of fire extinguishers, fire escapes, and only one exit in a three story building doesn't constitute an emergency?" Grayson asked. "If I prosecuted (every) house in Camden that lacks a fire escape I'd close half the buildings in the city down," Paglione replied. The occasion of these exchanges was the picketing of City Hall on June 2 by tenants of one family which owns approximately thirty of Camden's multiple dwelling slum buildings. Conditions in these buildings include a lack of fire escapes, fire doors, fire-fighting equipment, the presence of rats, roaches, and insects, exposed electrical wires, and human waste in backed-up toilets and bathtubs. The tools with which to start to alleviate the housing problems of Camden are available. At present according to city officials at least 150 homes owned by the City can be rehabilitated within a month or two and put on the rehabilita;ted low-income housing market. There are literally hundreds of privately owned homes presently vacant which can be rehabilitated if proper Initiative comes from the federal government, the state government, the city government, the home owners, business, Industry, labor nonprofit groups, and the poor. Over 200 of these privately owned properties were identified in a survey of one 1t~ by 7 block area in Central Camden presented to the city government in January by the Coalition. (Not all the houses on the list are rehabitable. The recent grant by your Department of funds to demolish properties in Camden was a direct response to this survey). The Camden Housing Authority has demonstrated a pungent distaste for using the authority it has to rehabilitate 100 houses. The interrelationship between representation of the poor on the Citizens Advisory Committee and the housing crisis here can be clearly seen. Until we wrote President Johnson in February, the Citizens Advisory Committee was composed solely of businessmen-representatives from `the Greater Camden Move- ment. These people who with only two exceptions live outside of Camden, and most of whom work outside of Oamden, are aware of Camden's business and industrial needs, but they are completely unaware of just what conditions the poor are forced to live in. Now the Citisens Advisory Committee includes civil rights representatives on the Neighborhood Conservation and Rehabilitation Com- mittee. However, the Citizens Advisory Committee consists of two committees which meet separately and never intermingle to exchange ideas. It is critical if Camden is to be rebuilt that industry and business understand the problems of the poor and financially contribute to their solution. They can only do this by meeting with and listening to just what the poor have to say. Therefore, `the Neighborhood Conservation and Rehabilitation Committee needs to be expanded to include not only the grass roots people, but prorisions must be made for the poor to be able to work directly with business to try to develop constructive approaches to the problems of the ghetto. In the long run, such intercourse could lead `to better undestanding of the particular problems of both sides, and hope- fully, to cooperative efforts by all elements in the community to provide more 1ow-~income housing for the poor. In his letter of the 17th Mr. Hummel states: "We stand ready to assi~t in any way we can," The Department of Housing and Urban Development can only assist the people Of Camden by forcing the Camden City Government to make low income housing `the number one priority of Camden's Workable Program. Camden must immediately rehabilitate the 150 or more houses it ewns and the 95-626----68-21 PAGENO="0322" 316 Camden Public Housing Authority must use the authority it has to immediately rehabilitate at least 100 houses which are presently privately owned. The new Property Maintenance CQde passed by the Camden City Council contains provisions `which would facilitate the rehabilitation of privately owned property. The City must be forced to use the provisions to meet the housing needs of Camden. A city cannot tear dowu thousands of houses in three or four years without building replacement housing and maintain that no housing `crisis exists. Your Department can help by bringing together representatives from the city government, the State government and federal government, grass roots people, civil rights leaders, clergy, business, industry, and labor to map out a pla~i to provide Camden with the low income housing it needs. Mr. Hummel states: "The City is taking measures to increase the supply of standard housing for low and moderate income families." Except for housing for the aged, we are unaware of these measures and would like to be informed just what they are. Low income housing must be provided for `the generation presently leaving school if Camden is to stem the flow of young people from `this city. We would also like to point out to Mr. Hummel that while there may be "an increased use by the New Jersey Highway Department of the services offered by the Urban Renewal Division in Camden," we believe that overall no more than 5% of the people displaced by highway construction in Camden are being presently `referred to Urban Renewal. In his report Mr. Hunimel states: "The Urban Renewal Division has been reasonably successful in relocating families displaced under its programs and those referred to it by the Highway Department." We believe that recent events make a complete and exhaustive investigation of its activities, procedures, and resources in Camden mandatory. In order to fully understand the relocation crisis in Camden one must under- stand the relationship between the City Department of Welfare and the Urban Renewal Relocation Office of the Camden Public Housing Authority. The City of Camden has a contractural relationship with Urban Renewal for the latter to relocate for a fee of $40 per referral all persons displaced by code enforcement who request such relocation help. First, we charge that Mr. McHugh of the Urban Renewal Relocation Office has knowingly relocated at least one family in a house which was rat-infested, bad a leaky roof, faulty electrical circuits, inadequate ventilation, and was full of filth and refuse left by the previous occupants. ~Ep addftion, this house is in the path of a future highway. Second, we charge that the Urban Renewal Relocation Office has been derelict in fulfilling its obligations. During the week of May 29, 1967, fire broke out in 410 Haddon Avenue. The building was closed to human habitation. On Friday, Ji~ine 2, 1967, tenants clis- placed by the fire were referred to Mr. McHugh of the relocation office by the city for immediate relocation. The impression was given the city that these people would be immediately relocated. However, Mr. McHugh when confronted by the tenants told them he could not help them that afternoon, but would meet `them at 9:00 A.M. Saturday morning in front of 410. Later that evening the homeless tenants came to us for help. The City Business Administrator was reached and after futile attempts to contact Mr. McHugh, he agreed to put the tenants up at a hotel in the city. Saturday morning Mr. McHugh failed to appear and the tenants remained in the hotel for the whole weekend. Third, we charge that the Camden Urban Renewal Relocation Office functions on n prejudicial basis, constantly insulting through its behavior and by word members of minority groups. Many leaders of the Coalition when trying to obtain help for people displaced by govern- mental action have been told that these people are dirty, prostitutes, immoral, drunkards, e'tc. In some cases displacees have been `told to their faces that there was no housing immediately available for them, but that there were houses avail- able for "good" and "clean" people. Fourth, we charge that the City Department of Welfare has frustrated displaced tenants in their attempts to obtain relocation aid and has tried to relocate tenants themselves in order to avoid paying the $40.00 referral fee. In Mid-May a mother of a family of eight was refused referral to Urban Renewal by her case worker's supervisor to avoid paying the fee. The same woman was referred by city welfare to a house which has sewer rats roamihg the basement. It was only after we contacted the Business Administrator that this family received its proper referral. Fifth, we charge that county and city welfare in trying to themselves relocate families have housed families in indecent, inbu~ man, and unfit housing. In one case a woman was moved into a house with boarded windows. In a second case, one family was moved into a house which `lacked adequate heating, kitchen, and electrical facilities and in which the kitchen ceiling PAGENO="0323" 317 ~as falling, bannisters were missing, and the cellar steps were iti need of repair- ag. It is not only these cases which are cause for our concern, but the many, many ases and dozens and hundreds of unknown families who are caught in similar ircumstanceS, who do not come for help o~ know that there are people who care. Lastly, no pertinent response has been received from any branch of the federal overnment concerning our recommendations for federal legislation and/or execu- lye action establishing minimum standards for relocation assiStance to be given ersons displaced by highway construction financed by the federal government qual to the assistance available to people displaced by urban renewal. (Please ee pages 5-11 of the enclosed letter for our discussion of highway relocation ~roblems.) We believe that the problems posed by highway construction today iffect the areas of concern of all departments of the Executive Branch of the ederal government and that each department must give careful consideration to be full ramifications of highway construction. We ask Mr. Secretary that you: 1. Enforce the requirements of the Workable Program so that concerned grass roots people and representatives of the clergy and civil rights groups leading the fight to help the poor be appointed to the Camden Citizens Advisory Committee; 2. Rescind the recertification of Camden's Workable Program because there is no Minority Group subcommittee; 3, Withhold certification of Camden's Workable Program until low income housing is the number one priority of the Workable Program; 4. Indicate what steps have been taken and will be taken in the future to supply a racial breakdown of persons displaced by governmental action; 5. Undertake a complete and exhaustive study of the relocation activities, procedures, and resources of Camden's Urban Renewal Relocation Office. 6. Fulfill your responsibility to point out to the President, to the Congress, and to the members of the President's Cabinet the need for immediate and meaningful action to assist people affected by federally assisted highway construction in cities. This responsibility is clearly pinpointed in the 1966 Congressional Act which established the Department of Transportation: "The Secretary and the Secretary of Housing and Urban Development shall consult and exchange information regarding their respective transportation policies and activities; carry on joint planning, research and other activities; and coordinate assistance for local transportation projects. They shall jointly study bow federal policies and programs can assure that urban transportation systems most effectively serve both naitional transportation needs and the comprehensively planned development of urban areas. They shall, within one year after the effective date of this Act, and annually thereafter, report to the President for submission to Congress, on their studies and other activi- ties under this subsection, including any legislative recommendations which they determine to be desirable. The Secretary and the Secretary of Housing and Urban Development shall study and report within one year after the effective date of this Act to the President and the Congress on the logical and efficient organization and location of urban mass transportation func- tions in the Executive Branch." (49 U,S.C.A. § 1653(g) 1966 Curt. Supp.) Your role is particularly crucial since most often highways constructed in clties affect the poor and members of minority groups. Highways con- structed through ghettos bred new ghettos or only worsen conditions in remaining slum neighborhoods because of the paucity of low income housing fit for human habitation. The ramifications of the direct inter-relationship between the housing problems of the poor and highway construction in cities: must now be faced by the federal government, state government, and local government. We, therefore, request that you seek the President's' support for the proposals outlined on page 6 of ot~r letter to the President. 7. Support the creation of a "Joint Workable Program" to coordinate and cover both urban renewal and federally assisted highway construction pro- grams. Only by having such a "Joilat Workable Program" can one realistically hope for coordination of the government's urban activities and enforcement of federal regulations relating `to such activities. The direct interrelationship between urban renewal and highway construction must be actually considered in planning. 8. Schedule an appointment for us to meet with you in early September to fully discuss Camden's future and the ideas we have put forward affecting urban development In general. Sincerely, Rev. DONALD GRIESMANN. PAGENO="0324" 318 CAMDEN, N.J., July 18, 1967. Mr. ALAN BOYD, secret cry, Departmtnt of Transportation, Department of Transportation, WasMn~ton, DC. DEAR Mn. BOYD: On February 15, 1967, the Camden Civil IllghtsLMinisterium Neighborhood Groups Coalition wrote to President Johnson. In that letter (a copy of Which is enclosed) several crucial problems relatint to Camden's Workable Program and relocation problems created by federall~ assisted highway construction were raised. Ilecommendati~ns for legislativ( and/or executive action were made to the President on page 6 Of that letter. W( have received no meaningful or significant response on the issues raised concernini Camden's Workable Program. We have received no pertinent response concernini the matters raised about highway canstruction financed in whole or in part b~ federal funds and relocation problems caused by such highway consrtuction. Cor respondence from the Commerce Department and your Department has faile~i to deal with the substance of the proposals made. Pages five to eleven of the enclosed copy of the letter of February 15 point out in detail the problems people in Camden faced due to the Construction of two new highways and a connector linkit~g them. These highways cut through low income neighborhoods. They are being constructed without any meaningful attempt on the part of the City of Camden, the State of New Jersey, or the United States Government to provide decent low income housing units for the displacees to move into. Instead of slum conditions being eliminated, new slums are being created. Conditions in what remaIns of the ghettos are deteriorating rapidly. Overcrowding is a ehronic problem. Absentee property owners and speculatorr are permitting their property to rot. The effects of the highway construction are being felt throughout the city. In Parkside, a moderate income, predominantly Negro section of Camden families are being forced to subdivide their apartments and houses in ordei to provide shelter for relatives and friends who are being displaced. If this process continues, and it will have to unless Camden obtains a sudden and sub ~tantial infusion of decent low income housing for the bulk of displacement is yet to come, this residential area of Camden will become a slum and if it becomes a slum, it will help to perpetuate the myth that Negroes and Puerto Ricans create ghettos. Conditions such as these reveal the direct inter-relationship between matters of transportation and urban development. In the legislation which established the Department of Transportation, Con gress provided that: "The Secretary and the Secretary of Housing and Urba Development shall consult and exchange information regarding their respectiv transportation policies and activities; carry on joint planning, research an other activities; and coordinate assistance for local transportation projects They shall jointly study how federal policies and programs can assure tha urban transportation systems most effectively serve both national transporta tion needs and the comprehensively planned development of urban areas. The ahall, within one year after the effective date of this Act, and annually there after, report to the President, for submission to the Congress, on their studie and other activities under this subsection, including any legislative recoin inendations which they determine to be desirable. The Secretary and th Secretary of Housing and Urban Development shall study and report withi ~one year after the effective date of this Act to the President and the Congres on the logical and efficient organization and location of urban mass trans portation functions in the Executive Branch." (49 U.S.C.A. § 1653(g) 196 Cum. Supp.) The coordination of the activities of your Department in providing mean of transportation with the activities of the Department of Housing and Urba Development in attempting to help provide a decent life for all urban dweller is critical. We do not believe that anyone can gain a complete picture if h looks at matters solely from the perspective of his own Department an particular interest, and therefore, We hope in carrying out the directive o -Congress that you and the Secretary of Housing and Urban Development wil pool your knowledge and resources to show to each other, the President, th Vice-President, the Cabinet, and the Congress the drastic effects Which big way construction has on people's lives, particularly on the urban poor, whe needs created or aggravated by highway construction are not met by coi cosnitant actiOn designed to satisfy these needs. PAGENO="0325" 319 Since writing President Johnson in February, we have become convinced eat there is a vital need for a "Joint Workable Program" to coordinate and over both urban renewal and federally assisted highway construction pro- rams. Only by having such a "Joint Workable Program" can one realistically Lope for coordination of the governments urban activities and enforcement f federal regulations relating to such activities. From the broad perspective, we believe that your Department has a critical ole to play in determining `the future patterns and. modes of mobility of all he people living in `this country. C~rnsu'ltation with experts in urban planning bias made us begin to' question whether continued construction of super- iighways does provide the solution to the transportation needs of this nation. We are beginning to believe that highways are creating great hardships and rnguish for the poor in our cities, and thereby adding to urban deterioration; ;bat they are failing in their purpose to facilitate mobLlity of people; and chat they are helping a significant number of Americans to avoid seeing and ~ontributing to the solution of the deepening crisis in Urban America. The massive traffic-tie-ups which plague every city could be telling us that cars are not the right means to get people to and from work. Highways have also created the anomalous situation in which middle and upper class whites are able to eat and sleep in the suburbs while they return to and depend upon the city for their work and the cultural stimulation provided by' museums, the theatre, the night clubs, the movies, the sports events, etc. All these things raise tough questions concerning the future of the car iii American society, particularly when we bring into consideration the economic significance of that automotive industry. We ask Mr. Secretary: 1. That you support the recommendations made on page six of the letter of February 15, 1967, and that you seek the support of the President and the Congress for those proposals. 2. That you support the creation of a "Joint Workable Program" and that you seek the support of the President and the' Congress for it. 3. That you' schedule an appointment for us to meet with you in early September to discuss the problems of highway relocation arid possible alternate means and methods to satisfy the needs of both the people affected by urban redevelopment and the future transportation needs of this country. Sincerely, Senator MtTsRIE. I want to say I appreciate your willingness to come here and talk to us despite the fact that you have been discouraged from talking in the past. We do want to hear this story, we do want it to be part of the record of this committee, and we are desirous' of acting upon what you have told us. Father GEThISMANN. Thank you. Senator MtTSETh. Senator Baker? Senator B:AKER. I have nothing ftirther to say, Mr. Chairman, except I, too, want to thank you for underscoring in a dramatic way the difficulties that arise from otherwise routine and orderly automatic procedures that require the adjustment of grievances and the allevia~ tion of dislocations that come. I know of these problems from a. first hand example of my own state of Tennessee. I feel that we are fortunate in this committee in having a man of the sensitivity of Senator Muskie, our chairman, writing an agenda and preparing these hearings so we may intelligently approach this problem. I do thank you. Father GEIESMANN. Thank you, Senator~ Senator MIT5KIE. Father, one further thing: I understand that cer- tain agreements with appropriate agencies have been developed as a result of these hearings. Would it be possible for you to submit a Rev. DONALD GR'InSMANN. PAGENO="0326" 320 detailed report of those appearances with us so we may take an ap praisal of the situation Father GRIESMANN. Yes, I have left with you today some of the re- sponses to our grievances and some of the negotiable points we hav had. The task force in Camden is still going to town because they have received so much flak from the housing authority, they cannot get into their files and so on. As soon as the task force report is re- ceived, I will see to it that a copy of it is forwarded to this cormmittee~ So far, you have everything that ELUD has developed with us. I must point out that HTJD came up with 13 points which I have filed with you. We were going to meet with the city, with the mayor and the business administrator and the housing authority that attempted to leave us out of the meeting. But they took in the Greater Camden movement, who are our citizens advisory council, and Mr. Becket of HUD, regional officer in charge of the task force, said to us, we are only going to do business with those we contract with. We pointed out that the Greater Camden movement was not one of those they contracted with. Only after 35 people, some of whom are here today, threatened to barge into that room, could we even get in to hear what was going on, let alone offer suggestions. One of the suggestions offered is now just about a fact accomplished with a relocation review board, a proposal for which is in the report hereto. If we had been left out, we would not have learned what was discussed in that room. HUD's refusal at the regional level to obey the laws and to enforce the laws in the city of Camden and then to allow us into meetings is extremely peculiar to us. I wanted that men- tioned, too. Senator MUSKIE. You may he sure that we will ask for an explanation. May I say finally that I know many in this room have come here this morning from Camden with you. I am delighted that they have. I hope that they may get some small measure, at least, of reassurance that at least this committee is concerned with this proh1c~m and in- terested in~ doing something about it. Thank you, Father. Father GRIESMANN. Thank you, Senator. Senator MUSKIE. Thank you, Mr. Sharp. Thank all of you. The committee will be in brief recess while we await our next wit- nesses from the Southern Christian Leadership Conference. I under- stand they will be here in a matter of a very few minutes. (Short recess.) Senator MTJSKIE. Come to order, please. Miss Wright, it is a pleasure to welcome you and your group here this morning. This was not a planned part of this hearing, as you know, I thought circumstances seemed to combine to make this highly appropriate. So we realize you do not have prepared statements, but we appreciate your interest in using this opportunity to tell us of some of the things that are on your mind. You may handle it in your own way, identifying each of the people present so that the record will be complete. PAGENO="0327" 321 TESTIMONY OF MISS MARIAN WEIGHT; ACCOMPANIED BY MRS. LELA MAE BROOKS, SUNFLOWER, MISS; MRS. BARBARA AR- SENAULT, BERKELEY, MICH.; VINCENT NEGRON, BROWNSVILLE, N.Y; GEORGE FRANCIS, PASSA1~iAQUODDY INDIAN RESERVATION, PERRY, MAINE; AND THOMAS WILLIAMIS, JACKSON, MISS. Miss WIIIGHT. Senator Muskie and Senators on the committee, we are very happy for this opportunity to be here before you this morning. I just want to warn the stenographer that I speak extremely rap- idly and at any time she does not get me she should just signal and I shall try to slow down. My name is Marian Wright. I am from Jackson, Miss. I have been practicing law in Mississippi for 4 years with the Legal Defense Fund of the NAACP. I have with me this morning people who are partici- pating in the Poor People's Campaign. Beginning at my left is Mr. Vinnie Negron from New York City; second from the left is Mrs. Bar- bara Arsenault, a welfare mother from Berkeley, Mich.; next to me is Mrs. Lela Mae Brooks from Sunflower County, Miss. On my right is Mr. Thomas Williams from Jackson, Miss., a welfare recipient. On my extreme right is Representative George A. Francis from Sena- tor Muskie's State of Maine. He is from Perry, Maine. All these people, I hope, as soon as I make a general summarizing statement, will speak for approximately 5 to 7 minutes each, depend- ing on how much or what they want to say. I have not studied your bill, Senator, with a fine tooth comb. I am very happy just to hear the word "coordination" come out again. I commend you for your effort in this direction. There are, however, certain points we want to make to see if we cannot get some considera- tion by this committee. Part of the problem in this country is that there are not enough resources put into the causes of the poor. The other half of the prob- lem of dealing with the poor is that those programs that exist are not really reaching the poor. One in Mississippi and in Alabama and Arkansas and rural Georgia cannot really tell the difference between State and Federal Govern- ments. The sad fact is that in this day, 4% years after the ~964 Civil Rights Act, and many, many years after decisions requiring equality under the 14th Amendment, the fact is that the Federal Government is still the single largest supporter of segregation and discrimination in this country. And that is a disgrace. It comes from weak, ineffec- tive enforcement of existing laws. It comes' from weak, ineffective review of existing programs. And we have to stop pouring money down the same channels which are not solving the problems. I do not know how many years it is going to take us to learn that the old traditional approaches are not doing the job. Yet we persist in putting millions more every. year in the same bad programs. Several things I think need to be done. One of the things that strikes me from a cursory reading of this bill is that there is very little or no provision for citizen participation. I think we have heard in the last couple of years the desire of the people to have some part in the de- cision making processes of this Government. We cannot talk about PAGENO="0328" 322 urban renewal in the guise of continuing white metropolitan control of the inner city. People `have, to have a voice in what happens in their lives. It seems to me (basic that there be provisions for public hear- mgs before urban renewal plans are in fact put into force. Before de'- cisions are made that these pople have to move, these people should have a chance to know, discuss, and have the rationale provided `by the F:eder'aJ Government and have some input into the Government decision. I would strongly urge that any law that is passed now that affects residents of the inner city and poor residents' include a mecha- nisin where they can have some input about a planned program be- fore it occurs. Now, I don't think that is present in current law. Second, what is needed and what always amazes me, we complain day after day and year after year about the misappropriation and th~ mal'workings of Federal programs and always we hear from the Fed- eral agencies, there is nothing we can do. That is baloney. We are giv- ing money to employment agenci'es~-l00' percent; in welfare', 80 per- cent, and we can go down the list of grant-in-aid programs. Yet we say there is little we can do to correct corrupt practices to' correct what this country does with that money. In fact, the answer of the Federal Government is that our `only sanction is the drastic sanction of cutoff and that is such a horribly, politically difficult thing to do, therefore, we cannot do anything. My answer to that is cue, I think th~ Federal Government can use the threat of that sanction more effectively. If they keep using that as an excuse, it seems to me the C'ongress should come up with a realistic set of intermediate sanctions so if the States are no't using the programs in the way they ar'e intended, direct im- mediate action can `he taken. 1ff Sunflower County, Miss. is not using the funds in its program in a way that is commensurate with HEW guidelines, the money should be cutoff. There should be sanctio'ns so that particular people in particular parts of the State are dealt with. I think we have to look `at intermediate sanctions and quick and effective sanctions to insure that Federal programs are going to work the way they are supposed to. if would urge this upon you. The `third thing is that there is very little effective coordination. One o'f the things I w'ant, I want to see something in this bill about who in fact is going to do the coordination `and what kind ef uniform con- siderations an'd guideline's are there for them to do this coordination. One of the lacks in the Federal Government, I think has been the lack of clear, uniform, regulations `and guidelines which the public, poor and rich, have `access to. All of us he'ar about titles, all of us hear about the Federal grants being made, but nobody knows in most of these cities how in fact title I money is being spent. In Mississippi, I know, because I worked on it, that title I funds are being used to reinforce the dual schoo'l system. What is the proce- dure for doing something about that? One is if people knew the intent and how the money is being spent, then they could protest. There has to be some provision for publicizing wh'at programs are intended to do. We have not yet worked out an effective mechanism. This has not got to be in a technical legal lan- guage. It seems to me we have to know what title I is supposed to dc~ and what Congress wants to do in simple enough language that Mrs. Brooks can read it. PAGENO="0329" 323 I think people have to know what resources their county is using that is provided by the Federal Government. Somehow we have to pro- vide means for publicizing the intent and substance of programs by the Federal Government. Fourthly, there has to be a much more effective review system and it seems to me that has to be spelled out, or at least in guidelines. One of the problems is that in the school area, while the Federal Government will promulgate guidelines, it will still go down and negotiate, indi- vidual school district by school district, so everybody assumes that all the Federal guidelines are negotiable. In fact, they are. That is what makes poor people mad. Either we are going to have guidelines or we are not-I would urge that there be uniform guidelines that in fact are followed, that enough money be allocated to have the personnel to do that; fifth, that the poor people be involved in the system. It does not do any good for the Federal Government to call up and say we're coming to review your hospital on Tuesday morning at 10 o'clock. When the reviewing team comes, everything will look good and beds will be rearranged. After the officials leave the beds will be put back and everybody will be back where they were. It would seem a more effective, sensible review system has to~ be worked out. it seems oneof the ways to do this is to have the poor people who are `there on ai~ everyday working basis and see these progr~ms to have roles as evaluators and reviewers. That is not spelled out. I would like to have some consideration of that. The last thing I think one has to ta& about seriously is there has to be some planning on the part of Federal agencies. I am amazed at how we continue using MDTA to `train people year after year and having the training geared to jobs that still do not exist. Again, there has to be much better coordination. We keep talking about it. In fact, it is not done. We still have MDTA training too few welders and Ingalls Shipbuilding Co. in the State of Mississippi going out of the State to look for welders. It seems a sensible matter to make this job study before you decide what are you going to train people for. Yet, year after year after year,we pour miBions of doflars down.the drain to train people for jobs that do not exisfi It seems to me that just very basic fundamental `coordination programs that we talk about all the time but in fact never occur have to be taken seriously now and some- thing has to be done about it. The last thing, there simply has to be an end to discrimination in Federal programs. There are almost no black faces in any of the Fed- eral grant-in-aid programs in many of the Southern States. In Mis- sissippi, I can count on the fingers of one hand the number of Negroes in anything other than janitorial positions in the employment security program, for instance, which is 100 percent federally funded, in the welfare department, the-you can just go down the line. This is a disgrace. People wonder why in the world people now protest against the Federal Government. People dread going to these agencies, be- cause they know they are not wanted and they are not going to be helped. It seems to me the place to start is internally. I would like to see some `consideration given to effective enforcement of title VI tomorrow. We all get the story of why the jobless are not helped-agencies PAGENO="0330" 324 say, I am sorry, we don't have the personnel to do it. Somehow, we are going to have to bring the needs of the poor people together with employment needs and the nondiscrimination requirements of title VI and make it work and make it work soon. I want to make just one last word, just in a general vein, about the Poor People's Campaign. I think these people will speak for them- selves. I know a lot of people have expressed concern. It is an integrated group. They are coming here in nonviolence and it amazes me that people still can come to the Congress to ask you to do what you persist- ently refuse to do year after year after year. I came out of law school a very bright, eager young woman ready to change the world. I tell you, if one-third of what is going on with these poor people in Mississippi is true generally in America, the country is in serious trouble. I came out with a firm belief in law and institutional changing. After school case after school case, I have still after 4 years in Mississippi, found 4 percent of the Negro children in white schools, 96 percent of those children in still terribly unequal, Negro segregated schools. We cannot do the job alone without strong Federal enforcement and I think we have seen that it is not there. Something has to be done about that. I cannot stand much longer seeing babies with bloated bellies and babies coming to Headstart schools who cannot stay awake because of hunger. If this Government cannot feed its people, what can it do? If this Government is not moved after documentation over a year's period of severe manutrition in all our cities, all our States, what in the world can we do? People. ought not to continue dying like this. We are getting a whole lot of problems and a whole lot of questions about violence. I am suspect of Congress and I am suspect of people in this country ~ho continue to worry about violence that may be caused by poor people coming to Washington, while forgetting the chances of violence if people continue to be treated as they are. How can you worry about being inconvenienced so much when a child is inconvenienced by having to walk 7 or 10 miles to school without shoes. That is inconvenience. How can we continue to be so terribly concerned about what violence may occur when we are not equally concerned about the violence of a rat eating a child to death, as happened in North Carolina 2 weeks ago? How can we continue to harp on the possible violence this Poor People's Campaign may cause while forgetting the violence of people having to live day after day after day with rats and roaches and in fact, the poor themselves are the greatest victims of crime. We have to begin to get realistic. The fact that these people, after all `they have gone through, can still have the faith to come here and ask you to do the very reasonable things that they are going to ask you to do and much of what they have asked of the various agencies; and we will be happy to furnish you copies of those, three-fourths of which the agencies have the present and current power to do-and in fact the law says they are supposed to have been doing for years. They have not been doing it. It seems to me we have to look at these things in a hard fashion and s~y the people are simply asking that the pro- grams, that Congress has already passed, function as they are supposed to function. I think we have to go a long way to making the executive branch function this way. PAGENO="0331" 325 Second, I think when we are looking for work; when the training 5 not adequate to prepare u's for thOse jobs, the Congress has to, with in open mind, hear the pleas of people who want to work. The poor :lo not like welfare any more than you like it. We are simply here to say we want jobs but you cannot, it seems to us, say to them when they say, we come to look for work, we are not going to let you work. They ~re here as a last resort. They are desperate. One `of the things that is striking me a lot is the growing `bitterness of the young people. I think I am finding, even in my old age, and I found that the SNCC kids in Mississippi found, that many people have illusions that riots cannot occur in the South. SNOO is' already pass~ among the 13-, 14-, and 15-year-old kids. These are kids who have grown up in the civil rights movement, who have picketed, the~y have gone to jails, who have gone to schools despite the violence, who have seen their political candidates lose, who have heard us in the law area sort `of say, we cannot change it legally and who hnve seen us fail year after year after year and see themselves worse off than they ever were. There is very little we can Say to them now. What is even worse to see, I think, is the perception of these children. I want to tell you very briefly `the kind of things little kids in Mississippi are writing today which frighten me, but which, I think reflect the hypocrisy in this country which I think has t'o be changed. I have `told this story two or three times and I like it `a lot, but I think it points up what is wrong with the way the oom~try is working. This was done in 1964 in a Freedom school by a little girl. It was a parody on Cinderella. She called it Cindy Lillie. `Cindy Lillie said she lived in MComb, Miss. Every year in McOomb, there was a great big ball in the armory. Somehow the little girl heard the ball was given. It was given by the Ku Klux Klan. Every year, she begged her mum- my to go to the ball because she saw all the people going all `dressed up. Every year, her mother would say, maybe next year, Cindy Lillie, you're not old enough, or yiou don't have the clothes this year. Year after year, Cindy Lillie persisted and year after year, her mother had an excuse. Finally, when she was a little bit bigger, she was so per- sistent that `her mother could not give any excuse in the world. So she thought and `she said, you don't have any escort. Cindy Lillie said, "Oh, yes; I do," and you must remember this was 1~64, `she said, "Prince Charming Bobby Kennedy is going to take me `to the ball." Her mother said, "It is very doubtful," but Cindy Lillie said, "No, he promised me." So comes the night of the ball and an hour before it was to start up, Cindy Lillie got a telegram from Prince Charming that `he could not make it. Her mother said, "I told you so." But Cindy Lillie said, "That i's all right, I can go anyway." So off she went down to the armory in McC'omb, Miss., with her little invita- tion. She stuffed the 14th amendment in her purse and also the Civil Rights Act. She came to the armory and heard all the laughter and the music inside `and `she knocked on the `doors. They did not `open it. She kept knocking and finally these other guests came by so `Cindy Lillie went in with them. She saw the man at the door. He gruffly said, "W'hat it it you want, little girl ?" She said, "I came to the ball, I was invited." PAGENO="0332" 326 He said, "Where is your invitation?" She was getting a little nervouS, but she pulled out the 14th amend- ment. He said, "This is no good." She said, "1 have something else." She pulled tout the Civil Rights Act of 1964. He said "That is flO' goo'cl~ either." Then she got a little more desperate and she pulled out the Voting Rights Act of 1965 and she handed that tot him, The man said, "Sorry, lady, where do you think you are?" He began to pass these laws around and began to point out Cindy Lillie and everybody in the ball began to laugh and laugh. Cindy Lillie stood there and she began to cry and cry. This little girl, about eight or nine, in Mississippi wrote this story about 3 years ago. Three years ago, the Cindy Lillies were crying in Mississippi. Today, they are kicking, they are fighting, as well they may. Unless the laws of this Congress that pass and which have to be passed are going `to get people into the balls `of this society, into the jobs, into the houses; out of the hunger, into `the schools so that they can get decent lives, we are going to be in more trouble than ever before. Now, either you are serious about it or you are not. The key point I think you must recognize as legislators is that you cannot continue to expect people to remain responsive to institutions that everyday, per- sistently and élearly, Show them that you do not care about them. People respond to institutions that respond to them. After all, this is a government of people and people are not have to serve institutions~ it is the other way around~ I think nobody can den~t that what has gone on since 1954, with all the laws~ all the Federal grant programs, and `the existence and grow- ing existence of poverty in this country, somebody is failing because somøbody does not care. The Poor People's Ca~npaign is here to say to you, make the laws work. Give us the money that is going to help us be de~ent. We are not askhig for handonts. hi this oou~try we have the resources, we h~tve the money to appropriate~-it is a matter of priorities and what you choose to have cut-why must it always be the poor that is cut? This is the last chance, 1 think, for `this country to ve'spo'ad to the quiet and peaceful petitions of people ~w'ho are asking for very, very just solution's `to very, very real problems. Mrs. Brooks can lead off on this. Senator MUSKIE. Mrs. Brooks? Mrs. BROOKS. Giving honor to Mrs. Wright, I would like to say my name is Mrs. Lela Mae Brooks, I live in Sunflower County, Miss., which is a decent county. I would like to say today to you all, Mr. Eastland has been to Washington telling that we are satisfied in Mississippi. But I am work- ing with poor people like myself and that is where people are trying to get more social security and jobs. I understand Mr. Eastland to say we are satisfied in Mississippi, but his plantation people are not satisfied, because I have been on his plantation, and I am not afraid to say it, and they are hungry, too. Because people went there to buy food and his house is not decent, either, We want you all to know that we are tired waiting for a decent place to live in, a decent home, decent food to eat. We are tired of PAGENO="0333" 327 waiting on the white people and having them treat us like cats, dogs, even cows and pigs and things like that. Some of the houses some of the people in Mississippi are living in in Mr. Eastland's county, I want to tell you because I saw it with my own eyes, they are not decent for dogs to live in. They have better houses for tractors and they have tractors. We know you are responsible for that, you are responsible paying him for not planting his cotton. Yet there are people who are over 65 tears of age and can't get any welfare. We don't want welfare in Mississippi. We want money in our own hands. We don't wailt white men sitting on our money or you all either. We are not going to beg anymore. We are not in Washington to beg. You had better believe God Almighty would not have put us here if he did not want us here. He would have wiped us out long ago. We get assassinated all the time. We want jobs, we want to get decent pay for them and we want us not being able to work on welfare. But we don't want welfare. We want money in our hands. We want to build our own houses. We don't want to be born in a shack and die in a shack. We want Mr. Eastland to know the people are not satisfied in Mississippi. They are not satisfied all over the United States and we are looking for an answer. We are not going to wait for another hundred years. I want you to know we are not going to take any crap, eating food with bugs in it. We are tired of using commodes and having the sewage ditch run by the front door. If you think it is not true, I have asked a man to come from Indianola, Miss., to look at it. Do you think we like that filth? No. You would not want your wife and children to inhale it. How would you feel today with no food to eat, with people on welfare, with 1~ and 14 people in the house? We have most plantations up there and one person in the house working. Then they take our house rent. They come and take our automobiles and then we can't go to the doctor. rrhey told us in 1964, they said they were going to give us free lunches for the children. We put them in the white schools; they said they are going to cut and whip our children. Why do you want to whip our black kids and not expect us to whip a white child. I told them to keep their hands off of our black children. You all are going to have to realize we built Washington, we built these buildings and we must have money, we must live decently and I want you all to know it today face to face, because I am not friendly. I am a mad lady and am `mad because I do not have a decent place for my children to lay down. They can't get a decent education. You say we are not qualified. How did we raise y'all? I am not raising any more white babies for you. I am not. I am not working any more for $3 a day, from sun to sun. Then they tell us-you come by here telling me I get $50 a month disability and they tell me my gas bill is $26 a month and buy $50 a month food stamps? I am sorry. We are not coming here to beg. We are asking-we don't want anything from you all. You all go to work and start sitting down like we did. I say you can go to work in the cottonfields. We are not going to do it any- more. You better believe these younger children are not going, to take it and we are not going to either. PAGENO="0334" 328 So please hear us and hear us now and don't be a long time doing it, please. Senator MTJSKIE. Thank you, Mrs. Brooks. Miss WRIGhT. Mrs. Arsenault. Mrs. ARSENAULT. I am Mrs. Barbara Arsenault, residing in Resur- rection City. That is why I have such a bad cold. I hope you can understand me. I live in Berkeley, Mich., which is a suburb of Detroit. I have five children. I am an ADC mother. I used to live in Maine, but the weT- f are programs were so poor that we moved to Michigan. It is a little richer. State, I suppose. I am here as an ADC mother. My five children are on ADC. I do not work. I do not intend to work. I am not interested in a job. I have five children to raise. If I raise them properly, it will repay the cost of keeping me at home on ADC. It is very hard. It is a subsistence living. I do not buy food stamps because I cannot afford them, $44 twice a month, cash on the line, for $60 worth of stamps-I cannot buy less and I cannot get $44 up except for things like rent, flooded sewers~ broken furnaces-first-class emer- gencies are the only thing I can find $44 for twice a month. If you miss the food stamps three times, you are ineligible. I mean they are a joke. This is a Federal program and the administration is just fierce. I wonder who is getting them. I work with the Office of Economic Opportunity as a commissioner, a representative of the poor. I have seen a lot since I got there. I think a lot of your problems with Federal programs are local resistance. You have to use Federal influence, Federal law, Federal muscle to put these programs to work where they are needed. I have worked with title I, I have worked with Headstart, I have worked with a lot of the big programs, the better-known ones. I have seen-I do not know where the money goes, but we cut money out of this program, we cut children out of itso we can put a few children in it here. I count children. I know that 1 percent of those on public assistance can work. The rest are children or mothers like me who know they are needed to raise them, or disabled or aged people. Yet I know that most of the poor are not on ADC, they are not on welfare, they are not receiving any assistance. I am here because I was sent here, because half of the country sent us here to represent all of the poor. All we are doing is asking you to let a few more kids in on the welfare programs, on the ADC program. It is not the best. It is a little over $5 a week for food for each person. it is not much. I do not think many people here could live on it. We learn how. But at least, it is something. I am thinking of the children with the bloated bellies. I am thinking of the kids with diseases and no way of buying the food that it would take to cure them. A lot of sickness is caused just by malnutrition. I wish that you would hear just one thing from me. This is a poor little heap of poor people. We on public assistance are on the top of that poor little heap. It is way down, but it is still higher than most. I wish you would help lift the rest of them up to that little level. I would like to say something, too, about the Poor People Campaign. I feel like a little sliver of ice on the top of an iceberg. Half the coun- PAGENO="0335" 329 try is behind this. People have been feeding on us. People have been clothing us, people have been bringing us into their homes for baths. We have been waking up all over your cities, finding our clothes ironed. I love a cup of tea; I have a jar of instant tea from one lady, tea bags from somebody else. Somebody else paid the bill to get me here. A whole crowd of somebodies are minding my children so that I could come. This Poor Peoples' March is integrated. I live right down there in Resurrection City. We shiver together, we eat together, we work to- gether. We are having a beautiful experience in brotherhood. It works; it works beautifully. I would like you to take a look at it. This is what we are talking about when we are talking about inte- gration-people together. Who cares what color they are? And it is working down in Resurrection City. Please listen to that, that beauti- ful thing down there is just the top of the movement that stretches from coast to coast. Thank you. Senator MusiclE. Thank you very much, Mrs. Arsena.ult. Miss WRIGHT. Mr. Williams has just pleaded that he is not feeling well. He has had two heart attacks and he has not brought his pills this morning. He has asked not to testify. He is a man on welfare because of disability and he has an income of $84 a month. His basic reason for being here is just to tell you how difficult it has been to get on the food program in Mississippi. He still has not succeeded, and against the administrative redtape, the lack of coordination, the inability to get into programs that are designed to help him is just something that continues to break the poor down. So he asks you to excuse him. The Chief will talk now; Chief Francis. Mr. FRANCIS. Senators, my name is Representative George Francis of the Passamaquoddy Tribe in Maine. I have two problems; one is whisky and the other is bills. Ten years ago, when I returned from Detroit-I am retired from Ford Motor Co. and worked there 40 years-I returned 10 years ago and the condition there has never changed. I left there in 1909-went home-and the same conditions exist up there in regard to liquor I have been fighting the State for 10 years, and I have never gotten no place with them. I went before the two Governors, I went before the liquor commission, and the liquor commission said, why do you not clean it up? I was Governor of the tribe at the time. I said, do you want me to clean it up on 27 cents a day? That was my salary as a Governor. So I was called to Augusta here about 6 weeks ago. I had a hearing before the liquor commission and I told them at the hearing that water during the winter time, half the houses did not have any water~ but we had plenty of liquor. So the commissioner came to see me and asked me, what am I going to do down in Washington? And I said I was going to try to get some help on liquor problems. He said, do not do that, because the State will lose our welfare. I said, well, they have lost everything now; what can they lose? Now, they have taken the milk away from children just 3 weeks ago and have taken the hospitalization and medical care from all of the Indians only in the case of an emergency. Those are the things we do PAGENO="0336" 330 not know what is going on. Everybody is afraid to say anything. I am the only one on the whole reservation that is able to get up and say something, because people are off the reservation or out of the State. We have had a lot of publicity through the Boston papers, the New York papers; they cut us out of the Maine paper~, blanked us right out. They do not allow reporters to come on there no more. I do not know why. Several of your Washington officials were up there 2 weeks ago last Saturday on the housing problem. We had a letter from New York out there which wanted to get us, wanted to get houses for us. How can we buy a home when our yearly average income is $430. They ex- pect you to buy a home on that. That cannot be done. But they are try- ing to force housing-this is not the Federal Government, I do not think that that has anything to do with it. But I cannot find head or tail who is behind all this, causing the housing problem. They figured we wanted to build 30 houses on each reservation-there are two reservations-which is impossible for them to make those payments. They cannot even keep up the interest alone. If they do get houses on it, who is going to pay the interest on the houses? Eighty percent of those people up there cannot even pay their electric light bills, because I know; I pay them. I think they owe me about $2,000 now in electric light bills I have paid in the past, and I will never get back. So 10 years ago, they had a housing project brought up there and the housing project cost us $80,000 for 11 homes. Up to now, those houses have cost us over $200,000 because those houses were built on a swamp. I told them at that time-I was not the Governor at the time. I told them, you cannot build hOuses on a swamp. Well, they just took me for granted that I did not know nothing. But 6 months after those houses were built, the foundation went one way and the house went the other way. So they spent almost $46,000 to put the houses back together again. Now, they did that twice already. Now, the~y have to do it again. That is why I am fighting this housing project up there. We do not want to be taken again for $100,000. I cannot find anybody who will tell me what is backing this. That is one reason I came down here. I am going to the Housing Authority to see who is really behind it. I know that FHA came up there 2 weeks ago Saturday, and they said they had nothing to do with it. Eefore~ up to that time, they were behind us. Now they fell out. Now I would like to find out just what to do and who is behind all this. This is just nothing but a money scheme, that is all it is. Now, I had a problem. We have a trust fund up there for $212,000 which we do not get no interest out of the trust fund. The interest is taken away from us; I do not know why. Our stumpage on the land is $150,000 a year. That is $25,000 we are supposed to get that would build at least five houses. In 10 years, you would have them all built on your own money. But they will not do that. Those are things that I really came down for, to find out why they are holding our trust fund and taking our interest money away from us. Thank you. Miss WRIGHT. Mr. Negron. PAGENO="0337" 331 Mr. NEGRON. My name is Vincent Negron. I am from Brownsville, Brooklyn, N.Y. I represent an organization called Cusa, Christians and Jews for Social Action, in Brooklyn. I am vice president. I would like to speak specifically to the housing problem we have in Brownsville, Brooklyn. Many of you here have probably heard and read about the 500 empty buildings we have in our community and about the 10 to 20 buildings a day coming down. The relocation department there is not doing its job, for the simple reason that it relocates people into another, adjacent area which is also a ghetto area. The welfare department_let me verify a little thing. Brownsville is 85 percent welfare recipient. Sb you take an individ- ual family, you put it into the East New York section, which is the adjacent area of Brownsville, into another ghetto. The welfare depart- ment puts the individual family into this apartment which is just as bad as the one that has already been vacated, or that has emergency vacating orders to be out. The individual does not want them and is then put into a hotel in the city of New York. Then you have a family of nine, you have kids, you have school that the kids have to attend, and they miss maybe 2 or 3 or even 4 months of school, for the simple reason that they are traveling and they have to ask for a transfer, and you know it is not stable, living in a hotel. Now, you have the urban renewal areas in Brownsville. You have people knocking down our buildings and moving people into another area again, another ghetto area, putting them again into another di- lapidated (building with rats and roadhes again. Then the people are promised t*o be moved back into these projects; that is not done. We have spoken to Chairman Walsh from the housing authority in Brownsville; we have spoken to Mayor Lindsay, we have spoken to everybody down there. We have spoken to Frank R. Collier, corn- miSSioner of relocation down there. We ask that the city of New York and the Senators down here look into this and then build houses at the same moment that you knock one down, to build a brand new one right next door to it or to do something, because what you are doing is moving people from one place to another and creating a ghetto in another area. Iou cannot move people from one house into another house which is in the same condition. Last year, we had two babies die of pneumonia. And remember the heat problem we had? We had two babies die of pneumonia. If you remember, you may have read it in the paper, the Times, the Good Shepherd Center housed more than 1,000 people in their church so that the people would not freeze over there because of inadequate heat. The landlord cut out on us and left us in these empty buildings. And then the city takes it over and the city is a worse landlord. I do not have to tell you this, because we have been demonstrating for the past 2 years. We have been nonviolent in Brownsville. We have not had no riots yet. Not one yet. Now, a month ago, 2 months ago, 25 buildings went up in flames. Nobody got hurt, thank God. But ladies and gentlemen, let me tell you right now, if this keeps up in Brownsville, we, the people of Brownsville must do something. If the Senators here and the Congress, anybody, you people cannot heed to the message that we are giving you down here today, I feel sorry for this country. 95-626--68-------22 PAGENO="0338" 332 I am a Puerto Rican born in the United States, and I wanted to go back to Puerto Rico. When I went to Puerto Rico for a visit, I found out that you are there also. You have taken over also the Puerto Rican country. It was an agricultural country. Now it has become an indus- trial country. So it looks like we are stuck with the United States. If we are stuck with the United States, brother, we are going to fight you also in this country. All I am going to say is I wish you people would take a walk, just a walk, to the Poor Peoples' movement. I have, in my own houses. I have 18 people from my own neighborhood, just the poor. people here. We are building our own house over there. I want to tell you it looks better than anythii3gwe have in Brownsville. We have something better than anything in Williamsburgh, which is middle class. We are going to stay there. That is all I have to say. If you have any questions. ask. Miss WRIGHT. There are two or three things from these discussions which I shall point out. Again from a cursory reading of the bill, do you see any reason why you cannot include in the law that people are not to be removed in urban renewal until adequate housing has been guaranteed to them and, in fact, these people have been relocated in adequate housing ~ It seems to me again the thing that strikes me about the whole bill is how few social as opposed to technical, values are included. A city planning friend of mine tells me how much goes into planning a zoo-the animals must have the right temperature, they must have the right atmosphere. They have to have everything of the right size so that the animals can grow and be happy in the zoo. We do not give that much consideration to people. It seems to me we are concerned about highways. Why is it that we cannot write a law that people shall not be moved from one slum to another until adequate housing can be found for the people and they in fact shall be moved into adequate housing before an urban renewal program can come into force? I do not see any problem with that. It seems to me that is the minimal protection that we can give to these people. The second thing that worries me a lot, which is good in theory but not in actual practice, is your emphasis on trying to get more State responsibility and you talk about having to consult with and get approval of the local governmental agencies before instituting Federal programs. That is very well, and I would like to see that, assuming you have very strong, built-in guidelines that the States must follow and comply with, and assuming you have procedural systems for review built in. One of the things I would like to ask is that a review system include adequate hearing procedures, because it seems to' me that Agriculture, HEW, and a few other agencies of the Government do not have clear hearing procedures. I have asked for hearings at the HEW-a few years ago-~-and we have gotten no response. Some say that there is no hearing procedure for the. public; some say there is but it is so unwieldy that they avoid using it where possible. Why cannot we write in clear hearing procedures so that people can bring up violations of programs? Lastly, because the political pressure is so often so difficult to deal with, why cannot we have a system for judicial review of certain pro- PAGENO="0339" 333 grams if we feel certain laws are being violated in a substantial fash- ion ~ I would like to see built into the bills the right to judicial review and a clear hearing procedure. The third point I would like to make is while we are talking about consulting in the States, one of the problems is that many of the States and localities unfortunately ha1ve still, not come to the place where they are going to take responsibility. In Mississippi, we are suffering because of money the State loses from Federal programs. If we had the unemployed fathers program in welfare in Mississippi, we would be a lot better off than we are. It is not a solution, but it would keep a number of people from starving. The States, particularly in the South simply have not shown their willingness to take advan- tage fully of Federal programs by putting: up a State matching share, or to carry those programs out in a way in which they are intended. I would like to see a different kind of bypass mechanism built in whereby if States and localities-you have written it positively as I have read it-must agree to take these things assuming they meet cer- tain requirements. I would also like to see it say that if the State and locality have not seen fit to take advantage of this program, the Fed- eral Government should have the option, in areas of greatest need, to go ahead and carry on the program directly. We might think about that. I know it is complicated, but again in the food area, I have argued with the Agriculture Department that they. have the authority to initiate community distribution programs if the State refuses to do it. They refuse to do it in most, if not every instance. That is our big fight with them. That is why I think that should be left in there, that if the States refuse to do their duty, the Federal Government should act under certain clear cut conditions. I would like to join with our other speakers here in the invitation to come out and see Resurrection City. I would like to say again, you are Senators with votes. We are here to ask, and Ithink Mrs. Arseriault is correct, that the compulsory work program for mothers, should be repealed. We are here to say that the freeze is not the answer to pov- erty. We want that repealed. We are here to say that we want to work. It seems to me that this Congress, if it wants to, can put together an adequate jobs bill. I know the problems of appropriations, and I know again that there are other ways you can cut it if you want to. We need the job bill. People want to work. It seems to be minimal. This Congress should respond to that very just demand. You hear the problems the chief talked about of housing. People here say they want decent housing. There is a housing bill pending before you. You people can do that. All of us `are aware of the atmos- phere in this country today. But again, you are leaders. I think there are many ways you can mold the opinion of this country. You have a supplemental appropriation for summer jobs and Headstart pending in conference; it is minimal. When you are talking about that, you are talking about avoiding 30-percent cuts in Mississippi programs from last year's level of programing for needy Head'start children. I disagree with the priority that says we `should cut out sobs, 30 percen:t in Mississippi, so that people can be thrown out of jobs this winter and have `to come up and take money, the same money you are PAGENO="0340" 334 trying to save for the summers. You have to feed children in Missis- sippi now. Is it so unreasonable to say that out of a gross national product of $860 billion a year, you cannot come up with $75 or $100 million supplemental so that the kids who are in Headstart and getting one more meal a day can eontinue to get that one more meal? We are here simply asking that we not see any more of our children die because of hungers We want food stamps that people can afford. There are many adjust- ments that can be made to get the people in these counties into that program. There is much the Federal Government can do to get emer- gency relief programs into the neediest counties but since they always claim they lack authority, it seems to me minimal that this Congress should be kble to sajr that it is important to this country that people do not go hungry aiki enable us to get food programs into almost 400 counties where food programs do not exist. We come and go to hearings and talk and talk. I should point out that it is not enough `that we come here this morning and be graciously received, We want to see how you vote. You must realize the faith of these people is almost at an end. That they can continue to talk to people like ~rou will depend on what you in fact do and do immediately. It is not as if we were coming to pressure, you and make you do some~~ thing right away. We have been saying the same thing now for 5, 6, 7, 8 years. You simply have not responded. W~ are saying please respond or else we will simply have to begin to lash out, because there is no choice. You tell people you can either shut up and hopefully die, or give up, or to fight, either with guns or with fires or `anything else. I do not think any one of you would think nonviolence was a terribly great thing if you, Senator Baker, could not feed your child at night. I think you ~vould do everything you could in the world to feed him, when reasonable methods fail. If you, Senator Muskie, had no decent home for your family to live in or, as Mr. Scott from Baltimore `so eloquently in this committee hearing `said, had shared your `apartment with the rats and roaches every night, you would do what you could to change that. If you could just begin to ethpathize `with the desperate tnisery the poor live with every day, evaluate your own judgment and come up with a different kind of response from yourself as leaders, for if you are leaders, you ought to lead. I do not think this Congress ha's been known for its leadership in the last several years. I hope we can maintain faith in what we think is a go'od systeiñ, but the system simply has to adjust to include other people who are not included in it, or else it will be attacked from outside as well as inside. We thank you for the chance to come. We hope you will come to Resurrection City. Senator MU5KIE. Miss Wright, may I say just a few words? First of all, the discussion comes to matters which are unrelated to the bill before us, but we will come to that. We appreciate your constructive suggestions on this `bill, `and I assure you we will. I cannot predict how other members `of the committee will respond to specific recom- mendations, but I think the committee will `be' most responsive as a whole to suggestions you have made. PAGENO="0341" 335 I think it has been helpful to us as Senators, also, to hear what you have to say about other Federal programs. I am not a member of most of the other committees which are involved in these program's, although I am a member of the Housing Subcommittee. So it is helpful to get this insight that you have given us in these s~vera1 states. With respect to some of Chief Francis' problems, I shall under- take to get in touch with the appropriate State agencies to see how helpful I may `be in that direction. We welcome you all here. We understand that you are not satisfied with the opportunity to be heard. Nevertheless, it is important you have that opportunity. We have' been most happy to give you that opportunity before this committee and these two Senators this morning. With that, I hope that I will get down to Resurrection City, and expect to. Thank you very much. We will recess until 10 a.m., tomorrow. (Whereupon, at 11 :45 a.m., the hearing recessed, to reconvene the following day, Wednesday, May 2~, 1968, at 10 a.m.) PAGENO="0342" PAGENO="0343" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION WEDNESDAY, MAY 22, 1968 U.S. SENATE, SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS OF THE COMMITrEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to recess, at 10:25 a.m., in room 4221, New Senate Office Building, Senator Edmund S. Muskie (chair- man), presiding. Present: Senators Muskie, Baker, and Hansen. Staff members present: Charles M. Smith, staff director; Robert E. Berry, minority counsel; E. Winslow Turner, general counsel; Lucinda T. Dennis, administrative secretary. Senator MUSKIE. The committe will be in order. I think we will shortly be granted an exception to permit us to hold hearings in spite of the fact the Senate is in `session this morning. If not, we will have to discontinue, `hut in the meantime, let us proceed. Our first witnesses this morning representing the National Urban League are Mr. Wendell G. Freeland, member of the board of trustees, and Mrs. Murice Jefferies, community organizer, neighborhood de- velopment center and program., Washington Urban League. Mr. Freeland, won't you proceed in your own way. TESTIMONY OP WENDELL G. PREELAND~ MEMBER OP TEE BOARD OP TRUSTEES, NATIONAL URBAN LEAGUE, ACCOMPANIED BY MRS. MURICE JEPPERIES, COMMUNITY ORGANIZER, NEIGHBOR- HOOD DEVELOPMENT CENTER AND PROGBAM, WASHINGTON UEBAN LEAGUE Mr. FREELAND. Senator, the National Urban League appreciates this invitation and opportunity to appear before the subcommittee and add to your body of knowledge the information and evidence the league has gathered over its years of experience from the many affiliates. This ~tatement was originally prepared by the Washington office last week and we had only 87 affiliates, but we had a meeting in In- dianapolis of the board of directors and we brought in three new urban league branches, on in Lexington, Ky., one in Albany, Ga., and the other in Nashville, Tenn., so we now ~rave 90 affiliates in f lie United States. (337) PAGENO="0344" 338 I am a member of the national board of trustees and former presi- dent of f he Urban League of Pittsburgh. As you undoubtedly know, the league has been operating for some 58 years to secure equal oppor- tunity for Negro citizens and other minorities. It is nonpartisan and interracial in both its leadership and staff. The national office is New York, and Whitney Young, I suppose, is our No. 1 product as our executive director. We have a trained professional staff operating in day-to-day activi- ties in using the techniques and disciplines of social work in perform- ing services of the league. The professional staff numbers more than 800 employees whose operations are reinforced by some 8,000 volun- teers who apply expert knowledge and experience to the resolution of racial problems and racial relations. I am among the 8,000 volunteers with much experience, but little expert knowledge. The proposed legislation which you have introduced will insure the fullest cooperation and coordination of activities between levels of the government in order to improve the operation of our federal system. At the time this legislation was introduced in the first session of the 90th Congress, there were some 220 Federal grants-in-aid designed to assist the State and local governments. These were administered by 16 departments and agencies o~f the Federal Government. It should be noted that more than 75 of these 220 grant-in-aid programs have been enacted since 1961. There are obvious problems and there will be obvious problems for those responsible for the administration, and also for those the pro- grams are designed to s~rve. The consolidation of programs as proposed in titi~ VI seems to us to be one of the ways, ~r one of the npproaches, which will ~oive some of these problems. In any single area ~f concern, there are so many dif- ferent programs that the average citizen soon becOmes lost in the Fed- eral maze, and is thereby deprived of the right of supporting services. But, mpre importantly, he loses confldQnce in th~e institutions of government, and I think this is what we are seeing thr~ughout the country today. For exarOple, in the manpOwer field alotne, there were some 57 programs for vocational and job training last year. In PiUs- burgh, there are so many programs for job training we really do not know where we can find the people to be trained or where we can put them, or which office they should go to. The unsophisticated, poorly educated jobseeker is expected to be- come, overnight, educated and sophisticated and select the plan that best suits his experience and needs. Today, because of the tjme limita- tions ~tnd because of the interest of the Ui~ban League, I would like to talk most of all about title VIII, which deals primarily with uniform relocation assistance. rfhis title deals forthrightly with the problems which have been of primary concern to the National Urban League for a long time, and indeed, still confront us today on a daily basis. The establishment of a uniform policy for the "fair and equitable treatment of owners, tenants, and other persons displaced by the ac- quisition of real property in Federal and federally assisted programs" would be one of the greatest services this body could render to the rank and file of American citizenry. PAGENO="0345" 339 To the homeowning ghetto dweller or ghetto businessman or tenant, such a unified policy would have the greatest possible meaning. The way we are now, those who are least prepared to battle the strong arm of established government as represented by the eminent domain proceedings are also those who lose most under our present relocation programs. All too often these people know little or nothing about relocation payments~ advisory assistance, or assurance of availa- bility of standard housing. The same is true of the ghetto businessmen who are diplaced or forced to discontinue business because of local or State relocation programs. Most know nothing about the programs presently designed to pro- vide an orderly transition with a minimum of inconvenience. Thou- sands of individuals are affected each year by such Government proj- ects as urban renewal and highways-a great many are minorities living in slum areas. According to your own statement before the Sen- ate, Federal and federally aided programs are estimated to displace ap- proximately 111,000 families and individuals, 18,000 businesses and nonprofit organizations, and 4,000 farm operators each year. While these programs sometimes work hardships on individuals who are not poor, the practice has been to concentrate on the poorer areas, and I think this is because the residents of those areas are least likely to have the political power or the know-how to beat city hail down- town. Even where highway and urban renewal programs are administered fairly, there is a great need for advisory assistance. As you have said in introducing this legislation, and I quote~ "The poor, the nonwhite, the elderly, and the small business people all need intensive counseling to prepare them for, and to help them carry out their move." The major problems we face today with relocation was tersely summed up by Newsweek recently in its "Negro in America" special edition. The editor said: "Urban rehewal, which was designed to rebuild decaying city centers, has in practh~e all to often meant Negro removal; In Atlanta, for instance, 67,000. people *ere dis~placed by the leveling of slums and only 11 percent were relocated in public housing." The problem is further compounded by the fact that "unequal treat- ment" often results from the limitations of programs themselves, even when they are administered fairly. TWO families living side by side could receive drastically different benefits and assistance simply be- cause they were displaced by different programs. I think the record shows that a federally aided urban renewal proj- ect would give to a homeowner moving costs up to $200. The person next door owning his own home under the federally aided highway program would receive $200 only if the State has authorized partici- pation in the Federal relocation program. Inconsistencies for payments for business moving expenses are even greater. The Federal-Aid Highway Act allows expenses only up to $3,000, while dislacement by a federally aided urban renewal project entitled the businessman up to $25,000 for moving costs. I would like to relate, if I may, some of the relocation experiences the urban league has encountered in some of its affiliates. The Urban League in Detroit, for example, has conducted several studies which could prove useful to this subcommittee. Mr. Roy Wil- PAGENO="0346" 340 hams, the housing specialist for the Detroit Urban League, is to make available to you certain information. In a "survey of the quality and availability of housing listed by the Detroit Housing Commission," the urban league found that a majority of houses fall in one of three categories. They were (1) substandard, (2) too expensive, or (3) al- ready occupied by someone else. A common complaint in Detroit is that housing which is torn down by the Housing Commission is, in many cases, better than the housing into which the residents are forced to move. In New Orleans, though there is no urban renewal authority, there are still many problems for those who must be relocated. The housing director in the New Orleans office says that the "main villain has been the interstate highway program which provides absolutely no reloca- tion assistance." I would note here that many of the aspects of the highway program to get people around cities and into cities faster-out of the cities and into the suburbs~-~are the result of the flight from the cities and the flight from the problems of the cities by the white community. Other difficulties arise, of course, in New Orleans, from closing down of properties because of code enforcement. For instance, when the slum lords closed their tenements there usually are no relocation efforts, by the city government because no urban renewal funds are available in New Orleans. In Elkhart, md., we are told that the people who are replaced by urban renewal are not always included in the local public housing program. This is primarily because many of these individuals are welfare clients and city officials limit the number of "minimum rent- als" admitted to public housing. It is sort of a quota system, as it were. In Fort Wayne, md., ui~ban renewal plans for the Hanna-Creighton area were announced in 1961. Of the 490 families living in the area 90 of them are still waiting to be relocated. Relocation services were generally considered inadequate in relocating the other 400 families. There is an inadequate supply of replacement housing for no-income tenants. In another area of Fort `VVayne, the city exercised the right of eminent domain to clear away housing to make space for a commercial concern. Several families were forcefully evicted. Presently, there are five families still living in the area awaiting the outcome of a legal suit to obtain a fair price for their homes. In Cleveland, the renewal programs have caused the coining a new phrase, "Urban Renewal equals human misery." Television station WJW, in an ~ditorial~ states: `Since the beginning of urban renewal in 1957, hundreds of poor Cleveland families have been bulldozed out of their hemes. Though the city has poured millions into urban renewal, it has barely lifted a finger to find new housing for displaced families. The Little Hoover Commission Report found that urban renewal in Cleveland has been "grossly neglected" and challenged city officials to adopt a more positive, more humane attitude in relocating men, women, and children who are uprooted from their homes by the action of city hall. The Commission said that in one renewal project, ~`1,700 families were forced from their homes, and as far as the city knows, 1,200 of PAGENO="0347" 341 these families disappeared from the face of the earth because no pro- visions were made for them." From Miami we have another report that the "State Road Depart- ment, in removing people for highway construction, did not give suffi- cient notice of relocation assistance to those displaced. The State legislature did not pass the necessary laws to implement relocation pay- ments, so this money was not available to displaced persons." Since May 1967, the Miami Urban Renewal Agency has `been re- sponsible for the relocation of displaced persons and has made con- siderable progress toward its goals. `The fact remains, however, that the agency does not have the funds for relocation payments. Report after repo'rt, Mr. Chairman, from our local affiliates tell the same story-in too many cases urban renewal means "removal of low- income Negroes" and in too many instances this removal is accom- plished without the benefit of assistance payments or advisory assist- ance in terms of finding decent, sanitary, alternative housing. We also have reports from Dayton; Elizabeth, N.J.; South Bend, md.; Champaign, Ill.; Omaha, Nebr.; New Brunswick, N.J.; Flint, Mich.; and San Diego, Calif. All of these are having similar difficulties in working for the relocation of individuals displaced by Federal and federally assisted programs. From the foregoing you can see that one of the most glaring prob- lems relating to the various grants programs is that relocation policies are both inconsistent and inequitable. The common thread which runs throughout the reports we have received can be summed up in four statements: 1. There is an inadequate policy for making assistance payments and providing advisory assistance.; 2. There is no positive, affirmative assistance in locating decent, safe, sanitary housing comparable to that being vacated by displaced persons, or more desirably, better than that being vacated by displaced persons; 3. In most cases, there is' a lack of adequate notice before being forced to move; and 4. There tends' to be an unwillingness of local officials to comply ivith the "spirit of the law" in providing assistance to' the displaced. Let me digress from the prepared statement and point out that in Pittsburgh, which is so proud of its Golden Triangle and its new arena, when there was the Housing Authority of the C'ity `of Pitts- burgh, a separate public corporation, which was the responsible agent for relocation at the beginning of the program of urban redevelopment and renewal-the Housing Authority at that time accepted this respon- sibility. It had an obligation to accept the individuals who were eligible for public housing, but, on'ce that responsibility bad been accepted we found many instances of early eviction of people who should have remained in housing authority projects but who were undesirable as far as the housing authority administration was concerned. The letter of the law was "obey the spirit." These problems are not new. Three years ago the Advisory Commission on Intergovernmental Relations issued a report on "Relocation: TJnequal treat'ment of people and businesses displaced by governments." PAGENO="0348" 342 In that report, the Commission analyzed governmental policies and practices in relocation cases at all levels of Government. One of the report's basic conclusions was that persons and businesses displaced by Federal, State, and local level by public works and other programs, are entitled to assistance and relocation, and this title extends to lessees and tenants as well as to owners of homes and businesses. The National Urban League concurs in this conclusion and offers the following recommendations to implement the Commission's findings: 1. Provid~o for the full cost of relocation of persons or businesses displaced by Federal, State or local public improvement programs; 2. Monitor the enforcement of regulations to insure that all dis- placed persons-own~rs and tenants-_are given advisory assistance and the `services needed to find decent, alternative housing; and 3'. Require proof of available alternative housing before the release of Federal grants~in~aid funds. Among the nine major findings of the Commission's study, two are extremely important and of special interest `to the National Urban League, and are worthy of note here: 1. "The worst problem in relocating families and individuals is the shortage of standard substitute housing for low income groups." 2. "Nonwhites have the most difficult relocation problems of all population groups. Th'is comes from their general lower economic and educational status; the impact of urban renewal and code enforcement programs on neighborhoods where they are `concentrated; and public and private practices that restrict their access to housing." These findings by the Commission support the statements I have made here today. Negroes and other minorities are placed under a sort of legalized "double jeopardy." This double jeopardy consists of the inadequate policies of the Government which, at best, overwhelms those at the low end of the economic totem pole, and the all-too- frequent failure of local officials to even advise the poor about the limited benefits ~nd assistance provided by law. We commend this subeommitee for the comprehensive legislation it has proposed to deal with the problems of relocation payments and ~issistance available to persons' and businesses displaced. The National llTrban League believes the bill, S. 698, to be extremely important and timely. While by our very nature we can add little technical knowledge to the proposed legislation, I believe that some thought must be given Lo the relationship of past practi~es to the Nation's most critical problem. Much has been said and written in recent years and days, and even hours, I suppose, about riots, civil disorders, civil disobedience, and breakdown of law and order. But not very much has been said about justice. Not much is being done to mend strained relations which threaten to rend `the Nation into "two societies, one black, one white-- separate and unequal." The past practices of Government at the State, local, and Federal levels in regard to relocation have strongly tightened the noose of the white `community around the black ghettos in America. While we beef-up onr police departments and train our National Guard units in our long-range plans for improving the center cities, conditions that sparked the disorders in the past are growing worse. PAGENO="0349" 343 The population of our ghetto is growing at a fantastic rate. 500,000 more people will be living in the ghettos of America by the end of this year, as compared with the beginning of the year. By 1985, which is not too remote for those of us who look to that year as being possible in our existence, the Negro population in our central cities will increase by 72 per cent. In concluding, Mr. Chairman, I would suggest that meaningful action must be taken to avoid even more destructive civil disorders in the months and years ahead-~-disorders which will surely be costly in terms of human lives as well as the loss of public and private property. This is not to deny that some movement has been made. Indeed, we have made movement. We have made advances through social legisla- tion such as the Economic Opportunity Act, the Civil Rights Acts, the Manpower Development and Training Act, and even some aspects of the urban renewal highway construction bill. But the racial gap still widens. What we need is a national commitment to seek .a solution to the country's probiems-a sense of national urgency that we have not seen before. For the poor people, many of whom are in this city today, there is a "light at the end of a tunnel" and they are running fast to reach the affluent society which they believe lies at the end of the tunnel. Their race to the end of the tunnel is a determined race and it will not be stopped by repression-not even in the form of concentration camps or detention centers. We must meet the demands for human dignity- the clarion cry for a share in the American dream. We believe the provisions of S. 698, not only the particular title to which I have devoted most of my time, hut other sections, are a step in the right directiom This bill and other progressive legislation may extend hope to the despairing and faith to the cynic. If it does, this bill and this committee will have rendered a major service to the Nation. Senator MtT5KIE. Thank you very much, Mr. Freeland. We will hear from Mrs. Jefferies now, and after that we will have a few questions. Mrs. JEFFERIIS. I am Murice Jefferies, community organizer of the neighborhood development center. We are located only a few blocks from here in the Northwest One Urban Renewal area. I started at the center in 1965 as a neighborhood worker. I am also a displaced person of the Northwest One Urban Renewal area, and I was hired to work with my neighbors and friends around urban renewal projects in this community. The neigbborho~d development center serves the area that is `North- west One Urban Renewal. Directly across from OUT center is the route of the center leg freeway, and about two `blocks north of our center is the Shaw urban renewal area; so all around us some type of public work is going on. I have submitted to the committee copies of `my testimony "Pierce Street: An Urban Renewal Experience, Two Years Later." Because of its length, I will only read or speak to some of its contents. The ~eighbcrhood advisory council of the Urban League Neighbor- hood Development Center published a report in August, 1966 relating to the experiences of families relocated from Pierce Street in the PAGENO="0350" 344 Northwest One Urban Renewal area in Washington, D.C. The report was prefaced by a number of recommendations to the community and urged appropriate agencies and persons to make modifications in cur- rent relocation procedures and programs. Much of the effort expended by the community organization pro- gram of the neighborhood center during the 2 years since the report was* released has been devoted to the implementation of these recom- mendations. How well both the community and the urban renewal agency, the Redevelopment Land Agency, have succeeded in making modifications is summarized in the following statements. One recommendation to RLA was to increase effective use of social services to meet family and employment problems. Interpretation of regulations relating to eligible project costs denies local agency permission to provide direct services relating to relocation. Unsuccessful attempts have been made by the local agency and community groups to get District government agencies to provide new neighborhood services for Northwest One residents. Moreover, there has been a gradual curtailment of services providedby the anti-poverty program. Since 1966, the neighborhood employment service, located in the area, has been shut down. The neighborhood legal service office was merged with one in another part of town; and the housing office which conducted a code enforcement program has been closed. Of the remain- ing antipoverty programs, only three provide direct services to resi- dents-i day care center, a credit uflion, and a family counseling unit, all of which serve an area-wide population of 30,000. Residents have been demanding new social services during the entire period of family relocation. They have made appeals, presented testimony, appeared at budget hearings, and issued reports to the Board of Commissioners and the City Council, the Urban Renewal Operations Committee, the community renewal program, the Board of Recreation, the Department of Sanitation, the Department of Licenses and Inspections, the Board of Education, the Police Depart- ment, the Department of Public Health, and USES-DC. Additionally, an inquiry has been made of the National Capital housing Authority to. discover whether the Agency can provide any social services to residents who hold priority rights to return to new public housing in Northwest One. The Agency regulations apparently bar such "advance" social services.' Another recommendation made by the community was to provide more assistance in obtaining documents needed for public housing. "Illegal tenancy" was a problem relating to documentation which was discovered in the fall of 1967 when the site was being evacuated for the construction of the first moderate income housing. Several families who claimed they had lived, in the project area for several years but who were not included among the Agency's list of surveyed families and individuals were reported to be denied relocation bene- fits. They were termed "illegal tenants" because they were presumed to be living in acquired properties without authorization. Additional evidence of incompl~teness of original survey informa- tion was revealed in late 1967 as prospective lists of tenants were being contacted to apply for housing. Almost a dozen families who `Ccrngress~o'na1 review recomm'efldc(l. PAGENO="0351" 345 were able to present e~ridence of their prior tenancy were denied first right of refusal because the Agency had no record of them. Another recommendation called for a staging plan. A staging plan providing a construction timetable was prepared and presented for community consideration in September 1966. One purpose of the plan was to provide tangible evidence to residents that they did not have to move out of the area in advance of construction timetables. In May 1967, the Agency's policy on demolitions was sharply challenged by the community, resulting in a new agreement, with steps outlined to guard against panic moves by residents and to maintain and improve the quality of the life of the community during redevelopment. A second purpose of the staging plan was to help residents identify with and participate in planning for new low- and moderate-income housing to which they would hold first priority to return. The staging plan was not adopted as binding but as a plan subject to revisions which would better serve needs of residents. The following modifications in the staging plan have been supported, but not yet achieved, by the community: (a) A new elementary school building (estimates of classroom shortages run to 1,000 seats). (b) One of the housing complexes to include an early childhood center (preschool through first or second grades). (c) The shopping center to include at least one community-owned business. (d) Switch a public housing and moderate-income housing site to allow a construction speed-up. (e) Provision of some new and rehabilitated units as sales housing (13 units scheduled to be ready July 1968). (f) Extension of boundaries of the renewal project to include thG approved section of the center leg freeway so as to provide air rights housing over the freeway and additional housing beside the right of way. (g) Speed-up the beginning date of a community facilities building. (h) Creative development of open spaces for recreation use. (`1) A public swimming pooi. Another recommendation included in the Pierce Street report was to reserve a pool of standard rehabilitated housing to be demolished in the final stage. A pool of standard rehabilitated housing was not provided. Present tegislation tends to bar urban renewal agencies from improving housing designated for demolition. `The community was successful, however, in getting the Department f Highways and Traffic to invest in the 1967 rehabilitation of a ~4-unit building which was scheduled to be demolished in 1970 to tccommodate the center `leg freeway. (This area is s~heduled to ecome a part of Northwest One.) I would like to add, sir, that I think `it is very important for ~itizens to be allowed to live near or in the project site in onsite iousing. We have had a chance to help with the planning in our ommunity. I served on the board of directors of Sursum Corda, he first nonprofit housing organization to build here; and assisting PAGENO="0352" 346 in the community and working with neighbors, we have had an oppor- tunity to help them plan. Their original plans that they had brought to the community have changed an awful lot. Before they began construction, we had an opportunity to show their architects our lack of closest space, lack of storage space, and washroom facilities, and all types of things that were actually needed into a home rather than just a space or a room for a bed and a dresser. Among other recommendations made in 1966 was one to inspect all private relocation housing before occupancy. improvement in inspection procedures have been made, but gen- erally are not satisfactory. The License and Inspection Housing Division often does not respond promptly to inspection requests, and delays in inspecting properties sometimes result in rental of units to another prospective renter. The Agency conducts preinspection by its own staff to make judgments about conditions of properties. (Some landlords do not list with the Agency nor will some rent to relocatees because they do not want their properties inspected.) We also recommended to RLA that the Agency, verify rents and pay rent supplements to maintain gross rents at a maximum of 25 percent of income. Some progress has been made. The number of onsite locations is be- lieved to have reduced substantially the number of Northwest One families who would pay excessive rents in private housing. No new studies are available whic~h invalidate the Pierce Street figures that 50 percent of families relocated pay more than 25 percent of income in rent; that 40 percent of families relocated pay over 30 p~rcent; and that 20 percent of families relocated pay over 50 percent in private housing. Families or individuals living in areas of urban renewal, freeways, school sites and other public work nreas, suffer more than one disgrace. Because of lack of relocation housing, our center area has all the above mentioned and we live in fear, confusion, and apathy. Homeowners who are living in the Northwest One area find it very difficult to rebny a home for the amount they were paid. Many o~f them were ~eiigible families who -were living on social security. They could not meet other high payments, and the amount of money `that they had excluded them from public housing. Families with children can answer ads in the paper when they see a house for rent. Once you answer the ad-and you have children under 14 years old-they say they do not want you in the property even if you can afford the property. I have five children and a mother-in-law. In fact, there are eight of us in our family, and I know the difficulty in just trying to get a different `home to live with your family. If you can afford to pay the rent, they do not want the children, and who wants to move from low standard housing `to another low standard house? Even if they are small families, maybe a husband and wife with one child, who would not particularly like to live in an apartment, `but cannot afford maybe a two or three bedroom house, they cannot find any place in the District. People are just, you know, almost just giving up looking and walking and answering ads and calling, and as a re- sult, many people lie to get into homes. Where the inspections are made sometimes the landlords find out and the family will have to move. PAGENO="0353" 347 Some' of the families I have worked with In Northwest On~ has made at le~t three moves since they left the site in 1965. Some have moved since 1966, and so on. There have been many famili~s that split up because of urban re- newal. They were living already in overcrowded conthtions~ they could not find ~ `house `maybe as large that they `could afForc~, `so maybe a daughte~r or a sotL in their late teens would move into another place, giving the mother and father a chance to move into a home., As a re~ul't, this money i~ `taken out of the home and they are strug- gling with the high rents, plus the utilities, In substandard housing the n'tilities `are so high that many of us find our~elves in urban reneWal areas trying to make a decision: what will we pay this month; our utili- ies or our ren't. You cannot live without heat in the wintertime~ and because `of the openness of the home you find the rent-~the utilities very [ugh. I myself have had to purchase 100 gallons of oil a week. ~`his av- ~raged around $70 a month. This is very high money for a family even ~f the husband and wife can work. I would like `to mention a little bit here about public housing. Living ~rrangemehts appear to be a continuing maj'or cause of ineligibility for families trying to get into public l~ou'sing. This includes nonmarriages, is well as inclusion in `the family unit of persons not related by blood narriage. National `Capital Housing Authority' will accept common aw marriage, but refuses to extend eligibility `to familes whose heads ~re barred from a legal relationship-i.e., one'partner separated from )ut legally married to `anQther-although they have been living in a ~tahle relationship for a long period of time. Also, the interpretation of regulations bars elderly `people of op- )oslte sex who are living in `a companionship or housekeeping arrange- font. Itis believed that'a substantial number of old people are barred ~rom housing for the elderly because of this ruling. The inclusion in family units of, persons not related by blood or narriage has served to disqualify some families. `This may include hildren and elderly single persons as well as mentally or physically randicapped or incompetent persons. We have one family that i~ not eligible because it includes a lady vho had been a ward of St. Elizabeths Hospital. She has to live with omeone. This lady is not related to the family so she is not eligible. flake children, for instance, a child that' you have not legally adopted, ut. you have probably had since infancy. You cannot be moved into ublic housing since you are not related. These kinds of problems seem o simple to the individual, but when it comes down to actually apply- rig for public housing and filling out the papers, this is another roblem. A further recommendation tQ the urban renewal agency was to help amilies raise incomes. Helping families receive benefits to which they ar~. entitled (welfare nd social security) and supplementing i~icomes `through part-time ~nploymeut does not solve ~problems of individuals and families with icomes too low to qualify for pu'blic housing. Among persons to be re- )cated from the path of the Center Leg Freeway and from the older ~ction are some whose lack of earnings will, bar them from public ousing. Northwest One now has a number of families and individuals 95-626-68----23 PAGENO="0354" 348 living in acquired properties who for a varie4y of reasons are not eli- gible for nor are able to afford any type of decent housing. So here we will have people going from one room to another room, and all kinds of problems. Estimates show that 10 to 15 percent of city-wide dislocatees are too poor for public housing. I would like to add, sir, this little paragraph from the Pierce Street Report: "The families from Pierce Street do not gain from urban re- newal in `their block, and yet it is they who have paid the price. Statis- tics alone cannot express the story of these people, the anxiety, the fear, the days spent in official run-arounds, the breaking up of families, dis- placement, and the helplessness that accompany this. These elements must be added to `the cost. Does the community have a right to impose these burdens on those living in the paths of improvement for the greater public good? Does the price the poor pay for being so poor have to be so high?" Thank you. Senator MUsKIE. Thank you very much, Mrs. Jefferies. This is excellent testimony, and we are especially appreciative of your very specific and concrete recommendations. It is all too often that we get people who express concern abou't the problems, but do not help us tc work out the specific details. Your experience on Pierce Street hns been an invaluable source, and I think they `are very practical and concretE suggestions. Then yo'u h'ave additional statements or other statements that havE been prepared? Mrs. JEI3PERIES. Yes, these statements are some that we though would be helpful. They include the Pierce Street Report, issued ir August, 1966 our proposal for interim housing in Northwest, and ~ proposal for school site selection. We have t'aken or `have a policy herE on school site selections which we thought would be of interest. Senator MUsKIE. These will all be included in the recQrd. Mrs. JEFFERIES. Thank you very much. (The materials referred to will be included in the appendix of thes hearings~) Senator MusluE. There have been several other suggestion's offer& in the course of t'he hearings, arid I m'i'ght pose a few `of `them to the boti of you to get your reactions. I could anticipate some of your answers bu't we might just as well put them. One is that we ought to require that the housing where the dis placed will be relocated be available before approval o'f renewal pro grams so that the renewal `areas remain habitable to families that ar relocated. I assume that you both approve of this? Mr. FREELAND. Yes. Senator MU5KIE. It is implicit in some of Mrs. Jeff cries suggestiom Mrs. JEFFERIES. This, also, we have discussed in the proposal for th school site selection. We have one school si'te where `the families wer moved out, and on this very site they have moved in families from fly other school sites `at the same time they were trying `to' get the familie out. The community feels strongly that homes should be built befor they demolish homes for another school site, and also the same fo urban renewal. We feel that there should be `a hom'e for a home. The relocation plan to me, has been very lacka'dasical sort of thin and they cannot produce the relocation homes that they say they hay available in the city. PAGENO="0355" 349 Senator MUSKIE. The impression I get from your description of relocation programs in the city is that it is a sort of hit or miss thing, that it may or may not produce results? Mrs. JEFFERIES, Right, and if you are a relocatee eligible for public housing, there seems to be a good chance that when a unit is available, you will get one if you are eligible. If you are not eligible for public housing then your chances are pretty slim, Senator MUsKIE. What happens to the people whose income is too low to make them eligible for public housing? What do they do? Mrs. JEFri~RIEs. Well, they try to-we have tried to help them, as we mentioned, get part time jobs or something, which is not always the case. They usually end up in a room, in with relatives, this type of thing, and sometimes they move into substandard homes that they cannot afford to pay for. These families or individuals cannot even afford the $12 or $15 a week for a rooms Public housing would be much cheaper- Senator MnsiciE. The net effect is the overcrowding of existing housing, unless plans are made for additional development? Mrs. JEFFERIES. That is very true. Senator MUSKIE. Would you concur in that? Mr. FREELAND. I do. In fact, if you look at the statistics of reloca- tion, you will find that many people are relocated two or three tithes out of slum area No. 1 into an area which becomes slum area No. 2 and then into area No.3. This is one of the reasons, I suppose, that some of the statistics are so alarming, because we are talking about the same individual, the same family several different times. Senator MuSKIE. If we were to require the condition of Federal funding that the housing problem of all people displaced `be solved before the project moves forward, how adequate would our funding of urban renewal and highway programs at the present time be? Do you `have any estimate on that? I assume that this would slow down these programs. Mr. FREFLAND. It would. But one of the problems at the local `leveJ, of course, is that as soon as the Federal Government says there is money available the agencies rush to get it~ and I think that this "hit-and- miss" proposition has been going on for too long, not just in relocation and housing problems, but in many other areas of Government aetivi~ ties, and I think that the primary responsibility in the housing should be the use of some of these dollars and cents, and also some of these dollars and cents available from private sectors for the provision of decent, safe, and sanitary housing for those people who are to be displaced. Symbols are important to people, and the builder is a symbol of destruction, and if there is no symbol of construction, the lack of confidence in a Government and society just increases and is one of the root causes, in my opinion, of much of the disturbances in many of the core cities of America. In my own community in Pittsburgh, an area which had been planned to death literally (of course, all of the plans are no longer `in the books today), the people said no more bulldozers, and I `honestly believe that the people of that community in the city of Pittsburgh will `stand in front of a bulldozer until they find `homes for the people who may be displaced. PAGENO="0356" 350 $enator MUSKIE. Now the fact iS, of course, that there are a lot ~f these'projects, highway and urban renewal, and other public proj- cot's, that were planned for these areas because they were eyesores, not only because of the reasons that you gave in your testimony. The people in these areas are the people least forceful to city hail. But `the community wants to eliminate these eyesores. These eyesores them- selves are a reflection oFinadequate housing. Mr. FRI~ELAND. Cori~cct. Senator Mrsi~r~ What are the possible so~iroes of housing, as you see it ~ Public housu~g, we have been thld over and over again in the Housing Subcommittee of the Banking Committee, is not the answer. Rent `suppie~thents a~e a very e~peri'rnen'tal part of the administration program, entirely innovated to the local need `of housing. Rehabili- tation of housing is another program that has been started. Obviously, we need a greatly expanded program. What are the possible directions in which we might move to expand the housing suppiy for low income peop1e~ Mrs. J'i~w~s. Sir, long before we get there with the urban re- newal program as such, I would like to see us move first to inform people in `the community as to just what urban renewal is. Our `area was declared urban renewal in'October of 1963 but when it arrived in 1965 people wanted to know, what is urban renewal, who is RLA. There is `such "a little bit of knowledge in the community. Now, being fearful of inspectors and people' that `might see that you are evicted, naturally when a man emnes t'o my door I would say I only have three children, or my mother-in-law does not live with me; and `as a result, they are illegal `tenants when RLA acquires the property. So~ I think you need to think about these services that should go into tke urban renewal type' of area that would `help the families prepare themselves for ni~baii~ renewal,' and then you can actually `be able to `find out the housing n~eds. Then people will have confidence in the agencies and `begin to confide in them and let them know the truth. Now, in ordet to rent'a hous~, the landlord w'iU want to know how much money you make a `week. Now, if the house is $100' `a mouth, I am going to Oertainly s'ay my `husband makes $100 a week. He might only make $75, but unless I say `this, he will not rent me the house. So, `a's a result, I am living in the `house that I really cannot afford. Now, when the Governme~rit begins `to take all of the information down and `Sees this, or in planning for a home for n~e, here i's a lady that ~an pay $100 `a month, when actually I can only' p'ay $50, and this type of thing, So `I think th~e `services should, go in long' before the planning for actual h'on~es ~nd so forth are developed. &nat~r Mns'icie. But if your ex~erienoe,is any'i'~dication, once you h~e ~ot a ~house, once you have surveyed the `nè~d, you are going to find a need for `housing `that i's n'ot met by the community without the urban renewal projects and withou't the highway projects. Mrs. J ~ur5. That is true, sir. Mr. FR1~]~LANO. ,Sen'atoi~, I ~fee'l that in answer `to the first que'sti~on, that two things are ab'soiut~ly vital. Euphemistically, it is described in my statement as' public and private p~aotices restricting the access of Negroes to housing. The Kerner Commission calls thi's in another way, the color tax, and w'hat one finds at `the `tenant level in almost PAGENO="0357" 3~1 every~ bi~ city is that when Negroes move into `hqusin~' .which~ ~v~i1- able, which ha~ ~orrnerly been all white, there is an increase in rent~ Now, in other wprds, I am suggesting that ur~t~l the public and privat& practices which restrict housing supply. available to nonwhites in An~erica are. ceased with the aid of legislation .presenti~ on. the books, with the `aid, of eflf9rcement of that legislation at every level, there will be no resolution of the probl~rn. . Secondly, and more importantly, though I recognize the eyesore, and I even remember the first Supren'~.e Court decision when eyesores be- come a factor in `the right of ~ municipality to exercise eminent do- main, these eyesqres will be with u~ forever unless we `ha~egQod plan- ning, ai~d I. would ~ay let us have, the eyesores, but. de~ceiat housing, and if ~t me~ias fewer ~irban renewal projects,. we just have fewei~ urb~i rene~ya~ projects. The cqui~try u~iist mahea ohoice. ,I~ it means~ more money for planning and developing housing befOre the other houTsiug ~s. torn cjown,. that mQEey.mU~ be made available or we must recogpize that we. have failed in one of `the most important a~eas of the Amerjcan way. of life. .1' th'ii~k the decision, at least, the points ab~ut which the decision can `be made,~are pretty eMar. There must b~ free access to the housing market by Negroes, and. too,. Government rnu~ de~ide whether the eyesores, `the esthetic. .problems,are more im- portant than tl~ unman problems of decent,, sanitary, and safe hous- iiigforpeople. `. Senato~ Mnsi~IE. Now,. what ~u, tw~ have `said, .in e~eot, ~uggests. that the humane relocation policy cannot be developed tinless it is accompanied. by an expanded housing program. Mr. F~ELANu., Correct. . . . , Senator M~isKi~. Yo~u.. have made another point that.'had not occurred to me before. You say that as housing is destroyed to make way for urban renewal and .highiwiay projects, that it has the effect of shrinking the housing market and thus aiding or creating. an upward pressure on rent, To what extent is.this the case? . - Mr. FRE~TJAND~ I think that it can be sppported in every major oom~ munity in An ica,~ In Pittsburgh, for in~tance, just as~ an ex~mple, there-was an old furniture w'areho~se; No,, I Miller Street, and when. relocation efforts were ma~de in order- for us `to have `a new civic arena with a retractable roof that never seems to worl~~we got it-~and three bib~ks away there i~ No. 1 Miller Street, and this old furniture ware- house hec~me a dwelling unit for about "5 milli~n"-~-it seemed "s mih lion" p~ople. I mean, I do not know h'ow many people were in `that building. They had little closets `that became rooms, and the `social `services that were rendered tø the people.in there were.fantastic, and, of course, in larger cities this is duplicated on even a greater scale, but this is just `one example, and the rent was whatever the market would bring, as Mrs. Jefferies has pointed out. The poor people, `black people in America~ do pay more of their income, percen'tagewi'se, f'or housing. This is the color t'ax, and I am certain, `as I sa~id, though I have no specific statistics, but these could be made available from our national office, and I know in the data before the Kerner Commission you would find the' rate of `increase for the displaced person in his flew setting, and I `think the i~ate of increase is substantial `and it is prohibitive when you `consider the actual income of `the persons usually there. PAGENO="0358" 352 Mrs. PISPPEETES. Sir, I feel strongly about the staging plan. This is working somewhat in our area. The first families that moved from Pierce Street and some of our area in 1965 moved back a few weeks ago into new p~blic housing. They are in housing on the old Sibley Hospital site. This was something that we had to look forward to, and the people in the community. Now, we have 22 four-bedroom town- houses. These were filled up with residents that lived in the area that were eligible for this size, and `those that had moved out. Now the list ~s ready of families living in Northwest one `area of elderly individuals, you know, couples, and then for families eligible for two-bedroom units. So, here we are moving people back into the area tha't has been redeveloped already, and `at the corner next to it is coming out of the grour~d: and just yesterday the architect said these units might be ready by Christmas. So, then another part of the project area will be completed. Now, in the beginning we had one block, Pierce Street, that had to have `all the families relocated to `begin this `project site. That was the only little square `of about 50 families that had to go. Some of them were relocated in the area on site and the others moved `out into public housing, or into some private homes. * I think an effective staging plan would be very good to help relieve relocation problems. Somebody would have to move, but certainly not everybody. Then we work to speed up the maintenance service, give a little bit more maintenance; and families `are `able to live in the homes until something is ready. Now, the homes `that `are being bu'ilt now are 221 (d) (3) homes, and the sponsor i~ill u'se the rent supplements and the public housing leas- ing program. So here we will `hai~e mixed `families here in this project area. `It is a very exciting thing and we `have worked long and hard as a community tobring about many of these changes and recommenda- tirnis that'we started back in 1965. In fact, just a couple `of weeks ago one was `implemented, and that was reduc'ing ~the rent to 25 percent of the income, `and a couple of months ago we got guards in the area to `patrol the area, because `the police services decrease as families move `out instead of increasing, and you are living `between `boarded up `homes. So, I really believe in the staging plan, but it needs work. Senator MusicrE. Well, `the `staging plan, as you have described it, I agree. I thi'nk it makes all the commonsense `in the wo~id. ~I't is a phasing of the whole project to insure minimum displacement `of people at `any given `time. Mrs. JErFluEs. That is right. Senator Musiua. And adjusting that `displ'acen~ent to the creation of housing ppp'ortunities within the `project itself,' and perhaps the temporary use of housing within the area. Mrs. JEFFItIES. Right, thi's interim housing that we h'a'd `here, all of these are very exciting things that can help to relieve the human suffer- ing in the urban renewal in' freeway `areas `and the area that was rehabilitated which brought the ~people from the center leg into this big building until, hopefully, that they will be able to `build their right~ hou'sing,'iiu that particular `area. Senator BAKER. `Mrs. .Jeffries and Mr. Freeland, I thank you for your testimony. I am sorry I missed yours, Mr. Freeland, but I `have PAGENO="0359" 353 read parts of it. I have one or two general questions I would like to put, in addition to those that the chairman has already put. First, Mr. Freel.and, if I may, is the use of something like a staging program or its equivalent in general use in the country or generally advocated in the country? Mr. FREELAND. I think it is advocated, Senator, but I do not believe it is in general use. Senator BAKER. Do you think of any particular locality where they have made notable progress in trying to implement a staging plan? Mr. FREELAND. This I do not have. I will try to make available to the committee such information as we have at the National Urban League, and perhaps other agencies that have been involved in this field also might supply you with information. Senator BAKER. Well, I agree with both `of you and with the dh'air- man, that ~orne sort of coherent plan for the accommodation of `those who are displaced in the name of progress must be undertaken to help in this dislocation area. Let me put the second general question to either of you: do you attach particular significance to the apparent tendency to concentrate available relocation housing in certain areas versus the concept of trying to disperse it more generally throughout other neighborhoods in the city? I am really trying to balance the equities of trying to preserve some semblance of community identity which would go with con- centration of replacement housing versus the equity of trying to dis~ perse it, thereby creating the possibility of avoiding, once again, `a com' centration or isolation of the community in new structures. I wonder if either of you care to comment on that. Mrs. JEFFERIES. From my own experience, sir (I think I got the question), of living in substandard housing, I wanted good housing in a good neighborhood for my family. So, this is where I looked, but this is also where I could not afford to live. I had no money to purchase a Ilonse, and I could not afford the rents, so then you look somewhere else. You know, you still-your hopes are still high. So, when it boils down, you get anything you can, any place you can. Senator BAKER. I understand that, Mrs. Jefferies, but the point I am trying to develop in a rather awkward way, I am afraid, is whether or not you see some merit in trying to concentrate replacement housing in ~ne area, which more or less resembles the ooi~centration of a neighbor- Liood that was displaced, or whether there is some merjt in trying to iisperse `the replacements, by relocating them throughout a more ~eneral neighborhood so there is not the tendency to Oonóentrate? That is the point I am trying to make. Mr. FREELAND. I think ideally, Senator, I understand the thrust of ~om question, and I think ideally in America it would be the dispersal f displaced persons in the general housing market, and not another irea of concentration for the crea~tion of another black ghetto. However you point out identity-_retention of the community iden- i'ty-I `think the Negro community of America has reached the point, ~t least, in the majority of the large cities, that they feel that the kind f dispersement which is ideal, which ~ras considered ideal at lenst a Pear ago, may not be capable of attainment `and, therefore, wherever here is decent safe and sanitary housing these bodies should be placed. PAGENO="0360" 3~~4 As you well know, there are many arguments for. the exercise of power at the loèal level by i~Ot hating the Negro commUtht~r dispersed, but having it iii a gi~en ward ~r political snbdivision, so t~r~ can be maximum use of "ghetto power." Senator BAKER~ And also, if T th~y interrupt, there would be maxi- mum utilizatioi~ an4 effectiveness of social servio~s. Mr. FREELAND. Tes, 1 think that this wotild be a rØle~aIlt point, too. My wn view, I ha4ve stjll not given up on the country h~ th~ sense that I still bel~eve-ahd the National Urban tea~ue ~t~ll belidès that integration is a desirable goal, and that means housth~ inthgration as well as integration at other levels of operatioti I am afi~aid~thd~y, that mOst o~ the peopl~ in America are coiwinced that this goal i~ndt going to be at~aiiied v~ry ~oon and, therefore~ there must be some sort of short term alternatives There are dangers to a short term alternative Sen~or I3Ai~R I wonder, though, if the short term alternative, and I do not n~ak~ my judgmën~ at this pont, bnt 1 wond~r if the sb-~çri~ alternative. of rç~pondin~ to the d~sire th ma~intñán, in ~i black community identity, is jiot really potentially ~testruotive of bug term, objectives ~ I~ wonder if that is not the strongest argument agamst the rqbocation çf ~eplacees in one locality which so oftç~n, in faQt, is the case i\~r rREEI~AND~ Well, theoretically, I a~reè with you, Senator The short term alteruat~v~ is probably very dangerous to America, but I am a j~ragmatist You see~ 1 am a ~egro who no longer lives in a black ghetto, and 1 conside~ iñtegratc~l. hous~ng to be a rather important part of Ameu~ican life and I would conaider it a ~atbe mpor~a~nt part ~f American life ~f or the person who rents as wefl a~jhe per~on who owns. But I know the practicalities and I know `about the col~r tax tTnless we can deal with the practiordities, unless we can reduce the color tax, elimipate the color tax-~and ~overnmeni~ can exercise a role of leader ship in this, so obvicnis~y ~n the pi~ivat~ sector where the eljr~ünation must o~cur-unles~ we cart do this, I think we are confronted with the only altcrna~i~e, and that is mass rerno~al or mass replacement . in an~ther~ ghetto. Senator B4KER All right, sir On the ~pi~estion you touched, Mrs Jefferie~,it occurred to me iti the course of your remarks that in the face of th~ color tax, increased re~tals and the like, one general way of overcoming this l~ t~ put ~nor~ emphasis on the assistance that might be given families t6 ~ürchase rather than to rent. I wonde~ if you would agree that that is an area that we ou~b~t to giye wore attention to~ Mrs. JEFF~RIES.~ I think sb. I think if more could buy, this would help because homes that are for sale are more widespread, I would say, than homes for rent. In the little ghettos like we live, you have little clusters of homes one after another, that rent, or maybe someone owns the bot- tom flat and rents the top floor, just scattered about, you know, this type of thing. Senator BAK~. Without getting too far afield, because it is not a legitimate part of this hearing, would you view favorably `a program that generally either substantially lessened or eliminated the necessity PAGENO="0361" 355 for a downpayment and might contemplate some sort of subsidy of interest payments? Mrs. JEFFERIES. Yes. We do have in our area homes that will be for sale that we have worked to get. Some will be rehabilitated and sold to low-income families with `a small downpaymemt and the monthly payments would only be, you know, so much. And then there are six demonstation homes, and the people `are interested in trying to buy, it is wonderful to see. You know, here is something that I can afford to buy. They are applying for these homes and hoping that they will be one of the families. There are hundreds of families applying for less than 20 homes. Senator BAKER. Do you feel that this approach might have collateral benefits above and beyond the simple matter of accommodating re- p1 acees or relocatees in sanitary, safe, decent housing? Mrs. JEFFERIES. Yes. Senator BAKER. It might have some effect on the matter of pride and ambition and dignity that are so sought after. Mrs. JEFFERIES. I think so. Senator BAKER. I wonder, then, if I am not struggling with the wit- nesses for a plan that would accommodate staging or planning on a methodical basis for the purposes of relocatees in the progress of high- ways and urban renewal. There is the pragmatic necessity of providing for them immediately, and as best we can. Generous elei-uents of the desirability of Federal or governmental assistance to homeownership, which would carry with it then the element of discretion for the loca- tion of neighborhoods that might not otherwise appear if you `build large concentrated housing units to accommodate relocatees should be included in the plan. I wonder if that is not where we are reaching. I wonder, to put it in the form of a question, would that general format have some general appeal for either or both of you? Mr. FREELAND. I think it does. I think the Government insurance or the combination of Government and private guarantees which would make available for Negroes housing that could be purchased is an ideal situation. There are a number of matters Which are presently before the Congress, and also other matters that are before Congress and before the leadership of the Nation that would point toward this, and I would hope that these would receive approval, and I would hope also that they would be involved in the whole matter of relocation. It is a bigger part of the solution, more than this particular problem, the solution that you suggest, and I think it is a wise solution. Senator BAKER. We'll, it is more than just this. Of course, we find this problem in areas where you do not have urban renewal and high- way projects. I am distressed to find that so often we replace old slums with new slums, and I think there must be a way to' overcome this tendency. I see homeo'wnership as one of the ways, and I wonder if we should not devote more of our attention to making it easier to' buy a home. Thank you, Mr. Chairman. Senator MUSKIE. Thank you, Senator. Thank you, Mr. Freeland and Mrs. Jefferies. I am sure We could be further enlightened if we could keep you longer, but we have two other witnesses we ought to hear. PAGENO="0362" 356 Mr. FREELAND. Thank you very much, Mr. Chairman, and Senator Baker. Mrs. J~FFERIES. Thank you. Senator MTJSKIE. Our next witness is an old friend who has been before this subcommittee before, Clarence Mitchell, director of the Washington bureau of the NAACP. TEStIMONY OF CLARENCE 1VL MITCHELL, JR., DIRECTOR, WASH- INGTON BUREAU, NATIONAL ASSOCIATION FOR ThE ADVANCE- MENT OP COLORED PEOPLE Mr. MITCHELL. Mr. Chairman and members of the subcommittee, I thank you for this opportunity to appear, and before I get to my state- ment I would just like to take half a minute to say something which I hope will reach the attention of some who were present yesterday at this hearing. I think the record ought to show that you and Senator Baker were among the Senators who made it possible for this country to have a fair housing law, and you did it in a dedicated, workmanlike way. In some instances things that were in there might not necessarily have been the way you wanted them, but they were there, and I think particularly in Senator Baker's case it ought to be known that he said on the floor that he was interested in getting a certain amendment in, but if he didn't get that amendment he was going to vote for the bill anyway. Of course, in your case, Mr. Chairman, you were down at the funeral of Dr. Martin Luther King, which certainly you need not have been as a Senator from Maine, but you were there out of your desire to show your feeling and sympathy during a period of great tragedy. The other thing I would like to say is that I feel very ancient here because the witness who was just before me is from my hometown of Baltimore. Although he is a rich lawyer in Pittsburgh now, he also was one of my wif&s Sunday school pupils in our church, and he was one of the first Negroes to be in the 99th Squadron, which was part of the Air Force in World War II. He, along with othersi, made us all very proud of them, but inter- estingly in that period, Negro officers were not allowed admission to the main officers' section for recreation and that kind of thing. He and his associates decided they were going to do what we now call "take direct action." They went on into this place and they faced a court- martial for doing so. They were in grave danger of being-he was a captain, as I remem- ber, but in any event they were in danger of being court-martialed. We overcame that, of course, but the ir~teresting thing is they went over to Europe and fought for their country. They have come back and are now good citizens. I think it is important in these times to know that the fight for freedom did not begin just yesterday, and there are va- rious ways of carrying it on. I think also we have got to realize that we must abandon this de- featist attitude of assuming that we are not getting anywhere, and nothing is any good. The fact that you and Senator Baker are here is an indication of the concern of the elected officials for trying to dc something about the problems that confront this Nation. PAGENO="0363" 357 I think the people who are over at what is called Resurrection City are exercising a legitimate American right to petition for redress. I think it is also awfully important for the voice of the concerned group in Congress, like yourself, to reach out there to the Mall so that they can know that they are being heard and some of the things they are down here about are being handled. Having said that, I will come back to my statement then. Senator MTJ5KIE. Thank you very much. Mr. MITcnELL. Mr. Chairman and members of the subcommittee, I thank you for the opportunity to testify on S. 698. It is my opinion that the purposes of this bill are most important. One of the elements lacking in many programs for the public good is that of consideration of the rights and convenience of the individual. In the statement of introduction made on January 26 by you, Mr. Chairman, and in the language of the bill, itself, one senses a desire of the chief supporter and his associates to make certain that there is a minimum of inconvenience to the individual and maximum pro- tection of his rights while making changes that will benefit the country as a whole. I wish to make the following comments: 1. By assuring coordination and cooperation in the use and admin- istration of Federal grants this bill will eliminate a great deal of waste and confusion. However, it should also give assurance that the people of the country will not be forced to sell their homes just because it is possible to save a few dollars by running a highway through the homeowner's living room instead of through some part of town where the costs of land acquisition may be higher or because of arbitrary official action's. There ~hould also be assurance that those who want to stay in places of business or continue to live in their homes while broad programs of property improvement are underway will have a reason- able opportunity to do so. A classic example of arbitrary selection of a highway site came to us from Montgomery, Ala., in 1966. The writer of the complaint said that a proposed highw~y was planned to go through one area of a community but the route i~as changed, and I quote from his statement: "Go right through the middle of Rev. Ralph Abernathy's parsonage." The writer of the complaint said a highway official had told him that using that particular route "would get that preacher out of town." Fortunately, the plan was changed so that Mr. Abernathy's parsonage was not taken bu't other desirable homes of colored persons were taken. I would like to offer for the record, Mr. Chairman, a telegram which came this morning from Mr. Fred Gray, who is a lawyer in Montgomery, in which he confirms the fact that the original plan would have taken Reverend Abernathy's parsonage, right through his living room. It was changed because of protest, but it still took a large number of very good homes occupied by colored people. Senator MUSKm. That will be included in the record. Mr. MrronELr~. Mr. William R. Morris, director of the NAACP's housing program, has submitted these two examples of indifference to human needs in governmental action that displaces people: PAGENO="0364" 358 (a) The town of Ossining, N.Y., is the source of major complaint because a State highway program threatens to force approximately one-third of the Negro population to move. He says relocation housing is nonexilsi7enlt. The town's Workable Program for Community Tm- proveineilt expired in 1964. The housing authority is defunct and exists only on paper. If the program proceeds, these' people must leave the town to locate other housing. The second illustration i's: in Dunkirk, N.Y., complaints are being received that families are forced to move because of building code violation's in rental property. There is no relocation housing available. The city has an urban renewal program fo'r the downtown area. There is no public housing `available. The town wants to lo'cate a project in the Negro neighborhood where overcrowding of the school has already resulted in busi'ng of children. He is press'ing for scattered site housing which Senator Baker indicated might be desirable and plans `are at a standstill. Last year we received a complaint from South Carolina indicating that a number of colored farmers were being forced to `sell their land. Some `of them were elderly and ha'd no means to locate elsewhere. Upon `investigation it tu'rned out that the Government was expanding a wild bird sanctuary. Although this is a very fine project for preserving wildlife, it would seem that some arrangement could be worked out under which persons living `in the area might be allowed to remain if they preferred to do so. As I unilerstan'd it, the Department of the Interior sometimes works out arrangements of this kind~ but this possibility for being `allowed to stay w'as not revealed to the persons who were being displaced. In that connection also, Mr. Chairman, I would like to offer for the reciord an exchange of correspondence on th'i's m'atter which sub- stantiates the fact that it wa~ for a wildlife preserve and, in fact, this significant paragraph is in it: Although the title to these lands is now vested in the United States, the Bureau of Sport Fisheries and Wildlife is permitting the owilers to farm the land during the 1967 crop year and the present occupants to remain on the land until they can make ar~angements to relocate, but not beyond December 31, 1967. That letter is dated Febru'ary 17, 1967. 1 just c'anno't for the life of me see how it is going to hurt the birds to hare `some people liv'e on the land `after the Governnient improves it, and I cannot understand why in making these plan's Interior or other agencies would n'ot do as y'ou'r bill suggests, take into consideration the effect it is going to have on humans who are in the area. Senator MUSKIE. That correspondence will be included. Now, that date is in the past. Do you know what has happened? Mr. MiTCHELL. I do not, except that the date of cutoff has been reached and I assume that they are no longer there. I tried to get one of them on the phone this morning, or at least a person who knows about it on the phone this morning, and I was unable to reach him, so I could not get it up to date, as I did on the Mongomery situation. Mr. MIPCHELL. In reading the bill I have the impression that there is a need to make some of the safeguards mandatory and this is one reason why I suggest this: for example, I would change the word "should" in line 19 on page 52 to "shall." PAGENO="0365" On page 50, I would reword lines 17 through 23 by eliminating the phrase, "if consistent with project requirements." I would add a pro- vision requiring absolute assurance of rehousing before displacement.. I would include the same protection in lines 22 through 24 on page 56. 2. The bill contains a number of suggestions on assisting home- owners, tenants, and owners of small business in getting out of the areas `that are to h used for various kinds of improvement. As I have said before, in some instances "should" is used. It is my opinion that `the word "shall" is necessary. For example, line 8 on page 50 and lines 5 and 9 on pages 52 seem inadequate for protection of some persons.. Also, I think that we need to give more attention to the possibility of allowing owners to stay in some areas that are being improved. For' example, the construction of an underpass and the widening of the 100 block of Massachusetts Avenue, Northwest, in Washington have caused. a consjderable amount of demolition that has adversely affected the businesses in the area. In one case, the owner of a drugstore has been in the community for many years. His property is obviously valuable. It would seem that every consideration should be given to making it financially `attractive for this kind of businessman to stay and benefit from whatever im- provement there is in the area. I might say that my knowledge of the potential value of that prop- erty comes from the fact that our office for many years was located at 100 Massachusetts Avenue, and at the time we first became tenants we could have purchased it for $14,000, but we do not like to own prop- erty as an organization and did not purchase it. Subsequently, it was sold to someone on the death of some of the owners for $30,000, and it is my understanding that the last sale of the property' amounted to; something in excess of $70,000. Now, it seems to me that somebody must realize that is going to be a very valuable spot. The drugstore to which I refer is in that same general area, and it seems to me something ought to be done to see that a businessman like that can stay in the area if he wants to stay there; Fortunately, he is still holding out. I do not know how long he will do it, but in any event, I think we should not leave it to chance. I think legislation ought to guarantee it. A filling station operator iii the area finally gave up his business because `the roadway construction severely reduced the volume of his' trade. In that case a little assistance might well have permitted him to hold on until the work was completed. At that time the location will be excellent. When this construction started, it was difficult for people to get into his station and he tried to hold out as long as lie could, but eventually he had to give up and somebody else took it over. On the whole, S. 698 contains safeguards th'at would correct the worst kinds of abuses that now afflict those who are displaced by various public projects or Government assisted private programs. How- ever, there are some serious problems which are not covered by the relocation provisions of title VIII. For example, the proviso beginning on line 22, page 36, does not seem to help the homeowner who will `not get enough money from the sale of his dwelling to permit him to buy in a different area. PAGENO="0366" 360 You may know a Mrs. Murphy who was in the same kind of a situ- ation I have just mentioned. Well, III know a Mrs. Perkins who is in the same kind of a situation that I have just mentioned. She is a lady who I guess is about 70, owns a little two-story house in a neighborr hood which is no~ too~Mtro~tive, but her home is well taken care of and very nice. When th~i urb~u renc~wal gets into that area and buys her house, even if she gets~ as much money as the bill makes jt possible for her to get, it will riot be~enough ~or her to move to anoth~rhome and become an owner, which means that this elderly lady, who has all her life been an independent homeowner and taxpayer, will not be able to do it unless we find some way to make more money available. Senator 1\4VSKIE. The administration testified, I think it was last iveek, recommending that up to $5,000 be available in addition to the fair market price to cover just this kind of situation. I take it you would be receptive to that suggestion. Mr. MITCHELL. Indeed, I would. I think that up to $5,000 in that ~situation might very welibe adequate. I would say that a comparable dwelling, a dwelling comparable to the kind she now occupies, proba- bly would cost in that market at around $8,000 or $9,000, which would uiean that she would get `her price from the Government and presuma- bly up to $5,000 in addition. There might be a little left over that is not taken care of. But I have another suggestion in here `that might fill that gap. Senator BAKER. If the chairman will yield, and Mr. Mitchell will permit, there is also testimony taken at those hearings that considera- tion should be given to the test of replacement value as distinguished from fair market value oJ~ the facility taken. It seems to me that that may be a more equitable approach to the matter than the allocation or the allowance of an arbitrary additional "moving cost." Once again, I have an open miiid on this hut I think we have got to recognize the fact that ha the case of involuntary displacement the replacement is the significant cost rather than the fair market value of the property taken, and some consideration should be given to it. Mr. MITCHELL. Oh, I think that is so true. There was a case here in the Washington area where an elderly gentleman owned some prop- erty that was needed by private development and he held out, even though he just had a little shack, so he got, I think, nearly $100,000 in the end. Well, if we were in `a private operation, obviously, the owner could hold out and get what he wanted. I think, as you have indicated, that equity would suggest that we do something which at lea~t makes it possible for the displaced person not to suffer because he gets the fair market value of his house, but cannot purchase a similar place for `that amount elsewhere. Also- Senator HANSEN. Mr. Chairman, if I could interrupt, let me say first of all that I am very much interested in your testimony, Mr. Mitchell. I might add, parentheticaI1y~ I subscribe to the statement made by Senator Baker. It seems to me that that is the test that should be applied, and not the application of the fixed amount on top of what otherwise might be available. But if we are thinking about trying to put a person back into the status that he was in prior to the exercise of the rights of eminent domain, I think we have got to be concerned with the replacement. On that basis, have you any idea as to the impact that these programs PAGENO="0367" 361 have had insofar a~ placing a person in ~ position to go ottt arid to ac- quire the property so to be iii substantially as good a position as he was prior to the taking? Mr. MITCHELL. I would say, Senator Hansen, that I do not know of any case where an individual has moved from a dwelling because of urban renewal or redevelopment or some ether kind of a pro- gram and has beeii able to get eiiough money as a result of the sale to purchase free and clear another place to live or conduct a business, so that, so far as I know, and admit I do not know the whole story, but I do have some extensive first-hand knowledge, I do not know of any instance where an individual has been put in the sathe position that he was as to occupancy and ownership after he has been dis- placed, even though he has received compensation. Senator HANSEN. I just have one further question. I suspect that a person having to make this transition, having been forced against his wishes to sell his home or his business, would find that he is also con- fronted with a number of other costs when he tries to reestwbIish him- self in another area-the cost of moving his family, his furniture, and trying to build up a new clientele. I think it would be helpful to the committee if we had some reading based upon an accumulation of experiences that would spell out all the problems confronting people who are forced to move. Would you not share my feeling on that, Mr. Chairman? Senator MrTSKIE. Yes, to the extent that that information has been accumulated and is analyzed. Senator HANSEN. Whatever there is, and I have no way of knowing, but I think it would help to present a total picture for us. Mr. MITCHELL. I agree, Senator Hansen. I would think it would do two things: first, it ought to be in the hands of the various Govern- ment agencies who have been handling these `transactions, and if it is not in their hands it means that they have not been giving `the people the service they ought to have given. If it is in their hands, I think it will show pretty much what I have said, and it would be a very reliable figure. It might cause a lot of people to understand, again, `the importance of this bill. So' I hope- Senator MUSKIE. I would have `my doubts that there is available in Government agencies anything that would reflect the statement you have made, Clarence, that you cannot recall an instance in which anyone has been made whole. If any Goverument agency had such a document and statistic, it simply has been remiss in not presenting it to the Congress before. Senator BAKER. Mr. Chairman, may I say in that same general respect, I have an idea that the administrative agencies of `the Govern- ment could supply this information. The Government could supply information on the practice of making one offer for the acquisition of the property, and then reducing that offer if the landowner elects to litigate. It seems to me that the Government is dealing in a most cavalier manner in situations when, say, an arbitrary amount of $10,000 is offered for voluntary acquisition, the landowner does not accept it, and they reduce the offer or the tender to say, $6,000' upon going to' co'urt. PAGENO="0368" 362 This certainly is not in keeping with the idea of the equitable effort to make the displacee whole. Now, I wonder if the chairman would be willing to ask appropriate agencies to supply us information to the extent of that practice. I how of my own knowledge that it does exist. Mr. MITCHELL. I do, too. Senator BAKER. I would be very interested in finding out how extensive it is in those concerned with highway projects, with urban renewal projects, with other projects, including the Corps of Engi- neers, not to single them out specifically, but along with others who are involved in the acquisition of properties and the displacement of people by eminent domain. Senator MUsXIE. I think there~~ are probably other lines of inquiry that could accompany the two you two Senators have suggested, and I would ask the staff to do that with the Department-I do not know to what extent the Department of Transportation might have documer~tation of the practices of the various State highway com- missions, but to the extent that they are in a position to provide information we ought to explore it along these lines and others that occur to you. Senator BAKER. I am sure, Mr. Chairman, that they do have be- cause they reserve the right to pass on the transaction the amount of the original tender offered and the amount of money actually ten- dered in court according to various procedures for eminent domain. I am certain those two are available, and I think that might give us some reasonable information on the picture. Mr. MITCHELL. I think that would be true of many of the States and cities also and, probably, to a much worse degree than the Federal Government. Senator MTJ$KIE. I had not thought of it, but I do not think that I would be disposed to quarrel at all with the general statement that you have made, Senator H~nsen~? Senator HANSEN. It could be that this additional facet of inter- est has already been explored. But if it has not, what are the rules and guidelines that apply in the passing of title with the exercise of eminent domain insofar as tax liability is concerned? Are there certain times `within which' a reinvestment can be made? Has that question been explored? Mr. MITCHELL. There is a provision iii this bill which I believe is designed to try to meet that problem in that the extra amounts which are given are not to be considered as taxable income. I do not recall the section, but I assume that is what the framers of the legislation had in mind. Senator HANSEN. Does it make any differeiice whether or not that award is reinvested in other income-producing property on a whole? Mr. MITCHELL. There is a requirement, as I recall, that it must be in property where you acquire the fee, or a 99-year lease, and that either is a home in the case of a homeowner, or a business in the case of a businessman, as covered by this bill, which I think is a very good provision. Also the "substantial economic injury" clause in lines 20 and 21 on page 40 may well prevent many small operators from getting the kind of assistance they would need in a new area. Elderly and even PAGENO="0369" 363 some middle-aged homeowners and small business operators may have~ difficulty getting funds to make improvements required as a con- dition of remaining in an area of renewal or public improvement. And here is that suggestion, Mr~ Chairman, I referred to which. I think might fill a gap between the $5,000 conditional sum and the amount that the individual is able to get himself. I would like to suggest consideration of establishing a revolving~ fund capable of making high-risk, long-term, low-interest loans to such persons. It is my opinion that such a fund would require a, Government subsidy but it would be better to spend for this kind of program than to convert a former homeowner into a renter or to change a small businessman into a relief client. 3. The bill's provisions for identifying and policing Federal moneys going to the States are very much needed. I note that in the bill it is permitted that the State need not set up a separate bank account for these funds. I do not know whether there is any fiscal reason for that,, but I certainly would hope that if it did not have a separate bank ac~ count for these Federal moneys there would be some way of keeping- them clearly separated from State funds in some kind of a separate account. One hears a great deal about how much the Federal Government ia taking from the States, but little about what is `sent back. In addition%, it is very difficult to get an accurate rundown on just how much Federal money comes into a State and the purposes for which it is to be spent.. The States should be required to make this kind of information. readily available to the public at all times. The State should be re- quired to publish that amount of money, the purposes and that sort of thing `at least once a year in some kind of a publication where peo- ple would see it. The people of our country should know as mucl& as possible about the programs that are financed by the Federal Government. In some communities it is very hard to get information. Last week,,, f or example, I received a call from Mississippi that residents in a place called Senatobia-I do not know whether that is a spot for Senators or not-~but in any event, they were being `asked to sell their* property for a federally `assisted program, but they did not know what the program was. `Unfortunately, it is typical that officials of some communities do not believe that people affected by public programs have a right to know all the facts. 4. The bill provides for technical assistance. This is especially im- portant among persons who have good intentions and great dedication, but no particular experience in carrying out certain programs. At times it `seems that the supply of technicians is not keeping pace with. the need for such services. I believe that we must give mOre thought `to developing a supply of technicians in all fields. I also `believe that there must be some way of resolving conflicting advice which persons receive from the Federal Governmen.t ~lot long ago I was asked to intervene in a dispute over use of the waters of the Chesapeake Bay for sewage disposal. Apparently, this involved at least three different agencies. To some extent they gave conflicting views on whether use. of the. Bay would result in a health baza~d to. beachfront property. 95-626-68-----24 PAGENO="0370" 364 With the great stress on cleaning up waterways, it is difficult to see why any agency of the Federal Government would assist in making the Chesapeake Bay a part of a sewage disposal system but apparently this is what happened. The experts also decided that it would not be a health ha~zard to beaches. IL ~ta5 unable to make a copy of this, Mr. Chairman, but I would appreciate, with the committee's permission to Offer for i~nô1uision in the record, wherever you think it is appropriate, a release dated March 9, 196~Z, from the Department of the Interior, stressing the importance of cleaning up estuarine waters, and of course the Che~apeake Bay is a body of water with salt and fresh water. As one of the things asa hazard in the area, they want especially to avoid pollution of coastal areã~s by dumping in these kinds of (things. Senator MusicrE. That will be inserted in the record. Mr. MITcimLn. Thank you. The fifth point is, there is a great need for coordination of programs in order that those who are supposed to benefit from them get the maxi- mum possible service. A few nights ago I visited a very excellent home for elderly persons. It was built with Federal aid. At a late hour one of the residents decided she would take her dog for a walk. As I thserved the neighborhood, it offered a potential hazard even to a physiua~lly fit young individual hut there were no poliáemen in sight. It would seem to me~ that when such projects are built, there should be some kind of planning that will insure adequate security. This could be clone by agreements with the local police forces or making additional funds available for the training and hiring of individuals who would give adequate protection to pei~son and property in such cases. There must also be some assurance that the nonconforming uses which cause neighborhoods to deteriorate do not come back in after rehabilitation. When former Senator Douglas conducted hearings in Baltimore, one witness testified as follows: I served on a municipally appointed committee to study the correlation of the excessive number of liquor outlets in the center city with residential blight, slums, and deterioration of residential neighborhoods. We spent over a year m~aking a study for the benefit of the Mayor, the Liquor Boards and the Urban Renewal Agency. We found a high correlation between the number of liquor outlets and residential blight. In Harlem Park, our committee found not only an excessive number of liquor outlets, but an oversaturation. There were 36 taverns and liquor outlets in 32 residential blocks. Now, this seems to me that that is just a little bit too much public eçnvenience,. when you can get a drink at every block, and maybe you get too many. Further, we found that most of these liquor outlets were nonconforming corn- merieal uses on the first floor of residential buildings. Recently, the same witness developed information showing that land cleared for redevelopment was also being used to bring in businesses that did not belong in residential areas. In one case, a home for the elderly is being built under the auspices of a church and a fraternaF order. At the same time, an adjoining parcel of land is to be used for a night club. We must develop some Federal standards which will be safe- guards against local planning which defeats the broad purposes of redevelopment and renewal. Although I strongly favor local level PAGENO="0371" 365 - initiative, I think we must be sure that we avoid the kind of local pressures which undoubtedly èause blight and deterioration in areas we are trying to save. Now, Mr. Chairman, we in our organization. ha've been willing to spend money to try to protect neighborhoods against blight, and I will offer for the record the case of the City of Baltimore, The Schneider Bedding Company v. The National AsRociation for the Advancement of Colored People, which was in the Maryland Court of Appeals January 22, 1960. In this case, we are face to face with the kind of problem that individuals must meet in local communities. It involves a residential area that was not high class, but the people living there were happy, some were homeowners, and that sort of thing. The Planning Commission of the city said that a petition to `build a mattress factory next door to one of their residents should not be granted, `but the zoning board said that it should be granted, and the city council subsequently approved the zoning board's position, with the result that unless the persons involved had carried that that- ter to the court of appeals, the property would have been used for a factory. Well, it costs money to go to the court of appeals, but we spent it, and the case was won there, with the court holding that this came under the arbitrary capricious administrative rule, and that it was not proper for the city council to have approved use of the property as a factory, especially since the Planning Commission had said that it was not the thing to do. Well, that kind of experience is what many people who live in these blighted areas have to face all the time. They either put up with, the blight or they spend their money to get redress in court. Now, your bill reaches into that matter and I hope that we will have some pretty fl~m standards so that when we clean up these places and try to make them better for individuals, that we will not have some- body coming in with a junkyard or a nice go-go dance operation-not that I have anything against those. I am not sure I know what they are, but `the fellows who have the go-go dance places and the junk- yards and the things of that sort usually have a lot of political in- fluence locally, and they can get into the nicest neighborhoods through using that influence. I think if we are going tO' spend Federal money, we ought to be sure that we do not get either these exotic or more pedestrian types of deviations from zoning into the residential neighborhoods. Senator MUSKIE. Thank you very much, Clarence. We appreciate having your testimony. (The documents and correspondence above referred to by Mr. Mitchell, follow:) CLAJIENCE MITCHELL, NAACP, Wc~hington, D.C.: Several years ago the Alabama Highway Department was considering the route for Interstate 85 from Ann Street west to the downtown area in the city of Montgomery, Ala. The initial plan calls for Interstate 85 to take an area which would have included the parsonage of First Baptist Church, the church where Dr. Ralph D. Abernathy was the pastor. After a substantial protest, the route was. changed so as to exclude the personage of the First Baptist Church, however, the route still included a substantial number of residences of Negroes, which residences were some of the best Negro residences in the city of Mont- gomery. There was a great deal of protest to this route suggesting that an PAGENO="0372" 366 alternate route be taken, which alternate routes were known as the "northern group" or the "middle routes," however, the area finally selected as the area that took many fine Negro residences notwithstanding `the alternate route which, in the opinion of many, were less expensive and would have preserved some of the finer Negro residences in the city of Montgomery. D. GRAY, Montgomery, Ala.. FEBImARY 28, 1967. Mr. BILLIE S. FLEMING, President, NAACP, Manning, B.C. DEAR BILLIE: I have tried to reach you several times on the telephone con-~ cerning the attached letter which was sent by Charles F. Luce, acting Secre- tary of Interior. I have discussed with the Department of Interior the suggestion that the' families can remain on the land until December 31, 1967. I understand that in some c~tses the Department of Interior gives permits for persons to continue' to occupy land which has been taken by the Government. Some of these permits are for a five year period subject to renewal at the end of that period. I would suggest that you may want to check this possibility if the residents are interested in staying for a period longer than one year. I will be glad to continue to work on this end, but I believe that the interests of the parties will be protected best if they are represented by a lawyer in South Carolina. Sincerely yours, CLARENCE MITCHELL, Director, Washington Bureau. U.S. DEPARTMENT OF THE INTERIOR, OFFICE OF THE SECRETARY, Washington, D.C., February 17, 1967. Mr. ROY WILKINS, E~oeoutivo Director, National Association for the Advancement of Colored People, New York, N.Y. DEAR MR. WILKINS: This is in reply to your telegram of February jO con- cerning a displacement of Negro fawilies from land acquired for the Santee National Wildlife Refuge in Clarenclon County, South Carolina, which is ad- ministered by the Bureau of Sport Fisheries and Wildlife of this Department.. This land is being acquired' to complete an existing national wildlife refuge established for the conservation of the migratory waterfowl resource. Our in- formation is that nine families reside on the property. The Bureau of Sport Fisheries and Wildlife has been negotiating for the purchase of this land for many years. The land was acquired by condemnation with a Declaration of Taking and notice, of this action was served on the owners and occupants on February 7, 1967. Although the title to these la~ids is now vested in the United States, the Bureau of Sport Fisheries and Wildlife is permitting the owners to farm the land during the 19i7 crop year and the present occupants to remain on the land until they can make arrangements to relocate, but not beyond December 31, 1967. The Bureau of Sport Fisheries and Wildlife will post the land and man~ age the wildlife, but this activity should not interfere with farming operations. Sincerely yours, CHARLES F. LTJCE, Becretary oJ the Interior. [News release from the Office of the Secretary, for release to P.M.'s Mar. 9, l96~t] INTERIOR DEPARTMENT ENDORSES LEGISLA~TION TO PROTECT ESTUARTISS Enactment of legislation authorizing the Department of the Interior to~ "preserve, protect, devek~p, restore, and make accessible esituarine areas of the Nation wbi~h are valuable for sport and commercial fishing, wildlife conserva- tion, recreation, and scenic beauty" has been recommended to Congress by the Department of the Interi:or. In responding to a Congressional request for the Department'S attitude re- garding authorizing legislation, Dr. Stanley A. Cain, Assistant Spcr'etary for PAGENO="0373" 367 * Fish and Wildlife and Parks, said that such a law would focus attention on the Nation's valuable estuarine areas and provide a reasonable means for pro- tecting and developing these ar~as. "Estuaries are places where salt water meets fresh water," Dr. Gain said. "These marginal sea and land complexes make the es'tuarine areas a habitat rich in many valuable natural resources. At least 05 percent of our Nation's ~commercia1 fish and shellfish resources and most of our marine sport species inhabit the eatuarine environment during all or part of their life cycle. "Many of our valuable watertowl use these ~reas as nesting and wintering sites. Estuarine areas attract tecreationists for swimming, boating, bird watch- ing, hiking or just an opportunity to enjoy the beauty of natural resources along coastal areas. It is such areas we wish to protect and preserve." Basically the proposed legislation `directs the `Secretary `of the Interior to conduct a `thorough nationwide study to identify the estuaries of the country that need some form of protection or, in some cases, restoration. Following this identifying study, a mo're detailed look, probably on a regional basis, would determine which areas `should `be preserved, protected, o'r restored. The detailed `studies would `consider estuaries from a standpoint of economic and recreational potential, ecology, present use, nbed for present and `future urban and industrial development, the effect of such `development, the effect of pollution on fish, wildlife, wate'r supply, and w'aterpower, and the e~ects of dredging and filling. A total of $4.~ million would be authorized fo'r these studies. The legislation calls for State, Federal, or local government acquisition of -estuarine areas that cannot `be appropriately preserved `by permits governing ~dreclging and filling, local zoning laws o'r other legal methods. The bill provides that State hunting and fishing laws will apply to estuarine areas administered by Interior, except in `certain situations of conflict, such as public bathing beaches or other heavily used recreation areas. One of the bill's moist far-reaching aspect's is a section prohibiting dredging, filling, or excavation work in an estuary or in the Great Lakes and connecting ~waterways without a permit issued by the Interior Department. At present, * permits for such work are issued by the Army's Corps of Engineers which is charged wi'th the `responsibility for protecting navigation. A double permit system to protect navigation, plus the natural values of estuaries, `would go into effect with enactment of the legislation. And another section of the proposed legislation is designed to prevent pollu- tion of coastal area's `by governing dumping in estuari'ne areas or the Great Lakes. In his letter, Dr. Cain `emphasized that the bill is not designed to set up a system of "locked up" Federal areas. "It is intended to provide protection where ptotection is clearly needed," he said. "We believe that `this legislation, with these feaure~, is timely and realistic and `urge its enactment." 221 Md. ~l29 `CITY øT ]3ALTIM0EE, SCuNEIOER BuonINo COMPANY wr Al~. v4 NATIoNAL AssoCIA- TION ron ADVANCPMENP &r C'oLonnn PEOPLE m~ AL. (No. 87.) Counr OF APPEALS OF MAEYLANO, JAN. 22, 19&~. Zoning case. The Circuit Oourt No. 2 of Baltimore City, Joseph L. `Carter, J., held rezoning ordinance void, and enjoined utilization of rezoned property fo'r any use not permitted immediately prior to enactment of rezoning ordinance, and an appeal was taken. The Court of Appeals, homey, 1., held that since there ~~as no proof of a `basic mistake in original zoning or of a substantial change in ~baracter of neighborhood, `resoning was improper. Affirmed. (.Zoning Even though it seemed clear that associations we're nOt proper parties to ~oning case, where no objection had `been raised below, and ther~ were several ~rties plaintiff w'ho we're property owners, reviewtng court would not consider bjections to associations' being parties. PAGENO="0374" 368 2. Muyiiicipq,I Corporations Whenever validity of zoning classification is fairly debatable, legislative jucig- ment should be controlling. 3. Constitutional La/u, There .1's presumption in favor of validity of legislative `enactment. 4. Municipal Corporations Presumption in favor of val'~dity is stronger in original zoning or comprehen- sive rezoming cases than it is in instances of piecemeal rezoning. 5. Municipal Corporations `It is not function of court to zone or rezone but only to determine whether legislative body has properly applied law to facts; but when there is no basis for reasonahie debate, or there are no supporting facts in record, count can, and indeed nhoul'd, declare legislative action to be arbitrary, capricious, di'scrirnipa- tory or illeg~al. 6. Municipal Corporations There is a presumption that rezoning was reasonable; but~ in piecemeal rezoming cases there is also a counterprèsuiuP'tiOfl that original zoiling was well planned and designed to be reasonably permanent; and such counterpreisumPtion may `be overcome only by showing either error in original zoning or change in character of neighborhood; and unless one or the other, or both, is shown, pre- sumption of reasonableness is destroyed. 7. Injunction Zoning Where there was n~o proof of a basic mistake in original zoning or substantial change in character of neighborhood, question of validity of ordinance rezoning property `was not even debatable, and rezoning was properly set aside; and since rezoning ordinance `wins invalid, injunction to restrain use pursuant thereto was also proper. 8. Injwiwtion Zoning Adjacent `property owner had standing to attack validity of rezoning ordinance and to seek injunction against use of property for any purpose other than that permitted Immediately prior to enactment of rezoning ordinance. Marvin Miandel and Stanford H. Franklin, Baltimore (Mandel & Franklin, Harrison Ta. Winter, `City Sol., Ambrose P. Hartman, Deputy City Sol., James B. Murphy, Asst. City SoL, Baltimore, on the brjef), fo'r appellants. Ijinwo'od G, Roger, Jr., and `Charles J. Josey, Sr., Baltimore (Juanita J. Mitchell, Baltimore, on `the bnief),'for appellees. Before Brun'e, C. J., and Henderson, Hammond, Prescott and Homey, JJ. Homey, Judge. This is anot'her zoning appeal. In this instance, when the (iircu~t Court No. 2 of Baltimore City declared Ordinance No. 1612 of the Mayor and City Council of Baltimore (the Oity)-appro'ved December 19, 1957-null and void and enjoined the Schneider Bedding Company (Schneider) and others from utilizing the prqpeirty rezoned by the ordinance for any use not permitted immediately prior "to the enactment of the ordinance," the City and Schneider appealed. Ordinance No. 1612 (the ordinance) purported to amend Sheet No. 45 of the Use District Map [Baltimore City Code (1950), Art. 40, entitled "Zoning," as revised by Ordinance No. 711, approved May 21, 1953], by changing the property knhwn as 511-519 Wilson Street (the reconed property), from a "Residential Use District".to a "Second Oommereial Use District." While it was pending befo're the City Council, the ordinance, as required by law, was referred to the City Planning Commission (the Commission) and the Bo'a'rd of Municipal and Zoning Appeals (`the Board) for their reports and recommend at4or~s'. The Board recom- mended passage of the ordinance on the grou'nd that the proposed change of use "could not adversely affect the neighboring properties." On the other hand the Commission unanimously disapproved the ordinance on the ground that tc allow a second commercial use in the residential use district In question "would not he to the best interest of the community and would be to the sole benefit of OflE property," and urged that "this spot use change" be not adopted. The City Corn" cii, after a hea~ring on tho 1egi~lation, disregarded the recommendation of thE PAGENO="0375" 369 Commission and adopted the report of the Board. ~l'he Mayor approved the ordi- nance passed by `the Oouncil. [1] Alleging damage to their respective properties apd seeking declaratory and injunctive relief, this procee'd~ng was instituted by t~ group of property owner's in the neighborhood of the rezoned property as r,esidents, citizens and taxpayers of the City of Baltimore. The National Association for the Advancement of Ooiord People (N.A.A.O,P.) and a residential protective association were also joined as parties in the bill of complaint. While it seems clear that these associations were not proper parties, no objection was raised ~elow `and we sh~l~ not consider, it here since there are several parties plaintiff who are property owners. Sco Southland Hills Impro'vment Ass'n of Baltimore Gounty v, Raine, 1959, 220 Md. 213, 151 A.2d 734. The evidence shows that prior to the passage of the ordinance the rezoned prop- erty was subject to a lawful non-conforming use in a residential zone. It had been i~sed as a repair shop and garage for the storage of trucks, gasoline an'd oil for over thirty years. Surrounding the rezoned property there are a number of other non-conforming uses. In the same block as the rezoned property there is a coal yard, an automobile repair shop and a manufacturing plant, all of which are second commercial uses, and a laundry, a restaurant, a bar and a funeral home, which are first commercial uses. The entire frontage on the north end and south side of the 500 block of Wilson Street is 655 linear feet, of which 414 feet is used commercially. Since the original zoning, the Board [of Zoning Appeals] has per- mitted a change of non-conforming use and granted an exception with respect to 514-516 Wilson Street, which i's directly opposite the rezoned property, and had been used as a photography school. Recently a special exception was granted to use the same premises as a plant for the processing, finishing and assembling of precision parts, which is a second commercial use. The property iwmediately to the rear of the rezoned property is zoned first commercial. Pennsylvania Avenue, approximately one block away, is entirely zoned for second commercial use. In addition to the above undisputed facts, there was also testimony by real estate experts, on `behalf of the City and Schneider, to the effect that the rezoning would not adversely affect the surrounding properties or cause deterioration of the neighborhood because the area was already heavily commercialized, and that any change in use would be an improvement since `the rezoned pr'operty could not be used for residential purposes. But there was no evidence of error in the original zoning or of a substantial change in the character of the' neighborhood since the original zoning other than the granting of the special exception. On the contrary, although they produced no expert witnesses there was testimony by the protesting property owners to the effect that they had consistently endeavored to preserve the residential character of the neighborhood, that the rezorling would seriously affect the enjoyment and value of their properties for future residential use, and that the restricted and actual use within the i~esidential use district- despite the existing non-conforming uses and the sole special exception-wa's still predominantly residential as it has always ~eèn since the inception of zoning in Baltimore City. The City and Schneider contend (i) that the lower court was without authority to substitute its judgment for that of the legislative body since the question of validity was fairly debatable and the protesting property owners had presented insufficient evidence to overcome the presumption of validity; (ii) that the prop- erty owners offered no proof that they had suffered special damages which dif- fered in kind and character from that suffered by the public generally; and (iii) that it was error to admit Into evidence the prior actions of administrative agen- cies not empowered by statute to zone or rezone. (I) [2-4] The courts `bave long recognized the general rule that on a review of zon- ing and rezoning ordinances the function of reviewing court is restricted and that such court may not substitute its judgment for that of the legislative body. On the contrary, whenever the validity of a zoning classification is fairly debatable, the legislative judgment should be controlling. Missouri Realty, Inc. v. Ramer, 1958, 216 Md. 442, 140 A.2d 655; Wakefield v. Kraft, 1953, 202 Md. 136, 96 A.2d 27; Village of J~uclid, Ohio v. Ambler Realty Co., 1926, 272 U.S. 365, 388, 47 S.Ct. 114, 71 LEd. 3Ø3~1 Moreover, there is a presumption in favor of the validity of the legislative enactment. Kroen v. Board of. Zoning Appeals, 1956, 209 Md. 420, 426, PAGENO="0376" 370 ~121 A.2d 181, 184; Wakefield v. Kraft, `supra. But the presumption is stI~onger in original zoning or comprehensive rezoning oases than it is in instances of ~piecemeal rezonlug. Missouri Eealty, Inc. v. Earner, supra. [5-7] While it is true that it is not the function of a cobrt to zone or rezone but only to determine whether the legislative body has properly applied the law to the facts, it is, nevertheless, also true that when there is no basis for reaaomrble de- bate or there are no supporting facts in the record, a court can-and indeed it should-declare the legislative action to be arbitrary, capricicsn~, dis~riminatory or Illegal. Kekes v. Board ~f Zoning Appeals, 1956,209 Md. 432, 437, 121 A.2d 249, 251; Wakefield v. Kraft, supra, 202 McI. at page 142, 96 A.2c1 27. It is ~ornmonplace to ~say that if there are no fa~ts to support the action of the legislative body then there is no question to debate, but that l's exactly the Situation which confronts U's In this ease. There is, of course, a presumption that rezoning was reasonable, but In piecemeal rezoning cases there is also a eonnter-p'reaurnption that the original zoning was well planned and designed to be reasonahly permanent which `may ~e overcome only by shoutng that either there was `error in the original zon- ing or there has been change in the character of the neighborhood, and unless one or the other, or both, Is shown `the presumption of reasonableness Is destroyed. Zang & Sons, Builders, Inc. v. Taylor, 1954, 203 Md. 628, 102 A.2c1 728. See also American Oil Co. v. Miller, 1954,204 Md. 82,102 A.2d 727. Senator MusluE. Senator Baker, Senator Hansen? Senator BAKER. I have nothing further. I thank Mr. Mitchell for his previous answers and thank the Chairman for letting me interrupt. Thank you very much. Senator Mus~IE. Thank you very much. Now, our first witness of the day has finally torn himself away from the floor, and we are delighted to have Senator Tydings here this morning. ~EST1MONY OP HON. J~OSEP~t D, TThTNGS, A tT.S. S~TATOB ~1tO1YI THE STATE OP MARYLAI~D Senator TThINGS. Thank you Mr. Chairman. Distinguished members of t~ie Senate Committee on Government ~Operations, I appreciate yo~ir committee allowing me to testify this ~morning in fai~or of my amendment to title VIII of the intergovern- mental cooperation bill. I ask permission to have my statement inserted in the record in its entirety. Senator MUSKIE. Yes, it will be. Senator TYDINGS. Mr. Chairman, when I went to the University of Maryland Law School, the law school was located down on Redwood and Greene Streets. It was somewhat of a blighted area. There were a few small stores, and one restaurant where most of the law students used to eat, and one little candy store which served not only candy, but some groceries, newspapers, and a lot of us used to stop in there. The proprietors were elderly people, husband and wife, 6~, 54, somewhere in that area, and all of the students enjoyed them, and they made a living down there-not much, but enough, and that was their life. This area was selected as a principal urban renewal area for Baltimore City. If you happen to be there now, you will see that there is a new law school, new nursing school, new annex to the hospital, new school of sociology. It is a beautiful addition to the city. B~it in `the course of it~ this little store was condemned. Now, the elderly couple didn't own their place of business, they rented it. They 1 Metsenbeum in his work on Zoning s~s that this was the fii~st zoning ease to reach the Supreme Court of the United States. I Metzenbaum, Law of Zoning, p. 57 (2' ed 1955). PAGENO="0377" 371 were tenant~. E~o, they got no compensation by way 0 conden2nMi!n.~ Their business, ~hicli they had built up over a 1ifetu~,small as~it was, was destroyed. They could not relocate anywhere. That whole area was taken. Their business was tied up with the Un~vei~sity of Maryland Law School, Dentistry Schoçl, the Nursing School, the schools in that area. Now, the purpose of my amendment to title VIII i5 to cover that, ~peqjfic type of hardship where you have tenants or lessees in an urban reneval area, where they are e]derly people of `~0 years or olde~, here they are not high-income ea~rners, where their net income per year is less than $10 000. . .. I just thinI~ that to turn them loose ~ui~d give them $;5~000 ei~ ~e-. stroying their business and destroying. their lives, is ~incons~iqnp~le. My proposal to you, gentlemen,. is that you, provide additio~a1 corn- pensation wi1~hin ~igicl, designated, specified cases. Where the parties are tenants, wI~ie~e they are ove~r. ~0, where they have veraged J~s~ than $10,000 a year over tl~e, last 3. years, I prQpose that they receive three times their average net.earnrngs for the past 3 years. . , For mstance, if the net annual earnings had averaged $6,00Q for this~ elderly couple, and ,1 think it, might haye been that mucl~, they would, he entitled to receive $18,000. . Now, that, I think is only fair compensation. One oi~ the tragedies of these urban renewal areas, and the Feçle,ral highway. pr~jec~s, and others,.. is the failure to reaUy cQrnpe~isate the poor and the h~lpless who are overrun. I can tell you stories,ahout highway reloeation in Maryland that are just tragic4 In Baltimore City, I know of aperson who bought a house 18 years ago for $7,500 or $8,OQO and paid oiI~ most of his mortgage of $7,000 over those 18 years; then the notice of con- demnation went out, , , , , , ` * People left the area and then 2 years later the State roads acquisi~ tion agent came and advised him that he would be given fair market value, and there were ~ot many willing buyers in. that area. He got $1. 100 for a house he paid'$8,500 for, and he still hadalmost, that much le~ in the mortgage. . , , *` * This whole area which we are looking'into is one which really needs study~ and my "Ma and Pa" amendment, as Icall it, would correct one specific kind of, injustice that ha~ been ~ by product o,f urbau renewal. I have been working on~ this now for 4 years, since I have been in the Senate, and it is a rather simple measure. Furth~rnore, Ido not think it would be an expensive amendment. HIJD has indicated there would, not be more than 1,000 businesses a year at the most who would be eligible. As I indicated `to. you, the criteria again as follows: the proprietor of the business would have to' be a tenant, not an owner, would have to be 50 years of .age or older,, his average annual net earnings ~or the preceding three years would have had to have been less than $10,000 per year, his business would have had to have been of such character that he could not be relocated without substantial loss of his existing patronage. For a person who' meets these criteria, the compensation would be three times his average annual net earnings for the period preceding the condemnation. So, I am very delighted that you would take time to hear me, Mr. Chairman. Senator MUSEIE. Thank you very much, Senator. PAGENO="0378" 372 I think it is clearly a case for concern and I could not say that your solution to it is inequitable. I gather that the Budget Bureau is now op- posed to it, but we will look at it, nevertheless. Senator BAKER. Mr. Chairman, may I say a word in that respect. I agree that Senator Tydings addresses himself by this amendment to an area of real inequity and difficulty. I wonder, however, if we should entirely limit our consideration to the "Ma and Pa" aspects of it, because in my own experience I have seen young people just beginning and commencing in business who frequently are tenants and who are completely destroyed from a business standpoint because they do not happen to have a lease for a term of years or, as we lawyers say, any other freehold interest in the property. I wonder if we should not give some thought to a change by this bill in the basic eminent domain relationship so that the court might hear proof on the probability of the tenant being permitted to remain in that location and then apply the general rules of capitalization of his reasonable expected profits, because I think that, really, is the underlying issue. The real issue is what under ordinary circumstances could a person expect to make in the reasonable time that he could be ~pe~ted to remain in that location, and. what compensation should be paid to keep him from being left unwhole by reason of the in- voluntary taking. T thank Senator Tydings for his contribution. I wonder though if we should not extend our consideration of this in the committee beyond just the Ma and Pa example which the Senator has been kind enough to give us. Senator TYDINGS. I think you definitely should. You have a re- sponsibility to do so, Senator, and the merits are all as you indicate. Of course you will receive probably, stout opposition from the Bureau of the Budget at this time for any amendment in this direction because it will cost money. This whole area, the whole area of fair compensation for those displaced by Federal projects, urban renewal and highway projects d~serves, a~ you point out, real overhauling, be- cause the inequities and the unfairnesses that are visited are ti~agic in many instances. And, of course, it is generally the people least able to protect them- selves, least able to secure a day in court~ who are hurt the niost. The iost will be something that will have to be taken into bonsideration. I have limited my amendment because I think the older people, those over 50, are hurt a litti~ har~er than the young people. A young person is better able to land on his feet than someone who has had his life involved in a neighborhood and k~iows everyone-c-than the man who is going into the shadows in his declihing y~a?s. Senator BAKER. Well, I agree with you, Senator, but the likelihood is that we would have less resistance from the Bth~eau of the Budget because of the saving in money, but I am ~ure we all must bearin mind that in .the involuhtary taking, in the eminent domain field, unique among all fields, I think we owe a positive obligation to make sure that the person whose property is taken is not worse off after the taking than he was before the taking. I really wonder if the Go~rertiment, this Government or any governments is not in bad faith to, in effect, say, "You must suffer for t;he common good in disproportion to the value of the project to the l)oPlllatlon generally." PAGENO="0379" 373 Senator TThINGS. Mr. Chairman, I might' say that Senator Baker has put his finger on a very, very sensitive point. In my judgment, the condemnation procedures of this Government in urban renewal and highways are extremely unfair. We have before the Public Works Committee, as you are well aware, a study of this whole area' and its relationship to public roads. And Chairman Randolph is very concerned. We have now pending before the Judiciary Committee an amend- ment in relation to condemnation, what is fair compensation, and I certainly would encourage you to get involved in this area and to try and right some wrongs, because they certainly need to be righted. Senator MUSKIE. Senator Hansen? Senator HANS1~. Well, first, let me thank you very much, Senator Tydings, for your contribution this morning. I do think that there may possibly be another group of people deserving of our attention. I refer to those, not leaseholders but property owners, who by virtue of their age do not have the aggressiveness necessary to move into a new area and to start up business again. I think they might also be reasonable objects of our concern, because those people are in a neighborhood where they have grown up, where their i~oots~ are deep and their friends are many. They could produce, and it is likely that they would, perhaps five or ten more years of profitable activity; but to say at age 55, we will pay you the fair market value and perhaps give you a little more in addition for the inconvenience and the other costs that will be incident to your moving, is not enough. You are not going to find people at that age willing to go~put and to establish new businesses, try to make new frieñds-I think this is implicit, in Mr. Mitchell's testimony. When people reach a certain age, they do not have the zip that is necessary for them to reestablish themselves. I have some deep feelings about this whole process of condemnation; I have ~een it applied in my county and I know bow it `affeetepeople. You can uproot a young couple and though it may be difficult, they can make the adjustment. Senator* Bak~r has addressed himself very ably to that point. However it becoi~ies increas4igly difficult, in my judgment, for older people to make the transition~ and as a conse- quence, I think they are likely' not to reinvest, they are likely to take the money. Because o1~ this, I would like to `know what the policy of the government is ini~ofar as the awards that may be made-what' the tax liabilities are. It is my understanding generally, and. I am not expert in this area at all, that within a reasonable time you can rein- vest and escape some taxes that otherwise would ap~1y. I think that th~ aged persons who are i~v~Ived in the `Governmeiit's ~xercise o~ the right of eminent domain ought to be considered, along ~vith other factors, in determining how our Government can treat these people. Senator TYDINGS. I think this whole area is one where you can be )f immense public service. Senator MusicIE. Thank you very much. Senator TYDINGS. This legi~lation is long overdue. Thank you. Senator MUSKIE. Thank you, Senator Tydings. PAGENO="0380" 374 (The complete `prepared statement of Senator Tydings, above~ re~erred to, follows;) STATEMENT OF SENATOR JosFrn D ~YDING~ N~r. Chairman~ I want tc~ thank yon for enabling me to come here today te testify in support of ~my ag~endment tp Title V]~I qf t~e Inter~overninenetal Ce- operation bill. `I know you have bad several clays of hearings on the bill as a whole, and have heard from a widely representative group of interested wit- nesses, 1 hope this means that man~r mor~ people ate ~ware of the need for thia legJsla~i~m than has been tri3e in the past. ` , ~efore getting cloyn to, th~ case fo~~ my ~mendment, I w~nt, to commend you, M~. Chairin~n' arid the o~ber members of `the ~ubcommittee for the ex- ten5i~~O work yoti hk4e' beOit dkilng `fo~r several years to ffluniitiat~ ` thO need foe inter-governmental cooperation and ~o bamther `out' Sokn4 rem&lies for `prob- lems, w1ftc1~ iI~ extremely coutipjez an4 dimcult to resolve. This is fairly esoteric' w~r~-t~re generaL ~1ic h~is neven~ been very aware that problems' grow like wee~i~ betweeli the variohs le\~els ap4 conipartments of gOvernment in qils country.. ¶this', is not ai~ area of refOt~n' ~kat `is easily explkiued. But the effott `and intèhligeneee~end~doti thisleg~5la't1on should be widely recognized. The country is g~~atly inyont' Øebt. TAtJe~VIIL :oç t~ijs bill Would establish uniform relo~ation\ payments and ad- visory assistance for those who are displaced from homes or busn~esses by ~ed~raliy-spo~brel1 prOgra~s. We are talking primarily of urban reneWal and. highway con~trttct1on prOgrain~. ` ` ` The nee~ for audi vrelocatlon assistance has, been fully doeumehted by this si~eoiñmittee~ byth~ ~o~ise ~eJçet Sn eçgnnciittee on Reel Property Acquisition,. atid b~ the Advisory Comi~ilssioi~ on Tnte]~governme~tal RelationS. F~irthermore~ th~ UñanjiflotlS ~/Otë for this bifl 14 the Seiiate* last year 1ndicate~ that the cx- tdtthive'stttdiesma'de by each of thes~groups'have borne fruit. My `amendmeflt to Title VIII js designed to cover' a specific kind of hardShip Wbi~h,, in ~ny view,: would not bç properly re~edjed by the liill as it stands M~y amendment would anthOrize paym~nt according to a set formula to the oWnei~' of a displaced pelvate busidess Which cannot b~ relbcated without a sub- stantial loss of its patronage. In order to be eligible, the owner must be fifty years ,of age or older and" a tenant ~f the property from which the businesa was djsplaceçL, ~Ii~ ear~ing~ ov,ei' a three year period have to hayO averaged lessthan $10,000 a year, ` " Mr. Chairman, as yoti pointed oat last year during `Senate consideration o~ this bill, "small businesses-particuha~ly those owned and operated iiy the el- derly, such: `as `Mom and Pop' gtocery' stores~-are major casualties" of land aCquisition and' clearance for urb4~i rer~ewal or highway construction. The price of progress in urban renewal is too often destruction of the livelihood and earning t~lp t~rtt~ the' small7 neighborhood storekeeper. In Baltimore, fb1~è~ample, I knew Of a cOrner ~ándy store owner who lived. and worked in the same location for 40 years. ` His store was a focus of activity where neighbors ~toppecj to bay their newspapers, to chat and to buy last minute groceries. `For 40, years he was part and parcel of that community. I lived in the nei~hhorho~d when I' was a law student at the tiniversity of Maryland,. and I was a frequent visitor hi that little candy store. Several years passed and then the city of `Baltimore embarked upon an urban renewal project in tb~ area. The candy store and all of its customers were tokL they had to move. The owner of the building, from whom this man had rented. for 40 years, received payment for his building. But the proprietor of the candy store received no payment at all. His store was gone, his clientele was `gone,. his goodwill was a thing of the past. He was set `adrift' at 65 years of age with no place to live, no source of income, and only token relocation assistance. This Was clearly an extreme hardship, To be sure, some hardships are inevitable tè we are to redevelop slum neigh- borhoods and renew economic life in the cities. I do not think we should allow a measure of inconvenience to block progress. I support urban renewal. But I firmly believe that we Owe a moral obligation to the families and small busi- nesses `that have to be relocated to minimize their sacrfices and to make them as whole as possible. Title VIII as written would provide 100% Federal reimbursement for busi ness moving expenses up to $~5,00Q and provides for federal sharing for costi PAGENO="0381" 375 exceeding that amount. As an option, a s~n~t1i bnsinessman could choose to receh~e a payment hot to exceed $500Q. The $5000 payment is designed for a business which "cannot be relocated without a substantial loss to its existing partonage." I submit that for an elderly proprietor, such as the owner of the candy store I have described, that $5000 payment is Inadequate. Urban renewal did not result in hi~ relocation; it put him out of buSiness. It cut off bin source of income as effectively as if his business had been cotidemned. And this calamity happened too late in life for him to begin again. The amendment I have offered would make ti more equitable settlement in these very specific cases where it will not be possible to move and begin again. It would fu~ovide a lump-sum cash ~iayment-in lien of relocation and moving expenses-~equa1 to 3 times the average annual earnings of the business for the past three years. If, for example, the candy store owner bad an average annual income of $5000, he would be entitled, under my amendment, to a lump-sum payment of $15,000. This would, In effect, be a payment in compensation for future earnings lost. Of course, this amendment Would hflve very limited ap- plicability. In order to qualify, a proprietor would have to meet the following four tests: 1. He wo~ild have to be 50 years of age or older. 2. He would have bad to be a tenant and not the owner of the.piioperty in which his business was located. 3. His average annual net earnings for the preceding 3 years would have to have been less than $10,000 per year, an~ 4. His business would have to have been of such character tj~at it could not be relocated without "a substantial loss of its existing patronage." In essence, this amendment would apply only to the small "Mom and Po~'~ neighborhood stores in which the owners were over 50 years old, earned less than $10,000, and rented their shop. I might note that i~ the storekeeper owned his premises, he would obtain condemnation payments for his property as well as relocation funds-and thus would be. mach more* adequa~eiy compensa~ted than the storekeeper who is merely a tenant. The payment formula I have suggested~ would provide a modest amount, wholly consistent with our moral obligations to alleviate the hardships imposed by urban renewal progress. Furthermore, Mr. Chairman, the cost of this amendment wotild be low. I have received an estimate from the l)epartment of Housing and ljrban Develop- ment that not more than 1,000 businesses per year would qiullify under this arn~ ridinent. If we assume the average annual earnings of these, 1,000 businesses to be $7,000 per year-a relatively 14gb figure consider~n~ the $1Q,000 ceiling in the amendment-we would be paying an average of $21,060 to each ~f these 1,000 businesses estimated, or a total of $21 milliofi. This Is a sthall suul in relation to our total urban development budget. Mr. Chair~nan, I am pleased that the Committee is eonsi~ering this amendment and I greatly appreciate being invited to appear here today to speak for it. Thank iou very much. Senator MU5KIE, Our last witness is Mr. Berkeley G. Burrell, presi- lent of the National Business League. ~ESTIMONY OP BER1~ELZY G, ~tJR~~LL, PRESTh~NZ NATiOIq~AL BUSINESS LEAGUE) AOCOMPANIZ~ BY CRARLES `~, WILLIAMS VICE PRESIDENT, S~RENLEY DISTILLERS CO., AND BUXTON COOK, ASSOCIATE DIREC~QR 0$' ItESEARCH, NATIO~AL BUSLNESS LEAGV11~ Senator MJSKIE. Mr. Burrell, will you identify the gentlemen with iou? Mr. BUIIRELL. Thank you. Mr. Charles T. Williams; who is by ~tocatiOn vice president of Schen- ey Affiliates, ~uid on my right i~ Mr. Buxton Cook, who is the assô- iate director of research for the N~itionaI BusitiOss L~ague. I myself am Berkeley G. Burrell, presidelit of the National Business 4eague, an organization of Negro businessmen primarily, founded PAGENO="0382" 376 in 1900 by Booker T. Washington, and we continue in the tradition of the founders to attempt to espouse better management techniques and to encourage entrepreneurships among Negroes. We are presently in. 52 cities and we have a funded project, funded recently by the Office of Economic Opportunity and the Economic Development Administration to further this objective of ours within 13 project cities. First of all, I might say that the National Business League is always pleased to be afforded the opportunity to present its views on pending legislation prior to the enactment of the laws. All too often we are confronted with the "Fait Accompli," and must react to statutes al- ready adopted very frequently to limited avail. So today we have an opportunity to comment on pending legislation prior to its enactment, and that very opportunity dramatizes most succinctly, our poverty, our deprivation and the disadvantage of our position relative to our white contemporaries. The National Business League is a dedicated organization composed largely of poor business people and we do not have the resources to clinically dissect the kind of sophisticated legislation proposed here today. That is a job for sharp young lawyers whose services we need but for which we cannot pay. So our remarks here today must be viewed in the context of our ability as a voluntary, poor, business oriented organization, not as the expert legal testimony of exceptional lawyers. Looking at the bill as a whole, it seems to be trying to set some broad general standards of equitable acquisition and reuse of property by Federal agencies. To the extent that these enactments will achieve that goal, the NBL is constrained to applaud its purposes, and to hope that its principal objectives will be achieved. Such a uniform standard of action in this area is long overdue and if passed one can only hope that its intent and purpose will not be frustrated by "administrative repeal" or strangling execution regulations. The bill's present text repeatedly refers to "the administrator" but no place that ~we could find states what administrator will have the powers set forth, nor does it clearly indicate what agency of Govern- ment would have jurisdiction over the bill's end product, Too, it is not clear to us just how far this bill intends to go in making mandatory upon the State or local agencies the general provisions of the legislation. Where a State ndministers the performance of Federal legislation. There is too ample a degree of room for State repeal of Federal intent where the Federal intent and thrust is not more clearly stated. Moreover, there should be some penalty attached for noncom- pliance by a State in any area of the legislation's action pha~ses. On page 33 of the proposed bill, section 801 of title VIII declares it to be public policy that persons to be relocated because of Federal action or federally assisted action shall be justly and equitably treated But nowhere in this or subsequent sections do we find any detailed enforcement teeth in such a policy. Earlier in title V, the bill's intro~ duction mentions "Federally Assisted" and "Federally Aided" pro grams. Now, it may be that somewhere in the bill there is written som kind of enforcement guidelines or techniques that would assure equita ble enforcement of the provision of the bill, whether the action takei PAGENO="0383" 377 is direct Federal action or action by an agency of local government that is aided or assisted by Federal public funds. For example: if the Daimler Grocery Store in llattiesburg, Miss., is in the path of a proposed new secondary road that the county is going to build, we would want this bill to have same specific penalties spelled out to assure that Vernon Daimler would not be denied the relocation assistance provided by this bill just because he is black and just because the agency in Mississippi that handles the project is manned by bigoted local civil servants. Our question to this committee is: "how would this particular NBL merchant be assured of the benefits intended by this legislation if an intervening State or local agency administers its provisions ?" Where are the enforcement teeth? What will happen if the local agency follows a policy of rampant, premeditated, racial discrimina- tion in the administration of this and all of its other official functions? What in this will prohibit or preclude the operation of such a policy of flagrant bias?. To go a step further, any State or local governmental agency in the normal pursuit of administering the public policy objectives of the office involved can embark upon a worthy community project, that has widespread community support. Indeed, such a project could serve an unchallengable public community need. But to execute the project di~placements and relocation of minority citizens will be necessitated. In many areas of this Nation, the displacees will not find it practical to secure standard housing accommodations of the prices and pay- ments set forth in this legislation. It is our thinking, in the light of today's circumstances, that some provision should be Written into section 805 or other appropriate sec- tions of title VIII that will assure the payment of enough money to establish the displacee in his new location. The actual physical reloca- tion is only part of the problem. In the case of a residential dwelling, relocation payments should accomplish the objective of transplantation of the household to the degree that the operational obligations are identical to the position held prior to movement. In other words, whatever proportionate share of net income is allocated to each living and for household operational expense prior to movement, that same proportionate share should prevail subsequent to relocation. In the case of a typical NBL business, the same conditions and cir- cumstances should prevail with respect to his living accommodations and in addition to his business. This assumes, of course, that to some degree both elements are affected by the relocation. With specific reference to the business, the relocaition payments must achieve the objective of reconstituting a going concern in a new business environ- ment. If a farmer is entitled to actual and reasonable expenses in searching for a replacement farm, certainly the small business operator is entitled to actual and reasonable costs of feasibility studies and other servh~es and cost needed to establish a new business location. We have a pilot program, Project Outreach, where we are providing a small amount of technical assistance to businessmen with such prob- lems. What we are doing fills only the smallest part of the need, and indicates how much more attention and resources must be applied, not to solve the problem but just to find out more about how big it is. PAGENO="0384" 378 Lct us for a minute take a look at the findings of small businessmen which have been uprooted and scattered in the past. The two most responsible Federal programs have been the urban renewal program ~conducted under the Housing Act of 1949, as amended, and interstate highway construction conducted under the Federal Aid Highways Act. tTp to 1963 of the total number of businesses displaced by Federal programs, 70.3 percent were displaced by urban renewal projects and 19.2 percent by Federal aid highway construction. The third large ~displacee of business, the low-rent housing program, conducted under ~the Housing Act of 1937, as amended, displaced 75 percent of the total businesses displaced for. the same period. It is estimated that through 1972 approximately 18,000 business and nonprofit organizations per year will be displaced by Fedèial programs, as compared to a yearly average of 11,000 over the most recent years. Business displacement is an urban phenomenon, 93 percent of all displacements were in urban areas. Who owns these businesses which ~are being displaced and what kinds of businesses are these? Well, all this takes place in the older and most rundown part of town and we all know who lives there. Dislocation impairs a business' chances for survival and moreso if the business is small. How serious is this impairment? The findings of a survey of 50 loc~d public ttuthorities fOr urban renewal by the Urban `Renewal Administration in 1963 shOwed that 35.3 percent of all disphtced busifiesses discontinued operations. Of the operators discon- tinuihg, 55.~ percent were tenants. The overall result is that the typical business displaced is a small, perhaps marginal, service or eating establishment with a walk-in clientele, which is especially, vulnerable tO displacement. - Gentlemen, that's us. In Nashville today, this minute, `the construction of a link of Inter- state 40 through the heart of.the Negro business district will directly dis~ilace ~0 businesses and seriously afrect another 146. The highway is ~dividing the North Nashville community, a~fecting access of the popu- lation to schodis, chur~he~, parks, hospitals, and the businesses. In its wake, about 600 d¼vellings will be razed, thus `removing part of the population; the poor system of streets in the area will be further com- plicated by the permanent closing of 47 streets and the temporary blocJdn~ of another 10. `the sight of blocked sidewalks, the 5-mile detours, the dissection of -service stations, the granting of $200 to remove a dry cleaning plant, equipment and all, the evacuation of leasehold tenants with no compen- sation for recent lease improvement, the refusal of compensation to -tenants without leases. Gentlemen, to me, this is a disaster area, which I toured only last week. On page 40, line 10, this bill refers to assistance from the Small Business Act. The ~eetion cited is the single most conservative loan program in the entire package of SBA financial assistance existing today. Section 7(a). loans start with a requirement that the borrower must invest as much money in the business as SBA loans. So if a displacee needs a $20;000 loan to reestablish in a new location, he has to have $10,000 of his own. It is our considered view that section 7(a) will knot and cannot be made to serve the needs of the small inner-city busi- PAGENO="0385" 379 ness that is adversely affected by public action requiring relocation of his business operation. We do feel, however, that we oan suggest directions in which legisla- tion might be pointed that will yield the greatest good to our society. With that in mind, we would suggest that this committee give serious and careful consideration to the creation of a small-business capital fund to be set up by SBA for the purpose of revitalizing and stimulat- ing small enterprises that are relocation candidates. Such a fund could be used not only to relocate the business, but to upgrade and revitalize it with a view toward enriched profit production. There is an inherent kind of negativism about uprooting and relocation of business and businesses. The knowledge that the enterprise can get liberal assistance to upgrade and expand and enrich its functional operation can have an electric effect on the general surrounding community. First, the small business operator becomes immediately an advocate for the project requiring his removal rather than an antagonist. The price he gets for his present enterprise is less likely to be as important to the operator as it would have been otherwise. Because he is in- digenous to the surrounding population, he will have a more salutory effect on the attitude of that population than would otherwise be the case. To carry the hypothesis further, the NBL working with the SBA and its management assistance people could organize local small en- terprise groups to create small neighborhood convenience centers that would be profitable for the operators and inspirational and mo- tivating for the community. To make such a program effective, we think the pending legislation should spell out the broad operational methods and modes for such an experimental program. And it must provide for a special allocation of funds for its opera- tion. For above all, the Congress has perhaps done no greater dis- service to our membership and to the small business cofnmunity at large than to set up the SBA as a convenient whipping boy. The very mention of SBA in this pending legislation is little short of criminal. And it is the fault of the Congress that this is so. For whatever learned reasons that it may have or have had in the past, the Congress assigns an increasingly larger workload to the SBA, but it gives it no meaningful budget with .whic~h to operate. It is cruel and inhuman punishment for the Congress to give to the SBA $5 or $~3 million and then direct it to execute programs requiring $50 or $flO tnillion. It is cruel and inhuman to extend false hope to a multitude of small mtrepreneurs, but it is equally monstrous in its depre~sing and de- Dilitating effect on the SBA establishment, many of whom are fine, ledicated public servants. From my brief acquaintance with him, I get the impression that the present SBA Administrator is the kind of ~apable public servant who would make many of the SBA programs ~ar more effective if he had more funds. Therefore, although the record will show that I am, and have been, ne of SBA's most severe and unrelenting critics, with regard to this egislation, I urge that all of its facets dealing with the relocation of ~usinesses should be made a function of the SBA; and its management ssistance people working with the NBL should be given a special 95-G26--65-25 PAGENO="0386" 380 mandate and a special budget that will allow the total revitalization of small enterprises affected by public action. NBL does not believe that public improvement activities requiring relocation of citizens and their function should be ipso facto regarded as disasters, nor should such actions be associated ~with disaster as- sistance. If the Small Business Act is to to be amended, it should be so changed as to provide a program of special assistance to the little business that is adversely affected by public action. The NBL criticism of the proposed amendment described on page 40, commencing at line 12, is that it places the burden of proof of eco- nomic injury on the little fellow with limited resources. Any agency employee can determine that there has been only slight economic injury and effectively preclude the entrepreneur from assistance. It would `be far better to make anyone who is touched at all by public actions indicating relocation in the interest of survival, eligible for the special SBA assistance we have described. For in any objective evaluation of SBA participants or clients, those who are most easily declared ineligible for assistance are likely to be those who are most likely to succeed with reasonable SBA aid. In summary then, we suggest a special SBA assistance program for businesses adjacent to or in areas affected by public action; we suggest that section 804 be made more explicit in calling out the extent of mandatory compliance by local agencies acting as alter ego for the Federal Government and that provisions for the ample funding of the several programs and policies set forth be clearly identified and ear- marked. Thank you very much. Senator MusKIE. Thank you, Mr. Burrell, for your excellent testi- mony. It is just the kind of thing we want. May I say, first of all, that it is the intent of this legislation by making it 100 percent federally funded to insure that its provisions are made available across the country. Several suggestions have been received in the course of the testimony to insure that there is adequate `followup to protect those who have been designed to be benefited by the legislation, and this followup function is an important one. We will look at the legislation to insure that we have done all that we can to protect it. With respect to adequate fundings, unfortunately, we are not the Appropriations Committee. We can write what we~ think ought to be the goals, and we certainly will, but there is no way that we can write in here anything that will tie the hands of the Appropriations Committee, and I would not want to abuse you on that score. Mr. BURRELL. Well, I would say, Senator Muskie, the best thing in the testimony this morning, I think, first, the testimony is tough to follow. I think they were excellent witnesses. Senator MusKIE. Well, might I say that although you disclaimed any expertise in this field, your testimony waters down your disclaim Mr. BTJRRELL. Well, listening to them, and then to hear the respons of the gentlemen present, I am just amazed by the concern of yor gentlemen as it relates to the kind of legislation that we eventuall~ get. Either you are the finest public servants we have, or it is tougi to assemble them all in one room, to march with the same banner t accomplish these great public services. PAGENO="0387" 381 Senator MUsKIE. Well, let me say this: this legislation before us is the product of about 3 or 4 years of work, and it has not really been gone into as thoroughly as it should have been, and as we are trying to do now. I think that the concern we are reflecting here would be shared by substantially the majority of the Congress once they get the same exposure to the facts and to the injustices. So, I do not think you ought to attribute to us any higher level of concern than I think is held by the majority of the Members of Congress. Mr. BTJRRELL. I will just reserve my other criticism until I see the final action. The other thing, Senator, was this morning there was some discus- sion about what to do with displacees in an urban renewal area, for example. I think we have got a long ways to go in new technology in housing. I would hope that the concerned agencies would look toward being more innovative in this area. For example: where there are large areas of cleared land, we have not even begun to experiment with pre-fab homes, especially in the mobile home area where you take-if you look at one mobile home it does not mean anything, but if you put them together then you really begin to do something. If you stack them, then you are really beginning to come up with some configurations in which people could actually live cheaply, quickly, and you could-well, you could go as far as you would like with that. In addition to the fact that mobile homes could be stacked and stairs could be run up the outside, or could be run through the center, and they can be put together, that they can be erected fairly quickly, is the fact that they could be erected and constructed within the indigenous neighborhood in which it is going to occur. A mobile home factory is simply a large overgrown cabinet shop. You could employ numbers of people just putting these things together and moving them to the site, and quickly, and moving other people in. I rode to Mississippi about a month ago and I got the feeling that we had not even begun to approach the problem of how do we move those shanties, even as dramatically as using helicopters to move one of them out of the way and drop it in the trash pile, and then drop another one right in its place. Like that, it could be done. It could be done cheaply, but who in this country is prepared, and what agency is prepared, to approach those kinds of technology and to begin to think innovatively like this. But it can be done, and I sub- mit that it must be where we are headed if we are really going to solve bhe problems of progress as it relates to human needs and the renewal Df people. Senator MUSKIE. You have just made a speech that I have been naking to the members of the Housing Subcommittee, but you have nade it better than I have. I agree with you that we have not addressed )urselves to applying technology to the problems of low-income hous- ng. I could not agree more, Senator BAKER. Mr. Chairman, if I could, I ~would like to get my ~wn pet oar in the water in that respect.~ I agree with what you say, )ut I also think that we have been terribly slow in making technologi- al advances and advancement of new techniques for the reclaiming PAGENO="0388" 382 and rehabilitation of existing structures. I think that so often whole neighborhoods could profit immeasureably if satisfactory and eco- nomic ways were found to make those neighborhoods hospitable. In some cases it may be necessary to destroy them and rebuild them. It would obviously eliminate in some cases dislocation. It would obviously eliminate much of the eminent domain inequity that we have spoken of. Obviously, you start with a structure in many cases, at least, that could be rehabilitated. So, I think we are falling behind in the technology of rehabilitation as well as the technology of construction, and I think this is a subject that should have extensive thought and activity before we launch ourselves on this matter of meeting the need for massive new decent housing for so many people in this country. Mr. WILLIAMS. Senator, I am down from New York, and I am Mr. Williams of Schenley Industry, and my chairman has been very interested in this whole project. I would ask that you look into the possibility of what could be done about immediate occupancy of people who are being removed from housing, for additional housing. And through some contacts I ran into a corporation called Howard P. Holfman Associates, their organization and their consultants in management of corporate land plant and equipment. They advocate rehabilitation of existing structures the same as you, Senator Baker. They have been in this field for 4 years and they say, in essence, and I will give it to you ~very quickly, that rehabilita- tion of existing structures which are souhd on the outside and, of course, often dilapidated on the inside, is a time-saving event. The time that they save ranges between ~0 to 60 percent of the new construction. No demolition is required, no excavation of founda- tion or `structural work to be done. The cost, which is important, Sen- ator, is that it reduces the cost in a range of 20 to 40 percent of new construction and results in more house for the same dollar amount. it reduces people's relocation problem because they can start on a block and between the time the people move out and the time it is completed, it cart be done in 4 months, whi~h means that they can use the temporary structures Mr. Burrell was talking about and move these people back in new structures within 4 months, The original feeling, Mr. Chairman, of the people of the neighbor- hoods, `of conrse, the people ~`ho have lived there for many years, can also be moved back into their existing communities. Now, according to what I understand, this program can provide ~pportxinitie~ to upgrade the economic `and s~cial health `and welfare of the urban areas. Profits can be made from being `owners or in- vestors, and I am not talking about the indigenous citizen who feels that he has no stake in America becoming a part owner of this operation. I will get to that in just one second, how that can be done. Creative, new, and broadening market `of oppor'tunities for build- ing and `household products can also provide a testing laboratory for construction companies and products for material that could be used on site. Now, they have done a couple of programs, and I have complete photographs of the time it began until they `stopped, `and I am like a fathe~r, I just have these piotllres in my wallet, and `I just `happened to have this. PAGENO="0389" 383 I am down from New York and I was not aware that we were going to testify today but I did have this before me and I am vice chairman of the NBL, and I did have this and he asked me to come along, and I do have these pictures of the structures from the original to the time they have been completed, so you can see what can be done. Now, my board chairman feels that this, and of course according to Mr. Weaver, New Yor1~ alone, he says, is going to need 8 million dwelling units. In New York Oity alone, he says, 58,000 buildings are in need of rehabilitation at a cost of over $5 to $7 million in the next decade. To project these flgtires for the whole nation, Mr. Weaver says, raises the prospect of dealing with numbers so astronomical that only a computer could comprehensively handle them, and again we get back to the pix~blem of, where do we get the money to do `this sort of operation, because the cost is important. Well, here Mr. Rosenstiel feels at the present time, and I will read a brief excerpt from his notes: At the present moment, slums are a cancerous condition in American life in the midst of an atTh~ent ~o'eiety. Certainly, the slums wHit be abolished. The qpastiou is whether t1~ people w~iie now subsist in them will 1*ve an oppor- tunity to enjoy life in our affluent society before theY die, The speed with which we are approaching this problem today is that of `a snail's pace'. There has been a very prevalent difficulty in obtaining the necessary funds for slum clearance. At the present time, this difficulty has been aggravated tO `an even greater degree. On the one hand, we have the continued drain on the American financial scene, although we cannot relate financing to the loss of life or limb or the hearthreaks of families. Moneys going to Vietnam add to the burden of ob- taining nioneys for slum clearance, with speed `and dispatch. The moneys used in the race in `space add tremendously to the expenditures for defense in a world in flux during the era of change in the balance of power among nations and upheaval. All `of this is costly and hardens the arteries of what should be the human heart. Too many people become too callous too fast. The law's of human nature, the hypocrisy of the law itself, in many, many instances, and of the lawmaker, too, in many, accentuates the abnormal creation of so-called criminal elements. Mon~ys reaching into this area of endeavor, human nature `being what it is, escapes taxation' in many Instances. And tire puhlieity attendant thereto paints us `as `a lawless country the World over. The disproportionate amount of money that undoubtedly have e~eaped taxation not onlty here hut in many places `in the world, is evidenced by the fact that there are so many tax havens. By the time the Federal Government catches up with its evasion, `and `sometimes this Is impossible to do because the evasion is so hidden, the untax-paid moneys have g~own by leaps and bounds in faraway places. Again, t'his is Mr. Rosenstiel, quoting: It is my opinion that the so-called bad `money, a's well as what we refer to as good money, can be tapped for slum clearance. What is wrong with form- ing a slum clearance district, and taxing the same way you do a school district, the `road district, tire levee district, et cetera. Or you could do it `on `a slightly modified basis and `something like the Mackinaw Bridge Authority. Let's take `a city called X. Let's say, they estimate they can `do a slum clearance job for $200 mhitli'on, Let us say, through legal processes this dis'trict is formed `an'd `can issue tax'free bonds. And suppose it wanted to issue $200 million in tax-free bearer bond's. The land would be appraised, the cost `of the buildings in reconstruction, and all of the things necessary to make the district part o'f the American community with decent living conditions, and with speed. All of this would probably be worth many mere hundreds of millions more than the bonds could call for. These would be bearer bonds, presumably paying a high interest rate of 5 percent (or PAGENO="0390" 384 even 41/2 percent), tax-free, and they would attract moneys from other sources, perhaps even without trying. When this tax-free interest rate was related to the gross rate that would have to be obtained from the average person to equal the tax rate, you would find a ready market and certainly in bearer certificates the moneys "filched", for want of a better word, out of the country would return if no questions were asked. I do not believe there would be much trouble raising huge sums of money for slum clearance in this way. Also, there would be many public-spirited citizens, of all races, creeds, and colors, who would not only be delighted to put their shoulders to the wheel to see that the finest end result was obtained from this money, without any shenanigans and with speed and dispatch. That is his statement. Senator MUSKIE. Thank you very much. Mr. Cook, did you have a statement you wanted to make? Mr. Coow. No, sir. Senator Musxin. Senator Hansen, do you have any questions you wanted to put? Senator HANseN. No, I do not think I do. However, Mr. Chairman, 1 might make an observation. I, too, have been disturbed, through not exposed as much as many have been to the problem. 1 am concerned thOut what happens to people within these areas that have been taken by the Government for one purpose or another. Highway programs have beeü mentioned, and. I think urban renewal programs have been mentioned. I think it is difficult, arbitrarily, to assess the full impact of the costs that devolve upon the shoulders of the persons who are in an area that is taken by the Government When you put a road, a super high- way, an interstate highway, section of an interstate highway system, so as to effectively block in people from one part of a town and thereby deny their patronizing little stores that may continue existing in another part, you may have done irreparable harm to that person's business. Yet it may be far enough removed from the project that he would not be entitled to any consideration at all. Yet he has very definitely been hurt. And I am concerned also about the fact, or I think it is a fact, that sometimes we tear down homes and what happens to those people who are caught in the bind, those who have been moved out of an area; they may have only been tenants, but where did they go? I think there is a lot to be said for the presentation that you have just made. It makes awfully good sense to me, that if we could incorporate within your framework a continuing concern of the Government permitting us to extend to those persons some of the assistance that the Government has given others in our society from time to time, thereby enabling them to become homeowners, that we will have gone a long way in assuring that these newly renovated areas would be kept up. I do not think there is any better way to encourage people to care for property than to give them some ownership in it, and ~ny pro- grams-and I happen to be a sponsor along with others of a bill that would tend to do this-would be one of the best things we could do. I would invite your comment on that point. Mr. WILLIAMS. Sir, nobody breaks a window in his own house, you know, because it is not profitable for him to do so. This is why, in American life, we must bring the indigenous communities into a position where they can obtain this, and we are spending a tremendous PAGENO="0391" 385 amount of money in the area, but I do not believe we are getting our money's worth. For example, I am chairman of the Board of the Office of Economic Opportunity in Nassau County. We have a drastic program out there for the lack of housing, so much so that theDepartment of-they call it the Social Welfare now, but the Department of Welfare has to house people where they cannot find housing for them in motels. They pay them $10 a day for a room in a motel with a family with four or five kids living in one motel room. Now, it seems appalling that we have to spend this money because we do not have anything available, yet this is one of the most affluent communities in the Nation today. So, I think something must be done to address ourselves to the fact that we are spending money, but are we getting our money's worth. This is the question that I am concerned with. I do not mind spending it if something comes out of it. Senator HANSEN. Thank you, Mr. Chairman. Senator MU5KIE. Well, gentlemen, I think as in all such cases, we must finally come to an end here in our sessions. We must get over to the floor. But I appreciate your testimony. It has been a most worthwhile morning and I am glad we were able to get permission from the Senate to continue with our hearings. Mr. BURRELL. Thank you very much. Senator MU5KIE. Thank you. (Whereupon, at 1:05 p.m., the committee adjourned.) PAGENO="0392" PAGENO="0393" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION TUESDAY, MAY 28, 1968 U.S. SENATE, SuBcoMMrrmE ON INTEROOVERNMENTAL RElATIONS or ~ CoMMrTa~E ON GOVERNMENT OPERATIONS, Wa8/thigton, D.C. The subcommittee met, pursuant to recess, at 10:20 a.m., in room 457 Old `Senate Office Building, Senator Edmund S. Muskie (Chair- man), presiding. Present: Senators Muskie and Hansen. Staff members present: `Charles M. Smith, staff director, Robert E. Berry, minority counsel; E. Winslow Turner, general counsel; Lucinda T. Dennis, administrative secretary. Senator MusKm. The committee will be in order. I apologize for being late. We seem to have just too many meetings on different subjects around this town. Our first witness is an old friend of this committee, a Senator of distinction, with whom it has been my pleasure to serve since we first made the mistake of coming here in 1958. It is a pleasure, Senator Moss, to welcome you. TESTIMONY OP HON. PRANK E, MOSS, A U.S. S~NATOR PROM THE STATE OP UTAH Senator Moss. Thank you, Mr. Chairman. I appreciate the oppor- tunity of appearing here this morning. I have a prepared statement which is fairly brief. I think perhaps brevity can be improved if I stay right with the text, although, of course, I shall be most happy to respond to any questions or colloquy that you and Senator Hansen would like to propound. Mr. Chairman, for a number of years, I have been a cosponsor of the Intergovernmental Cooperation Act, this year numbered S. 698. This version is a comprehensive bill which has been painstakingly drawn `to make our huge programs of assistance to State and local governments as effective and economical as possible. A number of the provisions of this bill were contained in the act passed by the Senate in August 1965. `Unfortunately, the House did not act on that measure, and so these provisions have had to be reintroduced. A significant provision of the 1965 bill provided for congressional review of future grant programs to insure that they are reexamined Bysternatically, and reconsidered in the light of changing conditions. (387) PAGENO="0394" 388 Since 1965, the need for this section has become much more acute. In your remarks introducing the act in 1967, you pointed out how much Federal programs had grown in just one Small area-Federal grant programs for community water suppiy, sewers, and sewage treatment facilities. Five agencies of the Federal Government are presently involved in administering such grants. Even though the agencies have worked out arrangements designed to minimize ad- ministrative confusion, it is still difficult for State and local govern- mental officials to sort out these programs, and to know w4iich ones might be of the greatest help in solving their prc~bii~nis. There are now more than 200 major Federal grant-in-aid programs to assist State aaid local governments. I understand there are something over 400 different authorizntions. Many of these are extremely valuable-- even necessary-but there can be no doubt that they should be reviewed periodically and systematically, and that we must attempt sub- stantially to reduce the number. While it is true th~t State and local governmental agencies, which maintain the day-to-day contact with the general public, lean now come before congressional committees to let us know their views, there is no formal or systematic procedure for bringing such matters to the attention either of Congress or of the executive branch. Therefore, all too often, no new program will be initiated to meet a specific need without sufficient consideration being given to the greater efficiency which might come through the ex- pansion or alteration of existing programs. As our population increases, it is virtually certain that the size of Federal grant-in-aid programs will also expand. Therefore, the need for a systematic program of review becomes grdater by the year. This bill contains an effective mechanism for bringing about the needed re- view of programs. This is the automatic expiration of grant-in-aid progi~ams after 5 years. In cases where no termination date ~5 specified by law, and a grant-in-aid program is not specifically exempted from the provisions of this act, then the authority to make such grants-in- aid will expire not later than June 30 of the fifth calendar year which begins after the effective date of such act. It also provides that the committees of the Senate and the House to which legislation extending such authority would be referred, shall, separately or jointly, carry out studies of the program with a view to ascertaining whether or not its continuation would serve the public interest, including a determination of whether or not a substitute might be an improvement. A significant new authority is provided in title VI. This authorizes the President to submit to the Congress plans for the consolidation of individual categorical grants. Congress could accept or disapprove the plan in a manner similar to that provided in the Reorganization Act of 1949, which was passed in accordance with the recommenda- tions of the Hoover Oommission. This means that a consolidation plan will go into effect 90 days after submission by the President unless, during that time, either the Senate or the House passes a resolution in opposition to the plan. There are many other provisions in this comprehensive measure Altogether, it will enable the Federal Government, the States, and the local governmental bodies to achieve the fullest cooperation and coordination of those activities in which they are jointly engaged PAGENO="0395" 389 and for which the Federal Government is providing a substantial por-~ tion of the financang. I urge prompt Committee approval of this measure and surely hope that Congress will enact the measure this year. Senator MIYsKIE. Thank you very much, Senator Moss. I appreciate this statement. There are many, many aspects of this bill which you and I could get into, but which I think time prevents. You did not mention the relocation provisions of this bill. Senator Moss. No~ I have not covered that in my testimony. I just really made a brief and cursory statement on the general objectives of this bill. I wanted to stress the great proliferation that there had been in these programs. Now, I suppose every State now has to have a department for just trying to keep track of all the Federal programs and keep them sorted out, because the State officials and particularly the municipalities,. and when you get down into the smaller-sized ones, are utterly be- wildered. They have no way of knowing where to turn, there are so many different programs. They all need to be coordinated. Senator MUSKIE. On this broad area of grants consolidation, of reduction of administrative red tape, block grants and tax sharing-I think it finds all of us arguing against eadh other and inconsistent with our own points of view from time to time. So it is no wonder that local officials and State officials are at least as confused as some Of the rest of us. For example, this legislation contains a provision to which you have referred, giving the President authority to consolidate individual categorical grants. Now, I know that this is going to be opposed by some in the Oongress who see this as an unwise delegation of Congres- sional authority to the Exeentive. Yet some who find themselves in the ranks of the opposition are also strong supporters of tax-sharing, which would delegate Congressional authority over program ob- jectives not to the President but to State Government's. So we have this problem of somehow evolving a more flexible and sensible chan- neling of Federal resources to the States without getting tangled up in our own philosophical problems. Are you troubled by the faatr-I gather you are not, so I put the question anticipating a negative answer-that consolidated grants would delegate authority to the President over these programs? In a sense this~ is legislative authority. Senator Moss. No, I am not, philolsophicafly or otherwise troubled by that. It seems to me that the President being the ExeciTtive arm of the Government does have greater ability to move forward and take a positive action, whereas the Congress, being the legislative body, is not an action body so much as one to consider and either approve or disapprove. So I think the provision that is here in the bill of permitting the President to order the consOlidation and giving the Oon~ress a period of time within which to disapprove if we think it is unwise is a reasonable provision aaad this has worked well on the Reorganization Act that the President has used, well, ever since 1949, has used quite well. I do not worry about that delegation, no. PAGENO="0396" 390 Senator MU5KIE. Senator Mundt has. suggested that perhaps objec- tions to this provision in the bill might be softened if it were modified in the reorganization powers to permit amendment by the Congress of the President's consolidation plans. Before I offer or suggest involvement in that action, what is your reaction ~ Senator Moss. Well, my reaction is somewhat negative to that. It seems to me if the Congress finds such a flaw in the proposal thut the President sends up, then it had better turn it down and send it back saying this is not approved. I am sure that out of that, with conferences with the leadership of the Congress and the leadership involved, the `executive branch might well make an amendment and send it back again for second consideration. But I am afraid if we get into the situation of the President sending it up and t'h~n on the floor, we begin to offer a lot of amendments rather than simplify and streamline what we are talking about, we may come out with something as complex when it is finished as when it was sent up in the first place. After all, the idea here is to try to consolidate and simplify and streamlit~e as much as ~ste can. That is presumably what the President's proposals would do. The Congress still has to appropriate the money, we `still have to look at the overall program, and I would not favor giving the amendatory power to the Congress on the President's proposals. Sen~tor Mrsi~IE. I would like to make two observations of my `own, simply to make them a part of the reeord where they will be readily available for discussion by the committee and the subcommittee in the markup session. I think the point you make is very valid. Second, 1 think if we allow this amendatory process, the 90-day period for action by the `Congress would have to be eliminated. The process being what it is, I do not think by consolidating the power to legislative recommendation, you can expect realistically to get it completed within the 60 or 90 days that might be permitted for congressional action. Also, one of the purposes in trying to do this in the way a reorganiza- tion plan is handled is to minimize the political difficulties involved in eliminating the identity of programs which have a `built-in con- stituency in the Congress and elsewhere. For example, in the water `and sewer field, we have the so-called Aiken program for water and sewer projects. This is in the Department of Agriculture for communities of under 5,500. The Department `of Interior has the `big waste treatment grant program, which benefits all communities, including communities of the size I have just referred to. We have in the Department of `Commerce the supplemental grants for these programs under the Economic Development Administration. HTJD has the associated `programs to construct `sewerS. There is one other I have left out, but in any case, in all o'f these programs, there are built-in constituencies within the agencies, within the `classes of beneficiaries, within the Congress. If you were to `chal- lenge all of these to exercise their initiative in diluting any recom- mendation for consolidation that the President would propose to the `Congress, I think you would virtually destroy the prospects for consolidation. PAGENO="0397" 391 I make these observations simply as my present reaction to the suggestion which I think was offered by Senator Mundt in wholly constructive content. But I think we have to come to grips with this basic proposal of consolidation as a meaningful and perhaps tough means of consolidating programs and moving toward the objective of block grants, which is the objective subscribed to by so many members of the Congress who seek to approach it from different philosophical points of view. I do not know whether we can resolve those points of view, but 1 think what we are hoping for is block grants. I look on the consolidation proposal as one means of approach~ ing that. I have `used your statement as a means for making my own speech, but that is not unusual in the Senate. Senator MtJNDT. You have `done very well. Thank you very much. Senator MU5KIE. Our next witness is Congressman Chester L. Mize of Kansas. I apologize to you for interrupting your schedule. STATEMENT OP HON. CHESTER L. MIZE, REPRESENTATIVE PROM THE SECOND CONGRESSIONAL DISTRICT OP KANSAS Mr. MIzE. Thank you very much, Senator Muskie, Senator Hansen, for giving me the opportunity to ask a question this morning. In the first place, I enthusiastically support this legislation which, as I understand it, basically is to provide uniform, fair, and equitable treatment of persons, businesses, or farmowners displ'aced by Federal or federally assisted programs. What I want `to ask is what can be done to e~tabli's'h a standard policy to reimburse lessees on railroad rights of way that are co displaced. Let me give you an example of the problem that we have out in my State of Kansas. For example, the Defense Department acquired many thousands Of acres 4 o'r 5 years ago in connection with the expansion of Fort Riley, Kans. Included in the land that was taken, was a Union Pacific Rail- road right-of-way. On this railroad right-of-way was a grain company. which leased land from the railroad. The railroad is paid for its property but this grain company was not. We do not seem t~ have a policy to reimburse these lessees for their improvements. Now my predecessor, Bill Avery, who incidentially is running for the U.S. Senate this year, intro'duce'd a bill for compensation to this particular grain company. It was referred to the Committee on Public Works. It g~t bogged down there. I introduced the same bill when I came. In a later year it was tacked on to the omnibus rivers and harbors bill. It passe'd the House but failed in the Senate. Senator MeNamara was responsible for striking this particular section of the bill. Senator McNam'ara was very kind and wrote me and suggested I introduce a private bill, which I did, but this bill bogged down. I have the same problem now with a railroad that is being taken in connection with the Big Perry Dam out in my congressional district. I have `the city of Valley Falls which has some improvements on `this right of way not being compensated. I have another grain company on this railroad, not being compensated. Now, if my question is not appropriate to this legislation, please say so, and I will comtinue my search for an answer to `this problem. PAGENO="0398" 392 It is a knotty one and I have some awfully unhappy people, with whom I'm sympathetic. Senator MusKIE. Well, let me say this, Congressman. When this bill was introduced first, about 3 years ago, its principal objective was to nndertake to make uniform policy in this field, covering all Federal programs including direct Federal programs and Federal aid pro- grams. Because of the difficulty of legislating in this field, we limited our objective pretty much to that. Now time has caught up with us and there is increasing pressure not only to do `that but `to develop more realistic policies for reimbursement of people's displaced land than `we have had in any of the Government agencies. Last week, we had, I think, some very persuasive and indeed moving testimony from people associated with Resurrection City `and the poverty march, `as well as representatives of the Negro community. Their testimony highlighted th~ very great inequities that are imposed upon people who are displaced, who tend to be lower income groups. So I think probably the subcommittee's attention is going to be focused more and more upon `the inadequacy of some of our present policies, even in the agencies which have the best programs. Now, I cannot predict what the subcommittees might do to respond to that challenge. I can only say to you that I think there is some prospect that we can focus on, so it would `be most appropriate for you to submit your proposal to us in this larger context. Page 54 of the bill-I do not know if you have looked at it-comes closest to doing anything for tenants or lessees. Begin on line 8: For the purpose `of determining `the extent of the acquisition of real property and the valuation thereof, no building, structure, or other improvement shall be deemed to be other than a part of the real property solely because of the right or obligation of a tenant, a's against the owner of any other interest in the real property, to remove such building, `structure, or improvement at the expiration of his term, and the head of the rederal agency shall pay to the tenant the fair value of the building, structure, or improvement, which fair value shall be determined `by such agency head as the greatest of (1) the contributive value of the improvement to the ~present use of the entirety, (2) the current cost of reproduction less depreciation of the improvement, or (3) the value of the im- provement fo'r removal from the property. I gather `this means that the tenant can get reimbursement only if he has an interest `as against the owner o'f the property. This, I would think, would not go far enough from your point of view or from the point of view o'f the other witnesses last week. All I can say `to you this morning is `that `we are alerted to this larger policy question and I hope we can give it some attention, but I cannot predict wha't we will do. Mr. Mizn. `I appreciate your saying that, `Senator. It is a problem, and I hope that possibly, we can establish `a s'tandard policy to' re- imburse these lessees on the railroad right-of-way's, where `the railroad is p'aid but they are not. Senator MusKIE Do you have an amendment to offer~ Mr. MIzE. A's I say, I am here more to `ask for advice and `counsel. If you would suggest that I see to it that an amendment is prepared and offered, I will go that route. Senator MusKIE. Why not do it and we will at least consider it and deal with it frankly and honestly with you `on it. PAGENO="0399" 393 Senator Hansen~ would you like to inquire? Senator HANSEN. I have no questions. Mr. MIZE. Thank you very much. Senator MUSKIE. The next witness is Secretary Robert C. Weaver, Department of Housing and Urban Development. We are pleased to welcome you, Mr. Secretary. May I apologize to you also for being late. TESTIMONY `O'~' ROBERT C. WEAVER, SECRETARY, DEPART1~ENT OF HOUS~ING AND URBAN DEVELOPMENT; ACCOMPANIED BY IL RALPH Th~YLOR, ASSISTANT SECRETARY FOR DEMONSTRA- TIONS AND INTERGOVERNMENTAL RELATIONS, ASHLEY A. FOARD, DEPUTY GENERAL COUNS~L, AND J~O'HN FRANTZ, BUDGET OITICER Secretary WEAVER. I am pleased to appear before you today to present the Department's views on the proposed Intergovernmental Cooperation Act `of 196~T-S. 698-and several related measures. We welcome `the continuing exploration of the problems of federalism and the role of `the Government in dealing with the problems of an urban society. It is appropriate that `the legislative proposals contained in this omnibus bill focus not on Washington alone, `but also on the State, regional, and local levels of government. A complex and decentralized system `of government, an exploding urbanization process, rising expectations, and `advances in technology mean that there can he ~io ultimate or unciianging solutions `to how government o~n'ducts its business. We endorse the genei~al objective's proposed in this act- more uniform administration of Federal grants to `State governments; extending reimbursable technical assistance services to both State `and local governments; supporting rather than bypassing the local general-purpose government's of the country, wh'ere ultimately `all pt~blic and pri- vate services must be coordinated and delivered; continuing congressional review of Federal grant-in-aid pro- grams to assure their relevance and adequacy in meeting national need's; simplifying and consolidating grant-in-aid programs where greater effectiveness can be achieved thereby; more uniform and expeditious Federal practices with respect to the acquisition, use, and disposition of urban land, including con- sistency, to the extent possible, with local pl'anning goals, `and more equitable and uniform Federal relocation policy ,to mini- mize the possibility `of hard'sthiip among the people and businesses displaced by Federal and federally-aided programs. It should `be emphasized that none of these `objectives designed to' 3upport strong and capable governments are meaningful unless they mve the effect ~f bringing public re~ources to `bear rn making our urban )laces worthy `of the people who live in them. Neat and orderly idministration is a mockery unless it assists the people of urban PAGENO="0400" 394 America in providing decent housing, averting the spread of slums and blight, focusing resources on needs that are most pressing, and provid- mg opportunity for people to choose among types of environment that fit their needs and desires. It is indicative of the great strength of our democratic system that most of our public debate centers not on the objectives of his bill but rather on the most effective means of achieving t'h~m. In this context I would like to comment on the titles of the propQsed legislation and briefly identify some actions currently underway by our Department in cooperation with other Federal agencies and State and local govern- ments that complement or that are consistent with the bill's basic objectives. Senator MUSKIE. Secretary Weaver, I cannot resist making a com- ment on two hearings I recently chaired, one yesterday and this one today. Yesterday, we were concerned with considering the potential of the steam engine as motor power for the automobile. We had two exhibits, two steam automobiles constructed in terms of the available technology today. We could not find room in that hearing. Everybody wanted to come to look at these gadgets and hear what the potentials were. We had the television cameras, the newspapers~ and cameras. I suspect that as a result of that hearing yesterday, I got publicity from coast to coast, on the networks and in newspapers whose names I have never even heard. Well, today we have a dry technical bill which is concerned with the problem of making government work. The reason I am stimulated to make this comment is the first complete statement on this' page, that it has to do with making this system work for people of this country. It is technical, it is dry, but it has more meaning on which the people affected are responding and upon which they have focused attention than almost any bill that comes before a congressional committee, There are exceptions, the housing bill, which is before the Senate, is equally meaningful. But here, we cannot get attention upon legislation that can really, in somewhat fundamental ways, redirect the process of government so it can achieve the goals you so eloquently stated at the beginning of this paper. I could not resist that comment. Secretary WEAVER. If I may make a postscript, I think one of the probIem~ that faces us is we are a gadget oriented society. When we come up with a gadget, no matter how superficial it may be, we get a response. When we come up with tough analytical problems that have great meaning and importance, we are faced with the situation you mention today. Senator MUSKIE.. Now that we have commiserated with each other, you may proceed. Secretary WEAVER. We favor title II which has the objective of mak- ing full information available to `the Governor and of furthering the uniform administration of Federal grant fun'd,s to the States. In this connection, the Department last year initiated a service to each of the Governors under which we prorvide his designated representative with quarterly reports on HUD supported projects within the State. JIUD has several programs which are administered through the States Two of these are relati\rely new, the urban information and technical assistance program authorized mid~r title IX of the Demon- PAGENO="0401" 395 stration Cities and Metropolitan Development Act of 1966 and the community development training program authorized under title VIII of the Housing Act of 1964. In both of these, maximum cliscre- tion has been given to the Governor for designation of appropriate State agencies to carry out the programs. In addition, several elements of the section 701 planning assistance program involve grants to the States. There too, particularly in connection with the program of as- sistance to State planning, we have taken adva~itage of the adminis- trative leeway permitted under the law in order to assure the involve- ment and support of the governors. We also favor the provisions of title III which authorize Federal agencies to provide specialized and technical services to State and local governments on a reimbursable basis. It is premature to identify the specific HTJD services that will be called for by the States and locali- ties. They might, for example, utilize aid in connection with certain of our specialized market housing analysis activities or ask us to provide specialized training services as the Department's training capacity becomes further developed. The Department is in full accord with the objectives of title IV to achieve a more coordinated intergovernmental policy in the adminis- tration of Federal urban development programs. The Department's model cities program has a special pertinence to the objectives of title IV since the very essence of the program is an attempt to bring about the most effective and economical coordination of Federal, State, and local governmental efforts and private efforts to improve model neighborhoods. The program is an experiment in bringing together old programs and new so that they may be focused on the physical and social needs of the area. It involves a multiple funding approach which uses separate established programs; but it also provides supplementary funds to bridge the gaps between exist- ing programs and to permit new and experimental approaches. In the model cities program, the mayor and his model city agency staff are charged with developing comprehensive, coordinated neigh- borhood programs and with obtaining widespread participation of neighborhood residents in program planning and execution. For this purpose, Federal programs cannot bypass the city government, and there must be assurance that independent local agencies will not work separately, or at cross purposes with each other. For the model city program to succeed, local activities, though funded from separate sources, must be responsive to an overall strategy for solving the neighborhood's basic prthlems. In meeting the challenge presented by the need for coniprehensive and coordinated model city activities, local officials have raised hard questions as to the ability and willingness of the Federal Govern- ment to respond in a correspondingly coordinated manner. Doubt has been expressed as to the commitment of the Federal Govern- ment to change its old and established ways of doing business. They ask whether the Federal Government will pr~vlde adequate funds in a timely manner; will provide adequate technical assistance; and whether Federal procedural requirements will be streamlined both in planning ~nd execution stages. We recognize the problems and share the concerns expressed by local officials. They are very real. We are now actively engaged 95-626-68------2~ PAGENO="0402" 396 with other Federal departments and agencies in making the changes which are necessary to provide a coordinated Federal response. I would also like to take this opportunity to describe briefly several efforts that the Department currently has underway in sup- port of more coordinated policy and administration of grants for urban development. The Council of State Governments is currently working on a major HTJD research project aimed at strengthening the role of State governments in the administration of federally assisted grant- in-aid programs. The purpose of the project is to provide better links between comprehensive planning and the functional State plans re- quired by many Federal grant programs. Over 80 Federal grant programs currently require the States to prepare a plan as a condi- tion of receipt of aid. The study should lead to more consistent Fed- eral planning requirements and strengthen the role of the Governor in the administration of State programs. The Department has recently established an interagency commit- tee to examine federally supported State technical assistance programs for helping localities in all aspects of community development. This committee is composed of representatives from OEO, EDA, HEW, Agriculture, Transportation, and Labor. It is assessing the impact of federally supported t&~hnical assistance programs on State adminis- trative structure and ways of coordinating `the funding, coverage, and administration of these Federal aids. The study will identify sp&dfic instances in which improved coordination might enhance the effective- ness of federally supported State-local technical services, propose improvements in interagency review of proposed activities, and help reduce duplication of grant coverage and approval. Another recent effort by the Department to improve HTJD rel~a- tions with States and localities was the further decentralization of Departmental operations and a reduction in time for processing grant applications. This was done in line with the recommendations of the Joint Administrative Task Force established by the Presi- dent and chaired by our Assistant Secretary for Administration, Dwight Ink. In addition, in order to better assist States and localities, we hope to establish a staff in each HTJD regiOnal office to coordinate and unify HTJD program relationships at the State and local level. They will assist the Regional Administrator in serving as liaison among States and localities on matters involving more than one program or requiring Departmental level participation and coordination. This should contribtue to a more coordinated policy and a better mix of programs for improved urban development. We recognize the desirability of assuring that there be periodic congressional review of new Federal grant programs, as provided for in title V. It is important after a reasonable time to examine grant-in-aid legislation in order to be satisfied that the authority and funding provided is appropriate and adequate to current needs. We endorse, however, the views of the Bureau of the Budget concern- ing the disadvantages of a fixed 5-year termination date for grant programs as compared with more flexible provision for review. PAGENO="0403" 397 Title VI of the bill would authorize the President to follow a proce- dure based on the Reorganization Act of 1949 in proposing the con- solidation of grant-in-aid programs. There is undoubtedly a continual need to focus the attention ofthe Congress and theexecutive branch on opportunities for con~bining related grant programs, especially those that are too narrowly defined. The finest example we have in recent years of consolidating grants to form a more flexible and effective grant program is the Partnership for Health Act. This act consolidated upwards of some 15 small and specific categorical health programs into a single authorization, ap- propriation and set of requirements. Under it, each State now has maxi- mum discretion in providing health services in the light of its own special needs. It may be instructive, however, that this major reform was accomplished through the conventional legislative route. This route was also followed with the somewhat more limited, but potentially significant consolidation in last year's economic opportunity amend- ments of a number of federally assisted work and training programs. We are not certain that title VI as drafted adequately deals with the problem. The language authorizes modifications of grant-in-aid formulas but does not deal with related matters of consolidated grant administration, such as eligibility to receive funds, planning require- ments or program coverage. We therefore defer to the Bureau of the Budget on the approach taken in this title. I am glad to report that earlier this month the Department of Hous- ing and Urban Development took action to consolidate the administra- tion of three of its programs designed to bring about a positive commitment by the States to the urban development problems of com- munities, and to strengthen the management capability of State and local governments. This reorganization brings the urban information and State technical assistance program and the community develop- ment training program under one roof with the long established section 701 planning assistance program. These three closely linked programs Df technical assistance, training and planning are now consolidated idmini~tratively under our Assistant Secretary for Metropolitan Devetopment. We are already working on a number of steps that will permit us to translate this Federal administrative action into improved Lnd simplified procedures. One of these, as Governor Connally mdi- mted in his testimony for the National Governors Conference and the ~ouncil of State Governments, is a single application covering State dds under the three programs. The provisions of title VII are designed to assure that the Federal ~-overnment, in its real property acquisition and disposition proce- iures, takes accountof local land use controls and planning objectives. ~Ve are, of course, in basic agreement with this objective. It is, however, worth noting that from an urban development stand- )thnt, the significance of this title is necessarily dependent upon the ~uality of the local land use controls and planning. And in connection vith disposition activities particularly, the most notable area for inter- ~overmnental cooperation may e~tend well beyond the minimum tandards of this titler-~and involve, not conformity of land disposition o current local regulations and objectives, but the establishment by he lodality of new regulations and objectives that will enable Federal urplus land to be used in new and imagin~ative ways. PAGENO="0404" 398 As you may know, the President last year announced a national demonstration program centered upon creation of complete commu- nities or neighborhoods on Federal surplus land in urban areas. This program has now progressed through its preliminary phases, and responsibility for its continuing development is centered in the Depart- ment of Housing and Urban Development. Several sites in various areas have been identified, with three, in the District of Columbia, Atlanta and San Antonio already announced. Planning efforts are well under way for future development of areas that will not only enlarge housing choices but inc~lude a full range of uses-shopping, eduoation, recreation, and other community facilities and public services for citizens of various income levels. This program of Federal excess land for critical urban needs depends on securing maximum involvement of pris~ate enterprise and also requires cooperation among a number of Federal agencies. A creative and imaginative response on the part of local governments is a third essential-a local response that measures up to the unique opportunity for rapid, high quality and relatively low-cost development which the availability of surplus land may represent in communities where land is scarce in relation to urgent urban needs. While the demonstration program has so far centered upon relatively large sites, the basic approach and concepts involved can also be applied to smaller tracts. These may be particularly useful, for example, for relocation housing or low- and moderate-income housing. But, again~ the local governments must be prepared to seize the oppor- tunity and, if necessary, to adjust their own plans and objectives accordingly. Thus, while I accept in broad principle the provisions of title VII, I would urge that the resulting legislation or the pertinent committee report specifically state that these provisions are in no way supportive of unduly restrictive land use controls. Title VIII, which would establish a uniform relocation assistance policy for Federal and federally assisted programs, embraces a phi- losophy which we have consistently advocated over the years. Although relocation assistance has often been inadequate, we take considerable pride in the role that our housing and urban development programs have played in pioneering the concept of governmental responsibility for families and businesses displaced in the course of carrying out public acquisition programs. Froni its inception some 19 years ago, the urban renewal program required that there be decent housing avail- able for displaced families, arid this was later supplemented with a system of payments to families, individuals, businesses, and nonprofit organizations to cover moving costs and certain other relocation expenses. These requirementS were also made applicable to other pro- grams of the Department. In many ways title VIII is an outgrowth of our experience and recogniz~s the appropriatene~s of extending these benefits to other Federal and federally assisted programs. Although HUD programs are covered by such legislation, many other Federal programs are not covered by adequate relocation requiremerit5~ and thete are substantial differences in the requirements which do exist. It is our belief that legislation such as is contained in title VIII should be enacted as soon as possible, so that those who are required to move from their home or PAGENO="0405" 399 place of business as a result of a federally financed public activity can be assured that they will be compensated adequately for the expenses and losses incurred as a rcsult of the move. It is of equal importance that they not be forced to move from their homes unless there is adequate provision to assure them of appropriate housing elsewhere. Passage of this legislation is needed to eliminate the serious inequities which prevail today. In the area of relocation payments, this legislation is an important milestone in the creative Federal approach to urban problems. There are some items of compensation which are new to HUD programs. For example, one is the proposal for payment of expenses in search- ing for replacement farm property, which the admiiiistration would extend to other properties. Another is the proposal to contribute to- ward the cost of substitute personal property up to an amount meas- ured by the moving expenses that would have been incurred if a busi- ness or farm operation had not disposed of personal property. Just as there are items whi~h are new to us, there are features in title VIII which represent departures for other Federal departments and agen- cies. The complexities of administering a program of relocation pay- ments and services are extensive, and I pledge our full resources and accumulated experience in achieving the uniform and effective ad- ministration that is contemplated. The Deputy Director of the Bureau of the Budget in his recent testimony before the subcommittee provided detailed comments and recommendations concerning the provisions of title VIII. These com- ments and recommendations were developed in close consultation with interested departments and agencies. My remarks, therefore, will merely serve to underscore and supplement the Budget Bureau testimony. One of the greatest concerns of the Department has been the very real hardship often suffered by lower income homeowners who arc displaced as a result of federally assisted acquisition activities. Fre- quently, these homeowners, many of whom are elderly or with limited resources, are unable, with the amount that they were paid for their previous home, to buy another home which is of the same approxi- mate size and similarly located with respect to employment, shopping, and transportation. When the value of the home which is taken is in- adequate to afford a decent, suitable replacement, the practical con- sequence of the displacement has been a loss of homeownership. A payment, in such cases, of not to exceed $5,000 as proposed by the Bureau of the Budget will help fill the gap for many displaced home- owners. We give this proposal our strongest endorsement. The provision in section 802(b) to give a displaced business the option of receiving an amount equal to its average annual net earnings up to $5,000 appears to confuse the concept of a fixed relocation pay- ment-designed to simplify the burdens of administration-with the small business displacement payment presently provided in HTJD programs. These concepts should be separated in the manner sug- gested by the Bureau of the Budget-one payment for actual moving expenses and another for economic readjustment. We fully endorse the objectives of title IX to establish a uniform policy for the land acquisition practices of all Federal and federally assisted programs. The development programs in our Department PAGENO="0406" 400 have been governed by uniform policies for land acquisition since the enactment of title IV of the Housing Act of 1965 in August of that year. We are pleased to endorse their extension to all of the land acqui- sition programs of the Government. Section 905 of the title sets forth the land acquisition policies that State agencies will be required to follow as a condition of Federal financial assistance for the acquisition of real property or the provision of a public improvement. The requirement that an owner of real property be offered a fair and reasonable price before commence- menit of negotiations was adopted in February of this year for the low- rent public housing program, the title I urban renewal program, and other programs of the Department. We believe that an offer of the full fair value for property to be acquired is necessary to protect the un- sophisticated and the poorly informed, who should not be required to contend with unduly hard bargaining by agents for a public body. Indeed, we believe that a policy of offering fair value is necessary to discharge the governmental obligation to see that all owners of real property are treated fairly and impartially before their property is taken for a public use or purpose. While this policy represents a marked departure from past governmental practice, we believe that it represents a necessary reform, and our limited experience to date in- dicates that it is working well. I should point out that we regard this as a fair-price policy, but not a hard and fast one-price policy, since it is possible to have negotiations as to price, centered upon factors that may have been overlooked by the public body in arriving at what it believes to be a fair and reasonable consideration for the property. Section 905(b) (2) provides that the State agency will, in determin- ing the amount of compensation for the property, disregard any de- crease in the value of real property prior to the date of valuation, if the decrease is caused by the public improvement and is not due to physical deterioration within the reasonable control of the owner. We believe that it is generally fair and equitable to ignore any decrease in the value of the property that is caused by the ptthlic improvement or the likelihood that the property is to be acquired for the improvement. We agree with the recommendation of the Bureau of the Budget, that the effective date of the land acquisition practices required under section ~05 (b) should be deferred to a date 3 years after enactment, in lieu of the January 1, 1970, date contained in the bill. The addi- tional leadtime will not only permit States and municipalities suffi- cient time to make changes in their laws, but also to determine whether to apply these policies to other land acquisition programs and to make the necessary adjustments in present procedures and practices so that the new system will work well from the time it is initiated. As recom- mended by the Bureau of the Budget, the effective date of section 906, which repeals the present HTJD land acquisition policies, should be similarly postponed. I would also like to mention an expense item which is presently corn- pensaible under our programs but which is not covered under this legis- lative proposal. The part of the title that deals with federally assisted programs contains no provision, such as is found in section 904 in the case of Federal programs to cover expenditures incidental to the trans- fer of property to the acquiring agency. These would include record- PAGENO="0407" 401 ing fees, mortgage prepayment penalties, and similar expenses. We be- lieve it would be appropriate to extend this coverage to federally assisted programs. In conclusion, Mr. Chairman, I want to state that the Department of Housing and Urban Development believes that the objectives of the Intergovernmental Cooperation Act are most meritorious. Enact- ment of this legislation will make a positive contribution in the effort to coordinate Federal assistance with State and local programs and goals. I especially want to stress the importance of its early enactment. Senator MTJSKiE. Thank you very much, Mr. Secretary for your ex- cellent statement. With respect to the relocation title, last week, in testimony which we received and to which I have already referred this morning, a nuin- ber of suggestions were made. I think it would be helpful to the com- mittee if we can get the comments of your Department upon those suggestions. I will ask the staff to give the appropriate people an opportunity to review that testimony. I think we ought to be sympa- thetic and responsive `to the recommendations. Secretary WEAVER. Let me say~ Mr. `Ohairman, that my own feeling, and I have attempted to express it not only in words but in deeds, since in most instances, it happens to be the poor and the disadvantaged that are the most subject to displacement and relocation, often for improve- ments which benefit other elements in the population, that this dis- placement should extract the minimum psychological and economic costs from the people who are inconvenienced and sometimes incapaci- tated to restore themselves to their former states. This is the philoso- phy that I have. Senator Musxn~. I think there is another very practical political consideration to be served here. These people are here to present their problem.s and their grievances. This is legislation we have `been con- sidering for 2 or 3 years. So here is an opportunity fo'r us to respond in a constructive `way that is the product of long deliberation. I think we ought to welcome that opportunity. Let's turn to the suggestion on page 14 of your testimony about the land acquisition provisions of this bill. By deferring for 3 years for persons who might be treated inequitably by the adoption of a policy in which we assured greater equity for those persons after 3 years, are we creating second-class citizenship for those who fall in the 3-year period? Secretary WEAVER. This recommendation is really a technical one given me by Counsel in the light of difficulties in changing State con- stitutions and getting State action. The reason for this is purely pragmatic, based on the fact that sometime's the legislatures do not meet every year, sometimes `the process `of constitutional changes is time consuming. This is the only reason it has been proposed. Senator MU5KIE. So is that recommendation really keyed to the Bureau of the Budget's recommendation that the costs of these pro- grams be shared? Secretary WEAVER. No; I do not think this has anything to do with that. Senator MU5KIE. I am sorry, I was thinking of the other one. Secretary WEAVER. That is the other; yes. PAGENO="0408" 402 Senator MUSKIE. I guess we have not focused on this recommenda- tion enough to ask any intelligent questions. We `will look at the rec- ommendation more carefully and submit any questions we may have as a result of that to you. You have referred to the fact in your testimony covering the model cities program that filliP and other agencies are undertaking to co- ordinate requirements and procedures. Now, our understanding is that the cities are having trouble in coordinating their activities, be- cause the Federal agencies are not working together as they should. I know I got this complaint in Connecticut the other day, from someone in the audience. Although my speech was not on this st~bject, the point was brought up that the model cities program is not really leaving initiative to the local community and `that Federal agencies were mak- ing it difficult to achieve coordination at the local level and to exercise initiative. I wondered, Mr. Secretary, if you could tell us specifically what HTJP is doing to coordinate Federal programs and to deal with difficulties that the cities say they are encountering in this connection. Secretary WEAVER. I think that probably Assistant Secretary Tay- lor, under whose jurisdiction the administration of model cities would be, could give a more detailed statement than I could. Senator MU5KIE. It might be very helpful in connection with the present business on the floor. Mr. TAYLOR. Senator, we were aware of this problem and this dan- ger from the beginning. We recognized at the time we started this pro- gram that there would be an urgent need for the Federal agencies to deliver a coordinated response to the coordinated planning and prob- lem identification that we were requiiring of the cities. We have been working on this at several levels. First of all, we are operating the model cities program as a Federal agency-an interagency program-with teams of Federal regional peo- pie reviewing applications, visiting the communities, working together with the cities. We are convinced, both from our experience and the experience of the cities, that this is not enough. We are now engaged largely at the Washington level although recently we have moved it through the interagency process to the regional level for recommendations as to how it is to be done in a process which we think will answer the real problems that the cities are identifying. We are asking the Federal agencies to provide a different kind of technical assistance and develop a new relationship, not only with the `city governments, but with the model city structures, including the citizen structures, so as to help the communities identify the range of possibilitiies that the Federal programs offer. To make their planning meaningful and significant, we are asking the Federal agencies to earmark or allocate funds so that as objectives are identified, we can say to the cities in the interagency process, yes, there is money available for this or, no, you had better wait a year on that. We do not want to encourage planning to which we are not capable of responding, for fiscal or other reasons. This new approach on technical assistance, backed by earmarking and allocations, is a different way of operating than Federal programs historically have. Since close to a hundred Federal programs operate through State funding mechanisms, we are asking the States to partieS PAGENO="0409" 403 ipate in what will be a Federal-State resource team effort with local government. We have the support of the executive branch in this effort. We are discussing it with the other ~ederal agencies, as the Secretary indicates in the testimony. We believe we can make it work. We know that we have to make it work or the program will not succeed. Senator MUSKIE. Is it your guess that the criticism that th~ cities are not really allowed to exercise their initiative has resulted from rigidities built into established programs and leading to the Federal- State joint ftmding situa1~ion? Mr. TAYLOR. I am surprised at that comment coming out of Con- necticut, sir, knowing the state of planning at this time. Senator MusKre. This was in the Hartford area. Mr. TAYLOR. They have other problems up there. I do not believe that it is the result of program rigidity. I belie~te that it primarily results from tlSle desire of some of the cities to move forward imme- diately with program impact, rather than responsive to what we believe is the major objective of this program, to take a hard look at basic causes and make sure that the projects fit into a strategy. There is that dkthotomy locally. But we recognize that the I~ederal programs will have to be flexible. We strongly support the consolidation efforts and the other elements in your proposed bill, because it will en~ourage flexibility, it will encourage the maximum loc~il ability to use, as you described in your comments, the block grant approach to programs and problems. We think we have to move in that direction. I do not believe that there has beei~ the kind of rigidity of which they complained in Connecticut, but I also do not believe that there has been the kind of positive help information, i~illingness to be flexi- ble, backed by earmarking, that the program will need. Senator Musi~IE. May I point `to something else that may be involved and a problem that perhaps you might not even be aware of. I think there is a tendency-it is human nature more than anything else-on the part of Some public officials to assume that the Government knows better and that the quality of efficiency in programing on the local level may be inadequate. As a result they may have a tendency to assert themselves a little more strongly because of `this into the planning process or the policymaking process in a way that suggests to the American people that there is a Federal domination. To what extent have you been able to observe this? Ts that the effect? Mr. TAYLOR. I agree with your comment that it is endemic to the system. It does exist. Wherever we see it, we try to knock it clown. I am exerting as much strong administrative direction on the side of insisting that they recognize the local nature of the planning process as I possibly can. But communication from Washington down to the region to the man who is visiting the city is often less than perfect. We have tried and we will continue to try, Senator. Senator MiJSKIE. I think there is a vote. Secretary WEAVER. We would be very happy for you to go to vote, sir. Senator MUSKIE, We will take a brief recess. (Recess.) Senator MUsKIE, Mr. `T~aylor, d4d you have any additional statement to present to the committee? Mr. TAYLOR. No. PAGENO="0410" 404 Senator MtrsKIE. The Budget Bureau recommended that the bill be amended to provide that relocation payments should be shared in accordance with the project formula. I do not know whether I should invite you to take issue with the Bureau of the Budget or not. I am going to create the opportunity. I think it is a very difficult problem that the Bureau presents here, especially after the testimony of last week. I am very fearful that if we wait for the States to react to that kind of provision in the legisla- tion, there simply will be no relocation programs in the States. How do you react? Secretary WEAVER. I think I would have to look at this in two ways: First, rather parochially, for those programs for which I have responsibility where we now have relocation payments, which are the most liberal of those in any other programs in the Federal Government, and where payments are now made 100 percent out of Federal funds- I am told that this was done at the beginning because of constitutional and legal considerations, because it was felt at that time that there might be some impediments of an institutional nature for some of the States to make adequate contributions to these payments. I would certainly feel that unless I were satisfied, and I am not now satisfied, that within this period of transition there were an assurance that pay- ments through this new formula would be made equal to what they now are I would be opposed to the new formula as a person and I would certainly so indicate if I were asked by the Bureau of the Budget. I speak now as an individual, but I think this problem is so pressing and so important that the danger of cutting payments off or of reducing them in this particular period would be tragic. And I could not in good conscience propose that. Now, we have another problem. That is with the new programs and here, I think you have a different situation. It would probably be appropriate to experiment with the new and see what could be done in this period, because you are not taking anything away; you are giving more anyhow. If it were successful there, then you could adapt our programs to the success in the new approach. Senator MUSKm. Well, my reaction to that would be that especially in the highway field, you simply do nc~t have too many States with a favorable power structure, if that is the way to describe it, in those programs. In my State, the highway program is run and served by people who are interested in drawing straight lines with their roads. Of course, in a State like Maine, you can do that with minimum risk of displacing people. I recall one such straight line that went through a cemetery. Well, that displaced a few people, but I guess they did not care. But I found no sympathy at all in the highway program with these kinds of problems when I was Governor. Not that they are insensitive to people or not human like anyone else, but this is simply an area to which they have not been exposed, about which they have not been concerned, and with which they have not dealt programwise. The highway programs are creating many of these problems. To expect them to respond is a little unrealistic, especially when you take into account the fact that highways are pretty much built by earmarked funds and those funds are protected jealously by the constituents in these State capitals. To suggest diverting those funds to these social PAGENO="0411" 405 purposes I think is going to create a little difficulty in many State capitals. That is simply my own viewpoint and it may or may not be shared by members of this committee. But it was to avoid those diffi- culties, which are not necessarily constitutional or statutory, but human, that we suggested 100 percent Federal funding of those re- location programs. That puts my view on the record. Did you want to add anything? Secretary WEAVER. I think my answer i~ more or less suggested by my earlier remarks. That is I know the 100-percent Federal funding does work. I do not know whether the other will or will not work. Therefore, in the programs for which I am responsible, I would want to keep the 100 percent until the other had been proven to my satisfaction. Senator MUSKIE. You have gone about as far as I could realistically expect you to go this morning. I have one other question, but it could be on another subject, and I suggest this might be the point to invite Senator Hansen to ask any questions, either on the relocation amendments or any other portion of the bill. Then we will get back to this. Senator HANSEN. Thank you, Mr. Chairman. I am prompted on the spur of the moment to ask a question of you, Mr. Secretary, which is just the converse, I think, of that proposed by the distinguished chairman. In Wyoming, we have relatively little dislocation of people with the construction of new highways because, as most everyone knows, we have a very low population density out there. But we have this situation. There have emerged and developed along the older roads in Wyoming a number of small businesses. With the impact that the interstate program ha~ and the review that is afforded Federal administrators on road locations, we have had a number of instances where little towns have been completely bypassed. Obviously, this is the reverse working of relocation in that all the busi- ness has just dried up and left the area and a lot of people, for all practical purposes, no longer have any customers. Would you care to make any observations on how your Department might possibly be interested in the impact that this sort of program has on our problem in Wyoming? Secretary W1~AVER. I must say that our concern to date has been with the reverse side of the coin. Senator HANSEN. I appreciate that. Secretary WEAVER. It has been where the highways have rather helter-skelter gone through and dissected and disrupted larger than urban centers. Senator MU5KIE. May I interject at that point, Mr. Secretary, and add another, I think,, kind of situation in the general category of problems that Senator Hansen suggested. Last week's testimony suggested that in many instances, highways cutting through urban areas do cut off small businesses from their former markets and without actually being displaced themselves, these businesses in a sense have been removed and are not eligible for com- pensation. So I think even in urban areas~ you have problems like this one. PAGENO="0412" 406 Secretary WEAVER. What we have attempted to do in our own pro- grams with any activity that we have is to make certain compensations. I had the very difficult problem some years ago of what we call the Ma and Pa business; you know, the old couple, may be the candy store. Maybe they only make a couple of thousand dollars a year, maybe they do not make that much. But they cannot pay $5 more rent and they cannot be relocated; they are indigenous to that neighborhood. It presents a tremendous problem, because how do you evaluate what they are worth? They are not worth anything any place else; they are not worth too much where they are. What we did was try to steal some- thmg from the labor movement with a dismisal wage, you know, and we had a sort of dismissal cash payment to them, It was from that that evolved this $5,000 we are talking about for people who are displaced with homeowriership. I think that it is that type of thing that we ha'~ to develop, each situation requiring a different type of tool to minimize injustice be- cause there is the other side of the picture. That is that you just cannot look at this as an inexhaustible fund which can just be spent without any regard to the economic factors in it. While you have to be co~x- cerned with the human, you also have to ha've some type of adminis- tratively feasible approach. This is what we did in that particular instance. Senator MusKII~. May I ask this? Are those cases of actual physical displacement or do they fall in the category which Senator Hansen suggested? Secretary WEAVER. No, these are people who are put out of business because of urban renewal or because of HTJD housing. Senator MusKn~. Their property is actually psysically taken? Secretary WEAVER. Well, the property usually is not their's, but the property which they lease or rent is actually physically taken. It is not bypassed. When you get to the problem of bypass, I must say I thought my problems were difficult enough, but I find this one is even more difficult than anything I have dealt with. It has been impossible, even dealing with these I have been familiar with, to give answers ofF the top of my head. I certainly do not know the answer to this one. Senator MUSKIE. Have you had a situation in urban renewal proj- ects like the one cutting off the business from the highway; that busi- ness is not taken, not subject, not eligible, but located near the slum housing and the substandard residential areas which are taken. What do you do with that kind of thing? Secretary WEAVER. The classic example of that is a store, let us say in New York City, which I know fairly well~ which specializes in Puerto Rican foods and specializes, particularly in a market that is practically a 100 percent Puerto Rican market. You have an area there torn out by an improvement and the Puerto Rican population is ma- terially reduced. That store has a problem and there are no provisions that I know anywhere in a~iy law that meets that problem. I suppose the answer to that is that there is a point where anybody who is in business has to take certain risks and they are risks of changes which come. The question is first in dealing with those risks that are definitely and direotly indentifiable before you get to the fringe ones. PAGENO="0413" 407 I do not think we have the direct ones handled properly yet, and I think we ought to concentrate on the direct ones, first, and then go, if we want to, to the fringe ones afte~wards. Senator HANSEN. Thank you, Mr. Cliairmttn. I know you have another question or two, but perhaps I should go ahead. Senator Musi~IE. Go ahead. Mine is on a different subject. Senator HAN8EN. I think there has been some testimony indicating that there is concern, reasonable concern among people who see your Department going in with an urban renewal project and running the risk of the Department of Transportation deciding at a later date that it needs a road right through the section where you have `built some new homes. What sort of liaison or cooperation is there between your Depart- ment and the Department of Transportation to obviate this sort of possibility? Secretary WEAVER. We are now in the process of drawing up a detailed memorandum of understanding between DOT and HTJD which will delineate very, very carefully what our responsibilities are in planning ançl how those responsibilities will be coordinated with their activities. I think that out of this will come an effective tool to prevent this sort of situation. I say that because I know that Secretary Boyd is as concerned about that as you or I. We have talked about it at great length, and I believe we are going to be able to work out machinery which will get the two departments in a structure which will minimize, if not completely avoid, that type of thing. Mr. TAYLOR. We have identified highway p~rns in 22 of the 75 Senator MU5KIE. Yes. Mr. TAYLOR. We have identified highway plans and 22 of the 75 model neighborhoods. Mr. Briclwull, the Oommissioner of the Bureau of Public Roads, and I and our staffs are worldng together, not only to avoid the kind øf problem covered by the secretary, but also in other specific kinds of things. For example, in North Nashville, we expressed to Mr. Bridwell the concern of the model neighborhood structure, the citizens participation structure, as to the impact of a highway on North Nashville. This was ac highway where the property was acquired before the niodel neighborhood was designated. But th&final plaimir~g~for the construc- tion was ~tiil a little o~e12, and he more than doubled the number of access points between the halves of the neighborhood so that the road did not have the impact of being as cruel a barrier as it was originally proposed. I think by working together, we can sc~ften'the point of view of the engineers and bring to bear IltiD's concern with the social, the eco- nomic, and the people factors. Senator HANSEN. I have one further question that I think is perhaps associated with theother two. What is done when an urban renewal project is undertaken and a substantial amount of substandard housing is to be torn down and razed~? What does yourDep'artment do to see that those persons whose dwellings are to be removed ~6nd adequate or at least temporary hous- ing until the new housing that will be brought into being becomes available? PAGENO="0414" 408 Secretary WEAVER. We have in the statute and in our regulations now in practice a relocation policy and program. I think we are somewhat unique in this, in that we first require, as soon as that project gets into planning-andthis is a new requirement-that there be established a center whereby the people who are going to be dis- placed are informed first of what their rights are under the law-and the law requires that they have access to safe, decent, and sanitary housing; secondly, that this center will give them assistance in finding such housing. Then we require that the city come up first with a plan for re- location and secondly, we check on the performance of this-not as minutely as we would like, but within the limitation of what personnel we have. If there are complaints either by individuals, by community groups, or others, we then move into the city and work with the local people in order to correct the problems. In instances, I have actually stopped the carrying out of projects because the relocation was in- adequate. But we do have these requirements and we are enforcing them, I think, to a much higher degree than before. I would say that certainly eight out of 10 of the people who are displaced by urban renewal do move into safe, decent, and sanitary housing and we know where they are. Now, there are a certain number who move out before we can get to them. That number is being reduced. Those we do not know, but we do go back and try to find them. Often, these are people who do not have local roots, and it is awfully hard to find them once they have gotten away. But this is what we do. Senator HANSEN. What is the situation with regard to rights-of- way for highway building? Does the Department of Transportation evidence a like concern and interest in adequate, suitable housing for those persons who will be displaced by the highway construction program? Secretary WEAVER. Well, let me say that Secretary Boyd, I think, certainly `this is his concern. However, his legislation is not as effective as is our legislation. As I understand the situation, and the Deputy General Counsel will have to check me, the highway law does not require relocation. It simply says that Federal funds can be used for relocation. So this leaves it up to the States to determine `whether or not and to what degree it is going to be done. This is not uniform, nor are their provisions as high as ours. But more important, it `is not uni~ form and it is left up to a group which sometimes is more concerned with getting from here to there than what happens in the process. Senator HANSEN. Thank you. Senator MUSKIE. I have a number of questions which we would like to submit. Several could lead to extended discussion, but I am afraid we just do not have the time, so I shall submit them. I shall confine myself to one final question. I see you have John Frantz with you. I would like to `have him testify on o~ie point. This is the proposal by the administration to provide authority to the Federal departments and agencies to enter into agreements among themselves for the joint handling of various Federal aids related to a single local project. In a letter of March 27 to the chairman of the full PAGENO="0415" 409 committee, you endorsed the bill, saying that it would encourage needed cooperation in program development at the State and local level and help improve coor4ination among Federal programs and make them more responsive to State and local needs and assist in eliminating unnecessary administrative burdens and paperwork. Your department has many, programs in which the techniques and pro- cedures set out in this bill might be applicable. I wonder if you could give us some examples of the way in which specifically this bill, if enacted, would help achieve the objectives you have noted. I would like, if possible, for you to relate your answer to the model cities pro- gram and the neighborhood center program. Mr. FRANTZ. Yes, sir. Senator, as I think we tried to indicate in our reply, the Department has been working administratively to attempt to achieve results that are along the lines pl~ the proposed bill. The model cities program is perhaps the most directly rn-point case, because a model cities project may involve undertakings in which a considerable number of Federal departments and agencies may have an interest, either direct or in- direct, and may have funds involved, either in large or small amounts, in an undertaking which the model cities law contemplates should be packaged and should be related to a planned set of local objectives. That requires the kinds of work between the departments, both at the Federal level and at the regional level, and ultimately at the city level, that Assistant Secretary Taylor was describing. Now, in connection with the neighborhood facilities program IIUD is primarily concerned in making grants for a physical structure to be located in the neighborhood. But of course, the purpose of the structure is to serve the people of the neighborhood, and in terms of size and in terms of physical design and in terms of location, it has to be considered in terms of the social service programs which are supported by other departments and agencies. So, again it has the aspects of being a joint venture. Now, I think that we have achieved a moderate degree of success in working both at the local level and at the Federal level in developing cooperative relation~hips for timing funding, for timing contractual relationships, for working oiit~ let us say, a joint audit program so that there is a single audit made rather than a whole series of disconnected audits. And this, as I say, can be done to a degree administratively. We do feel that the enactment `of this legislation would show a congressional interest and a congressional sanction which would pro- vide both a push at the Government level and an invitation at the local level, `to work along these lines and to develop systems that would be easier for both them and us. Senator MUSKIE, Really, this bill, like some provisions in S. 698, is aiming at the block grant idea eventually. Mr. FRANTZ. It moves in that direction, certainly, yes, sir, although the provisions f the bill, a~ you know- Senator MUSKIE. Would not carry you that far. Mr. FRANTZ. They do not carry it that far, that is right. They retain a capability to track the dollars back to a categorical grant purpose in the originating legislation. Senator Mu5KIE. Thank you very much. Senator Hansen may have some questions to submit which he would like you to answer. PAGENO="0416" 410 We are pushing a little bit, because time is running out, Mr. Secre- tary. You know your appearance here always stimulates a lot of thoughts and questions which we would like to discuss, but we have to cut off at some point. Thank you. Secretary WI1AVER. Thank you, Mr. Chairman. (The material previously referred to follows:) RESPONSE TO QUESTIONS SUBMITTED BY SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS OF THE CGMMITTEE ON GOVERNMENT OPERATIONS OF THE U.S. SENATE ON S. 698 I. RELOCATION ASSISTANCE IN PLANNING STAGE O~ PRO3EC~ Present law and the provisions of S. 698 provide for relo~atiou payments and assistance beginning only when an agreement has been reached between either Federal Government and the locality to proceed with a project. As far as I know, no assistance is available during the planning Stages that precede such as agree- ment. Yet this is the period when displacement begins under the threat of com- pulsory removal when the project is actually undertaken. In urban renewal, for example, survey and planning may continue for many months in an area that has been designated for eventual renewal. During this period, property values decline, business concerns lose patronage, tenants drift away, and living conditions deteriorate. QuesUon,s (1) Can you suggest ways in which the problems of residents and business firms in such an area could be eased during the period before relocation assist- ance becomes obligatory under existing law or this proposed new legislation? Under the provisions of 5. 698 and existing HUD programs, relocation pay- ments and relocation assistance is provided to those who are displaced as a result of the acquisition or reasonable expectation of acquisition of real property by a State agency in connection With a federally assisted project. There are two elements which have to be present-there must be an acquiettion or reasonable expectation of acckuisiiion of real property by the agency, and there must be a federally assisted project. Under the prban renewal program, for example, re- location payments may be made with respect to a person who moves from the site on or after the date of execution `of the Federal loan and grant contract or the date of HUD concurrence in the commencement of project execution activity if that occurs, earlier. Thus, relocation payments can be made as soon as there is Federal approval to proceed with acquisition in the urban renewal project. This Department is aware of the problems concerning residents and b'usi- nesse's located in proposed urbat renewal areas. We have `attempted to ease the situation by encouraging local public agencies to establish information and counseling programs as early as possible during the survey and planning stage. If residents and b'uslpesses `are made aware `of all the pertinent facts- that the urban renewal project is still `in the proposal stage, that they will be eligible for relocation payments an'd assistance if the project is `approved by the Federal Government, and that they will not be required to move for many mouths or several year's-the problem of premature moves from the s'ite and th'e resultant loss in income of property owners and businesses can be eased considerably. The problems faced by residents' `and businesses during `the planning phase would `be `substantially `alleviated under the "Neighborhood Development Pro~ gram" concept contained in section &1 of the proposed Housing and Urban Development Act of 1968, S. 3497, recently passed by the Senate. A Neighborhood Development Program would consist of urban reneWal project undertakings and a'ctivities in one or more urb'an renewal `areas that are pl'anned and carried out on the basis of annual increment's. `A key element of the Program is its focus on the staging and timing of `activities in order to achieve systematic accom. plishments. Under thi's system, there need to be no real lag between the deci- sion that an area is in serious physical condition and the beginning of actual activities to correct these conditions. Under this approach, detailed planning and scheduling would proceed along with actual development in the urban re- newal `area. PAGENO="0417" 411 (2) For example, would it help to require that a continuous relocation `assist- rtnce service be established as `a part of the official plan of `action of the com- munity, as part of its Workable Program, to have responsibility for aiding persons displaced by any project financed, in whole or in part, by public funds? The Workable Program, which is `a prerequisite for `such HTJD programs as urban renewal and public housing, now requires `that communities have an acle- quate program for the relocation of families displaced by governmental action of all types. Our program guides stress the desirability of establishing a city- wide relocation agency with full responsibility for planning `and implementing t'he relocation program in the community, particularly where a large volume of ilsplacement by various projects and activities is involved. The extension of relocation payments and assistance to other Federal programs contemplated nnder S. 698, would substantially increase `the capability of communities to establish such `city-wide relocation assistance p'rograms `on a continuing basis. Although we recognize the benefits which many communities would derive from `the establishment of `a continuous relocation assistance service, we do not believe that this ~hould be made a mandatory requirement for all communities. In many communities the scope of governmental displacements would not war- ran't servic'e on a continuous basis. Moreover, we do not think that the Work- able Program is the appropriate vehicle for implementing such `a requirement, since it is only a prerequisite fo'r certain HTJD-assisted programs and is not required in `the case of other federally assisted programs. If `it is desire'd to require services on `a continuous `basis, we `believe `this could be handled more appropriately in connection With the `rul'es and regulation's which `are to be issued by the President. (3) (J~'uld not such a relocation service be the means of concentrating avail- able social services on `the needs of `the families `and individuals of the `area who face dislocation as a result `of an Impending public project? Such a rel'ocation service would facilitate `the concentration of available social services on the needs of displaced famili~s and individuals. It should be noted, In this connection, that `poli~i'es developed under `the urban renewal program require that `those displaced be referred to' appropriate public' au private volnutar~ agen'ci'es equipped to provide services an'd counseling on matters of health, employment, training, and similar problems. In addition, local public agencies are encouraged to make sit'e office space available `to these agencies, tO assist in coordinating the services, and to make the services and counseling conveniently `available to the `persons affected. Our Workable Program guides encourage communities to establish referral services as an integral part of their relocation `assistance programs. II. TEMPORARY RELOOA~PION HOTYSil~G It Is provided in Sec. 105(c) `of tbe Housing Act of 1949 that to obtatn Federal `assistance for urban renewal, `a loc'al public agency must agree to `provide "a feasible method for `the `temporary relocation of families and individuals displaced from the prop~'rty acquired." Qsestions (1) What h'as been your Department's experience with this provision? Since enactment of the Housing Act Of 1949, local public `agencies have been required to `provide a program for the p'ermoineat relocation of families and individuals displaced from the property `acquired. It has' been the policy of the Department to discourage the use of temporary relocation housing except for the following circumstances: to assure that families' and `individuals are no't required to remain in structures which inadequately protect health and safety; `to permit project activities to proceed before permanent relocation housing is available; and to provide `housing on a temporary basis while permanent; relocation housing is being `constructed in a project area. (2) To what extent do local public `agencies provide temporary housing? See our response to question #1 above. (3) What kinds of housing are made use of for this purpose? Most temporary relocation housing has consisted of units in `th'e urban ~enewal projec't `areas which have be'en vacated. Available vacant units may be )ccu'pied on a temporary basis until demolition or rehabilitation is under- aken. In such `case loc'al public agencies are required to maintain plumbing, iea'ting, `and electrical systems in safe operating condition, and to make `uch repairs as `are needed to make the units habitable during the period of 95--626-68---27~ PAGENO="0418" 412 temporary occupancy. As noted in the question which follows, the Department recently issued new policies and procedures under which local agencies may purchase or lease mobile homes for the temporary relocation of displaces. (4) I note that only last month your Department announced a new policy permitting the use of mobile homes as temporary housing faciliti'es~ Have mobile homes not been used for tbi~ purpose prior to this time? The Department had not heretofore authorized the use of mobile homes for temporary relocation, although they have been used for this purpose in connection with disasters. (5) Would use of this kind of temporary housing making more feasible the relocation in one urban renewal area of the same families that were displaced from that area? The use of mobile homes as temporary relocation housing would facilitate relocation in `an `urban renewal area of the same families that were diaplaced from that area. T'his is one of the principal reasons for issuing the new policy. The use of mobile homes permits families to remain on or near the site while housing for their permanent use is being constructed or rehabilitated. iii. PRIOR AVAILABIlITY OF RELOCATION HOUSING In 19435 `the Housing Act of 1949 was amended `by `the following addition to Sec. 105(c): "Sec. 105(c) (2). As a conditiop to further assistance after the enactment of this paragraph with respect to each urban renewal project involving the displacement of individuals and families, the Administ~ator shall require, within a reasonable time prior to actual displacement, satisfactory assurance by the local public agency that decent, safe, a~d sanitary dwellings as required by the first sentence of this' subsection are available for the relocation of each such iiulividual or family." Questions (1) What has been the effect of this new provision? We require local public agencies to re-examine their available relocation resources `as they approach the beginning of actual displacement. Accordingly, not more than 60 days prior to the estimated date `of the commencement of actual displacement of a substantial number of individuals an'd families, the local agency must provide `assurance `that the information on relocation hous- ing `submitted to HUD at the time of loan and grant contract js still valid. This is important because significant changes can occur during the period which may have elapsed between loan and grant contract and commence- ment of actual displacement. (2) Does it offer assurance that s'ui'table relocation housing will in fact be made available to each displaced individual or family? HUD policies have always provided that families in urban renewal area~ not be required to move, except on a temporary basis, unless they are given an opportunity to `obtain `adequate `housing within their financial means. This new provision reinforced this policy by requiring the local public agency to re-evaluate the availability of relocation housing shortly befo're displacem'en't is `to `occur. (3) Has it resulted in an improv'ement in performance `by local public agencies in carrying out their relocation responsibilities? The requirement in section 105(c) (2) together with more stringent HIJD control's has, in our view, resulted in an improvement in the performance of local public `agencies in carrying out their relocation responsibilities. (4) How do yen cheek local agency performance to see `that these assurances are actually `carried out? Within the limits of available `staff, Regional Office personnel visit localities having active programs that will involve displacement and relocation. Any coin- paints or other indication `that a `local public agency i's not carrying out its relocation responsibilities are promptly investigated and remedial action is required where appropriate. Our review of reports on relocation activities alsc enables us to monitor local agency performance. IV. SHORTAGE OF RELOCATION HOUSING The Advisory Oommis'sion on Intergovernmental Relations, in its `study of th4 relocation problem, said that the difficulty most frequently encountered wa~ "lack of adequate supp~~~ of i~tiindard housing, particulariy £c~ large7 low-income and nonwhite families." The testimony taken by this Su'boonimnititee would cer PAGENO="0419" 413 taiiily bear this out. No matter how carefully we write the requirements that suitable housing be provided for displaced families and individuals,, our relocation efforts will fail unless the necessary housing actually exists in the areas where it is needed. Your Department has responsibility for a number of different programs designed to increase the supply of housing available to low and moderate income families. Questions (1) What provisions are there in existing housing law or in the regulations of your Department to help assure that the housing produced by these programs is made available on a priority basis `to displaced persons? There are a number of provisions in existing housing law to help `assure that housing is made available to displaced persons. In the case of the low-rent public housing program, local authorities are required to give full consideration to their responsibility for the rehousing of displaced families. Special eligibility requirements are applicable to displaced families and individuals, and the law authorizes payment of an additional operating subsidy of up to $120 per year with respect to public housing units occupied by displacees. The leased housing and turnkey programs which can provide housing more quickly, are new tech- niques which enable the public housing program to be more responsive to reloca- tion needs. Individuals and families displaced by governmental action are also eli~gth1e for rent supplement housing. The FHA mortgage insurance programs under section 221 of the National Housing Act, although now available for other families, were designed to meet the needs of displaced families and priority of occupancy is always accorded to displacees. (2) is there coordination between HUD's housing programs and these Federal programs which involve land acquisition, for the purpose `of providing the addi- tional supply of relocation housing that is needed in a given area for displaced families and individuals? The Workable Program requirement provides a basis for achieving coordination between HUD's housing programs and Federal programs which involve land acquisition. Any locality which `seeks certification or recertification of its Work- able Program must present evidence of the availability of ~uitab1e housing to meet the needs of those to be displaced by all governmental action in the corn- munity. In many instances, Workable Program certification or recertification has been withheld until a locality has initiated action to plan the development of required relocation housing. In such cases, HTJD cooperates in `every way possible with the locality in achieving the requisite coordination with HUD housing assistance programs. It should also be noted that, pursuant to section 105(c) (1) of the Housing Act f 1949, local public agency relocation assistance programs must assure the neces- ~ary coordination of relocation activities with other project activities and other ~danne'd or proposed governmental actions in the community which may affect ~he carrying out of the relocation program. Enactment of S. ~98, and the extension of relocation assistance requirements ~o other Federal programs, should result in improved coordination at both the ~ederal and local levels. V. PAYMENT FOR DIRECT LOSSES FROM DISPLACEMENT The Housing Act of 1949 now provides for payments to cover not only ~reason- ble and necessary moving expenses" but also "any actual direct losses of property xcept goodwill or profit." S. ~8 provides for "fair and reasonable relocation payments," but does not pecifically refer `to direct losses. `uestions (1) Judging by your experience in urban renewal, how significant is this mission? In the urban renewal program, compensation is presently provided for actual us in the value of property (exclusive of goods or inventory) sustained by ~ason of the disposition or abandonment of the property resulting from the splacement. Under section 805(a) (2) (B) of S. 098, the President's rules and ?gulations for "fair and reasonable relocation payments' are to provide for imbursement where a business concern disposes of personal property and places property at the new location. We believe that this provision, as modified PAGENO="0420" 414 by the Bureau of the Budget proposal, would provide an adequate substitute in most cases for the present payinex~t for actual &rOct losses of property. It should be noted in this connection, that we are advised by the Bureau of the Budget that it is their understanding that such compensation could also be made available to the business concern ~hich disposes of personal property, but which closes its doors and does not move to new location. This would be under the general authority given the President under section 805 to. issue regulations spelling out the types of losses for Which compensation would be provided. (2) Have payments for direct losses proved to be a significant part of total payments made? Any comments you care to make on this would be appreciated. Out of some 51,300 relocation payments made to business concerns under the urban renewal program as of December 31, 1967, approximately 19,700 involved payments for property loss. Of this number, 12,880 were for property loss, alone, and 6,298 involved moving expenses and property los's. Thus, relocation payments for property loss were Involved in `somewhat more than one4hird `of the number of relocation payments made. The dollar amount of reloc:ation payments' for property loss wa~s approximately $29 million, reflecting some 40 percent of the total relocation payments to business concerns (exclusive of the Small Business Displacement Payment) totalling $72.2 million. VI. PAYMENTS ~novu FAIR MARKET VALUE FOB OWNER OCCUPANTS The Bureau .~f the Budget has suggested that the owner of real property taken hn'der a Federal or federally assisted program who purchases another borne within a year be paid an amount of up to $5,000 which when added to the acquisition payment, equals the average price for a standard dwelling adequate to accommodate the displaced owner. This proposal has been supported by the testimony of other witnesSes, including the National Association of Henning and Redevelopment Officials. Questions (1) Do you feel this to be a desirable addition to the relocation benefits avail- able under the Act? The Department's testimony before the subcommittee, strongly endorsed the proposal for a payment of up to $5,000 for lower income displaced homeowners. The Department believes that this is a needed addition to `the relocation benefits now proposed In S. 698. When the value of the home which is taken is adequate to afford a decent, suitable replacement, the practical consequence of the displace- ment has been the loss of homeownership. (2) Do you feel that the $5,000 limitation is adequate in the light of present day costs in the housing market? Although we have had no experience in administering a payment of this kind, we believe that the $5,000 limitation should be adequate. VII. CITIZEN PARTICIPATION A number of witnesses have testified on the need for a greater degree of partici- pation by area residents in the planning of renewal or development projects. They are particularly concerned that the families and citizens that will eventually be displaced by the project will have a full opportunity to expres's their Views before final decisions are reached. I am aware that in the case of some of your programs, the Workable Prograir must provide for citizen participation. How far does' this' go in accomplishing thE kind of full citizen participation we are talking about? `I note that in the case of Camden, New Jersey, When disputes arose in the corn munity over the inadequacy of relocation provisions for urban renewal and higi way projects, your Department obtained agreement by the local authorities tha there would be established a relocation review board to hear complaints~ fron citizens and refer them to appropri~te agencies for action. Should not such a re view board be required in all programs where people are to be clis'placed b~ federally assisted public projects? The Citizens Advisory Committee required under the Workable Prograr provides a city-wide forum for citizen participation in the community's efforts t eliminate slums and blight and to prevent further deterioration. `The degree o participation by citizen groups with respect to particular aspects of the' prograr varies as between localities. ETID policies encourage communities to establish PAGENO="0421" 415 range of special subcommittees to assure maximum citizen participation in cer- tain key areas. A subcommittee on minority group housing is generally required as part of the citizen participation program, to study and recommend ways and means to secure better housing for all minority and ethnic groups. Some cities, where a significant amount of displacement is expected to occur have established a subcommittee on relocation housing, for the purpose of working with local official's responsible for rehousing displaced families. Other cities have established special citizen group's to participate in comprehensive community planning activi- ties, to work with urban renewal and public housing officials, to work with local officials in developing long-term capital improvement programs, or to a~sist in setting up programs `of neighborhood participation in areas where action is needed for blight prevention. It should be recognized that Citizen Advisory Committees and, special sub- committees established pursuant to the Workahl~ Program do not always provide adequate representation to the residents of project areas whose lives are most immediately affected by the urban renewal process. As a result, the Depart- ment is now exploring a more appropriate method of involving those persons directly affected by the relocation process. This is part of a larger effort the De- partment is now making to' involve citizens more directly in the renewal process. In view of the foregoing, we think it would be premature to comment on the question of whether a relocation review board, such as the one established in Camden, New Jersey, should be required for all federally assisted programs. Senator MU5KIE. I think we have time for one more witness. I under- stand from the staff that Mr. Stalling will be able to come. back to- morrow. Therefore, we will conclude this morning with Mr. William L. Taylor, staff director of the U.S. Commission on Civil Rights. If this gets too prolonged, we may have to put him over until tomorrow, but I think we have until 12:30 to meet, if that will be sufficient time. TESTIMONY OP WILLIAM L TAYLOR, STA~' DIRECTOR, U.S. COM. MISSION ON CIVIL RIGHTS; ACCOMPANIED BY MARTIN E. SLOANE, SPECIAL ASSISTANT TO TH~ STA~'P DIRECTOR Mr. TAILOR. Thank you, Mr. Chairman. Senator MUSKIE. We shall be delighted to have you come back another time if you cannot finish today. I do not want to cut yo~u short. Mr. TAYLOR. I shall be glad to abbreviate my statement. If the com- mittee wishes me to come back, I will do it. I am William L. Taylor, staff director of the U.S. Commission on Civil Rights. With me this morning is Martin Sloane, special assistant to the staff director. We appreciate the opportunity to present testimony on title VIII of the proposed Intergovernmental Cooperation Act, which `deals with aniform relocation assistance. Senator Mu5KIE. May I say I am delighted you `chose to testify on ;his, because I think it will be most helpful. Mr. TAYLOR. Thank you. I might say before I get into my statement, Mr. Chairman that I Lppreciated the remarks you made earlier this morning aboi~t the Poor E~eople's Campaign. It seems to me that looking back over the last ~ew years, almost all progress we have made in matters of race rela- ions and matters of social justice have come as a result of peaceful )rotests and demonstratioi~s of various kinds, which are within the )urview of our democratic form of goverfiment. I think, again, that if )ongress and the executive branch react to the demonstrations and to he protests by enacting social welfare legislation and improving our PAGENO="0422" 416 performance within the executive branch, it will be an appropriate way of making progress through the traditional processes of our Gov- ernment. We like to think that testimony by the Commission and the preparation of commission reports is at least partially responsible for progress, but somehow, that is not always quite sufficient. So I did ap- preciate what you had to say on the subject. Senator MuSKIE. Thank you. Mr. TAYLOR. Turning to the act, we believe that the problems to which title VIII is addressed-the gross inconsistencies in the kinds of assistance available to families and businesses displaced by Federal and federally-assisted programs and the inadequacy of assistance avail- able under any of these programs-are urgent ones, requiring im- mediate corrective action. It is clear that problems of relocation are a major factor inhibiting the success of many programs aimed at im- proving the quality of life in our cities. It also is clear that they are a part of the underlying problem that has bred unrest and disorder in our urban centers. We believe title VIII can make a substantial contribution to resolv- ing these problems and we urge its enactment. We have several sugges- tions to offer, however, which we believe would enable the bill to deal more effectively and comprehensively with problems of relocation. We also wish to add the caveat that there are distinct limits to the impact of legislation aimed at relocation assistance alone, in the absence of forceful measures in other areas. What we are talking about here are measures to assure that families whose lives will be affected have a voice in the decisions concerning the operation of programs involv- ing displacement, measures to assure that when displacement is necès- sary, there is, in fact, a sufficient supply of housing available to accommodate the families who are to be displaced, and above all, meas- ures to assure that relocation will serve as an instrument for unifying our urban society and facilitating the full participation of the poor- and particularly the nonwhite poor-in community life. Senator MusitlE. May I interject at this point? In the testimony last week, there was a suggestion that we ought to find a way in connection with this legislation, to arrange for participa- tion by the poor. No specific suggestions have been offered as yet. If you do not have one-I have not read your testimony-it would be helpful if you could address yourself to that question as it occurs to you. Mr. TAYLOR. We do have a suggestion in our testimony. I do not think it is specific enough for purposes of legislation, but we shall be glad to pursue the matter and try to make it more specific. Senator MUSKIE. Fine. Mr. TAYLOR. Since our Commission has been in existence, approxi- mately 11 years now, we have maintained a continuing interest and con~ cern with problems of housing. We also have maintained a continuing concern with problems of displacement and relocation, particularly as they affect minority group members. In 1959, when the Commis sion issued its first report on housing, we examined relocation policie~ and practices with respect to families displaced by urban renewal. Ii 1961, the Commission broadened its inquiry to include problems o: relocation under the federally assisted highway programs. We pointe out at that time, that there were marked disparities between the as PAGENO="0423" 417 sistance available to families displaced by urban renewal and those displaced by federally assisted highways. In fact, until 1962, the Federal highway program, unlike urban renewal, imposed no obliga- tion either on the Federal Government or on the States to provide any relocation assistance. Although the Federal highway program now provides some degrees of assistance to the families it displaces, other programs, such as those administered by the Department of Agriculture and the General Services Administration, still carry no provisions for any relocation assistance, either financial or advisory. As the Advisory Commission on Intergovernmental Relations and other agencies have demonstrated, these disparities exist among a wide variety of programs-Federal, State, and local-that involve displacement. Urban renewal, which has received more than its fair share of criticism for the inadequacies of its relocation assistance program, actually provides the broadest and most comprehensive range of assistance of any Federal or feder- ally assisted program, including compensation for moving expenses, relocation adjustment payments of up to $500, and advisory assistance to families who are displaced. Title VIII would establish uniform standards for relocation as- sistance which all Federal or federally assisted programs would be required to satisfy. To a large extent, these standards would be based on the current relocation assistance provisions contained in the urban renewal law. For example, section 803(c), relating to relocation assist- ance programs, is virtually identical to the provisions now applicable to urban renewal. The bill also seeks to raise the level of assistance beyond that currently available under urban renewal or any other program. For example, section 80~(e) would provide for payments to displaced families in amounts up to $1,000 over a 2-year period to assist them in securing decent, safe, and sanitary housing. We believe the necessity for establishing uniform relocation assist- ance in all Federal and federally assisted programs involving dis- placement, and for improving the quality of assistance available to displaced families, has been amply demonstrated. Title VIII represents needed legislation. We wish to point out, however, that the problem of relocation does not exist in a vacuum, but is a part of the entire process by which families and businessmen are uprooted through the impersonal use of governmental power. Relocation assistance, in the form of money or guidance, cannot adequately compensate people whose homes and rnsinesses have been sacrificed, with little or no oportunity for protest, n favor of such presumably higher public interests as more efficient and use or the enlargement of suburban highway arteries-particu- arly when they receive no real benefit from these public improvements. 3y the same token, the problem of relocation cannot realistically be riewed separately from other problems facing our cities-problems f inadequate housing and of growing racial and economic separa- ion-to which relocation is closely tied. Nor can the problem of elocation be fully resolved unless corrective action also is taken to liminate other inequities and to provide for more basic change in the ature of urban society. Programs of public improvement have a variety of purposes and ~ects, sometimes inconsistent with one another. For example, the PAGENO="0424" 418 highway program, by facilitating travel between cities and within metropolitan areas, has contributed significantly to transforming us into a mobile society. It also has been a major factor in the flight to the suburbs of the white middle class, transforming central cities intx areas where the poor and the nonwhite increasingly predominate. Urban renewal, by contrast, is concerned with revitalizing our cities,. in part, by attracting the very people that the highway program has enabled to leave. Despite the inconsistencies in purpose and effect among various public improvement programs, they have a number of elements in common. Most involvemassive displacement and a net reduction in the number of housing units. For example, urban renewal, through the end of 1965, had demolished more than 333,000 homes. During the same period, it had replaced them with only 84,000 dwelling units- approximately one-fourth the number the program had eliminated from the Nation's housing inventory. In 1967, alone, the Federal high- way program eliminated more than 30,000 dwelling units. By the very nature of the program, it replaced none of them. In addition, these programs tend to be highly selective with respect to the families they displaced. They have their principal impact on the poor. According to the Secretary of Transportation, during the 18- month period between April 1965, and October 1966, more than one- third of the families displaced by the highway program lived in homes valued at less than $6,000 or which rented for less than $60 a month.. Fewer than 20 percent of the families displaced resided in homes: valued at more than $15,000 or which rented for more than $110 a month. According to a census study of urban renewal relocation dur- ing the summer of 1964, 80 percent of the families displaced had incomes of less than $6,000. Two of every five such families earned less than $3,000 a year. These programs have at least one further element in common. They displace a disproportionate number of nonwhites and other minority group families. In Baltimore, Md., almost nine of every 10 families displaced by public action during the decade of 1955 through 1964 were nonwhite. In Nashville, Tenn., the case discussed earlier, more than half the housing units occupied by Negroes were demolished through similar action during the present decade. The Federal high- way program, alone, threatens to wipe out all of the 234 Negro busi- nesses in North Nashville, which are reported to represent almost 90~ percent of the Negro-owned and operated businesses in Davidson County. For urban renewal, of the displaced families whose color is known, nonwhites represent fully 60 percent since the program's inception. Thus the impact of these programs fails with special severity on the poor-particularly the nonwhite poor-those who are least able tc protect their vital interests, those whose range of relocation choice, b~ virtue of their race and their economic position, necessarily is th narrowest. These programs have been more of a threat than a hope t the urban poor. Highways have meant elimination of their homes an businesses on a massive scale. Urban renewal has meant, as charged Negro removal. What I am suggesting is that Federal intervention to protect th interests of these famiiie~, r~stricted to the relocation stage of th PAGENO="0425" 419. programs, can be only of limited value. Relocation is only the last stage of a process initiated many years before-a process that begins with planning. If the interests of the poor are to be protected ade- quately, they must be protected at this point. Usually, they are not. One reason is that, at least in the past, the programs have been con- cerned more with factors of economics and logistics than with social welfare. Thus decisions on the location of highways have been made by deter- mining the ~hortest distance between two given points and by calcu- lating the relative cost of acquiring properties that happen to be in the way. Urban renewal, while professing to be aimed at revitalizing cities, has viewed its functions largely in economic, rather than human terms. The program has been more concerned with producing greater tax ycilds from city land than with determining ways in which the quality of life for all city dwellers could be improved. Although "citi- zens participation" long has been a requirement in the urban renewal program, the views and interests of the families who reside in areas that need renewal rarely have been decisive factors in determining the course of the program. On the contrary, in many programs, plan~- fling decisions are made of wkich the poor, whose lives are to be dis- rupted, either are ignorant or only vaguely aware. These decisions come fully to the surface only years later in the form of bulldozers and dislocation. By that time it often is too late to change the course of the program. In short, the key decisions often have been imposed on the poor, on the basis of factors that do not include their social welfare and largely without consulting them or seeking their vi~ws. To some extent, these deficienices are being corrected. The Federal Highway Administration now considers environmental factors as well as logistics in plannning and carrying out highway construction. The Department of Housing and Urba~a Development is placing greater emphasis on residential reuse of urban renewal land and is stressing rehabilitation rather than clearance. Further, both agencies have instituted procedures to assure that the families to be displaced are consulted, or at least advised of the pending clearance well before the ~f act, In addition, title IX of the bill before the committee would establish as a policy to guide Federal agencies in their land acquisition activities that human considerations, including the economic and social effects, should be taken into account in determining the bound- aries of a public improvemnt project. More, however, nee4s to be done. First, we urge the committee to provide in the bill for prior con- `sultation with the people affected as a uniform requirement for all relevant Federal or federally assisted programs. Thus,, before. any such program involving displacement. could. be carried out, it would have to be demonstrated that th~e famil~es and businessmen in the area, `or their designated representatives have been consulted in. advance of decisions on plannning,. and that they have been given maximum opportunity to participate jn making key decisions such as those related ,to the location a~d the, nature of the public improvement and its timing. . , . , . Second, to assure against mere paper, compliance with. this require- ment, the legislation should provide that if, despite the protest~ of the people affected, the decision is made to acquire the properties, this decision must be justified by a showing that all factors have been con- PAGENO="0426" 420 sidered, including the welfare of the people to be displaced, and that the public interest nonetheless requires the acquisition. There also should be a procedure for a speedy review of the decision by an outside agency not connected with the operation of the program. Turning to the issue of relocation, itself, title VIII recognizes that the problem of relocating displaced families, most of whom are poor and a disproportionate number of whom. are nonwhite, can be met only through assistance. The assistance provided in the bill would take several forms. First, financial assistance, which would be more sub- stantial than any provided under the existing law. The bill recognizes, however, that adequate relocation requires more than money and it also would require Federal and State agencies to establish relocation assistance programs which would offer services aimed at assisting displaced families in securing decent housing. Several of the key provisions regarding relocation assistance pro- grams, contained in section 803 (c), are derived from the existing urban renewal law. We believe these provisions are necessary if dis- placed families are to have a real opportunity to relocate in decent housing. On the basis of the experience under the urban renewal pro- gram, however, there is some doubt that relocation assistance pro- grams, under existing conditions, can be completely successful. First, there is a certain unreal quality about these provisions. One of the aims of a relocation assistance program would be "to assure that within a reasonable period of time prior to displacement, there will be available * * * at rents or prices within the financial means of families and individuals displaced, decent, safe, and sanitary dwell- ings * * ~ This provision seems to assume that in most areas of the country there is a sufficient supply of lower income housing and that all that is needed is for the poor to be directed to it. This simply is not true, at least with respect to cities, where most displacement occurs. Housing provided through the ordinary channels of the housing mar- ket is too expensive for most displaced families. Government subsidy programs aimed at providing a sufficient supply of lower income housing, such as public housing, FHA 221 (d) (3), and rent supple- ments, have produced only a comparative handful of units when, measured against the enormous need, which is calculated at some 6 million units. As the Civil Disorders Commission pointed out, the dimensions of the need for low- and moderate-income housing call for an unprece- dented national effort, which would produce 6 million units over the next 5 years. The administration's proposed Housing and Urban De- velopment Act of 1968 also recognizes the urgent need for the imme- diate production of a large volume of housing within the means of lower income families. In short, with the existing shortage of lower income housing there are severe limits to the effectiveness of any effort to assure satisfactory relocation of displaced families. We are told, nonetheless, that the great majority of displaced f am- ilies have relocated in what is considered to be standard housing. That statement, I think, was made earlier this morning. In view of the acknowledged scarcity of lower income housing, the obvious question arises-where did these families go? To a large extent, the answer is-we don't know. Urban renewal, for example which maintains the most comprehensive information on relocation, PAGENO="0427" 421 keeps it only with respect to families who have entered the relocation agency's caseload. The responsibility of the local public agency for relocation commences at the time the loan and grant contract with HIID is executed. Many families, however, move out prior to that time because of the impending clearance. These families are not part of the relocation caseload, nor are they included in the data concerning relocation. Further, there is no obligation on the part of `the Federal Government or the local public agency to provide any assistance to these families. Whether they departed before or after the urban re- newal loan grant contract was executed it is clear that their displace- ment was a result of urban renewal. No information is available, how- ever, on how these families fared after displacement. It is clear also that most of the families who did relocate in standard housing managed it without assistance from the local public agency. In the 1964 census study of urban renewal relocation, it was pointed out that although 90 percent of the families surveyed received coun- seling, financial, or other assistance from the local public agency during `the relocation process, 70 percent of the families relocated through their own efforts, without assistance from the local public agency. Thus, on the basis of the urban renewal experience, there is reason to question the effectiveness of relocation assistance programs, such as those provided in the bill. Further, many of the families managed it by stretching their limited resources to pay rent. According to the census study, the median rent that relocated families had to pay was 28 percent of their income. For nonwhites, it was even higher. About three of ten non- white families had to pay between 35 and 64 percent of their income for rent. Beyond this, however, there is some question whether all the families reported to have relocated in standard housing actually did so, at least in the sense that most of us view the term standard housing. The technical definition of standard housing deals primarily with plumb- ing. Thus a housing unit which is clearly in deteriorating condition is considered standard according to the technical definition so long as it has adequate plumbing facilities. In a long and, I think, useful piece in the New York Times yester- day, it was stated that there are 800,000 units of substandard housing in the city of New York. This is a staggering figure, obviously not based completely on plumbing. Moreover, housing that is occupied by more families than it is designed to hold is not thereby rendered substandard. On the basis of the Commission's experience, overcrowding is a major problem re- sulting from urban renewal displacement. For example, at the Com- mission's hearing in Cleveland, Ohio, we heard testimony that urban renewal had had the effect of moving Negroes from one slum neigh- borhood into the Hough area, causing the Hough area to become over- crowded and leading to the deterioration of other areas of the city. As one Commission witness put it: You are just moving your ghetto from Hough to Gleuville, to Mount Pleasant, and finally to Lee-Harvard and Shaker Heights and God knows where to from :here. This process is continuing. I saw a recent article which indicated ~hat the vacancy rate in Hough was increasing while other areas were )ecoming more overcrowded. PAGENO="0428" 422 Our witness concluded "that the whole thing is eventually going to erode the whole city." Thus, even while urban renewal areas are being rebuilt, the process of decay in other parts of the community is accelerated. There is some doubt whether programs such as urban renewal can be completely suc- cessful if, while concentrating on the revitalization of one part of the community, they contribute, through inadequate attention to factors such as overcrowding, to the deterioration of others. I am not suggesting that the legislation you are considering can be designed to resolve all of these problems. Nor do I intend to deprecate the requirements for financial and counseling assistance to displaced families. These are necessary and indeed, represent a part of the answer. As you recognize, however, much more is necessary if these require- ments are `to be of maximum effectiveness. First, they must be carried out with energy and compassion by Federal and State officials-officials who are willing to hold up a public improvement program until they are assured that relocation is satis- factory, not only in statistical terms, but in terms of the needs and desires of the families involved. There is some evidence that this has not not been the case in the past-that program administrators have con- sidered relocation more of an obstacle tO the operation of the program than an inherent part of it, which must be satisfied if the program is to succeed. One way of meeting this program is to divorce the respon- sibility for relocation from that of program operation, giving the re- location officials the authority to hold up the program until they are satisfied that relocation will be successful. I understand that flED has instituted such a procedure in the urban renewal program and I believe it warrants serious consideration by all other agencies which operate programs, involving displacement. Sympatheic and vigorous administration of relocation assistance programs, however, will not be enough. As one commentator has pointed out: "What is needed is not counseling but an expansion of the supply of low-cost housing." We recognize that low-income housing legislation is not being considered as part of the bill before you, nor is it specifically within the jurisdiction of this committee.' I wish to stress, however, that unless the supply of low-income housing is ex- panded on an unprecedented scale, through the expansion of existing Government subsidy programs and the enactment of additional pro- grams capable of producing low-income housing in volume, relocation will be a continuing and increasing problem. There is a bill pendin~' on the floor right now which, if enacted, can make a substantial contribu- tion towards providing the kind of expansion in the supply of lower income housing that is needed. I also wish to stress that the success of relocation cannot be judged solely in terms of the proportion of displaced families who relocate in standard housing. The problems facing our cities today stem not only from poverty and inadequate living conditions, but also from the growing trend toward racial and economic separation. Relocation in the past has tended to intensify the isolation of the poor, and particularly the nonwhite poor. Under the bill in'its present form, there is little reason to `believe that the experience willnot be the same. Mr. Chairman, this trend toward racial and economic separation must not be allowed to continue. The Ci~~il Disorders Commission, after PAGENO="0429" 423 a thorough investigation of the riots that occurred last summer, reached a basic conclusion: "Our Nation is moving toward two societies, one black, one white-separate and unequal." This conclusion is fully sup- ported by the facts the Commission on Civil Rights has gathered through hearings and investigations in urban areas and through our own reports. We are developing a society in which the affluent and the impoverished, the white and the nonwhite, live in isolation from one another. We are developing a society where it is possible, as the Com- mission learned at its Cleveland hearings, for a Negro child, raised in the heart of a large city, to reach adolescence without ever having known a white person of his own age. In short, we are developing a society that is rapidly being divided into opposite camps, hostile and mistrustful of each other. It will require a major effort for this trend to be reversed. Relocation cannot provide the total answer, but it can play a major role. I urge you to amend section 803 (c) to provide that a major purpose of a reloca- tion assistance program must be to contribute to the elimination of segregation by race and income. We believe that such an amendment can provide necessary guidance to those charged with responsibilty for carrying out these programs so that relocation will not continue to result in increasing racial and economic separation, but can make a major contribution toward ending segregation and unifying our urban society. That concludes my statement. Thank you. Senator MUSKIE, Thank you very much, Mr. Taylor, for your excel- lent statement. It is very much to the point. I am sorry that time forces us to recess the hearing. Senator Hansen, did you have anything you wished to ask? Senator HANSEN. No, only to compliment you on your excellent statement, Mr. Taylor. Mr. TAYLOR. Thank you, Senator. Senator MUSKIE. We are recessed until tomorrow morning at 10 o'clock in this room. (Whereupon, at 12:35 p.m., the hearing was recessed, to reconvene Wednesday, May99, 1968, at 10 a.m.) PAGENO="0430" PAGENO="0431" INTERGOVERNMENTAL COOPERATION ACT OF 1967 AND RELATED LEGISLATION WEDNESDAY, MAY 29, 1968 U.S. SENATE, STThCOMMITTEE ON INTERGOVERNMENTAL REI~&TIoNs, o~ a'ui~ COMMITTEE ON GOVERNMENT Oii~ATIoNs, Washington, D.C. The subcommittee met, pursuant to recess, at 10:20 a.m., in room 457, Old Senate Office Building, Senator Edmund S. Muskie (chair- man) presiding. President: Senators Muskie and Baker. Staff members present: Charles M. Smith, staff director; Robert E. Berry, minority counsel; E. Winslow Turner, general counsel; Lucinda P. Dennis, administrative secretary. Senator MU5KIE. We are pleased to welcome you, Mr. Bridwell, this morning. Please proceed with your testimony. TESTIMONY OF LOWELL K. BRIDWELL, FEDERAL HIGHWAY AD- MINISTRATOR, ACCOMPANIED BY FRANCIS C. TURNER, DIREC- TOR OF THE BUREAU OF PUBLIC ROADS Mr. BRIDWELL. Thank you, Mr. Chairman, Senator Baker. For the record, my name is Lowell IBridwell, the Federal Highway dministrator. With me is Mr. Francis Turner, Director of the Bureau f Public Roads. Before beginning my statement, Mr. Chairman, I ould like to comment that this subject of relocation assistance, in my opinion, is one of the most serious problems facing us in the Highway drninistration and the Bureau of Public Roads, and one of the most serious problems facing the progress of the Federal-aid highway pro- gram. Before the Senate Public Works Committee we have recently provided considerable testimony and certain other materials related ~o its hearings on the problems that are encountered in the highway rogram in urban areas. Without question, I think, any rational ~xamination of the problems that we face in the progress of the ~ederal-aid highway program has to have as one of its big parts he problems of displacing persons. So with that introduction, Mr. ~urner and I both are very pleased to have this opportunity to appear efore the committee to present our testimony, answer any questions, nd certainly urge, very strongly urge, action by the Congress in this ~ssion to provide the mechanics, provide the tools with which we can, i cooperation with the States and local governments, do a much more :lequate job of taking care of displaced persons and businesses. (425) PAGENO="0432" 426 Senator MTJSKIE. May I say, Mr. Bridwell, that I compliment what was the Bureau of Roads, now the Department of Transportation, for what I believe is almost a complete reversal in attitude on these prob-' lems over the last 2 or 3 years. I think you have humanized the pro- gram in a commendable way. You know the testimony that we get these days from the Department is most reassuring so we are especially appreciative of your attendance here this morning. Mr. BRmwE1a~. I will direct my testimony largely to title VIII of S. 698, the provisions of the bill which relate most significantly t& the Federal Highway Administration. The Department is filing a. letter with the committee on some of the other aspects of the bill, but I want `to concentrate this morning on the very important subject of' relocation assistance. Title VIII involves a uniform policy for the equ~table treatment of persons displaced by the acquisition of property by Federal or federally assisted programs. We favor enactment of this title as strengthened by the amendments recommended by the Bureau of the Budget. Part B of title VIII, which deals with federally assisted programs, recognizes the need for State and local agencies acquiring land to assure that those displaced have adequate replacement housing. Consistent with this `objective, section 807(a) (4) would require that no federally assisted project shall be approved without the assurance that decent,, safe, and sanitary housing will be available prior to displacement and within the financial means of the displacees. To assist displaced families or individuals to secure a decent, safe,, and sanitary dwelling, the bill would also permit payments of up t& $500 for each of two consecutive 12-month periods. We believe this provision is needed, not as an alternative to the provision of decent,, safe, and sanitary housing, but as a complementary feature. The need for this complementary provision is suggested by con- sidering the rent payments made by those who will be displaced. Many of these are in the low- or moderate-rent category. For example, our "Highway Relocation Assistance Study"1 disclosed the breakdown of rentals paid by 61,000 tenants displaced or to be displaced by Federal- aid highways during the 3-year period between July 1967 and June 1970 to be: 41 percent pay less than $60 per month; 43 percent pay between $60 and $110 per month; and 16 percent pay over $110 per month. Many of. these who will be displaced from low- or moderate- rental units will need assistance to finance suitable replacement hous- ing because of the shortage of low-rent housing. Relocation problems for people in low-cost housing are also serious for owner-occupants. We believe title VIII needs to recognize the prob- lems of the owner-occupant of real property which is acquired, but for whi'ch the fair market value is not sufficient to enable the previous owner to obtain a suitable dwelling. We favor the proposal of the Bureau of the Budget for a payment of up to $5,000 which would represent an amount which, when added to the acquisition payment~ 1 House Committee on Public Works Committee Print No. 9, 90th Cong., first seas., a p. 43. Transmitted to Congress, June 80, 1967 by the Secretary of Transportation pur suant to sec. 12 of the Federal-Aid Highway Act of 1962, Public Law 89-574. PAGENO="0433" 427 equals the average price r~quired for a decent, safe, and sanitary dwell- ing of modest standards available on `the private ma,rket,.1 Frequently, homeowners who must relocate face higher costs than they had formerly. In some cases, this `results because there is no suitable housing comparable in price to what these owners left. This seems likely to be the case for many of those to be relocated from high- way rights-of-way. During the 1967 to 1970 period (now about one- third past), about 86,000 owner-occupants have been or will be dis- placed for Federal-aid highways. The values of the 86,000 properties are as follows: 27 percent under $6,000; 46 percent between $6,000 and $15,000, and 27 percent o~ver $15,000.2 How serious a problem relocation may be for residents depends on such matters as `their age, income, and race and on the amount and cost of vacant land and replacement housing in the area. In one study of elderly homeowners,3 a majority of the resettled owners stated that the displacement had adversely affected their financial position. For example, the mortgage averaged $7,000 on the new property compared with $3,000 on the old. New housing was reported to be superior by 60 percent and to be not as good as the old by 30 percent. Section 905 (a) (3) concerns the establishment of a fair and reason- able price to be offered for property needed for a project. We favor this policy in so far as it requires that owners be immediately offered the full appraised value of their property. This is present practice in the acquisition of rights-of-way for Federal-aid highways. We are not sure, however, whether section 905 (a) (3) is intended to imply that the price originally established can never be altered, even when ele- ments of value not considered in the appraisal come to' the attention of the acquiring agency. We believe the committee may wish to make clear that `this section does not institute a totally inflexible one-price policy. A preliminary estimate by the Bureau of Public Roards indicates. that the highway relocation costs under the provisions of S. 698, as `While we believe this supplementary payment wlU alleviate many of the Inequities caused by the need to relocate,, candor requires us to concede that some instances of hardship will not be covered' by this legislation. For example, where an owner was forced to pay an excessive price for his home because he was a high risk or as a result of ab- normal market conditionis, payment of only fair market value for his property may not be enough to enable him to pay off the outstanding mortgage and still have' the amount of a dow'np,ayinen't on a replacement house left over. Yet such an. owner might not be eligible for' a supplementary payment under the proposed legislation, since a comparable decent, safe, and~ sanitary1 home would probably cost no more than the faIr market value of the property taken. Another situation not covered Is that of the elderly individual, living on a fixed retire- ment income or social security, who cannot re.pla,c'e his modOst but paid-fur house for the amount be receives as compensation,. Even If he could obtain financing, he may not be in a position to make mortgage payments on a new home. In all probability,, the supple- mentary payment wouldi not enable this' person to avoid the need. to Incur these new obligations. This problem is accentuated where a part of the elderly person's income comes from renting rooms in the house taken by the project. In addition to the problems already mentioned, the owner's extra Income from rents is entirely gone, and the move may put him in a location which is not as desirable to prospective tenants. 2 "Highway Relocation Assistance Study," transmitted to Congress by the Secretary of Transportation on June 30, 196T (House Committee on Public Works, Committee Print No. 9, at p. 43). `.Adkins and Elchman "Consequences of Displacement by Right-of-Way to 100 Home. owners, Dallas, Tex." (report to `Texas Highway Department and Bureau of Publtc, Roads; Bulletin 16, B 66-61, of the Texas Transportation Institute. A. & M. College of Texas, 1961, at pp. 8-18). 95626-6828 PAGENO="0434" 428 modified by our suggestions~ might be as high as $173 million annually.' As the land acquisition for the Interstate System tapers off in the next several years, costs attributable to this program should decline. Unless of course, the Congress enacts a follow-on or a new highway program which would require similar property takings. Senator MU5KIE. May I ask a question? Mr. BRIDwEu~. Yes, sir. Senator M~rsKIE. Is this estimate based upon the 100 percent formula of S. 698 or upon the formula of the Bureau of the Budget that these costs be apportioned between the States and the Federal Government according to the formula applied to the project? Mr. BRIDWELL. Mr. Chairman, I believe that subject to possible cor- rection, my understanding is that the $173 million is total cost, regard- less of where the funds come from. Current Federal legislation (23 U.S.C. 133), enacted as part of the Federal-Aid Highway Act of 1962, does not require the States to make relocation payments as a condition of receiving Federal-aid highway funds. Instead, section 133 merely permits such payments, where made, to be included as construction costs and thus reimbursed on the same basis as any other project cost, but only up to $200 in the case of an individual or family and $3,000 in the case of a business or farm. As of March 31, 1968, 37 States,2 the District of Columbia, and Puerto Rico authorized the payment of moving costs reimbursable in whole or in part under section 133. Of these, 25 States ~ and Puerto Rico substantially provide relocation payments in the amounts subject to Federal reimbursement under section 133. The laws of 11 States authorize their highway departments to make payments exceeding the limits of section 133.~ As a result, a portion of such payments are not eligible for Federal reimbursement. Section 133 does, however, require every State to provide relocation advisory assistance, but only for the relocation of families. While present Federal law does not require relocation ad- visory assistance for businesses and nonprofit organizations, almost every jurisdiction now offers this service. Relocation payments on a national basis show the magnitude of the trends in the program. For example, as shown in the tables appended to this statement, during the 33-month period from April 1, 1965, to December 31, 1967, residential relocation payments totaled nearly $61/2 million for about 55,000 payments, an average of $117 for each 1 $75 million for replacement housing assistance (21,000 eligibles averaging $3,~OO). $19 million toy rental assistance payments (32,000 units averaging $500). $60 million for the recommendations contained in the Highway Relocation Asisistanee Study. million for the cost of transferring property to the State (56,000 units averaging $5 -~. million for business relocations in excess of the amounts recommended in the Highway ReTocation Assistance Study (5,300 units averaging $1,000). Total. $i73+ million. 2 Alaska, Alabama, California, Connecticut, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts Miehigan. Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin. Alaska, Alabama, California, Georgia, Illinois, Kansas, Kentucky, Maine, Massachu- setts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Dakota, Utah, Vermont, Virginia, Washington, West Vir- ginia, Wisconsin. Connecticut, Indiana, Maryland, Montana, Nebraska, New York, North Dakota, Okla- homa, Peunsylvania~ Tennessee, District of Columbia. PAGENO="0435" 429 residential relocation payment. Business relocation payments aver- aged over $1,000 each and came to a total of over $6 million during this 33-month period. Besidential relocation payments during the last quarter of 1967 numbered over 5,700 and averaged $124, compared with about 2,000 payments averaging $104 in the quarter ending June 30, 1965. Business relocation payments show a similar upward trend. Congress has clearly recognized the need to strengthen the relocation assistance program. The Federal-Aid Highway Act of 1966 directed that a study be made of the relocation problem with special emphasis on the adequacy of relocation payments and assistance rendered. This highway relocation assistance study was transmitted to the Congress by the Secretary of Transportation on June 30, 1967, and was printed by the House of Representatives as Committee Print No. 9, 90tl~ Congress, first session. That study indicates that about 168,000 individuals, families, busi- nesses, farmers and nonprofit organizations either have been or will be displaced during the 3-year period commencing July 1, 1967. This will average 56,000 per year. About 23 percent of these are located in rural areas and 77 percent in urban areas. About 55 percent of all highway displacements will result from the interstate program.' The bulk of the 168,000 estimated displacements involve residences, either families or individuals. About 147,000 residences, 16,000 busi- nesses and nonprofit organizations, and 5,000 farms have been or are expected to be displaced during the July 1967 to July 1970 period. Of the 147,000 residential units, about 86,000 are owners and 61,000 are tenants.2 It is of course, obvious that the more adequate relocation program proposed by S. 698 would require greater expenditures than does the program presently authorized. Taking the 168,000 relocations which occurred or will occur in the period from 1967 to 1970, the total relo- cation cost, bothFederal and State, authorized under the present pro- gram could be about $37 million, or somewhat more than $12 million per year. This assumes that all jurisdictions participated fully. How- ever, since only 39 jurisdictions are actually participating under the present law, the actual cost for the calendar year 1967 was closer to $6 million. If the more adequate relocation provisions recommended by the present legislation were enacted, the cost would be approximately $173 million annually. These costs anticipate acquisition of Interstate System rights-of-way and can be expected as I mentioned earlier to diminish with the completion of that program. We think that the increased costs engendered by 5. 698, while large in dollars, are small in comparison with the more than $4 billion expended annually by the Federal Government alone in the Federal- aid highway program. The additional expenditures required in the proposed legislation are, in our view, entirely justified to insure that persons displaced by our highway programs are treated justly and that hardship is not worked on those few persons and businesses who `Highway relocation assistance study, transmitte~L to Congress by the Secretary of Transportatioa Juae 30, 1967 (House Committee on Public Works, Committee Print No. 9, 90th Cong., isit sess.., at p. 41). 2 Highway relocation assistance study, transmitted to Congress by the Secretary of Tranisportation June 30., 1967 (House Committee on Public Works, Committee Print No. 9, 90th Cong., 1st seas., at 41 and 43). PAGENO="0436" 430 must move iii order that the highway program may be completed for the benefit ~f ~s all. Finally, section 80't(b) provides in the case of federally-assisted projects that costs o~ relocation would be included in project costs and Federal financial assisth~nce would he provided to the same extent as other project costs, except that the Federal agency would contribute the first $25,000 of the cost of providing a relocation payment to any displaced person. The effect of the proposal would be to have the Federal Government assume almost all relocation payments. We believe that relocation payments are an. essential element of project cost and see no reason to exempt the first $25,000 from the usual sharing requirements. We believe strongly that relocation payments should be shared as other highway project costs. I thank you for this opportunity to testify on this legislation, Mr. Turner and I, to the extent of our ability, are prepared to answer questions. (The tables referred to follow:) TABLE 1.-HIGHWAY R ELOCATION PAYMENTS FOR ALL STATES APR. 1, 1965, TO DEC. 31, 1967 Quarter ending Residential payments Business payments Number of Total Average payments payments payment Number of Total Average payments payments payment June30, 1965 2,902 $209,062 $104 354 $339,905 $960 Sept 30, 1965 3, 406 387, 693 114 371 363, 598 980 Dec. 31, 1965 5, 598 584, 355 104 514 453,843 883 Mar. 31, 1966 4,951 538,229 109 597 547,663 917 June30, 1966 5,588 618,512 111 633 615,077 972 Sept30, 1966 6,106 716,792 117 596 618,823 1,038 Dec.31, 1966 5,659 665,029 118 627 625,206 997 Mar.31, 1967 4,778 589,394 123 677 899,698 1,323 June 30, 1967. 5~238 664, 554 127 573 574,906 1,003 Sept 30, 1967 5, 724 728, 708 127 590 638, 762 1, 101 Dec. 31, 1967 5, 740 709, 002 124 640 682, 1104 1,066 Total 54,790 6,411,930 117 6,162 6,355,485 1,031 TABLE 2.-HIGHWAY RELOCATION-PAYMENTS BY STATES JULY 1, 1967, TO DEC. 31, 1967 Resi Region State Number of payments dential payments Bus ness payments Total payments Average payment Number of payments Total payments Average payment Connecticut 429 $61, 010 $142 17 $28,982 $1, 705 Maine 33 4,993 151 5 752 150 MaSsachusetts 152 22,541 148 44 59,161 1.322 New Hampshire 41 5, 538 135 3 2, 230 743 New Jersey 444 51,435 116 62 90,366 1,458 New York 950 165,286 174 120 205,284 1,711 Rhode Island 28 2,740 98 7 18,124 2,589 Vermont 50 7,030 141 13 7,201 554 Puerto Rico Total, region 1 2, 127 320, 573 151 271 411, 100 1, 517 2 Delaware Maryland. 337 36 501 108 12 6,743 562 Ohio 774 78,681 102 83 102,789 1,238 Peonsylvania 514 85, 948 167 42 85, 067 2, 025 Virginia 422 39,799 94 71 27,586 389 West Virginia 492 58,349 119 39 23,086 592 Districtof Columbia 39 3,175 81 Total, region 2 2, 578 302,453 117 247 245. 271 993 PAGENO="0437" Resi State Number of payments dential payments Bus ness payments Total payments Average payment Number of payme~its Total payments Average payment 3 Alabama 482 $38,262 $79 61 $53,260 $873 Florida Georgia 350 30,027 86 8 2,549 319 Mississippi North Carolina 198 14,474 73 42 23,817 567 South Carolina Tennessee 350 30,697 88 21 10,192 485 Total, region 3 1, 380 113 460 82 132 89, 813 680 4 Illinois 131 12,488 95 19 11,837623 Indiana 927 104,010 112 57 42,198 740 Kentucky 310 28,704 93 51 38,028 746 Michigan 1,537 202,280 132 97 93,536 964 Wisconsin 120 17,748 148 38 43,988 1,158 Total, region 4 3, 025 365, 230 121 262 229, 587 876 5 Iowa 42 6, 360 151 7 2,961 423 Kansas Minnesota 365 48,635 133 88 87, 868 999 Missouri Nebraska 46 5,225 114 20 13,949 697 North Dakota 3 407 136 4 1,928 482 South Dakota Total, region 5 456 60, 627 133 119 106,706 897 6 Arkansas Louisiana Oklahoma 19 2,140 113 9 90,791 10,088 Texas - Total, region 6 19 2~140 113 9 90791 10,088 7 Arizona California 1,463 224,133 153 102 77,775 765 Nevada 18 1,576 88 18 21,767 1,209 Hawaii 90 10,625 118 8 1,005 126 Total, region 7 1,571 236,334 150 128 100,547 786 8 Alaska - Idaho Montana Oregon 233 25,017 107 33 20,984 636 Washington 59 9,131 155 16 25,123 1,570 Total, region 8_~___ - 292 34, 148 117 49 46,107 941 9 Colorado New Mexico Utah 16 2,745 172 3 839 280 Wyoming -- Total, reg~og 9 16 2,745 172. 3 839 280 Total, national 11,464 1,437,710 125 1,220 1,320,766 1,083 Senator MusKIE. With respect to that last point, your position is that provision of an adequate relocation ~aym&it in accordance with the provisions of S. 698 should he in addition to the sh~ri~ag of Fed- eral highway costs by the States ~ Mr. BRXDW~LL., Yes, sir. Senator Mrsiaio. That i~ writing off quite a powerful* inëentive in these days, is it not? . Mr. BRIDWELL. I would think so, yes, si~r. Senator Mt5KIE. But is it as powerful as other Federal programs n these days? . . 431 TABLE 2-HIGHWAY RELOCATION-PAYMENTS BY STATES JULY 1 1967, TO DEC. 31, 1967-Con. Region PAGENO="0438" 432 Mr. BRIDWELL. Of course, not being familiar or as familiar with other Federal-aid programs as I am with the highway program, I do n~t believe I am qualified to answer the question. However, I think it is perfectly obvious that in order to receive Federal assistance for any kind of program, certain kinds of standards, certain kinds of conditions, criteria, have to be met. I see nothing particularly unusual in adding this particular criterion as a condition of receiving Federal aid. Senator MUsKIE. But there are a number of programs that are not as popular in the States, or in all parts of the States, as highways. Highway construction is almost uniformly popular. There is a tre- mendous pressure on the State to meet this kind of condition. Recog- nizing this, the beautification program, for example, is keyed to this and it is pretty powerful medicine. But with respect to less accepted Federal programs, insistence upon a considerable condition could very well jeopardize the program in most of these States. Mr. BRIDWELL. Well, I suppose that that is possible, Senator Muskie. you will recall that when the Highway Safety program was enacted by Congress, there was a similar provision written in-when I say sim- ilar, I mean similar to the beautification program-that provided the so-called penalty provision. And there was some discussion among the States of, well, is it worth it? In other words, would it be less ex- pensive for us to ignore the highway safety program and just assume our 10-percent ci~t? I do not expect any State, not one single State to adopt that attitude, for a real good reason, that in the wisdom of Congress, all of these programs are wise and are needed and I cannot believe that any State is going to take the position that it does not want any part of these programs simply because of the conditions imposed. Senator MU5KIE. The Congress thought the defense highway sys- tem was so wise and so important that it provided that the Federal Government pick up 90 percent of the cost. Senator Baker suggested that the word should be "costly", not "wise.,, In other words, the Congress feels if the objective is important enough, in order to increase the objective, you increase the share of the Federal participation. You indicated that the relocation problem is an important one. I `believe there will certainly be delays to full implementation of the re- location `program by all of the~ States. So it seems to us that it is better, considering the urgency of the problem, that we provide a larger percent of Federal money. Certainly it is not that much, `as you indicated, in proportion to the total cost of the projects. The State highway commissioner of Maine tells me that although the division of the costs between the Federal Government and the State on the defense highway system was 90 to 10, as a practical matter, because there are many costs which were not subsidized, it is usually something less' than 90 percent for the Federal Government~ some- thing more than 10 percent for the States. So we are talking about elements of cost that fall within that range, I think. If that is the case, I see no reason why we ought not to fund this. It is easily within the capability of funding. I think the net Federal share in my State would still not exceed 90 percent of the cost of the defense system. Is that an inaccurate analysis? PAGENO="0439" 433 Mr. BRIDWELL. Well, let me break that down, if I may, Senator, into two or three parts. One, I think perfectly obviously, there are many instances in which a precise breakdown of cost does not turn out to be 90 to 10 for a lot of peculiar reasons appropriate to a particular project. Senator MU5KIE. It tends to become a pattern year after year. Mr. BRIDWELL. I would not think that that percentage would vary in any significant way. I suspect that one of the factors which influ- ences these statements to you would be the necessity that in connection with an interstate system project but not a part of it would be the necessity of upgrading, reconstructing feeder roads to the system. Now, certainly, that is not eligible for 90 percent Federal participation. If it is on the Federal-aid system, it is eligible for 50-50 participation. And of course in many cases, the connecting roads are not on any Fed- eral systeni, so it is a 100 percent State or State and local responsi- bility. Yet to make the system work well, these feeder or connecting roads must, in many instances, be upgraded, in some cases recon- structed. So if they are taking those kinds of costs into consideration, then certainly it would be less than 90 to 10. But it is very unusual for us within the rights-of-way, if I may put it that way, of a Federal-aid interstate project to disallow any features which would then raise the relevant cost to the State. And of course, you are aware of the public lands sliding scale in which some States receive more than 90 percent. Senator MU5KIE. I am ucally not complaining about the fact that this additional cost to the State changed the 90 to 10 ratio. I might have to make more specific instances. But that was not the thrust of my question. You mentioned the fact that what we are talking about here in the highway program is a $40 million- Mr. BRIDWELL. I believe my testimony, Mr. Chairman, was that 55 percent of the displacees are associated with the interstate program and 45 percent from others. And of course, under the proposal- Senator MUsKIE. The figure I am looking at is this: The Federal Government spends annually $4 billion in the Federal-aid highway program. Now, 1 percent of that is $40 million. You talk `about a $173 million cost; that is 4 percent. As I recall, I think 4 percent is a greater variation than my highway provision suggested, because it is half of 90-10, or 50-50. Incidentally, I might say that that $173 million estimate that you give is much greater than the one given to us by the Advisory Commission on Intergovernmental Relations. I think it was twice their estimate for the cost of all pro- grams under the act. I wonder if you would check your figures with the Commission's so we may have as firm a figure as possible ~ Mr. BRIDWELL. Yes, we will be glad to do so, Senator. (The material referred to follows:) Que~tioa Senator MusIaE. "I might say that that $173 million estimate that you give is much greater than the one given to us by the Advisory Commission on Intergovernmental Relations. I think it was twice their estimate for the cost of all programs under the Act. I wonder if you would check your figures wIth the Commission's so we can have as firm a figure as possible." PAGENO="0440" 434 Response Our estimate of the annual cost for the highway relocation provisions of 8. 698, with the modifications suggested by the Administration, includes the following items: MiU~ons For replacement housing assistance (21,000 eligibles averaging $3,500) _.. $75 For rental assistance payments (38,000 units averaging $500) 19 For cost of transferring property to the State (56,000 units average $250)_ 14 For business relocations in excess of amounts recommended In Highway Relocation Assistance Study +5 For recommendations of Highway Relocations Assistance Study 60 Total ±173 These costs should decline in the next several years as land acquisition for the Interstate System tapers off. This estimate is considerably higher than an estimate of costs given by the Advisory Commission on Intergovernmental Relations. Their estimate of relocation costs due to highway construction was about $33 million per year, The difference between the Federal Highway Administration estimate of $173 million and the $33 million apparently results because: 1. Our estimate Includes the expected costs of the recommended expansions of the relocation provisions offered by the Administration. 2. Our estimates are based on estimated displacements for the 1967-1970 period received from the 50 states. We understand that the Advisory Commission on Intergovernmental Relations' estimate is based largely on actual 1967 fiscal year displacements. The individual who made the calculation for us is not with us here in the hearing `this morning. But we did check the point of how we arrived at that total figure. It is based upon a projection of actual cases; in other words, taking actual case experience and then applying it to our estimate of the 168,000 persons, families, businesses, nonprofit organizations, and farms to be displaced. So it is our obvious belief that it is a reasonable and reasonably accurate estimate of costs. We are not raising the point, however, Senator, so that the record will not be confused, that this is too much money or that 1 percent or 2 percent or 3 percent is too much money. I rather would put it on the basis of the viability of a program, the realistic administration of a program where the Federal Government picks up the entire cost. Senator MUSKIE. Well, certainly your position is not unreasonable. I do not suggest that. lit is a perfectly reasonable proposition that the costs of this item be shared to the `same degree that other costs are. The response of those of us who are concerned with the bill to the opposition is that we think it is necessary because of the reluctance of the States to rise to this challenge, that because of the very severe human considerations `involved, 100 percent Federal funding can be justified. Reasonable men certainly can disagree on that. I cannot even predict how our committee would divide on it, if at all. But I thought we ought to explore a littl0 bit in the testimony here and give you a full opportunity to express your opinion, I understand it fully, I think. Again, 1 do not consider it an unrea- sonable point of view, but I still may disagree with it when we are through. Senator Baker. Senator BAKER. Just for the sake of a' thorough understanding of the reasons and justific~tions for yom' recommendation on the cost- sharing, I would like to run over it again, if I may. But before I do, I would like to a~k you, is it within your contemplation that moving costs would be an element of damages and would be subject to htiga- PAGENO="0441" 435 tion like any other element of damages under the present form of the bill? Mr. BRIDWELL. Senator Baker, I have not really focused on that particular question prior to this. Senator BAKER. I realize your statement said you were directing your attention to title VIII, and I apologize for giving the appearance of trying to put you on the spot. Mr. BRIDWELL. That is perfectly all right. Senator BAKER. On page 37, which is in part (f) of title VIII, it does state that all functions performed under this section shall be sub- ject to the operation of the act of June 11, 1946 (60 Stat. 237), as amended: Any displace~I person adversely affected or aggrieved by the operation `of thia section after the effective date of this act may institute in the district court of the United States for the judicial district in which such claimant resides or in which such claim first arose an action for the review of such determines. I assume that this means the amount of moving costs would be sub- ject to litigation, like every other element of cost. But what I really want to know is what your view is about the propriety of having the moving expenses subject to judicial review? Mr. BRIDWELL. I understand, Senator, and as I say, I have not fo- cused on this particular section of the bill prior to this. My reaction is that it is not necessary to make this particular process suNect to a review by appropriate legal means. We are taking the position that under our bill, this is an administrative activity in which we are participating in the payment of full costs and the only require- ment is the documentation of the costs experienced that this is con- sistent with the rest of the operation of the Federal-aid `highway program. Senator BAKER. Would you agree that the cost of making one whole~ which after all is the function of the moving allowance, ought to be included in the assessment of total damages. by any jury trying the case in any litigation? Mr. BRIDWELL. I think we look on this, Senator, as separate and dis- tinct from the operation of `the eminent domain proceedings in which, if a ne~otiation is not achieved, then of course, it is a matter of court determination. But we believe that this relocation assistance program is not directly a part of eminent domain action. Senator BAKER. Would you agree. with the general proposition that the thrust and objective of equitable eminent domain legislation should be to prevent one involuntarily displaced from his property from being less than whole after the `taking and completing the compensation payment? Mr. BRIDWELL. In a philosophical context, no, I would not dispute your statement; or conversely, I would agree with your question. Senator BAKER. 11 am sorry, sir? Mr. BRIDWELL. I say that in a philosophical context, I have no prob- lem with the import of the question. Senator BAKER. Of course, the bill as presently written, dealing with a full lOO-percent share of t.he first $25,000, I understand, `follows gen- erally the urban renewal formula. Can you tell me now some elabora- tion of your preference for the highway formula over the urban renewal formula within the framework of that general philosophical concept? PAGENO="0442" 436 Mr. BRIDWELL. I believe, Senator Baker, that it is our feeling that assisting a displaced individual-family and so forth-in finding a replacement structure is just as much a part of a highway project as any other activity within that highway project and that it should not be treated separately and distinct from other activities within that project and the meeting of Federal criteria. These are engineering cr1- teria and many other criteria which have very important sociological and economical interests and overtones. Senator BAKEcR. Senator Muskie, I think, put the question, is it not so that the States have not really performed very well in this field of displacement assistance and the like? Might the States not perform better in your view of they were entitled to a 90-percent contribution across the table in the allowance of moving expenses? Mr. BRIDWELL. Well, of course, under our suggestion, Senator Baker, for those families, businesses, et cetera, who are displaced on an inter- state project, the State would be eligible for a 90-percent reimburse- ment. In other words, a replacement cost is like any other cost, so it would be 90-10 or 50-50, according to the type of project involved. Senator BAKER. The question I am getting at is do you see any ap- parent built-in reluctance or resistance on the part of the States to the making of moving cost payments, other than the economic factor? Mr. BRIDWELL. I think I have to answer the question honestly, Sena- tor, by saying yes and no. The yes part is that there is some resistance; again, not philosophical resistance. It is much more pragmatic resist- ance because State highway departments are not trained, experienced, and practiced in this kind of activity and some of them are reluctant to undertake it because they consider this a field foreign to the engi- neering portions of constructing a highway. I frankly would have to say that I am disappointed that under the 1962 act, there are still some States that are not taking advantage of the provisions of that act, inadequate though it may be. Now, the other side of that is that some States do a really excellent job, a thoroughly good job. In some instances, the State highway de- partment does it itself; in some instances, it contracts with a local agency, usually the redevelopment agency, that also handles relocation assistance under urban renewal and other federally aided programs. I think it is pretty hard to come up with any kind of consistent pattern and say the States generally do or do not perform well. I would add two points to this. One is that as you are probably aware, the Federal-aid highway program, to a very heavy extent, operates under State law, so the States also are either aided or con- strained by their own State law. The second factor that I would like to mention is that some of the States have complained or, in another sense, have requested us to seek improvements in what we are able to accomplish under the 1962 act. Senator BAKER. One last question, Mr. Bridwell or Mr. Turner. Are you prepared to say today, and if you are not, I fully understand, but are you prepared to say today whether or not you will support a pro- posal that would allow moving costs, relocation costs, without an arbitrary limitation as to amount, ~s a part of the award in the course of litigation in the eminent domain proceeding ~ These costs would be borne on the formula now applicable to highway and interstate high- PAGENO="0443" 437 way programs-that is, 90-10--the objective being to make the in- voluntary seller no less than whole after the move is consummated. Mr. BRIDWELL. I would like to, if I may, Senator, and if it is agree- able with the chairman, respond in the following way: I would like to provide an answer to that question for the record, but to discuss it a little bit now in very general terms. The problems associated with relocation or, it think the problems associated with displacing persons and businesses, have been a feature of the Federal*aid highway program that has probably distressed me as anyone that I have to deal with, or that Frank does or any of our colleagues. The concept of making a person whole to me is eminently fair. As a matter of fact, I think justice in the ordinary way that I understand justice requires that you make a person whole. We have found extreme difficulty in trying to put down on a piece of paper in black and white how you accomplish this. For example, and I tried to sort through examples to test various ways, either by establishing criteria or by attempting to adopt procedures, how you accomplish this. And I do not know how you can handle such things as the elderly couple who have a fair-sized residence, they are retired, they may have a very small pension or may be living on social security and they supplement their income by renting rooms. Now, under fair market value, they are not going to be able to find, probably are not going to be able to find, another residence in which they can live in this same pattern. I am not sure that the supplementary payment of up to $5,000 would be significant in that kind `of a case at all, because it may very well be that fair market value translates into another residence that is decent, safe, `and sanitary by anyone's cri- teria. Yet they have lost this very important ingredient to their happiness and livelihood; namely, the income from renting two or three rooms. If on the other hand, you `try to figure out `how do you go to a system in which you guarantee replacement-well, it get a little bit silly to think about replacement in the sense of reproducing a hous'e, particu- larly many `of the kind that we `buy in `the highway program, which was built maybe back in the late 1800's or the early 1900's, in which they were large houses with many rooms and large rooms. It would be completely inappropriate to try to reproduce now that type of structure. So how do you get at this kind of thing? We are not unmindful of it and we are not unsympathetic; exactly the opposite. We are very sympathetic and we just frankly are not smart enough to figure out how you do it. `Or let me give y'ou another example. Whether we like it or not and whether we may say that it is completely unjust, the fact is that for certain people to move into a certain kind of neighborhood, realisti- cally, they pay more for a hou'se than some other people would have to pay. If we come along and take tha't house at fair market value then it is not being unrealistic `at all to believe that we will pay an amount substantially less than that individual p'aid to acquire the property, maybe only `a short time ago. The practical effect is that he may get en'ough, for example, to pay off his mortgage but not have a dime left over to show for what he believes to be his equity or a dime left over to result in funds for a down payment on a replacement house. PAGENO="0444" 438 Now, we can come up with all kinds of statistics and we can come up with all kinds of firm criteria and the human vagaries involved in this kind of situation, we frankly are not smart enough to cover all of, At least I know we have not been able to. Now, that is a long, long way to go about answering your question, `but the answer is certainly justice requires that you make a person whole. But how do you do it in our kind of system where we live by laws and we live by administrative criteria promulgated and then we try to require people to systematically follow this. Another arm of Government says if you write that criteria, you have to follow it, or the person receiving Federal-aid has to follow it. So these are the kinds of problems that are real. They are here, right today. We have to deal with them. We need without question better tools to deal with them. But I cannot sit here and honestly tell you that your bill or what the Budget Bureau suggested or what we are saying today is going to provide the kind of mechanism in which we can handle all these questions, because I honestly do not believe we are doing them. Senator BAKER. Mr. Bridweil, I thank you for the elaboration. May I say now that I feel that you and Mr. Turner and your Bureau have been most sensitive and keenly attuned to problems in this field and have done an extraordinarily good job. I agree with you; I think you need better tools. I also agree that the identification of just compensation is difficult. But I think these bills and the adjustments which `are being considered by the committee are to do precisely what you stiggest: that is, sharpen the statutory language so that we have more of an approximation with which to do justice than we do by some abstract legal com- pensation like fair market value. I think if you wish to make a more detailed answer later on, you may, but I share with you the con- cern that we have to find better ways to go about this~ Mr. BRIDWELL. Senator, without being able to define, without being able to suggest any specific language, I would only make the comment that somehow into this system, regardless of which partictilar bill is passed, there has to be some kind of flexibility. And in the final analysis, in this kind of an area, we have to allow a little bit more discretion or a little bit more trust in the person actually handling these cases individually than our system normally would allow. In other words, writing law or writing administrative criteria or procedures ~hieh are uniformly applicable throughout the Nation and in all States and to apply to all cases flies flat in the face of the kind of human vagaries which anyone in an administrative agency and involved in this kind of program can cite, instance after instance. Senator BAKER. May I interrupt just a second? I refer to the ex- tended flexibility which this bill offered and I wonder if you care to make suggestions on how we might give you greater flexibility in order for you to meet the requirements of just compensation. If you do, would you su~bmit suggestions to be considered later? Mr. BRIDWELL. We will sure try, Senator, because we are equally concerned about it, Senator MUsKIE. The question is to what extent can you anticipate all of the conceivable hardship cases that the project may generate. PAGENO="0445" 439 Secondly, Ito what extent can you generalize each of them and the objectives of these criteria? Man has not yet measured up to that kind of situation. I do not know if he is going to. I would welcome any- thing you have to offer in accordance with Senator Baker's suggestion. In your statement you have indicated support for the $5,000 sue- plemental payment on the taking of a home over and above its fair market value. Is it really necessary to put a $5,000 ceiling on it? Mr. BRIDW1~LL. May I respond in the context of my personal opinion? Senator MUSKre. Yes. Mr. BRIDWELL. No; $5,000 has not the slightest thing to do with it. The key to it is hc~w you define "decent, safe, and sanitary." Senator MUSKIE. Would you give any guess as to how much you would add to the cost if you eliminate the ceiling? Mr. BRIDWELL. Well, as long as you tie the two things together, you do not add anything, because I believe the words used here are "decent, safe, and sanitary" by modest standards, or something to that effect. The cost goes up or it goes down or it is some place in the middle ac- cording to the criteria of what constitutes "decent, safe, and sanitary." If, for example, you use the definition as used in the 1960 cenisus~ then there are not going to be very many cases in which you even use the $5,000. If, on the other hand, you define "decent, safe, and sani- tary" in the sense of a dwelling that each individual in the family must have a decent bedroom and a decent bath, then it is perfectly obvious that the cost is going to go sky high. Those are the ridiculous extremes. So the $5,000 per se is not really a meaningful criterion. The critical element in the phraseology is decent, safe, and sanitary by modest standards. Senator MusKn~. The $5,000 figure strikes me as representing an excess of caution by ad~ministrators who are concerned about open ended commitments. But I can understand this origin. I do not criticize it. It really strikes me that it is kind of `a hard and arbitrary line you can draw between justice for one group and injustice for another. Mr. BRIDWELL. I think it goes back to the samO problem that is a philosophical problem, Senator, that we have either discussed directly or worked around the edges of. It is this problem that in our sociéty~ we require or it has been our practice certainly to require i~ery spe- cific kinds of law, `administratively established criteria, and procedures. Then somebody else comes along and says, "Ok, now, this is what you said you were going to do and how you were going to do it." Then they check very carefully to make sure that you did it that way. Senator Mu5KIE. One of the reasons you do it that way is so that Congress can. have something to raise hell about with the Department. I have one more question the staff has prepared. I think, rather thlan take the time to read it, since it is a two-page question, I will submit it to you. It asks, for example, after the rhetoric, for all the rules, regulations, and other instructions related to relocation programs in the Federal- aid highway program, including bringing up to date the data on State programs contained in the recent highway report; secondly, provide separate information with respect to all negotiations and other mat- ters pertaining to land acquisition and so on, and the value of acquisi- tion; and thirdly, provide us with samples of specific oases involving PAGENO="0446" 440 land taking as worked out by the staff to show us the original offer of the purchase, the amount offered when the case went to the court and the amount the court awarded. I think that kind of information will be useful in the record. Mr. BRIDWELL. We will be glad to provide it for the record, Mr. Chairman, and I will have my associates in the office get in touch with your staff to work out the `specific types of information you want. Senator Mus:~IE. Thank you, very much, gentlemen. I appreciate it. Mr. BRTDWELL. Thank you. Senator MnsKIE. I understand we are going to have a vote about 11 :15 and it is now about 11 :15. We shall at least call our next witness to the table. If we have to leave, excuse us for a few moments. Our witness represents the Department of the Army, the Chief, Office of Engineers, Mr. Loney W. Hart. Mr. Hart, would you identify the men with you? STATEMENT OP LO'NEY W. HART, CHIEF, LEGISLATIV~ SERVICES OFFICE, DIRECTORATE OP REAL ESTATE OFFICE, CHIEF OP ENGINEERS, ACCOMPANIED BY ROY M:ARK0N, CHIEF, ACQUISI- TION DIVISION; HENRY V. SAUNDERS, ASSISTANT' CHIEF, MAN- AGEMENT AND D~ESPOSAL DIVISION; MARK S. GURNEE, CHIEF, OPERATIONS DIVISION; AND `THERON C. RILEY, PLANNING DIVISION Mr. HART. Mr. Chairman, members of the committee, I `am Loney W. Hart, chief of the Legislative `Services Office, Office of the Chief of Engineers, Department of the Army. The Department of the Army `has been designated `as the representative of the Department of Defense for this legislation. I represent the Department of the Army for that purpose. I might say I have with me four members of the Corps of Engi- neers, also, Mr. Roy Markon on my right, who is Chief of the Acquisi- tion Division of the Chief of Engineers; and Mr. Saunders on my left, who is Assistant Chief of the Management and Disposal Division. At the conclusion of my statement, they will be available to' answer de- tailed questions in their respective' fields by your committee. Senator MTJSKIE. Thank you very much. Mr. HART. I have `a prepared statement which I would like to pre- sent to the committee. This statement i's respectfully submitted as constituting the views of the Department of Defense on 5. 698 as requested by this committee. The purpose of this bill i's to achieve the fullest cooperation and coordination of activities among `all level's of government. Provisions are made to: (a) improve the `administration of grants-in-aid to the States; (b) permit provision of reimbursable technical `services by the Federal Government to State and local governments; (o) estab- lish coordinated intergovernmental policy and administration `of grants and loans for urban development; (d) provide for periodic congressional review of grant-in-aid programs; (e) authorize the con- PAGENO="0447" 441 solidation of certain grant programs; (f) provide for the acquisition, use, and disposition of land within urban areas by Federal agencies in conformity with local government programs; (g) establish a uni- form relocation assistance program, and (Ii) establish a uniform land `acquisition policy for direct Federal `and federally aided programs. The Department of the Army, on behalf of the Department of Defense, is generally in accord with the major objectives of the bill `as stated in its title. The need for cooperation and coordination of activities among all levels of government has assumed increasing importance in recent years. This is most evident to this Department with respect to the civil works program administered by the Corps of Engineers. In this connection, interagency coordination has long been established as a prerequisite to the comprehensive planning and development of the Nation's water resources. The provisions of this bill for the most part pertain to Federal grants-in-aid and federally assisted programs which do not materially affect the responsibilities of this Department. As to these, it is proposed to comment only briefly. The major interest of the Department of Defense relate to the provisions of titles VIII and IX which will be discussed in detail. Title I sets forth definitions of various key terms referred to throughout the act. These, in general, appear adequate except as to "displaced person." Subsection (5) of section 113 appears to be a catch-all definition to include all persons displaced who are not included in any other definition. However, the proviso excludes all tenants or licensees who are required under their agreement to remove their property at their own expense. Taken literally, this would exclude practically all tenants and licensees, since the normal lease invariably contains such a provision. The intent of this proviso is not clear. Accordingly, it is recommended that either this proviso be deleted or that a more definitive clause be substituted. Title II deals with the grants-in-aid of the Federal Government. The Department of Defense defers to the views of the agencies respon- sible for the programs i~hich would be directly affected by the provisions of this title. Title III would authorize Federal agencies to provide specialized or technical services to State and local governments on a reimbursable basis, pursuant to rules and regulations to be established by `the Bureau of the Budget. The authority granted would be in addition to, rather than in lieu of, existing authorities. The Department of Defense has no objection to this title. In title IV, the apparent intent of section 401 is to insure that `all Federal agencies involved in urban activities shall give adequate con- sideration to the tenets of good planning. The President would be authorized to establish rules and regulations to this end. The Depart- ment of Defense assumes that the provisions of this section would apply to only those projects, programs, and facilities to be located within urban areas or to be undertaken as integral components of urban area plans. This would seem to be a safe assumption, in view of the `faGt that the President already has adequate authority to estab- PAGENO="0448" 442 lish any rules and regulations required to insure the proper planning of nonurban public works. For example, policies and standards for water resources developmen.t activities are established pursuant to the provisions of the Water Resources Planning Act of 1965, and it is~ obviously not the intent of section 401 to supplant the requirements of that act. Section 402 would indicate it to be the intent of Congress that Federal loans, and grants-in-aid shall be made, in general, to "units of general local government," rather than to "special-purpose units." In carx~ying out the civil works program of the Corps of Engineers this Department finds it desirable in many instances to work with interstate `compact commissions, metropolitan water and waste disposal districts, conservancy districts and other `such entities, and it is assumed that it is not the intent of section 402 to require the abandon- ment of the traditional relationships in programs other than those in which Federal grants-in-aid are made available for activities to be carried out within urban areas or as a part of urban plans. Title V would provide that all future programs of grants-in-aid from the Federal Government to two or more States or to their polit- ical subdivisions, for which no expiration date is specified by law, shall expire not later than June 30 of the fifth calendar year which begins after the effective date of the enactment of such program. In addition, title V provides a specified means ~f congressional review and oversight and for `continuing studies in grant-in-aid programs by the Comptroller General, and upon request of the appropriate congressional committee, by the Advisory Commission on Inter- governmental Relations. The majority of the grant-in-aid programs administered by the Department of Defense, which include direct research grants author- ized by Public Law 85-934 `(~2 Stat. 1793), are excluded from periodic congressional review by the language of this bill. Since the provisions of title V would apparently have no material affect on the military departments, the Department of Defense `defers to the views of the other Federal agencies more directly concerned. Title ITT would provide certain authorities to the President for the purpose of consolidating grant-in-aid programs. This title concerns primarily programs under the jurisdiction of other Federal `agencies, and accordingly, the Department of Defense defers to the views of those agencies. Title VII would amend the Federal Property and Administrative Services Act of 1949, as amended, by adding a new title-"Urban Land Utilization". This prescribes a uniform procedure to be followed by the General Services Administration in respect to acquisition, change of use or disposai of real property located within urban areas. In general, it would require that such actions be consistent, to the greatest extent `practical, with the local zoning, planning, and development practices. Since `a change in use of military property, even where this involves `curtailment or closure of an installation, would normally be accomplished by the Department of Defense without any action on the part of the General Services Administrator, the restrictions imposed by the title would not, in most cases, impede the operations of this Department. For this reason, the Department of the Army, on behalf PAGENO="0449" 44:~ of the Departm~nt of Defense, defers to the views of the General Servioe~ Administration. Senator Mts~IE. Before you get to title VIII, which I think we will discuss at some length, I would like to return to your discussion of the definition in section 113, which you interpret as excluding all tenants or licensees who are required under the agreement to remove their property at their own expense. I think that subsection 8(a) and (4) certainly covers tenants as well as owners. it seems to me that your comment really `had to do with the proviso at the very end of section 113. Mr~ HART. This is true. Actually, Mr. Chairman, it was the proviso that seemed to cause the confusion. `Without the proviso, there would be no problem. That is why we recommended deleting it. For instance, in other sections of the bill, we deliberately provide for tenants and in connection with the acquisition and payment for improvements of tenants. Now, this is what really generated the so- called railroad lessee problem, because the licenses of `these people on the railroad rights-of-way had a provision which stated that upon termination of the license, you must remove all of your improvements within 30 days. Well, this is one of the conditions which this bill was desirous of protecting and we just thought that this proviso would in effect almost knock it out. So we were suggesting that really, the proviso be deleted and then I think everything would be clear. Senator MusKIE. This is the first time I focused on that proviso. I would gather that the stafr intended it to cover people who store property on premises. Mr. SMITH. It is the intent of this proviso to exclude from cover- age as displaced persons, entitled to relocation payments and serv- ices, persons whose property is maintained on the premises of another under a leasing or licensing arrangement, such as a jukebox or vending machine firm, which would be obligated under the terms of the lease or license to remove the property from the premises. This definition has no connection with the provisions of section 903 which provide the basis for compensation of lessors for `their property located on land owned by another, as in right-of-way cases referred to. Mr. HART. Mr. Chairman, perhaps we can discuss it with the staff afterwards. I can only say that from the exact language there, it merely says the owner of property on the premises of another under lease. Generally, this wOuld be our prob1em~ Senator MusKIE. I would agree with your interpretation of that language standing by itself. I am glad you called it to our attention. It certainly should be corrected. It was not intended to be as broad ii its effect as you fear it might be. Mr. HART. This was only intended as a minor item of calling this o your `attention, sir. Senator MUSKIE. I understand; but it was rather startling. We had ncountered that difficulty before and we thought we had taken care f it. This is why these hearings are useful. Proceed, Mr. Hart, `to title VIII. Mr. HART. Title VIII would provide a uniform policy under regu- Ltions established by the President, for the fair and equitable treat- ient of owners, tenants and other persons displaced `by the acquisi- PAGENO="0450" 444 tion of real property in Federal a~rd federally assisted programs. This policy is to be as uniform as practicable as to (1) relocation payments, (2) advisory assistanoe, (3) assurance of availability of standard housing, and (4) Federal reimbursement for relocation payments under federally assisted programs. The Department of Defense subscribes to the principle of reimburs- ing owners and tenants for their expenses and losses resulting from dis- location made necessary by public works projects, and also to the desirability of establishing uniformity of procedures to the extent practicable. The military departments, since 1951, have administered a similar program pursuant to section 2680 of title 10, United States Code. This authorizes payments to displaced owners and tenants for actual expenses, losses and damages incurred as a direct result of moving by reason of the acquisition of their property; total payments are limited to 25 percent of the values of the land acquired. The experience. of this Department is that this law accomplishes the objective of affording reasonable financial assistance to displaced persons. Title VIII would, in effect, expand the existing requirements to place primary responsibility on the acquiring agency to provide all forms of social and economic relief. The imposition of the collateral requirements by this proposal might, as a practical matter, often result in costly delays or preclude the accomplishment of land ac- quisition programs to meet defense missions. However, it is `the view. of this Department that title VIII, while administratively burden- some, presents a workable system, provided it is amended in certain aspects. Comments will be confined to those sections recommended for modification. Section 802(b) provides that under certain circumstances, a dis- placed `person who moves or discontinue's his business may elect to accept an optional payment of up to $5,000. We understand that the intent of this optional payment is to cover both (1) the cost of moving, and (2) a readjustment allowance payment to assist small businesses in making up for the economic impact of displacement. If this is in fact the intent, we recommend that section 802(b) be revised to treat these two purposes more clearly by providing for two separate payments; one for actual moving expenses and one for economic readjustment. Accordingly, section 802(b) should be amended as follows: Delete the first sentence in section 802(b) be- ginning on line 19, page 33, with the word "If" and ending on line 2, page 34 with "lesser." `Substitute the following for this sentence: "In addition `to `the payment `authorized by subsection (a) of this section an additional payment is authorized for any displaced per- `son who moves or discontinues `his business: Provided, The `average annual net earnings of the business are less than $10,000 per year. This payment shall be in an amount equal to the `average annual net earnings of the business or $2,500, whichever is the lesser.". Section 802(c) (3) provides that an additional payment of $300 be made if the displaced person purcha'ses a dwelling as his residence wi'thin 1 year from the date o'f displacement. This is an optional lump sum payment to cover closing costs and miscellaneous expenses for the acquisition of a re~ilacement dwelling. The amount is not consid- ered unreasonable in view of current market conditions. It i's an iterri PAGENO="0451" 445 which this Department, under existing regulations, allows not oniy as to dwellings, but also as to replacement in kind of all types of real property. Section 802(f) would make all functions performed under section 802 subject to the provisions of the act of June 11, 1946, and to judicial review. The primary purpose of section 802(f) is to give recognition to the principle that the payments authorized by section 802 should be viewed as rightful compensation of persons displaced by Federal pro- grams. The need for this provision would appear to be more theo- retical than practical. The Department of Defense has during 17 years administered thousands of applications for payments for relocation costs under its broad authority (10 U.S.C. 2680) with a negligible number of appeals from displaced individuals to the Department. We believe that the objective of this provision can be achieved by making clear that the provisions of section 802 as regards relocation payments would represent congressional policy and that the heads of agencies would be responsible for its faithful execution. For the language now in section 802(f) we recommend substituting: "Any person aggrieved by a determination as to eligibility for a payment authorized by this section, or the amOunt of a payment, may have his application re- viewed by the head of the agency, whose determination shall be final, and no provision of this section shall be construed to give any person a cause of action in any court~" Senator MUSKIE. May I ask this question? You say the need for this provision would appear to be more theoretical than practical. Do you intend to indicate by that observation that, in your judgment, it would be little used? Mr. HART. Our intent is to point out that from our experience, we~ do not think it would be really necessary. We do not believe there would be that many disputes. Of course, under our present authority, we pay for actual expenses incurred. These are realistic figures and they can be proven or documented. We have taken a very liberal view in our regulations as to the items covered. We have endeavored to cover practically all actual expenses. Now, of course, these do not include, as we now might have, in- tangible or indirect damages that a person might suffer, but only any actual moving expenses. So as an illustration, we have checked just recently our last 2 years of figures and in some 3,900 applications for payments that have been processed, we have only had 47 actual, you aught say, appeals and these were not all appeals per so. That included requests for guidance from the field offices, it included inquiries as to ~vhether things could be allowed. Actual disputes, we have had rela- ively very few. So in this case, we think that you do not actually have o have a judicial review, or rather, if you had, there would not be too nuch requirement. Senator MU5KIE. The reason I put the question as I did is that it vould not be as easy as you may think to eliminate this provision of he bill. It was certified in the last Congress as a result of very strong epresentation by a member of this committee. It would be difficult to liminate it, so I wanted to know `to what extent would it be used. Vould it be burdensome, would it flood us with a long line of litiga- on? Is it the kind of thing that perhaps might be salutary by its resence in the bill? PAGENO="0452" 446 Mr. IEIAIn. If I may just make a comment, Mr. Chairman, in our what we call Resettlement Act, there is not such a provision, of course, for judicial review. The question might come up as to, if there were, might that not be an incentive further to encourage that, whereas when you are dealing with strict factual evidence as to cost, your issues are more clearly defined. In this case, if it were ~set up as a judicial review and everything would be tried de novo, there is no telling where it might end. Certainly the implications as to the Administrative Procedure Act, if this were developed to its fullest extent, would become extremely burdensome by reason of the details involved, whether they were appeals or not. Senator MUSKIE. I suggest you may wish to exercise your persuasive powers with the other members of the committee. I have to go vote, but I will be back as soon as I can. I am glad you have gone as far as you have in your testimony. I think we can pro- ceed fairly expeditiously when I return. (Recess.) Senator Musi~rF1. Proceed, Mr. Hart. Mr. HART. Section 803 (a) provides that each acquiring agency shall establish a relocation assistance program offering services enumerated in subsection 803(c) for both displaced persons and others occupying adjacent property deemed adversely affected. While the need for such services is fully recognized, there exist many agencies at all three levels of government which specialize in the various essential assistance pro- grams and which have trained personnel to perform such functions. It is the preference of this Department that the primary responsibility for providii~g these comprehensive economic and social assistance pro- grams remain within those agencies currently equipped to handle the same. In any ease, the expansion of these assistance programs to include persons occupying adjacent properties is considered impractical to properly administer in view of the innumerable and variable factors essential to a determination of adverse effect resulting from a specific project. Accordingly, it is recommended that the last sentence of sec- tion 803(a), beginning with the word "If" on page 38, line 18, be deleted. Section 803(c) enumerates and describes the services and assistance programs to be provided. In order to assure flexibility and consistency with other administrative provisions of this act, it is recommended that this subsection be amended on page 39, line 6, by inserting after the word "include" the words "to the maximum extent practicable." Section 803(c) (2) would require Federal agencies to assure the availability of adequate substitute dwellings within a reasonable period prior to displacement. It also provides for a waiver of this requirement in periods of national emergency proclaimed by the President. This Department views with great concern the serious impact the requirements of this section may have on Department of Defense pro- grams. A strict interpretation of this provision appears to make man- datory that the acquiring agency actually provide or be satisfied that there is available decent, safe, and sanitary housing prior to displace- ment of indi~iduals. Adherence to this ctmditioii could, in some cases result in serious delay of urgent national defense projects. The Burear PAGENO="0453" 447 of the Budget, in recognithn of this problem has recommended this provision be amended by deleting the balance of section 803(c) (2) beginning with "such assurance" on line 18, page 39, and substituting the following: "the ~President may prescribe by regulation situations when such assurances may be waived; * * ~." This Department con- curs with the proposed change. Section 804 provides that when lands are acquired by a State agency for a Federal public improvement project, such acquisition shall be deemed to be an acquisition by the Federal agency having authority over the project for purposes of providing relocation payments, as- sistance, and assurances. It is assumed that the purpose of this provi- sion is to assure relocation assistance for individuals displaced when local interests provide the necessary lands for Federal projects, as in the case of navigation and flood control projects. Under existing statutory authorizations, a prerequisite for initiation of a local co- operation project is that the local interests furnish, without cost to the Federal Government, necessary lands, easements, and rights-of-way. It has been the view of this Department that any cost expended for the displacement of owners and tenants in this connection was an incident to the land costs to be borne by the locality. The Bureau of the Budget has recommended this section be amended to place primary responsibility on the local interests. This Department concurs in this proposal. Section 805 provides authorization to the President to make such rules and regulations determined necessary to carry out the provisions of the act and also prescribes minimum legislative guidelines. This Department is generally in accord with these provisions subject to clarification of the several subsections as hereinafter stated. Section 805 (a) (2) (A) stipulates that the displaced person is to be paid for actual and reasonable expenses in moving himself, family, business, or farm operation, and as to a farm, the expense of locating a replacement farm. No reason is apparent for limiting this benefit to farm operations. Therefore, it is recommended that this subsection be amended on page 42, by deleting the phrase "in the case of a farm operation" commencing on line 5, and by substituting "property" for "farm" on line 7. Section 805 (a) (2) (B) stipulates that if personal property is dis- posed of in lieu of moving it and is later replaced at the new location, the owner shall be paid an amount equal to the moving costs. The underlying objective of this provision is to authorize payment of the difference between the sale price and the cost of comparable replace- ment property, but not in excess of the cost of moving. However, as presently drafted, the owner would be entitled to an amount equivalent to the full cost of moving irrespective of any difference between the disposal and replacement amounts. Consequently, with respect to standardized items of property, they could invariably obtain an unwar- ranted windfall. It is recommended that this subsection be amended by deleting the remainder of the paragraph following the words "such property" on page 42, line 10, and substituting the following: "with comparable property at the new location at a price exceeding the sale price, the amount of the difference of such prices, not to exceed, how- ever, the estimated cost of moving the property or its market value, whichever is less." PAGENO="0454" 448 Section 810(a) would repeal existing laws relating to payment of moving costs and make the provisions of title VIII immediately ef- fective upon the enactment of this act. This is highly impractical since it would leave all agencies without any guidance pending issu- ance of regulations pursuant to section 805. Additionally, many States will require enactment of enabling legislation for compliance with the act. It is suggested that a new section should be added to this title to provide for the effective date of this title. This amendment is necessary to provide sufficient time for the assignment of responsi- bility and for drafting of regulations for direct Federal programs and to allow State and local governments sufficient time to make necessary changes in their laws and possibly their constitutions to permit the agreements required as a condition of Federal aid. We recommend the new section 811 should read as follows: "This act shall become effective 180 days after enactment, except that sections 807, 808, and 810(a) (4), (5), (6), (7), (8), (9), and (10) shall become effective 3 years after enactment; Pro'vided, That, commencing 180 days after enactment, the provisions of sections 807 and 808 shall be applicable with respect to any contract, grant to, or agreement with a State agency, where such State agency is able under State law or local ordinance to agree to the requirements set out in section 807 (a) and the provisions of law governing relocation payments and assistance otherwise applicable to the provisions of Federal financial assistance to such State agency shall be superseded by this act." Title IX would prescribe uniform policies for the acquisition of real property for Federal and federally assisted programs. This De- partment is in accord with the general objectives of title IX, which, for the most part, coincide with established policies. However, it is believed desirable to amend certain of these provisions for purposes of clarification, permitting greater flexibility and more fully protecting the Government's interest. Section 901 (a) (3) provides that prior to negotiations with land- owners, the head of the Federal agency will establish a fair reasonable price for the property and make a prompt offer for the full amount so established. It is understood that the intent of this provision is to assure that the acquiring agency will reimburse owners in an amount which is fair and reasonable, commensurate with the appraised value of the land, and arrived at through mutual negotiation. If this interpr6tatiofl is correct then these provisions would not be in conflict with the present policy of this Department. On the other hand, if the agency is to establish a fixed amount as the fair price for the property, and may n~t offer less, it may be equally inappropriate for the agency to voluntarily pay more than the fair price should the owner refuse to accept the fixed amount. This will result in reverting to a one-price policy, utilized by this Department prior to 1961. The current negotiation policy was ad~nted as a result of the enactment of section 301 of the Land Acquisition Policy Act of 1960. An opinion of the Department of .Justice was that Congress intended for the Army to engage in actual, practical, and realistic negotiations, taking into eonsideration all of the flexible factors considered in normal transactions by a willing seller and a willing buyer. The objective of this policy is to acquire land at a fair PAGENO="0455" .449 and reasonable price as that term has been defined by judicial deci- sions and legislative pronouncement. It is not intended to pay less than just compensation and no offers are to be made to landowners which, if accepted, would not be just and reasonable. This policy has received general public acceptance as being fair to the individual landowner and to the Government; and it has reduced, drastically, the necessity to revert to condemnation litigation in the Federal courts. Section 901 (a) (10) provides that if the acquisition of a part of a property will leave an uneconomic remnant, the entire property should be acquired. It is recommended this subsection be deleted. As a general rule, this merely reflects sound real estate practice when- ever the amount of severance damages closely approximates the value of the whole. However, unless expanded to provide further guidance, implementation will be difficult. For example, who determines the remainder to be uneconomic? Is the basis of use the same or different? Is the acquisition of the whole property to be with or without the owner's consent and irrespective of the project need? Is the procedure the same for multiple ownership as for one owner? Is there any variance between direct purchase or condemnation? Because of the many variable factors involved, each case should be resolved on the individual conditions. Section 901 (a) (11) provides that any agency in fixing boundaries for a public improvement should take into account "human consid- erations" including social and economic effects on persons in the area. This subsection is so broad and tenuous in nature that it would be impractical, if not impossible, to develop feasible project plans and programs on such basis. It is recommended that this provision be either deleted or amended to more clearly define the purpose. Section 903 (a) would require any Federal agency acquiring an interest in land to acquire a like or greater interest in all buildings, structures, and improvements comprising a part of the real property which are required to be removed or which will be adversely affected by the public use. The intent of the requirement to acquire improvements "adversely affected" is not clear and does not appear to serve any purpose. It is recommended that subsection (a) of section 903 be amended, on page 53, liz~e 16, by placing a pe~'iod after the word "land" and deleting the remainder of this paragraph. Section 904 provides that an acquiring agency shall reimburse the landowner for all reasonable expenses incidental to the transfer of title to the Government. This Department ha~ no objection to this proposal. However, accurate information is not always available at the date of closing. Accordingly, it is recommended that this section be amended by deleting "not later than" on page 55, line 3, and inserting the words "as soon as practicable after." This concludes my statement, Mr. Chairman, and I will be pleased to answer any questions you may have on this matter. Senatoi~ Mus~cIE. I appreciate your statement and detailed com- ments, observations, and recommendations, We will study them all cl.o~e1y. I doubt that we can get into them all tOd~y. With respect to the discussion of section 901 (`a) (10) on page 15, it provides that if the acquisition of a part of a property will leave an tmecon:omic remnant, the entire property should be. acquired. You ~bject to that as unrealistic. 1 do not see that it is any bigger~ or more PAGENO="0456" 4:50 difficult to administer'than the one you describe as `a sound administra- tive practice; that is, that the full property be taken where the amount of the severance damage closely approximates th~ value of the whole. We are both getting at the same problem. Obviously-at least it seems obvious to me-you consider it an equitable situation to acquire the taking, so the question is what is the best way to approach ~t. I think perhaps we both have clearly in mind the kind of situation that we `are trying to get at. But I think closely appropriating the value may not necessarily reach all the inequitable situations. Mr. HART. Our recommendation or suggestion, Mr. Chairman, was directed primarily to the fact that this may be considered mandatory. I thinl~ you are `correct that we are both thinking of the same thing in connection with severance damages or where you take so much of the man's land that he cannot really use it for anything. Our policy has always been that not only for the sake of the owner, but also just for good business, in a severance damage case of taking a part, you are going to pay for the whole, so it has been our practice to acquire the entire tract to avoid the extensive severance damages. On the other hand, when we read this, we are not really certain that this was meant to b8 mandatory, that we would have no discretion, because lots of times, we might be acquiring a piece `of property and the owner-it may not be `an economic unit, but maybe the owner desires to retain it. It might not be our desire at all one way or the other. If you read this strictly as `a malTidate, then regardless of the owner's desires, we would have to acquire it. This was all we were trying to direct attention to, that it should be flexible. I think you will find this runs through most of our statement. Senator MusKIE. If the bill requires it, it would result i~ an inequitable situation. Mr. HART. That is correct. And I think if there is a severance, I think under the `existing interpretation of the court on severance dam- age, we would be paying for the whole whether we took it or not. Senator MUSKIE. It may be that in your administration of that prin- ciple, you have been more humanitarian than other agencies. We are trying to find a test here that will insure equitable treatment what- ever the agency and program. Mr. HART. Mr. Chairman, we are not objecting to the principle at all. ~We are only worried about whether or not there is room for both parties to have a say. Senator MusKI1~. I understand. I think perhaps we ought to try to work out some language here. I do not think we are in disagree- ment as to the objective at all, Mr. HART. I think, Mr. Chairman, that most of our recommenda- tions have really been based on not in any way objecting to the pol- icies or principles. It is a question strictly o~ administration, that we do not get ourselves boxed in so that in our desire to do it one way, we are unable to avoid equally inequitable situations. As was said in earlier testimony before me, we cannot foresee all of these situations; there- fore, the Department of Defense basically has simply said, let us make the rules flexible. We will have uniform rules and regulations. Cer- tainly within those rules, there is that latitude. Senator Mu5KIE. That is my feeling about the thrust of the testi- mony, Mr. Hart. It reflects a great deal of experience in this field and, PAGENO="0457" 451 I think, humanitarian concern, so that ~e have recognition of that particular value. Just one other problem I would like to touch upon. It is on page 11. This, is with respect to navigation and flood control problems. You have raised the problem that has really not occurred to me with respect to this question of 100-percent Federal funding of relocation costs. It runs counter to the policy which is stated there, of leaving these kinds of projects regarding land costs as a local contribution. Is that right? Mr. HART. Mr. Chairman, I think that, I believe you are familiar with the navigation projects under your Rivers and Harbors Act. This requirement, I understand, has actually been in being since the 136 Flood Control Act where we had what was loosely termed the ABC requirements, two of which are that the local interests will con- tribute lands, easements as required for the project, and No. 2, will hold the United States free and harmless from all claims. Now, this is not really a grant-in-aid or something like that. It is really considered a contribution and has been more or less one of the underlying features' of our local cooperation projects. Senator MUsKIE. In effect, this bill would change the formula for sharing. Mr. HART. It certainly would. It would, in effect-I do ~ot presume to be getting in over my head. This is not my field. But it could affect the cost-benefit ratio. I have a representative of our Civil Works Plan- ning Division here if the committee desires to explore it further. Senator MUSKIE. We might at least invite a comment from him at this point. Mr. HART. I have Mr. Riley here. Senator MUSKIE. We will have a sufficient discussion of it in the record. Mr. RILEY. I think Mr. Hart has explained it rather completely in that this is part of the cost that we normally require of the local people, which is in agreement with the Flood Contrel Act of 1936 as it has been amended. So it is really not a grant or an aid. It is a requirement which we feel local people should make toward the improvement which we are providing for their protection. Senator MUSKIE. Do you make any effort to concern yottrself with relocation problems that may be involved in the taking of lands.. in connection with test projects? Mr. RILEY. This is a requirement that we ask the local people to do. They have the responsibility for it. Senator MUSKIE. So you have never tried to second guess them or check them on it? Mr. RILEY. No, sir; this is their contribution to. the project. Senator MUSKIE. Of course, the local interests could conceivably be ruthless' about it. That is the question that is troubling me a little bit. Is there any role that you could play? Mr. RILEY. We do have certain requirements or agreements with these only. This is the part that Mr. Hart might be able to explain, this particular portion of it, better than I could. Senator MUSKIE. Do you have anything on that? Mr. HART. Senator Muskie, I might say this in regard to the local cooperation projects. Heretofore, the Department of Defense, in our PAGENO="0458" 452 previous reports, has not raised this particular issue and we have spoken to it now only by reason that the Bureau of the Budget has asked a similar question ~nd asked us to bring it up. Senator MtrsKIE. The Bureau has submitted suggested language? Mr. HART. Yes, sir; and we, o1~ course, concur in it. I think our experience has been, why we have not been too concerned is that our navigation projects are primarily widening or deepening waterways. While on occasion, you might find someone living close enough to the bank of a waterway that they might have to move, in general, we have had very, very little requirement insofar as the relocation of people. Occasionally, you might find a business where there are piers or wharfs that might have to move out. But again here, on our navigation water- ways on which we operate, we have normally established bulk head- lines and pier headlines so that these structures, if they are within the channel, are generally already subject to navigation requirements, against obstructions to navigation, as you know. And they are at sufference if we allow them at all. So we just have not had too many problems. However, I might go further and say the reason we have not had too many problems is these local cooperation projects take some time to have authorization. They have public hearings. The local interests in effect generate it and have to support it right up to Congress and to the Committee on Public Works. These problems are apparent. And when there are people displaced, obviously, this comes out in the hearings. So normally, we have not in these types of projects had much trouble on the displacement of persons and local interests, to my knowledge, have had no real problem. So from a real estate standpoint, and the Corps of Engineers direc- torate of real estate is responsible for these types of payments, we have had no real problems over~ I know, the last 15 years, anyway. Mr. RILEY. I might mention that in connection with these items of local cooperation, it `has t~ be a legally constituted body of the State and the Statelaws would also tend to protect these particular people. Senator MUSTUE. I think we will include at this point in the record the language of the rivers project, section 804, which is included in the context of the colloquy with the Bureau of the Budget as follows: Snc. 804. Whenever real property Is acquired by a State agency for a Federal public improvement project, the Federal agency having authOrity over such project may only accept such property in those cases in which the acquiring State agency has made relocation payments, provided relocation assistance, and provided assurance of availability of housing a~ required in the ease of acquisi- tions of real property by a Federal agency, such payments and assistance to he considered `a part of the real property acquisition cost. Mr. HART. Thank ybu, Mr. Chairman. I did not put' it in becau~e I think my statement is a little bit long. However, since this is a Depart- ment of Defense report, I did try to make it a little more detailed, since we have not sent you `a formal report. Senator MUSI~IE. It has been very helpful. Senator Baker? Senator BAKER. I have no questions, Senator. Senator MUSKIE. Our next witness is Mr. Bettin Stalling. I would like to express my appreciation to you for your thought- fulness to the committee, your graciousness, and your patience in waiting. PAGENO="0459" 453 TESTIMONY OP BLTTIN STALLING, CHAIRMAN, COUNCIL ON COM- MUNITY APPAIBS, PBA, DISTRICT OP COLUMBIA CEAETER OP PED~ERAL BAR ASSOCIATIO1~ Mr. STALLING. Mr. Chairman and members of the subcommittee, I appreciate the opportunity of being here to present the view of the council. My name is Bettin `Stalling. I am a lawyer and I live in the District of Columbia. I `should like to state some of the areas of my experience in real estate law, homeownership, and appraisals. I served as counsel for the Appraisal Division of the Home Owners Loan Corp. and the Federal Home Loan Bank Board for approxi- mately 5 years; and approximately 10 years as Chicago regional counsel for the Home Owners Loan Corp., which embraced 22 States. I served as chairman of `the Illinois State Bar Association, section on real estate law, and chairman of the Real Estate Financing Division of the American Bar Association. I `am a former national president of the Federal Bar Association and appear here on behalf of and as chairman of the Council on Commu~iity Affairs of its District of Columbia chapter. Our council has given serious study to the various aspects of housing and this has involved a consideration of certain provisions of 5. 698. The council has concluded that the critical housing situation is at the center of the present crisis in our city, affecting its welfare and safety. rfhe Government's taking and threatened taking, for public use, the homes of owners who do not want to sell, is adding to the turmoil and trouble. Senator MUSKIE. May I interrupt you, Mr. Stalling. That is an- other vote. I guess we had better go over and make it and come back. (Recess.) Senator MU5KIE. Mr. Stalling? Mr. STALLING. I think I was on the last paragraph on page 1. I state that our council has given serious study to the various aspects of 5. 698 and concluded that the critical housing situation is at the center of the present crisis in our city, affecting its welfare and safety. The Gov- ernment's taking and threatened taking, for public use, the homes of owners who do not want to sell, is adding to the turmoil and trouble. Families are being uprooted and losses are occurring ill ever increas- ing numbers. Most adversely affected, in plain and simple language, are the poor, the elderly, the disabled, and people wo do not have the knowledge and capability for learning and understanding their rights. rrhe undeniable `fact is that the Federal bulldozer has stirred up dis- trust and bitterness and racial `tensions. The council believes that widespread individual homeownership is a stabilizing and beneficial influence in the community. Homeownership develops a greater sense of civic responsibility. It gives the whole family a stake in the community. Individual homeownership is pro- claimed by the Government as good for the citizen and good for the country. Since the Governmei'i't has long promoted and encouraged its citizens to purchase and own their own homes, it is the obligation and duty of the Government to foster and safeguard such ownership. Homes are `acquired by the poor at great sacrifice sometimes by all the members of the family. It is important and vitai to public confidence and trust in the Government that ~n owner forced to sell his home for PAGENO="0460" 454 a public improvement be treated fairly, and be compensated justly. Clearly, he should be no worse off after the taking of his home than before. Equity and justice demand that the homeowner should be made whole in his social and economic affairs to the fullest extent practicable and legal. The council considers the relocation assistance provisions of title VIII desirable and beneficial. Since any money received is subject to Federal income tax, unless exempted by statute, it is suggested that S. 698 contain an express tax exemption provision. This is to assure that the assistance which title VIII provides will be fully available for its intended purposes. The council's chief concern is with section 902 which provides that "the fair market value * * * shall" be paid as compensation for prop- cities puchased or condemned for public use. The council believes that to make the fair market value the sole standard of compensation is unrealistic and unfair as applied to all homes. One of the basic rights under our Government is the right of private property. It is one of the most important rights guaranteed by the Constitution. The last clause of the fifth amendment reads: ~ * * nor shall private property be taken for public use, without just compensation." The council considers that the fair market value is but one of the indicators of just compensation, and should be weighed along with other evidences when determining just compensation. The fair market value is an appraisal concept, determined by ap- praisers, and geared to the marketplace. It is arrived at upon the as- sumption that the particular home property is on the market. But an owner who does not want to sell his home, does not have his home on the market. This is not a situation of determining the amount a willing seller is justified in accepting and a willing buyer is justified in paying for a property on the market. There is no warrant to substitute an ap- praisal concept of fair market value as the constitutional equivalent of just compensation. Since the fair market value is a technical appraisal valuation, the services of a real property appraiser must necessarily be engaged. The council observes that the practical operating effect of section 902 would be to place in the hands of appraisers the function of determining the compensation to be paid for all future properties purchased or con- demned by all Federal agencies. The unique social and economic cir- cumstances and affairs of a given family in a particular home represent values which appraisers do not include in their limited and technical formulation of fair market value. Many home owners will suffer losses and hardships beyond the assistance provisions of title VIII if the fair market value becomes the maximum compensation for the acquisition. Rather than constituting the maximum, the fair market value should be the minimum, for no one should have his property taken for less than its fair value if such property were on the market. The council suggests that section 902 be amended to read as follows: Sac,. 902. If the bead of any federal agency acquires real property for public use in any State or the District of Columbia, by purchase or condemnation, the amount paid therefor shall be a just compensation as the head determines to be legal and proper so that those whose property is acquired shall not be worse off in their social and economic affairs than the~y were before the property is acquired. PAGENO="0461" 455 In conclusion~ the cost of improvements for public ase should in~ dude the amount necessary to put individual homeowners, whose properties are taken against their will, in as good a posit ion as if their homes had not been taken. The expense of doing this ~)nstitutes an element of cost, to be borne by all citizens, as are other costs of Im- provements. This is but fair. And the Government must be the very symbol of fairness. To be otherwise means the Government will con- tinue to lose, not gain, needed public support of its ever expanding improvement programs. Gentlemen, thank you for the courtesy of allowing me to present the views of our Council on Community Affairs. Senator MUSKIE. Thank you very much, Mr. Stalling, for your excellent statement. Our final witness on the final day of these hearings, is Mr. Harry Graham, legislative representative of the National Grange. STATEMENT OP HARRY L. GRAHAM, LEGISLATIVE REPRESENTA- TIVE OP TEE NATIONAL IRANGE Mr. GRAHAM. Mr. Chairman, I have a relatively long statement which has been prepared which I would like to submit for the record and try to summarize in less time than I would spend in reading it. Senator MU5KIE. Fine. It will be included in the record in full. Mr. GRAHAM. There are some parts of it that I think are partic- ularly pertinent and some which are Thore or less a statement of fact, but it is generally a very real support of this proposed legislation and gratitude to those who have sponsored it, because this, in our judg- ment, is an attempt to right a long-existing wrong which we hear a great deal about. I would say to our friends from the Department of Defense if they were here that they may not have any problems with* their takings, but this does not correspond to my correspondence. Some of the peo- ple are having problems, to say the kindest thing that could be said about them. This kind of problem starts when property has to be taken and especially when property is taken that has been in families for a long time, in determining their intrinsic values, and it becomes complicated when no compensating property is available. This frequently happens; not so much in the strip takings for highways as it is in the inundation takings for lakes and that type of project, where you move a whole community, or maybe three or four villages. Then you have a tremen- dous problem with social relocation, plus the problem of trying to find a comparable property when there is no comparable property. There is such a taking or a suggestion down in Kentucky, at the present time. We are having some correspondence on this, where they would take the most valuable land on all the forks of the Salt River and inun~ date it. Now, where a property owner could get comparable property in the State of Kentucky is a real problem. So despite the fact that, as the previous witness pointed out, ap- praisers have certain rules and one of them is that the fair market price is when a man who is willing to sell but not forced to sell, agrees on a price with a man who is willing to buy but not forced to buy. Well, one of the four factors is absent in eminent domain. The man may not PAGENO="0462" 456 be willing to sell. So a fair' market price, to some extent, can be puni- tive in this situation. Other factors come in of the taking of all the comparable property, the fair market price that would be established on the property before the taking began, which is the rule under which appraisers operate, is not possible to accurately determine. He cannot take into account ~tny appreciation of the property due to the projected taking. And I worked for 5 years as a professional appraiser; I know what I am `talking about on this subject. Our appraiser is very much bound by what he can do and what he cannot do at this point. But this just is not adequate nor is it fair to the people who are involved. The previous witness pointed out some of the social implica- tions. Please read what he said on this, because these social implica- tions are pretty tragic sometimes, to say nothing about being important. Therefore, there has to be another factor brought into this besides just a fair market value. Previously-it has been 5 years since I worked in this field-we were not~ allowed to make any allowance at all for moving expenses. We could work a little of it into the appraisal, hide it somewhere so the negotiator might have a chance at arriving at a settlement. But you could not itemize it as such. So the man who was being moved had no way of knowing there was any allowance being made for this. I think the allowances for relocation are reasonable. I would ques- tion, though, the $5,000 limitation on this. I know one man who has been relocated three times due to highway takings-this is par for the course-once now from Philadelphia, another a little farther north in Pennsylvania, and the last time up into New York, where U.S. Inter- state 81, took him out again. Well, you do not move a large farming organization-and this was a large operation-iSO, 200, or 300 miles for $5,000. It is impossible to do it. There should be some kind of basis on which the total costs of moving-this can become more than the actual cost of a moving van-comes into play. The cost of trying to operate land that is not as good as what you had before is important. If you have good bottom land, you have class one land, this is one thing. But sometimes none of that is available. You take all of your return out, all of your capitalization, and put it on class three land. How much of a loss have you taken at that point ~ On just your capitali- zation-you are over capitalized, even on the same amount of land, because it is not as productive. These are some of the problems that I think you are getting toward in this. I hope that you can do something to expedite this whole pro- posal in the direction that you are taking. Now, there are some other factors that enter into this. I just want to throw into the picture this problem of irregularity of takings. This en- ters into the other question of the remainder of the land. For the Gov- ernment to be required to take the remainder of the land sometime when it is an uneconomic unit, my experience, would be completely impractical. I have seen uneconomic units of 800 acres, because they were separated from the barns and the buildings. Now, this 800 acres is worth something to somebody, probably the adacent landowner. It may not be worth as much, because ho has it locked in, so the man has no access. So he is in the position to drive the hardest possible bar- PAGENO="0463" 457 gain. But we c~ompensated for this in our appraisal by putting 90 percent damage against isolated land. it Is much betterto pay the man pretty close to the value of the land, let it mote at a lrery modest price over into somebody else's ownership, keep the land in the county and in the township, keep it on the tax rolls than to have it go into the Government where the only way you can get it out is by an Act of Congress, as you know. It takes a private bill to move it out. This is just too difficult to do. We can pay him all right so he has no loss and soitiebody over on the adjacent farm will pick it up. Now, if it is just a small amount of land, we believe the Federal Government should pick up the transfer costs. I have seen pieces of land no bigger than that newspaper lying up there, that were left. I have seen them take pieces of land that size, too. These get pretty minuscule. I have also watched some irregularity of taking where-and .1 re- member a house on Long Island on the interstate up there-which I appraised. The line of taking went up to just about the middle of the house, if you think of it being like a square. Then they moved 6 inches away from the foundation of the house on two sides, went on down the middle of the far side and went on down the line. Now, by any rule of reason the house should have been taken, because no residence is worth anything when you have no land against it, unless you are a townhouse and then you have made provisions for that kind of situation. Now, this kind of irregularity gives an appraiser and the landlord fits. We could not appraise this one-when we came up to the building, we would allow 60 percent damage and we would ~o further when they jogged around it like this. But here is something sitting here like a sore thumb that has no business being on the right of way and they have no way of moving it. This irregularity of some of these takings is a problem that somebody could very well deal with so they would run relatively straight lines. It is better forthe Government anyway. They get an irregularity and they have the problem, of fencing around it and all of the intèr~tates have to be fenced. They had better take the house and get it out of the way, because what they saved was about 30 percent of that house and they left an angry community. This is not the way to run a government, in my judgment. The negotiating that goes on after the appraiser has conducted his business is a real problem. We were instructed to arrive at the best value that we could. Frankly, our appraisals for condemnation were higher than the same appraisals for tax purposes. We were making the appraisal level that could be negotiated in our judgment. Now, this is what happens, and this bill deals directly with it. (I do not know whether you knew this happened or not, from somebody who had really worked with it.) But I do know what has happened. In the State of New York, where I worked most of the time, a mati came out from the bureau of public roads. He had a little blue stamp about as big as a nickel. He put that down in front of the appraisal and he placed a figure in that. That figure had no relationship to our appraisal it all. This was the negotiating figure. Then the negotiator from the ureau of roads came out. He second guessed this. PAGENO="0464" 458 They made sight appraisals; they walked down the road and looked at it, and without considering any of the things we tried to take into consideration. These fellows were professional appraisers; I do not mean to imply they were not. The negotiator who went out there was bound by the negotiating figures. So I had the embarrassment of going down the road where I knew some of the people and putting what I called inadequate dam- ages-one was a case of $42,000. They offered him $22,000. At another one where I put $40,000, they offered him $28,000. These men were mad as sin at me, because as far as they knew, this was my figure. It had no relationship to my figures at all. These were five different cases in~ New York that went to court, and this is an expensive process, because you have to build a whole book of 20 comparable sales as part of your court records. So does the :~d- versary. This is what makes it so expensive. In five of those cases, they settled the claim within a thousand dollars of what my appraisal had been. If they had just offered the. fellow the appraisal to start with, they would have saved the court costs, saved a lot of mad people, saved a lot of time, and justice would have been served at the same time. Now, the oniy way that they would change this figure was if we would admit we had made an error in the appraisal. Then they would comes back with this windshield appraisal and put a different figure on it. But the onus was on the appraiser, not on the fellow who had made the stupid mistake of putting down a figure that was completely irra- tional. Sometimes I changed the appraisals and sometimes I did not. A couple of times I just got my back up and said, it is your fault, go ahead and solve it to suit yourself. They became victims of their own rulemaking. In my judgment, the bureaucracy that people fear in Government is not the bureaucracy of the White House or the Congress or cabinet members; it is the bureauc- racy way down the line to that fellow who deals directly with the people and deals with him in terms of arrogance: "I have the power and you can do nothing about it." Some of these fellows will go to the people with small claims and after the taking, that is what you are left with, just a claim. The prop- erty is gone. I want to leave with the committee some testimony on another bill, 1351, which is over at the Judiciary Committee, which I think could very well be combined with this legislation, because it deals with another problem that comes right at this point. When the claim is large, a man can afford to get a lawyer who can afford to hire an appraiser and get a book of appraisals developed and take it into court and get that lawyer on a contingency basis of about a third of the increase over the offering. This is standard procedure. But if the claim is down to $3,000, $5,000, he has no prayer of getting a lawyer on a contingency basis. And that person, nine chances out of 10, has no chance of hiring a lawyer on a fee basis and hiring the appraiser at the same time. So the little people are denied justice. They are denied the due process of law. They are denied all of the things that the Constitution guarantees them when this private property is taken for the general welfare. So what this other bill provides is that in those cases where somebody does take this into the court of claims and the Government PAGENO="0465" 459 loses their case, the Government' pays the cost of the court proceedings on the part of the person who has appealed `their decision. This would bring justice back in the picture., I `do not think it would create a lot more court cases. I think it would solve a lot of court cases. IlTicidentally, I think your legislation here would take `a great many cases out of the courts because if they had offered the reasonable price at the first time, this is all it would have taken to get a settlement. When they do not, then people get angry and they go to court. They have a right to go to court. That is what courts are for. I think this bill would restore some of the cQnfidence that people have in the Government. I am getting pretty annoyed at this continual attack on our Government, because I think it is extremely dangerous for Government. But I am also annoyed at the people who, by their arrogance and by their nndue exercise of powers bring this criticism about. We suggest that where eminent domain proceedings are instituted or negotiations are entered into prior to the taking of whole areas of land in keeping with the Supreme Court decision of informing indi- viduals of their rights in cases of criminal accusations that the individ- uals who `are losing property have a right to a statement in some kind of understandable language, preferably in a printed brochure, of their rights in this case. Most of them do not know their rights as well as the rights of the Federal Government. This would avoid a lot of the confusion. I do not see why this could not be done and done very easily, to the benefit of all concerned. In terms of the testimony that was given by the Department of Defense, I would like to make a couple of comments on that. A great share of the correspondence I get has to do with the Corps of Engineers and their taking procedures. We would oppose their suggestions, under section 802 on page 8. I do not think anybody should write into this kind of legislation that no provision of this section shall be construed to give any person a cause of action in any court. This denial of the right of a man to go to court is denial of a pretty fundamental right. If we cannot go to court and have to depend only on the Department of Defense for the judg- ment, then where is our defense? We ,also would oppose their suggestions for amending sections 803(a) and 803(c) where they would include the words "to the max- imum extent applicable." This is on the bottom of page 9 of their testimony. This is an escape clause that is a nothing word, "to the maximum extent applicable." Who determines what is the maximum extent applicable? These are way~s out of responsibilities. The Bureau of the Bu'dget recommendations on 804 we would oppose and we would oppose them especially in relation to the flood control projects. In 805, the substitution of the word "property" for "farm" might accomplish the same objectives, but frankly, I think you have `an awful lot of discontent in the farming community over `some of these taking proceedings. I think that you might want to include "property," but I would not exclude "farm." I would want these farmers to know that they were being considered and they are almost special cases. I know I am prejudiced, but I think they are pretty much special cases. 95-626-68-30 PAGENO="0466" 460 The 3 years after the enactment of this that they ask for seems to be a pretty long period of time fot~ enabling legislation to be passed. There are some States that d~ not have legislatures which meet every year. So let us give them 2 years. I do not think 1 year is practical. I do not think 3 years is necessary. I think they can get it done before that length of time. In 901 (a) the problem has come up in paragraph 3 of whether or not this offering of the fair market value was a binding offering whith could not be changed and sometimes it does have to be changed. I would suggest the addition of the words "at least" in that and then leave some leeway. The leeway that our negotiators had in New York, as I understood it, was that they could go to the limit of our appraisal plus 10 percent in an attempt to keep it out of court. That plus 10 percent was a pretty good plus and this is sometimes what it took to keep it out of court. And you could not try it for 10 percent anyway. So some leeway should be left in there on this, in our judgment. I would like also to say that we have-this is not in the bill, but we have had a number of very real complaints about the allocation of the power of eminent domain to State agencies which were not directly in- volved in these takings to accomplish the auxiliary objectives of State agencies. In particular, we had a good deal of correspondence from the State of Missouri where, after they had taken land in a valley for one of the dams and the inundation for these projeets, destroyed a wild life refuge. They therefore gave the power of eminent domain to the State conservation department to go beyond the taking of the Federal Government and take additional land for wildlife refuges that they had destroyed. Now, this seems to be a rather farfetched use of the power of eminent domain on the part of the Federal Govern- ment, to be letting somebody else use it. If they were using a State agency to take the land for the dam, this is one thing. But to give an- other agency the power to take land for the use of a State agency seems to me to be carrying it a bit too far. * The statement was made by the Department of Defense that they have hearings regarding these takings. The problem of how the hear- ings are advertised and what is made available to the public at the time of the hearings is an important element in decisions of com- munities whether or not to support these projects. In the highway hearings, we first of all were-we had hearings that showed the general location of the highways. This would be subject to argument; maybe there is a family cemetery or something like that that is in- volved. I have thought sometimes the engineers made a curve to get a tree, especially if it were a pretty one. But they will make a curve to avoid a cemetery when it is pointed out to them, because this is the last thing everybody wants to get into, moving a lot of dead bodies from a cemetery This is a complicated legal procedure that I will not go into now, but I will just tell you it is really complicated. But there are other factors that come into it. But in the final analy- sis, this man who is losing property-in strip takings this is particu- larly true-may think about his property line being at a certain level, but unless he knows at what elevation this road is going to be, how much grade there is above him or below him, real critical factors in terms of evaluation of'clamage, then he is in difficulty at the same time. PAGENO="0467" 481 The owner of th~ property or the o~cup~trit of the property, should be permitted to go with the appraiser when he makes his appraisal and nobody but an idiot, in my judgment, would oppose him, because he has to get as much information as he can to make a decent appraisal-. I have always wanted the man along if he would go along. Inside his house, he must go along, because you are in his most private possession. But at the time the negotiations begin, this man should be offered the appraised value, but he should also be told specifically what is happen- ing to his property in terms of grade changes, and a lot of other things that are involved in this. He should have access to the surveys not only in terms of the limits of the taking but in terms of all that goes on in the relationship to this so he can make some adequate decision about what this means. Because if you go along the side of a hill when that taking is over with, it may look a lot different than he thought it was going to look when he looked at this map and saw that these were the taking lines. In other words, what we are saying is the fullest possible information should be given to the person whose land is being taken. I would make one exception to this: I would not reveal the details of the appraisal. A different appraiser will arrive at the same figure by going different routes-not much, but there are differences. I think this gets down into a nitty-gritty thing that will create a great many problems for the appraiser in the community, especially if he lives there, and would really do the other person no great good. The most important information is what are the damages. If they are adequate, this is all really he has a right to know. But he does have a right to know what is being considered in terms of changes in the property while the damages are being considered. These are comments based on 5 years of doing appraisal in this field. It is just fortunate that in this instance, the National Grange policy and those of this particular witness are in complete agreement, partly because some of the things I told the committee had something to do with the way they develop their polidy. (The complete prepared statement of Mr. Graham follows:) I am Harry L. Graham, Legislative Representative of the National Grange. The Grange is pleased to appear before this distinguished Subcommittee of the Committee on Government Operations of the United States Senate in support of S. 698 which was introduced by Senator Mu~kie fron~ Maine and co-sponsored by the Senators from Washington, I)elaware, South Dakota and Utah. In keeping with the present legislative language, this bill could be called the "Fair Property Rights Law", because it guarantees to the property owner losing property to the Federal government that he will receive a fair, reasonable and just return for this property. The constItutional provision for this has been repeatedly perverted to provide for the lost return which the acquiring agency ~,ould negotiate or intimidate out of the property owner. The Grange, and all Americans should be grateful, and we are, to these distinguished senators for again bringing this legislation to the attention of this Committee and through you, to this distinguished body. This act includes the five titles of the similar bill which were approved inanimously by the Senate in 1965 and then allowed to die in the House would e re&rbmitted to the Senate, The Grange would have no comment on these except :0 state that they are well within the Orange's concept of trying to improve he utilization and assignment of such grants-in-aid and their efficient usage rnce they have been granted. This bill makes provision for sound management techniques which are always )adly in need and of critical importance in the effective use of the overall grant ystem, and there js no argument from any~ thoughtful and responsible person gainst better management of our finances and programs. PAGENO="0468" 462 Title VI of the new bill is of interest to us as an organization because it does make provision for the consolidation of individual categorical grants within broad fuflctional areas and to affect the inter-agency transfer of administrative responsibility for grant programs, subject of course to the type of congressional veto proviso that governs executive re-organization plans One of the complaints which we receive from our rural constituency is the difficulty of cutting their way through the tangle of overlapping agencies with vague jurisdictional bound- aries. There certainly needs to be something done to clear the air of this con- fusing situation, not only for the benefit of the constituency and all the mem- bers of this distinguished body, but from the standpoint of good business management. Title VIII of the measure was also passed unanimously by the Senate as S. 168:L in 1966. This title provides for relocation payments for those individuals and businesses which are forced to move as a result of the acquisition of real property for federal and federally assisted programs. It also provides for ad- visory assistance and the assurance of availability of standard housing as well as federal reimbursement for relocation payments under these federally assisted programs. This reimbursement suggestion is one which is based on the solid concept of equity. Under the previous rules for condemnation proceedings under eminent domain, at least in the highway takings program in which I was engaged as a professional appraiser for 5 years, there was no consideration permitted for the inconvenience and the cost of moving a business that had been dislocated by these acquisition programs. The best that could be done was to make a little more generous allowance in terms of the damages and hope that they could be negoti- ated out this way to prevent the maximum of financial loss. As we will indicate later in the testimony, even this was a pretty hopeless gesture, even though those of us who worked on these projects were certain that the whole concept of f~rci- bly moving somebody and making him pay the moving expenses was an offense to our sense of justice. The allowance of $100 to $300 for moving expenses for people whose dwelling has been taken is a modest and reasonable allowance, as is the allowance of $1000 which is the maximum which can be allowed for the movement of a farming operation which has been displaced. The movement of the animals and the equip- ment as well as the furniture on a farmstead is an expensive procedure and the $1,000 is not beyond the realm of costs under most circumstances. The granting of assistance to elderly and handicapped individuals in an amount not to exceed a $1,000 is also within the realm of justice. The Grange is particularly interested in title IX of this legislation, a uniform land acquisition policy for federal programs. Very frankly, the National Grange each year has numerous suggestions of ways to facilitate the taking procedure and to increase the injustice of the procedure. We are constantly receiving letters from constituents and from those who are not our constituents who plead for our help to either save their property from inundation or destruction or to see that they have equitable and reasonable return for their property. Many of these prop- erties have an Intrinsic value far beyond any commercial value. Since this value cannot be satisfied by any kind of monetary payment, at least that which is offered to them and which they are forced to accept should be a reasonable amount. As I stated earlier in the testimony, I've had considerable experience in this field of preparing appraisals covering the value of and the damage for federal and state acquisitions, prinvarily as a part of the interstate highway system, but not confined to it. I worked for the Thane Appraisal Service of Binghamton, New York, which contracted with the state of New York for the appraisal of the value of the property and the damage to the property in these takings, and then I later worked for the National Farm Consulting Service of Ithaca, New York, a firm which usually worked for the person who was losing the property. I would tell you that the experience of working for the latter was considerably more satisfactory than the ones which I bad as I worked for the state of New York which was acting as an agency for the Bureau of Public Roads of the United States government. The procedures which we followed will indicate the reason for my dissatisfaction with the employment by those who were taking the land and the reasons for my raising some serious ethical and moral questions which apparently have been raised preViously, or this legislation would not have been introduced. Briefly, the procedure which we followed was to establish land values, measure and type the buildings and calculate the cost of reproduction, and on the basis of comparable sales and ftxed land values, we would then figure the depreciation PAGENO="0469" 463 on the buildings to find the market value Of the property. After that, we figured the value oct the takings on the same basis that we had figured the value oct the property and then estimated the damage to the remainder of the property which was altered by these takings. These were many times strip takings and frequently divided the property and quite often left the property owner without access. Most of these takings were for non-access highways to a part of the propetty so if there was not a road or right of way Into the back side of the farm, where the taking was a strip taking which would go behind the barn and yet separate most of the land from the buildings, then this land was of no real utility to the farmer be- cause he simply couldn't get to it. [f sold, it had to be sold without access which meant that it could be acquired by property owners with adjacent property at a disaster price level. After the appraisals were completed and the damages had been figured, these were always checked by supervisors from the appraisal company, and then turned over to the claims department for the New York State government, who were in charge of the negotiations. One of their men would come to the project and take the appraisals one by one and drive down the road and place a blue stamp on them and put a negotiat- ing figure within the circle of this stamp which was the basis upon which the negotiator who came along later were to operate and the figure which they were not permitted to exceed. This figure might have little or no relationship to the appraised value to which we had put on the property or to the damages which we had determined had been inflicted against it. The only way this figure could be changed was for the appraiser to state that there was an error in the appraisal, re-figure it and re-submit it. Then the procedures permitted change. This figure, along with the total appraisal, was checked by an agent of the Federal Bureau of Public Roads who could put a different negotiating figure on the cane if he cared to, but both of these were binding' upon the negotiators. The result of this procedure was that frequently property owners were of- fered less than half of the damages which we had concluded were the basis for a fair settlement for the property owner. The personal problem Involved in this was that when the appraisals were being made in the areas where the appraiser was known, he became the community outcast because these people thought that the price which was offered them as a negotiating figure was what the appraiser had determined and we were not privileged to disabuse people of this misconception. Negotiators have various `attitudes towards the public with whom they work, but it is a relatively open secret that they are instructed to obtain this property for as small a consideration as can be negotiated. On the face of it, this sounds like good business, and If it was business `between individuals or individuals and corporations where the seller was not forced to sell it would be. However, by definition the condemnation proceedings violates the Ooncept `of the fair market price which is usually defined in appraisal journals and manuals as "the value at which a man who `is willing but not forced' to sell can `agree on with a purchaser who is willing but not forced to buy". Obviously, where con- demnation proceedings have taken place and thO right of eminent domain is being exercised, one of the four conditions of this formula is absent since the seller, at least theoretically, is being forced to sell against his will, and in most instances this is not only theoretically true bust it is practically true. At some point in `the procedure, the government or its agent files the condem- nation proceedings and surveys, and the property then belongs to the govern- ment. The previous `owner is left with a claim, and it is the claim which is negotiated. In eases where there are substkntial amounts o1~ money Involved, then the obvious recourse ~f the individual is to place his claim in the hands of a lawyer who is skilled in the negotiating of the subjects or who also is skilled in the presentation of these cases before the approprirtte courts. In cases where the amount in dispute is from $10,000 up, and certainly when the amcaint is in r~cess of $20,000, the ability to get a bempetent lawyer who will also bear bhe cost of the procedure which means the hiring of an expert appraiser for his imrposes, can be done on a contingency basis. This means simply that the awyer will take a share of the increase that he is able to gain for his client wer the original offering. This usually amounts to a third of the settlement. Let's look at two instances of how this operates. In `one, route 81 of the In- erstate System cut off a farm immediately behind the barn and missed the orner of a new barn by only six inches, leaving the rest of the land either PAGENO="0470" 464 inaccessible or more than six miles from the barn by way of the nearest under- pass. I placed damages on this ~arm at $44,000. The negotiators offered them $28,000, they took it to court, asking somewhere around $60,000 according to my recollection and after the whole period of litigation was completed the judge awarded the man exactly what I had previously indicated was a just and fair figure. In another instan~e, where route 17 was being widened west of Horse- heads, New York, we put an appraised value of the land and the damages at $55,000. The owner was offei~ed $28,000. The owner sued for $75,000 and the judgment of the court was $55,Q00. The foolishness of this is all the more apparent when the procedures which precede a trial in the Court of Claims are known. Not only is the regular ap- praisal used, but it is also necessary `to develop a "book" of appraisals of com- parable property which was sold in the area during a representative recent period. This then means that all these other properties have to be appraised and compared to the one which is the subject of adjudication. This is obviously an expensive process, running from $3,000 to $10,000, to say nothing `of the cost to the federal and state governments for their lawyers and the time con- sumed by the courts. The injustice of this is that the final figure which is awarded to the plaintiff, when it is the same as has been already determined by the appraisal, still is less than it should be because in the ease of the difference between $28,000 and $44,000, then a lawyer was paid a third of this which woald be $5,333 which is the loss that the individual farmer had to take In order to get his claim satisfied. He gained twice this amount but he still came out $5,333 under what be should have received. In another case, I put an appraised value of damages at $42,000 including the value of the land. This went into court and was settled before the trial at the maximum figure which was permissible which was the appraisal plus 10%. Again, in this case, the farmer lost a third of the increase over the original offer. This situation is bad enough, but consider what happens when the claim is relatively small, say under $10,000. If we bad put in an appraisal for $10,000 and the negotiators had offered only $6,000 or $7,500, then the amount that would be adjudicated is too small for a lawyer to assume this responsibility on a con- tingency basis. In other words, the plaintiff has to guarantee a payment of a certain amount and this is on a risk-all basis because there is always a possibility that the court would not Increase the amount that had been offered. This, to all intents and purposes, looks out of the courts the very people who most need assistance, for the simple reason that they do not have the money or dare not risk the money if they do have it for this kind of a court case. Therefore, the negotiators are prom~ to go to these people and make them a fiat offer on a take it or leave It basis, or rather on a take it or take it to court basis. For the poor and the elderly `and the infirm, the threat to take it to court simply scares them into signing away their property without just compensation as is guaranteed by the Constitution for these eases. I well remember one instance where a lady of eighty-four years of age, a widow woman, with very limited resources and on limited social security, lived in a little house of three rooms up a bank from the road but which still had a roadway available to get the coal trucks up to discharge their cargo Into the coal bin and as access to the house. The taking line was at the bottom of hor front steps. This in turn raises another question which is not covered by this legislation and that is the Irregularity of the takings which are sometimes surveyed to avoid touching ~ building, because if they take six inches of it they must pay for the whole building. I have seen instances where a straight line would have gone 15 ft. through the house and ~Vhen they came down to this residence itself, they would veer off to the right or left as the case would be and missed the property by a couple of feet on two sides and then resume their straight line which leaves the property extremely undesirable for any kind of purposes, un- less it would happen to be on the back side of a business property where the excess land was never used. These tactics are reprehensible to say the least and down right dishonest to say the most, In the case of this elderly `lady, she was left with 28 steps up to her front steps which were probably another 7 or 8 which she bad to climb before she could get into the house.' The roadway which had been available to her for the purpose of discharging the coal that she used to heat her house was de- PAGENO="0471" 465 stroyed. I submit to 3flOU that, whether t1i1~ lady was 84 years old or not, that there was not a great deal of value left tQ a 3 room house which had a property line that was next to the front steps and was 23 ft. above the elevation of the road. I placed, as I remember, a damage of something like $3500 against this property. The negotiator came out, gave her the hard line which I have previ- ously described,, and almost forced her under duress to sign an agreement to release her property for $1200. When I came by later she was sitting on her front steps, isolated from the road by a muddy hank because the steps down th~ bank had not be built and weeping copious tears about what had happened to her, her home, and her ability to use her home. Gentlemen, if one's sense of justice isn't completely offended by this kind of action, I don't know what their sense of justice is. We recognize the necessity of the government exercising due prudence in the expenditure of public funds. We expect that and anything else would be contrary to the intent and purposes of any of the laws which we have. However, we expect something else of our government and that is that those with power should use it with restraint, those with authority should use it with responsibility and those with power to make decisions concerning another per- son's property should make those decisions, and arrive at the compensations on the basis of equity to the person who's property is being taken as well as prudence on the part of the Federal Government. Fiscal prudence does not give license to those who are exercising this auth.ority to be arrogant, arbitrary, and unfair. As stated previously, for a number of years the National Grange has had policy of one kind or another on this subject proposed to it and usually has accepted it. The latest policy declaration was during our Oentennial Convention at Syracuse, New York, in November of 1907. It reads as follows: "Whereas, we believe that the present government land acquisition policy must be altered, modified and changed to further protect the affected landowner as well as the taxpayer during the full course of negotiations: Therefore, be it "Resolved, That the National Grange work- "1. To remove the secrecy from any government appraisal by requiring that they be made a matter of public record; "2. To eliminate the opportunity of a government agency to interpret, modify, alter or ignore the appraised values as established by the govern- ment's appraisers; and "3. To establish a 3 member board of qualified impartial appraisers (one being the choice .of the affected landowners) to be used in appraising and determining the fair estimate of value. This estimated value and the indi- vidual appraiser's reports must be presented to the affected landowner as well as the government agency for consideration in negotiating and arriving at a joint and realistic fair market value for the lands to be acquired; when an agreement cannot be reached, after thorough negotiations, then a con- demna~ion suit would be filed." Page 176, 1967, Journal of the Proceedings, Centennial of the National Grange. This legislation, especially that language in paragraph 3 of section 901 would cover the intent and purposes of the resolutions which had been passed by the National Grange. This states "before the Initiation ~f negotiations for property, the head of the federal agency concerned shall establish a price which he believes to be a fair and reasonable consideration therefore and should make a prompt offer to acquire the property for the full amount so established." In paragraph 3 of section 90~, the same requirement is made of state agencies which act in the name of a federal agency. The Grange, from the resolution which we have already read, would obviously enthusiastically support the passage of this kind of legislation. It establishes a basis on which the Federal Government will operate with its citizenry consistent with every concept of justice and fairness. ~tost cases are settled out of court to the satisfaction of the property owners. Rowever, in our judgment, this kind of legislation would remove most of the ~laims cases from the courts. Of course, in Instances where there is a vigorous lisagreenient between the contending parties, the property owner is still at .iberty to pursue the normal court procedures, but my own experience and udgment would indicate that this would be a relatively rare occurrence. Not only would justice be served hut the purposes of the bill as stated in see- ion 901, paragraph (a) 0± title IX would be accomplished. These purposes are `in order to encourage the acquisition of real property by amicable agreement PAGENO="0472" 466 with owners, to relieve congestion in the courts, to assure consistent treatment for owners In the many federal programs, and to promote public confidence in federal land acquisition practices, and-". Not the least of these items is to promote public confidence in federal land acquisition practices, which at the present time is at a low water mark. Too many people have been mistreated, mislead, and unjustly deprived of that which was rightfully theirs-just and fair compensation for property lost to the federal government in the interest of the general welfare. The Grange believes that all citizens bear equal responsibility to their govern- ment. However, this does not say that we believe that some people should bear an inequitable amount of the responsibility for the general welfare. This has been the ease in our federal land acquisition policy as well as In a number of states. In relationship to paragraph 2 of section ~O1, which requires that a property owner should be given the opportunity to accompany the appraiser during his inspection of the property, my Own experience does not indicate that there is any reason for this provision because I not only welcomed them, but found it essential in order to obtain the information which is required before an accurate appraisal can be made, it is also a matter of just plain good manners. Apparently there has been some questhn raised by the failure to follow the kind of policy which we had adopted, therefore to cover those instances the Grange would support this recommendation. The only part of this legislation which we would question would be paragraph 10 of section 901. Under the policy which we followe4, such land was depreciated or the remnant of a property by as much as 90%. In Other words, the property owner was paid that share of the value of the land. This then left him to nego- tiate the sale of the remnant with an adjacent property owner which was usually not too difficult to do, We would suggest however, that in seine instances these units are so small that it is uneconomic to keep them but it Is also uneconomic to pay the cost of the transfer of the remnant of the property. If the government would have any responsibility at all at this point, it would seem to us that its responsibility should be to cover the cost of the transfer o~ the property, especially when It has to be sold at an extremely low price. To have the government acquire this prop- erty would mean that it also would own ~ lot of property adjacent to legitimate rights of way and the problem of transferring property of the Federal Govern- ment back into private bands is simply so great and so complicated that it would have a tendency to remain with the government. Most of this would hare to be cared for, the fencing would have to be Irregular, and the whole problem of up- keep would far outweigh any other problems including the cost of the transfer of this property to a willing buyer. The only other suggestion which we have Is that in cases where a large amount of property is taken in one area, and in those areas where there are people who's roots are deep and where for many generations people have lived, tb~n the acqui- sition of comparable property becomes considerably more expensive than the value of the property which has been taken, when that value has been established by sales prior to the taking of this land and property by eminent domain. The very act of taking property creates a shortage of property in an area. Some con- sideration should be given, especially in terms of farm land, to coripensaté the individuals for a part of the increment of the price of land that is the direct re~u1t of the shortage which has been created by the federal acquisition policies. We're not sure just how this should be stated in legal langtiage, but we believe that the Committee and its staff understand how this problem can arise and does arise and that some provision should be made for meeting this situatiOn which shOuld provide that the person who has lost his property may Scquire property again of similar value and similar utility. This is not quite so important in terms of single dwellings, nor is ft so lthpor- tant in terms of business property. It is extremely important in terms of farm land, especially when that ~arm land is taken for purposes of InundatiOn, because this means that in m5ny areas the only prime farm land that is aVailable has all been taken and the comparable land Is not available a~ any price: The re- sulting financial loss to farm operators who are forced to farm mar~ual land and to take the loss that comes On the Capitalization of their investment as a result of this, is an economic problem which needs to be considered in the linal negotiations and settlement for property where this situation exists. PAGENO="0473" 467 We wo~ild also suggest that when emta~nt domain proceedings are instituted or the negotations are entered into prior' to the taking of whole areas of land, that in keeping with the Supreme Court decisions of informing the Individual of his rights in cases of criminal accusatiops, that the individuals who are losing property to a federal acquisition program should also be informed in some kind of understandable language in a printed brochure of their rights in this case as well as the rights of the federal government. We would call to the attention of the Committee that S. 1351 now before the Judiciary Committee, provides another important link in this chain. This pro- posal, introduced by the distinguished senators from Oregon, provides that, when one who has lost property due to the exercise of the right of eminent domain, and who chooses to go to court for a decision, and then has `the settlement figure raised by the court above the highest amount previously offered, the costs of the proceeding including the legal and other necessary fees of the individual, must be paid by the Federal government. ~bis would help to solve this problem and we would suggest that this Committee might consider combining these two pieces of legislation under one bill. ~thts has been done by some states. With these suggestions, the Grange concludes its testimony. We congratulate the authors of this legislation and the interest shown by the members of this Committee in it for their proposal. We earnestly urge the endorsement of this bill by this Committee. Likewise, we earnestly urge its adoption by the Senate and we assure the Committee that the Grange will do whatever it can and we will be willing to follow your lead at this point to assure that this legislation is acceptable to the members of this distinguished body. *We thank you for this contribution to justice and equity which are basic to our democratic processes and without which our democratic processes cannot survive. This legislation will bring new meaning and value to the fifth amend- ment to the Constitution which concludes, "nor shall private property be taken for public use, without just compensation". Mr. GRAHAM. Mr. Chairman, you are very kind to stay so long. It is way past lunch hour. I appreciate your staff and your staying. Senator MU5KIE. Thank you, Mr. Graham. This is very interesting testimony. It is very good to have it. Sometimes forces around here force us us to bypass lunch. Mr. GRAHAM. I can afford to pass it, My doctors say I should. Senator MuSKIE. I regret that it was not possible to arrange a satis- factory time for Secretary Wilbur J. Cohen, of the Department of Health, Education, and Welfare to testify in person. The testimony that he would have presented will be included in the record at this point, (The testimony of Secretary Cohen follows:) STATEMENT or HOr. WILBUR J. Conm~, SECRETARY or HIr.AL'rE, EDUCATION, Aith WELFARE Mr. Chairman, I welcome the opportunity to testify on two bills, S. 698, "The Intergovernmental Cooperation Act of 1968," and S. 2981, "The Joint Funding Simplification Act of 1968." We have made some significant progress, in my opinion, in Creative Federalism since I last appeared before you to `testify on S. 561, "The In- tergovernmental Cooperation Act of 196~." But much remains to be done and it is for this purpose that y~u have introduced S. 698. Recent legislation by the Congress' has dealt with national `problems, and programs for overcoming them, that ~evere1y tax the combined resources of Federal, State `and l~eal government. Although we must act as a Nation on national problems, we must at the same time keep the dispersion of power and initiative which we value so highly. National problems cut across State and local lines. And the solutions to these problems are dependent `on an effec- bive working rllationship among gil levels of government. President Johnson has provided the leadership in developing a new Federal, state and local partnership, which he has described as Creative Federalism. rbrough this relationship, power and Initiative must be shared in new and lexible ways. It is essential that this partnership-a mutually respecting PAGENO="0474" 468 partnership of Federal and nOn-Federal agencies and institutions-be strengthened and made more effective, enhancing the power and vitality of each member. The realization of the great social advances envisioned by legislation enacted by Congress in recent years is dependent upon effective administra- tion at the State and local as well as the Federal government level. The national interest requires both the* effective administration of programs supported by Federal funds and the strengthening of State and local govern- ments. Expanding State and local services, shortages of personnel~ and ad- ministrative and fiscal problems an point to the need for development with the States and localities of ways of meeting these problems. Creating a healthier, more vital partnership will require improved coordi- nation of programs at the Federal level; greatly improved ecsnmunicatioiis among State, local and Federal governments; better coordination of program~ at the local level; community and regional plannitig that rises above frag- mented political jurisdictions, and tiew forms of intergovernmental cooperation. Finally, the basic processes of State and local governments must be strengthened through better planning and financing procedures. For these reasons I strongly support the objectives of both S. 698 and 5. 2981. In the report which I am submitting to the Committee each of the titles of S. 698 is discussed in detail and we have previously submitted a report on S. 2981. I would like to confine my remarks to the provisions of these two bills that are of the greatest interest to the Department of Health, Education, and Wrelfa re. TITLE IT-IMPROVED ADMINISTRATION OF GRANTS-IN-AID TO THE STATES First, I would like to discuss title II of S. 698 When I testified on S. 561, 1 expressed doubts about abandoning clear identification of responsibility and accountability for grant programs which any weakening of the single State agency concept might entail. I recognize that new problems have been develop- ing. Many programs require multiagency and multidisciplinary approaches to accomplish multiple goals and to obtain effective management. I am also aware of the varying administrative needs and capabilities of the States. For these reasons, I am in favor of the single State agency waiver authOrity in title H. The fact that an agency is designated as the single State agency however does not exclude use by it of other State agencies. In fact, we encourage utilization by the designated agency of the resources and services of other State agencies, and we have required cooperative `planning and woi~king rela- tionships in a number of programs~-for example, in the planning of facilities for mental retardation programS, I would also like to mention a signifiëant trend among the States. This is the creation of a combined State Department of Health and Welfare. Ten jurisdic- tions now have such departments. The creation of these combined Health and Welfare Departments, I believe, Is a recognition of `the interrelationships of the problems of health, income, and services `and a realization of the necessity to better coordinate the services In these fields'. This trend among the States is further recognition of the need for better coordination `and administration of F4~derally assisted programs at the State level. Our Department has recently advised grantee organizations, Including State and local governments, of the need to improve methods for managing funds under the letter of credit procedure. We have recognized the incentIve to better ca~h flow management by the prOhibition on the earning of interest on Federal funds. Consequently, we believ~ It would be undesirable to adopt a provision whi'h relieves Sta'tes of accountability for interest earned on grant-in-aid funds. Accordingly, after a careful review of e~perlenee and trends, we strongly favor the enactment of title II with the exception of the provision on earning of interest, TITLE Iv-CoORDINA~txD INTERGOVEDNMENTAL POLICY AND APMINISTRATTON OF GRANT~ FOR TYRBAI~ DEVELOPMENT The need for improved interdepartmental coordination is a particularly im portant concern for the Department of Health, Education, `and Welfare with lb 149 Federal assistance programs, which often must be related to programs o~ activities of other Federal departments for efficient State and local administra PAGENO="0475" 469 tion. Nowhere is this more significant than in the administration of grants for urban development, To this end, we have, over the years, forged some effective relationships through interdepartmental committees or task forces and through effective per- son-to-person liaison. A recent example of an effective coalition of the Federal partners for a common purpose was the establishment of a Joint Administrative Task Force by the President, with representatives from the Departments of Housing and Urban Develo~xment; Health, Edheation, and Welfare; Labor; and, the Office of Economic Opportunity, to speed the processing of State and local applications for Federal grants-in~aid. The Task Force focused primarily on four types of multipurpose projects of major signiflcance-Model Cities, Neigh- borhood Service Centers, Manpower Programs, and Water and Sewer programs. The Task Force accomplished its ob~eetives of reducing the processing time in some 42 programs by 50 percent, and, in a second phase, extended its review to other Federal grant-in-aid programs with similar results. The Joint Administrative Task Force developed a common application form for local governments to use when applying for grants-in-aid from several Fed- eral departments and agencies for support of neighborhood service programs. This form, adopted by the Departments of Health, Education, and Welfare, La- bor, Housing and Urban Development, as well as the Office of Economic Op- portunity, has greatly simplified the application process for local communities as well as the reviews at the Federal level. The Joint Administrative Task Force also recommended and has seen adopted an interagency coordination structure for use in the review and approval of Model Cities applications and in the provision of technical assistance to cities preparing Model Cities demonstration programs. The four agencies have estab- lished (1) a Washington interagency review committee for joint action on Model Cities planning grant applications as well as subsequent program grants; (2) regional review committees; and (3) joint technical assistance teams and local city working groups. Within the Department, we have made specific organizational changes to im- prove our ability to work effectively with other Departments on urban prob- lems: Early in 1967, Secretary Gardner established the Center for Community Plan- ning for the purpose of providing an urban focus for the Department and de- veloping HEW responsiveness to the needs of the city. The Center coordinates Departmental activity in connection with the Model Cities, Neighborhood Services Program, Parent Child Centers, the Youth Op- portunity Campaign and other urban programs. It has built a "Technical As- sistance Network" utilizing local Social Security district office managers and other Departmental personnel, through which requests for information and as- sistance in connection with urban problems may be routed rapidly to that point- the State, the Region or the appropriate agency in Washington-where the most effective help can be given. One of the Center's major tasks is to develop new and more flexible mecha- nisms of funding comprehensive urban programs such as the Model Cities. It has teveloped and is operating a system for prompt interagency evaluation of multi- ~mrpose projects involving HEW and other Departments. The Center represents :he Department on interdepartmental task forces and committees concerned with irban programs and with semi-public associations such as the Conference of ~iayors and the National League of Cities. The Center is currently working with the Cotulcil of State Governments and he Department of Housing and Urban Development to develop policy for the ~edera1 Departments in working with the States In the Model Cities and other irban programs, and to advise the States of `the role they should be playing in his effort. While the joint efforts we have undertaken with HUD and other agencies con- erned with urban development have made a substantial contribution, it is lear that Title IV provides us with important new tools to achieve a more fficient administration of grants for urban development. I therefore support he purpose of Title IV to advance the developmOflt of consistent Federal poll- les and procedures for carrying out a firm, constructive urban development olicy. PAGENO="0476" 470 TITLE V-CONGRESSIONAL REVIEW OF FEDERAL GRANTS-IN-AID TO STATES AND THE LOCAL UNITS OF GOVERNMENT The need for and importance of Congressional review of government programs is an accepted fact. Department of Health, Education, and Welfare grants are, in effect, reviewed through several methods: (1) The consideration of amend- ments to authorizing legislation frequently requires a fresh look at the basic laws, (2) There are time ]Jmif~atjons in most of the, basic enabling legislation requiring Congressional action (for extension) and therefore review. (3) The budgeting and appropriation process provides an annual mechanism for the evaluation of the cost, efficiency, and performance of programs, (4) Advisory councils charged with the comprehensive evaluation of programs have been es- tablished by Congress for a number of our major grant programs. I concur in the views of the Bureau of the Budget that periodic reviews of grant programs by the Comptroller General or other bodies as specified in Title V would not be as effective or serve the same purpose as reviews by the substantive congressional committees. Based on our experience in the Department of Health, Education, and Welfare I do not see the need for the provisions of Title V. It proposes authority which Congress already has for fixing the duration of grant programs and procedures for review of them. I am also concerned about the provision for the automatic termination of programs at the end of five years. The variations and complexities among our many grant programs are such that no arbitrary period of duration is appro- priate for all of them. I would like to suggest as an alternative to Title V-or as an addition, in any case-a program which would authorize appropriations for one additional year if legislation to authorize a program's extension was neither enacted nor rejected by the beginning of the fiscal year of the program authorization. This would provide lead time for orderly Federal, State and local planning. This recommendation is essential, in my opinion, if we are to improve the stability of Federal-State-local fiscal, administrative and program relationships, In addition I would like to suggest that any Congressional review of legislation of limited duration ought to be completed at least one year in advance of the expiration of program authority. TITLE VI-CONSOLIPATION OF GRANT-IN-AID PROGRAMS Title VI constitutes a new alternative to the current methods used for consoli- dation of grant-in-aid programs. It would authorize the President to follow a procedure based on the Reorganization Act of 1949 which would result in the submission of a grant consolidation plan to the Congress where it would be subject to the type of veto that presently applies to expensive reorganization plans. Our Department has been active in seeking to achieve a strengthened partner- ship with State and local governments by supporting grant consolidations which recognize the vital role played by our State and local units and their need foi increased grant-in-aid flexibility. The enactment of the Partnership for Health program, PL. 89-749, and the concepts embodied in title II of the proposed Partnership for Learning ~nd Earning Act of 19G8 are recognition of the neec for consolidation and improvements in narrow categorical aid programs. Our deepest concern about title VI Is that it would limit Congressional actior to either approval or veto of complex grant consolidation proposals put forti by the President. We believe the present system of a broader consideration of such legislativ~ proposals has many advantages. In our experience, the amendments made as result of congressional committee reviews have been a major contribution to th improvement of grant-in-aid legislation. While this Department favors the objectives of title VI, we believe thes objectives can be better accomplished by other means. The firs.t of these we have already mentioned-the normal legislative process The other would be to introduce the flexibilities embodied in S. 2981 which woul significantly overcome the impediments resulting from the multiplicity of narro~ categorical grants. PAGENO="0477" 471 S. 298l-~T0INT FTJN~ING SIMPLIFICATION ACT Section 6(b) of S. 2981 provides an important new means by which Federal agency heads may arrange for joint review of proposals by a single panel, board, or committee in lieu of separate review. In authorizing the establishment of joint management funds in section 8 of the bill, accounting and administration will be streamlined and simplified both for recipient institutions and awarding agencies. In addition, the establishment of uniform administrative and technical requirements encouraged by section 6(a) will go far in reducing the administrative complexities which often stand in the way of responsive program administration. In summary this Department strongly endorses the concepts of grant simplifi- cation reflected in S. 2981 and we feel that the authority contained in S. 2981 will permit an application of these concepts to help solve the mounting problems associated with the increasing complexity of Federal aid administration. The Department of Health, Education, and Welfare welcomes the attention, Mr. Chairman, that the Committee under your distinguished leadership is devot- ing to the central issues of good administration and intergovernmental coopera- tion, which are so vital to the successful operation of the Department's programs. Senator MtTSKIE. This brings these hearings to a close. (Whereupon, at 1:20 p.m., the committee adjourned.) PAGENO="0478" PAGENO="0479" OOMMUNICATIONS AND `STATEMENTS SUBMITrED FOR THE RECORD STATSMENT BY JOHN W. GARDNEn 1 am John W. Gardner of Washington, D.C. I submit this statement on "Uniform Relocation Assistance" as an individual and not as a representative of any organization. However, I draw upon my experience as the former Secretary of the Department of Health, Education, and Welfare, and my present responsibil- ities as chairman of the Urban Coalition. The renewal and reconstruction of American cities is an essential part of the needed response to the urban crisis Which now confronts this nation. Much of the vitality of our urban civilization is focused in our central cities. Although suburbs and new towns have an important ~place in urban development, the central core of metropolitan areas must be preserved and improved. To improve cities inevitably requires a certain amount of tearing down as a prelude to reconstruction. This rebuilding process means that residential and business properties must be acquired and their occupants displaced. Families and single persons will have to move from their homes and businessmen from tb~dr establishments. These persons are inconvenienced and some of them suffer considerable personal hardship to benefit the whole community. Because of this, there is a major public responsibility to assure that those who must relocate are treated with great care and generosity. A wide variety of public programs cause displacement `but the two activities which produce the most relocation are urban renewal and highways. In the cities, both seem to move a disproportionate number of poor and moderate income families and small businessmen. A major focus of urban renewal is the demoli- tion of deteriorated housing, most of which is `occupied by the poor, and within an urban renewal area many of the `businessmen who must move have small operation, with modes.t net income. The interstate highway program, with most of the routes in the countryside completed or underway, is concentrating more and more on the routes in and near the heart of cities, that is, in those neighbor- hoods where low- and moderate4nconie faniilies reside. Yet it is these families who already have the greatest difficulty finding adequate housing. Over the past two decades `there has been an increasing Federal concern about the relocation process. Unlike some of the construction programs of the nineteen- thirties, the urban redevelopment program, from its beginning in 1949, made provision for relocation payments, and the amounts of financial assistance and other services has been expanded in the intervening years. The highway program has had more modest provisions for relocation'assistance, but at least it provides some aid to the persons who must move. Nonetheless, when the Federal government itself acts as a developer in the construction of Federal facilities, it makes no relocation payments. Nor is assistance required under a number of the grant-in-aid programs. Moreover, the highway program provides less assistance than urban renewal, and these different benefit levels cause inequities among persons who are displaced. For example, ~n one side of the street families might be displaced by an urban renewal project md given financial assistance at one level while across the street other families tre dislocated by a highway project and given lesser assistance. This is unjust :o the displaced persons, and it is confusing to the general public. Because of these problems, the Uniform Relocation Assistance Act, which is :itle VIII of S. 698, is highly desirable legislation. It will go a long way toward ~orrecting the deficiencies in existing arrangements, The proposed act is commendable because of its broad coverage. It requires for he first time that Federal agencies must make relocation payments and provide dher assistance to displaced residents and buSinessmen. It extends this require- cent to States acting as agents for a Federal public improvement project. It Lpplies to federal assisted programs where States, political subdivisions, and (473) PAGENO="0480" 474 special purpose units of local government cause dislocation. Thus, it covers all public agencies which use Federal funds for projects where relocation is necessary. However, the bill apparently does not apply to nonprofit organizations receiving Federal assistance. Yet, private colleges, universities, hospitals, and nonprofit organizations constructing neighborhood facilities, sometimes displace persons in connection with projects which are federally aided. Perhaps such projects, too, should be encompassed by the act. The second important feature of the bill is the uniformity which it requires. Relocation payments and other assiStfiflt~ must be the same for each type of Federal project and federally assisted program. Although I am not a technical expert on the details of relocation payments, the requirements of the bill seem to me to be generally appropriates It would be better to err on the generous side than to be too stingy with those who must make a personal sacrifice by moving to promote the general public welfare. The provisions for relocation assistance other than monetary benefits are also important. The poor in particular need assistance in ioc~ting adequate housing at rents they can afford, and small businessmen need help in finding other quarters and in contacting institutions which make small business loans. Relocation assistance should be a process which starts early in any project. If unemployed family heads can enter manpower training programs six months or a year befQre they are to be displaced, by the time moving day arrives they can be in steady jobs with higher wages, snd thus be able tohave more income which will give them a wider range of housing choices ~arly health examinations followed by any needed medical services might be able to remedy many health problems before the move. A small businessman might benefit from management assistance before he has to relocate, and this would improve his chances for suc- ceeding in a new location. In a similar manner, other opportunities might be made available to persons prior to relocation. The bill should make clear that full and meaningful relocation assistance be. yond financial payments is not merely desirable but is a mandatory requirement. Perhaps the bill cotild be strengthened by prohibiting acquisItion and clearance of property unless there is a suitable program of relocation assistance rind an adequate supply of the right kind of housing and places for small businesses. As to financing relocation programs, I believe that it is appropriate for the Fed- eral government to pay the entire cost up to $25,000 for . any one person, as the bill provides. This allows uniform payments to start immediately without wait- ing for state enabling legislation. The ceiling permits the rare situation of unusu- ally high relocation costs of a business to be handled by sharing costs between the Federal government and the State or local agency on the same basis as other costs of the program, such as 90-10 percent in the case of interstate highways. and two-thirds/one-third for urban reneWal. I would urge that this bill be passed as soon as possible with its provisions to take effect upon enactment. The next severtil years will be crucial as tb~ activities of the Federal highway program are stepped up in cities and as urban renewal expands in conjunction with the model ~itles program. Delay would continue to make the poor and moderate-income families and small businessmen bear an in- ordinate share of the inconveniences of the programs which will make American cities better places to live and work. STATEMENT BY lION. STUART SYMINGTO~, U.S. SENATOR FRoM THE STATE or MIssoURI MoRE EQUITABLE TREATMENT FOR LANDOWNERS DISPLACED BY PUBLIC WORICS Mr. Chairman, Thank you for this oppdrtunity to comment in support of the amendment we have offered to titl~ VflI of your bill, 5. 698, d~s1gned to achieve a uniform policy for "fair and equitable trektment of owners, tenants, and other personS displaced by `the acquisition of real property for Federal and federally assisted programs." These programs are justified by expected benefits for the general public. The purpose of our proposal is to ease the unfair finanCial burden often placed upon those who are forced to sell their property to the Qovernment for such programs, when, because of circumstances beyond their control, the owners are not able to find reasonable replacement property that would entitle them to obtain capital gains tax deferral. PAGENO="0481" 475 Current law (section 1033 of the Internal Revenue Code) recognizes the need in sopie circumstances to allow deferral of payment of capital gains taxation on the proceeds of an involuntary conversion. flnder that section, the owner of land taken for public use can postpone recognition of gain on compensation he receives only by reinvesting in property of "like kind" within a specified period. Generally, this permits the landowner to reinvest in any comparable real property. The amendment we offer would permit the taxpayer to defer capital gains taxa- tion of condemnation awards when be reinvests in securities or a business If be establishes that to require him to reinvest only in comparable real property would work "undue hardship" on him. The term "undue hardship"~l~ one of equity; still this is a situation which calls for equity. Since the burden of proof will be placed on the taxpayer, this amend- ment would be restricted to relief situations rather than open up an area of abuse. As an example of circumstances which would constitute an "undue hardship", let us take the situation that arises in large reservoir takings. Comparable re- placement property often is not available in the general vicinity, and landowners would be required to move considerable çlistances in order to reinvest in similar farm property. Another hardship slituation would arise when a landOwner is forced to sell a going farm operation but has reached an age when be does not believe it physically possible tp start a new farming or ranching life, lie is being pushed into an early retirement. These people have no choice, no real alternative to selling their land; in order to avoid undue hardship, tax concepts should be made to conform with current needs and the increasing scarcity of land. Our amendment does not provide specific criteria for the application of "undue hardship." To do so would only confine the attempt to achieve equity to arbitrary limits. However, we can think of several factors that might merit consideration in determining "undue hardship": the age of the landowner, the number of years he has owned the land, and evidence of his efforts to find reasonable replacement realty Mr. Chairman, we believe that our amendment would provide considerable economic assistance `to persons across the country whose property is taken for public works programs such as reservoirs and highways. More equitable tax treatment seems in order for those who are forced to give up land that may have been built up over many years, even generations, and then who are taxed because they are unable to find replacement property. Your Committee's favorable consideration of this proposal will be appreciated. Amendment intended to be proposed by Mr. Symington (for himself and Mr. Long of Missouri) to the bill (S. 698) viz: On page 49, after line 10, insert the following: PART C-AMENDMENT TO INTERNAL REVENUE CODE PROPERTY REQUIRED TO REPLACE RK~L PROPERTY TAKEN BY CONDEMNATION Szo. 811. (a) Section 1033 of the Internal Revenue Code of 1954 (relating to involuntary conversions) is amended by redesignating subsection (h) as (I), and by inserting after subsection (g) the following new subsection: "(h) CONDEMNATION or REAL PROPERTY AFTER 1966.- "(1) ~peciaI rulo.-For purposes of subsection (a), if real property (not including stock in trade or othei~ property, held primarily for sale) is (as the result of its ~elzurO, requisition, or condemnation, or threat or immi- nence thereof) compulsorily or involuntarily converted, and If the disposition of the converted property (within the meaning of subsection (a) (2)) occurs after December 81, 1966, replacement property shall be treated as property similar or related in service or use to the property so converted. "(2) Replacemeat property deflned.-For purposes of paragraph (1), the term `replacement property' means- "(A) real property and any interest in real property, "(B) property to be used in trade or business of the taxpayer (as defined in section 1231(b) (1), but determined without regard to any holding period), and "(0) subject to the provisions of paragraph (8), any property to be held for investment by the taxpayer. "(3) AppUcation of paragraph (2) (C).-Subparagraph (C) of paragraph 95-626-6S-----31 PAGENO="0482" 47(3 (2) shall apply with respect to any property only If the taxpayer establishes that it would have worked an undue hardship for him to replace the prop- erty converted by the purchase of- "(A) property similar or related in service or use to the property con- verted, or "(B) property described in subparagraphs (A) and (B) of paragraph (2)." (b) Section 1033 (g) of such Code is amended- (1) by inserting after "December 21, 1957" in paragraph (2) (B), and before January 1, 1967"; and (2) by striking out the heading of such paragraph and Inserting in lieu thereof "Period of applicability." (c) The amendments made by this Section shall apply to taxable years ending after December 31, 1966. SUPPLEMENTAL STATEMENT BY SENATOR STUART SYMINGTON Mr. Chairman: Just this morning, Mr. Charles Smith, staff director of your subcommittee, made available to my office a copy of a letter dated May 15, 1968, addressed to you froxa Assistant Secretary of the Treasury Stanley Surrey. This letter further states the objections of the Treasury Department to the amendment proposed by Senator Long and me, I have had prepared a rebuttal to the Treasury Department's further argu- menit, and ask that itt `be Included in the record along with the letter which you have received. REBUTTAL OF TREASURY DEPARTMENT'S LETTER OF MAY 15, 1968 1. Fear of abandonment of the principle that a capital gains tax becomes due upon change in investment position is unwarranted. The situation we are concerned about involves an involuntary conversion, which allows deferral of capital gains because the change in investment position is not voluntary. Section 1033 of the Internal Revenue COde is a modification of the capital gains principle that has been long recognized. Our amendment would merely make the intent of section 1033 applicable in situations where replacement realty was not available. No new area for special treatment Is being suggested. These landowners have no choice, no real alternative to selling their land; in order to avoid undue hardship, historical tax concepts should be made to conform with current needs and the increasing scarcity of land. 2. The fear that there would be extensive litigation seems to he exaggerated. Admittedly the term "undue hardship" is one of equity; but this is a situation which calls for equity. Since the burden of proof will be placed on the taxpayer, this amendment would be restricted to relief situations rather than open up an area of abuse. The possibility of litigation arising should certainly be no excuse for denial of the right to relief. TREASURY DEPARTMENT, Washington, D.C. May 15, 1968. Eon. EDMUND S. MUSKIE, Cha~irma~n, ~ubco~hnittee on Intergovernmental Relations, U.E~(. Eienatè, Washington, D.C. DEAR MR. C~IAIRMAN: This letter is intended to supplement my letter to you of May 17, 1967,' setting forth the Treasury Department's views on an amendment to S. ~398 proposed by Senators Stuart Symlngton and Edward V. Long of Missouri. The original amendment would have permitted the proceeds of a land condem- nation award to be reinvested, without payment of a capital gains tax, in any type of real property, in any trade or business property, or (in those instances in which it would be "impractical" or would cause "undue hardship" to invest in suitable replacement property) in any type of investment property, including stocks and bonds. Since that time, Senator Symington and Senator Long have amended their proposal by removing the standard of, impracticality, and I felt that views should reflect this change. The Treasury Department continues to be opposed to this amendment to S. 698. The change in the amendment which has been suggested does not correct the basic and serious policy problems of deferring the capital gains tax to which I referred in my previous letter: The result of enacting the amendment would PAGENO="0483" 477 be to abandon the basic principle that a capital gains tax becomes due when the investor changes his basic investment position. This principle would then become subject to increasing attacks and requests for special treatment in other situations. In addition to this basic policy objection, the amendment continues to pose serious problems of administration and very possibly extensive litigation over the issue of "undue hardships," which concept was retained in the proposed amendment. Therefore, although the necessity of defining impracticality has been eliminated, this change has not vitiated the problems which I described in my previous letter because of the retention of the equally abstract concept of "undue hardship." For the foregoing reasons, the Treasury Department remains opposed to the enactment to S. 698. The Bureau of the Budget has advised the Treasury Department that there Is no objection from the standpoint of the Administration's program to the presenta- tion of this report. Sincerely yours, STANLEY S. SURRrY, Assistant ~S1ecretary. STATEMENT B~ HON. EDWARD V. LONG, U.S. SENATOR FROM PHE STAm OF Missouni Mr. Chairman, I appreciate this opportunity to comment on the amendment Senator Symington and I have proposed to S. 698. The amendment would revise the Internal Revenue Code so as to permit, under certain circumstances, the proceeds obtained through involuntary, cenversions to be reinvested without payment of the capital gains tax in property not now authorized. My concern about the present capital gains tax policy was aroused by land- owners in western Missouri who are being forced to sell their property to make way for the Kaysinger Dam and Reservofr which will provide flood protection, hydro-electric power, water supply and recreation for hundreds of thousands of people. There are presently 71 authorized projects of the corps of Engineers within a 200-mile radius of Kaysinger Dam, 107 projects within 300 miles. The displacement involved to these projects is and will continue to be a major factor in many communities throughout the State. Under existing provisions of the Internal Revenue code, if a taxpayer is forced by some external circumstance to change his investment position and reinvests the proceeds of a condemnation award in property which is similar or related in service or use to property con- verted, or which is of like kind with the property converted, then capital gains taxation is deferred. En many cases, those being displaced are unable to locate or acquire similar property with their condemnation award. My proposal would provide a more equitable treatment in such instances where it was established that similar property is not available in the general vicinity, and where a landowner reaches the age when it is physically impossible to start a new enterprise. It would broaden the range of choice in the rep1aeen~.ent of income producing property without the capital gains tax, to any type of real property,, any trade or business property, and certain types of investment securities. The Treasury Departmçnt, I understand, is opposed to the amendment. It has consistently taken a position against legislation to extend special tax treatment in the p~st. I firmly believe, however, that the situation is one which must be faced and one which deserves action. The issue is people whose lives are being disrupted, people who must bear heavy Ilnancial burdens so that all citizenS will benefit from projects. We cannot turn our backs on these people. The fact that the adoption of our amendment would result in a revenue loss to the government is not sufficient reason for ignoring the problem. Those whose lands are taken for the benefit of the general public should be afforded fair tak treatment. The thousands of farmers and local citizens being displaced as a result of the federal flood control program did not ask to have their property baken. The Treasury Department is also concerned that the amendment would lead ;o extensive liti~ation to determine whether it was an "undue hardship" to r~quire ~n investment in similar property in order to obtain deferral of the capital gains. ax. The fact that there is no present judicial interpretation of this phrase which vould be available to the courts should not preclude action. PAGENO="0484" 478 A definition of the term should be easily established by consideration of the time for reinvestment now allowed under ~ection 1038(a) (B) `of the Code, the age of the landowner, and evidence of unsuccessful good faith efforts made to restore the former investment position. The burden of proof is placed on the taxpayer and should insure that `the government is not presented with unreason- able litigation. The proposal is not a new one. In various forms it has been advocated for several years; Conditions facing those displaced by increasing federal activities justify a careful examination of the situation. STATEMENT BY HON. MILTON R. YOUNG, U.S. SENATOR FRoM TUE STATE or Nonvu DAKOTA Mr. Chairman, may I take this opportunity to thatik you and the members of the Committee for holding these hearings at this time. I strongly support the amendment which has been introduced by our colleagues, Senators Symington and Long of Missouri to title VIII of S. 698. This proposal would amend the Internal Revenue Code and make possible more equitable treatment for landowners forced to sell their property by condemna- tion or threat of condemnation for government programs such as floof control reservoirs, road construction, and similar projects. The current treatment of such cases has caused many hardships and the need for an effective change has long been felt. In order for a landowner to postpone the payment of capital gains tax ~on property taken in connection with a government project, present law requires that he reinvest in real property. This requirement creates severe problems for many whose farms and businesses represent years and even generations of investment of time and money. For too many of these people `it means either buying replace- ment property ht inflated prices or breaking family and community ties and seek- ing relocation in a new area. This is asking these folks to pay a very high price for the progress of their country. This amendment is patterned after a recommendation made in the 88th Con- gress in a staff study by the House Public Works Committee staff. It would permit the landowner to make income producing investments in nonreal property in cases where it would be impractical or would work a hardship on him and his family to buy replacement real property. Let me cite just one example that ha~ come to me recently. A North Dakota farmer had a substantial portion of land taken for right of way for an interstate highway. This did not take his whole farm, but it did reduce the size of the farm considerably~ He is located in an area where land values are already extremely high and because many other farmers in the community were In the same position, he has been unable to purchase replacement land for anything like a reasonable price. This farmer is making a great sacrifice to progress. First, a substantial portion of his farm was taken for the highway. Secondly, he will either have to purchase replacement property at inflated prices or pay capital gains tax on the proceeds of the sale. The proposed amendment is not a new idea, but It does differ in at least one im~ortaut respect from other such suggestions. This amendment would require that the subject taxpayer establish that reinvestment In real property would work an undue hardship or would be Impractical. I feel that this requirement more than meets the objections that have been made `in the past that such author- ity would open a broad loophole In our tax laws. Mr. Chairman, few, if any, of our great public works projects are ever con- structed without creating some dislocation of businesses, farms, and families. A great deal of effort is expended to lessen the impact on those directly affected. I strongly feel that this amendment would be a great step forward in these efforts. There is good and ample justification for such action. I cannot urge too strongly that action be itaken now to eliminate this inequity~ The amendment offered by the Senators from Missouri proposes an effective isolu~ tion to this problem and I hope it will be approved at an early date. I `thank you for the opportunity `to present these views to the Committee. PAGENO="0485" 479 NATIONAL COUNCIL OF THE CHURCHES OF CHRIST IN THE U.S.A., Washington, D.C., June 12, 1968. Hon. EDMUND S. Mus~nr, Senate Office Building, Washington, D.C. DEAR SENATOR MU5KIE: We are pleased that your Committee on Government Operations is considering S. 698 which will establish a uniform relocation assist- ance policy, as well as other matters. The necessity of such a policy is well established in that the various Federal programs have differing provisions regarding the relocation of people affected by their projects. Contact with church units throughout the country serving the people who have been affected by these programs impresses upon us the great importance of adequate and uniform relocation service. Let me elaborate on what we mean by uniform relocation service: that each family or individual be treated the same for relocation regardless of the program which neèessitates their relocation. The fact that a person has to relocate is the prime fact, and not the particular program which creates the problem. Congress in its wisdom may vary the financial or supervisory relationship the Federal Government has with various programs of highway building, public housing, or urban redevelopment. This variance however, should not extend to the treatment of the citizen. We therefore urge that your bill contain provisions that- 1. provide funds uniformly to the persons and individuals involved and to the agency administering the relocation program; 2. insure that adequate funds are so provided-it seems that the provision of the first $25,000 of the cost of relocation contained in section 807(b) should be adequate in most cases. Again, we emphasize the importance of this legislation. The process by which our cities are renewed is at least as important as the program of renewal. We trust that this legislation will focus on providing both uniform and adequate assistance to the citizen regardless of the variations between the Federal Govern- ment and the particular programs. Sincerely yours, JAMES A. HAMILTON, Director. NATIONAL GovERNoRs' CONFERENCE, Washington, D.C., June 7, 1968. Hon. EDMUND S. MUSKIE, Chairman, Subcommittee on Intergovernmental Relations, Committee on Gov- ernnusnt Operations, ~enctte Office Building, Washington, D.C. DEAR SENATOR MUSKIE: In testimony by the National Governors' Conference before your Subcommittee on the Intergovernmental Cooperation Act, it was indicated that the Governors and the states are vitally concerned with the problems created by the action of federal, state, and local governments, which displace persons and businesses. Specifically, we are concerned about the role of the states in relocation assistance. As was pointed out in our letter to you dated May 21, 1968, the states have begun to assume a `more aggressive `role in relocation efforts. While many states are meeting their responsibility for coord;inating i~elocation efforts, we feel that a commitment from the federal government is needed if uniformity is to be realized in the near future. Title VIII of S. 698 providing for relocation pay- merits of up to $25,000 in federally-aided programs Is a logical first step in achieving a uniform policy of relocation assistance. The federal relocation payment would be contingent, of course, on the state or local agency's agreeing to provide assistance payments as prescribed by federal 1~aw. In addition, however, serious consideration `should be given to creating pro- grams which would bring the states more `fully into the relocation programs. Many state officials, for example, favor federal matching funds to the states to provide for a statewide relocation effort as compfementing the provisions in title VIII of the Intergovernmental Cooperation Act (S. 698). We trust that you will find these additional comments helpful. If we can provide you with further information, however, please feel free to contact this office. Sincerely, CHARLES A. I3YRLEY, Director, Office of Federal-gtate Relations. PAGENO="0486" 480 STATEMENT OF HON. JOHN A. V0LPE, GOVERNOR OF `rrnc COMMONWEALTH OF MASSACHUSETTS Mr. Chairman, I appreciate very much this opportunity to present to YOU the iriews of the Commonwealth of Massachusetts on S. (398, and more specifically on title VIII, the Uniform Relocation Assistance Act. As you know, I have supported very strongly the provisions of S. 698. I do feel that we in the Commonwealth of Massachusetts have had a unique experi- ence with business relocation in highway and urban renewal programa I believe this may be a helpful discussion in your studies of title VIII. The Commonwealth has taken an active interest in the problems of reloca~ tion and two years ago established the only State Bureau of Relocation with authority to supervise and coordinate all government takings, including high- way displacement.1 We now have a body of knowledge and experience con- cerning displacement and the relocation process in the Oonimonw'ealth. A state- wide survey conducted by the Bureau of Relocation makes it possible for us to project that during the next five years government takings will displace almost 22,000 families and individuals and over 7,000 businesses. (See Table A at- tached.) Most of this displacement will result from highway and urban renewal programs which receive Federal financing and which provide relocation assist- ance differentially. Under our state law we are making rapid strides toward improving the planning for relocation, promoting the advance development of housing resources, and centralizing the provision of relocation services. However, in the Important area of providing uniform r~locatioil assistance payments, Congressional action is needed. For that reason, we support the adoption of title VIII of 5. 698 which establishes such uniformity in federally aided and Federal programs. The bill affects both residential and business rel~eation payments, and I shall discuss the importance of both provisions. Under title VIII of S. 098, moving expenses of households would be paid up to $200 and the following benefits would be added to all Federal relocation assistance: 1. The payment of $300 to displaced families who purchase homes will be of great assistance to low-income families who are often unable to make a purchase under favorable FHA terms because of the lack of a down payment (802(C) (3)). We favor this provision. Several of our Massachusetts renewal agencies have had success in relocating large low-income families in home own- ership, but their efforts have been hampered by the lack of a fund from which down payments could be made. Even for middle-income families displaced from homes they own, the present high interest rate and the operation of the point system makes the purchase of a new home a burden. This small payment will mitigate the hardship to some extent. 2. A dislocation allowance equal to moving expenses but not more than $100 (802(C) (2)), and 3. A payment to certain public housing eligible households who move into housing at a cost of more than 20% of income. (This is similar to the relocation adjustment payment established under sec. 114 of the Housing Act.) We believe these two provisions of the bill could be improved. We suggest that it IS time for a thorough overhaul of categorical benefits. Experience has shown, in urban renewal, as in other programs, that categorical benefits with differential eligibility involve administrative effort which could more usefully be directed at solution of relocation problems. Furthermore, unreasonable in- equities and inconstisitencies flow from the categorical assistance programs. The hidden costs of relocation to the displaced family affect all families- they may be increased rent, or abandonment of furnishings unsuitable to the new home, or deposits for rent, utilities and the like. It is particularly critical for poor families. Relocation workers spend much time presently finding re- sources to meet these payments for low-income families, and some times desirable housing is lost when these sums cannot be found. Among the inequities inherent in the suggested payments is the fact that dislocation allowance would tend to be smaller for poor families with few be- longings, surely not an intent of the drafters of the legislation. 1The State of New Jersey also has a State Bureau of Relocation but ite authority does not extend to highway displacement, which accounts for about 40% of t~lsplacement In most states. PAGENO="0487" 481 The relocation adjustment payment, made only to those public housing eligible families who do not receive public housing and who pay more than 20% of the income, has two inconsistencies. First, one of the basic protections of the bill is that displacement is not to take place unless there is advance assurance that adequate housing, at prices they can afford, will be available to these families. Payment of a RAP indicates that th:is requirement is not being met. Second, the adjuStment payment only defers the hardship upon the family for two years. At the end of that period the payment ceases, and the household is left in housing which is beyond its means. A final criticism of the RAP program has been its excessive administrative requirements. Income eligibility, absence of suitable pu:blic housing, and the rent paid in new accommodations, all must be documented and `audited. Dedicated relocation workers spend more hours trying to establish eligibility and to secure this benefit for their clients. The line is fine, and receipt of the benefit depends upon the skill of the worker, rather than the need of the household. We have gone into this in some detail in order to lay the groundwork for a recommendation which would eliminate both of the special payments, and pro- vide instead a dislocation payment to all displaced families~ on a sliding scale, reflecting the size of the family, with a minimum of $100. Coupled with adequate moving expenses, which would include loss of property, this would assist the relocation process `and provide equitably for the expenses incurred in these forced moves. If displaced persons cannot find housing within their means, other assistance must be made available; for example, an expansion of the section 23 leased housing program, to provide a subsidy to rent in the private market. This pro- gram has worked very well in a number of communities in the Commonwealth, providing incentive for rehabilitation of private properties, iticreasing the tax rolls, and improving the quality of housing available to low-income families. Turning now to the problem presented by the present differential in business' relocation payments, as you know, a business displaëed by a federally aided highway is able to recover only a maximum of $3000 toward its moving ex- penses and receives no ether benefits. On the other hand, in the Commonwealth, businesses displaced by urban renewal receive full moving expenses, In addi- tion to other benefits, including a small business adjustment payment and reim- bursement for property loss. Sometimes, as with the Inner Belt in Boston, the highway displacement occurs on one side of a street and urban renewal dis- placement on the other, With disastrous results from the unequal assistance given. There is attached as an appendix to this statement an analysis of past and projected displacement of businesses in the Commonwealth, which details the liquidation rate and the moving expenses of displaced businesses. From this it will be seen that displacement of businesses due to public takings during the next five years is projected to amount to more than 7000 units, of which 42% will be generated by highways and 56% by urban renewal. For this reason, we regard the provision of uniform payments for full moving expenses in all federally aided displacement as essential. If prior experience holds for future displacement, fully one quarter of the businesses which move from highway rights-of-way in the Commonwealth will incur moving expenses n.e~cess of the $3000 presently paid. The proposed legislation provides $5000 (or one year's net income) as an )ptional payment instead of moving expenses. This payment is also available to )usinesses which discontinue operations. It eliminates a $2500 small business ~djustment payment in the present HIJD funded programs, and would be entirely iew to the highway program. Previous experience in `the Commonwealth indicates hat about 00% of highway business displacement would be eligible for such payments. In addition to being advantageous to businesses which are seriously [islocated as a result of forced moves, this fiat sum would eliminate much of he paperwork and administrative overhead of business relocation. One of the iost serious complaints of businessmen in urban renewal areas has been the mount of documentation necessary for reimbursement of moving expenses. [any of them are unable to spend the time necessary to secure documentation. .t the same time, business relocation workers In renewal projects estimate that icy spend about half of their time on paperwork associated with processing alms for reimbursement. The elimination of this amount of red tape would ~ee relocation workers for really helpful tasks related to successful relocation businesses. Although the amount paid to businesses is larger than the former PAGENO="0488" 482 HUD displacement payment, in the end administrative savings may well result in fiscal savings. While provisions of more adequate relocation payments will not prevent liquidate of some displaced businesses, notably those with elderly proprietors, for many small undercapitalized businesses, the provision of full moving costs will make the difference between successful relocation and the painful decision to go out of business. An analysis of past experience in the Commonwealth shows that while 25% of businesses displaced by urban renewal liquidate, for highway displacement this figure is now 35%. There appears to be a definite reiatio'nisbp between the adequacy of relocation payments and the higher liquidation rate. Projection of past experience also indicates that the uncompensated moving costs under present highway restriction of $3000 will reduce the net worth of more than 500 businesses and will adversely affect their working cash position. Therefore, the Commonwealth urges the adoption of a Uniform Relocation Assistance Act in order to assist more adequately the relocation of households from federally financed projects, and in order to provide for relocation assistance to buainesses which will minimize the liquidation rate of displaced businesses, end the inequities between programs operating in the same communities, and reduced the hardship upon businesses forced to move for the benefit of the general public. In conclusion, we all know that relocation has been a major source of con- troversy in capital improvement programs today. It can be expected that this tension will grow as more public works projects come into being. If the relocation programs can be made more effective and more equitable, the development process could be smoothed and improved, greatly to the benefit of those displaced and the community as a whole. TABLE A-ESTiMATED DISPLACEMENT OF HOUSEHOLDS AND BUSINESSES BY GOVERNMENT ACTiON, COM- MONWEALTH OF MASSACHUSETTS, 1968-72 Takings by- - Residential - Businesses Percent Family individuals Total Percent Renewal Highway Other 5, 085 10,627 1,438 3, 942 71 639 9, 027 10,698 2,077 42 49 9 3, 871 2,979 181 56 42 2 Total 17,150 4,652 21,802 100 7,031 100 Source: Commonwealth of Massachusetts, Bureau of Relocation. Derived from estimates furnished by agencies with eminent domain power. APPENDIx A This summary of business displacements for the period 1004 through 1007, and projections for lOGS through 1972 serve to emphasize the increasing serious- ness of the economic hardship on the businesses displaced incidental to Federal or federally assisted highway programs. Based on actual displacement repOrts received from all taking agencies within the Commonwealth, the following has been atablished: REPORTED DISPLACEMENT EXPERIENCE Urban llenewal.-19434 through 1967, 3623 business units were displaced. Relocation case records indicate the total relocation experience is as follows: (a) 2717 (75%) units relocated with move expenses (1) 2078 (75.4%) with relocation costs under $3000. (2) 441 (17.5%) with relocation costs over $3,000 but under $10,000. (3) 154 (5.6%) with relocation cOsts over $10,000 but under $25,000. (4) 42 (1.5%) with relocation costs over $25,000. (b) 906 (25%) units ceased operations incurring no move expenses but received property loss, small business displacement payments and other benefits. PAGENO="0489" 483 Federal and FederaU~i Aided Highway Programs, 1963 through 1967, approx- imately 246 unit~ ~tispiaced. Relocation case records indicate: (a) 217 (75%) units relocated with more eNpenses reimbursed up to $3,000. (1) 143 ($65.9%) with relocation costs under $3,000 paid In full. (2) 61 (28.1%) with relocation costs over $3,000 paid only $3,000. (3) 13 (G%)1 with relocation costs over $25,000 paid only $3,000. PROJECTED DISPLACEMENTS 1968 THIiOUGII 1972 Urban Renewal activities indicate 3870 units will be displaced during this period. There is no reason to believe that the relocation experience will vary substantially from the 1964 through 1967 period. Federal and federally aided Highway Programs project a displacement of 2979 units during this period, a 1400% increase over the past five years. During this five-year period there will be three units displaced by highway programs for every four units displaced by Urban RenewaL If the broader base urban renewal experience factors are applied to the projected highway displacement, the results are: (a) 745 units (25%) will cease operations-liquidation or other-with- out benefits. (5) 2,234 units (75%) would normally be expected to relocate: (1) 1675 units (75%) With move expenses within the present $3,000 limit. (2) 400 units (17.5%) with move expenses over $3,000, but under $10,000. (3) 125 units (5.6%) with move expenses over $10,000 but under $25,000. (4) 34 units (1.5%) with move expenses aver $25,000. Most recent national statistics indicate a liquidation rate of 25% for urban renewal activities and 35% for federal highway programs. It can be reasonably expected that 10% of the 560 units with move expenses in excess of $3000 will liquidate due to inadequate relocation compensation. The average number of employees in this business category is slightly over 4 per unit indicating a permanent loss of 224 job opportunities for the area. The other 500 will in relocating experience unwarranted economic hardship, in that the unconipen- sated move costs will reduce their net worth and, more importantly, their working cash position. This loss of course puts them in an inferior competitive position with both urban renewal relocatees and those businesses not displaced by either program. As indicated above an additional 745 units can be expected to liquidate for noneconomic reasons, but accelerated by the forced displacement. A gross inequity exists in that these business displacements will not receive the minimal compensation granted to similar displacements due to urban renewal activities. This type of business liquidation almost without exception, involves an elderly business man with a non-salable business due to impending displacement and because of age with no alternatives but to accept the economic loss due to liquidation. NATIONAL LuAGUE or CITIES, U.S. CONFERENCE OF MAYoRs, Washington, D,O., ,June 18, 1968. Hon. EDMUND ~. MusiciE, Chairman, S~nate 2ubcommitt~e on Intergovernmental Relations, Senate Office Building, Washington, D.C. DEAR SENATOR MUSKIE: Please accept this as a suppleteental statement to our testimony on S. 698, the Intergovernmental Cooperation Act. The National League of Cities and U.S. Conferent~e of Mayors wishes to reiterate its strong support for title VIII of S. 698 dealing with uniform relocation policy. In particular, we would like to comment upon section 807(b) which provides that the Federal government shall contribute the first $25,000 of the cost of providing a relocation payment to any displaced person. Such authorization is the most significant step taken by the Federal government in the history of `Urban Renewal experience is 1.5%. PAGENO="0490" 484 federal financial assistance for relocation and is most welcome by municipalities. While the price to the Federal government at first glance would appear high, the uniformity spread over the entire federal relocation assistance program accompanied by the other provisions of this title which will help overcome or substantially reduce the far more costly delay, confusion and frustration that now prevails from the welter of relocation policies, (with ensuing increased construction àos'ts, expensive court spits, etè.) will by far, more than compensate for whatever additional program expense section 807 (b) may create for the Federal government. As the Bureau of `the Budget pointed out the effect of the proposal (section 807 (b)) would be to have the Federal government assume almost all relocation payments. We believe this to be fair. However, the Bureau of the Budget stated that it sees "~ * * no reason to exempt the first $25,000 from the usual [pro- gram] sharing requirements." The rationale for this suggestion appears to be one of economy. We strongly oppose this suggestion. The adverse effect of this proposal on municipalities would not be worth the questionable savings to the Federal government. The Federal highway program is the greatest consumer of federal relocation dollars and moves far more people than any other federally assisted program. Under the B.O.B. proposal, the Federal government would still have to bear 90% `of the relocation costs. The additional 10% of the cost could be absorbed far more easily by the Federal government than by an individual city faced with relocating an exceptionally large `number of businesses and families because of highway construction. For example, most of the large relocation task in order for the city of Nashville as `cited by Mayor Briley, will be caused by construction of Interstate 40. Moreover, this proposal fails to recognize the already considerable expense borne by a city in any relocation undertaking, be it federally assisted or not. Most federal programs involving relocation require that cities have working relocation programs in `effect before they become eligible for federal relocation assistance. A city must, therefore, provide a whole range of services, including planning, at its own expense aside from the federal assistance it would receive. In some cases, notably urban renewal where a %_1,~ matching formula gen- erally prevails in the basic program, a similar matching requirement for reloca- tion expense would reduce the amount of relocation assistance presently received by cities from the federal government. Thus, introducing a variety of matching formulae defeats the objective of uniformity title VIII seeks to achieve. In summary, cities deeply involved in revitali~ing themselves are already pressed to the limits of their financial ability by the sheer costs of such revitali- zation including the major expenditures required to match federal assistance. The effect of the B.O.B. proposal would be like the straw that broke the camel's back to many cities or at least to bring about further delays while additional local matching funds are literally "scrounged" out of other monies already tightly budgeted for local programs. We also oppose the suggestion that the effective dates of sections 807, 808 and 810(a) (4), (5), (6), (7), (8), (9), and (10), be delayed three years after enactment of the bilL We see no `reason why it should take three years for federal assignment of new responsibilities and drafting of new regulations. We fully believe these provisions should be applicable with the 180-day period assigned the rest of the bill so that local governments can immediately be relieved of the financial strains and other Improper conditions title VIII seeks to correct. In conclusion, we strongly urge that section 807(b) not be amended as the Bureau of the Budget has suggested. For t'he Committees' additional Information, we are submitting a statement filed jointly by the National League of Cities and National Association of Counties with the House Public W'orks `Committee on the subject of relocation and the highway program. Sincerely, NATIoNAL LEAGUE OF Cirins, PATRICK HnALY, Ececutiive Director. ILS. CoNFERENCE OF MAYORS, JOHN GUNTHER, J3koecutive Director. PAGENO="0491" 485 SUPPLEMENTARY STATEMENT OF NATIONAL LEAGUE OF CITIES AND NATIONAL ASSOCIATION OF CouNTIEs TEE PROBLEM In many urban areas, highway improvement programs, particularly on the interstate system, are stalled `by mounting citizen opposition. These delays not only put off the date when these roads can be completed, to the great benefit to the nation, but also significantly raise the cost of completion of the delayed roads because of inflation of highway building costs and heavy extra expense often involved in redesigning roads to allay citizen opposition. A major factor creating this opposition is the relocation program which is carried out in con- nection with current highway projects. Presently, displaced persons and businesses often must bear substantial eco- nomic losses which go uncompensated by the relocation program. In addition, the accommodations which displaced persons and business finally obtain are often inferior to those which they were required to move out of. The problem is particularly acute in low income areas where decent accommodations `are in short supply. This prOblem is aggravated more for minority groups who have difficulty obtaining accommodations, or the credit to finance these accommoda- tions, in areas where decent, safe, and sanitary housing and business locations are in adequate supply. In addition to difficulties associated with the highway relocation program, the disparity between relocation assistance under the high- way program and relocation assistance under other programs, such as urban renewal, creates further citizen misunderstanding and opposition in highway projects. Individual attempts are being made by some local governments to minimize problems which relocation programs presently pose. However, federal aid to improve relocation programs is needed `because only the Federal government has the financial resources necessary to support and improve relocation programs on the same broad scale as the federal grant-in-aid programs which, in `their impIe~ mentation, cause many of the relocation prOblems. The highway program is neither the best, nor the worst, of the federal pro- grams which may require citizens `to relocate. Some programs, such as those carried out by the General Services Administration, provide no compensation for relocation expense at all and only the fair market value for property that is taken. However, the highway program, because of its magnitude and the admitted inadequacy of its relocation program, is perhaps more associated with relocation difficulties than any other program. In 1967, the Department of Transportation estimated that 48.983 families and 5,559 businesses will be dis- placed annually between now and 1970. Thus, improvement of relocation efforts under the highway program is crucial to a general improvement of relocation practices associated with federal grant-in-aid programs.. 5UGGESTED IMPROVEMENTS To correct present deficiencies in `the relocation provisions of the Federal Aid Highway Act and to reduce citizen opposition to highway construction pro- grams, the National League of Cities and the National Association of Counties urge that the relocation provisions be revised to include the following elements. (1) An equitable relocation program, once established by the Congress, should not require authorization by each `individual state in order to become effective in that state. The present relocation program is generally admitted to be inade- quate even in those states that have authorized the full payment prescribed in the Highway Act, yet fourteen states have not authorized expenditure of any money for relocation programs and a number of others have authorized less than the amount permitted by the Highway Act. Inaction of individual states should not be permitted to `thwart development of a national highway system by continuing inequitable relocation `policies which raise citizen opposition and stall highway improvements. Section 1&3 (e) of the Highway Act should be amended to assure that the relocation program will apply In all states, regard- less of state inaction. (2) The new relocation program must require that adequate provision be made for relocation of persons and `businesses to be displaced `by the highway program before demolition of property begins. Section 133(b) of the present Highway Act requires the states to give assurance that relocation "advisory assistance" be provided to families displaced by highway projects, This is not PAGENO="0492" 486 enough, the Act should require that before displacement begins, new quarters should be actually identified for all those to `be displaced; families, individuals, and businesses, whether they be tenants or owners of the property. An approved relocation plan should `be a condition precedent to approval of any highway project. The recent report `to the Congress by the American Association of State Officials notes: Purely from the humanitarian point of view, and to be fair and equitable to those who are inconvenienced by `th'e construction of needed highway facilities, ways an'd means of supplying adequate, sanitary housing before actual construc- tion starts on the highway project must be found. The Advisory Commission on Intergovernmental Relations has stated: "The Congress should require that state and local governments administering federal grant programs assure the availability of standard housing before proceeding with `any property acquisition that displaces people." (3) To the ex'tent possible, federal programs should be designed so that relocation activities in connection with various improvement programs can be coordinated under one relocation agency. Presently, relocation is `the secondary concern of various agencies responsible `for implementing improvement programs requiring relocation. Assigning relocation responsibility to a single agency whose primary concern and experience would be in the field of relocation will assure more equitable and efficient relocation of displaced `persons, while leaving the normal operating agencies free to pursue `their assigned responsibilities in con- nection with construction programs to improve urban areas. Federal grant-in- aid programs must be reviewed to assure that participation of a separate relo- cation agency, as an integral part of implementing the grant program, will be permitted, and can be supported. (4) Efforts must be made to eliminate the great `disparity which presently exists between relocation programs in connection with various federal, st'ate and local improvement programs. There is much `discontent with the highway relocation program in urban areas because relocation payments under the urban renewal program are so much greater than `those under the highway program. This disparity of payments is very difficult for citizens displaced from similar properties to understand and creates much frustration for those receiving `the lower payments. In addition, if a single relocation agency is to be responsible for the relocation program, as we believe necessary, great disparity in reloca- tion payments must be eliminated. (5) Finally, the most important, a new highway relocation program must make the displaced person whole again. It must place him in a home or business at least equal to that be had before, and on the same `terms and conditions as he enjoyed before relocation. If this canno't `be done, the individual should receive adequate compensation for his loss. In `many `cases, particularly in lower income neighborhoods with a limited supply of comparable housing and business locations, payments a'bove the fair market value `of the acquired property and above the limited compensation for `moving expenses presently provided will be necessary. Title VIII of HR. 5523, the Intergovernmen't Cooperation Act, would equalize relocation payments made in connection with Federal grant-in-aid programs, and substantially improve the level oi~ reloca'tion compensation available. Title VIII would permit the federal government to reimburse 100 percent of state and local government payments for rel~cati'on expenses and damages up to $25,000 for each individual or business displaced as a result of a federally aided program. A cost sharing formula is established for any portion of relocation costs above $25,000 per displacement. We believe `that this is an excellent ap- pro'ach and wo'uld broaden relocation compensation sufficiently to limit much of the frustration that now occurs over the compensation problem. The Advisory Commission on Intergovernmental Relations estimates that ap- plication of this formula to the highway program would raise relocation costs by approximately $29 million annually. It is our opinion that by adopting this ap- proach expensive delays and revision of highway plans occasioned by citizens opposition would be avoided, and that the total cost of constructing the highway would actually be reduced. As the recent report of the American Association of State Highway Officials notes in citing the need for a greatly expanded and more expensive relocation program: "Some of the efforts to save existing homes, many of whieh are in run down condition, involve expensive additional construction costs for retaining wall con- PAGENO="0493" 487 struction, and the like, to restrict the right-of-way widths so that the homes in question can be left in place. In fact, the additional highway construction costs involved may run to more than twice the cost of new replacement housing. "This additional cost is a rather substantial item when considering the very real cost of substantial delay in getting the project under way and under traffic, for highway costs definitely increase each year that the projeot is delayed." Over the past few years, it has been estimated that highway costs have risen annually about three percent as a result of inflation, however, reports by AASIIO indicate that presently inflation may be raising costs five or six percent annually. A report by the city of Chicago indicated that last year highway construction costs in and around Chicago went up 12% as a result of inflation. If these more recent inflation pictures are projected onto the whole highway program, or at least that part of it in urban areas, the very real benefits from avoiding delay attributable to opposition to relocation programs and other factors are apparent. STATE LAWS Some states have passed laws to reduce the inequities of relocation programs in their states. We cite some provisions of these state laws which we believe de- serve consideration for adoption as part of any new federal highway relocation program. The State of Pennsylvania, in 1964, adopted a relocation law which provides a standard of "just compensation" for relocation. This standard consists of pay- ing the fair market value for real property, plus certain other damages. Pay- ments for these other damages is available to both owners and tenants. These damages include: (1) reasonable expenses for removal, transportation, and in- stallation of machinery, equipment, or fixtures, not to exceed $25,000 and in no case to exceed the market value; (2) business dislocation damages, up to $5,000, where it is shown that the business cannot be relocated without substantial loss of patronage; (3) movIng expenses for personal property not to exceed the market value of the personal property. A Massachusetts law requires that any proposed acquisition involving dis- placement of occupants of more than five dwelling units or more than five busi- ness units may not proceed until the State Relocation Bureau has approved a relocation agency and a relocation plan for the project. The relocation plan must include evidence of the "availability of safe, decent, sanitary housing and com- mercial buildings within the means of the occupant to be displaced," it must also include a program for relocation of the occupants. The State of New Jersey required the commissioner of the Department of Com- munity Affairs to certify that displacing agencies have workable relocation as- sistance programs in effect before forcing anyone to move. The State of Maryland has recently passed a law wbi~h allows owner occupants to be compensated for the difference, up to $3,500, between the fair market value of their property and the average cost, within the same political subdivision, of a decent, safe, sanitary dwelling generally comparable in size to the dwelling being taken. LOCAL ACTION Principal focus for change in relocation policies must be on the states and the Federal government. City activity in relocation is generally governed by the limitations of state statutes and court decisions controlling payments above fair market value. Cin- cinnati, Ohio is presently developing a program of relocation payments for city programs. Under the program, the city would be authorized to pay $200 per family and $3000 per business for moving expenses. Before this year it had not been thought that municipal relocation payments were permitted by state law, so the only relocation payments made were those reimbursed by the state or Federal government. In the City of Detroit highway relocation payments are generally in accord- ance with the scale set in the Highway Act, however, a study of one relocation area indicated that relocated individuals and families were paying rents in their new quarters which averaged 16% above their rentals before relocation. In Atlanta, Georgia relocation payments are also made according to the stand- ard set in the Highway Act, with the state making the payments after they are requested by the local relocation agency. Atlanta goes beyond the state require- ments for finding people housing, however, and helps the people to be relocated make contact with those who might provide them new quarters. PAGENO="0494" 488 NATIONAL ASSOCIATION OF COUNTIES, Washington, D.C., June 1~, 1968. Hon. EDMUND S. MUSKIE, Subcommittee on Intergovernmental Relations, Senate Office Building, Wash- ington, D.C. DEAR ED: This is a follow-up to our testimony of May 14 to advise you that the National Association of Counties is strongly in favor of section 807(h) of 5698, the Intergovernmental Cooperation Act of 1968, which would permit the federal government to reimburse 100% of state and local government relocation costs up to $25,000 for each individual or business displaced as the result of a federally- aided program. A cost sharing formula is established for any portion of the cost above $25,000 per displacement. We believe the approach you have taken in your bill is a most desirable and workable one. It would broaden relocation compensa- tion sufficiently to reduce much of the frustration now occurring at the local level over the compensation program. We feel strongly that by adopting this uniform approach, expensive delays and reviews of plans occasioned by citizen opposition would be avoided. This reloca- tion problem has also become most apparent in hearings we have testified at on the federal highway program. The great disparity between relocation assistance under that program and under other programs such as urban renewal creates terrific citizen misunderstanding for our local officials. Altho individuals at- tempts are being made at the local level to avoid some of the problems which federal relocation programs presently pose, uniform program of federal assist- ance for all its myriad relocation programs is desperately needed. The testimony of Mr. Hughes of the Bureau of the Budget indicated some problems that the Bureau had with section 807(b). As our witness on May 14, Gladys L. Speilman, chairman of the Board of County Commissioners pointed out, any attempt to turn back the clock and require local and state governments to provide relocation matching assistance in the same proportion as the grant- in-aid matching ratios, would be catastrophic. We believe it Is impractical and unrealistic to expect a rolling back of HUD programs, not only urban renewal, but also Model Cities, which relocation as- sistance would go below existing arrangements. Fiscally, the savings would not be very significant in that BOB proposes that a basic formula prevail, and in the case of our federal highway program, the largest relocation assistance program, the matching ratios would be 90-10. Title VIII would necessitate states and local governments to enact legislation permitting their governments to enter into contractual relationships. Local bodies will have to seek immediate enabling legislation in order to continue programs they are now in. Furthermore, the $2~,000 maximum figure takes away much of the sting in making relocation programs uniform at the local level. The Bureau of the Budget proposal, on the other band, sets an effective date of 3 years after enactment. This would serve to avoid most of the land-acquisition problems in the federal interstate highway program. The BOB position is that this 3 year interim period would give legislatures time to tool up for the change. I might suggest that a more subtle reason might be to save federal money during this most critical point in our federal spending. We believe that the effective date must be immediate in order to make the job of enabling local legislation easier. The $25,000 provision of section 807(b) would facilitate immediate enabling legis- lation by our local governments. In conclusion NACO believes that the federal government must find the finan- cial resources necessary to support and improve our present relocation programs. Congress can make the programs fair and uniform for all concerned by enactment of title VIII in 8698. Sincerely yours, BERNARD F. HILLENBRAND, Ea,ecutive Director. NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS, Washington, D.C., June 5, 1968. Mr. CHARLES M. SMITH, Staff Director, Subcommittee on Intergovernmental Relations, Senate Office Building, Washington, D.C. DEAR CHARLES: NAHRO is glad to respond to your request for our opinion on the proposal of the Bureau of the Budget that relocation payments be shared under a matching formula, rather than reimbursed in full by the Federal government. PAGENO="0495" 489 We have a number of observations related to: (1) past experience in Federal assistance to relocation (2) practical questions in achieving adequate relocation assistance (3) the elements of uniform relocation assistar~ce and (4) the role of the Federal government in relocation assistance. PAST EXPERIENCE IN FEDERAL ASSISTANCE TO RELOCATION Under the Housing Act of 1956, a system of 100 percent reimbursement was established for relocation payments under the urban renewal program. This was extended to the public housing program in 1964. Under this system, local public agencies administering urban renewal and public housing established relocation service offices and began to disburse payments and give assistance to all those çlisplaced. Over the period of the last ten years, payments made to dis- placees have universally met the standards set in the Federal statute. With the assistance of the Federal government, local public agencies have been able to gain expeHence and insight into the whole problem of displacement. The urban renewal program has performed a leadership role in understanding the effects of displacement and bringing assistance to those displaced. It is on the threshold of organir4ing even more effective relocation techniques and assistance. The Federal Highway Act of 1962 provided for relocation assistance on a matching basis of 90 percent to ten percent. Under this system, only some 20 States have elected to avail themselves of Federal funds, and a number of these do not pa~r `the maximum benefits permissable under the Federal statute. More- over, the laws in these some 20 States, except for a handful of exceptions, cover reimbursement only for moving costs, and only for federal-aid highway displacement. If experience under these two systems in the past is any criterion, than meet- ing the standards set in Federal statutes and moving ahead to set up effective relocation operations on the State and local level, is far more likely under a 100 percent reimbursement schedule. PRAcTICAL QUESTIONS IN ACHIEVING ADEQUATE RELOCATION ASSISTANCE As noted above, only some 20 States have established legislation which au- thorizes re~ocation assistance-and only six of these States have laws which cover reimbursement beyond moving costs and federal-aid highway displacement. Based on past experience, it is not likely that changes would or could be made in State laws, within the three year time schedule set in the proposal of the Budget Bureau, to make a shared-cost system workable. One of the important rationales in establishing a 100 percent reimbursement schedule in the urban renewal pro- gram in 19~56, was doubt as to whether State constitutions and laws would permit local publiç~ agencies to extend compensation in excess of awards for property acquisition. This is still a serious copstraint on a shared-basis for relocation assistance. Conversion of the urban renewal and public housing programs to a shared sys- tem of relocation assistance at this time could be a serious set-back to the relocation progress which has been made over the past decade. Local communi- ties, already in financial distress, would be required to find a matching contribu- tion in most cases equal to one-third of total costs. Any inability to do so would undoubtedly result in discouragement and frustration among displaces them~ selves, particularly if this involved a step-back from the benefits currently being given. THE ELEMENTS OF UNIFORM RELOCATION ASSISTANCE Two factors relate to the rationale for a uniform policy of relocation assistance by the Federal government. First, relocation assistance has come to be recognized as a uniqud governmental function, with an identity of its own, not basically affected by the type of improvement activity which causes displacement. Under such an understanding, it does not seem logical or equitable for the Federal government to reimburse relocation assistance in one federally-assisted program to a greater degree than in another, as would happen if the current matching formulas should be used as the basis for reimbursement: (for example, inter- state highway displacement would be reimbursed on a 90-10 basis, while most reimbursement for urban renewal would be on a 2/~% basis.) A second factor is Lhat the administrative ground-rules for reimbursement, as well as the level )f reimbursable payments, should be considered in the establishment of a uni- !orrn relocation assistance program by the Federal government. Only such a sys- :em can truly be called "uniform." PAGENO="0496" 490 TIlE ROLE OF THE FEDEIIAL GOVERNMENT IN RELOCATION ASSISTANCE The Federal government must continue to perform a leadership role in bringing relocation assistance to all those displaced by public action. The goal of the present title of S. 698-uniform relocation assistance for all those displaced by Federal or Federally-assisted programs must be made a reality. The surest and most effective way to achieve this goal is for the Federal government to provide for 100 percent reimbursement of relocation costs. Such action by the Federal government would also provide the quickest way to stimulate State and local governments to take responsibility for providing assistance for those displaced by State and local improvement programs. At the present time, about half of all displacement comes from State and local public programs, not related to Federal assistance. Already, the role of the Federal government in bringing assistance to those displaced by Federally-assisted programs is bringing actions to provide similar benefits for non-Federally-related displacement. For all of these reasons, NAHRO favors the establishment of a 100 percent Federal relocation assistance for all. Federal or federally-aided programs which cause displacement. Sincerely yours, JOHN D. LANGE, Ewecutive Director. STATEMENT OF ANGUS MCDONALD, DIRECTOR OF REsEARCH, NATIONAL FARMERS UNION Mr. Chairman and members of the committee, although we cannot qualify as experts in the field of state and local taxation and programs which make available to the states grants-in-aid for various purposes, we feel that this legislation is a step in the right direction inasmuch as it would, if enacted and adniinistered properly make systems of states, grants-in-aid and various pro- grams initiated by the Federal Government more consistent in carrying out the objectives of Congress. Our impression is that the several states administer grants-in-aid in various different ways depending on the local situation. It has been reported that in some instances grants-in-aid by the Federal Government were used to reduce or sub- stitute the amounts available appropriated by the state. If this is true, we think it is a subversion of the Congressional purpose. The plight of the states and local tax districts in regard to the availability of needed funds is well known. Although we do not favor the turning over of Fed- eral funds to the states without standards or strings attached, we would hope that the some 220 grants-in-aid programs would be continued and expanded and that this legislation would lead to greater efficiency in the administration of programs. We would hope also that the legislation would encourage the states to rely more on income taxes as a source of revenue. We note from a recent report titled "State and Local Taxes" authored by the Advisory Committee on Intergovern- mental Relations, that of the thirty-one billion, nine hundred and ten million total dollars collected by states in the year 1967, only two billion, two hundred and twenty-seven dollars were derived from corporate net income taxes. In view of the substantial reduction in corporate taxes effected by Congressional law, we hope that the states will rely more heavily on corporate taxation and taxation of wealthy individuals. The Farmers Union has recently supported the principle of ability to pay taxation in a resolution passed unanimously at our national convention in March 1968. This principle was reaffirmed on May 27, 1968 in a statement issued by the Executive Committee of the National Farmers Union which called f91r the impo- sition of excess profit taxes to meet the current fiscal emergency. PAGENO="0497" 491 Billions of dollars annually are realized by foreign corporations from invest- inents in the various states. Stockholders residing in New York, Boston, Pitts- burgh and other financial centers drain Southern and Western States of their financial resources contributing little for welfare and educational purposes. STATE or VERMONT, Montpelier, Jifay 20, 1968. Hon. EDMUNu S. MUSKIE, Chairman, ~abco'inmittee on Intergovernmental Relations, $enate Committee on Government Operations, ~Senate Office Building, Washington, D.C. DEAR SENATOR MUSKIE: In October of 1967, the 59th Annual Governors' Con- ference passed a resolution urging "enactment without delay of the Joint Fund- ing Simplification Act." This recommendation reflects the growing concern of the Governors with pro- liferation of federal grants-in-aid. More specifically, it reflects concerns about the increasing complexity in responding to federal grant offerings so as to carry out national and state purposes. We have long urged, in testimony before the Committees of Congress and by resolution at our annual meetings, the need for streamlining and simplifying the procedures which govern the flow of federal funds to the states, as well as to other governmental jurisdictions. As Governors, we welcomed the President's message of March 1967 in which he took cognizance of the proliferation of grant- in-aid programs as contributing to red tape and delay, placing "extra burdens on State and local officials." In that message, the President proposed general legislation making it possible "for federal agencies to comhine related grants into a single financial package thus simplifying the financial and administrative procedures." The Joint Fund- ing Simplification Act was drafted to facilitate such simplification of financial and administrative procedures. To give greater specificity to the consideration of this Act, the National Gov- ernors' Conference Committee on Revenue and Taxation, of which I am chair- man, solicited from the Governors their experience in packaging of federal grants to achieve state objectives. Review of these experiences suggests that legislative authorizations called for by the Joint Funding Simplification Act would- (1) permit the more effective use of federal funds in carrying out congres~ sional intent as well as state objectives; (2) avoid the delays involved in sorting out the multiplicity of grant pro- visions now available; (3) facilitate the adoption of packaged grant programs to move forward more rapidly and in concert with state policies; and (4) reduce the cost to the states in applying for and receiving federal funds. Responses from the Governors thus indicate the urgency of action as a begin- ning step toward removing barriers to packaging of federal grants-in-aid. Differ- ences in administrative rulings, in accounting provisions, in plan submittal 95-626---68-----32 PAGENO="0498" 492 requirements, ~oupled with the variety of appropriation provisions, stand in the way of effective use of federal `aids by the states in carrying out national and state objectives. The attached statements abstracted from the responses of the Governors indicate that combined packages of federal grants have not been successfully worked through under existing legislation. The nation's interest in industrial development in the backward areas would be pursued more effectively if a number of grant programs could, in fact, be put together `to help the states carry on the intent of, for example, the grants administered by the Department of Transportation and the Economic Develop- ment Administration. Water pollution control would be achieved more rapidly if grants from several agencies could be combined. Rural water and sewer planning could be advanced by combining funds of the Department of Housing and Urban Development and the Department of Agriculture. The pursuit of health services in `the neighborhoods, of health care for migrant workers, of child welfare services, could be greatly enhanced if the appropriate grant provisions could be combined. It is clear from the reports of the Governors that where the federal agencies have taken the initiative, such `as in combining through a single plan submission of separate grant programs, such combinations have been worked thrOugh with reduced processing time and reduced expenditure of funds by the states in apply- ing for and receiving federal assistance. The joint plan submissions for title VIII `of the Housing Act `of 1964 and title IX of the Demonstration Oit*ies `and Metropolitan Development Act of 1966 serve `as a model for what might be done. In response to the President's Quality of Government Message several federal agencies have sought to develop other packages of federal aids. The recent endorsement by the U. S. Office of Education of a combined packaging of educa- tional aids proposed by the State of Texas provides a design for comprehensive packaging and planning of federally assisted educational programs. The state plans for the Elementary and Secondary Education Act, titles I, II, III, V and VI, the National Defense Educational Act, titles III and V-A, the Vocational Edu- cation Act of 1963, and the Educational Professions Development Act of 1967 are to be modified to permit the packaging `of federal funds for these programs, and the use of `the funds in accord with the developed state coordinated policy. Local school districts in harmony `with this policy may generally submit single plans for federal aid `and single reports. In other instances, where the intent has been to package federal `aids, authority was not available that could facilitate and encourage such combinations. Delays in processing, developing out of precise reviews of differences in legislative authority, create barriers to such packaging in `the absence of new `legislative authority. As one Governor points out `the progress toward program simplifica- tion has been `haphazard because of the `absence of a `strong federal commitment, an absence which in part is attributed to lack of clear legislative authority. We would welcome the inclusion of this letter `and attached materials in the record of hearings on S. 2981, the Joint Funding Simplification Act. Sincerely, PHILIP H. Herr, Governor. PAGENO="0499" CONNECTICUT (1) Has any single agency in your state (or combination of agencies) been successful in pac~~ ~ to achieve a specific state objective under existing federal legislative a uthority? If so, list the federal grants, re federal gran QJ ~biuet~ as fob State objective Title of grant programs Federal agencies Stat ~ge~ Technical assistance and ~ Title Vlll, Housing Act, and title IX U.S. Department of Housing and Urban Dev~ State Oe~~~munity~q (2) Please cite examples where a state agency (or combination of state agencies) has been unsuccessful in their attemit~ to package federal grants, or discouraged from such attempts by presumed lack of federal authority. Provide the same details about the çrograms and agencies as in question (1). State objective Title of grant programs Federal agencies State agencies Planning 701 urban planning, BOR planning, and PPR HUD, Interior, and DOT Development commission, highway department planning, agriculture and natural resources, and depart- ment of finance and control. General Comments Except for one application to the Department of Housing and Urban Development for a program under title VIII of the Housing Act of 1964, as amended, and title IX of the Demonstration Cities and Metropolitan Development Act, which has received tentative approval, we have not been successful in packaging two or more federal grant applications into one proposal to achieve a specific State objective. We have, on several occasions, sought to enhance our applications by providing a combined program description; however, applica- tions had to be reduced to individual applications to each Federal agency for its portion of the total program. It is recognized that joint funding by more than one Federal agency of specific State objectives, which often also involve more than one State agency by packaging applications, state plans, and/or project proposals, represents a major departure from existing grant-in-aid procedures at both the State and Federal levels. Packaging arrangements authorized by the Joint Funding Simplification Act appear to be adequate in the light of present State policies and procedures. Experience will no doubt point up problems inherent in the proposed legislation, as well as additional steps which can and should be taken. Federal agency administrative regulations should allow the flexibility necessary to administer programs in accordance with each State's ability and willingness to implement programs within the intent and spirit of enabling Federal laws. PAGENO="0500" gram Department of Improved health services in localities - localities Improved health services for migra~~ Workers Migra~~ health services; services for Children Developing comprehensiv health services in Comprehensiv health services (2) Please cite exanlples Where a state ~ ha~ ~ in its atte~p~ to PCckag0 federal gra~~5 State objective Title of Federal agen~1~5 State agen~1~5 roducing ~ Title Ill Public Works and Economic D fCemmerce Department of business and economic devej. Sec 701 of Housing Act )f Hous~ a,~ Urban Development 7e Pending Oue or more Prop~ ~ an atte~p~ to PacJcag~ Federh Title of gra, - -~araI agen~j~5 Title I Of Higher Educa Iealth Education and Welfare - Title VIII of Housing Act * and Urban DevelopmeflL~.. (1) ~as any 5ing1~ agency ~ Your ~~te been Successful in Packaging two or more federaj gran~5 to achieve a speci~~ State objec tive under exis~j~g fedei~l legisla~j~~ authori~y~ If so, list the federal gra~~5 that Were Co~bjned as -7 I PAGENO="0501" KANSAS (1) Has any single agency in your State (or combination of agencies) been successful in packaging two or more federal grants to achieve a specific state objective under existing federal legislative authority? If so, list the federal grants that were combined as follows: State objective Title of grant programs Federal agencies State agencies Recreation planning 701 and Bureau of Outdoor Recreation HUD and BOR Department of economic development; health; water resources; highway; park and resources authority; forestry, fish, and game commission; historical society. P-55 health planning 701 and health planning HUD and HEW Department of economic development and legis- lative council. Rural water and sewer planning (cities under 701 and water and sewer planning HOD and Farmers Home Administration Department of economic development (acts as 2,500 population), coordinator between cities and consultants). ~, Transportation studies in metropolitan areas..., 701 (city gets grant for study, highway receives HOD and Bureau of Public Roads Highway commission. reimbursement for its costs from Bureau of Public Roads highway planning and research funds). (2) Please cite examples where a state agency has been unsuccessful in its attempt to package federal grants. Transportation studies in Metropolitan Areas-Since these projects involve origination and destination studies, land use studies, and socio-eeonomic studies, there is often a lag of time between completion of each phase; Highway officials have found that in some cases their part of the over-all project is badly out-dated by the time the city receives its HIJD 701 money and gets the city portion under way and completed. Biggest problem is fitting time-wise the studies and funding together while study data is current. General Comments Our review of federal grant programs administered through state agencies reveals that examples of packaging accomplished or at- tempted have been limited to planning and survey activities of the Kansas Department of Economic Development (State planning agency) and the State Highway Commission. PAGENO="0502" MAINE (1) Has any single agency in your State (or combination of agencies) been successful in packaging two or more Federal grants to achieve a specific State objective under existing Federal legislative authority? If so, list the Federal grants that were combined as follows: State objective Title of grant programs Federal agencies State agencies Vocational training of handicapped 1 Manpower Development and Training Act Voca~ Office of Education-Social and Rehabilitation Education-Maine Employment Security Comnils- tional Rehabilitation. Administration. nion. Professional training of Department of Education Title ill, NDEA Office of Educati3n Education. personnel.2 Title V(a), NDEA do Do. Title V, ESEA do Do. Title II, ESEA do Do. Title 1, ESEA do Do. Improvement of early reading programs Title IV, ESEA (iS. Office of Education Do. Title V, ESEA do Do. Title Ill, NDEA do Do. Hospital construction Public Law 88-443 Hill-Burton-Public Service; Mental Health Center Health and welfare mental health and corrections. ~ Do Public Law 88-164 Construction, National Institute of Mental Health. Retardation, construction Public Law 88-164 Social and rehabilitation services Mental health and corrections. I Counselor service on personal adjustment and work orientation of multihandicapped (basically mentally retarded persons). 2 Combined in payment of salaries, tuition, fees, books of members of professional staff on securing graduate level training. (2) Please cite examples where a State agency (or combination of State agencies) has been unsuccessful in their attempt to pack- age Federal grants, or discouraged from such attempts by presumed lack of Federal authority? Provide the same details about the pro- grams and agencies as in question (1) - State objective Title of grant programs Federal agencies State agencies Vocational training of unemployed and under- Vocational Rehabilitation Manpower Development Social and Rehabilitation Administration; US. Education; Maine Employment Security Corn- employed, and Training Act; Vocational Education-Neigh- Employment Service; Office of Education; De- mission. borhood Youth Corps. partment of Labor. PAGENO="0503" (3) Do you have pending one or more proposals for Federal funding that involves an attempt to package Federal grants? Please give the same details about programs and agencies as in questions (1) and (2). State objective Title of grant programs Federal agencies State agencies Construction of college facilities Title I, Higher Education Facilities Act Office of Education; Department of Housing and Education. I Urban Development. Title I, NE. Regional Commission Economic Development Administration Do. I Possibility of eligibility of Washington State College for EDA. aid. Definitely qualifies for HEF.A. funds. General Comments The progress toward program simplification has been haphazard, in part; I feel, because of the absence of a strong Federal commit- ment. In my judgment, additional steps towards simplifying the administration of Federal grants should be taken quickly. For instance, Maine's strategy for economic development stresses the need for identifying and strengthening transportation netwurks linking our Re- gional growth centers. To this end, joint funding of transportation programs by HTJD and the Department of Transportation would be g~ most helpful. I would further suggest the good offices of the New England Regional Commission be used to pinpoint those precise areas of Regional development where the need for coordination in the administration of Federal programs has become apparent. MICHIGAN (1) Has any single agency in your State (or combination of agencies) been successful in packaging two or more Federal grants to achieve a specific State objective under existing Federal legislative authority? If so, list the Federal grants that were combined as follows: State objective Title of grant programs Federal agencies State agencies Manpower development training Manpower Development Training Act; title Il-B, Departmen t of Labor, Bureau of Employment Department of education. Economic Opportunity Act; title Ill, Elementary Security and Bureau of Apprenticeship Train- and Secondary Education Act. ing; Department of HEW, Division of Vocational Education and office Education; Office of Economic Opportunity. PAGENO="0504" (2) Please cite examples where a State agency (or combination of State agencies) has been unsuccessful in their attempt to pack- age federal grants, or discouraged from such attempts by presumed lack of federal authority. Provide the same details about the pro- grams and agencies as in question (1). State objective Title of grant programs Federal agencies State agencies Recreation-Parks-Land acquisition Land and water conservation fund and crop and Department of Interior, BOR; USDA Michigan Department ol Conservation. adjustment program. The Bureau of Outdoor Recreation has decreed that they must provide 50% acquisition costs (or none) precluding the effective use of other federal programs in land acquisition (namely Pittman-R obertson, Dingell-JohnsOn, P.L. 566, Green Span, etc.). (3) Do you have pending one or more proposals for federal funding that involves an attempt to package federal grants? Please give the same details about programs and agencies as in questions (1) and (2). State objective Title of grant programs Federal agencies State agencies Community development Titles VIII and IX HUD Office of Planning Coordination. Airport development Federal aid airport program, Public Works and Federal Aviation Agency, Economic Development Department of commerce. Economic Development Act of 1965, titles Ill Administration, Upper Great Lakes Regional and title V. Commission. General Commeats The various packaging arrangements authorized by this proposed Act (including the waiving of the single state agency requirement under certain circumstances) would allow the states to use federal assistance more creatively. However, some of the administrative improvements proposed in this bill should not be contingent on joint funding. There is a great need for more uniform technical and administrative requirements among related Federal grant-in-aid pro grams regardless of whether there will be joint funding under these programs. There is also a need for greater flexibility in the statutory and administrative requirements for federal aid programs. Both Con- gress and the federal aid agencies have a tendency to use "boiler plate" language geared for those states with the least administrative capabilities. This policy places unnecessary and unreasonable administrative burdens on the majority of states. Since this bill authorizes federal agencies to review their program requirements and authorizes the President to recommend changes in the statutory requirements to Congress in order to assist joint funding, perhaps the purpose of the bill could be broadened to include a general review of federal aid requirements. PAGENO="0505" NEW HAMPSHIRE Genera' Comments The New Hampshire situation does not conform to the several questions raised in your April 2 letter. Our state has a detail line item appropriation system which does not allow transfer of funds between agencies; and further prohibits transfers from appropria- tions for permanent personnel services, out-of-state travel, or equipment. Due to these limitations the packaging of federal grants must occur prior to budget consideration and approval by the Executive and Legislative. This means that such federal allocations must be known by the agencies in firm dollar detail prior to October first in the year preceding the biennial legislative session. These limitations and conditions do not detract from my interest in early action on the Governors' Conference proposal. Instead, it emphasizes the need for such early action well in advance of October 1, 1968. If the present federal fund allocation is not changed, the New Hampshire budgets passed by the 1969 Legislature will prohibit a packaging of funds until fiscal 1972. OHIO (1) Has any single agency in your State (or combination of agencies) been successful in packaging two or more Federal grants to achieve a specific State objective under existing Federal legislative authority? If so, list the Federal grants that were combined as follows: State objective Title of grant programs Federal agencies State agencies Program for school disoriented youth in Cm. Vocational Rehabilitation Act 29 U.S.C. 4 (sec. 31 US. Office of Education and the Rehabilitation The Bureau of vocational rehabilitation and the cinnati. et seq.) and vocational education funds under Service Administration, division of vocational education. the Vocational Education Act of 1963. A residential center at Mahoning Valley ~ Manpower Development and Training Act of 1963 U.S. Department of Labor, U.S. Office of Education, Ohio Burea~t of Employment Services; bureau of and Vocational Rehabilitation Act, and the Rehabilitation Service Administration, vocational rehabilitation and division of voca- tional education. Mental health for Dover area Hill-Burton and Appalachian HEW and Commerce Department of mental health and correction. Five county region mental health, Zanesville County-Community Mental Health Center HEW, Public Law 88-164, for construction; HEW, Office of correction and department of mental Public Law 89-105, operation for 51 months. hygiene. Job training Supportive services to on-the-job training program OEO and Department of Labor Ohio Office of Opportunity-TA. Neighborhood Youth Corps Supportive service to Neighborhood Youth Corps do Do. Special impact Aims-Jobs, Cleveland, Ohio Department of Labor and OEO Do. Day care Day care of urban, rural, and migrant OEO and HEW Ohio Department of Welfare, Education, and Health. Ohio Office of Opportunity-TA. PAGENO="0506" (2) Please cite examples where a State agency (or combination of State agencies) has been unsuccessful in their attempts to package federal grants, Or discouraged from such attempts by pres umed lack of federal authority. Provide the same details about the programs and agencies as in question (1). State objective Title of grant programs Federal agencies State agencies Combination of remedial education with job Manpower Development and Training Act of 1963, Health, Education, Welfare, and Labor, and Office Division of vocational education and division of training of unemployed, and title Ill (adult education phase of the OEO). of Economic Opportunity. Federal assistance programs. Training of unemployed youth with referrals Neighborhood Youth Corps (under the OEO) Office of Economic Opportunity; Health, Educa- Ohio Bureau of Employment Services and division from other agencies. tion and Welfare, Department of Labor. of vocational education State of education. Training of delinquent youth in cooperation Manpower Development and Training Act (ex- Department of Labor and U.S. Office of Education_ Ohio Youth Commission and the division of voca- with the youth commission. perimental and demonstration funds), and the tional education and Ohio Bureau of Employ- Vocational Education Act of 1963. ment Services. Training of unemployed within Akron, Ohio, National Alliance for Businessmen and the Man- Departments of Commerce and Labor (Consultant services: Division of vocation education) under a cooperative relationship between the power Development and Training Act. Akron City Public Schools Administration. city board of education and industry and bu- siness. Cleveland Training Center for School Disoriented National Alliance for Businessmen and Vocational Office of Economic Opportunity, National Alliance Division of vocational education and Cleveland Youth. Education Act of 1963 and Office of Economic for Businessmen, and U.S. Office of Education. City Board of Education. Opportunity. (3) Do you have pending one or more proposals for Federal funding that involves an attempt to package Federal grants? Please give the same details about programs and agencies as in questions (1) and (2). State objective Title of grant programs Federal agencies State agencies Pilot neighborhood center for Cincinnati Model city Office of EconomicOpportunity, HUD, and HEW Ohio Office of Opportunity and Ohio Department of Development (TA). SOUTH DAKOTA General Comments In regard to your first question we would like to inform you that the only federal grants that were combined for a single purpose to our knowledge have been Farmers Home Administration, Water Sewer Planning Grants, along with Housing and Urban Development "701" Planning for some of our Counties. These grants were not actually combined grants but one grant did recognize the product pro- duced by the other grant and a considerable amount of duplication was eliminated in both grant programs. As regard examples where the State Agency has been unsuccessful we wish to advise that we have not attempted to combine federal grants due to the fact that most of the guidelines for various programs do not lend themselves to the combining of federal grants which would be extremely important if the guidelines were such that they would allow packaging of these grants. PAGENO="0507" We would certainly urge adoption of legislation which would package these grant programs. In one of the areas in particular that we are interested in would be planning on both the local and all the state departmental levels using a single agency in state government to coordinate the various activities of various departments of State Government. We in South Dakota are attempting to do this through the State Planning Agency at the present time; however, most departments obtain their grants directly from federal departments and by- pass the single state agency which eliminates the possibility of packaging more than one Planning Grant in an application. RHODE ISLAND (1) Has any single agency in your State (or combination of agencies) been successful in packaging two or more Federal grants to achieve a specific State objective under existing Federal legislative authority? If so, list the Federal grants that were combined as follows: State objective Title of grant programs Federal agencies State agencies Initiation of State planning, preparation of Highway planning and research, urban planning BPR, HUD, OCD-DOD, and New England Regional Department of Public Works, Rhode Island De- comprehensive plan, assistance, community shelter planning pro- Commission. velopment Council. __ gram, and regional action planning commissions. State data bank Urban planning assistance and highway planning HUD and BPR Do. and research. Base mapping Metropolitan mapping, community shelter plan- Bureau of the Census, OCD-DOD, BPR, and HUD..... Rhode Island Development Council, Department of ning, highway planning and research, and urban Public Works, statewide planning program. planning assistance. Construction of Interstate 95 in Providence Urban renewal and interstate and defense highway HUD and BPR Departmentof Public Works, Providence Redevelop- ment Agency. Construction of Memorial Boulevard extension in Urban renewal and prinury highway system do Department of Public Works, Newport Redevelop- Newport. ment Agency. Green acres Open space, land and water conservation HUD; Department of the Interior Department of natural resources. Statewide planning Highway planning and research; urban planning DOT; HUD Statewide planning program. assistance. Public transit Mass transit demonstration projects; mass transit HUD Statewide planning program; Rhode Island Public grants and loans; urban planning assistance. Transit Authority. Recreation area in Bristol, RI Open space HUD; Bureau of Outdoor Recreation Department of natural resources. Inservice training Title I of the Higher Education Act of 1965 U.S. Office of Education Local and metropolitan government; Bureau of Government Research of the University of Rhode Island. PAGENO="0508" (2) Please cite examples where a State agency ~(or combination of State agencie's) has been unsuccessful in their attempt to pack- age federal grants, or discouraged from such attempts by presumed lack of federal authority. Provide the same details about the pro- grams and agencies as in question (1). State objective Title of grant programs Federal agencies State agencies *. .__ .~.*_._ _. ._ *. _.. ._*_ .*___**__. _.*____*_ .,__. ._ -- _. _. ._. ._.,,_ _.. --- _*. lndustrial development Grants for public works facilities-highway con- EDA; DOT Department of Public Works. truction. Water Pollution Control Grants for public works facilities-grants for basic EDA; lIUD Do. sewer facilities. Water service to east bay area Public works and development of facilities, Urban EDA; lIUD Public Utilities Division Statewide planning pro. Planning Assistance. gram. Acquisition of Big River Reservoir site Land and water conservation, public works, and BOR; EDA Department of Natural Resources. Statewide plan- development facilities, fling program. (3) I)o you have pending one or more proposals for Federal funding that involves an attempt to package Federal grants? Please give the same details about programs and agencies as in questions (1) and (2). State objective Title of grant programs Federal agencies State agencies ..- ..- .-. -. ...- --~ ..-. .. - ..--. -.--~ -. ..- .-..-.. -, ....... Comprehensive State planning for fiscal year Highway planning and research, Urban Planning BPR; HUD; OCD-DOD. New England Regional Department of Public Works. 1968-69. assistance community shelter planning, regional Commission. Rhode Island Development Council. action planning commissions. Extension of Rl-37 and expansion of 1. F. Green Primary highway system BPR; FAA Department of Public Works. Airport. Airport development program. Strengthen local government Training for community development. Urban in- HUD Rhode Island Development Council. formation and technical assistance. Develop an "umbrella" program to administer Title I, ESEA compensatory education, title II; U.S. Office of Education Rhode Island Department of Education. and supervise several Federal programs. ESEA school library resources; title Ill, ESEP supplementary educational centers; title V ESEA strengthening State education depart- ments; title Ill, NDEA science, mathematics, modern trench language; title V NDEA testing, guidance. Analysis of several areas of current and pro- Title VI 11 of the Housing Act of 1964; title IX of the HUD Local and metropolitan government; Community posed programs. Demonstration Cities and Metropolitan Develop- Assistance Division of Rhode Island Development meet Act of 1966. Council. PAGENO="0509" PENNSYLVANIA (Department of Public Instruction) (1) Has any single agency in your State (or combination of agencies) been successful in packaging two or mere federal grants to achieve a specific state objective under existing federal legislative authority? If so, list the federal grants that were combined as follows: State objective Title of grant programs Federal agencies State agencies Support RIMC's 1 NDEA, title Ill, Appalachia 1 USOE, Department of Commerce DPI, Department of Commerce. (2) Please cite examples where a state agency (or combination of state agencies) has been unsuccessful in their attempt to pack- age federal grants, or discouraged from such attempts by presumed lack of federal authority. Answer: We are presently attempting to package NDEA and E SEA programs. There appears to be legal problems since both repre- sent categorical aid. Provide the same details about the programs and agencies as in question (1). State objective Title of grant programs Federal agencies State agencies Beef up State leadership services and special NDEA and ESEA USOE DPI. programs for LEA's.' 1 LEA, local educational agency; NDEA, National Defense Education Act; ESEA, Elementary and Secondary Education Act; and RIMC, regional instructional material centers. (3) Do you have pending one or more proposals for federal funding that involves an attempt to package federal grants? Please give the same details about programs and agencies as in questions (1) and (2). Answer: Yes; we are planning to package State Administrative Funds for the Programs in Item 2. State objective Title of grant programs Federal agencies State agencies Reduce redtape NDEA USOE DPI. Simplify the reporting and accounting ESEA USOE DPI. PAGENO="0510" General Comments (Charles Lieberth) * 1. The operation of a project is frequently restricted by the rigid Federal program manual. Imaginative approaches and flexibility are essential to meet local requirements and application. 2. The State has a very limited role in priority determination of programs emphasizing social and economic approaches. 3. Certain Federal programs require citizen participation yet exclude State participation. The State's role is often only as a par- ticipant in supplying funds. 4. Federal program administrative organization needs to be adapted to State-local needs. The Act would aid in this adaption. 5. The State must have a major opportunity to exercise control over the future of individual and city environments. It must have an important role in the development of an urban-rural strategy. 6. The Act is a step toward the development of a State system viewpoint utilizing Federal funds and programs. A systematic tech- nique for program application and audit would reduce the present constraints on unified and pin point action. 7. The Act is a legislative vehicle which will enhance the intent and spirit of Creative Federalism. Recently I have had the opportunity to contribute to a packaging design for ESEA-Title V. Under this arrangement there would be a single State submittal, a single State financial reporting requirement and audit. This is a current development and it exemplifies the aim of the Joint Funding Simplification Act in one area of Federal programs. D. Allan Huff, Director of ESEA-Title V, Bureau of Elementary and Secondary Education, Office of Education, H.E.W., Washington, D.C., provided us the opportunity to contribute in its development. WASHINGTON Department of Public Assistance (1) Has any single agency in your State (or combination of agencies) been successful in packaging two or more Federal grants to achieve a specific State objective under existing Federal legislative authority? Comments We have never been successful in packaging two or more federal grants to achieve a specific state objective under such packaging arrangements as would be authorized by the Joint Funding Simplication Act. (2) Please cite examples where a state agency (or combination of state agencies) has been unsuccessful in their attempt to pack- age federal grants, or discouraged from such attempts by presumed lack of federal authority. Comments We have been discouraged from attempting to package federal grants in the past by presumed lack of federal authority, particularly in programs relating to the testing and training, including the provision of basic education and/or vocational training, for otherwise employable persons in order to make them partially or fully self-supporting. *Charles J. Lieberth, Director, Federal Program Coordination. PAGENO="0511" To achieve state objectives, we have attempted at the State level to utilize programs that are under the jurisdiction at the federal level of the Department of Labor, the Office of Economic Opportunity and various division of the Social and Rehab Services, such as Vocational Rehabilitation, Children's Bureau, and other divisions of the Department of Health, Education and Welfare, such as Public Health, and Education. At the State level, the following agencies have been involved: The Department of Health, the Division of Voca- tional Rehabilitation of the Department of Education, the Vocational Education Division and Basic Education Division of the same de- partment, as well as the State Office of Economic Opportunity and the Department of Public Assistance. (3) Do you have pending one or more proposals for federal funding that involves an attempt to package federal grants? Comments We are currently experiencing a problem in taking advantage of federal provisions to earn federal grants-in-aid through Title XIX of the Social Security Act for persons over age 65 in mental institutions due to a rigid interpretation of the "single state agency rule." Department of Health State objective Title of grant programs Federal agencies State agencies Planning, constructing, licensing, and certifying "Public Health Services," sec. 314(d), Pub!ic health facilities. Law 89-749. Hospital Administration, title VI, Public Health Service Act (sec. 606). Medicare, title XVIII of Social Security Act (sec. 1864). Health services to Indians Sec. 302 (C-b) Federal Property and Administra- tive Service Act. Maternal and Child Health, title V of Social Secu- rity Act Public Health Services, sec. 314(d), Public Law 89-749. Public Health Services, sec. 314(e), Public Law State department of public instruction. 89-749 (1) Has any single agency in your State (or combination of agencies) been successful in packaging two or more Federal grants to achieve a specific State objective under existing Federal legislative authority? If so, list the Federal grants that were combined as follows: Plan, organize, coordinate resources, and pro- mote smoking and health program. Bureau of Health Services, Public Health Service, State health department. HEW. Hospital and medical facilities program, PHS, State insurance commission. HEW. Social Security Administration, HEW State Department of Labor and Industries. Division of Indian Affairs, PHS, HEW State health department. Children's Bureau, HEW Bureau of Health Services, PHS, HEW Do. PAGENO="0512" (2) Please cite examples where a state agency (or combinatio n of state agencies) has been unsuccessful in their attempt to pack- age federal grants, or discouraged from such attempts by presumed lack of federal authority. Provide the same details about the pro- grams and agencies as in question (1). State objective Title of grant programs Federal agencies State agencies Highway safety HIghway safety program. Public Law 89-564 Department of Transportation Washington Traffic Safety Commission. Public Health Services, sec. 314(e) Public Health Service, HEW State department of health. Enhancement of health services in local areas...._ Public Health Services, sec. 314(d), Public Law 89- U__do Do. 749. Maternal and child health title V Social Security Children s Bureau HEW Division of vocational rehabilitation Act. Medicare, title XVIII and XIX, Social Security Act. Social Security Administration, HEW State department of public assistance. PAGENO="0513" 507 WASHINGTON URBAN LEAGUE, NEIGHBORHOOD DEVELOPMENT CENTER AND Pno- GRAM-PIERCE STREET: AN URBAN RENEWAL EXPERIENCE TWO YEARS LATER SUMMARY OF ACTION TAKEN TO IMPLEMENT RECOMMENDATIONS MADE AUGUST 17, 1966 TO THE COMMUNITY ON CHANGING RELOCATION PRACTICES The Neighborhood Advisory Council of the Urban League Neighborhood Development Center published a report In August 1966 relating to the experiences of families relocated from Pierce Street in the Northwest One Urban Renewal area in Washington, D.C. The report was prefaced by a number of recommenda- tions to the community and urged appropriate agencies and persons to make modifications in current relocation procedures and programs. Much of the effort expended by the community organization program of the Neighborhood `Center during the two years since the report was released has been devoted to the implementation of these recommendations. How well both the community and the urban renewal agency, the Redevelopment Land Agency, have succeeded in making modifications is summarized in the following statements. RELOCATION STAFF Recommendation 1: Hire local residents to assist relocation staff and in inspecting relocation housing. Progress: The U.S. Civil Service CommIssion responded to the Local Agency request and established a new category of civil servants, urban renewal aides, in the Spring 1967. Twelve positions at GS-3 and GS-4 were allocated, and are being filled by neighborhood residents. Recommc4ndation 2: Make staff available evenings and weekends. Progress: The office staff was scheduled `to work half-days Saturdays for approximately a year. Recommendation 3: Increase effective use of social services to meet family and employment problems. Progress: Interpretation of regulations relating to eligible project costs denies Local Agency permission to provide direct services relating to relocation. Unsuccessful attempts have been made by Local Agency and community groups to get District government agencies to provide new neighborhood services for Northwest One residents. Moreover, there has been a gradual curtailment of services provided by the anti-poverty program. Since 1966, the neighborhood employment service, located in the area, has been shut down. The neighborhood legal service office was merged with one in another part of town; and the housing office which conducted a code enforcement program has been closed. Of the remaining anti-poverty programs, only three provide direct services to residents- one day care center, a credit union, and a family counseling unit, all of which serve an area-wide population of 30,000. Residents have been demanding new social services during the entire period of family relocation. They have made appeals, presented testimony, appeared at budget hearings, and issued reports to the Board of Commissioners and the City Council, the Urban Renewal Operations Committee, the Community Renewal Program, the Board of Recreation, the Department of Sanitation, the Department of Licenses and Inspections, the Board of Education, the Police Department, the Department of Public Health, and USES-DC. Additionally, an Inquiry has been made of the National Capital Housing Authority to discover whether the agency can provide any social services to residents who hold priority rights to return to new public housing in Northwest One. The Agency regulations apparently bar such "advance" social services.' Recommendation .~: Simplify and provide more assistance in obtaining docu- ments needed for public housing. Progress: No significant changes have been provided. "Illegal tenancy"1 was another problem relating to documentation which was `discovered in the Fall 1967 when the site wuss `being evacuated for *the construction of the first moderate income housing. Several families who claimed they had lived in the project `area for several years but ~`ho were not included among the Agency's list of `surveyrd families and individuals werh reported to be denied relocation benefits. They were termed "illegal tenants" because `they were presumed to be living in acquired properties without authorization. 1 Congressional review recommended. 95-626-68-----133 PAGENO="0514" 508 Additional evidence of incompleteness of original snrvey *informai~iOn was revealed in late 1967 as prospective lists of tenants were being contacted to apply for housing. Almost a dozen families who were able to present evidence of their prior tenancy were denied first right of refusal because the Agency had no record of them. ON SITE RELOCATION Recomm,CncIa~tiOfl 1: Absorb pe'rcen'ta~e of rents, maintenance costs, and guard and police service in projects costs. Progress: A full review of rentals in Northwest One resulted in imme- diate reductions in some rents; and reduction in rentals at dwellings with excessive fuel bills due to heat loss (121 of 296 rentals were reported to have been reduced). The local agency has adopted a new HUD guideline, effective in May 1968, which would reduce rentals to welfare recipIents to the level of their shelter allowance and to other renters not to exceed 25 percent of family income. RecommendatiOn 2: Increase efficiency and size of maintenance staff. Progress: A concentrated maintenance program, begun in September 1966, and originally termed "maintenance month" stretched over a year. After eight months, all properties bad been inspected; it wa's revealed by the Agency that 195 structures of 220 required major work (heating, plumbing, electrical or roofing). Between November 1966 and May 1967, the Agency reported it bad doubled its volume of completed work orders over the previous six months. Emergency telephone numbers of the property management staff we're cir- culated throughout the community. The maintenance staff was increased from twelve to over thirty, including some `area residents. RecommendatiO% 3: Hire neighborhood residents for patrol duty to reduce breakdowns in service `due to vand~dism. Progress: PriVate guards were hired in February 1968 on a twenty-four hour basis to protect government properties. Recommenda~tiO1i 4: P'repare a staging plan. Progress: A staging plan p'roviding a construction timetable was pre- pared and presented for community consideration in September 1966. One pur- pose of the plan was to provide tangible evidence to residents that they did not have to move out o'f `the area in advance of construction timetables. In May 1967, the Agency's policy on demolitions was sharply challenged by the communitY, resulting in a new agreement, with steps outlined to guard against panic moves by `residents and to maintain and improve the quality of the life of the community during redevelopment. A `second pur'po'se of the staging `plan was to help residents identify with `and participate in planning f or new lo'w and moderate income `housing to which thby would bold first priority to `return. The staging plan was not adopted as binding but as a plan subject to revisioflS which would better serve needs of residents. The following modifications in the staging plan have been supported, but not yet achieved, by the community: (a) A new elementary school building (estimates of classroom shortages run to 1,000 seats). (b) One of the housing complexes to include an early childhood center (pre- school through first or second grades). (c) The shopping center to include at least one community-owned business. (d) Switch a public housing and moderate income housing site to allow a construction speed-up. (e) Provision of some new and rehabilitated units as sales housing (13 units scheduled to be ready July 1968). (f) Extension of boundaries of the renewal project to include the approved section of `the Center Leg Freeway so as to provide air-rights housing over the freeway and additional housing beside the right of way. (g) Speed-up the beginning date of a community facilities building. (1~) Creative development of open spaces for recreation use. (i) A public swimming pool. Reoomm&adation 4a: Reserve a pool of standard rehabilitated housing to be demolished in the final stage. Progress:2 A pool o'f standard rehabilitated housing was rot provided. Present legislation tends to bar urban renewal agencies from improving housing designated for demolition. 2Congres~sioual review recommended PAGENO="0515" 509 The community was successful, however, in getting the Department of High- ways and Traffic to invest in the 1967 rehabilitation of a thirty-four unit building which was scheduled to be demolished in 1970 to accommodate the Center Leg Freeway. (This area is scheduled to become a part of Northwest One.) Recommendation 4b: Offer families on-site relocation without jeopardizing their final relocation benefits. Progress: Approximately 100 families have' been relocated on-site since September 1966, without jeopardizing their final benefits. Several have been moved more than once, either becauae their present homes were beyond repair or because they were in an area scheduled for demolition in advance of construction. Relocation Benefits Recommendation 1: Relocation benefits should be increased and each new household created by relocation should receive moving expenses. Progress: Agency asserts it is ~`making payments to' `the full extent author- ized by existing legislation and regulations issued by H1IJD," and that it supports expanded and increased relocation benefits. Private Housing Recommendation 1: Inspect all private relocation housing before occupancy. Progress: Improvement in inspection procedures have been made, but gen- erally are not satisfactory. The License and Inspection Housing Division often does not respond promptly to inspection requests, and delays in inspecting prop- erties sometimes result in rental of units to another prospective renter. The Agency conducts pre-inspec'tion by its own staff to make judgments about con- di'tion of properties. (Some landlords do not list with the Agency nor will some rent to relocatees because they do not want their properties inspected.) Recommendation 2: Verify rents and pay rent supplements to maintain gross rents at a maximum of 25 percent of income. Progress: The number of on-site locations is believed to have reduced substan- tially the number of Northwest One families who would pay excessive rents in private housing. No new studies are available which invalidate the Pierce Street figures that 50 percent of families relocated pay more than 25 percent of income in rent; `that 40 percent of families relocated pay over 30 percent; and that 20 percent of families relocated pay over 50 percent in private housing. The sponsor of the first moderate income ho'using in Northwest One has completed arrangements to use the rent supplement program in almost-one-fourth of his units. Another fourth will be leased to the public housing authority. The significance of this is revealed by the following story: The first former Northwest One residents to return in April 1968, to newly completed public housing in Northwest One had been relocated in 1966 to a moderate income development in Southeast Washington. The family income had decreased and they were unable to sustain themselves in 221(d) (3) housing, without a rent supplement. None was available. The shortage of rent supplement money makes it doubtful that other non-profit sponsors will be able to obtain `the national rent supplement monies. The community has strongly supported rent supplement legislation for the District of Columbia. Recommendation 3: The Relocation Adjustment Payments, though inadequate, were not paid to Pierce Street relocatees by August 1966. (The last family had moved in June 1966.) Progress: No'ticesi and claim form's were sent to' Pierce Street families and all Northwest One residents on Augus't 4, 1966. Few understood the intent or the actual administra'tion of the payments; and the greatest benefactors of the payments appeared to be the landlords. There is a recognition that legislation is needed for the District of Columbia. One formula is as follows: the payment should be in an amount, which when added to 20 percent of the annual income of the displaced family or individual at the time of displacement equals an amount that will not exceed the rental, including utilities, required for a twelve- month period for such a decent, safe and sanitary dwelling of modest standards, aequate in size to accommodate the displaced individual or family in an area not generally less desirable in regard to public utilities and public and commercial facilities. Recommendation 4: Acquire and rehabilitate large housing units to supplement the supply in both public and private markets. PAGENO="0516" 510 Progress: Among first families on-sited in Northwest One were those seeking targe units. The need for large units continues, although a number of new large units are coming into completion. The Public Housing Authority, has for two years (since August 26, 1966) been able to acquire and rehabilitate large units. The staging plan has been revised to include seven houses scheduled for demolition but which are now being rehabilitated for sale to large bedroom, low income families (under 221(h)). Public Housing Reconvmen&i~tion 1: Assign a staff person from NOHA to the Relocation Office to help process applications. Progress: A staff person was assigned September 1966. Recoininwndation 2: Provide weekly and monthly status reports. Progress: RLA receives monthly reports. Counselors were instructed to advise applicants about the status of their applications. Eligibility records are reviewed every three months. Many applicants still are unclear about what they should do to qualify for housing. Recommendation 3a: Explain eligthilty documents to all applicants, both in advance of filing and during document-gathering period. Progress: Many residents still are unclear about the importance of certain documents they are required to obtain, and do not understand the relationship of the documents to their eligibility for housing. RecOmmendation 3b: Help families overcome eligibility requirements which bar their acceptance. Progress: Living arrangements appear to be a continuing major cause of in- eligibility for families trying ito get into public housing. This includes non- marriages, as well as inclusion in the family unit of persons not related by blood marriage. National Capital Housing Authority will accept common law marriage, but refuses to extend eligibility to families whose heads are barred from a legal relationship (i.e., one partner separated from but legally married to another) although they have been living in a stable relationship for a long period of time. Also, the interpretation of regulations bars elderly people of opposite sex who are living in a companionship or housekeeping arrangement. It is believed that a substantial number of old people are barred from housing for the elderly because of this rthing. The inclusion in family units of persons not related by blood or marriage has served to disqualify some families. This may include children and elderly single persons as well as mentally or physically handicapped or incompetent persons. Recommendation 4a: Average family incomes for at least a twelve-month period. Progress: No changes in procedures for figuring family income are known to have been made. One significant change in regulations has been made on recommendation of community groups. In order to close the "income gap" (the disparity between maximum allowable income in public housing and minimum income in 221 (d) (3) moderate income housing), the continuing occupancy maximum for relocatees has been Increased in public housing. Recommcadation 4b: Help families raise incomes. Progress: Helping families receive benefits to which they are entitled (welfare and social security) and supplementing incomes through part~time employment does not solve problem of in~iividuals and families with incomes too low to qualify for public housing. Among persons to be relocated from the path of the Center Leg Freeway and from the Older section are some whose lack of earnings will bar them from public hobs'ing. Northwest One now has a number of families and individuals living In acquired properties who for a variety of reasons are not eligible for nor are able to afford any type of decent housing. Recommendation 5: NOHA should purchase more new and used houses, outside project areas. Progress: The agency received authority to acquire and rehabilitate 240 units (August 26, 1966). Recommendation 6a: Combine small public housing units to create large units. Progress: NOHA does this where "it is appropriate to do so." Recommendation 6b: Adjust ceiling costs to permit construction of large apart- ments. PAGENO="0517" 511 Progress: According to NCHA, "An adjustment of statutory cost limits on a per room basis would require a change in the U.S. Housing Act. Housing Assistance Administration has been informed of NCHA's difficulty in building within administrative cost limits, especially for larger units. For several years we have urged that such limits be increased." Recoiwinendation 7: Give families sufficient advance notice of available units. Progress: Families continue to complain of the short notice of available units, and security deposits and one month's advance rent. There seems to be an assumption that the prospective tenant should have money saved for the security deposit and advance `rent. Although Housing Authority procedures allow families five days to notify the manager if `they want a location, some are told they must decide during `their first visit to a property office. SHELBY COUNTY COMMISSIONERS, Memphis, Tenn., May 30, 1.967. Senator HOWARD H. BAnER, Jr., Old senate Office Building, Washington, D.C. DEAR SENATOR: Thank you for `forwarding to me copies of Senate Bill's 098, 735 and 799. The bills have been reviewed by Mr. Jerrold Moore, Director of Planning of the Memphis and Shelby C'ounty Planning Commission; Mr. William H. Williams, Shelby C'ounty Attorney; and myself. We have reached the following conclusions: 1. That Senate Bills 799 and 735 should be defeated. 2. Senate Bill 698 should be supported if the following modifications are incorpora'ted: A. Page 13, section 302, lines 2 through 10, be amended to read as follows: "The Secretary of any department or the administrative head of any agency of the Executive Branch of the Federal Government is authorized, upon written request from a State or political subdivision thereof to provide specialized or technical service's to the department or agency by the unit of Government making the request". B. Section 303 should be stricken in its entirety. C. Section 401 could be interpreted to mean that rules and regulations are to be established which would be concerned with the content of local planning and programming efforts. We strenuously object to some "paper- shuffler" in a regional office or in Washington passing on the adequacy or competence of our work. If, on the other hand, this Section may mean a standardization of review criteria among the several grant-in-aid programs, we would favor it. Section 401 "B" should be changed to' establish a mandatory review bya voluntary advisory committee, consisting in part of officials rep're'senting National, Regional, State and Local viewpoints, appointed by the President or Director's of Administering Agencies, to establish rules and regulations pertaining to eligibility for grant-in-aid assistance. (As written, section 401 "B" doe's' no't make National, State and local review abSolutely necessary.) D. Section 602(b) should read as follows: "Each grant consolidation plan shall provide for only one consolidation of individual grant programs, and shall be subject to review by a voluntary advisory committee as established in Paragrap'h C o'f this letter." E. There was a difference of opinion on Section 803 (c) (2). Mr. Moore felt this' was a responsibility o'f county government. Mr. Williams felt this should not be a responsibility of county governments. I felt this responsi- bility should be shared by the principals' contributing to' the program caus- ing the displacement. The nee'd for a firmly developed program of grant-in-aid coordination and nore local participation in establishing grantee guidelines is paramount to loser Local and Federal intergovernmental cooperation. I am grateful to you for forwarding these bills for my comments, and would ppreeiate your bringing the above to the attention of the Senate Committee on iovernment Operations. If additlonl correspondence with other Committee mem- ers would be helpful, please let me know. Sincerely, CLIFFORD L. TUCK, Director, $helby County Department of Coordination. PAGENO="0518" 512 SECRETARY OF HOUSING AND URBAN DEVELOPMENT. Washington, DXL, september 30, 1967. THE PRESIDENT, The White House, Washington,, D.C. DEAR MR. PRESIDENT: On May 11 you asked Secretary Gardner, Secretary Wirtz, DireCtor Shriver and me to etstabiish a Joint Administrative Task Force to speed the processing of state and local applications for components of multi- purpose projects. On behalf of my colleagues, I am pleased to submit thiS final report of the Task Force. The goal you set in your memorandum was to reduce by at least 50 per cent the time it now takes to process applications at the Federal level. The Task Force working with program officials completed a study of 42 pro- grams in four bPoad areas of primary significance to multipurpose projects. These areas are Model Cities, Neighborhood Centers, Manpower and Water and Sewer. Eight Federal departmenfis and agencies are involved in all or some of these projects. In the area covered by the study, we have accomplished your objective by reaching decisions and initiating aCtions which will achieve a solid reduction of 50 per cent in total Federal processing time. With continued diligence, we expect to improve that percentage. We have developed measures to kindle a more immediate Federal response to the needs of the staites and cities. These include the elimination of duplicative procedures, delegating more decision making authority to the field, and holding moire consultations with local and state officials before applications are filed. The overall processing time also depends heavily upon the actions of state and local governing bodies. However, the streamlining measures adopted by the Federal Government should also produce savings in time at the state and local level, enabling those officials to move ahead with plans and programs at a faster rate. The time saved will permit low income families to move into housing at an earlier date, neighborhood centers will be established more quickly in communities that need them, and manpower `training will be made available sooner-all with- out further impact on Federal budget commitments. We regard this as a milestone `in your efforts to make the machinery of the Federal Government function more smoothly and efficiently, and improve its serv- ices to the cities and states. We believe the report shows dramatic evidence of what can be accomplished through inter-departmental cooperation and a search- ing review of program administration. Coupled with the earlier study of multipurpose neighborhood centers by the Bureau of the Budget and `the Executive Officers Group, this report represents an important beginning. Ahead are the large tasks of completing implementation, examining additional programs, and developing bold and innovative methods to coordinate Federal activities still more effectively In conducting multipurpose projects. We assure you that these all-important matters will continue to receive high priority and our close attention. Respectfully yours, ROBERTO. WEAVER. SUMMARY OF JOINT ADMINISTRATIVE TASK FORCE REPORT SCOPE OF STUDY The Task Force focused on 42 programs in four multipurpose areas: Model Cities (involving eight Departments and agencies). Neighborhood Centers (involving two Departments and OBO). Manpower (involving three Departments and OEO). Water and Sewer (involving four Departments). PAGENO="0519" 513 RESULTS Decisions already implemented or in the planning stage of implementation will achieve the following estimated reductions in Federal processing time in each multpurpose area: Percent ~fodel cities 50 ~eighborhood centers 50 ~Eanpower 47 Water and sewer 57 Within these general percentages, time savings for individual compounds will vary markedly because of: current differences in processing time other factors such as legal constraints, complex engineering requirements for construction projects, and the extent of state involvement in the grant process. All the necessary decisions have been made to implement the process of re- luction in time, and in most programs implementing action has been initiated. These improvements will enable the Federal Government to respond more quick- .y to the problems of the communities. At the same time they permit state and ocal officials to move ahead more rapidly with such programs as housing for low ncome families, the establishment of neighborhood centers and manpower train- ng facilities. State and local processing of applicaitions for Federal assistance should be nade easier through many of these improved Federal procedures, thus saving ocal officials time not reflected in the tables of this report. SCOPE or STUDY The Task Force focused on 42 programs in our multipurpose areas: Model Cities (involving eight departments and agencies). Neighborhood Centers (involving two departments and OEO). Manpower (involving three departments and OEO). Water and Sewer (involving four departments). RESULTS Agency officials have made all decisions necessary to implement recommenda- ions', and in most programs implementing actions have been initiated. When all nplementing actions have been completed `they will achieve the following esti- iated reductions in Federal processing time in each multipurpose area: Percent [odelcities 50 ~eighhorho'o'd centers 50 Ianp'ower 47 Va'ter and sewer 57 Within these general percentages, time savings for individual components will ary markedly because of: current differences in processing time other factors such as legal contraints, complex engineering requirements for construction projects, and the extent of state involvement in the grant process. Projected time savings listed above will enable the Federal Government to ~spond more quickly `to the problems of the communities. At `the same time ~ey permit state and local officials to move ahead more rapidly with such pro- rams as housing for low income families, the establishment of neighborhood ~nters and manpower `training facilities. State and local processing of applications for Federal assistance should be Lade easier through many of these improved Federal procedures, thus saving cal `officials time not reflected in the tables `of this report. * * * * * * The job ahead requires further action by state and local officials to improve ~eir handling of applications. During the study, several opportunities for im- PAGENO="0520" 514 provement were identified and discussed with representatives of state and local groups. The Federal departments and agencies stand ready to assist in this effort. Subsequent sections of the report contain analyses of the four multipurpose areas included in the study. Detailed working papers `on each program also are available. ATTACHMIONTS Attachment A gives selective examples showing the reduction in processing time. Attachment B lists Task Force staff members. Attachment 0 itemizes the work covered by the Task Force in etthmitting its report in two major phases, including a progress report to the President on June 30. PROJECTED PROCESSING TIME REDUCTIONS IN SELECTED PROGRAMS Original NeW ATTA~HMENT A LOW INCOME AND OTHER MULTI-FAMILY PROJECT MORTGAGE INSURANCE (HUD) WORK TRAINING AND EXPERIENCE (LABOR) SOCIAL AND REHABILITATION SERVICE SECTION 13(a) TRAINING SERVICE PROJECTS (HEW) COMMUNITY ACTION PROGRAM (OEO) FROCESSING TIME IN WORK DAYS 200 300 0 I I ~`~4~2%~i139 63% reduction will be achieved by simulta~ieous processing techniques, delegations to the field, improved production planning and scheduling systems, creation of a data bank to eliminate re-submission of information, and increased pre-application consultation. These approaches have been tested in seven FHA offices as part of a comprehensive program originated and conducted by FHA. _88 ~4o 55% reduction will be achieved by decentralizing approval process to field for large projects, eliminating district office reviews, and improving local technical assistance for project development. -47 51% reduction will be achieved by making early determina- tions of facilities having potential to meet guidelines and standards of National Policy and Performance Council, in- volving regional office staff in developing project program- ming and having applicants evaluate their ability to meet standards and program guidelines. ~135 35% reduction will be achieved by increasing pre-applica- tion consultation and technical assistance, creating con- stant data files which permits earlier establishment of grantee eligibility, improving standards for application re- view and improving completeness checks of grant applica- tions by regional office processing units. PAGENO="0521" 515 ATTACHMENT B-PERSIDENT'S JoINT ADMINrsviwrIvR TASK FORCE MEMBERS Dwight A. Ink, Chairman, Assistant Secretary for Administration,, Depart- ment of Housing and Urban Development. Leo R. Werts, Assistant Secretary for Administration, Department of Lwbor. Donald F. Simpson, Assistant Secretary for Administration, Departmen~ of Health, Education, and Welfare. Robert C. Cassidy, Assistant Director for Management, Office of Economic Opportunity. STAFF Guy W. Chamberlin, Jr., Staff Director, Director, Office of Management and Organization, Department of Housing and Urban Development. Joseph 0. S'miroldo, Deputy Staff Director, Office of Management and Organiza- tion, Department of Housing and Urban Development. MODEL CITIES TEAM MANPOWER TEAM Howard E. Ball, HUD, Chairman. F. Randall Jones, HUD. Earl Canfleid, HEW. Charles McGinnis, Labor. Joseph Daschhach, FIUD. John Moller, OEO. Harold G. Fait, OEO. Thomas O'Brien, HEW. John W. Forrest, HEW. Roger K. Gibson, OEO. WATER AND SEWER TEAM Bernard Gross, Commerce. Stephen J. Havens, HUD. Leo A. Morris, HUD, Chairman. Logan B. Hendricks, SBA. ~1rs. Marian Close, Commerce. Michael P. Kastenec, HUD. Joseph S. Orane, HUD. Mrs. Joyce Kelly, OEO. T'homas L. P. Ferry, Interior. Arthur Lieb, Labor. Gene Hoffman, Agriculture. Ernest M. Norsworthy, Jr. HUD. Dennis E. Walton, HUD. Murray N. Price, OEO. Dale L. Jones, HUD. Lawrence Stevens, Interior. Grant Tolley, Agriculture. NEIGHBORHOOD CENTERS TEAM MANPOWER TEAM John Kane, HUD, Chairman. William W. Baird, HUD. Edward Salner, Labor, Chairman. James Brawley, HEW. Richard Baldauf, Commerce. Arthur Li~b, Lalior. William Dellarde, Labor. Murray Price. OEO. ATTACHMENT C-MAJOR STEPS IN TASK FORCE STUDY Action taken d'urlng'Phase I of the rep~rt included: Interviewing local, state, and Federal Regional Office personnel through visits to major cities. Interviewing Federal Central Office personnel. Collecting actual recorded data on current processing step's and times required `to accomplish them. Constructing process flow charts. Developing recommendations to `streamline Federal processing and esti- mating their potential impact on current processing times. F PAGENO="0522" 516 Study Phase II ends with this final report to the President. Major steps included: Extending contacts with local, state, and Federal personnel including a special presentation to representatives of: Council of State Governments. International City Managers Association. National Association of Counties. National League of `Cities. U.S. Conference of Mayors. Working closely with pr~gram personnel to: Refine and test recommendations for validity and feasibility. Seek additional opportunities for processing improvements. Implement approved recomm'endation~ to the extent possible. Develop `action plans completing implementation. MODEL CITIES BACMGROUND AND SUMMARY The Model Cities demonstration represents `the boldest `and most innovative approach ever taken by the Federal Government to respond to the crisis o'f the cities. It `draws upon a broad range of Federal programs which provide the maxi- mum impact on a problem area `o'f a city. Delays in individual prbgrams could pyramid to an intolerable `level unless methods are adopted to str'e'~mline and simplify the processing `function. Therefore, elimination `of time lags has particu- lar significance for this ambitious program. This problem has been placed under the microscope of a Model Cities System Improvement Team consisting of representatives from eight agencies: Department of Health, Education, and Welfare. Department of Housing and Urban Development. Department `of Lahor. Office of Economic Opportunity. Department of Agriculture. Department of `Commerce. Department of Interior. Small Bushiess Administration. During Study Phase I ending June 30, the Team analyzed 22 Federal grant-in- aid programs relevant to Model Cities. It determined processing times, and made recommendations to cut delivery times in Federal review and approval precedures. In the second phase the Team worked closely with program personnel in test- ing, refining, and implementing proposed recommendations, and in identifying additional improvement opportunities. RESULTS Table I (at the end of this section) shows processing time reductions to be achieved by implementing approved recommendations. The original average Federal processing time for programs examined was 155 days. This will be cut in half and reduced by an estimated 77 days, or an average reduction of 50~ per cent. Most time savings stem from four basic recommendations to: Delegate more authority for final decisions or milestone actions to field officers. Increase significantly the amount and nature of pre-application consul- tation and technical assistance. Adopt concurrent processing techniques wherever possible. Reduce to a minimum technical reviews performed at the national level. In addition to these basic recommendations, more time can be saved by installing: Standard processing times coupled with workable processing control and scheduling systems. Simplified amendatory and revision procedures. PAGENO="0523" 517 THE JOB AHEAD Three major tasks lie ahead: Completing implementation of decisions. Reducing processing time in many programs not covered in the study but which are potential components of Model Cities packages. Evaluating actual and projected results. In addition, special studies should be conducted to consider: A "one-shot" city eligibility profile or consolidated data book. Under pres- ent systems applicants are required to submit over and over again informa- tion that is not likely to change for years. Consolidated applications. Training programs to foster improved inter-governmental coordination in carrying out Model Cities activities. TABLE i-SUMMARY OF PROCESSING TIME REDUCTIONS, MODEL CITIES Program Original processing times (workdays) New processing times (workdays) Time s avin ~ W kd or ays ercen Agriculture: Food stamps Commerce: Economic development OEO: Community Action program Interior: Land and water conservation 15 149 135 71 15 90 88 30 0 59 47 41 0 40 35 58 Labor: Work training and experience (Neighborhood Youth Corps, New Careers program, Operation Main- stream, and Special Impact program) SBA: Displaced business loans HUD: 88 56 40 30 48 26 55 46 Community renewal Openspaceland Urban parks and urban beautification Demolition of unsafe structures 126 364 196 59 70 121 126 45 56 243 70 14 44 67 36 24 Code enforcement 124 91 33 27 Urban renewal 495 295 200 40 Low-rent public housing 115-312 Rehabilitation loans and grants 221(d)(3) housing Rent supplements HEW: 163 35 376 398 78 20 139 179 85 15 237 219 52 43 63 55 Hill-Burton 11 5 6 55 Vocational rehabilitation expansion Equal educational opportunity Migrant health Air pollution grants Community health service.. 38 247 150 85 83 19 70 75 40 42 19 177 75 45 41 50 72 50 53 50 Total 3, 464 1, 708 1, 756 50 NEIGHBORHOOD CENTERS BACKGROUND AND SCOPE In an address at Syracuse on August 19, 1966, the President called for a multi- purpose neighborhood center in every ghetto in America. In response to this call, a Neighborhood Centers Pilot Program was initiated which will place in each of 14 selected cities a multipurpose center developed under component programs in HEW, HUD, Labor, and OEO. To improve administrative procedures in both the Pilot Program and its com- ponents, an Interagency Study Group was established in March 1967 under the joint sponsorship of the Bureau of the Budget and the Executive Officers Group. Based on a five week study, this group identified several important areas for improving program processing. It also recommended major changes in organi- zational arrangements for managing the Pilot Program. In the Pilot Program and in component programs, many Interagency Study Group recommendations were installed or initiated. Additional improvements were introduced to help speed up processing and insure a smooth operation. PAGENO="0524" 518 RESULTS Pilot program The Washington Interagency Review Committee (WIRC) is the policy group in charge of the Pilot Program. The management improvements it installed includes: 1. A "project management" type organization both in Washington and in the field. In Washington, a separate organizational unit, under the direction of the Chairman of the WIRO, is responsible for centralized operation of the program. In the field, each pilot city is handled by a Federal Regional Team consisting of one member each from HEW, HUD, Labor, and OEO. The team is chaired by the HUD member, who functions as field project manager. This type of organization structure was a principal recommendation of the Interagency Study Group. It has proven a major factor in promoting interagency cooperation and instilling a real "sense of urgency" in program operations. 2. Group conferences and face-to-face discussion among participants in the pro- gram, in lieu of lengthy review procedures, both in field and Washington operations. 3. An initial program submission, which served as the major document for specific Federal program applications to the participating agencies. 4. Simplified application forms and procedures, which will serve as the final submission for some program components. Developed by the Manpower Team working with the WIRC, this common application reduces to a minimum the information required for approval and funding 28 component programs. UompoHent prograinis Decisions made in 11 component programs in HEW, HIJD, and OEO will re- duce processing time by an average of 50 per cent (Table II). Actions to achieve this reduction includQ: Delegating additional authority to the field. Eliminating technical reviews in Washington. Reducing the number of man4atory reviews in the field. Increasing pre-application consultation and technical assistance. Installing a priority system of rating applications. THE JOB AHEAD The Pilot Program will focus primarily on ways to capitalize on experience gained and lessons learned. Especially important is the potential application to the ongoing Neighborhood Centers Program and to Model Cities of: Project management techniques. Group conferences. Common application forms and procedures. For component programs, the job ahead centers on completing implementation and evaluating results. TABLE Il-SUMMARY OF PROCESSING TIME REDUCTIONS, NEIGHBORHOOD CENTERS Program Original processing timet (workdays) New processing times (workdays) Ti e avin m s g W kd or ays ercen HUD: Neighborhood facilities HEW: 212 93 119 56 Comprehensive health projects 314(e) PHS National Institutes of Mental Health (PHS) Demonstration projects, sec. 1115 Maternal and infant care 230 200 56 83 104 100 26 42 126 100 30 41 55 50 54 50 Sec. 13(a)training service Sec. 12 construction grants Vocational rehabilitation and demonstrations 47 48 120 23 24 60 24 24 60 51 50 50 Comprehensive health service youth Child welfare research demonstration 27 83 14 42 13 41 50 50 OEO: Community action program 135 88 47 35 - Total 1,241 616 625 - 50 PAGENO="0525" 519 MANPOWER BACKGROUND AND SCOPE On May 26 the Joint Administrative Task Force established a Systems Im- provement Team to study Federal Manpower programs. The Team was chaired by the Department of Labor, and included representatives of HEW, HUD, OEO, and Commerce. It initially selected a list of some thirty manpower programs covered by the Cooperative Area Manpower Planning System (CAMPS). Six were analyzed in detail. The remaining 24 were already being reviewed by the Model Cities or Neighborhood Centers Teams or involved no Federal application procedure or processing time. RESULTS When implemented, decisions made will reduce Federal processing time by an average of 47 per cent in five of the programs analyzed (Table III). The sixth program, Work Experience and Training for Welfare Clients, is shifting sig- nificantly because of statutory changes, and while the Team made tentative recommendations, new processing procedures for this program have not yet been established. Decisions made for program improvement include: Using the CAMPS Area Plan as a basic reference document in preparing and reviewing manpower program applications. Increasing concurrent reviews at Regional level. Delegating additional approval authority to Regional Offices. Increasing assistance and guidance to applicants in the preparation of program plans and applications by Federal field personnel. Involving agency representatives earlier in programs operated jointly by two or more agencies. Installing internal administrative improvements such as: Rescheduling during peak application periods. Using the telephone, including conference calls, instead of time-consuming written communication. Eliminating "back and forth" sequences in processing. Expediting formal approval and notification for acceptable applications. In addition to processing decisions, the Team recommended a coordinated approach to manpower programs. This proposal would expand the CAMPS system from a planning to an operational system, use the CAMPS Area Plan as a unified basis for Federal project development, and introduce simplified and uniform application forms and procedures. THE JOB AHEAD Next steps in the Manpower area involve: Completing implementation of processing decisions and monitoring results. Evaluating the proposal i~or a coordinated approach to manpower programs. TABLE Ill-SUMMARY OF PROCESSING TIME REDUCTIONS, MANPOWER 1 Original New Time savings Program processing processing times times Workdays Percent (workdays) (workdays) EW: Vocational rehabilitation workshop project develop- ment 63 28 35 56 Vocational rehabilitation workshop improvement. -- - 42 20 22 Vocational rehabilitation innovation 46 23 23 52 50 EO: Migrant and seasonal farmworkers 92 55 37 abor-Commerce-HEW: MDTA 241-EDA training insti- tutional and on the job 64 38 26 - Total 307 164 143 - 40 41 47 1 Other manpower programs shown in model cities table. 2 Status of manpower programs not included: MDTA-Labor (with HEW): No significant Federal processing time. Work experience-welfare clients-Labor-HEW: Legislative change-new processing being developed. Testing, counseling, guidance, job-placement, and development-Labor: Financed by annual appropriations through e Department of Labor. National apprenticeship program-Labor: No application procedures required. PAGENO="0526" 520 WATER AND SEWER BACKGROUND AND SCOPE Four Federal agencies make water and sewer grants and loans under the fol- lowing jurisdictions: Department of Housing and Urban Development (ITIJD) communities of all sizes in urban or urbanizing areas (except waste treatment). Farmers Home Administration (FHA) of Department of Agriculture-Rurally oriented communities of under 5,500 people. Economic Development Administration (EDA) -Department of Commerce- Specified economic development areas regardless of community size, where the project will have long-range economic impact. Federal Water Pollution Control Administration (FWPCA), Department of Interior-First consideration of all waste treatment projects, although FHA a~d EDA may also fund such projects. Several new laws in 1965 expanded the program to such an extent that an Interagency Coordinating Committee was set up to coordinate the efforts of these four agencies. In addition to processing improvements generated through this Committee, each agency has been aCtive for a number of months in improving its individual program through such techniques as extensive on-site analysis of regional processing and visits to applicants. RESULTS Efforts by the four agencies working individually and in concert through the Interagency Coordinating Committee generated decisions which will reduce processing time by 57 per cent over the initial base period (Table IV). Significant actions to achieve this reduction include: Developing a simple referral form for applicant inquiries. This permits filing an inquiry with any of the four agencies, with jurisdiction determined by the Government. Combining this referral form with the basic application to eliminate or reduce repetitious information and requests for more data during the pre- liminary review and rating process. The new form also applies to several other programs of the four agencies. Clarifying and expediting jurisdiction determinations between HUD and FHA; between HUD and EDA to cut down unnecessary referrals; and between FWPOA and the other three agencies to expedite processing of referrals for waste treatment plants. Unifying auditing, bidding and similar practices between the four agen- cies, before exploring the feasibility of developing standard forms for the supplementary technical data required for full project reviews. Revising internal processing procedtires by: Installing an attrition system to keep backlogs at workable levels and expediting information to inquirers on project disposition. Eliminating technical review in Washington. Streamlining press release procedures. Combining fund reservation and project approval processes. Developing a standard engineering contract form. Providing design criteria and other guide documents to engineers. Developing guidelines for field staff use in uniform assembly of loan and grant dockets. Revising and simplifying processing instructions. Releasing a standard construction contract. Improving instructions to applicants for preparing project submissions. Conducting training meetings for state office personnel. PAGENO="0527" 521 THE JOB AHEAD Most recommendations in the water and sewer area have `been implemented. Hence, the job ahead will focus on: Comparing actual and projected results. Studying the execution phase of each department's program. Improving the coordination activities of the Interagency Coordinating Committee. Original New Program processing times (workdays) processing times (workdays) - Workdays savings Percent -- Commerce: Specified economic development areas \griculture: Rurally oriented cnmmunities Interior: Waste treatment projects tUO: Communities in urban or urbanizing areas 245 245 25 232 115 118' 25 66 130 127 0 166 ` 53' 52 0 72 Total - 747 324 423 57 ~TAT16MENP or U.S. R]GPRESENTATIVE Wu~LIAM F. RYAN, FROM THE 20TH CONGRESSIONAL DISTRICT OF NEW YORK Mr. Chairman, I am pleased to state nay views before the SubcommIttee on [ntergovernmental Relations on 5. 698. This legislation is Sorely needed, and I applaud your work in this long neglected irea. I am specifically interested in title VIII, which establishes a uniform reloca- :ion policy. I have been concerned with inequities in the area of relocation for oome years. As you well know, although some Federal programs do require relocation assistance, most either do not, or leave assistance to the discretion )f the grantee or to the `administrator. I know that in New York City families `displaced as a result of urban renewal kcquisltion are eligible for relocation assistance, ~ut those dislocated es a result )f direct Federal construction or institutional expansion by universities or hos- itals facilitated through Federal grants or loans often receive no `such `benefits.' In past years, I have introduced legislation increasing urban renewal bene- its, and other legislation requiring benefits to be paid by recipients of other ipecific grant-in-aid or loan programs. This year, I introduced HR. 16953, the E~elocat'ion AsSistance Act. It extends such requirements to all Federal grant-in- dd, direct loan, or acquisition construction. As I understand the Chairman's bill, S. 698, my bill differs' mainly in that my )ill H.R. 169'53 would establish a central relocation agency, to `be located in the )epartment of Housing and Urban Development, Whereas 5. 698 requires each' ~gency to take appropriate action. My bill provides that no Federal agency shall approve an application for loan ~r grant assistance, nor undertake direct construction without first identifying )ers'ons to be relocated, informing them of their rights, and providing the )i'rector of Relocation Assistance with information sufficient to permit the -omputation of relocation benefits. HR. 16953 charges the Director of Relocation Assistance to make payments of enefits, `and to keep a current file on all federally assisted programs covered by he act and the ne'ed for relocation assistance. It also requires thait he take `action o insure that individuals and ~usin'e5smen displaced as a result of federally tided programs be fully informed of their rights and given assistance in reloca- ion. He is further required to coordinate his activities with other Federal gencies. Payments would `be made through annual appro~riation~. I am certainly in accord with the intent of S. 698, and I commend the Chair- aan. I would hope that the distinguished sUbcommittee would give du'e consider- ,tion to the approach which establishes a central Relocation Assistance Bureau ather than leaving this function in each administering agency. There is `a clear need for general coordination `of relocation measures, including :eeping `statistics, providing information, and ensuring that agencies are comply- ng with the policy. I include a copy of my~bill, H.R. 16953. I am hopeful that uniform relocation legislation will meet with prompt and avorable action. PAGENO="0528" 522 Tnn Nnw ENGLAND COUNCIL, Boston, Mass., Jane 20,1968. Hon. EDMUND S. MU5KIE, Chairman, S~bcom'inittee on Intergovernmental Relations, Committee on Government Operations, U.S. Senate, Washington, D.C. DEAR Mn. OH~1RMAN: This statement is submitted on behalf of the New England Council to support S. 698, the proposed Intergovernmental Cooperation Act of 1968. The New England Council was established in 1925 at the request of the six New England Governors. It is a broadly representative group, interested in the sound economic development of the region. As a consequence, it is par- ticularly interested in proposed legislation which may strengthen and improve the economy of the New England region. Through its interstate relations program, the Council maintains close liaison with some 25 regional conference groups of New England state officials. It has been three years since the Senate passed legislation similar in objective to 5. 698. Unfortunately, this legislation was not enacted into law. Nevertheless, as a result of the attention focused on the subject of intergovernmental relations at that time, much useful work and further development of the su~bject has occurred. There is unquestionably an increased awareness of the need to identify ways to improve and strengthen Federal-State relations. We think that this point has been made with great force in the testimony presented on the pending legislation. By way of further emphasizing the need for the proposed bill, how- ever, we would make the following background points. We are presently in an era of fiscal federalism. The Federal government is responsible for administering at present over 220 grant-4n-aid programs in- volving over 400 separate appropriation accounts. By comparison, in 1930 Federal grants amounted to approximately $0.1 billion to support ten programs with Federal aid for highways accounting for approximately 68 percent of the grants. Under existing programs which provide for a total Federal commitment of over $18 billion, the Federal government has imposed a variety of diverse requirements on State and local governments, including different matching requirements; different procedures to process grant applications; overlapping plans to qualify for Federal aid involving, among other things, the development of 80 State comprehensive plans, 701 comprehensive plans, community development district plans and overall economic development plans; administration of project grants by different kinds of Federal authorities and ofilcials at different levels of the Federal government; varying percentages of Federal support for different pro- grams administered by the same agency and varying percentages of Federal support for similar programs administered by different agencies; the need to relate to a number of special units of government and non-government corpora- tions and other units especially created to deal with categorical grant programs; a multiplicity of advisory councils whose membership is not consistent, whose function in many respects is duplicatory and whose authority varies widely, and competing services such as the agricultural extension service and the urban extension service whose respective jurisdiction is not clear. Out of this maze or thicket, as it has been characterized by the President, have emerged two significant things: the expert in-grantmanship and an unevenness of grant programs which is less widely known and understood. For example, one State in New England actually received less than its "share" of grants because of the inability to marshall the skills and effort to concentrate on grant proposals. Also, one eastern State has received 70 percent of the funds under the poverty program with only 30 percent of the population. At the same time, n study of the school lunch programs has revealed that the children who benefit are not necessarily those most in need in every instance. A consolidation and simplifi- cation of Federal grant programs, such as envisioned by the pending bill, should significantly improve the present situation. Congress itself provided a precedent for the consolidation of grant-in-aid programs with the enactment of the Comprehensive Health Planning and Public Health Service Amendments of 1966 which make possible a "block grant" approach in certain health programs. A series of bills have been introduced in this Congress aiming at the same objective: the Federal Grant-In-Aid Review Act of 1967 by Senator Scott: the Temporary National Commission in Intergov- ernmental Fiscal Needs and Rescources proposed by Senator Kennedy in 1967; the Joint Funding Simplification Act of 1968 by Senator McClellan, as well as title VI of the proposed Intergovernmental Cooperation Act. PAGENO="0529" 523 The Congress has already taken some decisive and signith~ant action by enact- ing the Safe Streets and Crime Control Act providing for distribution of funds on a pro rata basis to the States. Further, the debate last session on the Mundt Amendment to the Intergovernment~~ Personnel Act (5. 699) revealed that there is more than just a passing interest in how to grant more fiscal independ- ence to State and local governments. It is hoped that action will be taken soon on additional measures. The problem grows as a demand for increased public expenditures at all levels of government continues to increase. Even though State and local revenues have increased rapidly (at the rate of 9 percent a year), expenditures have increased at an even higher rate (10 percent annually). Federal grants and borrowing have helped make up the difference. This trend has focused more and more attention on the need to find better ways to channel available public funds to meet specific needs more adequately. For example, the Regional Planning Association of New York recently recommended that the Federal government pay all costs of welfare, `anti-poverty, public health and special educational programs which in its view were putti'ng an undue drain on local resources. It pointed out that if these costs, amounting to approximately $5 billion, were shifted entirely to the Federal government, cities and States would be be'tter able `to provide other `needed services. It also recommended in its study of projects and services provided in the New York metropolitan region (including Connecticut and New Jersey) that public funds spent on programs to alleviate poverty should be doubled from the estimated 1967 level of $11.5 billion. In short, the pressures continue to mount for more programis and more investment. At the same time, it should be `noted that there have been major efforts to inform appropriate public officials about existing programs in order to maxi- mize thei'r effective use. In order to inform key State and local officials about the operation of the multiplicity of Federal programs, the Office of the Vice President, and the Office of Emergency Planning have over the past couple of years undertaken to organize comprehensive briefing sessions for Governors, mayors, city managers and others. This concentrated approach has proved to be of great value. However successful communication has its real limitations. As more and more has been `learned about the opportunities available under the variety of Federal programs presently in effect, responsible govern'men~ officials at all levels have increasingly come to understand the inevitable difficulty of dealing with so many `diverse and duplicatory programs. Further it has become more `and more apparent that the emphasis under various Federal programs on specific program planning (as opposed to compre- hensive planning) often distorts priorities by causing State and local officials to shape plans around the availability of funding. The loss of momentum be- tween the time a grant application is submitted and a project is funded and the uncertainty about the availability of funding are also serious deterrents to a consistent `development of public programs. New techniques must be found which provide some assurance to State and local officials that the implementation of programs can proceed in an orderly way. It is true `that the improved communication at all levels `of government about common plans has already had many desirable consequences in dealing with some of `these problems. Federal officials now deeply involved with PPBS, candidly speak about the great deficiencies in the Federal delivery system and that the Federal government is one of the worst distributors of services. Hopefully, as the cost-effectiveness analysis technique is applied to more areas of Federal government spending, this should ultimately lend to discontinuing less efficient grant-in-aid programs. In turn, the use of the same techniques and improvements can be hoped for at the State and local level. Theae developments may go far to accomplish some of the objectives which are embodied in the pending bill. In addition, much other Federal activity at the administrative level is pres- ently being directed toward making the Federal government more efficient in the delivery of services and cash. The Joint Administrative Task Force of September 1967 interagency report to the President, entitled "Reducing Federal ~rant-in-Aid Processing Time" has been put into effect. An interagency corn- a~ittee with representatives of the De9artrnent of Housing and Urban Develop- nen't, the Economic Development Administration, the Farmer's Home Admin- [stration and the Federal Water Pollution Control Administration has been ~ormed to handle the administration of the various water and sewer grant-in~.aid rograms. The Department of Housing and Urban Development has established priority system for various grants-in-aid; an interagency committee is studying 95-626-68-_-_34 PAGENO="0530" 524 the impact of federally supported assistance programs on the State administra- tive structure and ways of coordinating funding, coverage, and administration of aid programs; a Center for Community Planning has been established in the Department of Health, Education, and Welfare and the Bureau of the Budget series of Executive Orders A-80--85 provide for review procedures by State and local government before agency regulations are published in final form. An official of HTJD reported to a group of municipal officials recently that the department has reduced the processing time of 17 grants-in-aid by 50 percent. Just recently, the New England Planning Administratoi~s Conference learned from the regional HUD staff that an experimental approach to block grants has been developed with the State of Colorado 701 funding. This effort to give the State planning staff some direction and flexibility in their dealings with local planning officials is significant. The bill would also help deal with the crisis in governmental organizations created by the city problem. The Advisory Commission on Intergovernmental Relations has issued a thoughtful and powerful warning that the crisis in American cities is creating a crisis in the American governmental structure. As cities in turmoil turn to the Federal government for aid, the Commission fears that under the strain of emergency conditions both cities and States will increasingly allow the Federal government to assume many responsibilities that local governments traditionally have carried, and if properly assisted, could continue tu carry. Before the balance in the present Federal structure is upset, it is essential that steps be taken to ensure that all levels of government will be strong partners in providing public services. The States have an important role in supporting local programs designed to meeting pressing needs. Yet there has been considerable pressure to bypass the States in meeting local needs. We understand that the Advisory Commission on Intergovernmental Relations will soon undertake a study of State aid programs. Such a study should serve a very useful purpose in clarifying the important role that State governments must play in supporting effective local programs. In money terms, States have already dramatically increased the level of support. A recent study by the Tax Foundation shows that State aid programs in support of education, highways, welfare, general government, housing and a host of other functions has tripled from $6.5 billion to $16.8 billion at present, an amount almost equivalent to the total Federal aid available to State and lOcal governments. In New England, each of the States has substantially in- creased its support of local government functions during the same period. Connecticut leads the way with a 248% increase, followed by New Hampshire, Rhode Island, Maine, Massachusetts and Vermont. Connecticut's commitment makes it the fifth highest on a national basis. The National Governors Conference, in its study of Federal-State relations, has urged that: all further Federal-local assistance programs be drafted so as to include the participation of State governments; existing Federal grant-in- aid programs which bypass State governments, be amended to provide for State participation; and `the Federal government shall allow those States which have the interest and develop the capacity, to coordinate federally aided programs at the State level within broad and basic national goals. This extensive background comment is simply to make the point that action by Congress on the pending bill is highly desirable this year if we are to make further progress in dealing with some of the difficult problems outlined above. In this connection, we would like to submit these specific comments on the titles of principal interest to the Council (titles H, IV, V, VI, and X) Title II would provide needed assistance to government officials, particularly relating to the use of grant-in-aid funds and the timely transfer of funds to the States. Also important is the provision eliminating the "single state agency" concept to permit greater flexibility in the States' development of counterpart programs. However, the language of section 201 which places the responsibility of obtaining financial data upon the Governor and the Legislature should be revised to require mandatory repor'ts to be submitted to the Governor and the Legislature by all Federal agencies administering grants-in-aid in the State. Further, these reports should cover all governmental and non-governmental jurisdictions. Such a report is now submitted on a quarterly basis by the Depart- ment of Housing and Urban Development to the Governors. This provision would go a long way toward clearing up the information gap which currently exists. The provisions of title III providing for the reimbursement by State and local governments of technical services appear to contain adequate safeguards for the private consultant. PAGENO="0531" 525 We would agree with the objectives of title IV and the intention expressed in sections 401 (b) and (c), to take into account all viewpoints at all levels of government and that all Federal aid for urban development be consistent with and further the objectives of State and local government comprehensive planning. These provisions appear to be the key to minimizing problems which result from bypassing of State government. However, the consultative mechanism required of Federal departments and agencies in section 401 (d) should involve appropriate participation of State and local officials. Perhaps the process visualized in the Comprehensive Development Planning, Programming, and Coordination Act of 1967 offers a solution. We also believe that it is important as provided by section 402, to require that Federal departments and agencies shall favor units of general local government. Unfortunately, this is not the case in the "Joint Funding Simplification Act of 1969". Grant-in-aid programs should, if anything, encourage the reduction in the number of units of local government. At the same time, efforts should be made to recognize interstate compact agencies, intrastate and regional agencies devel~ oped by units of general government. Titles V and VI provide significant authority to review, evaluate and consoli- date Federal grant-in-aid programs. The Congress in discharging its responsibili- ties should benefit from the experience of the Comptroller General and the recom- mendations of the Advisory Commission on Intergovernmental Relations. We believe further thought should be given to how the Congress can staff itself to effectively do this work. One suggestion which merits attention is to authorize each committee of Congress to retain a professional staff person to serve as a review specialist. It is to be hoped, however, that whatever approach is adopted, Congress will take a broad comprehensive view of programs and priorities. The authorization in title VI of the procedure allowing the President to use the same prowers granted by the Reorganization Act of 1949 represents an advance toward the improvement of intergovernmental relations that can be best measured by enactment. This significant power not only places upon the Chief Executive the burden of putting into effect administrative improvement which inevitably would flow to him from his staff, but also places Congress on notice that it, too, must exercise its legislative powers effectively. The President has already demon- strated the workability of this method by the transfer of urban mass transporta- tion grant programs from the Department of Housing and Urban Development to the Department of Transportation. We assume that this authority will be carefully directed to matters of internal organization of existing executive branch functions. We believe that the new title X represents an important step forward by allow- ing Federal agencies, at long last, to accept the accounting and auditing methods of State and local governments. This provision should not only simplify auditing procedures, but there is merit in granting recognition to the competency of State and local accounting and auditing procedures. In conclusion, we believe the pending bill should be enacted. It should be noted that the Interstate Relations Committee of The New England Council has estab- lished a special subcommittee to undertake an intensive study of Federal-State- local fiscal relations. This study will provide a means to acquaint The Council's membership with various aspects of this important problem and will be a means to provide a continuing review of many of the matters which are the subject of the pending legislation. Very truly yours, A. THOMAS EASLEY, Es~ecutive Vice President. STATEMENT OF THE NATIONAL AssocIATIoN OF STATE BUDGET Orriczns o~ S. 698, INTERGoVERNMENTAL CoopERATIoN ACT OF 1967 (Submitted by Bill B. Cobb, budget director, Texas, and president of the National Association of State Budget Officers) The National Association of State Budget Officers is an affiliate of the Council of State Governments comprised ex officio of the state budget officers of all fifty States and the commissioners of finance and administration in those States where this official is superior to the budget officer. The Association is much interested in many of the provisions contained in the Intergovernmental Cooperation Act of 1967, and I am pleased to testify in support of the principles of that act. PAGENO="0532" 526 While all provisions of the proposed act would be beneficial to intergovern- mental relations, I shall address myself to those provisions of most concern to budget officials. The first is section 201, which requires federal agencies, upon request, to notify the Governor or a state official of federal grants to the State. This section is desirable because it attempts to solve a problem of great concern to Governors and legislators. Decisions on grants are often made between the federal agency and its stale counterpart without clearance with the central decision-making bodies of the State. Without this information at an early stage, the chief executive and legislators cannot adequately plan state programs and financial support. The need for information on grants has been recognized in all States, and at least forty-six of them have established offices or positions of federal-state coordinator, most of them located directly in the Governor's Office. A formal fed- eral requirement for the federal agency to cooperate with the States in providing the central administrative units with information on federal grants will strength- en state ability to develop sound program and financial plans. Section 202 will assist States in good treasury management by allowing, in cases where this is not already done, the commingling of all funds for short-term investment purposes. Section 203, requiring a minimum time lapse between transfer of funds from the U.S. Treasury and disbursement by the State, represents sound treasury man- agement on the part of the U.S. Government. This section does' not recognize, how- ever, a problem that the States have with reimbursable grants, such as those for highway programs. Most States receive more money in reimbursable programs than they do in programs funded in advance. It should be possible to include a provision for Immediate reimbursement based on normal state expenditure pat- terns subject, of course, to federal audit, to aSsure that States do not have to lay out money and wait a considerable length of time before reimbursement. Section 204 provides for waiver of the single state agency requirement if the State presents evidence that such provision "prevents the establishment of the most effective and efficient organization arrangements within the State govern- meet * * *"* This provision will make it easier for States to reorganize functions for improved management. For example, the New Mexico Department of Finance and Administration administers federal grants flowing through to public schools and the Illinois central personnel agency engages in personnel administration activities for health agencies. These arrangements were established by the two States to bring about administrative improvements, yet they may run counter to the federal single agency requirement. The section couid be made stronger from the state point of view if the burden were placed on the federal agency to find something improper about the state administrative arrangement rather than require the State to defend any deviation from the single agency requirement. Effective administration may be accomplished under many organizational forms, and the arrangements set up by the States should ordinarily not be challenged by federal agencies. Title III, allowing federal agencies to provide special or technical services to state and local government on a reimbursable basis, should make easier the utilization of the expertise developed in the federal agencies in many programs in which States need help. We endorse this attempt to make more flexible the working out of personnel interchanges among units of government. The vast expansion of federal grant programs, and their splintering into many oategories-480 at a recent `count-makes review and coordination devices par- ticularly necessary. Pities V and VI are addressed to this. Title V, requiring Congre'ssiional review of federal grants-in-aid, will formalize a procedure that Congress in the normal course of events might undertake any- way, namely, to review all programs periodically, measure them against their intent, determine to' what degree they are meeting their intent, note the relation- ship among the' various programs that have been established a different times and decide if alternate arrangements might better serve national goals and objectives. Coordination among programs mirht also be achieved. For example, when four program's provide aid for water pollution control, som'e unifying legislative action `might be helpful. The National Association of St'ate Budget Officers in 1963 adopted a reso'lu- tiori endorsing the periodic review of federal grant programs. Title VI provides a means of consolidating grant4n-aid programs. Between presidential findings under this title and Congressional findings under Title V, considerable stride's shca~ld be possible to assure that many related cate- PAGENO="0533" 527 gorleal grant programs are correlated through the use of simplified administrative procedures to achieve the basic goats set by Oongress. In this donnecthm we also endorse the principles of S. 2981, the Joint Funding Sinipl'iftoatkin Act of 1967. This act, in conjunction with Titles V and VI of the Intergovernmental Cooperation Act, will provli'de a battery of means to el'im'inttte some of the ill effects of too many &ver'se categorical grant programs. Amendment number 748 to S. 698, providing for improved coordination of auditing, Should be beneficIal to both federal and state `agencies. State agencies have frequently `co'm~lained of long delays in federal audits. This amendment should nntke possible more timely audits, whether `done by `state or federal auditors, `simply through reducing the number of audits any federal program auditor is required to perform. It should also, where necesSary, encourage States to provide adeqtiate and timely audits so that state agencies will net be so subject to later fed~ral audits. In summary, Mr. Chairman, we endorse th'e `basic objectives of the Inter- governmental Cooperation Act and the Joint Funding Simplification Act and urge favorable and `prompt Congressional action. (The subcommittee submitted the following questions to Federal departments and agencies: (1. A description of any change's in your agency's relocation assist- ance and compensation policies, procedures and benefits made subse- quent to your report to the Select Subcommittee on Real Property Acquisition, as published in December 1964. (2. A description of any cihanges in policy or procedure relating to the evaluation, appraisal, negotiation and acquisition of real prop- erty made subsequent to your report and answers to questions given to the aforesaid select `subcommittee, as `published. (3. Are your negotiators allowed to make an offer for the acquisi- tion of real property below the agency approved appraisal; and if so, under what circumstances or rules is such action permitted? (4. Since January 1, 1965, state the following: ((a) Number of purchases in which the initial offer was less t'h'an the agency approved appraisal; ((b) Number of actual purchases made at less `than the agency approved appraisal; ((c) Number of purchases made at the agency approved ap- praisal; and ((d) Number of purcifiases made above the `agency approved `appraisal. (The responses received are as follows:) DEPARTMENT OF THE ARMY, OFFICE OF THE CHIEF OF ENGINEERS, WasMagton, D.C., June 24, 1968. ~Ion. EDMUND S. MUSKIE, 7hairman, Subcommittee on Intergovernmental Relations, 7.5. Senate, Washington, D.C. DEAR SENATOR Musiun: General Cassidy has asked me to reply to your recent ommuni'eation requesting certain information to be used in developing a full ec'ord with respect to S. 698, the Intergovernmental Cooperation Act. The information in the tt'o'llo'wiing paragraphs is furnished in response to the orresponding `paragraphs in your letter: (a) No changes have been made in our relocation assistance and com\pen'sa- ton j~oli'cics, procedures, or benefits~ subsequent to the report to the Select Sub- onimittee on Real Property Acquisition, a's published in December 1964. (b) No changes in policy `or procedure `relating to the eTalulati'on, appraisal, egotiation and acquisition of real property have been made `subsequent to the ~port to the select subdommittee. (c) In our acquisition procedures, the initial offer does no't always represent ie exact appraisal figure but it does represent a fair price for the property. 11 initIal offers are within a reasonable range of the appraisal figure, taking PAGENO="0534" 528 into consideration that an appraisal does not establish value and that other expert opinions of value will normally vary, either higher or lower. Initial offers may be made which are below the exact appraisal figure but they cannot be substantially below. They must be within the probable variations to be expected to result between oi~1inions of different experienced appraisers. The concept behind this policy us that market value is not necessarily deter- mined by appraisals. Rather, market Value is arrived at by negotiatibn between a willing buyer and a Willing seller. A uniform practice of restricting offers to the exact amount `of an appraisal would derogate from our sl~ated policy of engaging in actual, practical, rea1iistic negotiations, taking into consideration all of the fie~ible factors which would influence a willing seller. This policy is in `addorcllaiWe With the intent `of Congress as ~xpressed in SectIon 301 of the Land Acquisition Policy Act of 1960, Pubile Law 86-645. A peliley pr~onidin'g that an appraIser `dh!osen by the Government shall fix a value `below Wbi~h the United States dannot purchase would, in effect, sub- stitute his judgment for market value. Furthermore, if `the appraiser's opinion is considered as a substitute for the `establishment ~f the lowest fair price, it is logical to stibs'titute his opinion as the `mkximum price. As a `result, any true negotiations would be precluded. As stated in the select subcommittee repOrt, "The purpose of the appraisal is to estimkte the fair n~arket value of land under judicial concepts". This is defined in our procedures as "the highest price estimated in terms of money which a property will bring if erposed for sale in th'e open miarket allowing a reasonable time to find a purchaser who buys with knowledge of all the uses to Which it is adapted and for which it is capable of being used". While the appraisal is net an eXact science, the appraisers rely on certain assumptions and data of the r~ai estate `market to arrive `at price and not a reasonable ilange of value. Our negotiations are conducted within this range, which is determined from the appraisal and the appraiser's analysis of the data contained therein. (d) There is incelosed a tabulation ubo'w'ing the number of tracts of land ac- quired by the Corps `of lln'gineers, during the period 1 January 1965 through 30 June 1967, and indicating the number and percentage of instances in which the property was purchased ait less than the appraisal estim~ate, the number and percentage purchased at the appraisal, and the number and percentage purchased at an amount greater thkn the appraisal. This `data includes all land acquisition b~y the Corps of Esigineers, including that for Civil Works, Army and Air Force military, NASA an4l others. No consolidated report i's available indicating `the number or percenta'ge of tracts on which the initial offer Was less than `the `appraised valuation. As pointed out above, negotiations consist of a series of offer's and co'un'teroffers designed to reach an agreement as to price which is just and reasonable to the landownei an'd fair to the Government. Therefore, it is reasoniabile to assume that in `substantial number of cases `the inItial offer `Was less than the Government'i appraisal estim~ate. I tr'ust that this information is satisfactory for your purposes. Sincerely, MAX McConn, Colonel, Corps of Engineers, and Director of Real Estate. EXHiBIT A Tracts Tracts Tracts optisned at less Percent optionecl at the Percent optioned at more Percent than the appraisal appraisal than the appraisal Jan. I-June 30,1965 Fiscal year 1966 Fiscal year 1967 790 11.0 1, 060 10. 0 831 10. 0 2,874 3, 037 2, 236 39.0 29. 0 26. 0 31. 2 3,621 6, 290 5, 390 50 61 64 Total 2, 68110. 3 8, 147 15, 301 58 Note: Total tracts, 26,129. PAGENO="0535" 529 U.S. DEPARTMENT OF TRANSPORTATION, FEDERAL HIGHWAY ADMINISTRATION, Washington, D.C., June ~5, 1968. lion. EDMUND S. MU5KIE, ~Yhairman, Snboommittee on Intergovernmental Relations, Committee on Govern- ment Operations, U.S. Senate, Washington, D.C. DEAR SENATOR MUsKIE: This is in response to your letter of Jtme 13, 1968, requesting certain information for the record in connection with S. 698, the pro- posed Intergovernmental Cooperation Act. We understand from Mr. Turner, Subcommittee Counsel, that you wish to learn changes in our procedures since Jfinuary 1, 1965. For convenience, we have restated the specific requests in your Letter followed in each case by our responses: "(1) A description of any changes in your agency's relocation assistance and ~ompensation policies, procedures and benefits made subsequent to your report `o the Select Subcommittee on Real Property Acquisition, as published in L~ecember, 1964." There have been some changes. The more significant ones are the following: (a) Notice must be given to a property owner as to availability of reloca- tion assistance in 15 days after the start of negotiations on a parcel where such negotiations Commence less than six months before possession is needed. Bureau of Public Roads Policy and Procedure Memorandum (PPM) 80-5, issued April 20, 1967. See also par. 9c, 21-4.4, May 24, 1966. (b) In the case of a business move, climants may be paid on the basis of the lowest reliable estimate, and the cost of such estimates are eligible cost items. Par. Sm(1), Bureau of Public Roads Policy and Procedure MemO- randum (PPM) 80-5, December 27, 1967. "(2) A description of any changes in policy or procedure relating `to the evalua- ion, appraisal, negotiation and acquisition of real property made subsequent to rour report and answers to questions given to the aforesaid Select Subcommittee, .s published." (a) With respect to delivery of payments to grantors of right-of-way, no Federal-aid participation in the costs of rights-of-way or related inci- dental costs is permitted where payment is delivered by the appraiser or negotiator on a parcel. TM 21-7-65, April 20, 1965. (b) Where Federal-aid funds are participating in the cost of right-of-way, the property owner shall not be required to surrender physical possession of the property until payment of 75 percent or more of the established fair market value has been made available to the property owner without prej- udice. The payment can be made available by direct `tender in negotiated cases or by deposit into court in a condemnation case, provided the con- demnee has the right to draw against such deposit. Federal funds will not be available for interest payments after the date payment has been made available on that portion of the final settlement or award represented by such partial payment. TM 21-9-65, September 13, 1965. (c) Federal-aid participation in right-of-way costs will not be permitted unless the property owner, in the first instance, has been offered in writing the established fair market value of the property to be taken for highway purposes. The mere sending of a letter to that effect is not sufficient; per- sonal contact must be made and the full effect of the taking explained to the property owner. At the same time, the owner is to be supplied in writing, with an explanation of the steps available' to him, If he elects to reject the State's offer, IM 21-14-65, `November 30, 1965. See also IM 21-2-67, Jan- uary 27, 1967. (d) A written statement must be filed by the negotiator, after each con- tact with the property owner, indicating the substance of the contact. A certification must also be filed as to the negotiator's interest, when negotia- tions are successful. PPM 80-4, April 17, 1967. (e) Simple value findings, rather than formal appraisals as such, and short form appraisals are authorized, defined and encouraged for use. Value findings are confined to properties of $250 or under, and short form appr'aisals to $2,500 or under. (1) Original `appraisals must be retained for a period of not les$ than three years from tlie date of payment of the final voucher. Any requests for correction or reviSion should be in writing, setting forth the reasons for the request. CM, Feifruary 3, 1966. PAGENO="0536" 530 (g) Value findings are now authorized on properties of $500 or under, a follows: Th~e cost of small "nominal value" tracts of right-of-way is eligible fo Federal funds participation when acquired without formal written apprah als, but on the basis of written "value findings" made by qualified bigbwa~ department staff of fee personnel. In connection with very small taking~ some highway departments prescribe a minimum payment to a propert, owner. Federal funds may participate in such payment if they do not excee $50 per parcel. TM 21-8-67, February 24, 1967. (h) Federal funds may participate in the first two appraisals made fo any parcel valued at over $500. Federal funds may participate in the co~ of two or more appraisals on parcels valued at less than $500 upon prio approval by the division engineer on a parcel basis. TM 21-8-67, February 2~ 1967. (i) A significant policy relating to control of access impairment has bee revised to read as follows: Payments made for personal property, loss of business or goodwill, cui cuity of travel and diversion of traffic, or other items of damage not generall compensable in eminent domain, are not considered eligible for Feder~ participation. Federal funds will participate in payments made for loss C impairment of access if such payments are based upon elements of damag generally compensable in eminent domain. Paragraph 5n, PPM 80-1, July 2~ 1967 (formerly 6b of PPM 21-4.1). "(3) Are your negotiators allowed to make an offer for the acquisition of re~ property below the agency approved appraisal; and, if so, under what circur stances or rules is such action permitted?" Under our procedures, the negotiator must offer the property owner the fu current market value of the property to be taken, as determined by the Sti~te reviewing appraiser, at the first contact where price is discussed. Such an off( must be presented in writing at the time the verbal offer is made, and is confirmE in writing on or prior to the second negotiating contact. The written offer ca be in the form of a letter, deed, option, agreement, etc. The negotiator must recoi the amount of all offers in his record of call report, and such report must be ma a part of the parcel file. PPM 80-4, paragraph 3(b). "(4) Since January 1, 1965, state the following: (a) Number of purchases in which the initial offer was less than tl agency approved appraisal ;" Since November 30, 1965, it has been our requirement that the initial off to the property owner be the full amount of the reviewing appraiser's esi mate of value. This amount in most cases is the amount of an apprais~ On properties requiring more than one appraisal, in most cases, the reviewil appraiser will select one of the appraisals as the amount of offer. Curre regulations prohibit Federal-aid participation on parcels where less th~ State's approved estimate of value was offered and settlement made on th basis. "(b) number of actual purchases made at less than the agency approv appraisal;" As indicated above, such purchase's would not be eligible for Feder aid reimbursement because they are contrary to our regulations. To o knowledge, no record's of such purchases are being kept by the State. any event, we have no present knowledge of the `extent of such purchasi but in any case, they must be n'egligble or nonexistent. "(c) number of purchases made at the agency approved appraisal ;" An extensive analysis of S'tate right-of-way purchases and files would required to provide precise data on this point. However, the majority right~of-way pu'rchased by the States fall into this category; we estimate t1 to be appro~imately 80 percent of all acquisitions. "(d) number of purchase's made above the agency approved appraisa "Purchases above appraisals involve administrative or `stipulated sett ments, and such action would require justification as specified in our regu tions. This category is estimated to account for approximately 10 percent the total acquisition's that qualify for Federal-aid reimbursement. The maining 5 percent go to condemnation to clear title or other technical reas and 5 ~ercen't go to contested trial. The above are national averages; th~ could be variations from State to State and region to region. PAGENO="0537" 531 We trust that this information ~itlll be of help to you. If we can be of any further `assistance, please do not hesitate to call on us. Sincerely, LowELi~ K. BRIDWELL, Federal Hiiihway Admlnistra~tor. GENERAL SnnvIcEs ADMINISTRATION, Washington, D.C., June 26,1968. Hon. EDMUND S. MUSKIE, Chairman, Subcommittee on Intergovcrnrne~~a~ ReZations, Committee on Govern- ment Operations U.S. Senate, Washington, D.C. Dear SENATOR MUSKIE: Thank you for your letter of June 13 concerning the acquisition of real property by General Services Administration for Federal buildings projects since January 1, 1965. The following is submitted in response `to your numbered questions: (1) There has been no change in our relocation assistance and compensation policies, procedures, and benefits subsequent to our report to the Select Sub- committee on Real Property Acquisition as published in December 1964 because there has been no change in our statutory authority for the acquisition of real property. Since that time General Services Administration has favored the en- actment of uniform legislation which would authorize all Federal agencies to pay certain relocation costs and other benefits over and a'bove the price paid for the real property based on its current fair market value. (2) There has been no change in our policy or procedure relating `to the evaluation, appraisal, negotiation and acquisition of real property `since the 1964 report and the answeris `to questions submitted `by the Select Subcommittee. (3) Our procedurce require that negotiations by our realty officers `be directed to payment of just compensation for the property, recognizing that this is a price within reasonable range of the current appraised fair market value arid that a real property appraisial is not infallible nor inflexible but at best reflect's a `range of value. In an effort to acquire real property at a price within reasonable range of `the appraised fair market value as a rule our realty officers commence their negotiations at a figure `slightly `below the appraisal with the expectancy that in most instances a satisfactory pric'e will be reached at or above, but within reason- able range of the appraised fair market value. As stated in our answer to question 20 furni'shed to the Select Subcommittee in March 1964, we follow this policy of flexible negotiations with the range extending from an offer or counter-offer at or below the `appraised fair market value, which, if a'c'cepted `would con- `sti'tute just compensation for the property, to an offer or counter-offer in `excess of the appraised fair market value which can be justified as within a rerisionab'le range of the appraised fair market value. Prescribed procedures expressly require our negotiators at all time to exerci'se care "to completely `and honestly protect the interests of property owners * * * who may be unfamiliar or inexperienced in real estate transactions and real estate values." (4) Since January 1, 1965: (a) Number of purchases in which the initial offer was less than the agency approved appraisal-390. This is the total number of parcels purchased for `the prescribed period and is included as an estimate in the absence of specific information as to how n.egotiation~ were started on each parcel, since negotiations are usually started at a figure less' than the appraised fair market value. (b) Number of actual purchases made at less than the agency approved appr'aisalsh_-64. In all of these instances we believe that the price paid was within a reasonable range of appraised fair market value and constituted just compensation for the property. (c) Number of purchases made at the agency approved app'raisal-54, (d) Number of purchases made above the agency approved appraisal- 275. Out of a total of 390 parcels purchased, 84 percent were acquired at and above he appraised fair market value. Sincerely, LAWSON E. KNOTT, Jr., Administrator. PAGENO="0538" 532 U.S. DEPAnrMENT'orT:un Irttnnion, OIFFICE OF TI~E SECRETARY, Washington, D.C., June 25, 1968. Hon. EDMUND S. MU5KIE, Chairman, S~thcom'mAttee on Intergovernmental Relations, Committee on Govern- ment Operations, U.S. Senate, Washington, D.C. Dnan SENATOR MU5KIR: This is a followup letter to my letter of June 18, and is in response to the questions asked in your letter of June 13, in connection with S. 698. The answers to the questions bre as follows: 1. There have been no changes in the Department's relocation assistance and compensation policies, procedures and benefits since our report to the Select Subcommittee on Real Property Acquisition, as published on 1964. 2. There have been no changes In polices or procedures relating to the evaluation, :a?ppraisal, negotiation and acquisition of real property since ottr report to the aforementioned. Select Subcommittee on ~ea1 Property Acquisition. 3. In most of the laud purchasing programs carried on by this Department, our negotiators offer the landowners the current estimated full market value as determined by an approved appraisal. In the case of land purchases made by the Park Service and in connection with the Migratory Bird Program, we are authorized to make and do make offers for less than the approved appraisaL 4. Since January 1, 1965: (a) Number of purchases in which the initial offer was less than the Department approved appraisal has been 4, 938 (b) Number of actual purchases made at less than the Department approved appraisal has been 1, 687 (e) Number of purchases made at the Department approved appraisal has been 17,087 (d) Number of purchases made above `the Department approved appraisal has been 3, 147 Sincerely yours, ICENNETH HOLUM, Acting Secretary of the Interior, GENERAL COUNSEL or THE DEPARTMENT or COMMERCE, Washington, D.C., June 24,1968. HON. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, U.S. Senate, Washington, D.C. DEAR lYin. CHAIRMAN: This is in fui~ther reply to your request for the views of this Department concerning 5. 2981, a bill to provide temporary authority to expedite procedures for consideration and approval of projects drawing upon more than one Federal assistance program, to simplify requirements for the opcr- atlan of those projects, and for other purposes. The purpose of tllLis legislation is to remove or simplify certain administrative and technical impediments which hamper or prevent the consideration, proc- essing, approval, and administration of federally-assisted projects which draw upon resources available from more than one Federal agency program or appropriation. This bill is permissive In nature. Although it makes the head of each Federal agency "responsible for taking actions, to the maximum extent feasible under applicable law, which will further the purposes of this Act with respect to Federal assistance programs administered b~* his agency," this language does not require the head of the agency to take actions which although permissIble under existing law would not be consonant with good management practices. This Department supports the enactment of S. ~981. The Bureau of the Budget advised there would be no objection to the sub- mission of this report and further that enactment of this legislation would be in accord with the program of the President. Sincerely, JosEPH' E. BARTLETT, General Counsel. (The material supplied by the Department' of Housing and Urban Development f~ollows:) PAGENO="0539" 533 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Washington, D.C., February 6, 1968. LOCAL PUBLIC AGENCY LETTER NO. 449 ubject: Negotiations for acquisition of real property. The attached statement of policy and requirements governing negotiations or the acquisition of real property is applicable uniformly to all Renewal and ]~ousing Assistance programs, including urban renewal projects. 1ff ective date of policy The attached prescribed policy and requirements are mandatory with e~spect to each negotiation started after 30 days following receipt of this ~etter. If an LPA. began its negotiations with an owner before the end of such P-day period and its initial offer to the owner was less than the HUD concurred- n acquisition price, the LPA shall, before the expiration of 90 days after eceiving this Letter, either: (1) Acquire, contract with the owner to acquire, or institute condemnation proceedings against, the property in accordance with the HUD require- ments in effect immediately before the issuance of this policy, or (2) Make a final written offer to the owner of the full amount of the HUD concurred-in acquisition price. mplementation of policy The introduction of the attached prescribed policy will require little or no hange in the present negotiating practices of many LPA's. For others, modi- ications will be needed. If any LPA encounters legal or difficult practical tupedinients to achieving full conformance to the policy within the times speci- [ed in this Letter, the LPA should promptly notify the HUD Regional Office f the nature of lts problem, any relief needed, and its proposed solution of he problem. lodification of program policy and requirements The attached policy and requirements cancel the provisions of *the Urban tenewal Manual, Section 13-4-2, second, third, and fourth paragraphs under he heading, "Payment of Fair Prices." All remaining provisions of the Urban ~enewtal Manual and outstanding LPA Letters, pertaining to real estate acqui- ition, continue applicable to all acquisitions of property, including properties of he kind exempted by the attached statement from its specific requirements. DON HUMMEL, Assistent ~S'ecretary. Attachment. Lttachment to: HAA circular dated February 6, 1968 (Low-rent public housing program). Local Pi~b1ic Agency Letter No. 449 (Urban tenewal program). Letter No. NF-7 (Neighborhood facilities program). Code Enforcement Letter No. 11 (Code enforcement program). ~o: Local `agencies acquiring real property for RllA~as'sisted programs. ubjeot: Negotiations for acquistion of real property. PURPOSE This statement establishes the policy to be followed uniformly by all local gencies in their negotiations with property owners for the purchase of real roperty for projects assisted by the Housing Assistance Administration or the ~enewal Assistance Administration. The principal purposes of the policy are (1) to provide additional protection or the interests of property owners, especially the unsophisticated or poorly riformed who have limited aibility to negotiate with representath~es of local gencies, and (2) to put all negotiations for the acquisition of real property or RHA~assisted programs on a basis that acknowledges and accepts the obliga- ion of public entities to treat all owners fairly impartially, and consistently in Legotiating the acquisition of their properties. PAGENO="0540" 534 POLICY ON NEGOTIATI0~S The negotiations of a local agency with a property owner for `the `acquisition of real property or any interest therein, except property of a kind specifically exempted below, shall be on the basis of offering the owner initially `the full amount of the acquisition price determined by the local agenCy and concurred in by BUD to represent fair compensation for the property to `be acquired. Negotiations exempted from the foregoing initial-offer policy must, of course, also be conducted fairly and impartially. SCOPE AND APPLICAI3ILITY Programs affected.-The a'bove~stated policy and `the requirements set `forth b~- low shall govern the negotiation's of local ageneie.s with property owners for the acquisition of real property for the following RHA-assiste'd programs: Low-rent public housing, urban renewal, urban parks (open-space land prO- gram), neighborhood facilities, and code enforcement. Properties covered by the policy-The policy and requirements apply to the local agency's negotiations with owners for the acquisition of all properties, except: 1. Property proposed for purchase from an owner who is under no compulsion to `sell, i.e., where the local agen'cy is not `committed or required `to acquire the property and will buy the property only if it can do so at an acceptable price and on an acceptable `basis without resorting to a trial of the is'sue of value or com- pensation in an eminent domain proceeding. 2. Property owned `by the Federal Government, a State or local government, or an ins'trarnentality thereof. 3. Property donated to the project. 4. Property of an owner who voluntarily and knowingly offers to sell his prop- erty to the project for less than its fair market value and executes a statement to that effect. 5. Any property for which the BUD concurred-in acquisition price is more than $100,000. 6. Any `specifically identified property or interest in real property, regardless of its value, of such an unusual character that the local agency finds, with BUD Regional Office concurrence, that the fair compensation for the property should be determined `by negotiating the basis of compensation and the amount thereof without first making a firm initial offer to the owner. Examples of the kinds of property and property interests for which such a finding may be appropriate are cemeteries, railroad operating properties, utility easements, limited interests and servitude's in land, and special-purpose industrial plants and similar properties involving complicated or controversial determinations of what is a fixture, i.e., realty, and what is personalty. EASIS FOR POLICY The foregoing policy accepts a's valid for RHA-assisted projects the principle that the owner of a property to b'e taken for `a public purpose generally should not be forced to bargain `with a local agency to obtain an offer of the full amount determined by the local agency, with BUD concurrence, to represent the fair compensation for his property, The policy thus `recognize's `tha't a `public en'tity armed wi'th the power of `eminent domain ha's a public duty, in its negotiations with owners, not only to protect th'e pu'bl'ic interest, but also to safeguard the rights and in'te'res'ts of the owners. The local agency's real estate representative, accordingly, must `rbcognize that the central purpose of his negotiations of purchase prices should be to induce each owner to sell his property to the local agency at a price that represents the compensation that the owner would be `entitled under eminent domain law `to receive and the local agency would be obligated under such law to pay. With that objective in mind, negotiation's will b'e conducted as they should be-from the viewpoint of `seeking agre'emen'ts as to fair compensation, rather than as a bar- gaining `procedure that pits the power of the public body against the negotiating ability of thb owner. The policy has not been made applicable to negotiationis `for `the `purchase of properties in situations whe're `the owner is under no compulsion `to sell because in such cases `the owner is under no pressure or threat of condemnation action and i's enti'rely free to `sell or not to sell as he please's. If he chooses to sell, `he does so voluntarily and needs no more protection `than a seller of property in a private sale. PAGENO="0541" 535 Properties having a H1TD concurred-in acquisition price or approved valuation of more than $100,000 have also been excepted from the requirement bec'a'u~e the determination of the proper valuation and compensation at such value levels is likely to require negotiation to reach a fully objective determination of value. Other exceptions have been made, as noted, whe~e the policy would be inap- propriate or unnecessary. NEGOTIATING PRACTIO~ The negotiations with an owner of property, which the local agency would acquire by condemnation if an agreement with the owner as to the purchase price cannot be reached through negotiation, shall be started as soon as feasible after the required appraisals of the property have been completed and the price determined to represent the fair compensation for the property has been con- curred in by the HTJ'D Regional Office. In every case f~r which the prescribed negotiating policy is applicable, the owner shall (be offered initially the full measure of compensation authorized by the HUD price concurrence. In making the initial offer, the local agency or its real estate representative shall explain to the owner in a personal interview, `if feasible, the policy of offering owners initially, and without any bargaining, the ~u1l price de'termin'ed on the basis of competent appraisal to be the fair com- pensation for the property. Before, or preferably during, the first interview, each )wnbr shall `be furnished a `written statement of the amount and the terms and ~onditions of the offer and an explanation of the steps the local agency will take [f the owner elects to reject the local agency's offer. Merely sending a letter to an )wner-ocdupant or a nonoccupant owner resi'ding in th'e same locality is not ~nough. Effective personal negotiations are as necessary, if not more essential, tnder a full-fair-offer proebdure, as when using the conventional trad:ing method ~f negotiation. The local agency's real estate representatives and staff members who will iave dealings with property owners must (be able to explain the local (agency's icquisition policies and practices, including the full-fair-offer policy, and be able o assure owners that the local agency's policy is to protect the interests of the wners as well as the public interest. The real estaite representative who negoti- tes with an owner must understand thoroughly the steps `taken an'd the method sed to determine th'e `price offered to the owner, and he must be able `to explain be process convincingly to the owner. His approach to the owner must never be a arbitrary one. B'ut he must make It clear to the owner, on the `other hand, mt the offe(r is the full amount determined by the local agency, and concurrred 1 by HUD, (to be the compensation that th'e owner is entitled to receive for is property and that `the offer will not be changed unless evidence that the !fered price `is not sound is furnished by the owner or otherwise found `by the cal agency to exi'st. The policy must never he `regarded or explained by negotiators, or anyone else, requiring or establishing an inflexible one~price system, Because the objective the payment of fair and proper compensation, price adjustments can be made, ~d they should be proposbd by the local agency whenever needed to correct a `eviously concured-in acquisition price for a property. If an error of appraisal other justification for revising a concurred-in acquisition price is discovered, e local agency shall submit a request for a revision to (the HTJD Regional Office, Eth appropriate explanation and justification. OBJECTIVES OF REIAL ESTATE ACQUISITION POLICY The principal ~bjective of the Department's polices on real estate acquisition s been, and will continue to be, to make HUD-assisted land acquisition pro- ems models of fairness and efficiency. The adoption, on a national scale for all TA-assisted programs, of a uniform practice of offering each owner the full iount of the HUD concurred-in acquisition price at the outset of negotiations is tieved to be an important further step toward full (realization of the goals of mess and efficiency, not only for H~IJD, but also for all local agencies parti- ~ating in HUD programs. PAGENO="0542" 536 URBAN RENEWAL MANUAL PRovIsIoNS SUPERSEDED 13 4-2 LAND ACQUISITION LAND ACQUISITION PROCEDURES PAYMENT OF FAIR PRICES * * * * * * * To ensure that every homeowner and owner-occupant of small multi-f amil3 residential property is protected as completely as possible by this fair-pric policy, the LPA shall pay, for each property jn either of the categories listec below, a price that is not less than the lowest satisfactory appraisal considerec by the LPA and the HHFA Regional Office in establishing the niaximun acquisition price for the property on Form H-6144. In determining whether proposed price complies with this requirement, the LPA may adjust the valua tion reported in the lowest satisfactory appraisal to reflect the value of an~ rights or interests which are to be reserved in the vendor, as provided belol under the bearing "Reservation of Rights in Vendor," but which were no considered by the appraiser in reaching his opinion of value. The foregoing limitation on minimum acquisition price applies to each acqusi tion, by purchase or by stipulation or agreement as to value in a condemnatio: proceeding, of either of the following: (1) Single-family dwelling property occupied entirely by the ownem regardless of the property value. (2) One- to four-family dwelling property in which the owner is a occupant and for which the HHFA concurred-in acquisition price for th property is $15,000 or less. A price that is lower than specified above may be paid only if the LPA ha submitted to the HUFA Regional Office a justification of the proposed lowe price as representing fair compensation for the property and has receive HHFA concurrence in acquisition at the proposed price. The justification ma consist of a staff analysis of the available appraisals and other pertine~ valuation data or an additional appraisal in which the property is valued by th appraiser at not more than the LPA proposes to pay. * * * * * * * 0 PAGENO="0543" PAGENO="0544"