February 8, 1962

Page 2132

THE ESTABLISHMENT OF A DEPARTMENT OF URBAN AFFAIRS FAIRS AND HOUSING: REORGANIZATION PLAN NO. 1 OF 1962

Mr. MUSKIE. Mr. President, one week from next Monday, on February 19, the Senate will take up Reorganization Plan No. 1 of 1962, establishing a Department of Urban Affairs and Housing.

I do not need to remind my colleagues that this recommendation by the President has occasioned some controversy. In response to various public criticisms of the proposal, letters I have received from constituents, and questions raised on the merits and details of the reorganization plan, I have had prepared two documents which provide an objective analysis of the plan, its intent, and its implications.

I hope these direct and dispassionate examinations will restore a sense of balance and perspective to the debate on the plan, in place of the partisan fireworks which have obscured the real issues this week.

With this objective, Mr. President, I offer two exhibits for the consideration of my colleagues. The first is a series of 18 questions and answers on criticisms which have been leveled at the proposed reorganization of the Housing and Home Finance Agency and related agencies into a Cabinet-level department. The second exhibit is an analysis of the question which has been raised as to the application of this plan to problems in small communities. Some fear has been expressed as to the possible smothering of small-town interests under a big-city oriented department. I hope this paper will answer the questions and allay the fears of those who, with me, want to preserve the integrity of our communities, large and small.

I ask unanimous consent that the two exhibits be printed in the RECORD at this point.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

EXHIBIT I

1. Question. What Is the purpose of Reorganization Plan No. 1 of 1962?

Answer. It is the purpose of this plan to raise to departmental status the functions of the Housing and Home Finance Agency so that Federal functions relating to urban affairs and housing can have a voice in the Cabinet and be given the proper weight and position in the overall administration of the executive branch. The plan also has the purpose of providing in the Department better internal machinery for coordinating and otherwise administering these functions in order to serve better our States, our cities and towns, the Congress, and the people whom all of the programs are designed to ultimately serve.

2. Question. Briefly, just what would the reorganization plan do and not do?

Answer. Basically and in legal effect, the reorganization plan would do one thing and one thing only: It would create a new department in the executive branch and transfer to it the existing functions of the Housing and Home Finance Agency, providing for their administration in accordance with sound principles already approved by the Congress for other executive departments. This includes the placing of authority in the Secretary of the Department to supervise and direct all functions of the department -- a normal, logical, and consistent method of operation, as distinguished from some of the scattered authorities in the existing Housing Agency.

The reorganization plan would do the following:

(A) It would not authorize any new function or program whatsoever.

(B) It would not provide any additional funds.

(C) It would not commit or obligate the Congress in any way to authorize any new program or function.

(D) It would not remove any authority or control of the Congress over the executive branch.

(E) It would not extend in the slightest any power or control of the Federal Government.

(F) It would not impinge on, or in any way affect, the authority of any State, city, or other local body.

(9) It would not transfer any function from any Federal agency or department except the Housing and Home Finance Agency.

3. Question. Why should a new department be established by reorganization plan, instead of by an act of Congress?

Answer. The recent action of the Rules Committee on H.R. 8429 effectively prevents the Congress from debating and acting on a bill for this purpose on its merits. The administration originally preferred to have Congress acts affirmatively on the question, and recommended legislation for this purpose.

The executive department most recently established -- the Department of Health, Education, and Welfare -- was proposed through a reorganization plan of the President. In submitting Reorganization Plan No. 1 of 1953, President Eisenhower said that his action was demanded " * * * by the importance and magnitude of these functions which affect the well-being of millions of our citizens."

Under the American system of government, the Cabinet bears a close and even personal relationship to the Chief Executive. It is appropriate that the creation of a new Cabinet department should be effected by an exercise of Executive powers with the review and assent of the Congress as provided In the Reorganization Act.

4. Question. How does this reorganization plan differ from the legislation reported by House and Senate committees at the last session of the Congress and acted on by the House Rules Committee?

Answer. This reorganization plan is essentially the same as that legislation, except as to a few minor provisions which legally cannot be included in a reorganization plan.

5. Question. Wouldn't the functions of the new department be small in scope and importance compared with those of existing departments?

Answer. No. The gross expenditures under operations to be included in the proposed department are greater than those of six of the present departments. Almost two thirds of the financial assistance being provided by all Federal credit operations is being provided under programs of the Housing and Home Finance Agency. These programs now involve close to $50 billion in Government and private investment. Under one or more of these programs financial assistance has been provided to more than 2,000 communities.

Already 70 percent of our population lives in urban areas, and the massive shift of population to these areas continues. One of the greatest of all domestic problems results from the magnitude and complexity of providing adequate and properly planned commuting and other public facilities, especially in urban areas extending across municipal and even State boundaries. Administering the Federal measures designed to assist in meeting these urban problems is proportionately important in operating the executive branch of the Government.

The national economy is particularly sensitive to fluctuating conditions of the housing industry and to related Government aids, and interrelated Government policies regarding them are among the most important of all Government domestic policies.

Of great significance is the unavoidable complexity of these housing and urban development programs which present a continuing stream of extremely difficult problems. They play a major role in the whole relationship of the Federal Government to its States and localities.

6. Question. Wouldn't the establishment of the new Department for city dwellers be inconsistent with the past practice of establishing departments on the basis of their basic purpose?

Answer. The plan would certainly not deal with all of the activities that happen in cities or cover all of the functions of the Federal Government relating to people living in cities. The vast growth in the population of urban areas is indicative of the importance and magnitude of the urban problems which the new Department would handle, but this is not intended to indicate that all the Federal functions relating to these people would be handled by the new Department, any more than all the functions of people living in rural areas are handled by the Department of Agriculture.

Rather, the Department would be established for the basic purpose of dealing with those functions which are particularly urban in nature. They are the functions now being performed by the Housing and Home Finance Agency. Educational and health activities in cities would continue to be aided by HEW; transportation by air and interstate highway and rail would continue to be aided by Commerce; labor matters would continue to be handled by the Labor Department, etc.

The new Department would have as its basic purpose assistance to the improvement and development of urban areas.

Thus, grants under the existing program to aid urban planning could enable a city to plan its own growth and placement of its residential, commercial, industrial, and recreational areas. This would enable the city itself to determine where an airport or a highway aided by an existing department should be located.

7. Question. What could the new Department do that is not now being done? Isn't the proposed reorganization plan merely to change symbols?

Answer. It is true that the plan would provide no additional functions. However, the raising of existing functions to Cabinet level and the proposed new machinery for their administration would accomplish the purposes indicated above, which are extremely important to the welfare of the people in our urban areas and to the Nation as a whole. To the extent the Federal Government's machinery is improved, the States and localities should also benefit, and to the extent the Federal Government can provide better leadership in this field, it will assist the States and localities to strengthen their own machinery for the same purpose.

8. Question. Would the new Department have a unified purpose?

Answer. Yes; because the urban development functions are closely intertwined with the urban housing functions. The urban planning, urban renewal, and community facilities functions relate to the urban housing functions because all of them have a single unified objective -- to provide homes in good neighborhoods in well-planned communities adequately served by related public facilities. Indeed, as a category, the functions of the new Department would be much more unified and interrelated than the functions of several existing Federal Departments which require far less coordination of the day-to-day activities of their several bureaus or offices.

9. Question. Wouldn't the mere reorganization of the Housing and Home Finance Agency accomplish the desired purposes without the creation of a new Department?

Answer. The mere reorganization of the Housing and Home Finance Agency would fail to accomplish the principal objective of the plan -- giving the proper weight and position to urban affairs and housing matters in the overall administration of the executive branch of the Federal Government.

10. Question. Wouldn't the purpose of the reorganization plan be better served by merely establishing a coordinating commission or other body?

Answer. No. Such a proposal only superficially touches on the problem. It fails to recognize the importance and scope of the increasing problems of our urban areas with their vast influxes of population and the increasing difficulties of providing transportation and facilities of all kinds across municipal and State boundaries, affecting tax structures and presenting a myriad of local coordinating difficulties.

11. Question. Why doesn't the reorganization plan transfer to the new Department the functions of the Federal Home Loan Bank Board and the functions of the Veterans' Administration related to housing?

Answer. The problems of coordinating the VA guaranty program with the FHA mortgage insurance program have long since been worked out and the programs are working smoothly. By its very nature, the VA housing program is a temporary one and eventually will be discontinued and liquidated. Any advantage of transferring it to the new Department at this time would be much more than offset by the disruption of the Washington and field offices which would necessarily occur if the transfer were made.

As to the Federal Home Loan Bank Board, the Congress has already acted on this matter when it separated the Board from the Housing and Home Finance Agency in 1955. This was done by the Congress on its own initiative and was not recommended by the executive branch. There is no reason to assume that the position of the Congress is different at this time, nor is the executive branch contemplating any change.

12. Question. Won't the establishment of a new Department lead to a vast new bureaucracy with Increased Federal spending?

Answer. The creation of the Department would have no significant bearing on either extension of functions or increasing expenditures. It creates no new functions and provides no additional money. Nor is there any basis for assuming that the creation of a Department carries any implied commitment or encouragement to increased expenditures. There is every reason to believe that the Congress will look at each program on its own merits.

Some agencies which are not Departments, such as the Housing and Home Finance Agency, have greater annual expenditures than many of the Departments.

It is a mistake to assume that Government agencies always continue to grow and spend increasing amounts. The Housing and Rome Finance Agency expenditures for the last fiscal year were 40 percent of its expenditures for a peak fiscal year during World War II when the Congress considered increased activities of the Agency to be warranted. Functions of the Department of Health, Education, and Welfare have continued to grow, but there is no basis for concluding that the establishment of the Department was the reason for any increase. Rather, it was because the Congress decided that the functions added to the Department were desirable functions. They would have been authorized if the Department of Health, Education, and Welfare had not been created.

Actually, the establishment of the new Department should Save Federal funds and save funds of local communities in vast amounts. The only increased cost which can be expected as a result of the reorganization plan amounts to $50,000 annually for the salaries of several important new officers. The savings in interest costs alone, through more expeditious handling of urban renewal projects, for example, could run into millions of dollars annually.

13. Question. Doesn't the reorganization plan centralize more power In Washington?

Answer. No. The reorganization plan deals only with the organization of existing Federal functions, and increases no authority or Power. It in no way commits the Congress or the President to do so. In any event, this reorganization plan is not dealing with any subject matter involving Federal versus State power. All of the programs of the new Department are voluntary programs of aid to cities, States, or individuals who request it. Insofar as cities or other public bodies participate in any of the programs, such participation must be authorized by the State legislature or some specific constitutional provision, or both. In practice, the States control this participation in great detail. At all times, the State would be free to withdraw or change a city's rights to future participation in the programs. The State itself could participate in the aid programs for public bodies.

The States and localities are bound to benefit from improved administration under the plan. In every field where States are interested in themselves making a contribution to local urban development, the new Department would provide the most effective possible source of Federal encouragement to such State endeavors. It may be pointed out that the program of grants for the planning of urban communities, which would be transferred to the Department, is already administered almost entirely through States themselves, as distinguished from direct financial aid to cities.

14. Question. Wouldn't the reorganization plan impinge on States rights and reduce the status of States and cities?

Answer. No. The reorganization plan has no relationship to the constitutional or legal status of the States and their subdivisions whatsoever. The status of the States remains entirely unchanged. Their functions in this field would be encouraged and strengthened as a result of the plan.

15. Question. Won't the housing functions of the Federal Government be downgraded in the new Department?

Answer. No. Actually, this would be impossible because housing will always constitute the core of the new Department's activities and will be closely related to each one. About three-fourths of all the privately owned structures of our urban areas are residential. All of the public facilities provided by municipalities have a direct relationship to housing. This is true in matters of planning, financing, and development. Even as to commuter transportation, there is an increasing need for closer coordination in planning transportation in relation to the planning of housing developments. In recognition of the importance of housing in the new Department, the reorganization plan has retained the structure of the Federal Housing Administration without change.

16. Question. Wouldn't the creation of the new Department emphasize aid to big cities, to the detriment of smaller communities?

Answer. Experience under the programs of the Housing and Home Finance Agency has proved that this would not be true. Emphasis has been given to aid for smaller communities because they frequently have the greater need. The record in this regard is included in the attachment, "HHFA Programs for Smaller Communities."

17. Question. Wouldn't the creation of the Department tend to emphasize central city areas at the expense of suburbs?

Answer. No. Our suburbs would be the major beneficiaries of the improved administration of the programs of the Department relating to the future growth of our communities. This includes programs relating to the planning of the physical development of growing areas, whether residential, commercial or industrial. It includes the planning of streets, roads, utilities, and the location of schools as well as housing. The permanent benefits of proper planning of Suburban areas are not limited to esthetic considerations but include the savings to residents of their time as commuters, and their money as taxpayers.

Suburbs would also be the major beneficiaries of improvements in the administration of Federal programs of financial aid for new housing construction and for the provision of related public facilities, such as transportation, in the right place at the right time and at financial costs which are not unreasonably burdensome.

18. Question. Shouldn't creation of the Department await further study?

Answer. The entire subject has been studied so long and so thoroughly in both the executive and legislative branches that no purpose would be served by undertaking a further study. As far back as 1937, the report of the National Resources Committee to the President suggested that the Federal Government give attention to the common problems of urban dwellers, as it had to farmers through the Department of Agriculture. In 1955 the Kestnbaum Commission thoroughly studied the problems of Federal, State, and local government relations in the areas of housing and urban affairs, and pointed to the need for greater coordination of the Federal programs in these areas. A similar study and report was made in 1961 by the Advisory Commission on Intergovernmental Relations.

The Congress itself has studied the problem exhaustively. Committees of both Houses have held hearings and have taken volumes of testimony on this specific problem. A subcommittee of the House Committee on Government Operations held hearings on bills to create such a Department in 1955, In 1959, and in 1961. A subcommittee of the Senate Committee on Government Operations held hearings on the same subject in 1959 and 1961. In 1960, the Housing Subcommittee of the Senate Committee on Banking and Currency held similar hearings. All three of these committees reported bills to create a similar new Department.

EXHIBIT 2

HHFA PROGRAMS FOR SMALL COMMUNITIES

The proposal for a Department of Urban Affairs and Housing has been referred to as a measure for the big cities. There have been congressional demands for a similar department for small towns and at least one bill, introduced in the House by Congressman CUNNINGHAM, of Nebraska, would establish such a department.

While the big cities are, of course, vitally interested in the proposal for a Department of Urban Affairs and Housing, the smaller communities are equally interested.

In his message transmitting Reorganization Plan No. 1 of 1962, President Kennedy said:

"It should not be assumed that these are matters of concern only to our larger cities. Hundreds of smaller cities and towns are located on or near the fringes of rapidly growing urban areas. The problems of the cities affect them today, and will be theirs tomorrow. Hundreds of other smaller towns and cities not now affected will be so situated a few short years hence. Thus, the smaller towns and cities have a stake In this proposal as vital as, and only a little less immediate than, that of our large urban centers. This plan is addressed to their needs as well as to those of the major cities."

Mayor Daley, of Chicago, and Mayor West, of Nashville, both emphasized this point in their testimony on the bills last year.

Mayor Daley said: "I would like to give particular emphasis to the far-reaching benefits that this bill would give to our urban and suburban communities. This is not a bill for the big cities."

And Mayor West, speaking on behalf of the U.S. Conference of Mayors and the American Municipal Association before both the House and Senate subcommittees, said: "When we speak of a Department of Urban Affairs we do not mean a department of big city affairs or small-town affairs. This Department would be charged with looking after the programs of vital interest to the big city and the small town."

Ed E. Reid, executive director of the Alabama League of Municipalities, also speaking for the American Municipal Association, made the same point in the statement filed with the House and Senate subcommittees. He said:

"There is one point which I cannot emphasize too strongly. Some people unfortunately seem to identify a Department of Urban Affairs only with large cities. This impression is completely mistaken. To be sure our large cities have some special problems, as do small communities. However, cities of every size have many problems and aspirations in common. I feel confident that a Department of Urban Affairs and Housing would not be administered simply to benefit the larger metropolitan areas."

"The Alabama League * * * represents all Alabama communities, regard regardless of size. These communities range from very small towns up to the metropolitan area of Birmingham with a total population of over 600.000, but most of them are small, by big city standards. I would not be testifying in support of this measure, If I did not believe that all of these communities would benefit."

Some of the programs which would be transferred to the new Department are particularly designed to help small cities. These include the program of advances for public works planning and the public facility loans program, both administered by the Community Facilities Administration, and the urban planning assistance program administered by the Urban Renewal Administration. In each of these programs, the major portion of the assistance is given to communities of under 60,000 population.

Other HHFA programs also contribute to the welfare of the Nation's smaller cities. For example, over 585,000 FHA mortgages were insured in counties outside of standard metropolitan areas during the period of 1935-52. About $300 million in capital grants has been made available to communities under 50,000 persons through URA's Slum clearance and urban renewal programs. And over 40 percent of the communities with low-rent public housing projects in preconstruction, construction or management were cities of less than 5,000.

A program outline of significant HHFA assistance to the small cities follows:

COMMUNITY FACILITIES ADMINISTRATION

Advances for public works planning

Interest-free advances are made for the planning of essential public works. The advances are repayable when and if construction is undertaken.

Communities under 5,000 population have provided 1356 of the 3518 applications received as of December 31, 1961, and 2,778 applications have come from cities under 50,000 persons.

Communities of 50,000 or less have submitted 78.5 percent of the applications under this program.

Public facility loans

The program of public facility loans is especially beneficial to the smaller communities. Loans for essential public facilities are made to non-Federal public bodies unable to obtain funds from other sources at reasonable Interest rates. Loans are limited to 40 years. 'Current Interest rates for loans are 3% percent, or 3% percent for communities situated in redevelopment areas designated under the Area Redevelopment Act, Public Law 87-27.

The Housing Act of 1961 established a population limit of less than 50,000 for applicant communities or, less than 150,000 for communities situated in redevelopment areas.

By the end of December 1961, there had been 393 net approved loans for over $115 million made under this program.

URBAN RENEWAL ADMINISTRATION Urban planning assistance

Under the urban planning assistance program, two-thirds grants are made to State planning agencies for aid to municipalities, counties, and communities with less than 50,000 population. Three-fourths grants are made for urban planning for municipalities and counties in designated redevelopment areas. Although grants are also made for State, interstate, metropolitan area, and regional planning, the bulk of the program is geared to communities of less than 50,000 population.

Financial assistance for the preparation of community plans has been made available to 2,001 localities of under 50,000 population. These represent over 85 percent of the total number of communities assisted under the program.

Urban renewal.

HHFA also provides financial assistance to localities for planning and carrying out urban renewal projects. For communities of up to 50,000 (150,000 in redevelopment areas), the Federal share is three-fourths of cost instead of two-thirds:

Of the 470 localities participating in the urban renewal program, 100 of them are under 10,000. Localities of under 50,000 population total 291.

A total of 349, or 43 percent, of the 813 urban renewal projects being planned or undertaken in June 1961 were In cities of under 50,000 population. Of the nearly $2 billion capital grant reservations made in the program, 293 million or 16 percent have gone to communities of under 50,000 population with $47 million alone reserved to cities of under 10,000.

FEDERAL HOUSING ADMINISTRATION

The latest statistics on FHA-Insured home mortgages by location of property cover the period of 1935-52. Some 19 percent of the FHA-insured mortgages In this period were in counties outside of standard metropolitan areas and In which the largest city had less than 50,000 population.

The dollar amount for the 585,000 FHA-insured home mortgages in counties outside of standard metropolitan areas in this period was a little over $3 billion.

PUBLIC HOUSING ADMINISTRATION

Out of a total of 1,517 communities with PHA low-rent housing in preconstruction, construction, or management on September 30, 1961, 1,177 were outside urbanized areas: 853 of these were communities of less than 10,000 population and 650 had population of less than 5,000 according to the 1960 census.