`04 ZN;Z;.°

.Ar 513'• Zrbs-Z

H 31VIEOWNERS ASSISTANCE (,,3

GOVERNMEN1

Storage KSU LIBRARIES 

HEARING

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON ARMED SERVICES

UNITED STATES SENATE

NINETIETH CONGRESS

FIRST SESSION

ON

S. 1216

A BILL TO AUTHORIZE APPROPRIATIONS DURING FISCAL

YEAR 1967 FOR USE BY THE SECRETARY OF DEFENSE FOR

ACQUISITION OF PROPERTIES PURSUANT TO SECTION 1013

OF PUBLIC LAW 89-754

MARCH 20, 1967

Printed for the use of the Committee on Armed Services

U.S. GOVERNMENT PRINTING OFFICE

76-820 WASHINGTON : 1967
z

COMMITTEE

RICHARD B.

JOHN STENNIS, Mississippi

STUART SYMINGTON, Missouri

HENRY M. JACKSON, Washington

SAM J. ERVIN, JR., North Carolina

HOWARD W. CANNON, Nevada

ROBERT C. BYRD, West Virginia

STEPHEN M. YOUNG, Ohio

DANIEL K. INOUYE, Hawaii

THOMAS J. McINTYRE, New Hampshire

DANIEL B. BREWSTER, Maryland

HARRY F. BYRD, JR., Virginia

WILLIAM H. DARDEN, Chief of Staff

CHARLES B. EIRBOW, Chief Clerk

ON ARMED SERVICES

RUSSELL, Georgia, Chairman

MARGARET CHASE SMITH, Maine

STROM THURMOND, South Carolina

JACK MILLER, Iowa

JOHN G. TOWER, Texas

JAMES B. PEARSON, Kansas

PETER H. DOMINICK, Colorado

SUBCOMMITTEE ON S. 1216

HENRY M. JACKSON, Washington, Chairman

HOWARD W. CANNON, Nevada JOHN G. TOWER, Texas

DANIEL K. INOUYE, Hawaii PETER H. DOMINICK, Colorado

HARRY F. BYRD, Is., Virginia

GORDON A. NEAsz, Professional Staff

II
HOMEOWNERS ASSISTANCE

MONDAY, MARCH 20, 1967

U.S. SENATE,

SUBCOMMITTEE OF THE

COMMITTEE ON ARMED SERVICES,

Washington, D.C.

The subcommittee (composed of Senators Jackson (chairman),

Cannon, Inouye, Byrd, Jr., of Virginia, Tower, and Dominick) met pursuant to notice at 2:15 p.m., in room 212, Old Senate Office Building,

Senator Henry M. Jackson presiding.

Present: Senators Jackson, Cannon, and Dominick.

Also present: Gordon A. Nease, professional staff member.

Senator JACKSON. The committee will come to order.

We have before us for consideration this afternoon S. 1216, which

would authorize appropriations during fiscal year 1967 in the amount

of $11 million for use by the Secretary of Defense for acquisition of

properties pursuant to section 1013 of Public Law 89-754.

(The bill S. 1216, together with documentation of the basic legislation, follows:)

[S. 1216, 90th Cong., first sass.]

A BILL To authorize appropriations during fis3a1 year 1967 for use by the Secretary of De-enselor acluisition of properties pursuant to section 1013 of Public Law 89-754, and for other purpc,ses

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That in accordance with subsection 1013(i) of

Public Law 89-754 (80 Stat. 1255, 1292) there is authorized to be appropriated

for use by the Secretary of Defense for the purposes of section 1013 of Public Law

89-754, including acquisition of properties, an amount not to exceed $11,000,000.

ASSISTANCE TO HOMEOWNERS IN BASE CLOSURE AREAS

BASIC LEGISLATION

Section 1013 of Public Law 89-754, the Demonstration Cities and Metropolitan Development Act of 1966, authorizes the Secretary of Defense to provide

assistance to military or civilian employee homeowners by reducing their losses

incident to the disposal of their homes when the military installations at which

they were serving or employed are ordered to be closed in whole or in part. To

provide such assistance, the Secretary is authorized "to acquire title to, hold,

manage, and dispose of, or, in lieu thereof, to reimburse for certain losses upon

private sale of, or foreclosure against, any property improved with a one- or

two-family dwelling.* * *"

The Act establishes in the Treasury a fund to be available to the Secretary

for extending such financial assistance to qualified homeowners but subsection

1013(i) requires that appropriations for the acquisition of properties must be

authorized by a military construction authorization act and that no monies in

the fund may be expended except as may be provided in appropriation acts.

The Act authorizes assistance for the owner of a qualified dwelling if he was a

serviceman or a civilian occupying the dwelling and serving or employed at the

installation at the time of, or under specified conditions within stipulated periods

prior to, the public announcement of the closure action. Any individual who is

eligible under the criteria of the Act may elect to receive (1) a cash payment as

partial compensation for losses sustained in a private sale or (2) as purchase
2 HOMEOWNERS ASSISTANCE

price for his property, an amount equal to 90 percent of the fair market value

prior to the base closure announcement, or the amount of the outstanding mortgages. Also, the Secretary of Defense may reimburse or pay on account of

eligible persons such sums as may be paid or be otherwise due and owing by such

persons as the result of foreclosure commenced by mortgagees after the base

closure announcement and prior to March 3, 1967.

SCOPE OF THE PROGRAM

Studies at installations announced for closure between November 1, 1964 and

December 31, 1966, indicate that about 124,600 military personnel and 81,200

civilian employees will be affected and that 12,980 and 32,370, respectively, will

be eligible homeowners. It is estimated that some 28,500 homeowners-8,500

military and 20,000 civilians—will establish eligibility for assistance by June 30,

1967, but it is estimated that about 10,600 will elect not to apply for assistance

because (being in areas where the impact of base closure on the housing market is

negligible), they can sell at a price in excess of the prices available under the

alternatives provided by the statute.

Accordingly, it appears that about 17,900 individuals will apply for assistance

under the Act during Fiscal Year 1967. Even though a major portion of FY

1967 is already passed and some time is required to develop maximum administrative efficiency, it is estimated that about 45 percent-8, 100 of the applications

can be processed by June 30, 1967; the remainder will be handled as expeditiously

as possible in FY 1968.

Base closure actions announced on January 19, 1967 are not expected to have

have a perceptible impact on the homeowners assistance program during Fl 1967.

ELIGIBILITY CRITERIA

Section 1013 of Public Law 89-754 spells out in detail just who will be eligible

for assistance. The Secretary of Defense may provide assistance with respect

to "any property improved with a one- or two-family dwelling which is situated

at or near a military base or installation which the Department of Defense has,

subsequent to November 1, 1964, ordered to be closed in whole or in part, if he

determines—

"(1) that the owner of such property is, or has been, a Federal employee

employed at or in connection with such base or installation (other than a

temporary employee serving under a time limitation) or a serviceman assigned

thereto;

"(2) that the closing of such base or installation, in whole or in part,

has required or will require the termination of such owner's employment

or service at or in connection with such base or installation; and

"(3) that as the result of the actual or pending closing of such base or

installation, in whole or in part, there is no present market for the sale of

such property upon reasonable terms and conditions."

Further, the section provides:

"(b) In order to be eligible for the benefits of this section such employees or

military personnel must be or have been—

`(1) assigned to or employed at or in connection with the installation or

activity at the time of public announcment of the closure action,

"(2) transferred from such installation or activity, or terminated as employees as a result of reduction-in-force, within six months prior to public

announcement of the closure action, or

"(3) transferred from the installation or activity on an overseas tour unaccompanied by dependents within fifteen months prior to public announcement of the closure action;

Provided, That, at the time of public announcement of the closure action, or at

the time of transfer or termination as set forth above, such personnel or employees

must—

"(i) have been the owner-occupant of the dwelling, or

"(ii) have vacated the owned dwelling as a result of being ordered into

on-post housing during a six-month period prior to the closure announcement:

Provided further, That as a consequence of such closure such employees or personnel

must—

"(i) be required to relocate because of military transfer or acceptance of

employment beyond a normal commuting distance from the dwelling for

which compensation is sought, or
HOMEOWNERS ASSISTANCE 3

"(ii) be unemployed, not as a matter of personal choice, and able to

demonstrate such financial hardship that they are unable to meet their

mortgage payments and related expenses."

These eligibility criteria are intended to insure that assistance is extended only

to DoD-connected homeowners who have been proximately affected by a base

closure action. It is contemplated that other persons, such as local businessmen,

will be assisted through the Defense Department's vigorous economic adjustment

program, which is designed to assist communities in minimizing the economic

impact of military base closures. The program is limited to career or careerconditional Federal employees, on the basis that there should be an eligibility

threshold for homeowners assistance, just as there is for other employee benefits.

PROCEDURES

The types of assistance available and the mechanics of the program can best

be illustrated by examining in sequence the procedures planned by the Defense

Department. To begin with, it is contemplated that an applicant for assistance

will obtain an information brochure on the program from his military or civilian

Personnel Officer, or, if he is no longer associated with the Federal Government,

from the Personnel Officer of the nearest military installation or activity.

The brochure will describe the eligibility requirements and rights of applicants

under section 1013 of Public Law 89-754, as well as the procedures to be followed

in seeking the alternative forms of assistance which are available.

The applicant will also obtain and submit to the Personnel Officer an Application

for Homeowners Assistance. This form will contain1. Information as to his service or employment at an installation or

activity announced for closure,

2. Reasons for desiring assistance (relocation outside commuting area or

financial hardship, with related detailed information), and

3. Information on property for which assistance is sought.

The Personnel Officer will review the Application and verify the facts relating

to eligibility, and certify that the applicant has been determined to be eligible,

or that he has been determined to be ineligible (with reasons therefore).

If the Personnel Officer determines the applicant to be ineligible, he will return

the Application with a Determination to that effect. Applicant will have a right

of appeal to the Central Claims Office, and to higher authority.

CENTRAL CLAIMS OFFICE

If the Personnel Officer determines the applicant to be eligible, he will so certify

at the bottom of the Application form, and forward the form to the Central

Claims Office for further action.

The Central Claims Office will take the following actions with respect to Applications from eligible homeowners:

1. Applicants whose homes have been foreclosed. The Claims Office will confer

with the Veterans Administration

'

Federal Housing Administration, and mortgagees (as appropriate) and pay deficiency judgments, debts owing to VA or

FHA, and other foreclosure costs directly on behalf of the applicant. To the

extent that the applicant may have already paid all or part of his valid foreclosure

costs, the Claims Office will reimburse him.

2. Applicants whose homes have already been sold. The Claims Office will

obtain fair market value appraisals, both current and prior to the base closure

announcement, for the property for which assistance is sought. It will remit to

the applicant a check in the amount (if any) by which 95 percent of the prior

FMV exceeds either the current FMV or the actual salesprice (whichever is higher).

If no payment is due the applicant will be so advised. In all cases applicants

will be informed of the basis for the decision in his case (essentially the amounts

of the two appraisals).

3. Applicants still in possession of their homes.—The Claims Office will obtain

current and prior FMV appraisals, and inform applicants of the amounts of such

appraisals so that they may elect to:

(a) Sell privately and claim loss compensation, or

(b) Assign their properties to the Government for the amount of the

outstanding mortgage(s), or

(c) Assign their properties to the Government for 90 percent of the prior

FMV.

Upon receipt of the appraisal information, homeowners electing alternate 3(a)

will sell privately and thereafter send the Claims Office a Claim for Loss Compensation with evidence of the gross sales price received. The Claims Office will
4 HOMEOWNERS ASSISTANCE

thereupon remit to the homeowners a check in the amount (if any) by which

95 percent of the prior FMV exceeds either the current FMV or the actual sales

price (whichever is higher).

Homeowners electing to assign their properties to the Government under alternates 3(b) or 3(c) will send the Claims Office an Application for Government Purchase. The Claims Office will approve such Applications by endorsement and

transmit them to the appropriate office for action with respect to property acquisitions, mortgage assumptions, and cash equity payments (alternate 3(c)).

INTERAGENCY ACTIONS

Pursuant to the provisions of section 1013(g) of Public Law 89-754, the Department of Defense is currently engaged in discussions with the Department of

Housing and Urban Development in order to determine which functions the latter

Department might most effectively perform in connection with this program,

especially with respect to acquisition, management, and disposal of properties.

COST ESTIMATES

Total costs of homeowners assistance in connection with base closure actions

between November 1, 1964 and December 31, 1966 are estimated to be $49.8

million, including $11 million in FY 1967 and $27 million in FY 1968. These

are net costs, after deducting estimated receipts from dispostion of acquired

properties.

The table appearing below contains an approximate distribution of the FY

1967 authorization into principal categories. It is based on Department of

Defense estimates which involve a number of complex factors such as the number

of military and civilian personnel displaced, time phasing of displacements,

percentages of homeowners among displaced personnel, average values of homes,

percentages of market declines in impacted areas, and probable elections by

homeowners as to types of assistance.

Summary of authorization request, fiscal year 1967

Activity Number of

cases

Amount

Payments to homeowners (reimbursement for losses in private sales) 

Operating costs (operating and maintenance costs for acquired properties,

appraisal fees, and administrative costs for all types of assistance) _ 

Capital outlay (equity payments to homeowners, payments in foreclosure

cases, and payments on assumed mortgages) 

4,970

3, 130

$1,

1,

7,

593,

617,

790,

000

000

000

Total authorization.. 8,100 11,000,000

Senator JACKSON. I believe a few words of explanation as to the

significance of this bill are in order. We are all quite aware that a

substantial number of military installations were ordered closed or

consolidated by the Secretary of Defense between November 1, 1964,

and December 31, 1966. This program affected some 205,800 personnel, both military and civilian. Of these, some 45,350 were estimated

to be homeowners. Many of these homeowners now find themselves

in a dilemma. The closure of these installations in some areas has

adversely affected the real estate market, making it extremely difficult

for the homeowner to dispose of his property without suffering a substantial loss. The military homeowner has no choice but to accept

such transfer as is given to him. The civilian member is in about the

same position if he wishes to continue his employment.

Three courses of action appear to be open to them insofar as the

disposal of their property is concerned; namely, face foreclosure,

dispose of the property at a loss, or let the house remain vacant.

It is not beyond reason to assume that many of these people have

their life's savings tied to the equity in their homes. They are without

resources to purchase another home at their new post of assignment.
HOMEOWNERS ASSISTANCE 5

Since these people, both military and civilian, are victims of a situation

created as a direct result of the base closure program, it seems only

just that some steps be taken to afford them relief. A legislative

proposal was submitted by the Department of Defense which was

subsequently incorporated into the Demonstration Cities and Metropolitan Development Act of 1966 which was passed during the last

session of Congress. This relief provision is set forth in section 1013

of the act and begins on page 36 of Public Law 89-754, which is

before you. In brief, it provides for the payment of deficiency judgments and other foreclosure costs on behalf of those who lost their

homes through foreclosure. For those who sold their homes at a loss,

a payment will be made in an amount equal to the difference between

the fair market value at the time of the sale and 95 percent of the fair

market value prior to the announcement of the closure. If the home

has not been sold, the property will be taken over by the Government

and the owner compensated for the difference between the amount

of the mortgage and 90 percent of he fair market value prior to the

announcement of the closure.

At this time it is estimated this program will result in a net cost to

the Government of $49.8 million but, of course, this remains to be

seen. The bill we are considering today is the first increment and

will permit the processing of perhaps as many as 8,100 claims before

June 30 of this year.

The military construction authorization bill for fiscal year 1968,

which will soon be before the Armed Services Committee, contains a

request for a second increment in the amount of $27 million.

Before closing my remarks, I should like to point out that Senator

Tower has taken a very active part, along with Senator Stennis, in

bringing about legislation to afford these homeowners relief.

Our witness today is the Honorable John J. Reed, the Deputy

Assistant Secretary of Defense for Family Housing. I believe you

have a prepared statement, Mr. Reed, and you may proceed at will.

STATEMENT OF HON. JOHN J. REED, DEPUTY ASSISTANT SECRETARY OF DEFENSE (FAMILY HOUSING) ; ACCOMPANIED BY

MARVIN H. MORSE, OFFICE, GENERAL COUNSEL, OFFICE OF

THE SECRETARY OF DEFENSE; AND JOHN H. ARRINGTON,

OFFICE, DEPUTY ASSISTANT SECRETARY OF DEFENSE (FAMILY

HOUSING)

Mr. REED. Thank you, sir.

Mr. Chairman and members of the committee, I appreciate the

opportunity to appear before you today on behalf of the Department

of Defense, in order to testify in support of S. 1216, which would

authorize funds for the purposes of section 1013 of Public Law 89-754,

including the acquistion of properties.

Section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966 (Public Law 89-754, enacted November 3,

1966) authorizes the Secretary of Defense to provide assistance to

owners of one- or two-family dwellings located at or near military

installations ordered to be closed in whole or in part subsequent to

November 1, 1964, providing the Secretary finds that such persons

are military personnel or civilians whose service or employment at

such installations has been (or will be) terminated as a result of the
HOMEOWNERS ASSISTANCE

closure action. The Secretary must also find that such persons were

owner-occupants of the dwellings at the time of the closure announcement, and that there is no present market for the properties on

reasonable terms.

To provide the authorized assistance, the Secretary is authorized—

to acquire title to, hold, manage, and dispose of, or, in lieu thereof, to reimburse

for certain losses upon private sale of, or foreclosure against, any property improved with a one- or two-family, dwelling. * * *

Eligible homeowners may elect either to receive a cash payment as

partial compensation for losses which may have been sustained in a

private sale, or to sell their properties to the Department of Defense

for an amount not to exceed 90 percent of fair market value prior to

the base closure announcement (or the amount of the outstanding

mortgages if these exceed 90 percent of prior value). The Secretary

of Defense is also authorized to reimburse or pay on account of eligible persons such sums as may be paid or be otherwise due and owing

by such persons as the result of foreclosures commenced by mortgagees

after the base closure announcement but prior to the 120th day after

enactment of Public Law 89-754—that date would be prior to March 3,

1967.

The act establishes in the Treasury a fund to be available to the

Secretary for extending such financial assistance to qualified homeowners; but subsection 1013(i) requires that appropriations for the

acquisition of properties must be authorized by a military construction

authorization act and that no moneys in the fund may be expended

except as may be provided in appropriation acts.

Studies at installations announced for closure between November 1,

1964, and December 31, 1966, indicate that about 124,600 military

personnel and 81,200 civilian employees will be affected and that 12,980

and 32,370, respectively, will be eligible homeowners. It was estimated that some 28,500 homeowners-8,500 military and 20,000

civilians—would establish eligibility for assistance by June 30, 1967,

but it was estimated that about 10,600 will elect not to apply for

assistance because (being in areas where the impact of base closure

on the housing market is negligible) they can sell at a price in excess

of the prices available under the alternatives provided by the statute.

Accordingly, it appears that about 17,900 individuals will apply for

assistance under the act during fiscal year 1967. Even though a

major portion of fiscal year 1967 is already passed and some time is

required to develop maximum administrative efficiency, it was estimated that about 45 percent-8,100—of the applications could be

processed by June 30, 1967; the remainder will be handled as expeditiously as possible in fiscal year 1968.

Base closure actions announced on January 19, 1967, are not

expected to have a perceptible impact on the homeowners assistance

program during fiscal year 1967.

Section 1013 of Public Law 89-754 spells out in detail just who will

be eligible for assistance. These eligibility criteria are intended to

insure that assistance is extended only to Department of Defenseconnected homeowners who have been proximately affected by a base

closure action. It is contemplated that other persons, such as local

businessmen, will be assisted through the Defense Department's

vigorous economic adjustment program, which is designed to assist

communities in minimizing the economic impact of military base
HOMEOWNERS ASSISTANCE 7

closures. Assistance to homeowners is limited to career or careerconditional Federal employees, on the basis that there should be an

eligibility threshold for this program, just as there is for other

employee benefits.

To begin with, it is contemplated that an applicant for assistance

will obtain an information brochure on the program from his military

or civilian personnel officer, or, if he is no longer associated with the

Federal Government, from the personnel officer of the nearest military

installation or activity.

The brochure will describe the eligibility requirements and rights

of applicants under section 1013 of Public Law 89-754, as well as the

procedures to be followed in seeking the alternative forms of assistance

which are available.

The applicant will also obtain and submit to the personnel officer

an application for homeowners assistance. The personnel officer will

review the application and verify the facts relating to eligibility, and

certify that the applicant has been determined to be eligible, or that

he has been determined to be ineligible (with reasons therefor).

If the personnel officer determines the applicant to be eligible, he

will so certify at the bottom of the application form, and forward the

form to a central claims office for further action. The central claims

office will process claims, determine market values, pay foreclosure

costs where appropriate, and make such payments to homeowners as

may be due to them for loss compensations. It will also certify

properties for acquisition on specified terms.

Pursuant to the provisions of section 1013(g) of Public Law 89-754,

the Department of Defense is currently enaged in discussions with

the Department of Houging and Urban Development in order to determine which functions the latter Department might most effectively

perform in connection with this program, especially with respect to

acquisition, management, and disposal of properties.

Total costs of homeowners assistance in connection with base

closure actions between November 1, 1964, and December 31, 1966,

have been estimated to be $49.8 million, including $11 million in

fiscal year 1967 and $27 million in fiscal year 1968. These are net

costs, after deducting estimated receipts from disposition of acquired

properties.

The table appearing below contains an approximate distribution

of the fiscal year 1967 authorization into principal categories. It is

based on Department of Defense estimates which involve a variety

of factors such as the number of military and civilian personnel displaced, time phasing of displacements, percentages of homeowners

among displaced personnel, average values of homes, percentages of

market declines in impacted areas, and probable elections by homeowners as to types of assistance.

Briefly, the summary table shows in the activity column payments

to homeowners. These are reimbursements for losses in private sales,

and we estimate 4,970 cases at a cost of $1.6 million • operating costs,

which cover all of the administrative costs, appraisal fees, and other

costs associated with acquiring the properties, we estimate at about

$1.6 million; capital outlay, which are the equity payments to homeowners, payments in foreclosure cases, and payments on assumed

mortgages, we estimate 3,130 cases requiring the amount of $7.8

7G-820-67-2
8 HOMEOWNERS ASSISTANCE

million; the total authorization that we see involved in fiscal year 1967

will be $11 million associated with 8,100 cases.

We are happy to answer any of your questions, gentlemen, that you

may have in respect to this program.

Thank you.

(The table referred to follows:)

Summary of authorization request, fiscal year 1967

Activity Number of

cases

Amount

Payments to homeowners (reimbursement for losses in private sales) 

Operating costs (operating and maintenance costs for acquired properties,

4,970 +$1,593,000

appraisal fees, and administrative costs for all types of assistance) 1,617,000

Capital outlay (equity payments to homeowners, payments in foreclosure

cases, and payments on assumed mortgages) 3,130 7,790,000

Total authorization 8,100 11,000,000

Senator JACKSON. Mr. Reed, first of all, I wanted to ask a couple

of questions before I turn to my colleagues. The effective date is

November 1, 1964, and for hardship that has accrued subsequent to

that date.

Now, what about the situations prior to that?

Mr. REED. The Congress, I believe, sir, discussed that particular

point as to those people who were at a base which was closed prior to

November 1964, and my recollection of the discussions with Congress

at that time was that the greatest number of hardships came with the

two big closure announcements in November of 1964 and in 1965,

and the basic legislation picked that as a cutoff point. There is no

retroactivity beyond November 1964.

Senator JACKSON. I was just thinking of some situations that

might arise where they can come back and say, "Look, I took a real

beating here and we ought to be covered. It occurred prior to 1964.

We are going back retroactively to November 1, 1964."

Your judgment is that as a practical matter there would be few if

any situations which could come under the criteria of the legislation

here.

Mr. REED. I am sure that there may be some cases, Mr. Chairman,

of people who have situations going back before that. But it is my

understanding, when this legislation was enacted last year, that the

Congress was desirous of finding some point in time to measure from,

and that the large closures, the ones which caused so much displacement, were the two big ones which I referred to earlier.

Senator JACKSON. I can just visualize; yes, Senator.

Senator CANNON. Was that cutoff date fixed in the bill that Congress

enacted last year?

Mr. REED. Yes, sir; it was.

Senator CANNON. So that is already established as a matter of law

now.

Senator JACKSON. There is no question it has been authorized, to

start with November 1964. But now, when the money is coming

along, I can just see these people coming around and saying, "Look,

I was at a little base and we took a real beating here and yet we are

being discriminated against." That is why I am raising it. I understand it is in the basic law that November 1, 1964, really was the
HOMEOWNERS ASSISTANCE 9

cutoff date. But this becomes a problem only when they see others

getting compensated, and I am trying to anticipate some requests that

may be coming in here for private relief, shall we say. That is why

I raised the question. Maybe we can have supplied, if you have the

information available, and I am sure you have it, the bases that were

involved prior to that date, say, for the last 4 or 5 years prior to 1964

of closures in which there might be an impact.

Mr. REED. Yes, sir.

(The information requested follows:)

Base closure actions with possible significant community impact, January 1961 to

October 1964

Date of

Installation or activity announcement

Benecia Arsenal, Calif Mar. 30, 1961.

Presque Isle Air Force Base, Maine Do.

Harlingen Air Force Base, Tex Do.

Chennault Air Force Base, La Dec. 27, 1963.

Donaldson Air Force Base, S.0 Do.

Greenville Air Force Base, Miss Dec. 12, 1963.

Stead Air Force Base, Nev Do.

Rome Air Material Area, N.Y Do.

Erie Army Depot, Ohio Do.

Naval Auxiliary Air Station, New Iberia, La Apr. 24, 1964.

Watertown Arsenal, Mass Do.

Sioux Army Ammunition Depot, Nebr Do.

Black Hills Ammunition Depot, S. Dak Do.

Senator JACKSON. How would you determine the fair market value?

Mr. REED. These will be determined by fee appraisal contracts at

the local level, utilizing local fee appraisers. It will be parallel to

what the FHA is doing in this area, and appraisals will be established

for each property in each of the given areas. This will be under the

administration of the central claims office.

Senator JACKSON. But you are going to employ local people.

Mr. REED. Yes, sir. We will employ by contract local fee

appraisers.

Senator JACKSON. Sometimes it is kind of hard to find out what

the market value was back at a given time, which was the test here.

It is the value of the property prior to the closure.

Mr. REED. That is correct, sir, and they will use accepted techniques such as prior sales at that time, and this type of procedure.

Senator JACKSON. With respect to homeowners who have lost their

homes through foreclosure, will they receive any cash payment, any

cash above payment of foreclosure costs?

Mr. REED. No, sir; they will not. The procedure that will be

followed will be this, that the Government will come in and either

pay off these legitimate foreclosure debts, including the payment of

court costs and attorney fees or else it will reimburse those individuals

for such costs which they can verify, if they have already paid, but

there will be no other cash payment to these people.

Senator JACKSON. Just the reimbursement for the actual costs of

foreclosure?

Mr. REED. The actual costs of foreclosure.

Senator JACKSON. So the equity part they lose?

Mr. REED. Yes, sir; they will lose it.

Senator JACKSON. As distinguished from one who had to sell, isn't

that kind of severe?
10 HOMEOWNERS ASSISTANCE

Mr. REED. It might be severe. There are examples on this, Mr.

Chairman.

Senator JACKSON. A small equity may be involved.

Mr. REED. Very small. Most of these cases would probably be

the VA—FHA type loan where there was an almost 100-percent

mortgage, very small downpayment. The other people, judging from

the considerable correspondence which we have received, as have you

gentlemen, I know, I think most of the people who had significant

equities are hanging on, waiting for this legislative relief.

Senator JACKSON. What is the reasoning behind the 120-day

limitation on the initiation of foreclosure actions?•

Mr. REED. This was written into the bill to provide a cutoff date

on the foreclosures so that the mortgagees seeing the legislative relief

being enacted would forebear from taking foreclosure action after

legislation had been enacted.

Senator JACKSON. Senator Tower could not be present and he has

submitted a statement, which will be included in the record at this

point.

(The statement referred to follows:)

STATEMENT OF SENATOR JOHN TOWER TO SUBCOMMITTEE ON HOMEOWNERS'

RELIEF, MARCH 20, 1967

Mr. Chairman, in my joint capacity as an Armed Services Committee member

and as ranking minority member of the Senate's Housing and Urban Affairs

Subcommittee, 

I have been insisting on and working for many months to achieve

financial relief for homeowners forced by arbitrary base closings to move and

often to suffer losses on their property.

In 1964 when the Defense Secretary disclosed his major base reduction plan,

affecting among many others in the nation my state's Amarillo Air Force Base

and James Connally Air Force Base at Waco; I urged the Defense Department to

immediately recognize the financial hardships sure to develop from the forced

sale of homes in what was certain to be a suddenly depressed market. Despite

the logic and equity of such consideration, the Defense Secretary chose to ingore

the problem.

In 1965 the Housing Act written in my Housing Subcommittee contained

provision for financial fella to these homeowners. Again this year, the Defense

Secretary refused to request the funds authorized and passed up a chance to

alleviate the problem early in the game. We had made available to him a chance

to grant mortgage moratoriums and to directly purchase some properties.

By 1966, when it became evident the Defense Secretary did not intend to

implement the wise, bipartisan provisions of the Congress; a further, more deterthined campaign was mounted. I introduced separate legislation to accomplish

the homeowner relief, and I introduced a resolution enabling the Armed Services

Committee to conduct a complete inquiry into the increasingly pressing problem.

The 1966 Housing Bill presented to the Senate by my subcommittee flatly mandated the Defense Secretary to implement the relief program. At this juncture

the Defense Department saw the handwriting on the wall and finally proposed

legislation of its own.

The Department's proposals did not provide all the relief many of us felt

desirable. However, in an effort to get something accomplished finally we agreed

on the Senate floor to ameliorate the committee's 'mandate" language and accept

the Department's suggestions and assurances that action would be forthcoming.

We now appear to have arrived at the point of action. I hope we can have

committee and Congressional approval of this new legislation and speedy Department implementation.

Senator JACKSON. There are a number of questions Senator Tower

has posed which you can respond to for the record.

Mr. REED. Yes, sir; I would be happy to do that.

(The questions and answers follow)

1. Question: In my view there has been a long record of delay of this program

by the Department of Defense, indicating that the Department never has been
HOMEOWNERS ASSISTANCE 11

particularly enthusiastic about it. Can we now be assured that the Department

is committed to the program and will carry it through?

Answer: The Department of Defense had certain objections to the original

homeowners relief legislation contained in section 108 of the 1965 Housing Act.

These objections have been eliminated by section 1013 of the Demonstration Cities

and Metropolitan Development Act of 1966 (Public Law 89-754), which substantially reflects DoD recommendations, and which repealed section 108. The

Department fully supports the principles embodied in section 1013 and will

implement it expeditiously.

2. Question: In light of the Department's rather elaborately publicized and

implemented programs of assistance to individuals and communities in base

closure situation, how do you explain the failure of the Department to anticipate

this particular homeowner need and to plan for its alleviation from beginning?

Answer: The homeowners assistance program authorized by section 1013 of

PL 89-754 represents an unprecedented step in the direction of increased personnel

benefits. The need for a program of this type became apparent following the

major base closure announcements of November 1964. After carefully considering the provisions of section 108 of the 1965 Housing Act, the Department

undertook a comprehensive study of the problem, and submitted its recommendations to Congress on May 13, 1966.

3. Question: I note in page 3 of Mr. Reed's statement the words "some time

will be required to develop maximum administrative efficiency." Far too much

time already has elapsed in institution of this assistance. Does this statement

mean we are building in further delays? Can the Department put some deadline

on what you go on to call "as expeditiously as possible"?

Answer: We feel that any new program does require time to develop maximum administrative efficiency, but we expect that this should be achieved within

a short time after the initial implementation date. Any FY 1967 relief applications which cannot be processed in FY 1967 should be processed during the first

half of FY 1968.

4. Question: Define for the subcommittee this word "proximately" as used on

page 3 of Mr. Reed's statement. How do you decide who is proximate and who

is not?

Answer: We were referring to those Department of Defense-connected

homeowners whose losses result directly from an actual or pending base closure

action, and not from some other cause. Determinations as to personnel "proximately affected" will be made in accordance with the detailed eligibility criteria

set forth in section 1013 of Public Law 89-754.

5. Question: How has the Department gone about determining eligibility?

Are you sure all concerned have been identified?

Answer: Eligibility will be determined by personnel officers at military

installations or activities upon receipt of applications. Although estimates

have been prepared as to the numbers of persons who will establish eligibility,

no actual determinations have yet been made.

6. Question: What program is planned to explain the assistance and to help

applicants?

Answer: Applicants will be furnished information brochures by personnel

officers, who will be prepared to discuss the types of available assistance.

7. Question: I note that on page 4 of the statement you say applicants "will

•obtain" a brochure. Do you not feel that after the long delays in this program

the Department has a special obligation to provide on its own initiative that

information and to be sure everybody concerned gets it?

Answer: The Department will take steps to see that persons affected by

base closure actions are informed about the program.

8. Question: How does the Department now feel the Department of Housing

and Urban Development might assist and coordinate in this program?

Answer: Pursuant to the provisions of section 1013(g) of Public Law 89-754,

the Department of Defense is currently engaged in discussions with the Department of Housing and Urban Development in order to determine which functions

the latter Department might most effectively perform in connection with this

program, especially with respect to acquisition, management, and disposal of

properties.

9. Question: What further base closures are in the offing that would affect the

scope of this program?

Answer: No specific information on this matter is available. However,

military installations are constantly under review as to how the needs of national

defense can most effectively be met at minimum cost.
12 HOMEOWNERS ASSISTANCE

Senator JACKSON. Senator Dominick?

Senator DOMINICK. I wonder if we can ask the last question in

that group. Senator Tower asked me also to go over these questions.

Senator JACKSON. Sure. Why don't you go ahead. I yield to you.

Senator DOMINICK. The last question is: What further base closures are in the offing that would affect the scope of this program?

That is a good solid question.

Mr. REED. That is an excellent question, sir.

First, I have no responsibilities in the area of base closures. The

history of this, I think, is well known to the committee, that the

Secretary has under constant review the complete group of installations of the Department. I personally know of no effort underway

at the moment except the standing effort for continued review which

is done by a different group in the Secretary's Office than my own.

I might volunteer, though, that certainly any future closures would

have an effect upon the same general area of this legislation.

Senator DOMINICK. In effect, what you are saying then is that this

is an open ended bill which would take care of closings so far as we

can see in the future?

Mr. REED. This type of relief would be established on a permanent

basis, yes.

Senator DOMINICK. Senator Tower also says, and I quote:

In my view there has been a long record of delay of this program by the Department of Defense, indicating that the Department never has been particularly

enthusiastic about it. Can we now be assured that the Department is committed

to the program and will carry it through?

Mr. REED. First of all, sir, the Secretary and the Department have

been enthusiastic about accepting responsibility for hardships to its

people created by acts of government. We proposed the legislation

in 1013 which the Congress then did adopt, and this repealed former

legislation which was section 108. Perhaps counsel knows the bill

(Public Law 89-177).

The reason we did this was that the 108 legislation was not the best

legislation because it did not establish eligibility nor did it provide

options to the people involved. We will pursue this new legislation

vigorously and we will pursue this relief, if granted by the Congress,

vigorously.

Senator DOMINICK. Mr. Chairman, the only other questions are

in the record and I presume they will be answered.

Senator JACKSON. Yes, they will be responded to, but go ahead if

you would like.

Senator DOMINICK. I would like to ask some of my own. What

basis do we use to distinguish between career military people and

civil service civilians who are eliminated from a household by virtue

of the closing of the base, and civilian technical personnel who are

employed by defense industries and who move out to a location and

then suffer the same problem when the defense contract is canceled?

Mr. REED. If I understand the question, Senator Dominick, you

are asking what about the people who are not directly connected with

defense but are indirectly connected.

Senator DOMINICK. Correct.

Mr. REED. In the study which was made of this, we did exclude

this type of person. There is no direct employer-employee relationship, which again we feel is the essence of this type of beneficial legislation. The different employment conditions of each of these con-
HOMEOWNERS ASSISTANCE 13

tractors vary. Some are reimbursed for this type of thing, we understand, and it is logical to assume that all contractor employees were

aware of the fact that they were employed strictly on a contract basis

and that contract might terminate at any time.

We feel that indirectly these people in the different communities

will be helped by the communities themselves as they go into the

very active economic adjustment activities.

There are many very good stories in this area, as you are aware, of

where the local economies after the military closure have picked up

substantially beyond what was there with the military presence. But

the heart of the thing is the employer-employee relationship.

Senator JACKSON. Will you yield right on that point?

Senator DOMINICK. Yes.

Senator JACKSON. What about a situation wherein the Government

has a contract to undertake to do a given Defense assignment by

contract, and for all practical. purposes they are the same as Government employees—except it is by contract as distinguished from an

ordinary defense-type industry situation. We have a lot of these

contracts out. These contractors can be located in a remote area.

Here's where you have a real hardship.

Mr. REED. Generally, Mr. Chairman, that has been viewed with

some thought that it was not a permanent situation. I think wherever

there is a permanency to a mission or the activity that we have gone

the civil service route or military personnel route, rather than contract.

The contract situation is generally an ad hoc situation.

Senator JACKSON. Yes, but you have got the Rand Corp. for the

Air Force. Supposing they decide to close it all out. We have other

contracts that have been going on for many years where there is a

closure.

I think what you have got here is a point where you are going to

have to cut off. I think if it is based on equities, it seems to me, one

can make a real strong argument about the indirect employee. We

do have a lot of Government contracts where we are undertaking to

do normal Defense work which could be done within the Defense

Department, but we are doing it through contractual relationships

between various entities, between nonprofit organizations and

universities.

Mr. REED. Yes. Of course, the key people in that relationship

would be taken care of by their employers.

At some point, as you pointed out you must limit this. We could

(extend this to the man who made an investment in a dry cleaning

plant because he assumed a military base would be there forever and

:he suffered a great loss.

This type of person just as the Government contractor personnel,

we hope will be taken care of by economic improvements.

Senator DOMINICK. Suppose you take a specific case. Let us take

the Martin Corp., which has this plant out in my State.

You have working for the Government in connection with that,

let us say, Department of Defense inspectors.

Mr. Reed. Yes, sir.

Senator DOMINICK. They are actually working for the Department

of Defense. Let us suppose that contract gets canceled back very

shortly, and there is no longer the need for these people. Do they

get relief under this?
14 HOMEOWNERS ASSISTANCE

Mr. REED. And this is, assuming this is subsequent to the November date, et cetera?

Senator DOMINICK. That is correct.

Mr. REED. I would like to ask counsel, but certainly the language

of the bill says a base closure in whole or in part, and if this were

not a military base as such, I doubt if it would qualify. But I think

perhaps an equal argument could be waged on the other side that

the contract inspection office was a military activity. I think the

law is not completely clear on this.

Mr. MORSE. It is my understanding that section 1013 would limit

in application the benefits to military bases or installations which, as

Mr. Reed suggests, would be those that typically are within the control of the Department, and to the extent that this is an assistance

which has developed in light of base closure, there would not seem

to be any room under this interpretation that would apply the relief

here to a contract or contract activity.

There had never been, as I understand it, any intention in the base

closure concept of treating terminations of particular procurements,

for example, as part of that approach.

Senator DOMINICK. Even though the Federal Government itself

owns the land and leases it to the contractor?

Mr. MORSE. Well, I think there might be some close cases. But

I think even there that would be the termination of a contractual

relationship rather than the closure of a military activity, as we understand it, involving military or civilian in-house personnel; yes, sir.

Mr. REED. Certainly the same result would be achieved by competitive procurement means where a large contractor lost a contract

to another company.

Senator DOMINICK. The thing I am concerned about is that the

provisions as we now have them worded in section 1013 will operate

inequitably amongst people, and I think this is what the chairman

was talking about, too, and the question is should any effort be made

to modify this in order to get the equities more even.

Senator CANNON. We could not modify it in this bill.

Mr. REED. I believe, sir, that we could not do any modification to

section'1013 at this point since the particular bill that we have submitted to you is merely complying with section 1013(i) of 

Senator JACKSON. We could by separate legislation. It was

handled by the Banking and Currency Committee.

Mr. REED. Yes, sir; it was.

Senator JACKSON. But if we could obtain jurisdiction to handle

this matter by handling it as a separate matter relating to the Department of Defense, we could put it in this bill, I mean, this is an authorization bill.

Mr. REED. Certainly in Senator Dominick's illustration, as I

tried to mention earlier, there seems to be a persuasive argument to

that point as to what is the definition of an installation. Is a contract

inspection office with, perhaps, 500 employees a significant installation?

Again we do not have the actual experience. The intent here is

certainly to aid those people who have been injured for reasons beyond

their control by an act of the department, rather than by competitive

act or an act of the marketplace or any other thing, and this being the

basic intent, I do not know how much room we have for legislative

interpretation. But if the intent of the Congress in giving us this

authority is to assist those Government employees who are subjected
HOMEOWNERS ASSISTANCE 15

to possible damages because of an act of the Department's, then it

would seem to me to be a persuasive argument to include such people.

Senator DOMINICK. Of course, you get right into the middle of the

other inequity if you take care of the inspection team, for example,

and did not take care of the ones who were employees of the contractor,

then you are going to get your throat cut that way.

Mr. REED. Well, our study group wrestled with this problem at

some length, and that is why we limited it to the directly affected

personnel.

Senator DOMINICK. Your estimate of the costs, I should have

remembered it but I do not, Mr. Reed 

Mr. REED. The total estimate is $49 million, sir, on a net basis.

The estimate for fiscal year 1967 is $11 million, and we will be back

before you in a month or so in the regular military construction

authorization bill for $27 million.

Senator JACKSON. The balance for the year following.

Mr. REED. The balance, sir, is stretched out over the next few

years beyond fiscal year 1968, depending upon closure dates and the

phasing of these different actions.

Senator JACKSON. What is the figure on the bases, the facilities and

installations that have been closed to date, sir?

Mr. REED. It is the $49 million figure.

Senator JACKSON. Why is it taking so long? Does this contemplate

others?

Mr. REED. Because some of these closures which were announced

are 4 and 5 years in the future, sir.

Senator JACKSON. Yes. But some of them really would not. In

the ones that aren't being phased out over a longer period of time, the

losses ought to be relatively lower than the ones where you just chop

right down. Some of them may not have any loss.

Mr. REED. That is correct, sir.

Senator JACKSON. There is some element of speculation, I assume,

here. It is a guestimate in part as to what the costs will be beyond,

say, next year.

Mr. REED. Yes, sir. As each year we come back to the committee

for this particular authorization we will have the advantage of the

prior experience, and I think we can do a much better job with our

estimates.

Senator JACKSON. Senator Cannon?

Senator CANNON. Was this $49 million cost estimate included in

the Secretary's estimate of the cost of closure of these bases?

Mr. REED. No, sir; it was not. The action to study this type of

assistance came subsequent to the first of the two big closures. Of

course, this is a general factor. The cost savings associated with

base closures are generally the operating savings when you arc 

Senator CANNON. That was going to be my next question. Then

the estimated cost savings that the Secretary announced at the time

of these closures, this would reduce those cost savings by $49 million,

would it not?

Mr. REED. I think, Senator Cannon, all of those savings are predicated upon operating cost savings.

Senator CANNON. That is what I understand. But if you are going

to go out and pay $49 million in addition related to the cost of closing

the bases that is going to reduce your estimated cost savings, is it not?
16 HOMEOWNERS ASSISTANCE

Mr. REED. Not on the operating savings concept, sir. The Secretary will certainly have a price-out of the relief costs based on our

experience.

Senator CANNON. I do not know what kind of a concept it is.

Senator JACKSON. The cost to Uncle Sam, I think is Senator

Cannon's point.

Senator CANNON. It seems very simple. If the Secretary, in announcing his cost savings in closing of bases of these millions of dollars

that were going to be saved, and you did not include this factor, and

you come in here and say we are going to pay now $49 million as a

result of these closures, certainly his cost savings will be reduced,

wouldn't you say?

Mr. REED. I do not know how he will do it in the future. I can

tell you in the past the savings have been predicated on operating

savings. These would not be classed as operating costs.

Senator CANNON. But you have never done any of this in the past

either.

Mr. REED. We have never done it, but he will be apprised of the

magnitude of these costs as he does his analysis on any future base

closings.

Senator CANNON. Why do you come in here with a separate bill

now in view of the fact that your military construction bill is coming

along now for this year in the next few weeks. Isn't it true that the

military construction bill will have additional funds in it for this

purpose?

Senator JACKSON. Yes.

Mr. REED. The fiscal year 1968 bill does have this item. The

thought here was to commence at the first opportunity this type of

relief because of the real hardships that some of these people are

experiencing, and come into the Congress in fiscal year 1967 on a

supplemental basis. The requirement was put into the basic language

in section 1013 that we must have it authorized and we must have the

specific appropriation.

Senator CANNON. All right. If this authorization bill is passed,

will you have to come along with a supplemental appropriation bill

to fund it?

Mr. REED. Yes, sir. Such a bill will come to Congress.

Senator CANNON. Actually, you are not going to be able to do that

physically much before the start of fiscal 1968, are you?

Mr. REED. Well, we assumed, sir, that we could commence by

May 15, that is our current thinking, trying to judge when the

Congress could enact the appropriations. Now, this will give us a

lead time through September, from May to September, to start

processing these claims, and we think this would be significant and

very helpful to the people involved.

Senator CANNON. Now, will the Department of Defense handle this

entire transaction; that is, the acquisition of these homes that have to

be acquired, and the management and so on, or is this going to be

transferred to Housing and Urban Development?

Mr. REED. We are still having discussions with FHA people. We

would hope the process would be this: The personnel officer would

establish eligibility, the claims office would be a central claims office,

and we are thinking of using one of the field finance offices, perhaps,

the Air Force or one of the other services, they would establish the

appraisals, draw the checks, et cetera. We would use FHA to acquire
HOMEOWNERS ASSISTANCE 17

the properties and go through the actual legal process of acquiring title

to properties and to manage properties, and through the broker system

dispose of properties. We would hope to avoid the role of property

management and leave that in the hands of FHA. But these discussions with them are not yet complete.

Senator CANNON. Now, have you made any breakout of the estimated operating costs of these managed properties?

Mr. REED. Yes, sir; we have. We feel from the $11 million figure,

sir, that approximately $1.6 million will be associated with operating

costs; administrative costs would total about $870,000 of this amount.

It might be helpful if we submitted for the record a cost estimate breakdown which amplifies the material that is in my statement.

Senator JACKSON. All right.

Mr. REED. We will be paying on the average about 20 percent of

the total for all administrative costs.

Senator JACKSON. Mr. Reed, if you will supply that for the record

in response to Senator Cannon's questions we would appreciate it.

Senator CANNON. That is all I have, Mr. Chairman.

Senator JACKSON. Any further questions? If not, thank you,

gentlemen.

If there are no further questions the committee will recess. Thank

you very much.

We appreciated having your statement, sir.

(The information requested above follows:)

Homeowners assistance program—Explanation of fiscal year 1967 cost estimates

Number of

cases

Amount

I. Payments to homeowners 

It is estimated that by June 30, 1967, some 8,540 individuals will

be eligible for, and will seek reimbursement for losses on prior sales

of their homes. It is anticipated that during the last quarter of

fiscal year 1967 payments can be made to about 58 percent or 4,970

of these eligible individuals, of whom 4,110 will be civilians and 860

military.

Civilians 

Housing market studies in representative areas showed that the

average fair market value for civilian employee properties prior to

base closure announcement was $16,500; these studies also indicated

the average sales price after closure announcement would be about

93 percent of the average prior value or $15,345. Since only losses up

to 95 percent of the prior value ($15,675) can be reimbursed, the

average payment would be $330 or for 4,100 cases, about $1,352,000.

Military 

These studies also showed the average prior fair market value for

military homes to be $14,000 and the average sales price to be about

93 percent or $13,020. With reimbursement limited to 95 percent or

$13,300, the average payment would be $280 or about $241,000 for 860

cases.

II. Operating costs 

This category includes the costs of operating acquired properties

as well as the administrative costs incurred in acquiring properties,

determining and making reimbursements for losses on prior private

sales, and making payments in connection with foreclosure actions.

4,970 $1, 593. 000

4, 110

860

NA

1,352,000

241, 000

1,617,000
18 HOMEOWNERS ASSISTANCE

Homeowners assistance program—Explanation of fiscal year 1967 cost estimates—Con.

III. Operating acquired properties 

It is estimated that some 5,900 homeowners will offer their properties for sale to the Government, but that only about half or 2,950

of these will actually apply for assistance in the last quarter of fiscal

year 1967. It is also estimated that the cost of operating acquired

properties, which would be held about 1 year on the average,

would amount to about 15 percent of the acquisition price; however,

since the mean acquisition date would be the midpoint of the quarter

(May 15) only about of the year's operating costs would be incurred in fiscal year 1967. Using the average prior fair market

values of $16,500 for civilians and $14,000 for military personnel, costs

are estimated at $747,000.

Administrative costs, acquired properties 

It is estimated that these costs would amount to about 5 percent

of acquisition costs for the caseload described above and on the basis

of K3 of total costs being incurred during fiscal year 1967, this would

amount to about $255,000.

Administrative costs, private sales 

It is estimated these costs, including appraisal fees, would amount

to about $100 per case for 4,970 cases (described above under "Payments to homeowners") or $495,000.

Administrative costs, foreclosure relief 

It is estimated that the cost of determining the amount of appropriate foreclosure costs and processing reimbursements to homeowners or direct payments on their behalf would amount to about

$50 per case, or for 2,390 cases which are described below, $120,000.

III. Capital outlay_ 

This category includes equity payments to homeowners who sell

their properties to the Government, mortgage payments on these

properties after acquisition by the Government, and foreclosure payments to or on behalf of homeowners.

Equity payments 

It is estimated that of the 2,950 cases in which the Government may

initiate acquisition of property, only some 1,100-1,200 would involve

sufficiently high equity to require direct payment therefor. About

34 of these would be civilians for whom the average payment will be

$.5,850 and the total payments would amount to $4,671,700. It is

estimated that the 4 who are military would have much less equity

(due to lower downpayments and shorter periods of ownership) and,

therefore, much lower payments would be required—about $600 or a

total of $248,400.

Mortgage payments 

It is estimated that for the 2,950 cases in which the Government

may initiate acquisition of property, about $350,000 would be required for monthly payments to the mortgagees. This was based on

M of a full year's payments ranging from $886 to $1,155 for various

average outstanding mortgage balances. The total number of cases

which would be initiated (2,950) has not been shown as "number of

cases"; this was reduced to-about or 740 to correspond to the level

of operating costs expected to be incurred during the period. (See

above, "Operating acquired properties" and "Administrative costs,

acquired properties".)

Foreclosure relief 

It is estimated that some 3,400 individuals would be eligible for assistance on foreclosure costs but that only about 70 percent or 2,390

applications could be made and processed by the end of the fiscal

year. It is also estimated that payments in these would average

just under $1,050; since no continuing actions on payments would be

involved in these cases, the total amount of $2,500,000 was shown in

the fiscal year 1967 budget.

Number of

cases

Amount

NA

NA

NA

NA

$747, 000

255, 000

495, 000

120,000

3,130 7,790,000

2,

740

390

4,

2,

940,

350,

500,

000

000

000

(Whereupon, at 2:55 p.m., the subcommittee was adjourned.)

0