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B. That low- and moderate-income families displaced by urban renewal receive 2-year supplemental relocation payments equal to the difference between rentals on standard housing in their communities and 20 percent of their gross incomes.

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It is evident that this same problem exists for families or individuals displaced by Federal-aid highway and other Federal and federally assisted programs. In many cases displaced low- or moderate-income families and elderly or handicapped individuals must increase the amount of money they spend for housing to an unduly high proportion of their income. It is reasonable for the public to assist these persons to accommodate themselves to their greater housing costs.

This recommendation would authorize the Housing and Home Finance Administrator to make rental adjustment payments in the case of low- or moderate-income families or elderly individuals (aged 62 or over) or handicapped individuals (within the meaning of sec. 202 of the Housing Act of 1959) that are displaced by any Federal or federally assisted program.

The amount of the monthly payment an eligible person could receive would be computed by determining the average annual rental required for a decent, safe, and sanitary dwelling of modest standards—deducting from this amount 20 percent of the annual income of the displaced family or individual—and dividing by 12. For example, if the average annual rental for a decent, safe, and sanitary dwelling adequate in size to accommodate the displaced person is $840, and the income of the displaced individual or family is $3,000 per year, the displaced individual or family could receive $20 a month.

As was suggested, in connection with the proposed Housing and Community Development Act of 1964, it is hoped that by the end of the 2-year period, during which monthly payments would be made to these persons, there would be a sizable increase in the supply of standard low-income and medium-income housing, and that some of the families involved would have increased their incomes and their rent-paying ability. Also, the payments would provide a transitional period during which displaced persons could adjust to the higher housing costs.

The Housing Act of 1964, as enacted, authorizes "relocation adjustment payments” up to $500, for families and elderly individuals displaced from urban renewal areas or low-rent housing project sites. The effect is to authorize payments for low- or moderate-income families or individuals on one side of the street in an urban renewal or public housing area, while denying payments to families or individuals across the street outside the project limits. Also, the limited amount of the payment provides little time for incomes to increase or for lowor moderate-income housing to become available in sufficient numbers. to relieve present hardship.

Recommendation 18. Low-interest loans for the purchase or con

struction of single family homes by low- or moderate-income

displaced homeowners (title IV, secs. 402-403) It is recommended that legislation be enacted to provide an FHAinsured low-interest loan program for the purchase or construction of single family homes by low- or moderate-income homeowner families, elderly individuals, or handicapped individuals displaced by any public program conducted by the Federal Government or with the assistance of Federal funds, who, in the opinion of the Commissioner of the Federal Housing Administration, cannot otherwise reasonably continue homeownership.

In the case of displaced elderly families or elderly individuals, the Commissioner would also be authorized to permit the deferment of principal payments, not to exceed 75 percent of the Commissioner's estimate of the value of the property, until the transfer of title to the property or the death of the borrower or the surviving spouse, if he finds this esential to the continuation of homeownership by such elderly persons.

The Commissioner would be authorized to waive mortgage insurance premiums, and Federal National Mortgage Association assistance would be provided to assure the availability of funds.

Comment.-The lack of standard housing at prices that low- or moderate-income families or individuals can afford is the most serious of all relocation problems. Low- or moderate-income homeowners, and particularly elderly homeowners, frequently have to discontinue homeownership because they cannot obtain financing, or cannot obtain it at terms within their means.

This recommendation would make it possible for most homeowners to continue homeownership, after displacement. Significantly lower monthly payments would be possible under the proposed deferred principal repayment plan for the elderly. For example, the monthly payment on a 20-year $10,000 home purchase loan at 33/8 percent would be $28.12, if the principal payment were deferred.

This recommendation is an extension of a proposal contained in the proposed "Housing and Community Development Act of 1964” relating to home rehabilitation assistance for elderly homeowners in urban renewal areas. Recommendation 19. Public housing subsidy for displaced families

or individuals (title IV, sec. 404) It is recommended that the U.S. Housing Act of 1937 be amended to provide the same public housing subsidy of not to exceed $120 per year per dwelling unit, now authorized for low-income famisies or individuals displaced by urban renewal or public housing projects, for low-income families or individuals 'displaced by any public program conducted by the Federal Government or with the assistance of Federal funds.

Comment.—The Housing Act of 1964 authorized the special subsidy indicated above for families or individuals displaced by urban-renewal or public housing projects. A similar subsidy was already available for elderly families or individuals. The Public Housing Administration has advised that 6 percent, or approximately 7,100 of the 127,490 admissions to public housing projects in 1963, were displaced families. Of these, some 2,100 were elderly and 5,000 were nonelderly displaced families.

In testimony concerning the additional subsidy for urban renewal and public housing displacees proposed in the Housing Act of 1964, it was estimated that 10,000 displaced families or individuals could be rehoused in public housing units annually if the additional subsidy were authorized. The magnitude of the expected displacement of families or individuals in the years ahead make it evident that the present subsidy should be extended to all Federal and federally assisted program displacees.

In a letter dated October 12, 1964, Public Housing Commissioner Marie C. McGuire explained the application of the subsidy payment:

The additional subsidy for displaced families is subject to the same requirements as to need and the same $120 per family per year limitation as is the additional subsidy for the elderly. In addition, the subsidy for displacees can be paid only to the extent the average rents charged displacees are less than the average rent charged nondisplacees, in both cases excluding elderly. Thus, where the income and rent distribution of displaced families living in public housing is the same as for nondisplaced families no additional subsidy is available.

With the additional subsidy solvency would not be endangered if the rents paid by displaced families averaged as much as $10 a month less than the rents paid by nondisplaced families. And since many displaced families may have incomes comparable to those of nondisplaced families it should be possible to set rents within the reach of displaced families with extremely low income. To illustrate, suppose half of the displaced families have lower incomes. In such case, it would be possible to set rents for the lower income displaced families which average $20 a month less than the average rent paid by nondisplaced families. If only onethird of the displaced families had abnormally low income,

rent averaging $30 a month less could be set for them. Recommendation 20. FHA section 221 housing for low- or moder

ate-income displaced individuals (title IV, sec. 405) It is recommended that the National Housing Act be amended to make low- or moderate-income displaced individuals, regardless of age, eligible for present FHA section 221 housing programs.

Comment.—The Housing Act of 1964 made individuals, regardless of age, eligible for admission to low-rent housing projects. "It also made elderly and handicapped individuals eligible for FHA section 221 housing for low- or moderate-income families. This recommendation would extend the eligibility for

present FHA section 221 housing programs to all individuals.

See also comments concerning recommendation 17.

C. A PROPOSED BILL TO IMPLEMENT RECOMMENDATIONS

A BILL To provide for equitable acquisition practices, fair compensation, and

effective relocation assistance in real property acquisitions for Federal and federally assisted programs, and for other purposes

Be it enacted by the Senate and House of Representatives of America in Congress assembled, That this Act may be cited as the “Fair Compensation Act of 1965."

TABLE OF CONTENTS

DECLARATION OF POLICY

TITLE I. REAL PROPERTY ACQUISITION

PART A. FEDERAL PROGRAMS

Sec. 101. Uniform policy on land acquisition practices.

Objective to buy, not litigate.
Opportunity for owner to accompany government's appraiser.
Full fair value offer for property.
Reasonable value information to owner.
Funds available to owner before possession.
Reasonable time for occupant to find home, farm, or business location.
Owner to have first opportunity to remove improvements.
Rent limited to fair value to short-term occupier.
Eminent domain procedures not to be used to compel agreement on price.
Condemnation by judicial proceedings, not by physical taking.
Acquisition not to leave owner with uneconomic remainder.

Human factors to be considered in fixing project boundaries.
Sec. 102. Compensation for property acquired.

Highest reasonable price for property.
No penalty to owner or government for changes in value before taking due to

project. Partial takings

Compensation based on "before and after" values.
Full credit for increased value of remainder due to project.

Full payment for decreased value of remainder due to project.
Sec. 103. Buildings, structures, and other improvements.

Acquisition.
Real property defined.

Tenants' fixtures.
Sec. 104. Acquisition of notes or other evidences of debt.
Sec. 105. Expenses incidental to transfer of title to the United States.
Sec. 106. Litigation expenses.

Unauthorized condemnation.
Abandoned condemnation.

Inverse condemnation (Tucker Act).
Sec. 107. Relocation payments.

In general.
Optional fixed payment for businesses dependent on neighborhood trade or

special locations.
Optional fixed payment for residential occupants.

Optional fixed payment for farm operators.
Sec. 108. Relocation assistance program.
Sec. 109. Federal programs with local cooperation.
Sec. 110. Uniform regulations.

PART B. FEDERALLY ASSISTED PROGRAMS

SEO. 111. Relocation payments and assistance.

Federal financial assistance available in all programs.
States authorized to contract with agencies having established relocation

organizations. Advances to States.

Federal share. SEC. 112. Requirements for approval of contracts or agreements for Federal

financial assistance. Relocation assistance. Relocation payments. Reasonable time for occupant to find home, farm, or business location. Full fair value offer for property. Funds available to owner before possession. No penalty to owner for decreased property value before taking due to

project.

Tenants' buildings or fixtures. SEO. 113. Displacement by code enforcement for urban renewal project or vol

untary rehabilitation under urban renewal plan. SEO. 114. District of Columbia and National Capital Housing Authority eligible

for Federal financial assistance.
SEC. 115. Definitions.
SEO. 116. Applicability of Administrative Procedure Act.
SEO. 117. Severability.
SEC. 118. Acts repealed.

TITLE II. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1954
SECs. 201, 202. Involuntary conversions.

Broadened concept of replacement property.
Nonrecognition of damages.

Beginning of replacement period.
SEC. 203. Exclusion of certain relocation payments.
SEC. 204. Exemptions from documentary stamp tax.

TITLE III. ASSISTANCE FOR OWNERS AND EMPLOYEES OF SMALL BUSINESS CON.

CERNS DISPLACED OR INJURED BY FEDERAL OR FEDERALLY ASSISTED PROGRAMS

SEC. 301. Amendments to the Small Business Act.

Disaster loans for injured small businesses.

Advice and counseling. SEO. 302. Retraining.

Services provided for under other Federal laws.

Training allowances for individuals.
Sec. 303. Amendment of the Social Security Act.

Unemployment compensation for employees of very small displaced busi

nesses.

TITLE IV. RENTAL AND HOME ACQUISITION ASSISTANCE FOR LOW OR MODERATE

INCOME FAMILIES AND INDIVIDUALS DISPLACED BY FEDERAL OR FEDERALLY ASSISTED PROGRAMS

SEO. 401. Rental adjustment payments.
SEC. 402. Amendment of section 221 of the National Housing Act.

Special assistance for displaced homeowners not otherwise able to continue

homeownership. SEC. 403. Definitions applicable to sections 401 and 402. SEC. 404. Amendment of section 221(f) of the National Housing Act.

Displaced individuals eligible for FHA section 221 housing (programs re

ferred to in 221 (f)). SEO. 405. Amendment of Section 10(a) of the United States Housing Act of 1937.

Additional subsidy for Federal and federally assisted program displacees

(except Urban Renewal and Low-Rent Housing Displacees).

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