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Another Economic Development project is in the construction of a sewer system in the Kailua-Kona area. The Economic Development Administration played a prominent role by providing 50 per cent of the financing of this project.

Prior to the construction of the sewer system, this prime resort area was faced with a severe pollution problem. The contamination was so great that the Health Department banned any future construction in this area until the situation was corrected.

After the sewer system was constructed the following additions were made to the hotel inventory in this area: expansion of the King Kamehameha Hotel, expansion of the Kona Inn, the construction of the 200-room Kona Hilton Hotel, an expansion of the Hilo Hukilau, the construction of the Kona Plantation Hotel, the construction of the Kona Tradewinds Hotel, and numerous other business esthe construction of the Kona Tradewinds Hotel, and numerous other business establishments.

II. Small Business Administration Financial Assistance Programs

Federal funds have played an important role in providing the financing for promising businesses which are unable to obtain financing through the normal private financial channels. These business concerns were granted loans which might not have otherwise been made from other sources. The business concerns have been able to add to their resources much needed working capital as well as the ability to increase their inventories, retire high-cost indebtedness, and construct new or expanded facilities. In practically every case an increase in the number of employees and a more profitable and efficient business resulted. This program has benefited the economic growth of Hawaii.

The Federal financial assistance programs have also been very important by providing the necessary means for cooperation among the various segments of the business community, the banking community, and local groups. The cooperation of these various groups along with the assistance of the Small Business Administration and State governmental agencies has enabled the program to progress so far as it has.

Small business concerns in all of the counties of the State have received benefits from the Federal loan program. With few exceptions, all of these loans have been in participation with the Small Business Administration. During the period 1964-66 the Small Business Administration has provided loan funds of $1,003,950. These loans have paved the way for additional loan funds from the State government totaling $514,200 and the banks have been induced to make loans of $240,850.

This is a clear indication that the impact of Federal loan funds have generated additional funds to aid Hawaii's hard-pressed small businessmen.

III. Local Development Companies

Another aspect of the Federal financial assistance programs relates to local development companies. This program is highly beneficial because it involves a broad base of community participation in assisting small businessmen in the area. The involvement of local residents in a business project makes them cognizant of the needs of small business and the important role that they play in the welfare of the community. So far, six loans have been made to local development companies. The Small Business Administration has provided $1,816,400 to these local development companies. This Federal assistance brought in additional financing of $264,700 from the State government as well as $100,600 from banks and over $400,000 from the local residents and other sources.

The numerous parties involved make for a highly complex relationship among all the strata of the community. However, the results have been so startingly beneficial that strong impetus has been given to the formation of other local development companies which have not yet take advantage of this Federal program. One particular project on the Island of Kauai bears special note. The town of Kapa, Kauai suffered a severe setback several years ago by the closing of one of its most important companies, the Hawaiian Canneries Co., which processed pineapple. Other means of generating income had to be found and tourism was determined to be one of the greater potentials. A small contractor with very limited resources had visions of building a resort in a very attractive area adjoining a beach. However, with limited resources, he was not able to get anywhere. The possibility of forming a local development company was proposed by the Small Business Administration official and the town's businessmen and resi82-388-67-55

dents jumped at this chance of being able to finance a resort operation with a minimum investment.

The culmination of this endeavor is the near completion of a 72-unit polynesian type hotel complete with a dining room and modern kitchen facilities. The hotel will be opened for business very soon.

MEMORANDUM

To: Mr. Myron B. Thompson, Administrative Director.

JUNE 16, 1967.

Subject: Congressman Resnick's Letters of May 13 and 31, 1967, Re Effect of Great Society Programs on Rural America

This department is not directly involved with implementation of the Great Society programs. However, through our Farm Loan Division we are working very closely with the USDA Farmers Home Administration in assisting and encouraging the farmers and farmer cooperatives to obtain credit under the Economic Opportunity Act.

We understand from the FHA that a number of the Kona coffee farmers have benefited from loans made under provisions of the EOA. These loans are nominal, with loans for home improvement limited to those on fee simple land. It is believed that this program would have greater impact if Hawaii's unique land tenure situation were taken into consideration and leasehold tenants could also qualify. KENNETH K. OTAGAKI, Chairman, Board of Agriculture.

JUNE 19, 1967.

Hon. JOHN A. BURNS,
Governor of Hawaii,

Iolani Palace,

Honolulu, Hawaii.

DEAR GOVERNOR BURNS: In response to your memorandum of June 5, 1967 I have reviewed Congressman Joseph Y. Resnick's letters of May 13 and 31, 1967, concerning the effects recently enacted federal aid programs are having on our rural communities.

Not only recently enacted federal health programs but continued and often increased financial funding for the older health programs have brought benefits to the rural portions of our State. These programs cover many health subjects such as the control of cancer, the chronic diseases, tuberculosis, venereal diseases, heart disease, radiological exposures and water pollution. They also include the promotion of dental health and mental health and the provision of services for the mentally retarded.

The financial support provided to the State by the Federal government for these programs has made it possible for the Department to bring their benefits to every rural resident of the State. I recommend that Mr. Resnick's Subcommittee on Rural Development be urged to support the continuation of federal aid for health programs.

Very sincerely,

WALTER B. QUISENBERRY, M.D.,
Director of Health.

STATE OF HAWAII,

HAWAII OFFICE OF ECONOMIC OPPORTUNITY,
Honolulu, Hawaii, June 13, 1967.

Re request from Congressman Joseph Y. Resnick.
Hon. MYRON B. THOMPSON,

Office of the Governor,

Iolani Palace,

Honolulu, Hawaii.

DEAR MR. THOMPSON: The poverty program in the State of Hawaii has been very active in the rural areas. The majority of the Head Start classes are in the rural areas of this State. Most of the poverty target areas are in the rural areas with a heavy concentration of the Community Action Program there. On each of

the neighbor island counties, there are Community Action agencies in operation. The rural "Grass Roots" projects have been extremely successful and refunding of these programs are now pending.

The Farmer's Home Administration has been very active in assisting the rural poor. This program has been very well received by the established agencies and the people benefiting from the services. As a result of an increase activity by the FHA, the Small Business Administration has stepped up their assistance to some of the low-income areas in this State.

The Neighborhood Youth Corps is in operation on each of the counties although the bulk of the slots are concentrated in the urban areas. The demand for slots is much greater in urban Honolulu than the rural areas.

The Hawaii Job Corps Center is a conservation center. The main camp is located in Honolulu, but there are two satellite camps on the neighbor islands of Hawaii and Kauai. A high percentage of the corpsmen recruited are from the neighbor islands and the rural areas.

Hawaii's poverty program is not a rural or urban problem but rather a general problem of lack of funds to do the job properly. The earmarking of funds in the Community Action Program adds to the difficulty of administering a program which should be based on local needs.

In general, we are doing very well with the funds available to us.

Sincerely,

WALTER P. S. CHUN, Director.

STATE OF HAWAII,

DEPARTMENT OF EDUCATION, Honolulu, Hawaii, June 8, 1967.

Mr. MYRON THOMPSON,
Administrative Director,
Office of The Governor,
Honolulu, Hawaii.

DEAR MR. THOMPSON: As requested, I have reviewed the letter of Congressman Joseph Resnick, dated May 13, 1967, and am transmitting my reactions to your office.

Federal Aid to Education Programs under Title I of P.L. 89-10, Neighborhood Youth Corps, Adult Basic Education, Head Start, Manpower Development and Training, Vocational Education, etc., have had considerable impact upon the education and welfare of children and adults in the rural schools of Hawaii. This impact could be greater especially for Title I, P.L. 89-10 programs, were it not for some of the unique problems confronting the rural and generally isolated areas. These problems are:

1. Late federal appropriations in school year is further compounded for rural areas which traditionally have difficulty in attracting and retaining qualified personnel. The short period from the time funds are made available (and the uncertainty as to the amount) and the program needs to be operative makes it most difficult for rural areas to obtain qualified personnel to implement the programs.

2. Rural areas for the most part are lacking in available resource persons, organized community agencies, and accessibility to facilities found in the urban areas. Thus, the use of federal funds is further restricted.

3. The costs of programs for rural areas are considerably higher than for urban areas for similar programs; e.g., field trips, cultural events, etc., are high in transportation costs for rural areas.

4. Generally, the rural area schools qualify for small amounts of money because of their small enrollments which make it difficult to implement a comprehensive program.

5. The rural areas in many respects have even greater educational problems than urban areas due to the lack of experimental background and their relative isolation.

Because of our single school system, however, the educational opportunities afforded our children and adults are much more equitable than in other school systems across the nation.

Sincerely,

RALPH H. KIYOSAKI, Superintendent.

OFFICE OF THE GOVERNOR,
Salem, July 18, 1967.

Hon. JOSEPH Y. RESNICK,

House of Representatives,
Washington, D.C.

DEAR CONGRESSMAN RESNICK: My agency people have not compiled as much information as I would have hoped for. However, the attached does speak for the impact of certain Federal programs on rural America.

I hope that it will be helpful in your deliberations.
Sincerely,

TOM MCCALL, Governor.

SOCIAL AND ECONOMIC IMPACT OF FEDERAL PROGRAMS IN RURAL AREAS OF OREGON

I. Economic Opportunity Act

Neighborhood Youth Corps projects, funded under Title I-B of the Economic Opportunity Act, have provided meaningful work experience and career exploration for approximately 1,500 rural boys and girls 16 through 21 years of age from low-income families in Oregon each year for the past two years. These youth, both in school and high school dropouts, have worked an average of 15 hours a week for 20 weeks at $1.25 an hour. They annually earned approximately $562,500 which enabled many to remain in school and others to return to school. This money moved into the rural economy. The training and education which the youth received better equipped them to assume a productive role in our society. College work-study programs, initially funded under Title III of the Economic Opportunity Act and recently transferred to U.S. Office of Education, have provided employment for rural college students from low-income families. Approximately 1,375 rural youth annually earned approximately $650,000 for summer work and over a million dollars during each of the past two years. This financial assistance, which enabled rural youth to complete their college education, will have direct and indirect impact on rural America. Many of these highly skilled youth will not return to rural areas but will take productive positions in urban and suburban centers.

Community Action programs established in 15 rural Oregon counties under the Economic Opportunity Act have developed a core of leadership which is concentrating on many rural community problems. Low-income rural residents for the first time are actively participating on C. A. boards administering programs for the poor. Low-income residents are becoming better acquainted with taking advantage of the many services available to them. Most notable examples are the Employment Service and Health Services.

Head Start programs for approximately 1,100 pre-school age children from low-income rural areas have been held in approximately 15 rural areas. Rural children have been better prepared to enter first grade, have learned many social skills, and have received medical attention so often neglected in rural areas. Program aides, many of the mothers of Head Start children, have learned how to better feed, clothe, and care for their children as a result of Cooperative Extension Service educational programs.

Education and training programs for former migrant farm workers and their families have contributed much to the economy of rural Oregon. Approximately 500 families, formerly migrant Mexican Americans, have settled in rural communities in western and eastern Oregon. Training programs under MDTA and special educational programs designed to qualify participants for GED certificates have reduced the rural welfare load and provided more highly skilled workers for rural areas.

Day Care Centers have been established in approximately 12 rural areas to provide supervised care and training for pre-school age children of seasonal farm workers.

Approximately 200 youth from low-income rural families in Oregon have participated in the Upward Bound program at Oregon State University.

A special community action program, Title II-A of the EOA, Green Thumb, has provided part-time employment to approximately 90 low-income elderly men from rural areas. They work on beautification projects on major arterial highways.

II. Higher Education Act, Title I

A Towns and Small Cities Project designed by the Cooperative Extension Service of Oregon State University has been funded under Title I of the Higher Education Act and is currently being operated in the Clackamas, Marion and Linn County area.

The program provides two Community Development Agents in this tri-county area to assist small towns and small cities in the identification of problems that prevent them from making adjustments to share in the benefits accrued from Oregon's social and economic growth.

The agents are working directly with 35 communities in solving problems and establishing training programs in federal aid assistance, parks and recreation, sewage disposal, municipal planning, water systems and leadership training. Specific assistance requested by these communities-by order of frequencyis federal aid, parks and recreation, sewage disposal, municipal planning, leadership assistance, water, youth employment, legal organization, housing, business development, community survey, library, community study and urban renewal. Educational material and programs include the development of a monthly newsletter to inform city councils of successful activities in other communities, radio programs, newstories and circular letters.

In addition, short courses or formal training programs have been presented in budget development, recreation and parks for the small community, and land use planning and zoning.

Although the program has been operative less than one year, success is measurable in communities that now are building libraries, sewer systems, parks or developing recreation programs.

The program is enjoying its success because it stimulates and develops organizational patterns and leaderships, enabling citizens to analyze and effect programs of social and economic improvement in the small community. III. Farmers Home Administration

Groups in Oregon rural areas have made particularly good use of the loans and grants available from the Farmers Home Administration of the U.S. Department of Agriculture to develop or improve water supply and distribution systems and waste disposal systems. During 1966, a total of 23 community assistance loans were closed in the amount of $2,760,540 and the total of all rural community assistance applications handled was $20,676,330. In the range area of eastern Oregon, a significant innovation has been the organization of grazing cooperatives through which groups of ranches have joined in borrowing FHA funds to purchase grazing land for their cooperative use. Small ranches have thus been enabled to expand their operations as today's conditions required. An example is the Hampton Butte Grazing Association in Deschutes County through which 16 ranches will take over the 86,000 acre Jackson ranch and increase its carrying capacity from 1400 animal units to 1900.

Hon. JOSEPH Y. RESNICK,
House of Representatives,
Washington, D.C.

BOARD OF NATIONAL MISSIONS,

OF THE UNITED PRESBYTERIAN CHURCH
IN THE UNITED STATES OF AMERICA,
New York, N.Y., June 19, 1967.

DEAR CONGRESSMAN RESNICK: Thank you for the opportunity you offer to testify on the effectiveness of rural development programs. Time would not permit preparation of an adequate presentation, so I will confine my comments to this letter.

My impressions from travel and reading are that most of these programs have been very helpful, though somewhat uncoordinated. The problems of bringing together various federal agencies and local governmental units into some sort of rational area or regional planning are not easy.

I do believe that the Department of Agriculture must find ways to appease the political pressures to "stick to technical agriculture" and move extensively into a program of education for grass-roots planning in non-metropolitan areas. The Rural Areas Development Program and the Federal Extension Service have

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