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Of this amount, close to $3 million will be directed to communities of about 5,000 population or less outside of Standard Metropolitan Statistical Areas (SMSA's).

Another HUD program, the 702 public works planning program comes as close as we can to attacking the problems of rural communities. The public works planning program provides for interest-free advances to cover the engineering and design of a wide range of essential public works:

About 90 percent of the advances have been made to communities under 50,000.

Priority has been given to communities under 5,500 population. Over 50 percent of all advances have been made to communities of this size.

More than 65 percent of 702 grants have, in fact, been given to communities with populations under 10,000. In the current fiscal year these grants will amount to $512 to $6 million.

In fiscal 1966, out of a total program allocation of $23 million, about $18 million in 702 planning advances went to communities with populations under 50,000.

The public facilities loan program provides long-term loans for the construction of an equally wide range of essential public works such as streets, bridges, water and sewer projects, and municipal buildings. These loans are almost entirely restricted to communities under 50,000 population. For instance, over 96 percent of the projects assisted under this program have been for communities under 10,000 population. In fiscal 1966, this group received over $25 million out of a total program of nearly $30 million. This is a popular program with smaller communities because they must pay higher interest rates, for the most part, than the large communities when they go to the market to borrow money. The National League of Cities report on the “Credit Problems of Small Municipalities,” published this April, may be of interest to the subcommittee. I submit a copy of this report for the record.

The basic water and sewer facilities program provides 50 percent grants for the construction of basic facilities needed for the supply, treatment, and distribution of water, and the collection and disposal of waste.

More than 77 percent of grant approvals under the program have been for communities under 50,000 population.

Over 35 percent have been in communities under 10,000.

In fiscal 1966, out of total grants of $90 million, $58 million went to communities under 50,000, and $21 million went to communities under 10,000 population.

The problems of slums, blight, and obsolete land uses are not restricted to the major metropolitan centers, and the smaller communities have made extensive and effective use of the urban renewal program to deal with these problems. Because the preservation of the economic base in small communities frequently is tied to retail trade activity and a few vital industries, a significant percentage of their urban renewal efforts has been aimed at the improvement of the central business district or making land available for industrial development. Of nearly 850 communities participating in the urban renewal program 621 have populations of under 50,000 and of these, 461 have populations under 25,000. As might be expected, the projects tend to become smaller as the population of the city drops, but, surprisingly, the proportionate effort becomes greater as the size of the city decreases. Although small city participation represents 16 percent of the population of all cities participating, the amount of Federal capital grant funds reserved for these smaller cities is 22 percent of all grant funds reserved.

Urban renewal demonstration grants have been made to assist small communities utilize the program to optimum effect. For example, a grant of $145,220 was made to the University of Maine in December of 1965 for a 3-year project to provide an urban renewal technical advisory service to small communities in the State. We are confident that this and other innovative efforts will point the way for other States to become active with programs of positive involvement on behalf of their small communities. I submit for the record the public release describing the demonstration project of the University of Maine.

Mr. RESNICK. If I may interrupt again at this point, I would like to ask about these grants. Just what are these States doing to help these smaller communities get into urban renewal and into the housing programs? As you point out here you had to give $145,000 to the University of Maine just so that the university can go out and educate the various communities in the State of Maine as to what services are available under HUD.

Mr. Wood. The grant is to demonstrate how to do the planning, and what technical assistance can be used in their own State facilities. It is more than information-it is educational.

Mr. RESNICK. Do you not think, in all honesty and candor, that this should have been a State function? Do you not think that the State should have set up an office and said, “Here, anybody who wants any information about housing and urban development, come on in," or send out a booklet to them?

Mr. Wood. I believe that the States can do a great deal more across the board in this area than traditionally they have done, Mr. Chairman. As of today, you see a wide range of performance in many States in their readiness and capabilities to respond to this problem. At least 12 States have within the last 3 or 4 years moved actively into this area.

Mr. RESNICK. You say that they have moved. Are they helping the big cities or all of the communities?

Mr. Wood. They are helping all of their communities. In effect, the kind of counsel that I think the States are providing and should continue to emphasize is the mobilization and pinpointing of resources for these smaller communities. First of all, they probably need more help and, secondly, State programs can have a major impact on their future.

Mr. RESNICK. If I may, Mr. Secretary, I just want to zero in on this one point. Here is a State where we have given $145,000 to the University of Maine. Now, the primary purpose for that is educational. Basically, most of the communities in Maine are small communities.

Mr. Wood. Correct.

Mr. RESNICK. I believe that there is only one large city, the city of Portland, and that has a population of only 70,000. It appears to me that not only in Maine, but in every other State, the people should have enough interest in their rural communities and in their rural areas to know the problems these areas have. It appears to me that they should have set this up-that they should have spent this $145,000 in order that their small rural communities could get the assistance that they need badly.

Again, I do know about New York State. If it has a program I have never seen it and I have never heard of it. We perform that function. We have sponsored conferences, and when I say “we” I am speaking now of my office. We have held conferences for our local officials and civic leaders. We work closely with the various departments, yours included. If anybody has any questions about Government programs they come to us and we dig out the information for them. Many Congressmen do no operate this way.

Most States, to the best of my knowledge, do not either. It just seems to me that when we talk about States' rights and State responsibilities, we are talking about a State function. The States do not seem to be performing it, however.

Mr. Wood. I concur in principle with your remarks about the appropriateness and the need for the State to assume this responsibility.

I would make one footnote on the generalization. Today States are beginning to move in this direction. Secondly, until they do perform this function, I think it is an important obligation, at least of our Department, to be responsive to the needs of the small and rural communities. I do not think that we can just let the whole concept die accidentally.

Mr. RESNICK. What I am saying is this, you could not possibly, you do not have the money or the people for the educational processes involved. You certainly are cooperating in our case and have been most helpful when we did run these conferences to get this information out. I do not imply any criticism of your Department in this area. I do not expect the Federal Government to try to educate every county and every village, but I certainly do expect the State to do it. The States are always crying about their rights, but you never hear them come in here and talk about their responsibilities. I find it incredible that we have to give $145,000 to the University of Maine just for this purpose. This, it seems to me, is an area in which the State certainly should be involved.

Mr. Goodling. I would like to ask what specifically did you get for this $145,000-can you give us any specifies?

Mr. Woop. Mr. Goodling, I do not have the report. I do not know whether they have made the report on this grant as yet. I can supply it for the record. I do not know personally what the outcome of the University of Maine project has been, except generally it is an advisory group contract designed really to do two things: to involve the State government and to involve the State University in the process of community development and in community problems. We want the universities-State universities like the University of Maine, wherever we can get them interested—to provide appropriate help and in formation. Certainly they can provide to the smaller communities, where the personnel may be limited, the kind of information that we have accumulated, particularly over the last 20 years. We can do this, we think, with these kinds of contacts on a very limited, in my judgment, too limited a basis. We want the universities in the states to have a continuing commitment. We feel that if we just come and go intermittently we may provide some help for some people, but we will not have built in the needed capability. We believe that the university may be the appropriate contact with smaller communities.

Mr. GOODLING. Why Maine and not the other 49 States?

Mr. WOOD. Apparently, because at the time, Maine indicated that it was ready to do this, Mr. Goodling. We thought that if we experimented with a small research and demonstration program we could identify those areas where we could find nationwide applications.

Mr. GOODLING. I do not always agree with the chairman on matters of this kind but I certainly agree with him that the States do not accept their responsibilities in too many cases. I have told my own people that.

Mr. Wood. I will indicate later in my testimony that we are prepared and are moving ahead to help the States provide more assistance in this area. It seems to me that it is a major new dimension for them to move into. I do not think that many of the States can do SO, however, because their funds are too limited in this field.

Low-rent housing programs: The vital concern of small cities for their economic base just noted has not led them to overlook the housing needs of their residents:

Of 2,713 places with local housing agencies on the first of this year, only 245 were over 50,000 population;

By the end of 1966, of almost 867,000 units of low-rent public housing under reservation or beyond, almost one-third were located in cities and towns with populations under 50,000.

Of these, over 215,000 units were outside urbanized areas and about 104,000 of these in communities of less than 10,000 population.

The provision of housing in small communities with the assistance of other Department programs has been given special attention. FHA mortgage insurance processing and procedures have been specially adapted to assure its availability to assist private financing of housing. Minimum property standards have been adjusted by FHA to permit variations in small communities. Also, in evaluating mortgage credit risks, consideration is given to the lower living costs existing in small communities. Meetings have been held with the local lending institutions to give them information on the assistance FHA can give to housing in their areas,

FNMA's secondary market facilities are available for FHA and VA housing with no distinction as to whether the housing is in urban areas or smaller communities. Certain FNMA special assistance programs have been limited to low-cost housing, much of which is located in smaller towns.

A number of the demonstrations of new methods of providing housing for low-income families financed with grants by the Department involve housing in rural areas. One grant was to help finance demonstration of methods for providing housing to migratory farm laborers. Other demonstrations underway involve self-help housing, use of new types of materials combined with self-help, and pooling of sites of deteriorating homes to provide locations for new housing financed with FHA below-market interest rate mortgages.

Even in the field of mass transit, which is usually thought of in terms of large cities, we are not neglecting our concern for smaller communities. In 11 cities with populations of under 50,000 we had made grants for the purchase of new buses or the repair and improvement of servicing facilities. Two of our mass transit demonstration grants are being used to analyze the special needs of smaller cities in terms of feasible systems and equipment suitable for limited volume ridership. We have also launched a research project with the National Academy of Sciences to improve the technology of the “nonrail" transit vehicle, with particular attention to the needs of the smaller city.

Mr. RESNICK. You are now speaking of the bus?

Mr. Wood. We are moving in two directions, Mr. Chairman. We hope to get out of our collaboration with the National Academy of Science an improved regular bus, a bus that does not have the characteristics of being a cause of air pollution and noise that some of the present ones have. Secondly, we hope we can design buses specifically for certain kinds of community services. We really do not need in smaller communities the same kind of mass transit pattern that is necessary in the cities.

Mr. RESNICK. You are putting up the money for the National Academy of Science to actually do the work!

Mr. Wood. It will be undertaking the investigation, yes.

Congress has provided the Department with a number of important new programs and program elements well suited to the special needs of all small communities, including rural communities. The Demonstration Cities and Metropolitan Development Act of 1966 makes constructive new approaches available to HUD as we seek to insure that the programs we administer are equally open to all the communities for which they were intended. The funds appropriated by the Congress must flow to the local units on the basis of the merits of the local program, local need, and to achieve the purposes of the programs as stated by Congress. Where the Congress has placed limits on the program by size of community, those limits have tended to be upper population limits, not lower limits.

First, I want to mention the new model cities program. When this program was first proposed, we tried to make very clear that it was not one which would be limited to larger cities, but rather one which would include participation by cities of all sizes. The first applications for planning grants are now being reviewed and I want to reiterate that assurance. Although only a limited number of cities will be able to participate, it is being administered in such a way as to assure that smaller cities will be fully represented. A very large number of

applications has been submitted from communities under 50,000 ponuation.

Next, it is important to understand the essence and spirit of government in most small and rural communities:

They do not typically have large professional staffs.

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