To the Congress of the United States:
     I transmit herewith Reorganization Plan No. 1 of 1962, prepared in accordance with the provisions of the Reorganization Act of 1949, as amended.
     In my special message on housing of March 9, 1961, and again in my message on the State of the Union earlier this year, I recommended the establishment in the executive branch of a new Department of Urban Affairs and Housing, of Cabinet rank. This plan would fulfill that recommendation.
     The times we live in urgently call for this action. In a few short decades we have passed from a rural to an urban way of life; in a few short decades more, we shall be a nation of vastly expanded population, living in expanded urban areas in housing that does not now exist, served by community facilities that do not now exist, moving about by means of systems of urban transportation that do not now exist. The challenge is great, and the time is short. I propose to act now to strengthen and improve the machinery through which, in large part, the Federal Government must act to carry out its proper role of encouragement and assistance to States and local governments, to voluntary efforts and to private enterprise, in the solution of these problems.
     The present and future problems of our cities are as complex as they are manifold. There must be expansion: but orderly and planned expansion, not explosion and sprawl. Basic public facilities must be extended ever further into the areas surrounding urban centers: but they must be planned and coordinated so as to favor rather than hamper the sound growth of our communities. The scourge of blight must be overcome, and the central core areas of our cities, with all their great richness of economic and cultural wealth, must be restored to lasting vitality. New values must be created to provide a more efficient local economy and provide revenues to support essential local services. Sound old housing must be conserved and improved, and new housing created, to serve better all income groups in our population and to move ever closer to the goal of a decent home in a suitable living environment for every American family. We will neglect our cities at our peril, for in neglecting them we neglect the Nation.
     The reorganization plan I am transmitting would establish a new executive department to be known as the Department of Urban Affairs and Housing. To the department would be transferred the existing programs and responsibilities of the Housing and Home Finance Agency. These programs include an extraordinary range of diverse yet closely interrelated activities: insurance of mortgages to finance the construction of homes and the ready interchange of existing homes, as well as their modernization and improvement; financial aids to local communities in comprehensive local planning, in slum clearance and urban renewal, and in the conservation and rehabilitation of neighborhoods and whole urban areas; advances and loans to assist in the planning and construction of needed public facilities; loans to assist in meeting the needs of our hard-pressed colleges and universities for student and faculty housing; financial aids in the search for solutions to the baffling problems of urban mass transportation; a variety of tools to stabilize and encourage liquidity in the private mortgage market; financial assistance in providing decent housing for low-income families; and others still.
     Widely different as these Federal programs are in subject matter and in techniques, they all affect the lives and welfare of families in our cities and their surrounding areas, and they all impinge in one degree or another on each other. None can or should stand by itself. The basic purpose of this plan is to establish a department which will bring a maximum degree of coordination and effectiveness to the planning and execution of all of them.
     Our cities and the people who live in and near them need and deserve an adequate voice in the highest councils of government. The executive branch and the Congress need an adequate instrument to assist them in the formulation and execution of policy concerning urban affairs and housing. States and local governing bodies urgently need an agency at the departmental level to assist them in formulating and carrying out their local programs for dealing with these problems. All these needs can best be met through the establishment of the department provided for in this reorganization plan.
     It should not be assumed that these are matters of concern only to our larger cities. Hundreds of smaller cities and towns are located on or near the fringes of rapidly growing urban areas. The problems of the cities affect them today, and will be theirs tomorrow. Hundreds of other smaller towns and cities not now affected will be so situated a few short years hence. Thus, the smaller towns and cities have a stake in this proposal as vital as, and only a little less immediate than, that of our large urban centers. This plan is addressed to their needs as well as to those of the major cities. Likewise, it should be emphasized that the department will have important activities of service to the States. The establishment of this department does not connote any by-passing or reduction of the constitutional powers and responsibilities of the States under our Federal system of government. Rather, the States must assume additional leadership in the future in dealing with problems of urban areas, and the department will maintain close working and consultative relationships with them: An example of this relationship can already be found in the urban planning assistance program of the Housing and Home Finance Agency which provides matching funds for use by States to aid municipalities and State, metropolitan and regional planning agencies facing rapid urbanization. Grants may be used by the States themselves to prepare state-wide comprehensive plans for urban development Just as the programs of the Department of Agriculture have strengthened the role of the States in measuring and helping solve the problems of their farmers, so the Department of Urban Affairs and Housing will provide additional opportunities for the States to play a strong role in the development of their urban communities.
     As the Senate Committee noted in its report on S. 1633 (S. Rep. No. 879, 87th Cong., 1st Session), "A Department of Urban Affairs and Housing is needed to provide Federal leadership to solve the problems emerging from the transformation of the American scene from a predominantly rural society to a vast urban complex. More than two-thirds of the American population now lives in metropolitan centers. The figure is multiplying. It is compounded of explosive population growth resulting from an increased birth rate, a declining death rate, and rapid migration of people from rural areas to cities, towns, and villages." The importance of our nation's metropolitan areas entitling them to representation at the Cabinet table is further emphasized by the great amount of tax revenues they contribute to the Federal government. For example, in 1959, taxpayers in the 10 largest metropolitan areas paid over $13 billion in taxes or 35% of the total amount of individual income tax.
     The need for such a department has been increasingly recognized in recent years. A proposal for a cabinet department substantially similar in nature was advanced at about the same time that the first consolidated Federal housing agency was established, twenty years ago. Since then, year by year, both the executive branch and the Congress have taken successive steps to create a more coordinated agency with a fuller range of tools to attack these problems. No fewer than five reorganization plans submitted by my predecessors have contributed to this process. On the legislative side, the Congress has enacted major legislation in the field of urban affairs and housing in every year but one since 1946. The time is here to take the next needed step.
     First, Reorganization Plan No. 1 of 1962 would establish a Department of Urban Affairs and Housing, to be headed by a Secretary who would be assisted by an Under Secretary, three Assistant Secretaries, and a General Counsel. All of these officers would be appointed by the President by and with the advice and consent of the Senate. There would also be in the department, as in many others, an Administrative Assistant Secretary appointed from the classified civil service by the Secretary, with the approval of the President.
     Second, the plan transfers to the Secretary of Urban Affairs and Housing the functions of the Housing and Home Finance Agency and its Administrator, including the administration of the programs of the Urban Renewal Administration and the Community Facilities Administration and the authorities now vested by law in the Public Housing Administration and its officers.
     Because of its magnitude in our economy and the immediacy of its impact on our people, housing has been and will continue to be the heart of this complex of related programs. In recognition of this fact, the plan provides for the transfer of the Federal Housing Administration as an entity to the new department. Provision is also made for the continuance of the existing office of Federal Housing Commissioner, appointed by the President with the advice and consent of the Senate. The Commissioner would continue to head the Federal Housing Administration under the supervision and direction of the Secretary as head of the department.
     Finally, in view of its special legal status as a mixed-ownership corporation, the Federal National Mortgage Association would be transferred to the department without change. The Secretary would serve as Chairman of the Board of the Association, as the Housing and Home Finance Administrator now does. No change in the organization or functions of the Association within the department affecting its secondary market operations could be made unless the Secretary finds that such change would not adversely affect the rights and interests of owners of outstanding common stock of the Association.
     In accordance with the spirit and intent of the Reorganization Act of 1949, as amended, this plan promotes the better execution of the laws, the more effective management of the executive branch of the government, and the expeditious administration of the public business. It aims to promote economy and increase efficiency to the fullest extent practicable. Its significance in the pursuit of these purposes must be judged in the light of the magnitude and significance of the programs affected.
     The various programs with which the new department would be charged involve Federal investments of billions of dollars, and contingent liabilities of billions more. The quality of administration of these programs has profound effects on land values and tax revenues in local communities throughout the country. The operations of these programs figure importantly in the vitality of the general economy. The policies that govern them play a major role in determinations of national fiscal and monetary policy. Their management in the most effective and coordinated way possible, therefore, will yield economies in the broad sense far outweighing the amount involved in the administrative cost of their operations. And even in the latter area, I am convinced that economy and efficiency will be importantly enhanced by the improved coordination which this reorganization plan will make possible.
     For all the reasons herein set forth, I have concluded that the creation of a Department of Urban Affairs and Housing is urgently needed to permit me to discharge most effectively the responsibilities in this area placed upon the President by the Constitution and by the statutes respecting these matters enacted by the Congress.
     After investigation, I have found and hereby declare that each reorganization included in Reorganization Plan No. 1 of 1962 is necessary to accomplish one or more of the purposes set forth in section 2(a) of the Reorganization Act of 1949, as amended. I have also found and hereby declare that by reason of these reorganizations it is necessary to include in the reorganization plan provisions for the appointment and compensation of the new officers specified in section 2 of the reorganization plan. The rates of compensation fixed for these officers are, respectively, those which I have found to prevail in respect of comparable officers in the executive branch of the government.
     Although the taking effect of the reorganizations provided for in the reorganization plan will not in itself result in immediate savings, the improvement achieved in administration will in the future allow the performance of necessary services at greater savings than present operations would permit. An itemization of these savings in advance of actual experience is not practicable.