amended making city approval optional. Since some of the benefits were therefore nullified in that rentals were limited without assuring tax exemption, the building erected in 1941 and 1946 were undertaken by the A. H. Consumers Society which is not under the housing law.

The first six buildings constructed by Amalgamated cost nearly $1,970,000, of which $315,000 was for land and $1,654,359 for construction. A 20-year 5-percent first mortgage of $1,200,000 was obtained from the Metropolitan Life Insurance Co. The remainder came from payments by the tenant members, at the rate of $500 per room, and from the sale of 6-percent preferred stock to tenants, the union, and other friendly organizations. In addition to the tax exemption (saving nearly $30,000 a year, or $2.11 per room per month), other savings were made such as by the purchase of comparatively low-cost land and by the one-half-of-1percent reduction in interest on the Metropolitan mortgage and from the waiver of the usual recording fees, revenue stamps, etc., by the authorities and the insurance company.

In 1929, building 7 in the Bronx Amalgamated group was completed at a construction cost of $1,003,021. This was followed by the construction of building 9 in 1931-32. This building was considerably smaller than its predecessors and contained only 115 apartments. The total cost was about $570,000, of which $380,000 was obtained on a 5-percent first mortgage from the Metropolitan Life Insurance Co. and the remainder from the members.

The success of the Bronx projects prompted Aaron Rabinowitz, then a member of the New York State Board of Housing, and Herbert H. Lehman, then lieutenant governor (later governor) of New York, to undertake the financial responsibility for the downtown Amalgamated venture. During the construction period they advanced about $800,000. The actual work, however, was carried out by the same group that built the Bronx buildings. The downtown building cost for construction was $1,064,713. The expenditure for land, however, was siderably higher proportionately, bringing the total cost of the project to nearly $1,520,000. It was financed by a mortgage loan of $960,000 from the Bowery Savings Bank, $60,100 from the sale of debenture bonds, and the rest from members' down payments.

con

Cost and conditions of membership.-In the admission of housing-association members, the members of labor organizations are given preference, but during the nearly 20-year period of operation many persons have changed their occupation, and a good many nonunionists are now living in the development. In general, preference is given to wage earners, members of labor unions, salaried people, and those who can be classified as belonging to the moderate-income group. The needle trades, with the Amalgamated Workers' members comprising the largest single group, account for about 50 percent of the residents of the Bronx apartments and about 25 percent in the downtown building.

In the Bronx buildings, the member applicant for an apartment was required to raise at least 50 percent of the investment; the rest could be met by contracting a loan. In order to enable the applicant to pay this loan over a long period, loans were made available by the Amalgamated Bank in cooperation with the Jewish Daily Forward.

In the case of the Amalgamated Dwellings, Inc., Messrs. Lehman and Rabinowitz pledged $350,000 (this was in addition to the funds supplied by them during the construction period) and authorized the bank to extend loans up to 70 percent of the required equity investment of the applicant.

The average rental in the buildings of the Amalgamated Housing Corp. project (Bronx) is below $11 per room per month; in that of the Amalgamated Dwellings (Manhattan) it is $12.22; and in the buildings of A. H. Consumers Society erected in 1941 (Bronx) it is $13. In the latter association's 1946-47 Bronx building the monthly charge is $16, this higher figure being necessitated by the high cost of construction and the fact that no tax relief is granted.

In the Amalgamated, the redemption problem has been handled very successfully thus far, notwithstanding that the first buildings were built in a period of high prices and were subjected almost immediately to an unprecedented period of depression. Reserves for redemption of shares have been built up through the voluntary contributions by the residents, over a number of years, of half of their patronage refunds from A. H. Consumers Society and the housing corporation. In the spring of 1946 these reserves totaled some $250,000 in the Bronx and $65,000 in the downtown project.

East River Cooperative Apartments, New York City

At the time of this report only one cooperative project had been undertaken under the provisions of urban redevelopment law. It is the East River Coopera

tive Apartments, the most recent Amalgamated project. When this plan was at first conceived, four local savings banks agreed to undertake the financing, the construction, and completion of the project. It was understood that the cooperative organization would raise 20 percent of the cost by the sale of stock or debenture bonds to applicants for housing. The banks were to accept a purchasemoney mortgae to the extent of the other 80 percent. This loan was to run for 25 years at 4 percent, with about 2-percent amortization. The local savings banks were later replaced by the Mutual Life Insurance Co. which was willing to accept 32 percent in interest, and the plan was modified to the extent that the responsibility for the construction and completion of the project was shifted to the cooperative organization. The insurance company limited itself to a loan not to exceed $5,600,000, or 80 percent of a total cost of $7,000,000.

The

Under the urban redevelopment law, the city agrees to accept the present assessed value (i. e., the unimproved value) of the property as the tax base. value of the improvements-buildings, and improvements to land—is exempted from taxes for a period of 25 years, after which the association will pay taxes on the full assessed value. The return on investment is limited to 6 percent of the total actual cost.

The individual prospective cooperator is required to subscribe to $500 of stock or debentures for each room for which he applies. Cooperators will pay toward maintenance a charge (rental) not to exceed $15 per room; no rent refunds or rebates are to be declared by the cooperative organization during the first 5 years. All savings are to be applied to reducing the mortgage indebtedness. The $15 per room will go to pay interest on the mortgage, depreciation, maintenance, taxes, etc. The "level payment" plan of amortization of mortgage under which the total monthly payments remain constant (but with an increasing amount of this going on principal as interest payments decrease), is to be used to decrease the mortgage liability.

Our Cooperative House, New York City

By

This project arose from the desire of Consumers' Cooperative Services, an organization operating a chain of cafeterias in New York City, to further the expansion of the cooperative movement. Unclaimed patronage refunds (minus taxes) on nonmember business were put into a reserve for such expansion. 1929, after 9 years' operation, the reserve had grown to over $136,000. Canvass of the membership indicated housing as a preferred field for action. A piece of land in the Chelsea district of downtown Manhattan was bought and a subsidiary, Rochdale Housing Corp., was formed to undertake the construction of an apartment house.

Financing and fate of project.—Construction was completed and the apartments were ready for occupancy by October 1930. The total cost was $652,700, of which $190,000 went for land, $395,890 for construction, and $66,810 for fees and financing cost. The money was raised by a first-mortgage loan of $300,000 from the Bowery Savings Bank, a second mortgage of $130,000 ($99,152 subscribed by members and $30,848 by CCS), a third mortgage of $119,600 raised by the tenants, a fourth mortgage of $37,700 held by CCS, and a loan of $65,400 to run until such time as all the apartments were taken by member owners. An association, Our Cooperative House, was formed by the residents and took over the management of the place on a 50-year lease from Rochdale Housing Corp.

However, the depression began to make itself felt with greater and greater severity. Unemployment caused a continuous turn-over in the cooperative's membership with the result that notwithstanding a rent reduction in 1933 and again in 1937, the association could hardly keep the building filled, much less attract owner members. In spite of these difficulties, the association was run economically and had been able to operate within its income until 1935 when it sustained a loss for the first time. A slight recovery for several years thereafter was followed by operating losses year after year beginning with 1940. In 1940 a revision of the mortgage structure was made.

The heavy mortgage structure and the additional problems entailed by the war, in the form of increased operating costs and frozen rent levels, made necessary another financial reorganization in 1944-45, when the organization was faced with the impossible prospect of having to redeem nearly half of the secondmortgage bonds which were to fall due on September 30, 1945. As of January 1, 1946, our Cooperative House went out of existence, and this cooperative experiment came to an end.

Opinions vary as to the causes of failure. All agree that the primary reason was the dislocation caused by the depression and the consequent unwillingness of prospective members to undertake financial obligations of such magnitude.

One of the greatest problems, as one of the original members points out, was only accentuated by the depression. That was the continual shifting of the working population from which the cooperative membership was drawn. Other factors mentioned were the rather high interest rates, maintained after current rates had fallen, the high luxury level of the project, and apartments ill-adapted for general

use.

COOPERATION IN OWNERSHIP AND MANAGEMENT, THE MUTUAL PROJECTS

Mutual home ownership is here used to mean a system of rental ownership under which the occupants of homes in a given community lease the premises which they occupy from a company owned by the occupants themselves. In such a project the cooperative takes over for operation and eventual purchase a completed development. No down payment is required of the individual member or of the housing association, all funds being supplied by the sponsor or builder.

The rentals paid cover amortization, interest, insurance, taxes, maintenance costs, administration, and an allowance for vacancies. The tenant thus gradually builds up an equity not only through the member payments on principal, but also through certain other credits. Repair and maintenance charges are estimated annually and any excess of actual expenditures is credited to the tenant's account, thus giving him a direct incentive to take good care of his dwelling. His share of the vacancy reserves is also credited to him.

Should the member vacate his dwelling during the first year of occupancy, any reserves to his credit accrue to the housing corporation. Thereafter, however, he would be entitled to a refund varying according to the length of time during which he has contributed toward the various reserves and the extent to which these have been or must be drawn against (as for maintenance during his occupancy and renovation for a new tenant.) He would also be entitled to repayment of his stock (or principal) equity in an amount equal to the "current price" (i. e., original price depreciated over the period of amortization, less the amount of principal remaining unpaid.) A new tenant coming in to take the withdrawing member's place takes over the dwelling at its "current price," with the same monthly payments on principal as were being made by his predecessor.

The mutual arrangement has certain very definite advantages to the member. He is not required to make any down payment whatever beyond, possibly, a membership fee. Should he have a period of unemployment or other difficulties which make it impossible to meet his monthly payments, he may utilize his excess reserves for the purpose, or may borrow against his reserves. As contracts for dwellings are easily transferable on the books of the corporation, and as units of various size are provided in the projects, a member whose family is expanding or contracting may move from one dwelling to another that is better suited to his needs, with proportionate increase or decrease in total and monthly obligations. West Acres, Pontiac, Mich.

In 1936 the late Senator James Couzens formed a corporation to which he advanced $550,000 with which to buy land and construct 200 houses of varying size and type, in Pontiac, Mich. No down payment was required, and the rentals established were "substantially less than the prevailing rental rates." The monthly payment on a one-bedroom house, for instance, was $32.70, and for a three-bedroom house $43.80. Nevertheless, it covered amortization, spread over a 25-year period, interest, taxes, insurance, maintenance, etc., and was sufficient to yield a 3-percent return continuously on the sponsor's investment.

During the 10 years of its existence the project, under varied economic conditions, proved successful. Not only did the residents have the benefit of low rents, but without exception families which had to move away realized (through various credits) more than they had paid in on amortization.

Public mutual-housing projects

Under the defense housing program of the Federal Works Agency, eight projects were designated as "mutual" housing communities; three of these were in New Jersey, one in Pennsylvania, one in Ohio, one in Indiana, and two in Texas. The projects were built by the Federal Government under the provisions of the Lanham War Housing Act and carry no rental subsidies.

The purpose of the mutual plan was twofold: (1) To enable the Government to dispose of the projects after the war, and (2) to enable middle-income families (i. e., with incomes too high to qualify them for subsidized low-rent housing but too low to permit the making of any sizable down payments on privately built dwellings) to own their own homes. It was considered advisable that the dwellings be placed

on a rental basis, under direct PHA management, with ownership retained by the Government during the war emergency, in order to insure their being available for war workers. However, the Government planned to sell them to nonprofit mutual housing corporations which were formed by the tenants and met certain prescribed conditions.

The proposed plan

Organization.-In order to enter into negotiations for purchase, the tenants must form a nonprofit mutual home-ownership corporation. As a first step toward the formation of such a corporation in a project in which there is sentiment for purchase, a tenants' committee is selected in an election in which every leaseholder in the project is eligible to vote. This committee acts as an organization committee for forming and incorporating the new corporation.

The corporation is run by a board of nine trustees-three representing the public, three the residents, and three the Government. When the residents have joined in sufficient proportions to indicate that the time is ripe for putting the mutual ownership plan into effect, the PHA is requested to lease the property to the corportation, with an option to purchase at the end of 2 years' operation. This 2-year period is designed as a testing time in which the corporation, under PHA supervision, masters the problems of management and learns to carry on independently. At the end of the 2-year period, the corporation may exercise its option to purchase. Membership requirements. No down payment is required. At the time of sale the corporation receives title to the entire property, but gives the PHA a mortgage for the entire purchase price and a promissory note for which the mortgage is security. These obligate the corporation to make, over a period of 45 years, monthly payments totaling approximately one forty-fifth of the purchase price per year, plus 3-percent interest on the unpaid balance.

The member pays a membership fee of $50 at the time of joining the organization. He signs a contract, binding himself to purchase, on an installment basis over a 30-year period, stock in the corporation equal to the value of the accommodations he plans to occupy. He is given a lease on the dwelling of his choice, running for as long as he continues to occupy it and makes his payments. These payments consist of a monthly rental which covers 3-percent interest, insurance, taxes, administrative expenses, reserves for maintenance and contingencies, and the payment on his stock subscription. Since the tenant is paying off his obligation in 30 years, whereas the corporation has a 45-year period of amortization, he enables the corporation to make prepayments on the principal owed to the Government, thus building up an advance equity or "cushion" for use in times of adversity.

An example of mutal-home ownership is Greenmont Village, Dayton, Ohio. Greenmont Village, Dayton, Ohio.—On October 1, 1945, at the expiration of the 2-year lease, the Greenmont Mutual Housing Corp. exercised its option and notified the Government of its desire to purchase the 130-acre tract containing 500 dwelling units and recreational and community facilities.

Every dwelling unit has a living room, utility room, kitchenette, and from one to three bedrooms. Monthly rentals are as follows: $27.50 for a one-bedroom unit in a double house, $30 for a two-bedroom unit in a double house, $32 for a two-bedroom unit in a single house, and $32.50 for a three-bedroom unit in a double house. These rentals are calculated to cover amortization as well as upkeep. Operating expenses at Greenmont have been kept low, averaging $10.86 per dwelling per month during the year ending September 30, 1945. This figure included expenses of management, janitorial service, utilities, repairs, replacement, maintenance of grounds and structures, waste removal, and insurance.

HOUSING WITH SELF-HELP FEATURES

The self-help feature has been included in the program of many housing cooperatives. Under self-help, some of the construction is undertaken by the members themselves. The kinds of work which have been done by members include clearing and grading the land, cutting the streets, excavating for basement and septic tank, pouring concrete, making building blocks, quarrying and shaping building stone, laying subfloors, making interior trim, other inside carpentry, laying the sheathing for the roof, and interior and exterior painting. This report discusses three examples of cooperative projects with self-help features: PennCraft, Pa., community; Iona, Idaho, Self-Help Cooperative; and Oakwood community, Chapel Hill, N. C.

Penn-Craft, Pennsylvania, community

The Penn-Craft experiment in housing dates back to the spring of 1937. Under the auspices of the American Friends Service Committee, a project to house 50 families of coal miners was launched using funds donated for the purpose. Fayette County, Pa., was selected as the site for Penn-Craft which involved subsistence farming features because many of the mines in Fayette County had been worked out and closed down by the time the project started.

The sponsors of the project hoped not only to demonstrate the possibility of improving the living conditions of the miners through self-help, under competent disinterested supervision, but also to insure a cushion (in the form of subsistencefarming homesteads) against hard times. The project was to be an experiment in education, utilizing the spare time of the miners to provide new and better housing owned by themselves and eventually leading to greater family selfsufficiency with decreasing dependence on paid employment.

The work has been carried out in two projects, the first on 200 acres of farm land in Fayette County near Republic, Pa., the second (now in progress) on 165 acres near the first property. In both cases, financing, management, and supervision were provided by Friends Service, Inc., a nonprofit organization. In the first project, only coal miners were eligible, but in the second project nonminers were also accepted.

Financing, and terms of contract.--Originally Friends Service, Inc., agreed to advance a cash loan of $2,000 to each member, of which not over $300 could be used for the hiring of the skilled labor necessary in construction, the remainder being used for building materials, outbuildings, cost of land, the homesteader's share of the cost of water system and roads for the whole project, and some small equipment; the loan must be repaid at the rate of $10 a month. In the new agreement these sums are raised to $2,500 and $500, respectively, and in the second project a down payment of $500 is required.

Under the original agreement the homesteader was to repay his loan (beginning when he moved into his finished house) over a period up to 20 years at the rate of $1 per month for every $200 borrowed; this amount included interest at 2 percent. A variable payment plan is provided for in the new lease agreement which relates the monthly payments on the cash loan to the family income.

The second lease agreement runs only for 1 year after date of occupancy, during which time the homesteader will pay the corporation a rental which will include interest at 4 percent. At the expiration of the year period, the leaseholder may exercise an option to purchase the homestead, in which case the corporation will assist him to refinance his cash loan, using the regular loan agencies to do so. From the proceeds of the refinance loan the corporation will be repaid in full, thus enabling it to turn over its funds more quickly and go on to further demonstration projects. In the original project, as noted, the corporation's funds were tied up for periods up to 20 years. At the end of that time, or sooner, if the homesteader paid up his loan more quickly, the latter would receive title to the property in fee simple, but not until his entire loan was repaid. The present lease agreement also reduces the subsidy on engineering service supervision and the use of heavy tools. The prospective home owner is now charged $15 per month for "overhead" from the time he signs the lease agreement until he moves into his completed dwelling.

Construction techniques.-Only two workers were on a cash basis; these were a skilled mason and a carpenter under whom, as gang foreman, the homesteaders and their sons worked. The plastering was done by the homesteaders under the direction of a plastering contractor hired by the corporation. Most of the homesteaders were unskilled in construction work, but the specialized skills of one or two members (an electrician and a carpenter) were utilized. For work done on each homesteader's house, the homesteader agrees to pay (in labor) a similar number of houses on the dwellings of the other colonists. The costs were

also minimized by making as complete use as possible of materials and resources at hand.

Progress of work.-Excavation on the first basement was started in August 1937. Because the mines were fairly active and the miners' free time therefore limited, the construction was slow. The first house was not ready for occupancy until November 1940.

By the summer of 1943 all 50 houses were occupied, and the project as originally planned was complete. Since then a further step toward greater family selfsufficiency has been undertaken and is now under way. A nearby farm of 165 acres has been bought and divided into 15 homesteads of 10 acres each. By September 1946, 11 of the new homesteads had been applied for; 8 of the