to create through sponsored trusts of this type appropriate housing facilities for the aged. In this way each community will provide the housing peculiarly suited to its own market. The aged persons will then have opportunities to live their declining years in decency and in security, without subsidy, in the communities of which they have always been a part. They will retain their contact with family and friends, with jobs and community organizations and not be forced to vegetate in some public dormitory or private facility which completely cuts them off from all that has made life meaningful for them in the years past. We are testifying, Mr. Chairman, only because of the present bill facing this committee and the change which it would make in section 213. We would have preferred to operate without publicity or attention until we had successfully built the first such project. Our theory of this matter, Mr. Chairman, is thiswe do not want to get the hopes of these people aroused and then not be able to satisfy them. We have already experienced the eager inquiries from older persons in our community who are aware of our research and the negotiations we have been undertaking, looking toward the possibility of sponsoring such a trust corporation.

Inasmuch as it will take substantial time to complete the work we are now engaged in, we have not wanted to arouse anyone's hopes with respect to this if the conclusion must be that we dash those hopes to the ground without success. Because of the many problems that must be solved in undertaking this new departure in the housing field we would have preferred to keep this matter quiet outside of official circles until a successful demonstration has been completed. However, the law, while adequate as it stands, appears to be up for reconsideration by the Congress. The proposed change of the bill from permitting FHA to insure 90 percent of replacement cost to only letting FHA insure 90 percent of "estimated value" puts a completely different color on the entire proposal. We do not feel that we can ask church trustees and other representatives of these nonprofit sponsorship groups to speculate with respect to this kind of an operation. They have relatively limited capital funds now available, or that they can expect to raise. The present law seems adequate on the point because once we had calculated costs we could say to the church trustees that before we could proceed they must raise 10 percent of this estimated cost and that they would be able to borrow the rest. However, if section 213 is amended as proposed in the pending legislation, we would be forced, if we were to carry out this experi ment, to ask the church trustees to raise an uncertain sum of money because what constitutes "value" is a question of judgment. FHA cannot and therefore must not and will not answer the question as to what "value" is until after the sponsor has procured land, hired engineers and architects, made detailed plans and specifications, submitted these to FHA, paid FHA filing fees, and gotten an estimate of "value" based upon a bona fide project submittal.

This means that sponsors of such a program would be forced to commit large sums of money on the necessary initial cost without knowing until after they had spent such sums of money how much equity money they would be called upon to raise in order to complete the project. These groups are not speculators making a profit for themselves on a success of the venture but only representatives of membership organizations seeking to serve their membership. We do not feel that it would be sound policy to ask them as a general principle to risk large sums of money upon the possibility that they would get an FHA estimate of value, on a commitment to insure a mortgage, in a sum sufficient so that the amount of equity which they would need to raise would still be within their means. The present law, which calls for them to raise 10 percent of the equity, seems quite adequate to this purpose.

Such a nonprofit organization will not risk its money without having the intention of following through successfully to completion such a project. The market for aged housing is such that when completed, if it is properly located, there is no question but that the units will be in great demand and the project will succeed. The sponsorship virtually guarantees 100 percent occupancy at economic rentals, and it offers a type of housing simply not now available to the older person. It does not really involve any great risk on the part of the investor and therefore there is no particular reason for this law to be changed, although there might be reason if such housing were to be sponsored and built, let us say, by speculative builders who did not know from where their tenants would be drawn.

In view of this pending change, we felt it desirable to come to Washington to inform you of the nature of the project we were attempting. We felt that our own proposal, if tried in Denver, would prove to be a pilot project that might be followed with appropriate modification in communities throughout the country. We believe that all potential sponsors recognize in it new hope for them in the

lution of a problem which has been frightening them. We would prefer to see ction 213 as is, but if other changes are needed they be so drawn as not to prent groups such as we represent here from sponsoring housing on the terms now ailable in the law. We have, of course, informed our own State FHA office as our proposal, and we will keep the Washington office informed as appropriate the carrying forward of this proposal if it is allowed to proceed as planned. The independent aged themselves see in this new hope and new opportunity add meaning to life and to expand the opportunities now available to them. e are anxious to test the plan in Denver and we believe that if it works in enver it can be made to work in other communities both large or small, in lorado or in Ohio, in South Carolina or in Illinois.

The University of Denver which we represent here this morning is a school ich calls its teams the Pioneers. We believe that we may be pioneering in s regard, but whether we are pioneering or not we believe that the issue is e of tremendous importance not only to the 14 million who are already age but to the many millions more who approach old age with fear and trepidan because of the loneliness, frustration, and the feeling of uselessness which sets so many of the aged. As members of our committee have pointed out in rown sessions, many persons will derive a feeling of security simply by wing that housing of this sort will be available when and if they need it. In er words, we will help to provide security not only to those who are residents thin the project but also for those who can see themselves in later years nting to be residents of such housing, and their number is growing. From the standpoint of the University of Denver College of Business Adminration, and our Department of Building Industry and Real Estate we believe it this represents a significant new venture for the building industry. Now .t the pressure of building homes for the veterans and the new families formed the war and postwar years is slowing down, we believe that the introduction a new program which will permit the builders to provide housing peculiarly ted to the needs of several millions of the aging will be a powerful stimulus the industry at this time. It will provide a new and very significant addition the FHA-insured housing program.

inally, from the standpoint of the mounting governmental expenditures on titutions for the mentally ill, for the senile, and for the chronically ill, we here the possibility that the provision of this housing may minimize this 'den by reducing the number of individuals who fall into the need for institual care. This may be a very real aid to our State and local budgets. As an nomist, I am firmly convinced that steps which can prevent dependency and ease are far superior to any form of treatment of dependency and disease er they have occurred. But most exciting of all, this proposal is one that is not actually involve any investment of public funds whatsoever, but simply utilization of the very successful form of insurance under section 213 or its ivalent in the Federal Housing Act. The aged can on this sort of program their own way, and in doing so will retain their independence which is so cious to them and so vital to their well-being and to their feeling of emotional 1 psychological security and satisfaction.

day we thank you again, Mr. Chairman, for your courtesy in hearing us on rt notice. If there is anything we can do to help the committtee in its furr consideration of this problem we shall be most happy to be of assistance. The CHAIRMAN. Your idea is primarily to help old folks and keep em out of the poorhouses.

Mr. SKRIVAN. That is right, and for independence. It is not a rity thing. It maintains their independence, they provide for emselves, and for their own financial security.

Mr. JOHNSON. I would like to give you the experience we have had presenting this to every group before whom we have gone. We esented this idea at the Governors' Conference on Chronic Illness d the Aging, in January, and it was tremendously well received. e have been overwhelmed with support.

The CHAIRMAN. Well, give us more information on this, because I nk you may have a good thought here.

Mr. JOHNSON. We appreciate that, Senator.
The CHAIRMAN. And the staff will study it.

(The outline referred to by Mr. Johnson follows:)

HOUSING THE INDEPENDENT AGING

OUTLINE FOR DISCUSSION BY NONPROFIT GROUPS

By Byron L. Johnson and Gene T. Skrivan

I. The general problem of the aging:

1. A growing population, with relatively low income.

2. Often living in oversize, or dilapidated units.

3. Many are personally, medically, or financially insecure.

4. Often living alone, feeling frustrated and useless.

5. Desire companionship, security, decency.

MARCH 1954.

6. But many have little choice-few homes available, high cost.

II. An industry view:

1. From the mortgage standpoint: The aging are a questionable risk. hence large downpayment, and short-term mortgages, with high monthly payment-only the well to do can easily qualify.

2. From the landlord's standpoint: He fears they may become ill, be unable to pay the rent, require expensive care, he rarely caters to them. 3. The builder can keep busy caring for the young families.

4. Speculative rental housing has not been built for them.

5. The aging have not yet organized to provide it for themselves, and the industry has no quick solution in use.

III. Existing facilities for the independent aging:

1. The dependent aging have mental institutions, nursing homes, general hospital beds in some cases-good, bad, and indifferent.

2. The independent ones, in a few cases, own or rent adequate homes. 3. Some live with their relatives, often happily, but sometimes unhappily. 4. Some own homes that are old, too large, rundown.

5. Many rent quarters that are too expensive, sometimes slums, or live in old, rundown hotels.

6. Some are in institutions such as nursing homes that may be loaded with chronically ill cases, hence expensive give old-age homes a bad reputation.

7. Tendency for large establishments to become institutions, making inmates out of the residents-destroying independence.

8. Some homes require transfer of all property to the home at time of admission, and all income-destroy independence.

9. Many facilities badly located, away from friends, family, community ties, isolating residents.

10. Often badly designed structures for persons served.

IV. What kinds of housing do the aged want?

1. Suited to their personal and family circumstances.

2. Suited to living habits.

3. Physically designed to accommodate their limitations of strength. 4. Specifically, small apartments for light housekeeping, either 1 or 2 bedroom affairs, small living room and kitchenette, and private bath. Perhaps some duplexes for those wanting private grounds, more space, and some residence halls.

5. Built of materials that are easy to keep clean and maintain.

6. Located on a quiet bit of ground, with open space around for sitting in the fresh air and sunlight, playing light outdoor games, and having flowers and beauty.

7. Situated near public transportation, shopping, recreation, churches, medical facilities, and employment opportunities.

8. Housing that preserves independence in every way possible. Use tenant councils, self-help, as fully as possible.

V. How can we pay for this kind of thing?

1. Initial 10 percent must be ready before construction starts.

2. Sponsors either find it, get others to invest it, or get it from tenants. 3. Operating costs kept as low as possible by maximum use of self-help. 4. Costs per unit, for construction, should run from $4,000 to $6,000including land and overhead facilities.

5. Amortization of that expense (90 percent on the mortgage) will take about 6 percent per year to carry. Allow another 3 or 4 percent of original cost for annual operation (taxes, insurance, utilities, maintenance, etc.) This means 10 percent of $4,000 to $6,000 is the annual rental. In other

words, monthly rentals should run from $35 to $50-but that such rentals may accommodate two or more persons. Even people on the pension ought

ought to be able to pay the rental, on a shared apartment, without trouble. VI. What are the very next steps?

1. Will your church need this facility?

2. Will they participate in a joint project?

3. How many units, and what kind, do you want, now?

4. Are funds now available--how much, where, with what strings? 5. Schedule project in calendar terms.

(a) Each State, from land acquisition to tenant occupancy, takes time.

(b) How fast can your organization move?

(c) Designate a person, or small committee, to represent your group on a joint committee.

VII. Who, then, might undertake to provide housing for the aging?

1. Any nonprofit group that is interested in the welfare of its older members,

2. including churches, lodges, fraternal orders, veterans organizations, unions, professional organizations, etc.,

3. And if they do not do it, in the fullness of time we can expect: 4. These groups can create nonprofit trust corporations to build and operate suitable housing and related facilities.

VIII. But how can we afford to build houses for them?

1. The unit costs on suitable housing should run from $4,000 to $6,000 per residence unit (which may accommodate two or more persons), and on a project running to 250 units or more, this price will include the central facilities.

2. The project can be built by a trust corporation under section 213 of FHA, which means that FHA will insure a mortgage up to 90 percent of cost, for a 40-year term, at 4.5 percent interest.

3. This means that the sponsor needs to raise only 10 percent of the total cost by way of initial capital for downpayment-the rest is amortized out of monthly rentals.

4. Assume a 50-unit, $250,000 project—for a single sponsor-this would require raising only $25,000.

5. Where would that come from: From prospective tenants and their families, from friends of the idea, from those who would like to invest in such a project (sponsor might pay 5 percent on such an investment), and later from gifts and bequests-and from existing idle trust funds. IX. And how can we afford to operate it?

1. The tenants will pay an economic rental that will cover all the costs, operating and capital costs. Rentals will be from $22.50 to $55 per month per unit to operate the plant. This will not cover the social or health services discussed below, but will pay for principal, interest, taxes, insurance, utilities, maintenance, etc.

2. With two or more persons sharing a residence unit, this cost is within the reach of the budget even of pensioners. Many are now paying much more for much less.

3. They will get their own meals, in their own units, if they choose; or they may seat out in a cafeteria type, or dining hall type, facility that will sell meals as desired, not furnish meals as in an institution.

4. The sponsor will end up owning a very valuable piece of property, for having taken the initiative of creating the trust corporation and facility. X. What about medical problems?

1. If not otherwise available, it could be provided by pooling a number of smaller sponsored projects into a single area, with one set of jointly owned central facilities, perhaps 500 people will be served. They can each pay, say $5 per month, for health insurance, covering all their health needs-outpatient care, hospitalization, and surgery. With this pot ($2,500 per month) the organization can hire a full-time nurse, a specialist in gerontology, other specialists on a consultant fee basis, and pay hospital bills. The nurse can organize self-help for the lighter cases of chronic illness, with residents helping each other on housekeeping chores, and staying in their own quarters-a sort of local visiting nurse service.

2. The admissions contract will probably have to include the right to require the person with conditions beyond the facilities of the group to accept the judgment of the doctor as to hospitalization transfer.

3. With a happy, healthy sociable environment, there should be less chronic illness and complaint-this has been demonstrated elsewhere. XI. What about social services: recreation, hobbies, etc.?

1. The central facilities of a project of 300 units could include not only dining hall (doubling as evening recreation assembly hall) but rooms for hobbies and crafts, shops for those who want to putter around, greenhouse, and other centers for special interest groups-and the number of residents would be large enough that everyone should be able to find others who share his common concerns.

2. In other words, the idea is to create opportunities for tenant-run interest groups, voluntarily met and self-run. The management should simply help to bring those with common interests together, and help secure the needed equipment, etc. (Incidentally, sponsors might be very helpful on a continuing basis in assisting at this point.)

3. Nonresidents might be invited to join in the community activities, as interested, on a club basis, with monthly membership fee for use of facilities and this will help pay for the overhead of a director for social services.

4. Other facilities throughout the community should be called into play, so that the recreation department, public library, and other facilities are made available to the residents. But locating this project close in to such facilities is the best answer to most of this use of other facilities.

5. There must be no regimentation-one of the freedoms of the resident should be the freedom not to participate, or to start his own interest group. The aged have a lot of experience, maturity, wisdom, and talent. They are not little children, with rare exceptions.

XII. How do we get going at this?

1. Decide whether or not your group needs, and wants, to do this. 2. Find out how many need what kind of facility, in general.

3. Decide whether to strike out on your own, or join with other sponsors in a joint project. (The optimum, or least-cost-per-unit, project will have from 200 to 300 units. If your needs are substantially less than this, it might be better to find other sponsors interested in sharing central facilities, though each would own its own set of residence units).

4. Organize a trust corporation.

5. Acquire the initial capital, from whatever source it can.

6. Get a small committee, or a single person, designated to make the planning decisions, and get under way.

7. Process the plan through FHA.

8. Borrow the 90 percent.

9. Build it.

10. Operate it-through a paid manager, with the trustees in leal control. Use your best lay membership-don't expect that busy organization executives (as for example, ministers) can take over a full-time business like this in addition to their present chores.

XIII. What sponsors in Denver, Colo., have shown interest?

1. Congregational Church.

2. Baptist Church.

3. Lutheran Church.

4. Christian Church.

5. Jewish family and childrens service.

6. Episcopal Diocese.

7. Catholic Charities.

8. Nursing alumni.

9. Retired teachers. 10. Methodist Church.