lly impairs or arrests the sound growth of the community and which is to be veloped for predominantly residential uses, or (iv) ***." The amendment, as proposed, will include in the above paragraph the words ommercial or industrial", as follows: ** (iii) land which is predominantly open and which because of obsolete itting, diversity of ownership, deterioration of structures or of site improveents, or otherwise substantially impairs or arrests the sound growth of the nmunity and which is to be developed for predominantly residential, commer1, or industrial uses, or (iv) ***.” For purposes of correspondence with regard to the above statement, please dress: E. Paul Querl, Industrial Development Department, The Chicago Asiation of Commerce and Industry, 1 North La Salle Street, Chicago 2, Ill. SPOKANE, WASH., April 1, 1954. n. WARREN G. MAGNUSON, Senate Office Building, Washington, D. C. urge that you vote against current public housing legislation and vote for anding section 221 to include minorities and other low income families on trolled programed basis. Also vote for lower downpayments of 95 percent first $10,000 and for elimination of proposed Presidential credit control. se matters urgently need your attention for the benefit of the people of the te of Washington. 1. HOMER CAPEHART, United States Senate, Washington, D. C. VERNON CONYERS. GALVESTON LUMBER Co., INC., EAR SENATOR CAPEHART: I would like to express my feelings and wishes to you ator Capehart on the new housing bill which your committee is studying at present time. I deeply appreciate the importance of the chairmanship of committee which you hold; however, I am writing to you mainly because of r being my Senator. eing in the retail lumber and building materials business, I am keenly rested in legislation relating to our national housing plans. Then too, my tion also has something to do with my interest, being next door to the Bunker Air Base. We are in the locality that has been asked by our Federal ernment authorities to furnish some 2,500 additional housing units in the : 2 years to accommodate personnel that will be stationed at the Bunker Hill ne of the main problems that confronts the building supply companies at the ent time is the financing problem. Most new structures are financed in e way or another, and if the funds are not available for sound financing, the needed houses do not get built. The provisions of the housing bill S. , subsection 4 of section 201 will help. The plan to establish a secondary tgage facility is most important to our industry; however, in my opinion, provisions in the bill for a new FNMA would not do the job. The proposal mmended by the President's Advisory Committee on Housing would be far e suitable and accomplish that end. believe that the increase in maximum mortgage limits under section 203 from 000 to $20,000 for 1- and 2-family houses is necessary; however, I hardly ve that it is wise to make this increase discretionary with the President ing such authority, as it would make for uncertainty in our industry and construction industry as a whole. In line with this thought, the part of the osed bill that makes provisions for a 95 percent loan up to $8.000 is good; ever, the 30-year maturity period should be written into the law and not to the discretion of the President. The more loopholes we leave in our lation, the more authority we delegate to other parties other than Congress, more possibilities of future misinterpretation of the real intent of the bill he time Congress acts upon it. ong with the above provisions, it is necessary to provide a flexible interest for FHA-insured and VA-guaranteed loans, which section 201, title II of above bill does. 44750-54-pt. 1- 68 Of great interest to the construction industry is the hopes of having loust terms and larger limits on the title I modernization. This is of special interes to the lumber dealer-because of the tremendous "do-it-yourself" program sweeping the country-in itself a great stimulus to keeping activity on a hizi level for the construction industry. With proper financing available to the average homeowner, he will go ahead and make improvements on his presen owned home, not possible without the above modifications. Other features of the new housing bill before you are good. The consolidat of various programs of the FHA (this should be done in other agencies as wel for greater efficiency) the leveling out of FHA downpayment schedule to courage the building of the homes in the $11,000 to $15,000 range, as our hous progress is going to rely on this bracket mainly. Providing for such action is taken care of in the proposed bill. I will greatly appreciate your consideration of my views when final action take nin your committee on this proposed new housing bill. Yours very truly, GEORGE W. DAGUE, President DETROIT, MICH., February 25, 1951. Hon. HOMER CAPEHART, Senate Office Building, Washington, D. C. HONORABLE SEnator CapehaRT: At a meeting last week of the section 8 title! homebuilders of metropolitan Detroit, called for the purpose of considering th effect of the proposed amendment to the National Housing Act, I filed my re as chairman, a copy of which I enclose herewith. The report was prepared at the end of January and before the introduction of your bill and the one sponsored b Representative Wolcott. The membership, by resolution, instructed me as their representative to take all steps I thought might be necessary to call to the atte tion of the Committee on Banking and Currency and to our honorable Congres men the mistake being made in neglecting section 8 in the new housing progre Since that time I have had an opportunity of examining the bills introduced in the Senate and in the House, and find a provision simply for the repeal of sectio 8 of title I and no provision for its incorporation under title II as was propos in the recommendation to the President. It seems to me that the present legislation makes no provision whatsoever f housing for low-income groups except for section 221 which is "Designed to assist in relocating families to be displaced * * *" as the result of any rehab tation program or discontinuance of Lanham Act or Government housing, h other words, the act makes no provision whatsoever for additional units for income groups. Since I am away from the office due to slight illness, I am dictating this lets to my secretary over the phone and having her forward same with the enclosure to you in order that delay may be avoided. Sincerely, SIDNEY C. BARNES REPORT TO SECTION 8, TITLE I BUILDERS OF METROPOLITAN DETROIT ON PROPOSE SECTION 221 AND AMENDMENTS TO TITLE I The proposed section 221 is based on the assumption that under present on tions the building industry cannot produce owner-occupant or rental housi units for low-income families. The term "low-income families" is not defins except that the general statement is made that the phrase is intended to co all families whose income is insufficient to maintain them at a level of adequ living. On page 282 of the report there is set forth an adequate living b for some of the major cities. The amount necessary for adequate living for family of 4 in Detroit as of October 1951, is stated to be $4,195. Making al ance for the increase in cost of living since that time, the estimate at tod level would be about $4,294. The conclusion that must be drawn from the report is that private industr is unable to provide housing for families in the Detroit area whose income! below $4,294 per year. Since the enactment of section 8, title I of the NHA, under its provisions the building industry has been supplying housing on a stantly increasing scale to families with an income of $2,500 per year and Furthermore, all of the purchasers have qualified under FHA regulations reg ing adequacy of income to sustain their housing charges. This has all been de spite the fact that mortgage funds have been very tight, that most section 8 ilders have had to pay a premium in one form or another for their mortgages, id that there has been no subsidy to support the program. One of the subcommittees of the Senate Committee on Banking and Currency is made an investigation of the section 8 program in Detroit and I believe they ve the information in their files to prove that the program has created attrace new neighborhoods in the Detroit area, has built up substandard neighborods rather than created new slums. It is probably true that without the fine ministrative supervision and cooperation of the local FHA office and the intelent handling of problems and the willingness to cooperate on the part of most the builders in the program, a different situation might have developed. owever, it has been definitely proven in this area that the section 8 relaxation standards does not create new slums, but rather improves neighborhoods. The Subcommittee on Housing for Low Income Families has stated with regard proposed section 221 : "In fact, we oppose the lowering of standards which would affect the soundness the structure or the neighborhood environment because we would simply be eating the problems we are now struggling to solve." Standards should not be lowered to affect soundness of construction. Experice has taught section 8 builders, however, that when they go into an old neighrhood on a spot-lot project the effect is to build up rather than break down the ea. Old homes which have been neglected for years are spruced up, painted, d modernized to match their new neighbors; the individuals or the townships t in paving and sidewalks; the whole neighborhood competes for the best vns and gardens. This element of improvement has been fostered by local IA suggestion and help and most of the builders have cooperated. The above are facts which the committee should recognize. Carefully handled axation of neighborhood standards and site acceptability requirements can a long way in accomplishing the following: 1. Doing away with the necessity for subsidy to low-income groups by makavailable low-cost land. 2. Improving neighborhoods which would otherwise eventually deteriorate o slums. 3. Making available a larger quantity of sites, since many zoning requirents and private restrictions make the construction of low-cost homes proitive. Exhibit 5 attached to the subcommittee report on Housing for Low Income milies (p. 291) shows that in 1951 20.4 percent of the total urban populan earned less than $2,500. Assuming that section 8 cannot provide housing this segment of the population, can the proposed section 221 accomplish purpose? t can be assumed unless a secondary market is established through Govment subsidy, that mortgage money for a 100 percent, 40-year mortgage 1 not be available. If Government subsidized financing is made available n a minimum unit with a $6,000 mortgage can be produced for families able afford a total housing expense of $55.35 per month or only for families ving an income of over $50 per week. Since section 8 builders are already e to supply housing for such families, the new section accomplishes nothing ept that it eliminates the downpayment. If that is all that need be accomshed, then it can be done under section 8 pursuant to a much simpler plan. f section 8 was amended to permit sales under the land contract mortgage n initiated and developed by John Heal and Sidney C. Barnes, no downment or only such small downpayment as the builder may choose need required. The builders, in so doing, would stand on their own feet; solve problems of the minimum downpayment without further Government help. rthermore, FHA insurance funds would not have to be separated because risk of foreclosure in these cases would not be greater than under present ctice. To make this program work, only minor amendments to the law will be uired. In order to induce the builder to bear the risk of payment of the d contract balance, the Internal Revenue Code should be amended to provide t in such sales under section 8 only that profit received at the time of closing ough receipt of the mortgage proceeds and downpayment, if any should be sidered as income then received, the balance of the profit received through idation of the contract should be income if, as, and when received. t is my suggestion that the mortgage limit be increased to $7,000 for 2-bedm homes and $7,500 for a 3 or more bedroom home or for a 2-bedroom home with an unfinished attic capable of being used for 1 or more additional bedrooms on completion. The mortgage should continue to be 95 percent of appraised value. Those in the business know that one of the most important factors in keeping the incidence of foreclosure so remarkably low under section 8 has been the sweat equity of the owner. Owner completions should be continued and widened in all phases of their capability. This same method of financing can be used in the sale of rehabilitated used homes. To prevent abuses, it is recommended that no used home be acceptel unless prior to its rehabilitation it is inspected by the FHA and certain minimuma rehabilitation requirements be set and that a commitment for insurance there after be obtained on a specific set of specifications for each job and that the jobs be inspected and passed by the FHA. It is further suggested that a mortgage to a builder for rental purposes of 90 percent of evaluation be given both on new and rehabilitated homes. A higher percentage mortgage is justified in providing lower rentals. What is to be done for those families whose income is below $2,500 per year' Can private industry provide housing for them? Approximately 7 percent of the families of the country (as of 1951) have incomes between $2,000 and $2,7* Low-rental projects produced by private industry should be able to provid decent housing for such families. Relaxation of set standards will open up a certain amount of lower-cost sites. Careful administration by the FHA w not only prevent these units from deterioration into slums, but will help : lifting the standards of the entire neighborhood. A maximum mortgage limit of $5,000 per unit for 1- and 2-bedroom units and $5,500 for 3 and more beirooms should be sufficient. A 95 percent mortgage should be given to cooperatives and 90 percent to builders. In order to keep monthly housing charg as low as possible, it is recommended that for this group no mortgage insuran premium be charged. Section 8 is a readymade, proven method of providing housing for the low income and lower middle class income families. According to exhibit 5 (p. 291) attached to the report of the Subcommittee on Housing for Low Income Famil aproximately 28 percent of the urban families of the United States earned between $2,500 and $4,000 in 1951. The same exhibit shows that the total urbes families in that year earning from 0 to $4,000 was 48.5 percent of the total urbil families in this country. The startling fact is that it has already been dem strated by the section 8 builders that 58 percent of the families whom the committees have declared to be beyond the reach of private industry for their hous.ag needs without subsidy from the Federal Government can be and have been ade quately serviced. Furthermore, the percentage must probably be consideraby greater when we take into consideration the fact that housing can be provide. in the areas of more moderate temperature at a lower price. It seems obvious that what needs to be done is a streamlining and broadening of the section 8 program as a means of solving the housing needs of the poor What has been done in Detroit can be done on a national scale. The program should be separated and placed under the jurisdiction of a special Deputy Adri istrator who understands and is sympathetic with the needs of the people and the building problems involved. It should not be placed within title 2. because the problems, treatment, and handling are entirely different and because further experimentation is necessary. The success of section 8 in Detroit has been attributed to the fact that this s a city of workers who are acquainted with the use of tools, and they are therefore capable of finishing off their homes. I doubt whether the Detroit workers wh bought the section 8 homes were more skilled in the trades necessary to comp»l» a home than any other workers. My own observations have been that the per chasers who were raised on farms, generally speaking, did the best completi s jobs. I think, however, that the necessity of special skill has been overemp ssized. With very few exceptions, the jobs in completion could be done by almost anyone. One of the mistakes made in 1953 in the section 8 program was the requirement for a greater extent of completion. The result was an increase price, which blocked out a segment of the population needing homes. The section 8 program should be a great success in farm and rural areas as 1 means not only of providing homes, but farm buildings as well. If administra tively it was made possible for farm families to provide so much of their ow: labor as their capabilities permitted the program would go a long way to solvit: the rural housing needs. Not only would the farm family, with its special skil in construction, be able to make use of them, but they could also schedule the work during the seasons when their farmwork has been completed. |