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has not supported this recommendation, and has instead cut housing units to 20,000 for this year and 13,000 units for the next, at which time it is to come to a close.

The AASW strongly urges that the amendment proposed by Senator Maybank which calls for a return to the public-housing provisions of the 1949 act, other legislation notwithstanding, be adopted. In fact, it would appear that by this amendment Senator Maybank, a Democrat, is rescuing the President's own housing plan wherein he accorded public housing an integral place.

The AASW would point out that it has been amply demonstrated that private enterprise cannot provide, at a profit, good housing within the reach of all income groups. We call your attention to an article appearing in the New York Times, March 15, entitled "Billion Spent in Housing Since 1936 Yet 1 in 5 Here Is Slum Dweller."

* * because of the housing shortage * no nonveteran families qualified for public housing in almost 8 years, except those whose homes were torn down for slum clearance of other public projects.

Despite the notable improvement in the veteran's lot and the demolition of the worst hard-core slums, New York's overall housing problem is becoming more difficult instead of easier. One of every five New Yorkers today is a slun dweller or lives in substandard housing in a deteriorating neighborhood.

To clear the older slums and cut out the substandard housing that has infected larger areas, the city would need today 480,000 new dwelling units, according to Mr. Cruise (chairman of the city housing authority). But nowhere near that number will be built in the next 10 years, if the postwar rate of private and public housing is unchanged. The city's population, meanwhile, is being swelled by 50,000 to 60,000 migrants a year, most of them in the lowest income group.

Some real-estate men are enemies of all public housing, but the major realty groups and large builders agree on the need for public housing at the present range of $9 to $19 a room. The major realty spokesmen say there must be a large amount of housing in this rent range and that they cannot provide it.

The New York situation is not unique, though perhaps it is one of the more glaring cases of need in the United States. However, Philadelphia, Boston, Detroit, Baltimore, San Francisco, and Seattle are among the cities with acute housing needs. The inadequacy of housing for the country's low-income groups is so much a matter of everyday knowledge in the social workers' world that it is difficult for us to understand how responsible officials would advise the President that a program of $7,000 dwellings for persons whose homes are demolished in slum clearance projects and public housing at the rate of 35,000 units a year would approach the President's laudatory objective of decent housing for all American families.

In addition to families with low incomes, there is another group of American families who are poorly housed. This is the minority group. Fifteen million of our citizens have dark skin. Americans of Japanese ancestry number over 100,000 as do Americans of Chinese ancestry. The AASW commends the President for his frank recognition of the housing situation of minority groups. Given the situation from which we are starting, however, the President's ambition to assure equal opportunity for all of our citizens to acquire, within their means, good and well-located homes" is an ambitious one indeed. Progress does not seem to come very rapidly in this area.

It is noted that the President proposes no legislative guaranties of any kind here. Rather, he pledges administrative action. The AASW will be interested to see how the President implements his

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bjectives. Our chapters plan to keep careful tab on administrative ctions designed to bring decent housing within the reach of minority roups. Next year, we will be in a position to report what has been one here. Study of the administration's housing proposals does not suggest the AASW that there is likely to be much change in the amount of ousing constructed in 1954 over what was done in 1953. In fact, it is onceivable that there may be less. From the high of close to 1,400,000 arts in 1950, construction has run between 1,000,000 and 1,100,000 nese last 3 years. It is unnecessary to observe that this is not a sufficiit rate. Needs are not being met. With all the abundance of this economy, it is a shock for an Ameriin traveling abroad to find European countries outstripping us in pusing. Holland has done an extraordinary job in housing. So has weden. It is not that we lack the means to house our citizens. In 148 this Nation, with 6 percent of the world's population, had 40 ercent of its income. It is that we have not met the challenge of uis problem. The AASW does not believe that S. 2938 makes a dent 1 the problem at hand. The administration has proposed noble goals It has not done much to provide for their realization. Now, briefly, the point of our comments is that we wholeheartedly iare the objectives and goals of the President's housing program for 154. But we are not persuaded that S. 2938 will bring about what

hopes to achieve. In particular, we call attention to the number of families in the botim income brackets; inasmuch as the President says his housing proram is for all families, we would call attention to the fact that over alf of the American families are under the $4,000 income level, which ‘eates special problems in housing. With his program of the $7,000 mortgage purchase arrangement, e have three comments to make : First, that it is a very narrow program which the President puts orward, inasmuch as it is restricted to families who are displaced om slum clearance. Senator MAYBANK. What would you suggest about that? Miss HADLEY. What do we suggest? We think it is an intertingSenator MAYBANK. I mean just about that one subject you entioned. Miss HADLEY. The narrowness? Senator MAYBANK. Yes, the narrowness, as I understand it, of the resident's program in slum area replacement. Miss Hadley. The point I mean to make is that the President puts orward his program of the $7,000 advantageous mortgage, restricting to those who are displaced by slum clearance. You asked what our recommendation would be there. We would ke to see it done on a broader basis. Senator MAYBANK. For anybody? Miss HADLEY. For any low-income person. Then, furthermore, as I will come to it, Senator Maybank, we feel at there should be more in the public housing field. I comment, in the third point here, on the fact that with the income istribution which takes place in American families, that families with incomes under $3,000 are now in a position to take advantage of the President's mortgage plan here.

We feel it is unfortunate that the administration's bill, S. 2938. contains no authorization for public housing, and we strongly urge that Senator Maybank's amendment be incorporated by the committee

We further draw the attention to the committee to this item, which we quote here, from the New York Times, which we feel is a very interesting objective report of what housing conditions are in one of our major cities, and how far we have gotten with the various housing programs we have had in these last several years.

We highly commend the President for directing attention to the housing of minority groups, and distinctly feel that this is an area which will take a very special effort.

We note, however, that the President is proposing to do this entirely by administrative action; that there are no legislative guaranties written in.

Basically, I think it is the feeling of the association that with the abundance of the American economy—and we comment that this economy has 40 percent of the world's income-that it is a shock that we have not gotten further forward on housing. And unfortunately we don't feel that S. 2938 will accomplish the admirable goals which the President sets forth for us.

The CHAIRMAN. Thank you very much. We appreciate your testimony.

I want to say at this time that we have three more witnesses, and then we will temporarily close the hearings on housing. However, the record will be kept open for 10 days or 2 weeks, should anyone care to file any supplemental statements or make any statements.

We will hold 2 or 3 days of hearings a little later, on smoke abatement, at which we hope many of the mayors of cities will appear. I don't see how we can get around to starting to write up this bill before the 10th or 15th of April. We certainly are going to try to have this bill ready for action on the floor by the first of May, or sooner if we can, but not later than the first of May. But the record will be held open for anybody to file any statements that they might care to. We will possibly have 2 or 3 days of hearings in the next week on smoke abatement.

I just wanted the record to show that. I want the public to know just what our plans are.

Would you gentlemen prefer to finish in the next 10 minutes, or would you rather have a hearing starting at 2 o'clock. Whaterer your pleasure is will be ours.

Mr. RAIDER. We can conclude in a very few minutes.

The CHAIRMAN. All right. Our next witness is Mr. Whiteman of the Associated Builders of Greater New York.

Mr. Raider. Mr. Chairman, I am David L. Raider, attorney for the Associated Builders of Greater New York, and I am appearing for Mr. Whiteman, the executive director.

The CHAIRMAN. Yes, Mr. Raider, go ahead.

STATEMENT OF DAVID L. RAIDER, ATTORNEY, ASSOCIATED

BUILDERS OF GREATER NEW YORK, INC.

Jr. RAIDER. The Housing Act of 1954, as proposed in identical bills introduced in the 83d Congress, 2d session-S. 2938 and H. R. 7839-contains provisions that are of vital interest to members of this association who are active multifamily builders under FHA programs in the New York metropolitan area and in other States along the eastern seaboard.

Section 119, referring to section 213: The general provisions of the Housing Act with regard to section 213, as recited in section 119 of the proposed act, are endorsed by the members of this association. It is their experience that a majority of the interested purchasers have been unable to avail themselves of current 213's being offered for sale, due to their inability to meet the high downpayments required. Generally, these potential purchasers are families who do not have substantial cash reserves, but who are nevertheless excellent credit risks. The intended purpose of the new Housing Act, in making cooperative apartments available at low downpayments, should provide good housing at moderate carrying charges for these people who heretofore have been unable to avail themselves of the benefits of cooperative housing. It is the intention of the builder-members of this association to proceed with large scale projects upon the enactment of this new legislation.

An analysis of the proposed bill indicates, however, that the provision which would substitute a ratio of mortgage to value for the current ratio of mortgage to replacement cost might present a very serious obstacle to the implementing of the basic provisions of the bill which are intended to provide more liberal mortgage credit to cooperative purchasers and therefore might tend to defeat the fundamental purpose of this legislation.

Assuming, for example, that the same formula for determining valuation will be used in section 213 as is currently used in determining value under section 207, we start with the basic assumption that the value can be no higher than replacement cost, but it can be substantially lower than replacement cost. The FHA arrives at a determination of value on section 207 projects by using either a value by summation, capitalization of net income or profit, or by comparison, whichever is lower. The value by summation is the same as replacement cost. The value by comparison is very rarely, if ever, used because of the inability to secure precisely parallel projects. The use of value by capitalization on a cooperative project, where there is no income or profits, does not appear to be a sound method for arriving at the value of such project.

Therefore, the only reasonable method of arriving at a value of a cooperative project is the use of value by summation. Since the value

by summation is the same as replacement cost, the Housing Act should s be explicit in stating that the limiting criteria should be a mortgage

as a percentage of the replacement cost rather than as a percentage of

value.

The Federal Housing Administration, by its processing procedure, adequately covers the question of the economic desirability of the project at the time of the site submission and submission of the architectural plans. The site is considered acceptable only if it can justify the intended project and the plans are reviewed in the light of the development of the site for its highest and best use. We therefore believe that the processing routine safeguards the question of economic desirability and that a further restriction of making the loan as a percentage of value, rather than a percentage of replacement cost, can cause undue hardship on individual projects and could perhaps defeat the purpose of the proposed legislation in its aim to liberalize mortgage loans covering this type of project.

Section 115, referring to section 207: The provisions of the Housing Act in respect to section 207, as recited in section 115 of the proposed legislation, have been liberalized in respect to the per family and per room mortgage amount limitation. Our members feel that such increase in mortgage financing will attract builders in the metropolitan area with the result that rental projects that are needed will be built.

However, the ratio of mortgage loan to estimated value has not been increased by the proposed legislation. This produces the possibility that the increase in the per room and per family mortgage amount limitation will not be reflected, due to the limitation of ratio of mortgage loan to estimated value remaining unchanged. This conclusion is based upon an analysis of projects that have been proeessed pursuant to section 207 of the National Housing Act, as currently in effect, where the criteria of ratio of mortgage loan to estimated value has been either lower than or slightly higher than the present $2,000 per room and $7,200 per unit limitation.

That part of section 207 which provides for a ratio of mortgage to a value of 90 percent, where the project averages 2 bedrooms, with the maximum mortgage being no more than $7,200 a unit, should be liberalized to the same extent as the other section 207 subsections to provide a maximum mortgage loan of $7,500 per living unit.

The metropolitan areas of our country have land development cost and code restrictions which work against development of this type of project; but it is felt that with this suggested increase that these projects can be economically developed. The large group of lower middle income tenants have not been accommodated since the war because of high construction costs. However, it is felt that with the suggested liberalization of the mortgage, under this provision of section 207, that it is possible that large-scale projects can be developed to accommodate this group.

Sections 115, 119, 201: The proposed legislation provides that the maximum amount of mortgage affecting sections 213 and 207 shall not exceed the maximum mortgage amounts as same existed before the effective date of the Housing Act of 1954 unless the President, pursuant to section 201 of the Housing Act of 1954, authorizes a greater maximum amount, in no event to exceed the maximum amount as set forth in the proposed legislation. This requires affirmative action on the part of the President in order to put into effect the new legislation after its enactment by Congress. It is our belief that Congress intends to bestow the benefit of the new legislation for the coming building season. This legislation must be considered by the separate committees and then acted upon by both the Senate and the House of Representatives. It is expected that the enactment of this bill will permit

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