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Mr. McKINNON. Yes; but you don't know how many are looking for homes in that group:

Mr. DINGER. We don't know how many are looking for homes, but we do know that there is practically no housing available at prices that that income group can afford. There is no housing being made available, either rental or purchase, within the means of that income group.

Mr. McKINNON. În your $7,000 break-down, did I understand you to say that on $7,000 building, through cooperative building, you can cut $1,000 off of that?

Mr. DINGER. Yes; the Baton Rouge, La., group published that figure as the round saving that they realized through the cooperative efforts of this housing development.

Mr. McKINNON. How did they break that down? $1,000 off of $7,000 making it $6,000, or $1,000 off of $8,000 making it $7,000!

Mr. DINGER. I am reading from a paper, a paragraph near the end of this brochure, which I have added to the record.

These houses provided an effective substitue for rental housing, since the monthly savings compare favorably with rentals with much less commodious quarters. In addition, due to the nonprofit sponsorship of the American Legion, each veteran acquiring one of these houses will have an equity of approximately $1,000 in his house the day he moved in because it will be acquired at a cost at least that much under the prevailing market.

Mr. McKINNON. That is a pretty general statement. Do you have any tangible facts as to how much we can save on construction of cooperatives?

Mr. DINGER. I can immagine that that information would be available through this Nicholson Post of the American Legion in Baton Rouge. The exact figures as to what the savings would be I should immagine would differ with different communities but, of course, I want you to understand that in this particular project a considerable saving in land acquisition was realized through the purchase of some war land from the War Assets Administration.

Mr. McKINNON. I haven't been able to get any definite information showing where and how, other than through financing costs and extension of amortization, we are going to make any savings on cooperatives. I would like to see where we can save money cooperatively in building. I would also like to find out if that cannot be extended in certain regards to the regular individual type of construction to help the great majority of veterans who will not be able to get any advantage whatsoever under this cooperative title. After all, this cooperative title is going to benefit only a handful of people. You still have the great bulk of people looking for homes at the cost beyond what they can afford to pay. There must be some other ways of extending benefits in construction to the great majority of veterans rather than simply thinking we have done a good job by passing this one little cooperative title that will benefit 35,000 the first year and after that will benefit 215,000. This is only scratching the surface of our needs.

Mr. DINGER. That is correct. I would like to say along with your statement that the American Legion is at the present time making a study of the costs of housing which can be insured under FHA from the standpoint of building codes as another means of eliminating some of your high costs in production of housing.

In answer to your question, I think if you will just take the situation where a housing cooperative is going to benefit by the purchase of land, that is a large tract of land, there is going to be some saving there. By the nature of the cooperative, you will eliminate a speculative producer of homes. It is pretty hard to say just how much that is going to be per house, but there is a very definite area of speculation in housing construction today.

Mr. McKinnon. Does the American Legion feel that the FHA could be of assistance in reducing the cost of homes by insisting that the speculative buyer limit his profit?

Mr. DINGER. I would like to say that we still have that under study. "The idea has been presented to us and we have a resolution at our last national convention to study the question of building codes and how they might be reduced, insofar as FHA standards are concerned, thereby bringing the cost of the production of the house down.

Mr. McKINNON. Does the Legion have information which leads it to believe that FHA requirements can be reduced without cheapening a home, the quality of a home?

Mr. DINGER. Yes. That has been presented to us as a possibility and we are making a study of that at the present time.

Mr. McKINNON. How dong do you suppose it will be before your study will be complete?

Mr. DINGER. That is pretty hard for me to guess, except that to say that no official action could be taken on the result of such a study until sometime in May when our national executive committee meets.

Mr. McKINNON. You expect to have it completed by then?
Mr. DINGER. Yes; we hope to.
Mr. MULTER. May I ask a question at this point ?

The figures were presented to us by Mr. Foley, proceeding on the theory that private industry will do all the building. The cooperative is going to let out contracts to private industry which will do the actual building and the figures which he submits to us are on the basis whether it is private industry building for its own use adn resale at a profit or the cooperative building, the building and land cost will be the same. In other words, he takes a base figure of $7,000 a unit in one instance, $8,000 a unit in another and a $9,000 unit in a third instance. That is your cost that you start with. The over-all gain that is sought to be obtained here, whether the single family unit or the multifamily dwelling, is that you eliminate immediately the speculative profit that the builder may attempt to obtain by resale. In other words, that profit when one builds today for resale is immediately eliminated, because the owners are not going to sell. They are building for themselves just as you and I would do if building a home for ourselves. There is no element of profit to be obtained there on resale and none from rental.

Mr. McKINNON. There are a lot of people doing that today, in the open market, who are employing an architect or contractor to build their home direct for them without speculation.

Mr. MULTER. That is right.

Mr. McKINNON. And yet today we find a lot of those homes very expensive to occupy.

Mr. MULTER. In the main the man who can do that has his own capital and can put in a substantial investment and gets the balance



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on a mortgage that will rarely run more than 60 percent to 70 percent.

Mr. MCKINNON. You will not get FHA financing for the man who is building the job himself. You cannot do it that way.

Mr. MULTER. But I think mostly it is a man who buys up many acres, erects one-family homes or multifamily dwellings and then resells the homes to the proposed occupants. This bill will eliminate that profit that can be obtained from the time the building is completed and it is resold to the proposed occupant. Here the proposed occupant is the owner from the beginning, whether it be multifamily or single family dwellings. They eliminate that profit. By eliminating that, we have been able to get the charges down to these figures set up by Mr. Foley for us.

Mr. MCKINNON. Of course, I think you have a pretty hard time drawing just generalities on this type of thing, because I can point to instances where there have been developments where the speculator, if you want to call him that, has taken less than 10 percent out of the actual cost that it took to develop that project. On a $7,000 home or a $6,000 or $8,000 home it will be somewhat under $1,000. Sometimes that $1,000 or $800 or 10 percent cost, whatever it may be, will be represented by some type of management cost in a cooperative, too. I think there are a lot of chances for savings in cooperative construction, but I would like to get some specific examples of where that saving is being made to see what we can do toward projecting it over into the individual construction.

Mr. MULTER. What saving, if any, would be obtained in the cost of erection is a matter that I am afraid we will be able to determine only after the experiment has been rolling for awhile.

Mr. McKINNON. I am afraid that a lot of the cost of savings in this cooperative construction is being attached to the actual difference in the way of financing. In other words, there is no savings but we are amortizing it over a 50-year or 60-year period. Actually a 60-year period is going to cost the home owner more money in interest than if he could pay it off in 20 or 30 years. However, the lower monthly payments allow a family to have a nice home on the 50- or 60-year period that it would not be able to have on the 20- or 30-year period.

I think the easier terms is a good thing in many respects. I only wish it could be extended more for the individual home purchases, instead of concentrated alone in the cooperative title. I think the individual is entitled to the same thing.

Mr. MULTER. My hope is that this experiment will encourage the private builders to pursue the same method. You remember up to the time of Home Owners' Loan Corporation your home financing was done on a basis of a term loan, the entire sum coming due at the end of the 3- or 5-year period. Private lenders, and I mean both bank and insurance companies and other lenders, would not consider lending to a home owner on an amortization basis. The Home Owners' Loan came along and taught them to spread it over a 15-year period and not lose anything by doing it. Here we are going to teach the industry that the mortgage can be spread over a 50-year period and still have a sa fe investment.

Mr. McKINNON. I hope we can. One of the bright hopes is that we can open up the possibility for many more to own their own homes. .



Therefore, I think Mr. Dinger's point that this be administered in sympathetic hands is a most important point.

Mr. MULTER. I agree.
Mr. PATMAN (acting chairman). Any other questions.

Mr. COLE. Mr. Chairman, the Republican side is a little bit interested.

Mr. PaTMAN. I am sorry. I didn't know but what the Republican side had interrogated them first.

Mr. COLE. I don't have many questions, but I do have one or two.

Mr. Dinger, returning back to your brochure, there from Baton Rouge, as I understand it, the savings of $1,000 a house is largely due to the method of acquisition of the land or the acquisition of the land ?

Mr. DINGER. I do not have the figures as to just what made it possible, in detail, the savings of $1,000.

I think probably that the acquiistion of land had quite a bit to do with it because there would be no profit in the turn-over of land in this sort of—in a cooperative operation, such as there is in a speculative operation.

Mr. COLE. That, in that conection, I notice the statement in the brochure that through the cooperation of their Senators and Representatives they were able to acquire this land. Does that indicate that there was some political machinations in connection with it and that they acquired it at a less cost than the appraised value? Let's strike the word “machinations.” Political implications?

Mr. DINGER. I think that probably what they mean is that through the assistance of their congressional representatives here in Washington they were able to probably expedite whatever negotiations or conversations that they had.

Mr. COLE. But at least they did acquire the land apparently quite cheaply and from the Government?

Mr. DINGER. From the War Assets Administration.

Mr. COLE. Yes. That would not be typical, of course, of other acquisitions of land ?

Mr. DINGER. No; that would probably be exceptional.

Mr. COLE. Certainly not typical, therefore, before we make the statement that a proffered house may be purchased from the Baton Rouge Cooperative at $1,000 less than it may be purchased elsewhere, we should have some of the figures in connection with it, should we not?

Mr. DINGER. Yes. I explained in my answer to the previous question that I would be glad to contact Nicholson Post and try to obtain the exact figures, the break-down of that $1,000 saving. I pointed out that, in my opinion, a considerable percentage of it was as a result of land acquisition at a more reasonable value.

I think that also we have to recognize the potential saving which has been referred to by Mr. Foley of the difference in profit of land acquisition, the elimination of a speculative business. I think a cooperative would have the various builders in the locality probably bid for the work, and in that way bring down the actual speculative cost perhaps nearer to its actual value.

Mr. COLE. There have been a number of statements made and I was interested in the colloquy on the other side about the possible

prospective savings in construction of houses by cooperatives. I have been of the opinion that there were none and apparently the American Legion has not been able to develop any facts to substantiate it or apparently you have no real position on that question, have you? You have not made the statement that there was a savings in the construction under this method ?

Mr. DINGER. Yes; we have made the statement that there is a savings in construction. We don't mean that to apply to the individual builder.

Mr. COLE. No.
Mr. DINGER. We mean that to apply to the speculative builder.

Mr. COLE. What I mean is, has the American Legion made the statement that by cooperative building a savings will be had in the construction of units; and if so, upon what do they base that statement ?

Mr. DINGER. On the actual construction a saving would be realized only insofar as the members of the cooperative devoted their own time, assisting the builder or contractor in the erection of the homes. That might take different forms, but that has been done in at least one project that just comes to my mind vaguely in the East here where a number of veterans formed a cooperative corporation, a housing cooperative, and all got together and started building on one house. As they completed that one they moved to another one. Obviously the expense to them in terms of their end product, which is monthly rental, is much less as a result of that effort, that cooperative effort.

Mr. COLE. Other than the fact that the individual members of the cooperative assists in the construction, then there is no saving in the actual construction ?

Mr. DINGER. We don't say that a builder is going to make any more or any less profit in the construction of a house under this cooperative title or housing unit. I think that that is the best way I can answer your question. We assume that the builder will get the same profit, reasonable profit from work that he does under contract with the cooperative as he would under any other contract.

Mr. COLE. That is all, Mr. Chairman.
Mr. PATMAN. Any other questions?
(No response.)

(The brochure referred to herein is as follows:) HELPING THEM TO WHAT THEY FOUGHT FOR—A REAL AMERICAN HOME OF THEIR



(Issued by Nicholson Post, No. 38, the American Legion, Baton Rouge, La.)

The American Legion Housing Corp. of Baton Rouge, La., was organized early in 1946 to provide homes needed by veterans. A prior survey indicated that of the approximate 12,000 veterans in East Baton Rouge Parish, one-third desired to build homes, but that by far the majority of these could not meet the market prices then prevailing.

The Mayor's Veteran's Emergency Housing Committee proposed to Nicholson Post, No. 38, of the American Legion that low-cost homes be provided through the use of a tract of land then belonging to the Federal Government, and that a corporation be organized for the sponsorship of such homes. A committee, consisting of the following Legionnaires, was appointed to execute this project: Richard C. Cadwallader, attorney, chairman ; Lowell M. Roseman, realtor; and Jack P. F. Gremillion, attorney. These men were all veterans of World War II, and vitally concerned with the problem at hand. Mr. Cadwallader then was also


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