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Unfortunately we know of no examples in the United States where a private lender has made a mortgage loan to a cooperative group for the co-op ownership of a number of detached residences.

(b) Cooperative ownership facilitates quantity purchasing of fuel, insurance, maintenance supplies, and services, thus reducing the costs of these items.

Two cooperative projects near Dallas, Tex., have identical management, and both have 300 units each and were built at approximately the same time. One of them, Dallas Park, has not been able to buy its utilities cooperatively, while the other, Avion Village, has. The savings on utilities at Avion Village amount to 20 percent.

(c) In a co-op the corporation handles transferring of memberships at cost, thus eliminating most of what realtors would charge as commission every time a unit is sold, and eliminating the speculation in housing.

Cost of transfer of ownership in the co-ops is very little too, since all the projects have long waiting lists. At Greenmont Village in Dayton, Ohio, the waiting list is so long they will not accept applications. The turn-over is very small, too—over 70 percent of the families that first moved into the Amalgamated project in New York 20 years ago are still in the project.

When Norris, Tenn., was sold by the Government, a cooperative of the residents unsuccessfully bid for the project, but it was sold to private interests. One year later the homes were placed on the market at 30 to 35 percent higher than the co-op would have valued them if they had paid what the private interests paid for the project.

2. Comparing cooperative ownership of multi-family dwellings with private owned rental housing.

(a) The owner's profit is eliminated in the co-op, which operates at cost.

(b) Repair and maintenance is less in a co-op since minor repairs are done by the member owners themselves rather than having it done by professionals, and a good deal of self-maintenance is practiced in cooperatives.

(c) Decorating in a co-op is generally less, since the pride of ownership encourages people to keep their homes cleaner and to take better care of their property. Also much of the decorating is done by the members themselves in their spare time, thus saving the cash outlay for outside painters, cleaners, etc.

(d) On smaller co-op projects management costs are practically nil since it is generally handled by a management committee on a voluntary basis rather than on the usual management firm's 5-percent basis, typical of rental projects.

C. DIFFICULTIES EXPERIENCED BY COOPERATIVE HOUSING ORGANIZATIONS

1. Convention mortgage financing requires such a large equity investment (35 to 40 percent) that only upper income families can buy cooperative housing that is privately financed.

There are probably only three general exceptions to the above: (a) Where people lived in small community or rural areas and were able to perform their own labor; (b) where they are being helped by a labor union and liberal and philanthropic organizations, and enjoy partial tax exemption, as in New York City; and (c) where the Government is selling defense and war housing to cooperative groups for from 10 percent down to no down payment.

2. Where upper-income families have been able to raise sufficient equity, they have still been unable to obtain private mortgage financing for a cooperative ownership project if it is to consist of detached residences. Without exception that we know of, mortgagees have insisted on each family financing his home with a separate mortgage, even if they will grant a single large mortgage during construction.

Cooperative Community, Inc., at Glenview, Ill.; Bannockburn Cooperators, Washington, D. C.; York Center Community, Lombard, Ill., for example, all tried to build cooperative ownership projects and were forced to abandon their plans and are ending up with private ownership of the homes with certain controls over selling of any home in the project.

3. Under section 207 of the 1948 amendments to the National Housing Act, FHA, by insuring mortgages of housing co-ops, was supposed to make co-op ownership projects possible, and at lower down payments, lower rates of interest on the mortgage, and longer amortization periods. However, no such results have been forthcoming.

Due partly to the high cost of construction, but also to FHA's appraisal practices, 35 to 40 percent or more down payments are still required. Peninsula Housing Association's first house in the Palo Alto, Calif., project received an FHA commitment amounting to 56 percent of the total cost. FHA is insuring about the same percentage on the homes in Bannockburn, near Washington, D. C., where the down payments are ranging from $4,800 to $9,500. However, the mortgage insurance on these is under section 203, since they were started before the section 207 provision was law.

Further, the delay and buck-passing that various co-op groups have received when dealing with FHA has been almost enough to kill the projects. Schoolcraft Gardens has been almost 3 years in getting final approval of mortgage insurance on their project in Detroit, Mich. The AMVET Homestead Association in Columbus, Ohio, has been working for 2 years with FHA and still hasn't received final clearance. And members of Mutual Housing Association in Los Angeles charge FHA delay with adding at least $500 to the cost of their homes, besides keeping them from gaining occupancy at least a year sooner than they will get to live in their homes.

4. Generally speaking, cooperative housing associations have not experienced serious difficulties once their homes have been built. In other words, it has not been the experience of those groups of people now living in cooperative housing projects that any great problems have arisen in the operation of the project. Most of them are going along about as smoothly as any human institution could be expected to do.

Of course, there is friction and disagreement from time to time. Some groups seem to feel that there is too little democratic control, possible under their form of organization. As to others the question has been raised as to whether there might not have been too much democracy, especially during the period of construction.

The CHAIRMAN. Give us some information as to the organization for which you speak?

Mr. Voorhis. I am secretary, Mr. Chairman, of the Cooperative League of the United States.

The Cooperative League is an educational and informational organization, whose members, in turn, are some of the regional coperative organizations. Two mutual insurance companies are the other members of the league, being organizations like Consumer's Cooperative Association of Kansas City, Farm Bureau Cooperative Association of Ohio. That is, they are wholesale cooperatives which belong, in turn, to the local cooperatives in the areas that they serve. Those local cooperatives, of course, belong to the people who are their members.

The Cooperative League attempts to carry on an educational job with respect to cooperatives, what they are for, what their real objectives are, the fact that they do pay taxes and want to and other points of that sort. Then we have, also, an organization called the National Cooperative Mutual Housing Association, which is a loose federation of some of the existing cooperative and mutual housing associations. It is not a financial organization and I serve it merely in my capacity as secretary to the league. In other words, I don't get paid for that. I do get paid for being secretary of the league.

Mr. MULTER. Will Mr. Voorhis come back?
The CHAIRMAN. I do not know.
Mr. MULTER. I have just one matter to discuss, if I may.

Mr. Voorhis, you pointed out on page 2 of your statement that there were two items bringing down the cost of housing?

Mr. VOORHIS. Yes.

Mr. MULTER. First, savings which cooperation by joint action make possible and secondly, reduction in finance charges.

Mr. VOORHIS. Yes.

Mr. MULTER. I think a third item in bringing down costs is that the cooperative project eliminates the profit made by the owner when he resells a home to the private person who will occupy it, or if it is

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a multi-family dwelling by eliminating the profit from rentals as well as resale.

Mr. VOORHIS. That is exactly right. I did mention that. I did mention that you eliminate those profits and I mean those to be covered by the phrase “the savings which cooperative and joint action make possible, but I do think that further emphasis on those points is a matter of great importance and I think that the first one that you mentioned, that the profits from resale and so on are eliminated is of greater importance in the long run, because it means that under this bill you will be providing not for just the first purchaser who is going to get the advantage of a low-interest rate or something, but you are providing for the life of that housing that other people, as long as that housing exists, will have a similar opportunity to those of the first occupants.

Mr. COLE. Are you through, Mr. Multer!
Mr. MULTER. Yes.

Mr. COLE. In connection with the list of cooperatives that you have supplied for the record, how many of those cooperatives are units which were owned by the Government and acquired later by the cooperative, approximately?

Mr. VOORHIS. If I had 5 minutes, I could come pretty near on the button, but I would say that a dozen of them probably, something like that.

Mr. COLE. Has any effort been made to determine, on the basis of these cooperatives, what the savings, if any, has been as compared to comparable units?

Mr. VOORHIS. Yes; there are figures like that. I gave some of them my

testimony on maintenance and things like that. Mr. COLE. 'I realize that, Mr. Voorhis; but, if you will pardon my saying so, the use of one or two figures in one or two instances is not very valid so far as statistics are concerned.

Mr. VOORHIS. Yes.

Mr. COLE. What I have in mind is, are there any figures which would show the over-all savings

Mr. VOORHis. Compared to what?
Mr. COLE. As compared to privately owned units.

Mr. VOORHIS. Now, look, I wanted to give the committee, each member, a copy of this book, if I may. I haven't enough here but will furnish enough for each member of the committee. This is a study of cooperative housing in the United States. It is only about a year old, and it is the best, the only thing of its kind that we know of; and most of those things are going to be in here--not in a table, however, I will admit. We can show you that the total monthly payments at Dallas Park and Avaion Village in Texas, for example, are in the $30 bracket-I think it is $38 or something like that-for homes that we think are just as good as a lot of homes that are costing $50 to $80.

We believe that those savings are made possible because of the cooperative features. We think we can show that that is true,

Mr. COLE. That is what I am interested in.

Mr. VOORHIS. That is in here. You will find information of that sort right in this book.

Mr. COLE. What is Avaion Cooperative? Was it originally a Government

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Mr. Voorhis. Those are projects that were built; yes; built by the Government and purchased by the people there.

Mr. COLE. You see, Mr. Voorhis, those are not really comparable. We have no basis for judgment as to the cost of those homes and the purchase price. It is very difficult to make any comparison.

Mr. Voorhis. If you will refer to Mr. Murray Lincoln's testimony before the Senate committee, you will find there some pretty complete information about housing just constructed in Belleview, Ohio, and the savings that they found it possible to effect in that construction. Now, then, as to the savings that can be effected after construction is completed, there isn't any doubt about that.

Mr. COLE. Well, there is some in my mind, and I don't have any evidence to show to the contrary. For instance, assuming that there is a saving in Avaion, Tex., assuming that there is a saving in Dayton, Ohio, there are many special instances whereby these people obtain projects and units at a cost lower than it would be if they were building them and—building them through the ordinary channels of business.

Mr. VOORHIS. I think they paid a full price.

Mr. COLE. I don't know. We had testimony yesterday about a project in which they claimed that there was a $1,000 saving per unit. When we inquired into it, we found that they had acquired this land from the Government at, no doubt, a much cheaper rate than anybody else could have.

Mr. Voorhis. Let me say this: This bill does not propose a simple, easy solution to a problem. We are not here to say that “Just pass the bill and all of a sudden you are going to have a lot of homes spring

and everything is going to be solved.” What we are saying is that here is a method to the solution of the housing problem and that there is enough evidence here and there to prove that it will work and that it has never really had a chance.

Mr. COLE. I realize all of that. All I am trying to find out, Mr. Voorhis, is what the evidence discloses concerning a saving to the people living in them.

Mr. Voorhis. Of course, in order to make a sensible figure like that, you have to pick a comparable situation and make the comparison, and that is hard to do and be sure you are being fair.

Mr. COLE. It is very hard to do, but most people who have testified here have just assumed that that is true, and I can't assume that. I would like to have some evidence to substantiate it. I have some doubt that it is true. Let me carry on the reason why I

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that. The thing that concerns me here is this. We are planning to set up a constituent agency for the assistance of cooperative housing and that will grow up along side of the agency for public housing. I may be wrong, but I am inclined to think that the two will be highly competitive, that in the future we will find great competition between these two agencies, and sooner or later we will be asked for greater and more subsidies on the part of the cooperatives in order that they may compete with the public housing projects.

Nr. VOORHIS. With public housing? Mr. COLE. Yes. That is just my opinion, because that is exactly what is happening in the countries where cooperative housing is very effective. In all of the countries where cooperative housing is not effective, they are subsidizing their tenants to a very large degree by government assistance.

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Mr. Voorhis. That I don't quite agree with.
Mr. COLE. Where are they not doing it?
Mr. VOORHIS. Here is a little book on Swedish housing.
Mr. COLE. And they are subsidizing their tenants ?
Mr. VOORHIS. In some instances they are.
Mr. COLE. In practically all.
Mr. VOORHIS. No; I wouldn't agree to that.

Mr. MULTER. Tenants are subsidized in Sweden regardless of whether they are in cooperatives, publicly or privately owned houses. They are being subsidized because they need the subsidy, not because of cooperative housing.

Mr. COLE. I know that, sir; but my point is that we are going to be faced in the future with bills to subsidize the tenants in cooperative housing. That is just an opinion on my part.

Mr. Voorhis. I hope it is wrong. I would like to point out that in Sweden this much certainly is true that the activities of the housing cooperatives in Sweden have brought about a situation where the people in those buildings were certainly subsidized much less and much later than was the case with anybody else, and where you do have a national housing program in Sweden that is perfectly true.

It is an integrated situation; and they say to the cooperative outfits, “Go ahead and build this housing; let anybody live in it who wants to; and then we will contribute something from the Government to reduce the rents,” particularly on big families, as I understand it.

In Sweden there are also special municipal subsidies not granted to cooperatives but to the municipal corporations which wholly own and operate certain dwellings, where only the low-income groups are permitted to rent, and then there is a direct-rent subsidy for about 15 percent of the rent or 3 kronor per square meter of space per month in the municipal-owned venture.

Mr. COLE. That is right.

Mr. VOORHIS. On the other hand, I don't think that in any way invalidates the contribution that cooperative housing has made to the solution of the Swedish problem. I think that the question of whether a nation like Sweden wants to subsidize tenants, generally speaking, is one question. I assume we don't want to do that. If we don't, I think we ought to pass this bill, and I don't think that the passage of this bill will have any other effect than to make it a good deal less likely that demands of that sort for increased public housing are going to be made. In other words, if you leave matters in the present status quo, you are going to have a whole lot of folks who are going to be saying, "Look here, I make $2,400 a year and this fellow down the street from me only makes $1,600, so he gets to live in a nice house and I am still living in a very substandard home, and I don't think it is fair."

You are going to be asked to extend the scope of public housing. What we are hopeful of and what we believe is justified by the facts is that by the passage of a bill like 6618 it will be possible for you to turn the people loose on the solution of their own problem so that you can

avoid the necessity of the upward expansion of public housing. Mr. NICHOLSON. Mr. Voorhis, you mentioned Boston and what they had to say about housing. They, I think, will have a tax rate of

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