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MONDAY, JANUARY 30, 1950
HOUSE OF REPRESENTATIVES,
COMMITTEE ON BANKING AND CURRENCY,
Washington, D. C.
The committee met, pursuant to notice, at 10 a. m., the Honorable Brent Spence, chairman, presiding.
Present: Messrs. Spence, Patman, Hays, Rains, Buchanan, Multer, Mrs. Woodhouse, Messrs. Deane, O'Brien, McKinnon, O'Hara, Gamble, Kunkel, Talle, McMillen, Kilburn, Hull, and Nicholson.
[H. R. 6618, 81st Cong., 2d sess.]
A BILL To assist cooperative and other nonprofit corporations in the production of housing for families of moderate income
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Cooperative Housing Act".
SEC. 2. The purpose of this Act is to provide a means whereby housing of sound standards of design, construction, livability, and size for adequate family life, in well-planned, integrated residential neighborhoods, can be produced and made available for families of moderate income: (1) by furnishing technical and other assistance to cooperative ownership or other nonprofit corporations authorized to provide housing; (2) by making financial assistance available to such corporations for housing which is of such design and construction as will promote economies, both in construction and in operation and maintenance, which will be fully reflected in reduced rents or charges; and (3) by facilitating the investment of private capital in the development of such housing. The provisions of this Act relating to encouraging and assisting nonprofit cooperative ownership housing corporations shall be administered in a manner which will encourage and assist (1) families of moderate income in acquiring (subject to the right of the cooperative to repurchase) ownership of their individual dwellings where such dwellings are free standing, and (2) the association of persons into such cooperatives who (by reason of their like interests, association together in other fields, or otherwise) will contribute to the sound integral character and success of such cooperatives, provide necessary leadership therein, involve democratic voting principles, and avoid any speculative use of such cooperatives.
TITLE I-FEDERAL AID TO HOUSING COOPERATIVES
TECHNICAL AID TO COOPERATIVES
SEC. 101. To assist in achieving the purposes of this Act, the Administrator is authorized and directed to furnish technical advice and assistance in the organization of nonprofit cooperative ownership housing corporations and nonprofit corporations of the character described in section 303 (a) hereof in the planning, financing, development, construction, acquisition, and operation and management of their housing projects, and in the development and use of practical means for members of cooperatives to acquire (subject to the right of the cooperative to repurchase) ownership of their individual dwellings where such dwellings are free standing.
PRELIMINARY ADVANCES OF FUNDS
SEC. 102. To further assist in carrying out the purposes of this Act, the Administrator, upon application by an eligible borrower, may make a preliminary advance of funds to such borrower to assist in the formulation of a proposed housing project eligible for a mortgage loan under title II hereof: Provided, That such preliminary advance of funds shall be limited to the amounts required for necessary work preliminary to construction, and shall in no event exceed an amount equal to 5 per centum of the estimated development cost of such project as determined by the Administrator: And provided further, That no such advance of funds shall be made until the Administrator shall have determined that the borrower is a bona fide nonprofit cooperative ownership housing corporation or a private nonprofit corporation of the character described in section 303 (a) hereof, and that the borrower proposes to undertake a housing project designed to meet the housing needs of families of moderate income. Such advance of funds shall bear interest at the applicable going Federal rate plus one-half of 1 per centum, and shall be repaid out of the proceeds of any construction or other loan obtained by the borrower for the project.
PROVISION OF FUNDS
SEC. 103. (a) To obtain funds for preliminary advances as provided in section 102, the Administrator may, with the approval of the President, issue and have outstanding at any one time notes and other obligations for purchase by the Secretary of the Treasury in an amount not to exceed $25,000,000.
(b) Notes or other obligations issued by the Administrator under this Act shall be in such forms and denominations, have such maturities, and be subject to such terms and conditions as may be prescribed by the Administrator, with the approval of the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the issuance of such notes or other obligations. The Secretary of the Treasury is authorized and directed to purchase any notes and other obligations of the Administrator issued under this Act and for such purpose is authorized to use as a public-debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under such Act, as amended, are extended to include any purchases of such notes and other obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this section. All purchases, sales, and redemptions by the Secretary of the Treasury of such notes or other obligations shall be treated as public-debt transactions of the United States.
(c) Funds made available to the Administrator pursuant to the provisions of this Act shall be deposited in a checking account or accounts with the Treasurer of the United States. Principal repayments on advances made under section 102 shall be applied to the retirement of notes or other obligations issued by the Administrator pursuant to this section: Provided, That this requirement shall not be construed as limiting the authority of the Administrator under section 103 (a). Other receipts and assets obtained or held by the Administrator in connection with the performance of his functions under this Act shall be available for any of his functions thereunder. There are hereby authorized to be appropriated, out of any moneys in the Treasury not otherwise appropriated, such sums as may be necessary for administrative expenses of the Administrator in carrying out his functions under this Act.
POWERS OF ADMINISTRATOR
SEC. 104. The Housing and Home Finance Administrator shall supervise the National Mortgage Corporation for Housing Cooperatives (hereinafter referred to as the Corporation) created by section 201 (a) of this Act, shall perform the other duties prescribed herein, and shall have the power to adopt, amend, and require the observance of such rules, regulations, and orders as shall be necessary from time to time for carrying out the purposes of this Act and for coordinating the activities of the Corporation with the housing functions and activities administered within the Housing and Home Finance Agency and with the general economic and fiscal policies of the Government, and in carrying out these responsibilities the Administrator shall consult with the board of
directors of the Corporation who shall, in addition to their responsibilities under section 203 hereof, act as an advisory board to the Administrator in the administration of this Act. In the performance of, and with respect to, the functions, powers, and duties vested in him by this Act, the Administrator, notwithstanding the provisions of any other law, may exercise any of the powers enumerated in the second sentence of section 201 (a) of this Act and shall(a) appoint a Director to exercise, under the direction and supervision of the Administrator, the functions, powers, and duties vested in the Administrator by this Act, and the basic rate of compensation of such position shall be the same as the basic rate of compensation established for the heads of the constituent agencies of the Housing and Home Finance Agency: Provided, That the Administrator may, in his discretion, delegate any of the functions, powers, and duties vested in him by this Act to any officers or employees under his direction and supervision;
(b) take such steps as he deems necessary and desirable to assure that the benefits of the nonprofit character of any borrower hereunder are not dissipated through speculative devices and to encourage borrowers to adopt methods by which occupants of dwellings may be permitted to reduce their rentals or other occupancy charges by occupant maintenance and repair or other means of self-help and methods whereby they may acquire (subject to the right of the cooperative to repurchase) ownership of their individual dwellings where such dwellings are free standing;
(c) prepare annually and submit a budget program as provided for wholly owned Government corporations by the Government Corporation Control Act, as amended;
(d) maintain an integral set of accounts which shall be audited annually by the General Accounting Office in accordance with the principles and procedures applicable to commercial transactions as provided by the Government Corporation Control Act, as amended, and no other audit shall be required: Provided, That such financial transactions of the Administrator as the making of advances of funds and vouchers approved by the Administrator in connection with such financial transactions shall be final and conclusive upon all officers of the Government; and
(e) make an annual report to the President, for transmission to the Congress, to be submitted as soon as practicable following the close of the year for which such report is made.
TITLE II--NATIONAL MORTGAGE CORPORATION FOR HOUSING
CREATION AND POWERS OF CORPORATION
SEC. 201. (a) To effectuate the purpose of this Act, there is hereby created a body corporate to be known as the "National Mortgage Corporation for Housing Cooperatives with authority, as herein provided, to make and service loans, issue obligations in such amounts, at such times, and on such terms as the Corporation may determine, and to exercise the other powers and duties prescribed in this Act. In the performance of, and with respect to, the functions, powers, and duties vested in it by this Act, the Corporation, notwithstanding the provisions of any other law, may
(1) adopt and use a corporate seal;
(2) sue or be sued in any Federal, State, or local court of competent jurisdiction;
(3) enter into contracts without regard to section 3709 of the Revised Statutes and make advance, progress, or other payments with respect to such contracts without regard to the provisions of section 3648 of the Revised Statutes, and include in any contract or instrument made pursuant to this Act such other provisions as the Corporation deems necessary to assure that the purposes of this Act will be achieved;
(4) foreclose on any property or take any action to protect or enforce any right conferred upon it by any law, contract, or other agreement, and bid for and purchase at any foreclosure or any other sale any project or part thereof in connection with which it has made a loan pursuant to this Act;
(5) pay all expenses or charges in connection with, and deal with, com plete, reconstruct, improve, rent, insure, manage, make contracts for the management of, or establish suitable agencies for the management of, or
sell for cash or credit or lease in its discretion, in whole or in part, any project acquired pursuant to this Act and to pursue to final collection by way of compromise or otherwise all claims acquired by, or assigned or transferred to, it in connection with the acquisition or disposal of any housing project pursuant to this Act, notwithstanding any other provisions of law relating to the acquisition, handling, or disposal of real or personal property: Provided, That any such acquisition of real property shall not deprive the State or any political subdivision thereof of its civil or criminal jurisdiction in and over such property or impair the civil rights under State or local laws of the inhabitants on such property;
(6) acquire, hold, sell, or exchange at public or private sale, or lease, or otherwise dispose of, real or personal property, and sell or exchange any securities or obligations;
(7) obtain insurance against loss in connection with property and other assets held;
(8) subject to the specific limitations in this Act, consent to the modification, with respect to rate of interest, time of payment of any installment of principal or interest, security, or any other term, of any contract or agreement to which it is a party or which has been transferred to it pursuant to this Act;
(9) utilize and act through, without regard to section 3709 of the Revised Statutes, any Federal, State, or local public agency or instrumentality, or nonprofit agency or organization, with the consent of the agency or organization concerned, and contract with any such agency, instrumentality, or organization for the furnishing of any service or facilities; and may make advances, progress, or other payments with respect to such contracts without regard to the provisions of section 3648 of the Revised Statutes; and
(10) do all things which are necessary or incidental to the proper management of its affairs and the proper conduct of its business.
(b) The Corporation shall have power, with the approval of the Administrator, to select, employ, and fix the compensation of such officers and employees as shall be necessary for the performance of its duties under this Act, without regard to the provisions of laws applicable to the employment, compensation, leave, or expenses of officers and employees of the United States: Provided, That the rates of basic compensation of its officers and employees shall be comparable to those established for officers and employees under the Classification Act of 1949. Except as provided in provisions of law relating specifically to mixed-ownership Government corporations, the Corporation may determine the necessity for and the character of its obligations and expenditures and the manner in which they shall be incurred, allowed, and accounted for. The business of the Corporation shall not be considered official business of the United States within the meaning of any statute permitting the free use of the United States mails.
SEC. 202. (a) The Corporation may issue capital stock from time to time which shall be subscribed for by the Secretary of the Treasury on behalf of the United States, and payments for such subscriptions shall be subject to call in whole or in part by the Corporation: Provided, That the total amount of such stock subscribed for and held by the Secretary of the Treasury at any time shall not exceed $100,000.000. Stock held by the Secretary of the Treasury shall be preferred as to dividends and assets of the Corporation and shall be entitled to cumulative dividends for each year equal to a return on the average amount, at par. of such stock outstanding during such fiscal year at a rate determined by the Secretary of the Treasury, taking into consideration the probable term of the stock investment and the current average rate on outstanding marketable obligations of the United States as of the last day of the sixth month of such fiscal year. The Corporation shall issue to the Secretary of the Treasury receipts for payments by him for or on account of such stock, and such receipts shall be evidence of the stock ownership of the United States. There are hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the amounts necessary to enable the Secretary of the Treasury to make payments on such stock when called. Such stock or any part thereof may be retired at any time by the Corporation.
(b) The Corporation may issue capital stock from time to time for subscription by eligible borrowers. In order to assure direct financial participation by