COOPERATIVE HOUSING TUESDAY, FEBRUARY 14, 1950 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met, pursuant to adjournment, at 10 a. m., the Honorable Brent Spence (chairman), presiding. Present: Messrs. Spence, Patman, Buchanan, Multer, Deane, O'Brien, McKinnon, Mitchell, O'Hara, Wolcott, McMillen, Kilburn, Cole, and Hull. The CHAIRMAN. The committee will be in order. Today we have Mr. William Green, president of the American Federation of Labor. Mr. Green, we are always glad to have your views and the views. of the great organization for which you speak. We are glad to have you testify before the committee today. You may proceed as you please. I am sorry that there are not more members present, but I hope they will be in shortly. STATEMENT OF WILLIAM GREEN, PRESIDENT, AMERICAN FEDERATION OF LABOR Mr. GREEN. Mr. Chairman and members of the House Banking Committee, I am very glad to appear before your committee this morning to discuss a subject that has been very close to my heart, the problem of providing decent, comfortable housing for American workers. I consider this appearance in behalf of the American Federation of Labor of the highest importance. I have just returned from the winter meeting of the A. F. of L. executive council at which the cooperative housing bill, H. R. 6618, introduced by Congressman Spence, was thoroughly considered. I bring to you this message: The American Federation of Labor pledges its full support for this middle-income cooperative housing program because we believe that more than any previous housing legislation it will really meet the needs of workers and their families. I am attaching a copy of that statement as an appendix to my testi mony. At our sixty-eighth convention which met last October in St. Paul, Minn., a resolution was adopted unanimously urging enactment of the cooperative housing bill then before the Congress. The resolution pointed out that our postwar housing legislation has thus far failed to meet the needs of workers in the so-called middle-income group. It is because this new program is designed especially to meet the needs of the middle-income group, that the convention unanimously urged that the cooperative housing bill be enacted at the earliest possible inoment. We in the American Federation of Labor have never supported any social or economic program unless we were convinced that the proposed program would meet a genuine and a specific need. We certainly apply that criterion to the subject of housing. It is because we believe that the cooperative housing program will meet a genuine and specific need which is not now being met that we are vigorously urging its immediate enactment. I want to present our views regarding the present status of home building in this country before I discuss the specific points of the bill itself. I know that opponents of this legislation who have come before you during the past few days have argued that the private building industry which has just completed a record year, can meet all of the housing requirements of the American people. If this were true, certainly there would be little need for the program you are now considering. Let us, therefore, examine the actual record of the private building industry to see if it is really meeting the housing needs of the American people and particularly of our moderate-income families. An examination of the actual record will show that private builders have failed to pass two simple housing test: quantity and quality. First, word about quantity. The private builders are congratulating themselves on the fact that 1949 was a record home-building year with about 1,020,000 units constructed, as compared with the previous record of 937,000 units in 1925. Yet when we consider the growth in the Nation's population, the facts show that the 1949 record actually falls considerably below 1925, for in the latter year our population was smaller than it is today by more than 35,000,000. Impartial sources agree that in order to meet our over-all housing requirements, we need not 1 million homes a year, but a minimum of 112 million. Thus, the 1949 record construction is only two-thirds of what is required to meet our minimum housing needs. Nor does this 1949 record compare favorably with the output of other major industries. Compared with the 1920-29 decade, production of housing has increased much less than output of other commodities. Thus, in 1949, when industrial production was more than double our Nation's annual output during the twenties, housing construction had risen only 45 percent. Not only is our housing woefully lacking in quantity, but in addition its quality is far below our standards for decent family living. Gentlemen, I want you to find out about this quality for yourself. Last year a group of Senators and Congressmen, including, I believe, some from this committee, made housing history by visiting the District of Columbia slums within the shadow of the Capitol Building. Now, I am asking you to make housing history once more. I wish you would make a visit to a number of private housing projects in the metropolitan Washington area to see for yourself whether private builders are meeting the housing needs of the American people. You can get some idea of what you would find by studying a recent report of the United States Department of Labor analyzing housing units started in the Washington metropolitan area during the third quarter of 1949. According to this report, only 12 percent of the more than 11,000 apartment units built during that period had 412 or 5 rooms, and not one had more than 5 rooms. This means that only 12 percent of the units had two bedrooms, none had three bedrooms, and the remainder had one bedroom or none. In the construction of one-family houses for sale, the report indicates that 60 percent of the homes started in the Washington area during this period contained only one or two bedrooms, and 15 percent contained only one bedroom or no bedroom at all. More detailed data concerning the survey are attached as appendix B. To my mind, these figures are really shocking. They are a clear indication that private builders are forcing American families into housing units far too small for adequate family living. Why has this been allowed to happen? Let me call this to your attention: All of these apartments have been built with help from the Federal Government through the device of a Government-guaranteed mortgage approved by the Federal Housing Administration. I say that a chief reason for this shameful condition is the absurdly low standards which FHA uses to pass upon an application for an FHA guaranty. Let me point out one example of what I mean. FHA sets a certain "minimum size of space" for rooms in a dwelling unit which builders of houses and apartments have to meet before they can get approval for FHA-guaranteed loans. These standards simply do not provide enough space for decent family living. Of course, in many cases builders do not construct apartments as small as they are allowed to by FHA, but in the Washington metropolitan area during the past few months the situation with regard to size of apartments has definitely been getting worse. Recently, our A. F. of L. housing committee noticed that some twobedroom apartments now being made available in the Washington area were renting at $75 to $80 a month instead of $85 to $95. Encouraged by this apparent trend, we asked a member of our research staff to inspect these apartments. We found that although the rents in these apartments were indeed somewhat lower than in most new apartment developments in the area, the living space had been reduced more than proportionately. In fact, the living space in these apartments is actually at or near the absolute minimum required by the FHA. For example, a typical two-bedroom apartment which our staff member inspected had the following measurements: Living room, 10 feet 2 inches by 15 feet; bedroom, 10 feet 6 inches by 10 feet 2 inches; second bedroom, 8 feet 3 inches by 10 feet 8 inches; kitchen-dining space, 15 feet by 6 feet 2 inches. This is an over-all area of about 440 square feet, which means that the total area of the apartment is about 525 square feet. These are apartments which are being rented to veterans in the Washington area with one, two, and sometimes even more children. Perhaps you can more vividly understand the space if I bring your attention to the space here, the space from over here to over there. That would be even a little larger than the space provided for in these homes with the two-bedroom units. You can imagine how small that is for a family to dwell in. These are the housing units which private builders are constructing, and FHA is approving, for middle-income families. These facts by themselves are startling enough, but they become even more vivid when we realize that the housing units the Federal Government is approving for middle-income families would not meet the standards set for low-income families in public-housing projects by the Public Housing Administration. In our opinion, the public-housing standards represent an absolute bare minimum for decent family living. A comparison between the standards set by FHA and those set by PHA for a two-bedroom unit as well as a three-bedroom unit is included in appendix C. Gentlemen, I speak with the utmost sincerity when I say here today that if we permit these trends to continue we are not only encouraging the construction of the slums of tomorrow, but we are creating definite psychological and community problems which will have a seriously injurious effect on every aspect of American life. One of the most important reasons why we favor the cooperativehousing bill is just because it can do so much to arrest this trend toward the construction of so-called homes which simply do not permit decent family living. We believe that this bill provides a workable method whereby moderate-income families can get together in cooperatives to build decent homes at prices that they can afford to pay. No doubt others who have appeared before you have discussed the provisions of this bill in detail. I simply want to mention a few items with which we are particularly concerned. Perhaps the major change in the bill now before you as compared with the legislation which your committee considered last summer is the provision which will enable this program to be privately financed rather than supported by a system of direct Government loans. We approve the creation of a National Mortgage Corporation for housing cooperatives which would raise money by floating Governmentguaranteed bonds and in turn loan this money to voluntarily organized cooperative-housing associations. We believe that the financing arrangements in this bill will make possible an effective program under which the monthly housing costs in the projects constructed will fit the pocketbooks of middle-income families. This bill will permit a 3-percent interest rate and a 50-year amortization period for the cooperative projects. I want to emphasize the fact that any increase in the gross interest rate or any decrease in the amortization period will be reflected in an increase in the required rents or monthly payments. This inevitably would mean closing off from the benefits of the program some of the families who are most in need of it. Likewise, any increase in the down payment will make it impossible for many middle-income families to participate in this program. We have only one major criticism to make of the proposed amendment. That pertains to the question of administration. The legislation which you are now considering establishes a division within the office of the Housing and Home Finance Administrator which would be charged with the administration of this program. We strongly believe that the cooperative-housing program would be handicapped under such an arrangement. A cooperative-housing program for middle-income families represents a tremendous undertaking and an entirely new departure from previous housing programs. It must be headed by an individual who believes completely in the program, is vested with a certain amount of independence, and is fully responsible for the success of the program. That means that the agency he heads must be on the same administrative level with the Public Housing Administration and the Federal Housing Administration. It means further that the individual in charge of the program should be appointed by the President. We, therefore, strongly urge the establishment of a new unit, to be known as the Cooperative Housing Administration, within the Housing and Home Finance Agency, which would be responsible for the administration of this program. I want to close my statement this morning by telling you in concrete terms what we think this cooperative-housing program can accomplish. We think that most of the cooperative groups organized under this program will construct multiunit developments, many of them socalled garden-type apartments. We think the savings made possible under this program will permit construction of apartments which, unlike so many of the apartments now being built under the FHA program, will be built at an average cost of $8,000 for a 41/2-room unit involving rents or monthly payments of no more than $55-$65. This compares with rents for comparable units insured under the FHA of about $85-$95 a month. These savings will be made possible through the nonprofit nature of the program, a very low vacancy rate, the use of tenant maintenance, and by the very substantial reduction achieved through the favorable financing terms. Not all of the cooperative-housing groups will wish to construct apartment-type projects. In some communities, particularly rural or semirural areas, members of such groups will undoubtedly want to construct free-standing homes. To cover such a possibility, the bill wisely provides a means whereby such families can eventually acquire individual ownership of their own homes after utilizing at the outset all the advantages of participation in a cooperative nonprofit group. The American Federation of Labor is proud to have taken a leading part in the movement to obtain the cooperative-housing program for middle-income families. We have done so because we think it is the only program that can adequately meet the housing needs of millions of workers and their families. But I do not want to leave the impression that industrial workers will be the only group to benefit from this program. The fact that we have worked very closely with representatives of veterans, church, housing, and other public-interest groups indicates the broad support and the widespread appeal this program has. I confidently expect that when this legislation is enacted, members and affiliates of the A. F. of L. will play a leading role in making this program a success. I know from my own intimate knowledge of the housing needs of the American workers that there will be an immediate favorable response from A. F. of L. members and groups all over the country. I am sure that they will be taking a leading part in organizing cooperative-housing projects for middle-income families. All of them are looking to your committee for the opportunity to participate in this great program. The following is a statement issued by the executive council of the American Federation of Labor on housing and rent control: There has been much self-congratulation by the real-estate industry because 1949 was a record home-building year. |