tially impairs or arrests the sound growth of the community and which is to be developed for predominantly residential uses, or (iv) ***" The amendment, as proposed, will include in the above paragraph the words "commercial or industrial", as follows: “* * * (iii) land which is predominantly open and which because of obsolete platting, diversity of ownership, deterioration of structures or of site improvements, or otherwise substantially impairs or arrests the sound growth of the community and which is to be developed for predominantly residential, commercial, or industrial uses, or (iv) ***" For purposes of correspondence with regard to the above statement, please address: E. Paul Querl, Industrial Development Department, The Chicago Association of Commerce and Industry, 1 North La Salle Street, Chicago 2, Ill. SPOKANE, WASH., April 1, 1954. Hon. WARREN G. MAGNUSON, Washington, D. C. I urge that you vote against current public housing legislation and vote for expanding section 221 to include minorities and other low income families on controlled programed basis. Also vote for lower downpayments of 95 percent on first $10,000 and for elimination of proposed Presidential credit control. These matters urgently need your attention for the benefit of the people of the State of Washington. Hon. HOMER CAPEHART, United States Senate, Washington, D. C. VERNON CONYERS. GALVESTON LUMBER CO., INC., DEAR SENATOR CAPEHART: I would like to express my feelings and wishes to you Senator Capehart on the new housing bill which your committee is studying at the present time. I deeply appreciate the importance of the chairmanship of the committee which you hold; however, I am writing to you mainly because of your being my Senator. Being in the retail lumber and building materials business, I am keenly interested in legislation relating to our national housing plans. Then too, my location also has something to do with my interest, being next door to the Bunker Hill Air Base. We are in the locality that has been asked by our Federal Government authorities to furnish some 2,500 additional housing units in the next 2 years to accommodate personnel that will be stationed at the Bunker Hill base. One of the main problems that confronts the building supply companies at the present time is the financing problem. Most new structures are financed in some way or another, and if the funds are not available for sound financing, then the needed houses do not get built. The provisions of the housing bill S. 2938, subsection 4 of section 201 will help. The plan to establish a secondary mortgage facility is most important to our industry; however, in my opinion, the provisions in the bill for a new FNMA would not do the job. The proposal recommended by the President's Advisory Committee on Housing would be far more suitable and accomplish that end. I believe that the increase in maximum mortgage limits under section 203 from $16,000 to $20,000 for 1- and 2-family houses is necessary; however, I hardly believe that it is wise to make this increase discretionary with the President holding such authority, as it would make for uncertainty in our industry and the construction industry as a whole. In line with this thought, the part of the proposed bill that makes provisions for a 95 percent loan up to $8.000 is good; however, the 30-year maturity period should be written into the law and not left to the discretion of the President. The more loopholes we leave in our legislation, the more authority we delegate to other parties other than Congress, the more possibilities of future misinterpretation of the real intent of the bill at the time Congress acts upon it. Along with the above provisions, it is necessary to provide a flexible interest rate for FHA-insured and VA-guaranteed loans, which section 201, title II of the above bill does. Of great interest to the construction industry is the hopes of having longer terms and larger limits on the title I modernization. This is of special interest to the lumber dealer-because of the tremendous "do-it-yourself" program sweeping the country-in itself a great stimulus to keeping activity on a high level for the construction industry. With proper financing available to the average homeowner, he will go ahead and make improvements on his present owned home, not possible without the above modifications. Other features of the new housing bill before you are good. The consolidating of various programs of the FHA (this should be done in other agencies as well for greater efficiency) the leveling out of FHA downpayment schedule to eucourage the building of the homes in the $11,000 to $15,000 range, as our housing progress is going to rely on this bracket mainly. Providing for such action is taken care of in the proposed bill. I will greatly appreciate your consideration of my views when final action is take in your committee on this proposed new housing bill. Yours very truly, GEORGE W. DAGUE, President. DETROIT, MICH., February 25, 1954. Hon. HOMER CAPEHART, Senate Office Building, Washington, D. C. HONORABLE SENATOR CAPEHART: At a meeting last week of the section 8 title I homebuilders of metropolitan Detroit, called for the purpose of considering the effect of the proposed amendment to the National Housing Act, I filed my report as chairman, a copy of which I enclose herewith. The report was prepared at the end of January and before the introduction of your bill and the one sponsored by Representative Wolcott. The membership, by resolution, instructed me as their representative to take all steps I thought might be necessary to call to the attention of the Committee on Banking and Currency and to our honorable Congressmen the mistake being made in neglecting section 8 in the new housing program. Since that time I have had an opportunity of examining the bills introduced in the Senate and in the House, and find a provision simply for the repeal of section 8 of title I and no provision for its incorporation under title II as was proposed in the recommendation to the President. It seems to me that the present legislation makes no provision whatsoever for housing for low-income groups except for section 221 which is "Designed * to assist in relocating families to be displaced ***" as the result of any rehabilitation program or discontinuance of Lanham Act or Government housing. In other words, the act makes no provision whatsoever for additional units for lowincome groups. Since I am away from the office due to slight illness, I am dictating this letter to my secretary over the phone and having her forward same with the enclosures to you in order that delay may be avoided. Sincerely, SIDNEY C. BARNES. REPORT TO SECTION 8, TITLE I BUILDERS OF METROPOLITAN DETROIT ON PROPOSED SECTION 221 AND AMENDMENTS TO TITLE I The proposed section 221 is based on the assumption that under present conditions the building industry cannot produce owner-occupant or rental housing units for low-income families. The term "low-income families" is not defined except that the general statement is made that the phrase is intended to cover all families whose income is insufficient to maintain them at a level of adequate living. On page 282 of the report there is set forth an adequate living budget for some of the major cities. The amount necessary for adequate living for a family of 4 in Detroit as of October 1951, is stated to be $4,195. Making allowance for the increase in cost of living since that time, the estimate at today's level would be about $4,294. The conclusion that must be drawn from the report is that private industry is unable to provide housing for families in the Detroit area whose income is below $4,294 per year. Since the enactment of section 8, title I of the NHA, and under its provisions the building industry has been supplying housing on a constantly increasing scale to families with an income of $2,500 per year and up. Furthermore, all of the purchasers have qualified under FHA regulations regarding adequacy of income to sustain their housing charges. This has all been done despite the fact that mortgage funds have been very tight, that most section 8 builders have had to pay a premium in one form or another for their mortgages, and that there has been no subsidy to support the program. One of the subcommittees of the Senate Committee on Banking and Currency has made an investigation of the section 8 program in Detroit and I believe they have the information in their files to prove that the program has created attractive new neighborhoods in the Detroit area, has built up substandard neighborhoods rather than created new slums. It is probably true that without the fine administrative supervision and cooperation of the local FHA office and the intelligent handling of problems and the willingness to cooperate on the part of most of the builders in the program, a different situation might have developed. However, it has been definitely proven in this area that the section 8 relaxation of standards does not create new slums, but rather improves neighborhoods. The Subcommittee on Housing for Low Income Families has stated with regard to proposed section 221: "In fact, we oppose the lowering of standards which would affect the soundness of the structure or the neighborhood environment because we would simply be creating the problems we are now struggling to solve." Standards should not be lowered to affect soundness of construction. Experience has taught section 8 builders, however, that when they go into an old neighborhood on a spot-lot project the effect is to build up rather than break down the area. Old homes which have been neglected for years are spruced up, painted, and modernized to match their new neighbors; the individuals or the townships put in paving and sidewalks; the whole neighborhood competes for the best lawns and gardens. This element of improvement has been fostered by local FHA suggestion and help and most of the builders have cooperated. The above are facts which the committee should recognize. Carefully handled relaxation of neighborhood standards and site acceptability requirements can go a long way in accomplishing the following: 1. Doing away with the necessity for subsidy to low-income groups by making available low-cost land. 2. Improving neighborhoods which would otherwise eventually deteriorate into slums. 3. Making available a larger quantity of sites, since many zoning requirements and private restrictions make the construction of low-cost homes prohibitive. Exhibit 5 attached to the subcommittee report on Housing for Low Income Families (p. 291) shows that in 1951 20.4 percent of the total urban population earned less than $2,500. Assuming that section 8 cannot provide housing for this segment of the population, can the proposed section 221 accomplish the purpose? It can be assumed unless a secondary market is established through Government subsidy, that mortgage money for a 100 percent, 40-year mortgage will not be available. If Government subsidized financing is made available then a minimum unit with a $6,000 mortgage can be produced for families able to afford a total housing expense of $55.35 per month or only for families having an income of over $50 per week. Since section 8 builders are already able to supply housing for such families, the new section accomplishes nothing except that it eliminates the downpayment. If that is all that need be accomplished, then it can be done under section 8 pursuant to a much simpler plan. If section 8 was amended to permit sales under the land contract mortgage plan initiated and developed by John Heal and Sidney C. Barnes, no downpayment or only such small downpayment as the builder may choose need be required. The builders, in so doing, would stand on their own feet; solve the problems of the minimum downpayment without further Government help. Furthermore, FHA insurance funds would not have to be separated because the risk of foreclosure in these cases would not be greater than under present practice. To make this program work, only minor amendments to the law will be required. In order to induce the builder to bear the risk of payment of the land contract balance, the Internal Revenue Code should be amended to provide that in such sales under section 8 only that profit received at the time of closing through receipt of the mortgage proceeds and downpayment, if any should be considered as income then received, the balance of the profit received through liquidation of the contract should be income if, as, and when received. It is my suggestion that the mortgage limit be increased to $7,000 for 2-bedroom homes and $7,500 for a 3 or more bedroom home or for a 2-bedroom home with an unfinished attic capable of being used for 1 or more additional bedrooms on completion. The mortgage should continue to be 95 percent of appraised value. Those in the business know that one of the most important factors in keeping the incidence of foreclosure so remarkably low under section 8 has been the sweat equity of the owner. Owner completions should be continued and widened in all phases of their capability. This same method of financing can be used in the sale of rehabilitated used homes. To prevent abuses, it is recommended that no used home be accepted unless prior to its rehabilitation it is inspected by the FHA and certain minimum rehabilitation requirements be set and that a commitment for insurance thereafter be obtained on a specific set of specifications for each job and that the jobs be inspected and passed by the FHA. It is further suggested that a mortgage to a builder for rental purposes of 90 percent of evaluation be given both on new and rehabilitated homes. A higher percentage mortgage is justified in providing lower rentals. What is to be done for those families whose income is below $2,500 per year? Can private industry provide housing for them? Approximately 7 percent of the families of the country (as of 1951) have incomes between $2,000 and $2,500. Low-rental projects produced by private industry should be able to provide decent housing for such families. Relaxation of set standards will open up a certain amount of lower-cost sites. Careful administration by the FHA will not only prevent these units from deterioration into slums, but will help in lifting the standards of the entire neighborhood. A maximum mortgage limit of $5,000 per unit for 1- and 2-bedroom units and $5,500 for 3 and more bedrooms should be sufficient. A 95 percent mortgage should be given to cooperatives and 90 percent to builders. In order to keep monthly housing charges as low as possible, it is recommended that for this group no mortgage insurance premium be charged. Section 8 is a readymade, proven method of providing housing for the low income and lower middle class income families. According to exhibit 5 (p. 291) attached to the report of the Subcommittee on Housing for Low Income Families, aproximately 28 percent of the urban families of the United States earned between $2,500 and $4,000 in 1951. The same exhibit shows that the total urban families in that year earning from 0 to $4,000 was 48.5 percent of the total urban families in this country. The startling fact is that it has already been demonstrated by the section 8 builders that 58 percent of the families whom the committees have declared to be beyond the reach of private industry for their housing needs without subsidy from the Federal Government can be and have been adequately serviced. Furthermore, the percentage must probably be considerably greater when we take into consideration the fact that housing can be provided in the areas of more moderate temperature at a lower price. It seems obvious that what needs to be done is a streamlining and broadening of the section 8 program as a means of solving the housing needs of the poor. What has been done in Detroit can be done on a national scale. The program should be separated and placed under the jurisdiction of a special Deputy Administrator who understands and is sympathetic with the needs of the people and the building problems involved. It should not be placed within title 2, because the problems, treatment, and handling are entirely different and because further experimentation is necessary. The success of section 8 in Detroit has been attributed to the fact that this is a city of workers who are acquainted with the use of tools, and they are therefore capable of finishing off their homes. I doubt whether the Detroit workers who bought the section 8 homes were more skilled in the trades necessary to complete a home than any other workers. My own observations have been that the purchasers who were raised on farms, generally speaking, did the best completion jobs. I think, however, that the necessity of special skill has been overemphasized. With very few exceptions, the jobs in completion could be done by almost anyone. One of the mistakes made in 1953 in the section 8 program was the requirement for a greater extent of completion. The result was an increase in price, which blocked out a segment of the population needing homes. The section 8 program should be a great success in farm and rural areas as a means not only of providing homes, but farm buildings as well. If administratively it was made possible for farm families to provide so much of their own labor as their capabilities permitted the program would go a long way to solving the rural housing needs. Not only would the farm family, with its special skills in construction, be able to make use of them, but they could also schedule the work during the seasons when their farmwork has been completed. |