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If section 8 becomes a part of 203 and is administered by its personnel, it will most probably be treated as an undesirable stepchild, and I believe we can expect its death through regulations which will make the program impractical within a short time. This is not said in criticism of the personnel of the FHA. It seems to me only logical that those concerned principally with housing under section 203 will approach the problems of section 8 on the same basis. Mass production requires standardizations. In the same department exceptions are a nuisance, and the tendency will be to do away with them.

In the event the section 8 program receives serious legislative consideration, one of the important recommendations should be that the sole method of evaluation should be reproduction cost. Another is the insurance of construction advances for rental housing similar to section 608.

SIDNEY C. BARNES. DETROIT, Mich., January 26, 1954.

SPOKANE, WASH., April 1, 1954. Hon. WARREN G. MAGNUSON,

Senate Office Building, 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.

ANTONE EBERLE.

New YORK, N. Y., March 30, 1954. Hon. Homer E. CAPEHART, Chairman, Banking and Currency Committee,

Senate Office Building, Washington, D. C.: This association desires to register strong support to the testimony presented to the Banking and Currency Committee, March 19, urging the amendment of S. 2938 to extend the provisions of title IX of the National Housing Act and title III of the Defense Community Facilities and Services Act of 1951. Our 260-member agencies serving needy families throughout the United States are acutely aware of the desperate need for decent, low-cost housing, especially in the defense-impact communities. The worst of these situations result from Federal defense projects and, therefore, seem to us to place a particular responsibility on the Federal Government for alleviating the woefully inadequate housing available.

EARL N. PARKER, Assistant General Director, Family Serrice Association of America.

GUAM, April 7, 1954. Re Financing and Housing Needs of Guam. Senator HOMER E. CAPEHART, Chairman, Senate Banking and Currency Committee,

Senate Office Building, Washington, D. C. DEAR SENATOR CAPEHART: As one of the sponsors of a major rental housing project in Guam, I take this opportunity to outline the problems encountered therein and to appeal to you and your committee for legislative assistance. You are no doubt aware of many of the facts and problems herein set forth. My knowledge and analysis of the problem is firsthand, however, and I respectfully submit the following for your consideration.

Guam lies westerly 5,600 miles from the California coast. It is a naval base of great magnitude and the far western outpost of United States territory. When Guam was retaken from the Japanese occupation forces it was shelled by our fleet for 4 days prior to the invasion. Practically every building on the island was blown to bits. The invading forces moved into the island bringing with them their temporary quarters: Wood frame, Army prefabricated buildings, sheet metal quonset huts, and sheet metal Butler buildings were the primary housing facilities installed after the invasion. All of these units had an estimated life of approximately 5 years. This was 10 years ago. Today, those same buildings are being used in their rusty dilapidated condition as housing for the people of Guam.

The Organic Act of Guam as passed by our Congress in 1951 granted to the native population of Guam their citizenship, established an elective legislature, and appointive civil governor and bestowed upon Guam the status of a territory very similar to that of Alaska and Hawaii. At approximately this same time the critical need for new permanent modern housing was being discussed among the Guam Government officials, the Housing and Home Finance Agency and the Federal Housing Administration. It was determined at that time that FHAinsured mortgages should be made available to the people of Guam. Defense housing and military housing were discussed but it was thought better to provide title II housing for Guam since it was and is a better and more permanent solution to the housing problem. An FHA field office was established on the island and applications were taken for insured home mortgages. At this point the entire program failed. No lending institution in the United States, either insurance company or banking organization, was willing to make long-term loans in Guam even with FHA's mortgage insurance. Due to this lack of financing, the FHA's field office has processed less than 10 residential units since its establishment, almost 2 years ago.

The situation existing today in Guam is very similar to the situation which existed in Alaska prior to the enactment of the Alaska Housing Act. Alaska had the same problems we now have in Guam, namely, inadequate housing facilities and inadequate long-term financing to enable those facilities to be replaced with modern permanent structures. In 1953 the Senate Banking and Currency Committee in proposing legislation for the Housing Act of 1933 was well aware of this situation. In the Senate bill provision was made to make certain portions of the Alaska Housing Act applicable to Guam. Had this passed as the Senate bill had been written, housing projects in Guam would now be well under construction. Unfortunately, this was not the case. In joint conference it was decided that possibly the Federal National Mortgage Association's 1-for-1 plan would provide the necessary financing without further assistance. As has been proved this last year, the 1-for-1 plan is not the solution to Guam's problem. The reasons are as follows:

1. There is an inherent discount in the 1-for-1 program which must be absorbed by the builder. Since the earned income derived from a rental housing project is predicated on the sponsor's equity, and since said equity does not reflect the discount, the earned income on the actual equity, including the discount absorbed by the builder represents a return so reduced that it is not a sound investment on the part of the operative builder or rental project sponsor.

2. The 1-for-1 plan does offer a method of financing for units. to be built for sale. However, in Guam the market for sales units is negligible. This is so because Navy personnel seldom stay on the island of Guam beyond their 18 months normal tour of duty. The civil service employees of both the Federal Government and the Guam Civil Government are largely on 1- to 2-year contracts, thereafter returning to the States. The people in private enterprise on Guam are, to a large extent, assigned for relatively short periods to Guam branch offices of firms with headquarters elsewhere. It is the studied opinion of the writer that the construction of 40 or 50 sales units would flood that market. The demand for rental units, however, is quite a different story. Native inhabitants, now citizens, Navy personnel and civil service personnel and people in private enterprise all desperately need modern housing with adequate sanitation, parking areas, parks, playgrounds, in short, the type of housing we expect our people to have.

Since the 1-for-1 plan is not a satisfactory solution to rental housing projects, and since there is virtually no other market in Guam, it follows that the 1-for-1 program is of no assistance to Guam. The Navy made a survey of the housing requirements on the island. The figures established are classified but are available to the Senate. The Housing and Home Finance Agency made a survey of the housing requirements in Guam. This survey was transmitted to the Federal Housing Administration. It indicated an immediate need for a minimum of 1,600 units. The Pacific Iron & Steel Corp., joint venturing with M. W. Finley and D. E. Turner have completed the plans and secured firm commitments from the Federal Housing Administration for a project totaling only 600 residential units, plus accessory buildings. The mortgage amount as committed by FHA is $6,571,200. These sponsors have invested heavily in attorneys' fees, FHA examination fees, architects' fees, engineers' fees and travel expenses. The sponsors have made every effort to secure financing for the Guam project and have come to the conclusion that only through legislation can such a program of housing and financing be brought to a successful conclusion.

The new bill, H. R. 7839, restricts the activities of the Federal National Mortgage Association in such a manner that only through Presidential directive can any assistance whatever be made available to Guam. Further, it specifies that any mortgages purchased by the Association shall be such that they meet the current market requirements of private investment concerns, and further, that such mortgages be purchased at a realistic market price. It is the contention of the writer that these two restrictions would (1) either preclude the purchase of mortgages in Guam since it is easily proved that such mortgages are not acceptable to private lending institutions, or (2) that the realistic market values would necessarily be established so far below par that the resulting purchase cominitment would be unusable.

The writer has taken this problem up with the Housing and Home Finance Agency, Federal Housing Administration, the Department of the Interior, Office of Territories, and has recommended an amendment for the present housing bill as reported (H. R. 7839). The amendment was prepared by the General Counsel of the Housing and Home Finance Agency at the writer's request, as follows:

Page 169, line 9, insert the following before the period : : Provided. That, notwithstanding any other provision of this title, the Association is hereby authorized to make commitments to purchase and to purchase, service, or sell any mortgages, not exceeding in the aggregate $10 million in original principal amounts, in connection with projects or properties located in Guam, if such mortgages would have been eligible for purchase by the Association had they been offered to the Association prior to the enactment of the Housing Act of 1954.”

This amendment, if adopted, would definitely provide a solution to the housing shortage in Guam. It would make it possible for Federal National Mortgage Association to purchase at par mortgages in Guam using funds already available to the Association. We are not asking that the Federal National Mortgage Association be granted the power to make advances on construction, since this phase of the financing is already available through private banks with the proviso that the mortgages definitely will be purchased on completion of construction. We are asking only a limited amount of such financing since the requirements of Guam are small as compared to other areas.

The sponsors of the housing project above referred to sincerely request that your honorable body give full consideration to this proposed amendment. The interests of the sponsor and the Island of Guam are identical. Respectfully submitted.

M. W. FINLEY. (On behalf of Pacific Iron & Steel Corp.)

Gross Bros.,

New York, V. Y., March 10, 195h. Hon. IRVING M. IVES,

United States Senate, Washington, D. C. SIR: A problem of vital concern to the New York City builders has arisen in the housing bill, S. 29938. page 13, line 10. This refers to title 213. Cooperative Housing, and changes the criteria from estimated cost to estimated value.

As you know, New York ('ity has not kept pace with our national-housing economy and, in fact, the private builders have been unable to reach 30 percent of the volume established by them in the 1920's.

While the attitude of our city officials is quite friendly toward builders, nevertheless, when he finishes his building, he becomes a landlord, and in any rent-controlled economy, the position of a landlord is difficult. The solution lies in a builder performing his function as a builder, and then selling his product on a cooperative basis. This movement is making rapid progress, not only with respect to new buildings but also has spread to existing structures.

The change from cost to value in the housing hill came about because of its operation in what is known as a “sales-type" of cooperative, which refers to groups of individual one-family houses, and the change, if required, should he contined to that portion of the act.

In the management type of 213, which concerns itself with multifamily structures, this change will require the FIA to capitalize the net return from the rental amount, as stated in the application, in order to arrive at a value

Since the very purpose of a cooperative is to arrive at the lowest possible rent, caapitalizing this figure will automatically materially reduce the mortgage amount and increase the downpayment.

While the bill provides a 90-percent mortgage and, in the event of 65-percent veterans' occupancy, a 95-percent mortgage, the application of the most favorable rate in use would result in an 84-percent mortgage and a 16-percent downpayment. On a national basis, the average downpayment would be between 25 and 30 percent.

If a further penalty factor is imposed for location, these mortgage amounts will be reduced still more, and the downpayment increased accordingly.

It will be quite impossible to use title 213, in connection with title 1 urban redevelopment operation.

I would appreciate your good offices in bringing this matter before the Banking and Currency Committee, with your recommendation for its change. Respectfully submitted.

ALFRED Gross.

Capitalization effect on title 213, typical New York City apartment under

present laws

Sales price (FHA replacement cost per apartment)

$10,000 Rent

100 Operating cost (taxes, fuel, labor, etc.)-

50 Net amount for debt service available for capitalization, per annum.

600 Applying various capitalization rates to net return 1. 6 percent, 50 years, rate 14.74 equals $8,844, at 95 percent (maximum veteran

mortgage, $8,400), 16 percent downpayment. 2. 612 percent, 40 years, rate 12.76 equals $7,656, at 95 percent (maximum

veteran mortgage, $7,250), 2212 percent downpayment. 3. 7 percent, 40 years, rate 12.11 equals $7,260, at 95 percent (maximum veteran

mortgage, $6,900), 31 percent downpayment. 4. 694 percent, 50 years, rate 13.45 equals $8,070, at 95 percent (maximum

veteran mortgage, $7,650), 2342 percent downpayment.
Rate 1 is used in the New York insuring office of the FHA.
Rates 2 and 3 are in general use throughout the country.
Rate 4 is contemplated for title 1 redevelopment use in New York.

HOUSING AUTHORITY, CITY OF HACKENSACK, N. J.,

March 26, 1954. Hon. H. ALEXANDER SMITH, Senator, New Jersey,

Washington, D. C. DEAR SENATOR : The proposed Housing Act of 1954, S. 2938, recently introduced in the Senate of the United States, makes no provision for the expansion of the public housing program. It is of the utmost importance this bill be amended to contain provisions that:

1. Enable the President of the United States to determine whether the program in any fiscal year should be 135,000 public housing dwelling units, or more or less, which discretion was delegated to the President in the Housing Act of 1949.

2. Local housing authorities be authorized to prepare programs for public housing in the planning stage so as to develop a continuity of projects that would be ready for construction within the number of dwelling units provided for in each fiscal year in the Housing Act of 1949 or such greater or lesser amount as determined by the President.

As you no doubt know, Hackensack has only 144 units which are fully occupied and over 300 eligible applicants on file. There are, according to the 1950 census of housing report, 798 occupied substandard dwelling units in Hacken. sack. These have not been condemned because of the housing shortage. We urge you to support the above amendment to the proposed Housing Act. Sincerely yours,

JOSEPH C. BARSALONA,

Erecutive Director.

MOUNT LAKE REALTY,

Seattle, Wash. Hon. WARREN G. MAGNUSON, Senaté Office Building,

Washington, D.C. Urgent to defeat public housing and leave home dwelling construction for minorities to private industry. Imperative FHA lower downpayments immediately to maximum 5 percent up to $10,000. Lower income non-GI families forced to pay high rental due to inability to purchase in view of present downpayment regulations.

ALBERT L. LA PIERRE.

LINCOLN, NEBR., April 1, 1954. Senator Hugh BUTLER,

Washington, D. C.: Re housing bill from our 100 members. We are trying to house personnel of the Strategic Air Command here. Airmen with discharge can buy $12,000 house with nothing to $600 under VA. Civilians or airmen without discharge must pay at least $2,400 under FHA. Downpayment on comparable house at first of war was $600, under FHA, being 10 percent of $6,000. We want 95 percent of first $10,000 and 75 percent of balance written into bill. Need is urgent for average home buyer. Too high downpayments could make this a depression. We cannot operate 6 months to a year ahead with the uncertainties of executive action. Furthermore, President has had this authority and hasn't used it. Public Hous. ing has failed; should be left out of bill. Section 221, if properly expanded, will take care of low-income groups, especially minorities.

HOME BUILDERS ASSOCIATION OF LINCOLN,
ERVIN PETERSON, President.

Echo MORTGAGE CORP.,

Atlanta, Ga., February 22, 1954. Senator BURNET R. MAYBANK, United States Senator, South Carolina,

Senate Office Building, Washington, D.C. DEAR SENATOR: It is my understanding that on February 12, 1954, Senator Capehart and Representative Wolcott, chairmen of the Senate and House Banking and Currency Committees, concurrently introduced the administration housing bill (S. 2938 ; H. R. 7839).

My primary interest in this legislation is as follows: Under title I of FHA insured loans, there will be a provision, the summary of which is :

"TITLE I, FHA INSURANCE

*Increase improvement and repair loans from maximum of $2,500 to $3,000 and repayment period from 3 years 32 days to 5 years 32 days. Change the existing maximum of $10,000 for multifamily improvement or conversion loans to $1,500 per family unit or $10,000, whichever is greater, and the maximum loan terms from 7 years 32 days to 10 years 32 days."

For your information, I have recently written Mr. Samuel E. Neel, general counsel of the Mortgage Bankers Association, for his opinion as to whether the foregoing legislation will permit air conditioning of multiunit 608 projects. Mr. Neel's opinion is that same will be permitted under this legislation ; however, I do not believe that air conditioning is specifically set forth as one of the possible improvements under the title of this loan. Therefore, it will be deeply appreciated if you will see to it that it is clearly intended and understood that air conditioning of multistory units will be eligible under this title I loan classification.

You probably know that my dad and I, as well as J. C. Long, have interest in multistory apartment buildings, some of which are not presently air conditioned. Therefore, if by an FHA-insured loan we could cause these apartment units to be air conditioned, I am sure that it would be of great help and be deeply appreciated by all of us, not to mention the fact that I am sure there are many other owners of multistory units throughout the Nation who will definitely be benefited by this legislation.

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