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We object to increasing of these loanable amounts, not so much because this tends to be inflationary, but because this insures mortgages on houses which closely approach the luxury class. A $20,000 mortgage represents a house valued at no less than $24,500, the house of a $10,000 to $12,000 a year executive.

Even if we do agree that this high-income bracket housing classification has a right to Government help, I think we would also agree that easy credit of this kind frequently permits owners to overbuy or purchase a home which their income really doesn't permit. If we owe people a duty of helping them buy homes, we also owe them the duty of keeping them from getting head over heels in debt. Under the present law a house of just over $19,000 can be purchased under FHA insurance. That would seem ample for the ordinary needs of the average citizen.

In the next two paragraphs we suggest a plan which, if found necessary, could cut down the payments and still be economically sound.

We would suggest that a special provision be made in the case of homes between the $8,000 and $15,000 price range. That these homes be sold under trusteed mortgages or land contracts as follows:

One, reduction of the original downpayment to one-half of schedule, but in no event less than 5 percent.

Two, providing for enlarged or special amortization payments for the next 3 years.

Three, at the end of the special amortization period the owner will obtain a deed to the property subject to normal financing.

We do not believe this is necessary, at this time, but merely suggest it as a way out, in case this committe finds it is.

Section 213, cooperative housing: This section provides for loans used for the construction of cooperative housing.

We belive it rather unfortunate that this section has been expanded to encourage families, especially veterans, to enter into this form of homeownership. When housing is scarce this may appear a desirable way

of procuring a home. Unfortunately, the cooperative fails to do this on many counts. Except in a very few places and under unusual circumstances it has proved itself a poor investment. Its resalability is poor both as to facility and price. Neither physically nor psychologically does it give the feeling of home or homeownership.

In the next paragraph the scale of loans would seem to indicate cooperatives are favored, but we can't understand why they are so favored, because to us the cooperatives are the least desirable of home ownership for the average person.

Section 220, at the bottom of page 10, rehabilitation and urban renewal: This section provides for financial assistance in the rehabilitation of existing dwelling accommodations and the construction of new dwellng accommodations as an aid in the elimination of blight and slum conditions, and in the prevention of the deterioration of property located in an urban renewal area.

We believe that every reasonable means should be given cities not only to rebuild their slum areas, but to prevent the deterioration now in or closely approaching the twilight zone. We subscribe with all

. the conditions set forth in section 220 of the contemplated bill. We

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would like to suggest 1 or 2 others which we believe would be of great help.

Expert advice necessary:I do not believe that I am maligning people when I say that most people do not know how to redecorate, rehabilitate, or remodel a home on a sound economic basis. They frequently know what they like, but invariably do not know how to achieve it. Consequently, a great deal of money is wasted through poor rehabilitation, poor planning, useless construction, which, once the newness wears off, causes worse looking slums than we had before.

Therefore, we suggest :

One, that every city certifying under section 220, hire or provide for the services of at least one architect, whose duty it will be:

(A) To furnish examples of modernized facades of the types of homes indigenous to the city, and

(B) To provide architectural advice to prospective rehabilitators at moderate cost.

The importance of this I believe cannot be overemphasized.

Simple slum prevention: We have discussed the elimination and the prevention of slums for many years. We have discussed the socalled causes of slums, but we have failed to do the one thing which will do more to prevent slums than any other one thing provided for to date.

Slums are blamed on many things, but a fundamental analysis shows that these are not the basic causes but rather contributing factors or symptoms of slums. It would be foolish to say that aged buildings cause slums, or that locations cause slums, or that foreigners or colored people cause slums, or that a dense occupancy causes slums.

Reduced to its lowest common denominator the cause of slums is a loss in the desirability of a house, a location, or a district. It is wrong for us to think it is age. Are the New England towns to be considered slums? It is wrong for us to think it is location because of the remarkable changes that have been made in urban areas that have been rebuilt.

I will skip down to the paragraph headed, “Save the exterior and you save all.”

I have already mentioned the cause of slums as a loss of desirability which in turn is caused by a loss of eye appeal. What is the first thing that happens to start neighborhood deterioration? Do the roofs leak, does the plumbing give out, do porches sag, are windows broken, are lawns overgrown? The first move toward deterioration starts when 1 or 2 or 3 houses on the street are unpainted and unkept and remain so to the obvious discouragement of their neighbors.

Those who have the opportunity to watch neighborhoods disintegrate will remember that exterior painting is the first thing to be discarded once a neighborhood starts down the path toward slums. If we are to save our neighborhoods from a few penurious owners and a few avaricious landlords, we will follow the forward step of many European cities. They have found the solution in local laws compelling proper maintenance of the exterior of their buildings. Consequently, our second recommendation is as follows:

Two, every city requesting certification will be asked to pass a local ordinance requiring the refinishing of all painted surfaces of the exteriors of all buildings one coat no less than once every 5 years unless

5 waived for cause by the city building department.

Every citizen should be held responsible for the condition of the premises on which he lives regardless of whether he is landlord or tenant. Too many cities have ordinances which hold only the property owner responsible for the debris and litter on the premises. To help prevent slums the tenant must and should be held equally respon. sible. Local city councils back away from passing such ordinances for obvious reasons. Consequently, we have the following recommendation:

Three, that every city requesting certification be required to pass an ordinance, if they do not already have one, making the occupants of premises responsible for any debris, rubbish, or litter found on those premises, regardless of whether he is the owner or the tenant.

Full incentive: We believe that every incentive must be used to encourage the rebuilding of urban renewal areas. Consequently, we are in accordance with the provision of section 220 which increases, as added inducement for such rebuilding, the loans available from the 80 percent of section 207 to 90 percent permitted under this section. For the same reason we think it is a mistake to place any limitation on rents in these structures.

We believe that rents should not be controlled under this section for several reasons. Every incentive must be given the prospective builder to encourage him to build in the renewal area. The profit motive is one of the most important. Rent control itself is wrong in principle and favors the unscrupulous and dishonest operator. In addition, we believe that rent control is unnecessary because the area itself will preclude unreasonable rents. We also believe another important incentive would be to permit accelerated depreciation on this construction.

Section 220 (d), Paragraph 2, subsection (B) on page 18 of the House bill. This is believed to be unfair competition for the private builder or investor, who has to build or rebuild in these areas.

Under a liberal construction almost any instrumentality whether it be Federal, State, municipal, or private, whether it be a limited dividend or redevelopment or housing corporations or nonprofit organizations either public, quasi-public or private could become organized and start construction under this provision of section 220. It could become another form of public housing.

This would make it undesirable, in fact impossible, for private enterprise to compete. If it is the avowed purpose of this bill to have private enterprise carry on the urban renewal program, then this provision, section 220D, paragraph 2, subsection B, page 18, should be deleted.

Section 221, relocation : This is the section which provides for the system of relocating families displaced as a result of governmental action in the community which has certified to the commissioner according to this act. We would like to make the following suggestions:

One, the same limitation be placed on section 221 that was placed on section 220. Briefly, the required services of an architect.

Two, this type of financing provided under section 221 be available only in certified renewal areas, for the following reasons:

(A) Under the generous provisions of this section people will be encouraged to rebuild the core of the city. Given an alternative they would obviously pick some other location.

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(B) The 95 percent financing provisions for a $7,000 home under section 203 would obviate any great hardship to any one desiring to leave the renewal area.

(C) This would encourage home ownership in renewal areas which would be a beneficial situation for the entire area.

Section 221, paragraph (d), subsection 3, we object to for the reason we objected to the previous one, in that whenever it permits unfair competition with private enterprise, that it would discourage the entrepreneur from constructing housing in renewal areas, and because the 100 percent financing coupled with nonprofit organizations makes it very, very closely related to public housing. This particular provision in the bill could be used to circumvent limitations placed on the construction of public housing. I will not read the section on public housing that I have here, because I think our position on public is well known. We don't believe in it because we do not believe the type of people it was meant for are occupying it.

In conclusion: We have discussed the various provisions of the bill concerning rehabilitation, slum elimination, and urban renewal. We believe that this program is practical and that thereby sound civic goals can be achieved. However, as we stated previously, money is not the only tool necessary to insure the success of this program. We need planning and guidance for the borrowers to insure actual improvement to their homes. Occupants must be held responsible for the exterior housekeeping of their premises. We must recognize that responsibility for exterior maintenance must be mandatory upon the owner if we are to prevent future slums.

Inasmuch as public housing is not part of this bill, I will not read my entire statement on this subject. I am sure this committee is fully acquainted with our position against public housing and our reasons for it. However, I will ask that our entire statement be included in the record.

We do not believe that the present generous provisions for the financing of homes should be increased at this time. We are maintaining a very high rate of construction. Any overproduction would be deflationary, thereby wiping out the slim equities of the very homeowners created by this bilì.

At the beginning of our testimony we suggested that we would limit our consideration of the housing bill to its possible impact on our existing housing inventory. I use the word inventory purposely in the hope that it will remind us of our superabundant inventory in other products. These inventory problems are tremendous, and they are rising every day, not only in farm products but in so many commodities such as autos, steel, et cetera.

If there is any purpose for my being here, it is in the hope that I have shown you that housing can stand just so much of the hypodermic needle before it too can be overbuilt. In fact, I hope I have shown you that the overproduction of butter is child's play compared to the overproduction of housing. Butter spoils in a relatively short time, but it takes years to work off an overbuilt housing situation.

I hope I have shown you that in considering this bill we are deciding not so much the future of the housing to be built as the future of the 43 million nonfarm housing units now on hand. And if, at this critical stage, we are to become concerned, let us also be concerned with

the 30 or more million homeowners who have had the courage and thrift to save for their homes as well as with the few who haven't.

Under this bill we believe we may increase the construction of housing abnormally. We maintain such abnormal stimulation is the most dangerous thing possible to our economy. We are debasing the biggest asset owned by the majority of our people, their home. We are endangering its value, its desirability and the financial standing of all homeowners.

This bill, unless substantially modified, offers a sure method for deliberately creating overbuilding, overfinancing, abnormal rise in private debt and as the end result, a financial depression caused by inability of the borrowers to meet their mortgage obligations. Basic housing is now available to everyone at very small effort through modest savings. Little more can be asked or should be granted.

The next page I have included

The CHAIRMAN. Your statement will be put in the record, as prepared.

Mr. DuLAURENCE. Thank you very much.
The CHAIRMAN. Any questions, Senator Bennett?
Senator BENNETT. No.
The CHAIRMAN. Senator Frear?
Senator FREAR. No.

The CHAIRMAN. It is a very fine statement and we appreciate it very much. You have given us a lot of things to think about.

Mr. DuLAURENCE. Thank you, sir,
(The prepared statement of Mr. DuLaurence follows:)

STATEMENT OF HENRY DULAURENCE, CHAIRMAN, LEGISLATIVE COMMITTEE, NATIONAL

APARTMENT OWNERS ASSOCIATION, INC. Chairman Capehart and members of the Senate Banking and Currency Committee, my name is Henry DuLaurence, and I am chairman of the legislative committee of the National Apartment Owners Association. My home is Clere. land, Ohio. The National Apartment Owners Association appreciates the privilege of being permitted to give its views on the proposed housing bill under consideration.

At the outset, I would like to say that we are unalterably opposed to Government's interference or participation in activities which are part of or competitive to private business. We believe that none of these activities should be continued by Government unless they are absolutely essential to the national welfare and cannot be provided just as efficiently and economically by private enterprise.

The housing bill now being considered is very broad in scope. It includes "aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and the development of urban communities." It will affect our banks, savings and loans, and mortgage-banking institutions. The National Apartment Owners Association will limit itself to the consideration of its effect on our present supply of housing.

I would like to emphasize that we believe it highly desirable and extremely beneficial to have virtually every American family own its own home. We believe the family and society benefit through homeownership. Nerertheless since the Second World War we have been living under laws designed for the encouragement of home construction and ownership. We have had increasingly generous provisions for higher financing and lower down payments. We must face the fact that sometime (if we have not already done so) we will reach a point where all these seeming benefits will work a great disfaror to their recipients, and a hardship on the entire Nation.

In coming here as a representative of the association I wish to emphasize that, of necessity, I must speak for all housing—whether privately owned or rented. Private and rental housing are joined together with the common purpose of furnishing homes for our people. What affects one segment of our

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