protects whatever lending institution furnished the money. That is right and proper, because otherwise the money would probably not be loaned. But the so-called home owner not only does not get any investment protection, but he becomes the personal guarantor of a risk that in far too many cases he cannot afford to assume. The same thing is true in the case of GI home loans. Because of their desperate need for homes, many thousands of veterans, notwithstanding what appears to be excellent administration by the Veterans' Administration, have had to buy poorly constructed homes at the top of the market, and they cannot afford to pay for them. But the veterans, not the Government, are the primary guarantors of these bad risks. Under the provisions of section 213 (a) of this bill, veterans and other individuals needing homes could organize mutual home-ownership corporations and acquire comfortable modern homes in attractive and wholesome neighborhoods at costs that most of them can afford to pay. No down payment at all would be required of veterans, and nonveterans would have to put up only 10 percent. Neither would have to pledge their personal credit. Under the provisions of this section, even more favorable terms would be available for mutual home owners than are now available to investment builders of rental housing projects, which is as it should be. But the mere availability of these provisions is not enough. Veterans and other home seekers are not as a rule able, without professional guidance, to plan and develop cooperative housing projects which would be eligible for FHA insurance or which would attract insured mortgage investors. That is why a great many people, including myself, have advocated the setting up of a separate constituent agency within Housing and Home Finance Agency to provide this guidance. I must admit, however, that such a separate agency would perform many functions that are now performed by FHA. FHA would have to pass finally upon applications for mortgage insurance. FHA already has an admittedly competent staff available throughout the country. There would certainly be some duplication, and there might be serious division of authority. To be frank about it, the whole question seems to be one of motivation rather than of ability. I would not want to take the responsibility of saying that FHA would fail to carry out the mandate that is expressed in section 213 (a). I should like to urge, however, that development loans be authorized within the discretion of the Commissioner. Otherwise, some very worth-while projects might never get under way because of the lack of the small amount of initial financing necessary to get them to the mortgage-insurance-commitment stage. I have said that under the provisions of section 213 (a) of this bill. veterans and other mutual home owners could acquire modern, comfortable homes in attractive, wholesome neighborhoods at prices that most of them could afford to pay. I have made this as a statement of fact rather than as a statement of opinion. I have felt justified in doing this because of the actual operating experience of some experimental mutual home-ownership projects which were built by the Federal Works Agency under my direction back in 1941 and 1942 under the provisions of the Lanham Act. Representative Lanham and I persuaded the Administrator of the Federal Works Agency to authorize these projects for the purpose of testing out mutual home-ownership principles as applied to housing for medium-income families and also as applied to the postemergency disposal of defense-housing projects generally by the Government. It should be understood that, while these projects were deliberately experimental, they had to be developed within the money and the time limitations of the defense-housing program. Under these conditions, there was not time for proper planning. Contracts had to be let on a cost-plus-a-fixed fee basis. Competent supervision, skilled labor and good material were difficult, or impossible, to come by. The program was abandoned shortly after the outbreak of the war when responsibility for war housing was transferred from the Federal Works Agency to the Public Housing Administration. Only two of the eight authorized projects were completed at that time. The original objective of the experiments was pretty well lost sight of in the over-all absorption brought on by the war. Notwithstanding these vicissitudes, the nearly 8 years' operating experience of those of the projects where the original intent to sell to the mutual home-ownership corporations was carried out presents what I believe you will agree with me is very convincing evidence of the basic soundness and applicability of the mutual home-ownership principles followed. I myself have had no official connection with these projects, nor with the Government, since I got into the Army in the early spring of 1942. But I have kept in touch with some of them, and in January, when Mr. Patman and Senator Kefauver asked me to assist them in drafting a cooperative housing bill, I wrote the managers of two of the projects and asked them a series of questions that would reflect their operations and their fiscal condition. I have attached copies of these questions and answers to this statement. If you will examine these two documents, I think you will agree with my statement that good homes in good surroundings can be obtained, even at present prices, by families of average income without Government subsidy. If you will bear with me a little longer, I should like to invite your attention to some of the outstanding facts that are brought out in these questions and answers. To me, the most important thing is the attitude of the mutual home owners in these projects. They feel that they are home owners in a new sort of way. They feel the pride of possession and the civic obligations that go with it. They feel secure. They are not afraid to have children. Their family life is wholesome. There is no juvenile delinquency. Divorce is almost nonexistent. Although their communities are situated in the midst of great industrial areas, these mutual home owners live the natural orderly lives and practice the simple virtues that we have come to fear are disappearing from American life, except in our small towns and cities. From the economic standpoint, these mutual home owners are buying and paying for their homes with monthly payments of less than half what they would have to pay out for rent. And, within these monthly payments, they are building up reserves which progressively add to their security of tenure. Mr. Holder, the manager of the Dallas Park project, tells me that, after 3 years of monthly payments by Dallas Park residents, their accumulated reserves would, if necessary, carry them for 6 months without their having to pay out an additional cent to the corporation. He will testify later, and I know you will want to ask him in detail about this and other features of his operations. You will have observed from the photographs I have distributed how well the individual homes are kept up. These places can never become slums because the people who live in them own them and under their proprietary leases they maintain them in a uniform manner. It is significant that the loss taken by the Government in selling these projects to mutual home owners was less than 25 percent, whereas the estimated loss in the disposal of defense- and war-housing projects generally is more than 50 percent. The reason is very simple. People take much better care of what they own than of what they rent. Entirely aside from providing of practicable solution for the housing problems of vast numbers of our citizens, I predict that the enactment of section 21 (3) of this bill, and its effective administration, will do more to protect our country from foreign enemies than any measure this Congress could pass. People will fight harder and sacrifice more to protect their homes than for anything else, provided they are convinced their Government gives them personal security in these homes. Mr. PATMAN. Mr. Westbrook, supposing you go over the answers to these questionnaires just briefly and bring out the outstanding points. I notice this Greenmont Mutual Housing Corp. at Dayton, Ohio. Did you have anything to do with the construction of that project? Mr. WESTBROOK. Yes; that project was one of these experimental projects. Mr. PATMAN. And you state that the homes are well kept and the people are satisfied, and there is no juvenile delinquency? Mr. WESTBROOK. Yes; I think that is brought out very clearly, Mr. Patman, in the exhibit which gives the detailed analysis, attached to my statement (exhibit A). The manager of that project has drafted that quite fully. Mr. PATMAN. I notice one-bedroom apartments go for $27.50 a month, and three bedrooms are $32.50 a month. I notice you have two in Dallas. Mr. WESTBROOK. Yes. Mr. PATMAN. You are submitting these as part of your testimony? Mr. WESTBROOK. Yes, sir. Mr. PATMAN. They will be inserted in the record. (The information referred to is as follows:) EXHIBIT A.-Answers to questionnaire sent to Greenmont Mutual Housing Corp., Dayton, Ohio 1. Question. When did the corporation buy the project? Answer. March 1946. 2. Question. What was the purchase price? Answer. $1,521,882.12. 3. Question. What was the original cost? Answer. I believe approximately $2,000,000, although I am not sure. 4. Question. What interest rate are you paying? Answer. 3 percent. 5. Question. What is the period of amortization? Answer. 45 years. 6. What are the monthly charges per $1,000 valuation (purchase price), broken down? Answer. (a) Interest: 3 percent on unpaid balance (now approximately $3,600 plus per month). (b) Payment on principal: Approximately $1.85 per $1,000 ($2,818.30 principal pay per month). (c) Maintenance and repair: Setting up reserve of $3,465 per month. (d) Hazard insurance: Approximately $375 per month on total project. (e) Taxes: Approximately $1,900 per month on total project. (f) Vacancy or contingency reserves: None at present. A reserve is actually being created by the fact that stockholders are amortizing on a 30-year basis whereas the corporation is amortizing on a 45-year basis. 7. Question. Monthly costs to stockholders for Answer: (a) 1 bedroom, living room, kitchen, and bath__ (b) 2 bedrooms, living room, kitchen, and bath. $27.50 30.00 32. 50 32.00 8. Question. What are average rental charges by private landlords in the same general neighborhood for similar accomodations? Answer. Exact figures not known, although we do know they are at least double our rates. 9. Question. What rents did the Federal Government charge tenants before project was sold: Answer: (a) 1 bedroom, living room, kitchen, and bath?. (b) 3 bedrooms, living room, kitchen, and bath?. (c) 3 bedrooms, living room, kitchen, and bath?. (d) 2 bedrooms, single?- $27.50 30.00 32. 50 32.00 10. Question. For how long did the corporation operate the project under lease before buying it from the Federal Government? Answer. Approximately 30 months. 11. Question. How do these operating costs compare with costs of Government operation of similar projects in the same area? Answer. Unable to say. 12. Question. Do you have a waiting list of applicants who want to join the corporation; and, if so, how many? Answer. Waiting list of 1,200. No applications taken since November 1946 because of the long waiting list. 13. Question. What is the attitude of members or stockholders? Do they consider that they are homeowners or tenants? What community activities are carried on? Do members act together with respect to local political questions? What social and recreational facilities are available? What about juvenile delinquency? (Please answer the questions listed under 13 on separate sheets of paper as fully as you can. I want to get a comprehensive picture of life in the community.) Answer. The majority feel that they are home owners in a new kind of way. This is borne out by the fact that most of the occupants are constantly improving the appearance and comforts of their homes by planting shrubbery, shade trees, hardy flowers, etc., as well as installing inlaid linoleum and special built-in cabinets in the kitchen. Many have also built concrete patios, put up awnings, and purchased storm doors and windows. At their regular annual meeting the members elect what is known as an activities committee consisting of 10 members. This committee, along with one elected member from the various activity groups such as the Women's Club, Veterans Club, Religious Group, Boy Scouts, Girl Scouts, Youth Canteen, Town Hall group, Bowling Group and others, prepare and plan the various entertainment and social affairs for the Community Hall, picnic grove and the playgrounds. Our delinquency, according to the public authorities, is lower than anywhere in the city or any neighborhood surrounding the city. We just do not have any to speak of. A tract of land was given the township school board for the purpose of erecting a schoolhouse. We now have a very modern, up-to-date, 20-room school loacted near the center of the project, maintained and operated by the township. We also have two tennis courts, two ball diamonds, a backetball court, three shuffleboard courts, model airplane-landing field, swings and slides, and a wading pool. Our maintenance shop is equipped with modern power saws where we build screen doors, repair and build cabinets, etc. We own our own farm tractor and plows. The tractor is used for cutting grass and plowing garden land for anyone living in the project desiring a garden. The project has a large commercial building consisting of a supermarket and drugstore operated by the co-op, a barber shop, beauty shop and dry-cleaning establishment. The three latter concerns are operated by private individuals. 14. Question. What is the attitude of the public (nonmembers) toward the project? Answer. Excellent cooperation from public officials. Attitude of the public has changed considerably from bad to very good now. 15. Question. How does the project compare with respect to appearance and depreciation? Answer. (a) With other Government projects in the area: Very good. We are continually trying to improve the project by planting shade trees, shrubbery, etc., throughout the village; regular painting program, recreation programs. This year installed two tennis courts and a completely new street lighting project that be finished October 1, 1948. (b) With privately owned neighborhoods in the area: As good or better in appearance, and in many ways we feel it is much better-the appearance is uniformly good throughout the village. EXHIBIT B.-Answers to questionnaire sent to Dallas Park Mutual Ownership Corp., Dallas, Tex. 1. Question. A complete description of both projects, giving the number of units of each type of dwelling, community facilities, and other pertinent information bearing on the physical plant. Answer. One-bedroom apartments, 84; 2-bedroom duplexes, 68; 2-bedroom detached houses, 112; 3-bedroom houses, 36. 2. Question. The date the project was completed. Answer. February 1, 1942. 3. Question. Cost of project broken down into: Answer. (a) Cost of dwellings alone: Approximately $890,000. (b) Costs of community facilities, such as playgrounds, community center, etc.: Community House, approximately $40,000; playground and community center, approximately $5,000. (c) Costs of utilities, such as roads, sewers, electric and gas, etc.: Utilities, $60,000; roads, $110,000. 4. Question. When was the sale made to the Mutual, and at what price? Answer. June 1, 1948, $763,674.12. 5. Question. What interest rate are you paying? Answer. Three percent on all unpaid balance. 6. Question. What is the period of amortization? Answer. (a) For the Corporation, 45 years; (b) for stockholders, 30 years. 7. Question. What are the monthly charges per $1,000 valuation (purchase price), broken down into? Answer. (a) Interest: $2.50 per month for first year. (b) Payment on principal: $2.78 per month. (c) Maintenance and repair: $3.32 per month. (d) Hazard insurance: $0.55 per month. (e) Taxes: $5.34 per month. (f) Vacancy or contingency reserve: 10 percent of all monthly charges. (9) Any other charges (specify): $1.32 per month for management. 8. Question. What price does the Corporation pay "at the gate" for gas, water, and electricity? Answer. All utilities directly metered to consumers. 9. Question: How are charges for the above services pro-rated among the members? Answer: See answer to question No. 8. 10. Question: How do the charges referred to in (9) above compare with prices for similar services in the same locality sold individually and measured by meters? Answer: See answer to question No. 8. 11. Question: What are the monthly costs to members, including, gas, water, and electricity, for: Answer: (a) 1 bedroom, living room, kitchen and bath. $30. 25 37.00 41. 50 |