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In the Lakewood Park project, involving $30.2 million of FHA mortgages, the Weingart-Boyer group and Investors Diversified Services conducted a similarly profitable operation.

The Weingart-Boyer group received commitments from the Long Beach (adjacent to Los Angeles) FHA office for 6,663 units to be constructed under section 213. The only other section 213 commitment ever issued by that office was a project of 50 units.

The committee heard testimony that the section 213 program was used in Arizona to sell houses without any downpayment on a for profit sales program. Hyman Rubenstein testified that a construction company he owned built single-family houses which it sold to a nonprofit corporation he controlled for the amount of the FHA mortgage. That mortgage was 95 percent of FHA's estimate of the cost. The nonprofit corporation then sold the houses without any downpayment. Rubenstein testified that these houses were thus sold for approximately $8,000, with a profit to him of $1,000 on each house. If FHA's estimates were in line with Rubenstein's actual costs, FHA was allowing him a 17-percent profit in a program in which FHA insured construction advances and virtually insured the builder against loss.

Senator MONRONEY. Taking out the administrative section for cooperative housing did not help any to get genuine cooperatives going; did it?

Mr. CAMPBELL. That is right. At the inception of the program there were eight men plus secretarial help working on it. Today there is a cooperative adviser and his secretary as all that is left of that section, plus one of the prior members of the staff who is now working under the multifamily housing projects, working in that capacity. But it means 2 or 3 people doing what 8 were doing before and the possibility of policing these and preventing abuses is almost impossible.

Senator MONRONEY. Senator Payne, did you have any questions?

Senator PAYNE. No. The only thing I have is the observation that from what I know of it Senator Capehart has stated that the will of the Congress was pretty plain that they wanted this to be a provision to permit true cooperative housing.

Mr. CAMPBELL. That is right.

Senator PAYNE. The will of the Congress was circumvented because perhaps the law did not spell it out clearly enough. It certainly was circumvented so that the true cooperative was not what we were getting. We got something where some fellows figured some ways around it so as to be able to carry out just exactly what Senator Capehart has explained here.

So, if it is going to be a true cooperative in line with your testimony here, it is going to require some pretty careful drafting of the law to pin it down to that type of housing and to eliminate any chance for somebody else to come in and use that as a medium to get around it and make some real money on it.

Senator CAPEHART. A true co-op is one where, if there are a thousand cooperators, each gets exactly the same in profit, the same in benefit. We found in many cases, you see, where the five incorporators would take—just using figures now—a million or two million or three million in windfall profits, and then those to whom they sold the apartments, the units, maybe a hundred or two hunudred or a thousand, paid about the same as anybody else would pay for a comparable house. They did get some benefit in that they got longer terms, because that was a part of the title, part of the law.

Mr. CAMPBELL. In a couple of these places you would be very proud of the way these people are maintaining their projects. You get the homeownership factors that are awfully important in these things.

Senator PAYNE. You would say it was a pretty poor record if only approximately 25, as I understood you to say, are true consumer cooperatives out the two hundred-some-odd that were built!

Mr. CAMPBELL. What I would say is that the 25 were consumersponsored and were cooperative from the beginning.

Senator CAPEHART. They were true co-ops?
Mr. CAMPBELL. True co-ops.

Senator CAPEHART. The others were promoters who promoted under the co-op section, section 213, of the law.

Mr. CAMPBELL. That is right. Now, a number of others have become true cooperatives, and they are ones we are very proud of, because the people, after they found themselves in this situation, got together, pooled their knowledge and initiative, and have done an important job.

Senator CAPEHART. That is right.

Mr. CAMPBELL. And we hate to see some of those knocked in the head.

Senator CAPEHART. Another feature of section 213 is that the Government is obligated to loan construction money as they go along building. The Government is obligated to do it. Under other titles they have got to go out and find their own money and their own credit.

Senator MONRONEY. Any more questions?

Thank you very much, Mr. Campbell. We appreciate your testimony.

Mr. Clarence H. Olson. Mr. Olson, will you come forward? I believe you would like to introduce our next witness. We are glad to have you here, Mr. Olson.

Mr. Olson. Thank you very much. Mr. Chairman and gentlemen of the committee, my name is C. H. Olson. I am the assistant director of the legislative program of the American Legion, and we appreciate the opportunity to come before you this morning to support the principles of S. 1501 which I think is under consideration this morning, the Armed Services Housing Insurance Act of 1955.

I have with me the chairman of our national aeronautics committee, as we call it, which is a subdivision of our national security commission. Mr. Evans is a volunteer, one of the many who worked with us in our wide program.

Our statement is not of a technical nature, and I am sure it is not going to take very long.

In view of the fact that Mr. Evans is mixed up in the aeronautical business, his statement points more to the Air Force than other arms of the service, but that in no way is to detract from our general support of the measure for the benefit of the other services as well.

Senator CAPEHART. The Navy and the Army?
Mr. Olson. Yes, sir.
Mr. Jack Evans, gentlemen.
Senator MONRONEY. Thank you very much, Mr. Olson.

Mr. Evans, we are glad to have you before the committee and would appreciate it if you would just proceed in your own way.

Military housing

STATEMENT OF JOHN K. EVANS, CHAIRMAN, NATIONAL AERO

NAUTICS COMMITTEE, NATIONAL SECURITY COMMISSION, ACCOMPANIED BY CLARENCE H. OLSON, ASSISTANT DIRECTOR, LEGISLATIVE PROGRAM, THE AMERICAN LEGION

Mr. Evans. Mr. Chairman and gentlemen of the committee, thank you for extending to me the opportunity of presenting the following statement.

Despite the increasing degree of mechanization in modern warfare, I think we have all come to realize that our military personnel make up our most important military resource. In approving the recent pay raise for military personnel, Congress recognized the importance of attracting and retaining capable and experienced people in the Armed Services.

There is another item, equal in importance to that of pay, that affects the welfare of military personnel. It is the question of proper and adequate housing. This problem of living conditions and the welfare of our service personnel is the responsibility of every American citizen. If we try to avoid or limit this responsibility, we only ignore the fact that the peace of the world and the safety of our country depends on the quality and dedicated spirit of our soldiers, sailors, and airmen.

Above all, our security depends upon the skill of these men responsible for the operation and maintenance of atomic-age equipment. Any disregard for those human values which our military, the same as you and I, as Americans, have come to expect and accept can only lead to a continuing and costly turnover of personnel.

I, along with other members of the American Legion, have personally inspected the facilities at many of our bases and stations. We have found the lack of adequate housing to be a disgrace and a problem of concern to all of the armed services. It is especially critical for the Air Force because it is a new and expanding service. For this reason, I would like to place particular emphasis on the Air Force's housing needs.

The expansion of existing Air Force facilities and the construction of new bases have created a serious shortage of family quarters for our Air Force officers and airmen. It is true that some progress has been made by the Air Force in reducing this shortage, but a still greater effort is needed in the immediate future. The majority of Air Force families are not fortunate enough to get Government-furnished quarters. These families must depend on community housing. In most instances, such housing is either not available, is too expensive, or is too far from existing airbases. In those instances where it is available, community housing is either flimsy or so expensive that quarters allowances fail to cover the cost of rent.

Today there are about 445,000 men in the Air Force who must have housing for their dependents. To meet this need the Air Force can count on only 134,000 adequate family units.

Thus, there are 311,000 men in the Air Force today who do not have adequate housing for their families. Is it any wonder that the Air Force is faced with a serious reenlistment problem?

Of these 311,000, there are about 171,000 married airmen, who because of their grades are not entitled to Government quarters and who would not be affected by the proposed amendment to the National Housing Act. These airmen have been granted dependency benefits under temporary legislation due to expire June 30 of this year. The vast majority of these airmen have a continuing housing problem with the resultant effect on their morale. I sincerely hope that some form of permanent legislation will be enacted to take care of these individuals.

Senator CAPEHART. Mr. Chairman, would you yield a moment? You say there are about 171,000 married airmen who because of their grades are not entitled to Government quarters and who would not be affected by the proposed amendment to the National Housing Act.

Mr. Evans. Yes.

Senator CAPEHART. You mean S. 1501, the bill I introduced together with 29 other Senators?

Mr. Evans. Yes. That is as we understand it.

Senator MONRONEY. Under all those bills, Wherry Act and all, they go down only to those who are guaranteed quarters.

Mr. Evans. That is right.
Senator MONRONEY. By the rank that they have.
Mr. Evans. That is right.

Senator MONRONEY. It does not go down below master sergeant or something

Mr. EVANS. Correct.

Senator CAPEHART. Under the bill I introduced, it is the intention to cover any and everybody in the service—that is, married or who has dependents. If it is not written that way, it certainly ought to be changed.

Mr. Evans. Well, I am not a lawyer, but from what I have talked to some about

Senator MONRONEY. We have no jurisdiction over that. The quarters pay has to be diverted to pay for this housing, and

Senator CAPEHART. All of these 171,000 get rental allowances, do they not?

Mr. Evans. Well, it is under the special temporary legislation that expires June 30.

Senator CAPEHART. You mean the legislation expires June 30 giving them quarters allowances ?

Mr. Evans. Quarters allowances.
Senator CAPEHART. That does not come before this committee.

Mr. Evans. No. And when that expires, they are not eligible under this act. (The following was later received for the record :)

THE AMERICAN LEGION,
NATIONAL AERONAUTICS COMMITTEE,

May 13, 1955.
Hon. J. W. FULBRIGHT,
Chairman, Senate Banking and Currency Committee,

United States Senate, Washington 25, D. C. DEAR MR. CHAIRMAN: At the hearings before your committee on May 13 concerning housing for military personnel, I was asked by Senator Capehart as to why lower grade airmen were not entitled to housing. In response to this inquiry I would like to submit the following additional information which I respectfully request that it be included in the record.

At the present time all enlisted personnel are entitled to a monthly quarters allowance. The amount each airman receives varies betwen $51.30 and $96.90, depending upon the number of their dependents. These allowances are authorized under the provisions of the Career Compensation Act of 1949, as amended, and Public Law 771, 81st Congress. However, Public Law 771 which extended the benefits of quarters allowance to enlisted personnel in the lower four grades is due to expire on June 30 of this year. Upon the expiration of this law only the top three grades in the enlisted ranks will be entitled to quarters allowance.

Since Public Law 771 is a temporary authorization, the Air Force in establishing requirements for Government furnished housing units is unable to consider those airmen who will no longer be entitled to such housing. In an effort to extend these benefits to the lower four grades of airmen, a provision has been incorporated in H. R. 3005 which, if adopted by the Congress, will extend the provisions of Public Law 771 to July 1, 1959. If approved, the majority of these airmen will still have to depend upon community housing to meet their needs, Sincerely,

J. K. EVANS. Senator CAPEHART. Well, they would be eligible to live in the houses that would be constructed under this act by paying rent. They could pay rent out of their own pocket.

Mr. Evans. They would have to pay it out of their own pocket.

Senator CAPEHART. So, therefore, it becomes a question, I guess, of whether these 171,000 will or will not get quarters allowances.

Mr. Evans. They will not now, as I understand, sir.

Senator CAPEHART. They will be eligible under the bill as we have it. If it is not that way, we certainly will change it so they can live in these houses that we propose to build under this plan of course, by paying rent. Or they would not even have to pay rent if they had quarters allowances. They could be assigned to them. But we will check into that. I am glad you called it to our attention.

Mr. Evans. Thank you.
Senator CAPEHART. It is a technicality we can straighten out.
Mr. Evans. Thank you very much.

This then leaves 140,000 in the Air Force who are entitled to Government quarters under existing law but who do not have adequate housing. For the time being, some of these people are just out of luck; for example, even if authority and funds were provided, we could not build all the homes needed by the Air Force in Japan because there is not enough land available.

Since 1947 when the Air Force became an independent service, appropriations for new Air Force housing has been sufficient to provide İess than 2 percent of that required. The first such appropriation to be of any benefit was the fiscal year 1955 funding for approximately 2,230 units. Even this appropriation was in striking contrast to the fiscal year 1955 authorization for over 6,000 permanent family-type dwellings. If this is to be the pattern of future authorizations and appropriations, it will take over 60 years to satisfy the need of those airmen presently entitled to housing.

Obviously, dependence on appropriated funds will not meet the urgent needs of the Air Force. It is equally apparent that economic and budgetary considerations prevent us from depending solely upon appropriated funds to provide this housing.

On the other hand, laws making the National Housing Act applicable to the military family have provided about 25 percent of the Air Force's adequate housing.

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