HOUSING LEGISLATION FOR 1966 FRIDAY, APRIL 22, 1966 U.S. SENATE, COMMITTEE ON BANKING AND CURRENCY, SUBCOMMITTEE ON HOUSING, Washington, D.C. The subcommittee met, pursuant to recess, at 10:07 a.m., in room 5302, New Senate Office Building, Senator John Sparkman (chairman of the subcommittee) presiding. Present: Senators Sparkman, Proxmire, and McIntyre. Senator SPARKMAN. Let the subcommittee come to order, please. We have with us our colleague Senator Hart. Senator Hart, we are very glad to hear from you at this time. STATEMENT OF PHILIP A. HART, A U.S. SENATOR FROM THE STATE OF MICHIGAN Senator HART. Mr. Chairman, thank you. My statement, Mr. Chairman, is a very brief one. I request that provisions for FHA insurance of mortgages financing seasonal housing along the lines of S. 3116 introduced March 21 be added to any housing legislation your committee reports out this year. And I am grateful you permit me this opportunity. My interest in this legislation goes back more than 3 years when a respected builder in one of the State of Michigan's most beautiful areas called my attention to the problem. He reported that FHA officials believed they had no authority to insure mortgages on seasonal housing unless the project was in an area which offered all the facilities we traditionally look for, the facilities of a built-up area. Our objective, it seemed to me, should be the contrary-to make possible this type of financing in outlying and remote areas. I have in mind particularly redevelopment areas of this country, distressed areas, which do not lend themselves easily to industrial development but do lend themselves uniquely to recreation and tourism, areas such as parts of New England, the Appalachian region, upper areas of the Great Lakes Basin. I am sure every place in the country one could find such regions. I was glad, of course, when the administration included in the housing bill which it sent up in 1964 a provision to authorize this type of project. Your committee did not include this provision in its reported bill, but I hope that I may be able to persuade you this time. Let me make just three points. My principal interest is to bring this type of economic activity to areas that have been bypassed in our general national prosperity. These areas lend themselves degree to vacation activities, summer, winter, or both. The most logical and effective assist to the economies of would be through housing construction. The chairman far better than any witness that will appear before him. If we are not to start making a beginning in bringing into the mainstream when we are in a period of prosperity we? Perhaps the committee would prefer to limit FHA insur ity to redevelopment areas. Such a decision certainly woul standable. The committee may disagree with respect to payment requirement. If a 90 percent obligation is deeme 85 or even 80 percent perhaps could be substituted. Your certainly would be a sounder guide to this than mine. Second, perhaps I could refer to remarks I made when I this bill. I suggested then that if this provision became la should require as a condition of insuring that adequate p made for maintaining the natural setting and scenic val assuring adequate lot size and other subdivision and zo ards. I also noted the fact-and for this all of us are gratef tor Muskie that we now have in the basic housing law ment with respect to pollution control. This, of course, ply to this section if it is added. Last, it will undoubtedly be said that our first obligatio vide housing for the needy. Certainly we are in agreemen But until such time as this is indeed the exclusive direct enormous housing program, I believe it is not out of line loan insurance to aid the economies of our needy areas. This proposal has met very broad approval and suppo in Michigan, where the possibilities are quickly appreciat of the undeveloped rural but attractive areas we have, but f in many other parts of the country and from national or such as the Home Manufacturers Association, the Natio Corporation, the Mortgage Bankers Association of An American Plywood Association, the National Association Builders, and the National Forest Products Association. The Bureau of the Budget evidently takes the position. gram of this character is not warranted now. Perhaps a m proposal, confined to the depressed areas, would meet a mor response over there. My understanding is that at least at perhaps at the Department of Housing and Urban Develop had earlier been agreement as to its desirability and that i incorporated in the administration draft bill. In any event, Mr. Chairman, I realize that ours is th responsibility for decision. I know that your committee your thoughtful attention, and, even if on a limited basis. this additional tool can be added in order that areas where is available, where opportunity is rich, but where the e lagging, can be aided. Mr. Chairman, thank you for the opportunity to present Again I am very grateful. HOUSING LEGISLATION OF 1966 Senator SPARKMAN. Thank you, Senator Hart. Senator HART. Thank you very much. 301 Senator SPARKMAN. Thank you very much. I was just looking at the report of the Budget Bureau. You have received that? Senator HART. You are looking at the wrong material, Mr. Chair man. Senator SPARKMAN. Well, I can assure you that the subcommittee will give it careful consideration. We did, as you said, on a previous occasion and reported it favorably, I believe. Senator HART. Yes, sir. Senator SPARKMAN. No; it was not in the bill, but the committee considered it. Senator HART. Your subcommitte did regard it favorably. Senator SPARKMAN. Well, we will certainly give it consideration. We appreciate your fine presentation. Senator HART. Thank you. Senator SPARKMAN. The next witness is Mr. Larry Blackmon. president of the National Association of Home Builders. Mr. Blackmon, we are glad to have you with us again. You have been before us on many occasions. We are glad to have you. We have the printed copy of your presentation. You have some exhibits. You want those exhibits in the record too? STATEMENT OF LARRY BLACKMON, PRESIDENT, NATIONAL ASSOCIATION OF HOME BUILDERS; ACCOMPANIED BY LEON N. WEINER, FIRST VICE PRESIDENT; NATHANIEL H. ROGG, EXECUTIVE VICE PRESIDENT; HERBERT S. COLTON, GENERAL COUNSEL; AND JOHN A. STASTNY, MEMBER, EXECUTIVE COMMITTEE Mr. BLACKMON. I am going to cover some of the main points and ask that the exhibits and my whole text be filed for the record. Senator SPARK MAN. Very well. Without objection, the whole thing will be printed in the record. You proceed as you see fit. Mr. BLACKMON. Thank you. Senator SPARKMAN. For the benefit of the record you might present your colleagues. Mr. BLACKMON. Yes, sir; I will. As you said before, I have been before your committee many times, and I am grateful to have the opportunity to appear today. It is the first time that I appear as president of the National Association of Home Builders. For the record, I am Larry Blackmon from Forth Worth, Tex. I have with me Mr. John Stastny from Chicago, a member of our executive committee, and I hope a little later Mr. Leon N. Weiner, our first vice president and legislative chairman, will join us. I also have Dr. Nat Rogg, our executive vice president, and Mr. Herbert S. Colton, our chief counsel. As you know, the National Association of Home Builders represents over 45,000 members and some 390 local and State associations, associations in every State of the Union and Puerto Rico and the Virgin Islands. In general we support S. 2842-the Demonstration Citi S. 2977-the Urban Development Act of 1966-with some for amendment, but with the notable exception that—as almost identical legislation and for the same reasons-we so-called new towns and State land agencies provisions o title II of S. 2977. As I said earlier, we are going to summarize several before the subcommittee and ask that this information that to my testimony be filed for the record. Senator SPARKMAN. That will be done. Before we discuss these bills in detail, we call the commi tion to other important problems which we believe should attention and that of all governmental officials and indu sentatives charged with the responsibilities in these area building and urban development. They should receive sideration. I refer, of course, to the tightness and increasing cos rapidly rising prices and wages and interest, and the sca tain commodities in the construction industry. About 6 weeks ago, before the House subcommittee on bills to those before you, I referred to the increasingly d ditions facing the homebuilding industry and warned th its fair share of available credit to the homebuilding in not rebuild American cities, cannot adequately provide community growth, and, most important of all, it cann to provide good homes for American families at reasona In the last several weeks, these conditions have further d Then difficult; they are now intolerable. I now must wa less corrected-and corrected soon-monetary pressures exerted on our industry could cripple our capacity to 1 kind and volume of homes American families require. sult will be not only a drastic drop in homebuilding, but unfortunately, higher monthly costs to the home buyer for ing as we do manage to produce. Once the industry is p fall into the kind of condition it is now approaching, re not be quick or easy. I attach, and ask that the record include, a copy of tion's weekly publication dated Friday, April 8, 1966. NAHB "Scope" rated Friday, Apr. 8, 1966.) Senator SPARKMAN. All of your exhibits will be includ Mr. BLACKMON. Thank you, sir. The entire issue that I ask be included is devoted to ment concerning these problems and our efforts to obt solving them. Since that issue appeared, the FHA and VA maxim rate has been raised to 534 percent, as you know. It is tell if this will provide any substantial relief, although the fourth of a point, of course, strengthens the attractivene mortgages and VA loans. They are now in an even more area where competition for savings is continuing to go o HOUSING LEGISLATION OF 1966 303 The homebuilding industry depends on the savings institutions to finance our customers. Commercial banks are now being encouraged to pull savings out of mortgage-lending institutions by certificates of deposit at interest rates which long-term lenders cannot possibly match. It is difficult to see how this can fail to result in permanent serious consequences to the homebuilding industry and to the homebuying public. As a result of our industry's problems in the recurrent "tight money" crises of the 1950's, we concluded that housing should be given a voice in the councils of those who set national policies in allocating credit resources. We were among the first to advocate Cabinet status for housing to provide that voice. Nothing in these recent actions which have so seriously affected mortgage credit affords any basis for confidence that the bitter lessons of the first two post war decades have been heeded or, for that matter, even thoroughly understood. Therefore, I would be less than frank if I did not tell you that, concerned as we are about the importance of the legislation now before you, we are also deeply concerned about the immediate problem. However justified their objectives, it will be several years before their full force is evident. Long before then-unless present monetary conditions are corrected-the present productive capacity of our industry will be so sharply curtailed as to create a new series of problems. This is something that disturbs us a great deal. We are here today talking about new legislation, and we are faced with problems now of administering and having money available for legislation that you have so ably already provided for the country, and we need to look at the picture as well as some of the new legislation. DEMONSTRATION CITIES ACT, S. 2842 NAHB supports this bill because it seems to us entirely logical to try to rehabilitate people as well as structures. Certainly it is simple commonsense to demonstrate that focusing a vast variety of available Federal aids upon a blighted area in a coordinated fashion, rather than scattering them in a shotgun approach, will accomplish more for the slum areas and for the people who live in them if this proposal is enacted into legislation and properly administered. There is some reason to contend that success in this aspect of the program may very well substantially reduce the necessity for large public housing and urban renewal programs. If a higher level of education and consequent higher earning power and employment and other opportunities can be provided by the Federal programs coordinated under the bill, then the ability to obtain better living quarters and an increased pride in maintaining them in good condition should be increased. With respect to the criteria established in the act for the type of housing program required to qualify for assistance under the bill, we particularly applaud those provisions which would give priority to good design; the maintenance of natural historical and cultural characteristics; use of new and improved technology and design; and use of cost reduction techniques (sec. 4(c) (2) and (3)). A substantial part of the budget and energies of our association for some years has dinaatad toward nost roduction and the improvement of tech |