General REEDER. I do not think you will ever get enough with both to fully solve the situation. You see, we have 100,000 people for whom we could furnish quarters if we had the money available; 1,000 at $14,000 a unit is $1,400,000,000. We are not going to get that in the foreseeable future or any large piece of it. This will build some houses. We will build where it is wise to do so with public funds to complement and not compete. With the two measures, we will vastly improve morale and the quality of the person whom we can attract and hold in the military service. Mr. DEANE. How early do you expect to get under way with this program in the event the bill should pass? General REEDER. We have people interested now. In fact, in some cases, by the assistance and the very great cooperation of the FHA, there are projects getting under way which are roughly in line with this, where the risk could be written down sufficiently to get private enterprise to go in and build. But, again, in such cases, they will not build as much as they would under this. They will build 500. The CHAIRMAN. If there are no further questions, you may be excused. The statement of Congressman John C. Davies, of New York, will appear at this point in the record. (The statement referred to is as follows:) STATEMENT OF Hon. JOHN C. Davies, a REPRESENTATIVE IN CONGRESS FROM THE THIRTY-FIFTH DISTRICT OF NEW YORK My name is John C. Davies, and I represent the Thirty-fifth District of the State of New York. I appreciate very much having the opportunity of appearing before this committee and presenting this statement in behalf of the city of Rome, N. Y., which is in my district. The advent of expanded Air Force facilities in Rome, N. Y., which will mean hundreds of additional civilian personnel employed from outside for the Griffiss air base, has caused a housing crisis in this area. Even under normal conditions, there would be a shortage of homes in the Rome area because of the lack of building in the past few years. The expansion of the Air Force facilities will accentuate this shortage. It is imperative that we have homes-especially rental units-hundreds of homes. It is my opinion that if H. R. 4435, which is identical to H. R. 4491, is reported favorably by this committee and later enacted into law, the shortage of homes in and around this strategic Air Force base will be greatly alleviated. It is my hope that this committee will see fit to report out this legislation favorably. The CHAIRMAN. We will be unable to proceed further. The House is in session. The committee will adjourn. (Whereupon, at 11:10 a. m., the committee adjourned subject to the call of the chair.) MILITARY RENTAL HOUSING MONDAY, JUNE 6, 1949 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met, pursuant to adjournment, at 10 a. m., the Honorable Brent Spence (chairman) presiding. Present: Messrs. Spence, Brown, Patman, Monroney, Buchanan, Deane, O'Brien, O'Hara, Smith, Talle, McMillen, Kilburn, Cole, and Nicholson. The CHAIRMAN. The committee will be in order. We will resume the hearings on H. R. 4491. Mr. Foley, you may proceed. Mr. FOLEY. I have a brief written statement that I will read, if the committee please. STATEMENT OF RAYMOND M. FOLEY, HOUSING AND HOME FINANCE ADMINISTRATOR Mr. FOLEY. Mr. Chairman and gentlemen, in recent appearances before your committee I have presented my views on measures designed to provide Federal assistance for the construction of housing in urban areas, in rural districts, and on the farms, and legislation designed to meet the special housing needs in Alaska. Today we are concerned with still another problem involved in the over-all housing shortage that of providing adequate housing for military and civilian personnel at Army, Navy, Marine Corps, and Air Force installations. Representatives of the Military Establishment have described the urgent need of such personnel for housing and the detrimental effects of that need in terms of individual hardships and in terms of cost to our armed services in lower efficiency, difficulties of recruitment, and loss of trained personnel. We know that local offices of the Federal Housing Administration receive requests from builders and from military and naval installations for assistance in providing housing to serve the personnel of those installations. As Mr. Richards will explain, however, under existing legislation the Federal Housing Administration cannot provide mortgage insurance for most housing of this character. I am in full accord with the objective of H. R. 4491-to stimulate the construction by private enterprise of new rental housing for civilian and military personnel of military installations. This purpose would be accomplished by adding a new title VIII to the National Housing Act to provide for a more liberal form of mortgage insurance than is otherwise available, and by affording certain additional aids to such housing with respect to acquisition of land and utility services. The 21 most important feature of the proposed mortgage insurance is the waiver of the usual Federal Housing Administration requirement that the housing meet the customary tests of acceptable risk, including standards as to neighborhood and market availability. In place of this requirement, the Secretary of Defense or his designee would be required to certify as to the need for the housing and the permanence of the installation. I wish to emphasize that I do not believe this bill, or any other proposal for mortgage insurance, can provide more than a partial solution to the problems of meeting the housing needs at military and naval installations. However, in my opinion, H. R. 4491 would provide a workable method for stimulating housing construction to meet a portion of that need. Although Mr. Richards will discuss the specific provisions of the proposed legislation, I would like to explain briefly one of its important provisions. The maximum mortgage amount which may be insured under this bill could not exceed 90 percent of the amount estimated by the Federal Housing Commissioner to be the replacement cost of the property nor an average of $8,100 per family dwelling unit for the part of the property attributable to dwelling use. These limitations are similar to those presently applicable to mortgage insurance for rental housing under title VI of the National Housing Act, and I believe they are sufficiently liberal for the purposes of this new title. Other proposed legislation now pending before your committee with respect to mortgage insurance for military housing would permit higher mortgage amounts than provided in this bill. These higher amounts would, in my judgment, add to the Government's liability without materially assisting the provision of housing. An owner's equity of less than the 10 percent of the cost of such housing which would be required under the bill would not normally assure sufficient incentive to the efficient and economical development and operation of rental property. The Senate Committee on Banking and Currency recently considered similar legislation providing for insurance of mortgages on military housing in amounts higher than 90 percent of the cost of such housing. After thorough study of this matter, that committee recommended legislation containing the same maximum mortgage amounts as provided in H. R. 4491. The provisions of this bill which would authorize the Military Establishment to lease and sell lands and to furnish utilities and other services to builders of housing at military installations are, in my opinion, most desirable and important. At present, difficulties in obtaining suitable lands and necessary utilities are major deterrents to the development of housing at military installations, particularly in isolated areas. The leasing of such land by the Military Establishment at nominal considerations would make possible rentals within the financial reach of a larger number of prospective tenants. As I have previously indicated, mortgage insurance can provide only a partial solution to the problem of meeting the housing needs at military and naval installations. It is clear that privately owned housing of sound standards cannot generally be constructed to rent for sums as low as the $37.50 shelter allowance I understand is made to some lower grades of military personnel. This would be true even with the assistance granted in the proposed measure with respect to land and facilities. However, the testimony of representatives of the defense establishments indicates that the ability to pay rent for family quarters is not limited solely to this allowance, in a large number of cases. If it were, the possibilities of relief under this bill at current cost of building would be correspondingly reduced. I have been authorized by the Director of the Bureau of the Budget to advise that the objectives of H. R. 4491 would be in accord with the program of the President. I have incorporated in a letter to your committee the few perfecting amendments which I believe should be made to the bill. With these amendments, H. R. 4491 would be identical with S. 1184 recently passed by the Senate and now before your committee. Thank you, Mr. Chairman. I will be glad to answer any general questions or have Mr. Richards come forward now, if you wish, for specific testimony on the insurance features. The CHAIRMAN. There is an amendment suggested in the event condemnation proceedings are resorted to by the Government and operators default in the mortgage made eligible for insurance. Mr. FOLEY. We have suggested such an amendment in our letter to you of June 6, Mr. Chairman, and have suggested language, I think, that would be highly desirable and remove a further difficulty. The CHAIRMAN. Several of the members have expressed an interest in that amendment. Are there any questions of Mr. Foley? Mr. NICHOLSON. Mr. Chairman. The CHAIRMAN. Mr. Nicholson. Mr. NICHOLSON. I noticed the limitation of $8,100. Can you build a 6-room house for $8,100 today anywhere, Mr. Foley? Mr. FOLEY. It can be done, sir; yes. Mr. NICHOLSON. Will you tell me where it can be done? Mr. FOLEY. I would rather if you will have Mr. Richards discuss that since he is handling the operation presently under title VI and will be able to give you that information, sir. The CHAIRMAN. If there are no further questions, you may stand aside, Mr. Foley. We are very glad to have your testimony. (The letter above referred to by Mr. Foley is as follows:) Hon. BRENT SPENCE, HOUSING AND HOME FINANCE AGENCY, Chairman, Committee on Banking and Currency, MY DEAR CONGRESSMAN SPENCE: I have today appeared before the House Committee on Banking and Currency and presented my views on H. R. 4491, a bill to encourage construction of rental housing on or in areas adjacent to Army, Navy, Marine Corps, and Air Force installations, and for other purposes. The purpose of this letter is to set forth, for the convenient use of your committee and the members of its staff, the few perfecting amendments to the bill which I desire to recommend for consideration by your committee. The principal amendment which I recommend is the addition of the following new sentence at the end of line 21 on page 10: "If, during the time the mortgage is insured and before the mortgagee has received the benefits of the insurance, the United States acquires, or commences eminent domain proceedings to acquire, all or a substantial part (as defined by the Commissioner) of the mortgaged property for the use of the National Military Establishment, the mortgagee may, at its election, within such time and in accordance with such regulations as the Commissioner may prescribe, receive the benefits of the insurance as provided in this subsection, notwithstanding the fact that the mortgage may not be in default." |