was based in Mineral Wells, Tex., for many years, now has headquarters in Fort Worth. The company builds homes ranging from $9,500 to $25,000, supplemented by extensive activity in the multifamily housing field. It is also active in land developing, commercial construction, and international housing projects. At 42 years of age, Blackmon has been in the homebuilding business for 15 years. He is a native Texan who returned to his home State after working as an economic adviser in the State Department in Japan after World War II. În 1961 he made four trips to Latin America for the State Department to assist Latin Americans in establishing housing programs. He was named NAHB's outstanding regional vice president in 1961 and became a national vice president, representing Texas and Okla homa in 1962. He served as national vice president and secretary in 1963, as vice president and treasurer in 1964, and first vice president in 1965. This is his eighth year on the NAHB executive committee. Blackmon is a past president of the Texas Home Builders Association and a past director of the Fort Worth Home Builders Association. He was chairman of the NAHB committee on the Federal Housing Administration and the Veterans' Administration in 1961. He attended Texas A. & M. College. Mr. BARRETT. Thank you, Mr. Chairman, for that splendid intro duction. Mr. Blackmon, we, of course, want you to feel at home and be as comfortable as you possibly can. If you decide to read your statement in full, and we should like to ask you questions after you complete your statement, it will be all right. If you would like to read it in part and have some of the questions asked at that time by the various members of the committee you may do so with that approach. Whatever you choose to do, we will be glad to abide by. Mr. BLACKMON. Thank you, Mr. Chairman. STATEMENT OF LARRY BLACKMON, PRESIDENT, NATIONAL ASSOCIATION OF HOME BUILDERS; ACCOMPANIED BY LEON N. WEINER, FIRST VICE PRESIDENT OF THE ASSOCIATION; DR. NATHANIEL H. ROGG, EXECUTIVE VICE PRESIDENT; AND HERBERT S. COLTON, GENERAL COUNSEL Mr. BLACKMON. I especially want to thank the dean of our Texas delegation for his introduction of me. I was born and raised in his district, grew up there, and have looked to his outstanding leadership for many years as a guide and symbol. He has inspired many of us from that east Texas area to become acquainted with our Federal Government and its activities, and I am most pleased that he took time from his busy schedule to make the introduction that he did. Mr. BARRETT. Will you introduce your associates, please, for the record? Mr. BLACKMON. At this time I would like to introduce those at the table with me. I have with me Leon Weiner, first vice president of our national association and legislative chairman. He has been a close associate of br NT has hel 00, suppl Field. I and inter g busine ome Stat rtment e Depar rams. and Off mine as far as the association's work is concerned over a number of I have Dr. Nathaniel H. Rogg, whose background in economics has With me also is Herb Colton, chief counsel for the National Association of Home Builders. At this time I would like, Mr. Chairman, to go through my testimony and insert for the record certain items which I will indicate as I go through. The several bills that are being considered in these hearings include a number of proposals. Therefore, for the convenience of the comtinmittee, we have summarized in attachment A, appended to my statement, our position with respect to each item, and have included in attachment B, certain additions to the National Housing Act which we recommend to the committee. 3. as The 1965. 31. d be I shall limit my remarks this morning to comments on those particular aspects of these bills that the National Association of Home Builders believe require particular emphasis. I assume that the attachment will be included in the record to show our position in detail, Mr. Chairman. Mr. BARRETT. This may be done without objection. It is so ordered. Mr. BLACKMON. In general, we support H.R. 12341, the Demonstration Cities Act, and H.R. 12946, the Urban Development Act of 1966 with some suggestions for amendments. However, we oppose, as we did last year on almost identical legislation, and for the same reasons, the so-called new towns and State land development agencies provisions which are in title II of H.R. 12946. Before discussing these bills, we believe it in order first to bring to your attention the increasingly difficult conditions facing the homebuilding industry. Attached as exhibits I-A and I-B is material on housing, the national economy, and recent changes in the monetary market developed and written by our economics and builder services departments. The first, comparing housing, housing starts, and economic growth during the past few years, shows that although housing demands continue high, construction has declined while the overall economy has climbed to new records. It discusses briefly the flow of money from savings institutions to commercial banks as a result of the recent amendment to regulation Q. The second of these exhibits is the latest issue of the Economic News Notes periodically issued by our economics department. The section headed "Home Building" which commences at page 3, is particularly pertinent. While the legislation before you seeks, rightfully, to provide for the building of a better America in the years to come, the pool of savings capital on which our industry depends for its customer financing is being seriously depleted by the action of December 5 last which allowed the maximum rate permitted to be charged by commercial banks on certificates of deposit to jump from 4 percent all the way to 512 percent. I attach as exhibits II-A and II-B two recent stories which illustrate what is going on. As in 1957-of unhappy and unlamented memory in our industrysavings are again being allowed, indeed, encouraged, to flow from STAMOND MIBRARIES mortgage lending institutions into other forms of credit. Without its fair share of available credit, the homebuilding industry cannot rebuild American cities, cannot adequately provide for proper community growth, and, most important of all, it cannot continue to provide good homes for American families at reasonable prices. As a result of our industry's difficulties in the recurrent tight money crises of the 1950's, we urged at that time that housing be given a voice in the councils of those who set national policy which determine the allocation of credit resources. We were among the early advocates of a Cabinet status for housing to provide that voice. Nothing in the recent actions which have so seriously affected mortgage credit affords any basis for confidence that the bitter lessons of the first two postwar decades have been heeded or, for that matter, even thoroughly understood. As I am sure the committee understands, our enthusiasm for the pending legislation-which can have little significant effect for at least several years-is somewhat tempered by our very real concern that, under current money conditions, the present productive capacity of our industry will be sharply curtailed. We may not even be able to continue to provide homes in the volume produced during the past 10 years, much less increase our production to meet changing conditions in our society. Our comments on these bills are made, therefore, with the reservation that the problems of basic mortgage finance now confronting our industry are of immediate and vital importance. We are urgently concerned. DEMONSTRATION CITIES ACT (H.R. 12341) NAHB supports this bill because it recognizes the need for a start toward a coordinated approach which would rehabilitate people as well as structures. This seems to us entirely logical. Certainly, it is simple commonsense to attempt to demonstrate that focusing upon a blighted area, in coordinated fashion, the vast variety of available Federal aids, rather than scattering them in a "shotgun' approach, will accomplish more for slum areas than the people who live in them. 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. A higher level of edu cation, and consequent higher earning power and employment and other opportunities provided by the Federal programs coordinated under the bill, should inevitably be reflected in ability to obtain better living quarters and in increased pride in maintaining them in good condition. With respect to the criteria established in the act for the type of housing program required to qualify for assistance under this 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 the 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 have been directed toward cost reduction and the improvement of technology, design and environment. We believe it highly desirable that all Federal housing efforts be required to work toward these ends. Without Ty cannot oper com ue to pro tight me iven a etermine thing in redit a In this connection, we note also that H.R. 13065, the Housing and Urban Development Amendments of 1966 in section 106 also covers this same subject. As stated in the section-by-section summary of that bill, this section Would establish a program to encourage and assist the housing industry to reduce the cost and improve the quality of housing through the application to home construction and rehabilitation of advances in technology. This program suggested by this section, realistically conceived and advocate effectively pursued, could, we submit, save the Federal Government and the American public many times its cost, but only if cast in the mold of Federal assistance to nongovernmental agencies and bodies of all types, including universities and nonprofit and other private research groups. ghly sm for for at neer We therefore recommend that section 106 of H.R. 13065 be amended to emphasize that research thereunder be conducted through nongovernmental bodies or agencies, and that a start on such program be made by setting aside for research one-half of 1 percent of funds apcityofpropriated pursuant to H.R. 12341. ble to c he past conditi fore, now We Deople & We also recommend that the Congress clarify section 7 of H.R. 12341 to make more effective the Office of Federal Coordinator established thereby. We believe an office of this kind is necessary if the manifold Federal programs available to localities are to be kept from complete confusion in action. We see nothing in the bill which would give the Coordinator any duties or powers other than to advise local governments how most effectively to work with Federal grant-in-aid programs. We suggest that this be elaborated and clarified by comment in your committee report on the bill. In this connection, the title "Federal Coordinator" may be unfortunate. Perhaps the true function of this Office could be better expressed by the use of a name such as "Demonstration Coordinator" or "Urban Program Coordinator." URBAN DEVELOPMENT BILL (H.R. 12946) As I indicated at the outset of my remarks, we vigorously oppose title II of this bill but support titles I and III. Title II again brings before the Congress two proposals which it has already rejected. These are mortgage insurance for so-called new communities and direct Federal loans to encourage formation of State and local governmental agencies to engage in the business of land development for housing. Mortgage insurance for new communities: This is the third year in succession this proposal has been advanced. It was rejected 2 years ago. In 1965 a limited version became title X of the National Housing Act with the originally proposed $25 million limit on the maximum loan, for any one project at any one time, reduced to $10 million. The bill before you again attempts to increase that maximum limit to $25 million. Further, it would grant special benefits to the larger projects, not available even to a project as large as $10 million, in the form of a longer loan maturity and access to FNMA special assistance. With those exceptions, title X already provides everything proposed by this bill. As I said earlier, we testified against this last year and the record so indicates and I will not elaborate because this will be filed for the record. We believe these reasons are even more cogent today since the Congress last year provided, in sufficient form for every substantial experiment, what is here asked in expanded form even before that experiment can get started. Everything requested in this proposal can be done under the existing legislation except possibly to put Federal credit behind a few projects of huge corporations. We believe this better deferred at least until the results of operations under last year's $10 million ceiling can be evaluated. that Gentlemen, at the present time the program is just getting underway. There is actually little or no mortgage insurance program presented under title X at this time. They have some requests for feasibility studies and things of that nature but it is not a program has been tried or has had any experience. We think time should be given to find out just what is going to take place before embarking on an expanded program. On the land development agencies, this proposal, as we urged last year, would inject Government deeply, irrevocably, and on an inevi tably expanding scale into the business of land development as distinguished from the present system of private development of land under local community regulation. The proposal raises fundamental questions of the philosophy of Government in relation to private business. Last year we made crystal clear the attitude of the homebuilding industry. At that time, we said: The homebuilding industry is firmly dedicated to the proposition that Government should never do what industry can do as well or better for itself; that governmental action is needed only where there exists a private enterprise vacuum or serious abuse; and that Government action, when determined necessary in the public interest, should be taken in the least disruptive form and should remove impediments to private action, not supplant it ** We contend there is no serious abuse at this time and it is not needed. Our 1965 testimony appears at pages 552 and 553 of the hearings on H.R. 5840. We listed specific reasons why we were irrevocably against the proposal. We repeat and reaffirm that testimony. We urge the Congress to reject the land agency proposal so firmly as to preclude annual discussion of what we are convinced would, at one stroke, destroy the system of private ownership of land as we know it. Title IV of this bill would provide a system for grants for so-called urban information centers. It would be helpful to local communities to have available the type of program information contemplated, but we believe it preferable that this information be made available through the coordinators to be provided under section 7 of H.R. 12341. In our opinion centralization of such information in the coordinators would help avoid the proliferation of Federal sources to which local communities must resort to obtain information about housing programs. Additional suggestions: I refer to attachment A, appended to this statement, for a detailed summary of our views on H.R. 11858 and H.R. 9256. In addition, as attachment B, I submit a list of suggested amend ments to the National Housing Act, together with the reasons for each. These would: (1) Authorize FHA to insure mortgages on college housing. The substantial increase in the size of student bodies in our institutions of |