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To date I do not believe that you can effectively argue that the prefabricated housing that is being built shows substantial savings over on-site construction, but I doubt very much that the last word has been said on that topic as yet.
The CHAIRMAN. It is rather nebulous. We all agree it is rather nebulous. But the hope would be that they would bring it down to private housing. A witness appearing before this committee yesterday said there was not much hope in his mind but that they could produce a $10,000 house for $7,000 under this bill. We have got to be realistic about this thing. That perhaps is an exaggerated claim; do you not think so?
Mr. EDWARDS. I have no statistical data which would allow me to support that statement.
The CHAIRMAN. Of course, none of us would have until further research is carried out on the subject.
Mr. EDWARDS. Yes, sir.
Mr. BUCHANAN. Does the city of Detroit have an urban redevelopment authority?
Mr. EDWARDS. We have a city planning commission, Mr. Buchanan, and the Detroit Housing Commission, which cooperate jointly in understaking urban redevelopment plans.
Mr. BUCHANAN. You have a plan for urban redevelopment?
Mr. EDWARDS. Yes, sir; it is a portion of our master plan for the city of Detroit.
Mr. BUCHANAN. How much in the way of funds has the city appropriated for that purpose, for the specific purpose of urban redevelopment?
Mr. EDWARDS. To date a million and a half dollars.
Our basic problem here is something which has not been discussed very much by any of the committees, as far as I know. As far as I know, the Senate committee did not hold hearings on it; that is, on the basic responsibility, whether it is the primary responsibility of the Federal Government or the State government or municipalities to clear slums and provide low-rent housing. You answered that with a quotation of a statement by the House Post war Policy and Planning Committee, of which you said I was a member, which I was. I was not a very important member, but I assume it is expected that I would assume my share of responsibility for the statement made in the report and I am not trying to evade it at all, but my memory is that that section of that report has to do with making work in anticipation of any possible postwar depression.
Mr. EDWARDS. Yes, sir, I think that is right.
Mr. EDWARDS. Generally, on that question of responsibility, I would say that the responsibility is mutual. I expect the city of Detroit to be continually concerned with this problem. I would be ashamed if we were not concerned with it.
I will have to tell you gentlemen, though, that if the city of Detroit has to go ahead and do this alone, it will be many, many a long heartbreaking year before we manage to do anything with slum clearance.
The CHAIRMAN. How much did the city of Detroit put in in financing, into United States Housing Administration ?
Mr. EDWARDS. In financing, into United States Housing Administration?
The CHAIRMAN. Yes; aside from local tax exemptions, the city of Detroit's contributions to United States Housing Administration.
Mr. EDWARDS. The city of Detroit's contributions were the local tas subsidies, which were a substantial amount. I believe in the public housing in Detroit the city subsidy in the form of local tax exemption, the figure between the total assessment that would otherwise have been made and the payments made in lieu of taxes, has probably exceeded the total subsidy that the Federal Government has paid.
The CHAIRMAN. I thought I understood Mayor Van Antwerp to say that the tax returns from these projects were materially higher than they had been from the slums?
Mr. EDWARDS. Yes; that is true, but they are not materially higher than they would be if they were assessed at the full value.
The CHAIRMAN. The United States Housing Act of 1937 provided that local housing authority would put up 10 percent, and because of the unfortunate experience which we had with the United States Housing Act of 1937, which was repudiated in 1939, by the Congress some of the members of the committee think they should proceed rather cautiously at this time. In spite of the provisions in the United States Housing Act of 1937, that the local housing authority should put up 10 percent, we found a practice on Mr. Straus' part and Mr. Keyserling's part, at that time, that the local housing authorities sold their issued bonds for their 10 percent contribution. Then the annual contribution on the part of the Federal Government was increased sufficiently over the need to keep the rentals down to retire those bonds. I think we are justified in saying that no city that I know of, which participated in that program, other than to the extent of some facilities, taxation, and so forth, has ever contributed the 10 percent which the act says they should make available.
Mr. EDWARDS. Detroit, to the best of my knowledge, Mr. Chairman, has made no capital grant to United States Housing Administration housing. For that matter, Congress made no capital grant to it, either. It has been financed by private borrowing and the Federal subsidy has consisted of the grants-in-aid for the maintenance of low rents. We have contributed, as I say, probably in excess of the total Federal subsidy on all of these projects through making our contributions in the form of tax exemptions.
The CHAIRMAN. On that question, do you happen to have in mind what your Detroit per capita indebtedness is?
Mr. EDWARDS. I can tell you our bonded indebtedness within a few million dollars.
The CHAIRMAN. I mean your per capita debt.
Mr. EDWARDS. I believe you would have to get me a slide rule and I would figure it out for you. We owe about $250,000,000 and we have about 1,845,000 people. It is a very substantial bonded debt. It has been a serious detriment to any capital improvement in the city of Detroit for at least one generation, if we are not getting close to the second one by now. It has come down from the 1920's.
The CHAIRMAN. Do you know what the per capita debt is in the State of Michigan?
Mr. EDWARDS. Very little, as I understand it, Mr. Chairman. I think it is about debt-free.
The CHAIRMAN. I think it is about $36.20.
Mr. GAMBLE. You spoke about the redevelopment. I have been very much interested in that. You gave a figure. You said you did not think we would be able to get back more than 30 to 35 percent of the cost. Mr. EDWARDS. Just a rough estimate, Mr. Gamble. I said 30 to 50
. percent. It is just a guess.
Mr. GAMBLE. The reason I ask is that is a lighter loan than what some others testified to. Of course, it is a shot in the dark.
a Mr. EDWARDS. I try to be pessimistic when I talk about cost figures, Mr. Gamble, because previous optimism sometimes comes back and hits us in the face.
Mr. GAMBLE. But it is going to be an interesting thing. The reason I do not think it is going to cost as much money as some do is that in practically every city into which we went the slum area is right alongside the center of the city, and the high-priced land in the cityjust as in Chicago, south of the Loop, is the highest-priced land in Chicago. So the buildings cannot be of very great value. When you get it cleared, and sell it, I should think you would be able to get pretty good prices for that land.
Mr. EDWARDS. Well, I sit on the Board of Tax Review of the City of Detroit, and we have these cases of tax-assessment appeals brought before us pretty constantly. I think it is extremely rare where you find a building of any substantial nature at all—that is housing as many as one to two or three or four family units--where the assessment of the building would not be at least two to three to four to five times the value of the land.
There are some instances—and I can think of some_but they are rather rare exceptions, and they are in the areas where business is moving right into a residential neighborhood, and as a consequence has increased the land value in excess of the previously existing housing.
Mr. GAMBLE. In Detroit do you have statutory authority for holding the assessed value at the value level at which it is now? I am referring to the city of New York. You buy a property for a hundred thousand dollars. And if you tear that down, you can establish on it a housing project costing $500,000. Would it still be assessed at $100,000 for 10 years? Which is an incentive. I think this whole housing business is based on incentives. The more incentive we can give builders to go in and build, the more housing we are going to get. I do not know whether that would require a State law, in your State, or whether the city council could do that.
Mr. EDWARDS. It would require State legislation. We have never endorsed that principle in Detroit or in Michigan. In lieu of it we
have contemplated paying for the cost of clearing the land, which seems to me a much more direct and a rather more forthright method of achieving the same objective.
Mr. GAMBLE. The city would go in and clear it?
Mr. EDWARDS. We are undertaking to do it in this one project, where we have undertaken to condemn an area of the slums, appropriate the cost for it, and seek its redevelopment by private enterprise with the sale to private enterprise of the land at whatever the economic or market value of the land, cleared of its buildings, turned out to be. In that regard there is no doubt but that there would be a substantial subsidy involved in the whole proposition, if you start with the basic cost of slum clearance and add it to the cost of the project.
Mr. GAMBLE. Are you familiar with accelerated depreciation? We had some testimony on that. I assume there probably has been before the committee-accelerated depreciation of 5 to 10 percent in 5 years, in order to get the water out of these high prices? It is the same thing as we had during the war with war plants.
Mr. EDWARDS. I think I have read something about it, but I am not familiar with its application.
Mr. GAMBLE. That is just another incentive on which we have been working
Mr. EDWARDS. Incidentally, gentlemen, much as I am interested in seeing this so-called Detroit plan given a try, I certainly do not offer it to the committee as any evidence that that is the total solution. I think it is purely experimental.
Mr. GAMBLE. There is no one thing which is a total solution?
Mr. EDWARDS. I think that is right, and I am certainly appearing here just as much in support of all the other provisions of the bill, including title VI and the public housing section, as I am appearing in favor of the urban-redevelopment section.
Mr. GAMBLE. What is your situation in Detroit on building codes? I have forgotten, but I think we had some testimony on it. Are you one of the cities which is revising its building code?
Mr. EDWARDS. We have had a revision of the building code as recently as last year. I believe it was adopted about 8 or 10 months ago. It was a pretty thoroughgoing job of bringing the technical aspects of that building code down to modern times.
Ir. GAMBLE. That is under a performance code rather than under stringent regulations!
Mr. EDWARDS. I think that is correct, sir. I have had occasional complaints about the Detroit Building Code from people who, in most instances, ended up proving themselves to be unfamiliar with its provisions. A new builder comes in to town, or a mass producer wants to sell a house in Detroit, and, after having a couple of rounds with the building commissioner, in most instances, it ended up that the project which he was proposing to build could be built under our building code with no great limitations.
I do not mean by that to indicate that there may not be restrictive features of our building code as well as others. That could be revised granted developments in this general technical field of housing. But I think ours is a fairly moderate code and not a featherbedding code compared to some that I have heard complaints about.
Mr. GAMBLE. We had hopes, in our trips throughout the country, that the committee would arouse much interest in the matter of building codes, and I think there has been more interest taken in building codes in the last couple of years than ever before in the history of the country. That is all, Mr. Chairman.
The CHAIRMAN. Mr. Cole.
Mr. COLE. Mr. Edwards, on page 3 of your statement you say that this bill will make possible construction of enough houses to start cutting down our shortages, that it will keep houses going up in numbers large enough to approach the total need, and that it will do this at a price that bears some resemblance to people's pocketbooks. I would like to have you state, in that connection, how title II, for instance, of this bill would do those three things—which refers to the secondary market for GI loans.
Mr. EDWARDS. What is title II!
Mr. EDWARDS. What provision of the section are you talking about, Mr. Cole?
Mr. COLE. I am just talking about title II, any of it that would do those three things, or one of those things.
Mr. EDWARDS. I was referring to the whole bill, Mr. Cole.
Mr. COLE. I understand, but I am going to take it section by section, and I want you to tell me how each section will do those things.
Mr. EDWARDS. Well, let us take a look at 502, if you do not object to my refreshing my memory on it before we proceed to discuss it. I think the general purpose that would be served by this title, as well as certain others of the titles in the bill, is to provide for continued financing for mortgages for veterans and other persons who are in need of housing. I believe that one of the things which is stopping the construction of sufficient housing at the present time is lack of financing for people at a level which they can afford to pay. It seems to me this gives general encouragement to veterans to own their own homes.
Mr. COLE. Of course, we had a secondary market in the Reconstruction Finance Corporation, and I am wondering what difference there is, in this title, that would recommend it over what the law was.
Mr. EDWARDS. Well, you had title VI originally also.
Mr. EDWARDS. That does not mean it would be a good thing to drop it, because it has served a useful purpose.
Mr. COLE. I am not talking about that. I am just asking why this particular title is more important than the former method of providing a secondary market.
Mr. EDWARDS, I have no doubt but what several of the titles in the bill, Mr. Cole, could be spelled out in separate legislation, but I think it would be preferable to have it all in one housing bill.
Mr. Cole. I do not think you quite answered my question, Mr. Edwards. You make a lot of general statements here but I would like to know one thing, in connection with the title II—the secondary market for GI loans-just one reason why that is any better than the law we have had in the past.
Mr. EDWARDS. I do not recall making any statement that it was.
Mr. COLE. You have made a general statement. So we may assume, then, that title II, so far as you now know, does nothing to assist, over the laws that we already had.