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That provision goes into force after the initial group of directors are selected, and after there are cooperative borrowers from among whom choice would be made. This is a sound provision which will assure more realistic administration and the accomplishment of the basic purposes of the legislation.

Fourth. The substitute title would encourage home ownership among families of moderate income. Thus cooperatives could obtain assistance for the building of individual, free-standing dwellings, the title to which could be acquired by the individual families purchasing the homes.

These individual families would acquire their home subject to the obligation to make mortgage payments to the cooperative. The cooperative, in turn, would continue to make payments on its loan from the National Mortgage Association.

It would also have the right to repurchase the individual dwellings from the families if they decided to move at a later date. Incidentally, this right of repurchase will assure that the housing continues to meet its purpose of serving moderate income families and also will protect against speculative resales.

Fifth. The substitute title sets up the program on a longer-range basis, with a total borrowing authorization of $2,000,000,000, which would make it possible to build about 250,000 homes. It is wisely recognized that this program would start gradually, so that authorization for the first year is limited to $300,000,000. The balance is to be made available upon a determination by the President that increases are in the public interest.

Sixth. The substitute title provides additional flexibility with respect to the period for the amortization of loans to cooperatives and other nonprofit corporations. While the maximum maturity initially is limited to 50 years, the bill wisely includes provisions for limited extensions of time, should changing economic conditions make this necessary or desirable.

In all of these respects, we feel that the substitute title shows the great care and study which this legislation had since the original title III was reported by this committee. The legislation has been the subject of extensive consultations to reflect the best views and judgment of those who have experience in cooperative housing and in housing generally.

However, there is one respect in which we feel that the substitute is decidedly inferior to the present provisions of title III, namely the form of organization of the housing unit which is to administer the program of preliminary loans and other assistance. The substitute provides that this program shall be administered by an official appointed by the Administrator, and that this official would be the head of a division in the Office of the Administrator.

It is our considered judgment that the success of this program is largely dependent upon its administration. We believe this program requires a form of organization which is of the same dignity and status as the Federal Housing Administration, the Public Housing Administration, and the Federal Home Loan Bank Administration, the Commissioner of which would be appointed by the President, with the advice and consent of the Senate. An appointment made in this manner, and with this dignity, is more likely to attract the caliber of leadership and talent which this program requires. It also provides a

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responsibility to the Congress and the President which is vital in a program of this character. From the standpoint of public interest organizations, we cannot emphasize this point too strongly.

Moreover, the establishment of a separate constituent within the Housing and Home Finance Agency is a greater assurance that this program will receive the single-minded concentration and devotion that it requires, without the diversion of the many grave responsibilities already lodged in the Office of the Administrator. That office should be concerned with over-all matters of policy and broad supervision. It should not involve itself in the specific operations of specific programs. That was the underlying purpose and principle of the housing reorganization plan approved by the Congress. It was a sound principle then, and it is still a sound principle. At the same time, we want to make it clear that we are in complete sympathy with broadening and strengthening the powers of the Administrator so far as matters of policy and general supervision are concerned.

There is one other amendment we suggest to the substitute title III with respect to the period during which a cooperative must pay for its stock subscription. We agree that one-sixth should be paid at the time of filing the loan appiication with the mortgage association, as that is one way of making sure that the members of the group are seriously interested.

We feel that the second one-sixth should be paid at the time of the last rather than the initial loan disbursement, so as to give the moderate income families more time to save up for this down payment.

I would like briefly to indicate how the substitute title III will accomplish the objectives of providing decent houses for families of moderate income. The savings involved are not merely those that will result from longer term loans at low interest rates. These savings in financing costs will involve a reduction of monthly housing costs of about $14 a month.

However, this type of financing will only be made available to cooperatives and other nonprofit housing corporations who can demonstrate that they will achieve additional savings—through the use of the nonprofit feature, through a program of self-help by the people who live in the projects, and through other economies. Let me summarize what can be accomplished, in dollar savings per month, as compared with FHA section 608 projects through the use of these methods:

First, there is the saving through the nonprofit features. This is the saving from eliminating the allowed profit on investment in section 608 rental projects. Title III projects will involve no developers' profit on land or development, as these will be charged to projects at cost. We compute these savings as equalling $5 per month.

Second, there is the saving through self-help, with cooperative owners doing most of their own work in maintaining the project. Our estimates are based on the best experience in public housing projects, since it is reasonable to assume that cooperative owners would have even greater incentives for self help than public housing tenants. Savings from self-help will amount to $11 a month.

Parenthetically I would just like to cite one example of a cooperative project, the one that is called Greenmont Village, located outside of Dayton, Ohio. That started as a war housing project and was acquired by a cooperative.

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They have been managing it, as I recall, since 1946. I have not looked at the figures in the last few months, but I remember the figures the last time I studied them. The cost of operation in that project was at least a third under the cost of public housing projects.

a The people who lived in the project not only did their own maintenance, actually in that project they did their own painting, but in addition, they had a very small office staff. They had a manager in the project with a very small staff. Since the families who lived in the project felt themselves as owners of the project, there was a good deal of stability and small turn-over, and there was reduced paper work. This eliminated the necessity for a lot of clerical and other work that adds to management costs.

Actually I feel that the figures I am citing are on the conservative side rather than on the liberal side so far as what the savings are that can be achieved.

Third, there are the savings that result from eliminating the high vacancy and collection reserves required by high rents in FHA section 608 projects, and substituting a reserve that is appropriate for a moderate rental project. These savings equal $5 per month.

Senator Douglas. May I interrupt a minute?
Mr. KROOTH. Yes, sir.

Senator Douglas. Those vacancy reserves; The vacancy allowance is charged whether or not the vacancy occurs, is that not true, in private projects?

Mr. KROOTH. That is correct.

Senator DOUGLAS. So the mere fact that vacancies do not exist does not prove that allowance for that is not put into the cost figures?

Mr. KROOTH. That is correct. The rents include it, and if the vacancies do not occur, there is an additional profit to the operator.

The total of these monthly savings from using nonprofit and selfhelp methods is $21. This, together with a $14 saving in financing costs, would mean a total reduction in rents of $35. This would reduce the average FHA section 608 rental to $60 a month, including all utilities, or a shelter rent of about $52.

The important point to recognize is that the savings involved in this program are only partially savings resulting from more attractive financing

That financing, by the way, is set up in a way that financing markets would be prepared to make the money available at lower interest rates, and the financing program does not contemplate any subsidy or any cost to the Government.

These financing terms would be made available only if the project could demonstrate that it would achieve the other types of savings which I have described so that the project can achieve a monthly housing cost within the reach of families of moderate income.

In conclusion, we feel that the enactment of the substitute title III is necessary to carry out the national housing policy stated in the Housing Act of 1949, namelythat the general welfare and security of the Nation and the health and living standards of its people require

the realization as soon as feasible of the goal of a decent home and a suitable living environment for every American family

The present housing legislation falls short of meeting this goal by failing to meet the housing needs of families in the middle-income

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third. These are the families that constitute the backbone of America. This substitute title III is directed toward meeting the needs of this group; and we therefore

urge its enactment. Senator SPARKMAN. Senator Douglas, I am very much impressed with your statement on page 6, that the estimate which you make of savings through self-help are based on comparative figures with public housing projects where maintenance is required by the project, contrasted with where maintenance is provided, partially at least by the tenants. In those cases, the tenants do not directly profit them

. selves from the maintenance?

Mr. KROOTH. That is correct, sir.

Senator Douglas. But in the cooperative they would profit directly from the maintenance?

Mr. KROOTH. That is correct.

Senator DOUGLAS. Therefore there would be an added incentive toward better maintenance under cooperative organization than in public housing, and therefore these figures are understatements rather than overstatements of the situation?

Mr. KROOTH. That is true, Senator.
Senator DOUGLAS. I impressed that on Mr. Foley last week.
Senator SPARKMAN. Senator Flanders?
Senator FLANDERS. No.
Senator SPARKMAN: Senator Bricker?
Senator BRICKER. No.

Senator SPARKMAN. Thank you very much, Mr. Krooth; we appreciate the information that you have given us.

The Right Reverend Monseigneur O'Grady. We are glad to have you with us. Will you identify yourself to the record?

STATEMENT OF RT. REV. MSGR. JOHN O'GRADY, SECRETARY,

NATIONAL CONFERENCE OF CATHOLIC CHARITIES Monseigneur O'GRADY. I am secretary of the National Conference of Catholic Charities.

The Housing Act of 1950 represents a new departure in the relationship of the Government to housing. In this new program it is proposed that the Government assume the leadership in a program of cooperative self-help. This is something that many of us have been looking for through the years. The program proposes that the Government go out and assist in setting up housing cooperatives. We know that this is not an easy task. It will require the finest type of leadership on the part of Government officials. Many of us have felt that this program calls for a new type of personnel in Government. This is the reason why we have come out boldly for a new constituent agency within the Housing and Home Finance Agency especially charged with the administration of the new program. Many of us are finally convinced that such an agency is essential to the success of the program.

During the past year I have had considerable opportunity of observing the attitude of the Federal Housing Administration toward cooperative housing. I would say that by and large the representatives of FHA with whom I have conferred throughout the country have not only been unsympathetic toward cooperative housing but they have done everything in their power to oppose it. I must say therefore that with the mentality of FHA officials there is very little hope for cooperative housing. We need new personnel with a new vision; we need people who can join with us in a new crusade.

COOPERATIVE HOUSING AND THE DEMOCRATIC WAY OF LIFE

Cooperative housing should be regarded as a real effort on the part of the people to do things for themselves. It is a genuine expression of self-organization on the neighborhood basis. I have watched with

great interest the development of self-organization in many of our city neighborhoods throughout the country. It has been a truly fascinating experience to see what people can do for themselves if there is somebody there to point the way. I do not mean somebody who comes to them with a pattern. I mean somebody who can inspire them to think and to plan for themselves. I have seen what they have been able to do in repair programs in housing on a neighborhood basis. I have seen what they have done in adult education in throwing up of effective leadership on a community basis.

In recent years in the United States we have had too much planning and too much thinking from the top. The ordinary citizen has tended more and more to be inarticulate in community affairs; he follows along with great mass movements. The tendency toward selforganization is the best antithesis to this tendency.

I would look on the cooperative housing movement as a great challenge for the extension of self-organization and self-help. Among all sorts of groups in the United States, little and big, we do not want to think about cooperative housing projects in the same terms as the multiple rental housing projects in many of our larger cities. They are too large; the population is still too dense.

In a cooperative housing program I would think largely of families with children. These are the families that are having most difficulty in securing proper housing accommodations in our cities at the present time.

THE FIELD OF COOPERATIVE HOUSING

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Recently, I have had an opportunity of visiting a number of housing projects built under sections 203 and 608 of the National Housing Act. By and large, houses with three-bedroom units, which are the only type suited to families with children, sold at $10,000 or more. Most of the houses built under the FHA program were two-bedroom units and were selling from $8,500 to $9,500. These houses I feel are not suitable for family living. At least they are not suitable for families with children.

In a number of cities the home builders have tried to convince me that they were meeting the needs of middle-income families. In a few places they have shown me houses that cost $7,700 or $7,800. These houses were invariably two-bedroom units. The rooms were very small; in a number of places the public improvements have not yet been made which would impose an additional charge on the people who have purchased these homes, but I must say that in the cities that I visited I found very few homes of this kind. In no place have the home builders or the representatives of FHA given me sufficient evidence to show that they are making an effective contribution to the middle-income housing program. They are building

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