Images de page
PDF
ePub

the inability to obtain a suitable arrangement with a private contractor. There was also delay before approval of the local planning commission could be obtained. A further problem was that since the land purchased for the site was outside the corporate limits of Front Royal the corporation had to build connections—an operation which added at least $1,000 to the cost of each house. Sharp price rises and delays in obtaining supplies and equipment produced problems. Not the least of the ma difficulties was the problem of financing. Several of the leaders contributed all their savings, local unionists advanced funds, the local unions in Roanoke, Parkersburg, and Front Royal made loans out of the union treasuries, and the national union also helped. Finally a loan was made through a local bank. Nevertheless, funds were barely sufficient to cover operations.

The first few houses completed were built for $5,000 and $6,000, the next 30 cost nearly $7,000 each, and the final lot about $8,000. No profit was involved at any stage. The total costs were averaged and for the whole group of 50 houses, the purchase price was set at $6,050. The purchaser was required to make a down payment of $650 (which includes settlement costs of $114) and monthly payments of $33.68 over a period of about 25 years.

It is pointed out that, because of the nonprofit feature of the project, dwellings of comparable size and construction could not be found elsewhere for less than $8,500 to $9,500. Actually, the report made to the union membership notes, the $6,050 charged does not entirely cover the true cost (about $7,800, because of the sharply rising prices). The difference was covered from amounts realized from the sale of surplus land not needed for the project.

OTHER SPONSORSHIP

Garden Homes Co., Milwaukee, Wis.

An experiment carried out in Milwaukee under the leadership of the mayor, some 20 years ago, is of interest here, in that it provided a method of financing probably unique in this country, although it has been fairly common in Europe.

Briefly, the plan provided for participation by cities and counties through their investment in the preferred stock of a housing enterprise. Subscription for such stock was also open to other organizations and to individuals. The preferred stock was retired as the tenant owners paid for common stock to replace it. The plan involved no public subsidy or expense to the taxpayers, for interest was paid in the meantime.

The original plan contemplated the erection of about 3,500 houses. Actually, only 105 were built, and as far as the Bureau's information goes, no further action has ever been taken. However, although the plan did not materialize on the scale that was contemplated and the cooperative feature of common ownership was dropped, the enabling legislation is still on the Wisconsin statute books. Building-guild experiment, Suffern, N. Y.

An assault on the high cost of home owning, through a system of building guilds, was carried on in several places in New York and New Jersey in the middle and late 1930's, using a plan worked out by Ralph Borsodi, economist, writer, and teacher. The experiment began in a small way about 1935.

Each homestead project involved four parties: The Independence Foundation, a homestead association, the individual homesteader, and a “building guild. The Independence Foundation was a nonprofit agency formed to sponsor, finance, and provide technical supervision and cost accounting for the various building projects. Its funds were raised through the public sale of its investment certificates (bearing 6 percent interest) and loans from banks, building and loan associations, and other agencies. It purchased land at acreage rates and subdivided it into plots large enough to provide space for subsistence gardening:

In connection with each project, a homestead association was formed by the foundation to purchase the land, over a period of years, from the foundation and hold it as a collective agency of the individual homesteaders, granting use of the land to them under a 99-year lease. The houses in the homestead project, on the other hand, were held in fee simple by the occupying homesteaders, and were constructed by an association of building-trades workers (guild) formed for the purpose.

The Independence Foundation was in existence for 3 years. During that time it lent, for land and dwellings, some $200,000. Under its auspices eight guilds were established and some 50 houses were built. The first project of 16 houses in Suffern, N. Y., was followed by others in West Nyack and Ossining, N. Y., Ringwood, N. J., and Feasterville, P2. It ceased operations at the beginning of the

[blocks in formation]

war, when wartime restrictions on construction stopped all private building and when considerably higher earnings could be had by guild members, in war industries. On its demise, all of the projects except the Bryn Gwelyd Homesteads (Pennsylvania), reverted to the fee-simple plan of ownership of the land (the ownership of the houses had always been on that basis).

Mr. FOLEY. May I suggest that there is also an earlier report which contains additional material that you might want to call attention to?

Senator MAYBANK. I think a remake of this might be of benefit to the Senators who wouldn't have time to read it all.

Senator SPARKMAN. The staff will analyze it and extract from it such parts as may be pertinent for the record.

Senator Cain?

Senator Cain. If you will permit me a few questions, I would like to ask Mr. Foley one or two. This is my last afternoon on this committee, officially,

Mr. FOLEY. How fortunate I was to come today.

Senator Cain. I seek to have a little more understanding of this proposal before I leave.

Mr. FOLEY. Yes.

Senator Cain. These questions will evidence my sincere curiosity about where we seek to go.

Senator MAYBANK. May I add, since he has been such a faithful member of this committee, I feel certain the chairman will be glad to have him here at any time.

Senator Cain. I appreciate that more than you know, Senator Maybank.

Senator SPARKMAN. We are going to miss Senator Cain from this committee. He has been a very diligent and useful member.

Senator Cain. Senator Sparkman, I am grateful for those comments.

As I understand this bill, Mr. Foley, it is an operation extended to what is roughly defined as the “middle-income third.” That is a correct premise; is it not?

Mr. FOLEY. That is correct; yes.

Senator Cain. For the benefit of the record, what would you say are the upper and lower limits in dollars of that third?

Mr. Foley. I think, Senator, the best answer I can give is the table I have already provided to you, which covers in considerable detail and considerable break-down this question of yours.

Senator Cain. For the benefit of the record, would you put in the upper and the lower dollar limits, as you conceive them to be, sir?

Mr. Foley. That table shows, in the total picture, limits of from $2,654 to $4,247. The urban figure is the one I should quote. From

. $2,840 to $4,425.

Senator Cain. Are those dollar limits pretty well taken care of in the definition of what a "middle-income group” family is, as defined in the bill? I can find that definition in the bill, but I do want to ask your views about it.

On page 28, subsection (c):

"Family of moderate income” shall mean any family of two or more persons within the estimated middle one-third, according to total money income from all sources, of all such families in the locality.

Unless we construe that these cooperative ventures are to be built in American municipalities in which the middle income is not very

[ocr errors]

high, we must conclude the middle-income group as included in this definition will certainly include a dollar figure of far higher than what you have suggested.

Mr. FOLEY. I am not at all sure that I understand your comment.

Senator Cain. You have said that in your opinion, looking for knowledge on this matter, that families we seek to help under this bill are those whose salaries generally will be from $2,600 to $4,200.

Mr. FOLEY. $4,425 is the figure I gave.
Senator Cain. Yes.

Mr. FOLEY. The definition contemplates that the range to come within this definition would be found for the particular locality for which the project is proposed.

You see, there is a considerable difference, as you get higher in population.

Senator Cain. Yes. I have not as yet had an opportunity to study those figures. I am inclined to suggest that there are a good many localities in which the cooperatives might be formed where the middleincome group has a total annual income far in excess of $4,400.

Mr. FOLEY. I see what you mean. In certain smaller areas where the characteristics of the people are such as classify them as high income?

Senator CAIN. Yes.

Mr. FOLEY. I think you would probably seldom find a situation that would include the total of the locality that would be defined here. I I grant there may be exceptions.

Also, I suspect that in such locality you would probably find little impetus toward this kind of an enterprise. I may be wrong.

be wrong. Generally speaking, the locality considered in the definition would be large enough so that you would get a spread beyond that peculiar group of people.

Senator Cain. Your estimate of the annual income, in my opinion, begins to define the definition included in the bill, because from any point of view that definition doesn't mean any such thing as from two thousand-odd dollars to $4,400.

I think it could mean a very great deal more than that. When you say that in those cities where the annual income is higher there would not be much inclination to go into the cooperative housing movement. I am not certain, I am merely offering that. I am thinking of a community where possibly the average income would be quite high, out of this bracket here.

In my knowledge of that particular community, I offered that suggestion.

During the several years I have been on this committee, and mixed up with the problem of the subsidized low-rent housing problem, I am reminded of the fact that it was generally construed that those establishments would only be built in our large metropolitan areas. The last time I looked at the break-down of figures since the last Congress, units of such housing around the country, I am not shocked, but I am interested in knowing they are going in the direction of communities where several years ago we didn't think they were going.

Mr. FOLEY. May I comment on that, Senator?
Senator Cain. Yes.

Mr. FOLEY. My recollection of the debates that I had a part in in the past years on that was rather the reverse. The contention

[ocr errors]

made by the opponents of public housing was that it would all go in a dozen large cities; that it was a "big city bill and the smaller communities would not get any of it.” The contention of the proponents of the legislation was that it would be widely spread, as was the case in the first program approved by the Congress. The proponents were correct.

Senator Cain. Thank you, sir.
Mr. FOLEY. I don't want to seem to be evasive of your point.

Senator CAIN. No; I just wanted to raise the point. I don't know the answer to it.

Mr. FOLEY. If there is any material possibility of the type of thing you are talking about, perhaps a provision of protection could be written into the bill.

Senator Cain. My thought would be that we make the provision as definite as we can. If we are talking about upper limit for this type of housing for $4,400, we ought to say that.

In your opinion, how many families under your definition of money limit would be eligible for this housing?

Mr. FOLEY. You mean simply that fell within this income bracket?

Senator Cain. Yes; that could adequately be taken care of by such housing?

Mr. FOLEY. The figure, according to this census figure, total for urban areas, would be a third of 23,287,000 houses.

Senator Cain. Thank you.

Mr. FOLEY. That is the total of all the incomes of the urban classification.

Senator Cain. Just about 8 million families, potentially, we are talking about?

Mr. FOLEY. Yes.

Senator Cain. Do you have, Mr. Foley, the figures for the FHA and the VA operations during the year 1949?

Mr. FOLEY. I don't have them at hand. Perhaps someone with me does have them.

Senator Cain. What I am getting at, Mr. Greene, is the following question:

Are those figures broken down by income ranges of the families purchasing property assisted under those two methods of financing?

Mr. GREENE. By income ranges for 1949?
Senator Cain. Yes.

Mr. FOLEY. We have some tables, I think, on the first 6 months of 1949.

Senator Cain. This question goes with that, Mr. Greene:

How big a proportion of the families assisted by FHA or VA during 1949 would be eligible under the income limitation in this bill?

I don't know whether I am right or wrong, but it seems obvious, as we start, that middle-income families are presently being take care of by VA and FHA.

Mr. Foley. We have some figures illustrative of that situation.

I can give you the distribution of monthly rentals on section 608 projects.

As I pointed out in the testimony this morning, the situation with respect to meeting the needs in for-sale housing has been much better than the record in section 608. And the average taken for the country as a whole would be somewhat more encouraging than the figures taken for the probable problem area. Every family that has an income suitable for that can get that kind of housing. The fact is that those averages, which are encouraging for-sale housing, and show progress as against 2 years ago, are heavily weighted by the volume of that low-income down in southern areas, leaving a much less encouraging picture in the northern areas, and particularly in metropolitan areas of the northern half of the country where costs are higher.

On the rentals situation, section 608, for January-June 1949, it is much less encouraging. I have it here picked out by cities which perhaps is illustrative, and we can furnish more general figures. I think I have them.

For instance, figures in Washington—where there has been a large volume of rental housing construction under section 608

Senator Cain. Referring to the State of Washington?
Mr. FOLEY. No; the city of Washington.

This table shows that, of 13,853 units placed under construction covered by commitment issued during that period, the first half of 1949, there were less than one-half of 1 percent of them that proposed rent between $50 and $60 per family unit; 15.4 percent proposed rent between $60 and $70, and one-third proposed rents between that figure and $80; and the balance ranged above.

As distinguished from that, to show the impact of the geographical situation, take Greensboro, for instance. Let me take an extremely advantageous case-Memphis, where 2,030 units were placed under commitment in the 6-month period, and 50.7 percent of them were below $50 for proposed rent.

That requires explanation. There has been a great activity down there, because of the civic interest, and special abilities, and so forth, encouraging interest in the production of private, low-rent housing, particularly for minority groups, which largely contribute to that figure.

Then, between $50 and $60, 11.5 percent; and between $60 and $70, 32 percent. If that were the situation for the country as a whole, or even widely available in the country as a whole, you would have a much less urgent problem to consider here.

Take my own city of Detroit: 1,579 units committed in that period; that table shows none of them below $70; 13.1 percent below $80, and the balance above.

Take Philadelphia: 5,177 units committed; 3.2 between $50 and $60; 7.7 between $60 and $70, and the balance added above.

So that is fairly indicative of the general geographical spread. The situation in the South, however, is not to be judged by the situation in Memphis. For instance, in Greensboro, 320 units; there were 35.3 percent of them with rent less than $50. Whereas, in Houston, of 1,200 units, none were less than $50, but 31 percent were below $60. I think that gives a fairly typical demonstration of the problem in cities.

Senator SPARKMAN. May I ask what size unit that was?

Mr. FOLEY. I don't have them on this table here. I do have some break-downs. The table indicates a more discouraging picture, with respect to cost per room. Because cost per room—the size of the family units is not uniform as between cities, and there has been during the past 2 years a trend toward a smaller average unit; so

« PrécédentContinuer »