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Those are requisite to the procedure before FHA will finally issue a commitment for the insurance.
Mr. HAYS. How long do they take after you are ready?
Colonel MCCORD. FHA will issue a commitment after we have made the application, in anywhere from 30 to 60 days. It has averaged in some places in the neighborhood of 45 to 60 days.
Mr. HAYS. Do they ask your architects to make changes very often? Colonel MCCORD. Frequently, that is true, particularly if we have an inexperienced architect, with a title VIII program, he will incorporate features which will extend the cost beyond the mortgage limitation that is imposed by the legislation.
Mr. HAYS. Thank you. Mr. Deane.
Mr. DEANE. You stated, Mr. Ferry, that you were satisfied with this particular bill. As I understand it, title III has been dropped. Mr. FERRY. It has not proved too useful for us.
Mr. DEANE. I sympathize with you on that score, and I feel the same way. But also title IX has been dropped, has it not?
Mr. FERRY. Yes, sir. We haven't found that worked out too well. The Wherry housing seems to have been the actual practical approach to getting this housing, sir.
Mr. DEANE. As I understand, then, you are, to a limited extent, or to a full extent, depending upon Wherry housing for your main housing projects; is that right?
Mr. FERRY. That is true, sir, at the permanent basis.
Now, of course, let me clarify this for the members here. We still depend upon the local economy to take up some of the slack. In other words, we do not program for, nor do we build for, the full military requirements at a base. If there is a community within reasonable distance that can take part of it.
Mr. DEANE. Colonel McCord, would you describe the type of people, as far as military personnel, who are now using Wherry housing, as to whether they are enlisted men or junior officers, and the rents that are being charged, and other factors which you think would be of interest to the committee?
Mr. FERRY. I will ask Colonel McCord to give you figures on rents because I am not too familiar with those, but, actually, you know all military personnel are not entitled to housing. Only the three upper grades, which in the Air Force are master sergeant, staff sergeant, and technical sergeant.
The use of this Wherry housing is confined to those three grades, which in the other services are comparable-Navy and Army-and to officers ranging in rank right on up to full colonels.
Can you give us a breakdown of the rentals as between enlisted personnel and officer personnel, Colonel?
Colonel McCORD. Mr. Deane, I have not a breakdown specifically between the officer and airman rental charges. I do have the statistics on the average for the projects that we now have in being.
Mr. DEANE. And can you give us the size of the rooms, and so forth? Colonel McCORD. I have the average square feet per dwelling unit. We have computed the average square feet per dwelling unit as being the livable space-net areas that is exclusive of storage areas, walls, partitions, and so forth. Of our present projects our average is 964 square feet per unit. The average mortgage, per dwelling unit,
is $8,093. The average shelter rent, exclusive of utilities, is approximately $70. Our average utility cost-that is per month, of course. Our average utility cost, per month, has been in the neighborhood of $12 per unit per month. It gives us, then, a gross rent of approximately $82 per unit per month, and the average quarters allowance paid Air Force personnel is $86 per month.
Mr. DEANE. How does that compare to the other two services? Colonel McCORD. I do not have the figures for the other two services, but I think it is probably comparable.
Mr. FERRY. It is substantially the same, Mr. Deane. We have the figures here in case you would like to have them specifically. Mr. DEANE. If they are comparable, we will pass along.
Mr. HAYS. Will you yield?
Mr. DEANE. I yield.
Mr. HAYS. You said 964 square feet?
Colonel MCCORD. Yes, sir.
Mr. HAYS. Translate that into rooms so that I will have some idea what you are talking about? Is it a 2-bedroom unit, or a 1-bedroom, or what?
Colonel McCORD. No, those are 2- and 3-bedroom type units. We have tried to maintain a 2-bedroom unit on approximately 900 feet— 880 and a 3-bedroom unit will run about 1,100 feet.
Mr. HAYS. Thank you.
Mr. DEANE. Now, this housing, is it on the base or contiguous, or where is it located?
Mr. FERRY. These are usually, sir, upon the actual military reser
Mr. DEANE. Is it true that in some places the local taxing authorities have either considered or have been advised by the military with reference to taxing these housing units?
Mr. FERRY. There have been attempts where attempts have been made or pressures have been exerted to get some of this on the taxrolls. Mr. DEANE. What was the military viewpoint on that?
Mr. FERRY. The military viewpoint is substantially that if taxes were to be levied on these projects, on military installations, it would raise rents substantially to the point where it would work an additional hardship upon our people, and we are resisting the notion.
Mr. DEANE. Going back to Colonel McCord, we have in this record evidence which has been given on the cost of construction with reference to these long-range amortizations. I understand you to say that this 2- or 3-bedroom house, which I understand is brick, costs approximately $8,000.
Colonel McCORD. Mr. Deane, the materials of construction varies with the cost area. In many low-cost areas we have projects with masonry-type construction. In other areas it is frame-type con
Mr. DEANE. Well, this $8,000 unit, which you mentioned, what kind of construction is that?
Colonel McCORD. It varies, sir. It meets the FHA minimum requirements. In many of our low-cost areas we have masonry units. Mr. DEANE. Does that include the land?
Colonel MCCORD. No, sir; that does not include the land.
Mr. DEANE. Going back again, Mr. Ferry, to your statement that, so far as the legislation is concerned, the bill meets with your approval, I wonder if you have had an opportunity to really study completely the possibility of what this housing will cost if the interest factor changed materially?
Colonel MCCORD. Yes, sir.
Mr. DEANE. I have asked a member of the staff to prepare this statement for me in the last few minutes since I came to the committee room, and I wonder if you would check me to see whether this is
As far as FHA is concerned, maximum interest rate on Wherry housing remains unchanged at 42 percent. It was 4 until last year, when it was increased, was it not, to how much?
Colonel MCCORD. At the discretion of the Commissioner, but the maximum was not to exceed 42 percent, sir.
Mr. DEANE. What is the approximate rate now?
Colonel McCORD. Yes, sir.
Mr. DEANE. Under the authority of this bill, section 201, the President could raise interest rates to 212 percent, plus an average yield on long-term-say 15-year-Government securities, and under a similar authority contained in last year's Housing Act, the Treasury has set for this 6 months, a 27% percent. Now, what I am trying to arrive at the interest rates could be 22 percent, plus the 3, or approximately 512 percent.
Have you studied the bill to the point of analyzing the interest factor, so far as the rental cost for these Wherry units is concerned? Colonel MCCORD. Yes, sir; for every quarter percent increase in the interest rate the rents would be adjusted upward, if the interest rates were increased, $2 per unit per month.
Mr. DEANE. Approximately what are the FHA charges with regards to the premium, approximately?
Colonel MCCORD. I think it is a half of 1 percent, Mr. Deane.
I have here from a half to 112 percent.
Colonel MCCORD. Right. Right now I think our figures on most of our development projects are based on a half of 1 percent.
Mr. DEANE. Well, the significant factor that I gain from the interest factor here is, of the large increase in the rental cost-Did you say that would be for every quarter of percent change in the interest rate $2 per unit per month?
Colonel McCORD. Yes, sir; that is correct.
Mr. MERRILL. Mr. Deane, will you yield?
Mr. DEANE. I yield.
Mr. MERRILL. I don't quite see how that works. You say the average mortgage is $8,000.
Colonel McCORD. It cannot exceed $8,100.
Mr. MERRILL. Well, if you take $8,000, and take a quarter of 1 percent of that, does that come out to $20?
Colonel MCCORD. I have not any mathematics available for the committee at the moment. I can furnish that information and the computations which have just been filed for this particular $2 per unit per month increase in rents.
Mr. MERRILL. It looks to me as if a quarter of 1 percent of $8,000 is $20. That is the maximum amount of the mortgage at any time. Now, that mortgage will be decreasing over the years.
Now, $2 a month is $24 a year. It looks to me as though $2 a month increase in rent is $4 more than the maximum possible increase in the interest, at the maximum time of the mortgage. Am I wrong in that? Colonel MCCORD. If the chairman will permit, I will bring that computation to the committee this afternoon and we will furnish it to you, Mr. Merrill.
The CHAIRMAN. Very well. It may be put in the record. (The material referred to follows:)
Effect of increased interest rates on average Wherry housing mortgage of $8,100
Mr. DEANE. That is all, Mr. Chairman.
The CHAIRMAN. Are there further questions?
Mr. SPENCE. Colonel McCord, are you asking that the existing law be continued without change?
Colonel McCORD. Yes, sir.
Mr. SPENCE. You have no suggestions for any amendments?
Colonel MCCORD. No, sir; we are asking that it be continued as is,
Mr. MUMMA. Mr. Chairman.
The CHAIRMAN. Mr. Mumma.
Mr. MUMMA. Colonel, is the architectural service under the control
of the sponsor of the project? Who furnishes the architectural service?
Colonel McCORD. The using department.
Mr. MUMMA. In other words, your department?
Colonel McCORD. That is correct.
Mr. MUMMA. Do they have more or less standard plans which are adapted for the site, or does everybody do his own work?
Colonel McCORD. We try to vary the type of units so that they don't become too stereotyped. There are certain service of plans, Mr. Mumma, which we must follow, from our experience in developing a project, within the limitations of the $8,100 mortgage.
Mr. MUMMA. When the Army did the big building during World War II, or previous to it, they had standard plans for every type building, and they just employed an engineer to put the utilities in.
Colonel McCORD. That is correct, sir.
Mr. FERRY. We still do that, Mr. Mumma.
Mr. MUMMA. Well, it just struck me as funny. There is one little Wherry project that I was interested in. As I remember it, the architect, or the fellow who drew the plans, was from Newark, N. J. Now, it seems to me that there could be economy two ways, if they had more or less of a standard plan, and came in as you did in a big project and got an engineer, locally, who fit the whole thing in, which way to face the buildings, and everything. Every question the Wherry man had to solve he had to go to some fellow in Newark. As I remember, it was a Jersey location.
It seems to me that you could have more or less standard plans and save the Government a lot of money.
Mr. FERRY. We are making an attempt now, Mr. Mumma, in our latest procedure, to use local architects if they are qualified and have housing experience.
Mr. MUMMA. For a Wherry housing job?
Mr. FERRY. Yes, sir.
Mr. MUMMA. I think you will find most of them practicing in Pennsylvania are. You have to have a license to practice to start with. Mr. FERRY. Well, people who have not had experience in keeping it within the cost limits on this FHA housing are sometimes at a bit of a disadvantage.
Mr. MUMMA. Well, we have those fellows, too. It seems to me that was pretty far afield, unless the sponsor had something to do with it. Mr. FERRY. We are trying to use local architects.
Colonel MCCORD. One point, Mr. Mumma, which I think would probably clarify it: The cost of the plans and specifications is not a cost that is borne by the Government. It is paid for out of the planning funds, and as soon as a successful sponsor is selected that sponsor reimburses the fund from which the planning funds were drawn for the plans and specifications, so that the sponsor himself paid for the plans and specifications upon being awarded the contract. Mr. MUMMA. How does he pay for it, out of his own pocket, or out of the gross?
Colonel MCCORD. No; it is paid for out of the mortgage proceeds, which makes it a construction cost, put into the project, and is probably returned to him, then, over the period of years, in the form of his operational expenses and costs. He may get that back if the project is a successful project.
Mr. MUMMA. What I was wondering about was just this: If every. fellow has to design his own building that takes about 10 times longer: to do it than if a plan is furnished to him, which he should follow, using the local material which best fits into the project.
Colonel MCCORD. We have attempted to design the plans, or have the architect design the plans to secure the greatest living space possible within the area, for which the project is proposed.
Mr. MUMMA. I still think if you are developing a project you don't have to go to another community to get an architect. Thank you.
Mr. HAYS. Mr. Chairman.
The CHAIRMAN. Mr. Hays.