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Hon. JESSE P. WOLCOTT,
NATIONAL SOCIETY OF PROFESSIONAL ENGINEERS,
Chairman, House Committee on Banking and Currency,
House of Representatives, Washington 25, D. C.
DEAR MR. WOLCOTT: The National Society of Professional Engineers has noted with great interest the introduction and present consideration of H. R. 7839, a bill to aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and development of urban communities. Our interest is particularly in connection with the portion of title VII of the legislation, which would provide an authorization of $10 million to resume noninterest bearing planning advances to local and State bodies for public works plans, repayable when construction is undertaken, in order that such works can be ready for construction if the economic situation should require it.
The National Society of Professional Engineers has been interested in the advance planning programs since their inception as part of the War Mobilization and Reconversion Act of 1944, and we indicated our support of the continuation of these programs in 1947 and again in 1949. Many of our engineer members have had an opportunity to perform professional services in connection with the previous advance planning programs, and for that reason we feel that our organization is in a fair position to comment upon the previous programs and the desirability of reviving a similar program at this time. On three separate occasions the board of directors of the National Society of Professional Engineers has considered the matter of supporting the programs and this consideration has resulted in approval in each case.
It may be in order at this point to state that the National Society of Professional Engineers is composed of 39 member State societies, which, in turn, include numerous local chapters in all parts of the Nation (now numbering over 350 such local chapters). All of the more than 32,000 members are registered under the engineering registration laws of one or more of the States.
Based on our experience as outlined and the comments of our members who have participated actively in the advance planning programs, we desire to inform the committee of our continued support of the principles of a program for advance planning of non-Federal public works.
Our past and present support of the advance planning program has been predicated on the finding that the programs have been fairly and efficiently administered and that the relationship of professional engineers to the administration was handled on a professional basis by those experienced and qualified as professional engineers and construction experts.
It will be recalled that the program was first adminstered by the Federal Works Aency through its Bureau of Community Facilities and later by the same Bureau which had been transferred to the General Services Administration. Reorganization Plan No. 17 of 1950 transferred the administration of the advance planning program from GSA to the Housing and Home Finance Agency. This society opposed that transfer on the basic ground that the future success of the program would be jeopardized by having it administered through an agency which has a primary mission in the housing field as distinguished from the public-works field; a real and substantial difference in philosophy of operation and administration. Our position on the question did not prevail. The advance planning function has been in a state of liquidation in the Housing and Home Finance Agency for the past several years. Inasmuch as the program was being liquidated it did not seem too urgent that any further steps should be taken to retain the advance planning program administration in a proper agency.
However, now that the program is to be reactivated, it becomes a matter of deep concern to us that the new authorization will retain it in the Housing and Home Finance Agency. Rather than repeat our somewhat extensive comments on this question, we enclose a copy of our letter of January 21, 1954, to the Honorable Albert M. Cole, Administrator, Housing and Home Finance Agency, and Chairman of the President's Advisory Committee on Government Housing Policies and Programs. The letter was a comment on certain portions of the Advisory Committee's recent report, and a copy of the letter was sent to the President.
Since our letter to Mr. Cole was written, the anticipated revival of the advance planning program has become a reality and the problem therefore becomes more urgent and immediate. In addition to the possible solutions of alternative administrative location of the advance planning program outlined in our letter to Mr. Cole, an additional possibility has appeared. That is the proposed Public
Facilities Administrator in the Executive Office of the President, as suggested in the Public Facilities Act of 1954, introduced on February 8, 1954, by Senator Douglas (S. 2913) and Representative Bolling (H. R. 7766).
We have been advised by Mr. Cole that our views will be given the most careful consideration and by Gov. Sherman Adams, of the White House staff, that the President had referred our comments to Dr. Arthur Burns, of the Council of Economic Advisers.
It is hoped that your committee will give serious consideration to the question of the administrative location of the advance planning program. The National Society of Professional Engineers will be most pleased to provide any additional information at our disposal or consult with you or any member of the committee, or designated representatives, to further consider this matter. We request that this letter and the enclosure be included in the record of the hearing before the committee.
With sincere appreciation for your consideration,
PAUL H. ROBBINS, P. E.,
Hon. JESSE P. WOLCOTT,
REDEVELOPMENT BUILDERS OF NEW YORK,
Chairman, Banking and Currency Committee, House of Representatives, Washington, D. C. DEAR CONGRESSMAN WOLCOTT: On behalf of the Redevelopment Builders of New York, I would appreciate the opportunity of presenting for the record of your hearings on the Housing Act of 1954 our views and comments with respect to this proposed legislation and particularly its provisions for expanded action for the renewal of American cities. We are an association of the private building organizations engaged in carrying out privately financed redevelopment projects on a full taxpaying basis under the New York City slum-clearance program. Consequently we are already dealing at firsthand with the problems of rebuilding blighted and rundown city areas on a basis that will transform living conditions and will constitute a sound outlet for private-investment funds. The comments set forth below are based on our practical experience in this field and are presented with the thought that they may be of help to your committee in its consideration of this legislation.
At the outset, we would like to endorse strongly the basic provisions of the Housing Act of 1954 with respect to urban renewal and redevelopment and the accompanying FHA amendments designed to facilitate private investment in such undertaking. We believe that, with certain minor amendments and administrative interpretations, these provisions are workable and would provide a substantial stimulus to the job of revitalizing American cities.
From the standpoint of private enterprise participation in the rehabilitation and redevelopment of blighted areas, the most important new provision in the Housing Act of 1954 is section 220. In our opinion, the authorization of mortgages covering up to 90 percent of the value of multifamily developments in urban renewal areas is fully justified in view of the greater obligations which private developers must assume in undertaking such projects as compared with the conventional development of suburban apartments on open land.
Likewise, we endorse the provision for higher mortgage allowances for elevator construction. These will permit a realistic reflection in FHA mortgage financing of the higher cost of such construction and will correct the situation whereby redevelopment builders have been called upon to develop high-rise elevator buildings within the mortgage ceilings designed for less costly garden-apartment structures. There are, however, several matters which we would like to call to your attention from the standpoint of accomplishing in full the objectives of section 220.
FHA valuations.-We have no objection to the language in section 220 setting forth the basis on which the FHA valuation of multifamily projects will be determined. However, if the objective of section 220 is to be accomplished, believe it is essential that the mortgage commitments issued by FHA actually represent 90 percent of the overall cost of a project, including land and all other expenses. In our opinion, this means that the findings of the Housing and Home
Finance Administrator and of the Federal Housing Commissioner in approving areas for such projects should be conclusive evidence that the location is fully acceptable to the FHA for mortgage-insurance purposes and furthermore that the housing market in the area is accepted by the FHA as sufficient to support the type of housing accommodations called for by the redevelopment plan. Clearly private enterprise cannot be expected to proceed with projects in such areas if the FHA valuation is less than the replacement cost of the project or if the FHA's determination of maximum rents is less than the amount needed to carry such replacement cost in accordance with the established FHA procedures.
Maximum term of mortgages.-Under section 220, the maximum term of mortgages on multifamily structures is left to the discretion of the Federal Housing Commissioner. We urge that either by regulation or by statute, such maximum term be placed at 40 years on elevator structures and 50 years on fireproof structures, both on a level annuity basis. Such terms would be justified by the greater durability of these types of construction and would substantially offset the higher construction costs of these types of buildings from the standpoint of the rent levels necessary to carry the project. Under the FHA's present regulations for rental housing projects insured under section 207, the annual initial debt service on an apartment representing a mortgage investment of $10,000 is $675. By contrast, annual debt service on a level annuity 40-year mortgage (which is permitted by FHA under sec. 213) is $560 or a reduction of $115 or 16 percent. On a 50-year level annuity mortgage, the debt service would be $524, a reduction of $151 or 22 percent.
Maximum mortgage for projects with an average of less than 4 rooms per unit. The mortgage limitations in section 220 for multifamily projects with an average of less than 4 rooms per dwelling unit are definitely out of line with the comparable provisions in section 207 and section 213 and should be changed if section 220 is to be workable for projects in locations where the best plan and the market demand call for smaller apartments. For larger apartments, the bill would set maximum mortgages of $2,000 a room under section 207, $2,250 a room under section 213 and $2,250 under section 220 for walkup construction and $2,400, $2,700, and $2,700, respectively, for elevator construction. These allowances properly reflect the 80-percent mortgage under section 207 and the 90percent mortgage under section 213 and section 220. On the other hand, for projects consisting of smaller apartments, the maximum mortgage per dwelling unit under section 220 is limited to $7,200 for walkup construction, and $7,500 for elevator construction, the same dollar limits as under section 207 and comparing with $8,100 and $8,400 under section 213. Obviously these limits under section 220 should be raised to $8,100 and $8,400 to maintain comparability with section 207 and section 213.
Specific reference to redevelopment.-Since section 220 is intended to cover new construction in urban renewal areas as well as rehabilitation, the language of subsection (d) requiring "a specific plan of rehabilitation and conservation" appears too narrow and the word "redevelopment" should be added.
Eligibility of present title I redevelopment projects for section 220 mortgage insurance. We assume that it is the intent of the Housing Act of 1954 that slums and blighted areas already being prepared for redevelopment under title I of the Housing Act of 1949 may qualify for mortgage insurance under section 220, provided the locality presents to the Administrator a satisfactory workable program for the prevention and cure of blight as called for by section 101 (c) of the act. If this were not so, then there would presumably be a delay of at least 2 years before the benefits of section 220 could become effective in stimulating private rebuilding, taking into account the time required to plan and initiate new projects subsequent to the enactment of the Housing Act of 1954, and to prepare sites for rehabilitation or redevelopment.
FNMA support for section 220 mortgages.-We endorse the provisions of section 301 (b) and section 305 of the Housing Act of 1954 authorizing Federal support through the Federal National Mortgage Association of mortgages financing special housing programs in the public interest. We assume that it would be the Government's policy to utilize this authority, if necessary, to assure ready financing for projects in urban renewal areas. We are in agreement with the objective that insured mortgages on redevelopment projects as well as on other housing developments should command a ready private market without further Federal support. However, we believe it is essential that a federally supported secondary mortgage market be available in reserve for qualified undertakings in the public interest, such as redevelopment projects, in the event that normal private financing channels for such undertakings are temporarily blocked.
We are in agreement with the proposed changes in the mortgage allowances for cooperative housing projects insured under this section and believe that such projects are in many cases well suited for the redevelopment of blighted areas. We would also like to recommend a further change in the provisions of section 213 which we believe would greatly improve the workability of this program. This would take the form of authorizing the issuance of an 80-percent mortgage commitment under section 207 for the construction financing of a project, with the developer being extended the option of transferring this commitment to a section 213 mortgage upon the completion of the project and the sale of its dwelling units to qualified members of a cooperative corporation in accordance with FHA regulations. This would eliminate the necessity under present regulations of selling at least 90 percent of the dwelling units in a section 213 project before the start of construction, which has represented one of the principle marketing problems in connection with this worthwhile program. Since such an arrangement presumably would require legislative authorization, we recommend your consideration of including such authorization in the Housing Act of 1954.
Transfer of existing FHA insurance commitments to the provisions of the Housing Act of 1954.-In the interest of expediting progress on redevelopment projects already being processed by the FHA, we recommend that appropriate steps be taken to permit the transfer of commitments issued under the existing provisions of sections 207 and 213 to the more favorable basis authorized by the Housing Act of 1954, in the event of final passage of that legislation. In New York City, there are several projects at or near the point of commitment and it would clearly expedite the development of those projects, if their sponsors could be assured of equitable participation in the more advantageous terms provided by the pending legislation.
FRED TRUMP, President.
STATEMENT OF NATIONAL COUNCIL OF JEWISH WOMEN, NEW YORK 36, N. Y.
The National Council of Jewish Women is a voluntary association of over 100,000 individual members, whose primary objective is the promotion of the general welfare. Under our community welfare program our sections in some 246 communities throughout the United States are carrying on projects designed to meet the needs of the community. Because of their intimate contact with community problems, they have long ago recognized the vital importance of decent housing to the development of better communities.
The realization that good housing is one of the fundamental needs of any community caused our members to adopt a resolution in support of public housing in 1911. Since then our organization urged the adoption and actively supported proposals for a national housing policy consistent with the objective of a decent home for all Americans. The Housing Act of 1949 as it relates particularly to public housing and urban redevelopment, was strongly supported by our members.
We followed carefully the deliberations of the President's Advisory Committee on Government Housing Policy and Programs and were pleased to note that the Committee recognized the public housing program as an important and integral part of an overall national housing policy. Recently Mr. Albert M. Cole, the Administrator of the Housing and Home Finance Agency who also served as Chairman of the Advisory Committee, had this to say when he discussed the Federal Government's role in housing:
"It is imperative that we all realize at once-as did the Advisory Committeethat we cannot attack these problems piecemeal. We have a comprehensive program of three essential and interrelated parts which cannot be considered independently. * * *
"By treating the improvement of houses and neighborhoods, and the clearance of slums, as a whole on the one hand, and the supply of all types of housing, new and old, as a whole on the other hand, I think we establish the basic premises to enable families to improve their housing conditions and thus, for cities to improve their standards.
"But the free flow of families from undesirable into desirable houses and neighborhoods as they are made available presupposes that all these families
are able to do just that. Most of our families can, of course, buy or rent adequate homes on the private market. But unfortunately there are still large numbers in all our cities who cannot do so. Their incomes are too low. *
"These are the people who housing problems constitute one of the most serious roadblocks we have to the clearance and prevention of slums and to the renewal of our cities. Their problems must be solped, or we have just failed to solve the problems of slums and blight. * **
"If we expect to clear slums and renew our cities, the housing problems of these families must be squarely faced and solved."
In view of this demonstrated need, it is difficult to understand why the bill now pending before your committee (H. R. 7393) does not recognize the needs of those who need housing most.
The Housing Act of 1949 authorized the construction of 135,000 public housing units a year. It is now estimated that in order to meet the need 200,000 units a year should be constructed. In spite of the growing need for this type of housing, Congress last year took action which will virtually liquidate the program unless the provisions contained in the independent offices appropriation bill are repealed. The Housing Act of 1949 was considered and recommended by the Banking and Currency Committee which is charged with the responsibility of developing and recommending national housing programs. It would seem, therefore, that the responsibility for changes in the programs recommended by the Housing Act of 1949 should not be delegated to the Appropriations Committee whose sole responsibility is to deal with the expenditure of Federal funds.
The bill before your committee provides for an urban renewal program which is designed to clear and prevent slums. In order to carry out this program successfully, there must be some way to provide homes for those who will be displaced. The only aid provided in the pending bill, for those who will be displaced by urban renewal, is the program of low-cost housing produced through private means. The feasibility of constructing $7,000 homes has been seriously questioned by a number of witnesses before your committee, and it has been stated by those who are familiar with the situation that in many parts of the country it would be impossible to do so. Furthermore, the Administrator of the Housing and Home Finance Agency stated that "It would be misleading to say that we can make anything like enough such low-cost private housing available for these people right now or in the immediate future ***" He further stated, "The solution to their problem is the immediate crux of our whole effort to clear slums."
It would seem to us, therefore, that the entire program of urban renewal cannot be successful unless a substantial public housing program is authorized by Congress. We respectfully urge your committee to amend the pending bill in such a way as to permit the construction of the number of public housing units required to take care of the needs of those who are not able to avail themselves of housing produced through private means.
STATEMENT OF A. LEE PAINTER, PRESIDENT OF THE MOBILEHOME DEALERS NATIONAL ASSOCIATION, BEFORE THE HOUSE BANKING AND CURRENCY COMMITTEE IN REGARD TO THE BILL H. R. 7839, THE HOUSING ACT OF 1954
Mr. Chairman and members of the committee, my name is A. Lee Painter and I am president of the Mobilehome Dealers National Association with offices at 39 South LaSalle Street, Chicago, Ill. Our association consists of more than 500 dealers of mobile homes located in approximately 43 States. I am president of the American Trailer Co, and have been actively engaged for many years as a mobile-home dealer and mobile-home park operator in Virginia, Maryland, and the District of Columbia.
Our association is very much concerned that the comprehensive housing program presented in H. R. 7839 makes no reference to the mobile-home industry and thereby denies it the recognition which it has earned as the housing source for more than 2 million Americans, for it is approximately that number of people to whom the mobile home is a permanent dwelling unit.
Since World War II the mobile-home industry has earned its place as part of the housing resources of the country. The 1952 total industry production was 83,054 and the 1953 production was approximately 77,000. Surely an industry which has contributed so much-more, for example, than the prefabricated homes industry deserves proper recognition in comprehensive legislation which pur