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Now, I have this statement. That is the basis for this. I am not a housing expert; you men know that. I have not been before your committee with a housing bill. But from the time that that happened until now, I have made a research of the records, all of the legislation in connection therewith, and I tell you there is nothing that provides housing for these military men on the basis on which I am asking it. Unless it is done, you are going to continue to have trouble getting personnel to stay in the military services and I think this is just as essential as any part, you might say, of national defense.
You can appropriate for your guns and your battleships and your carriers and your bombers and everything else, we must train men and after we get them trained and we spend millions of dollars upon them, if these men do not have a place to live with their families you certainly run up against a handicap. This condition must be faced by this Congress.
Now, as I have already stated, Senate bill 1184, as amended, was introduced by Senator Maybank, of South Carolina, chairman of the Senate Banking and Currency Committee; Senator Tydings, of Maryland, chairman of the Armed Services Committee; and myself. There is no pride of authorship here. What we are trying to do is correct a situation which affects other bases. It affected the base we had in Nebraska.
In order to get the full support of this bill and a sponsorship that was joint, I came to the chairman of the committee handling the housing legislation and the chairman of the Armed Services Committee and got their full cooperation and coauthorship, if you please, in this bill at the time it was introduced.
This bill provides legislation to encourage private industry to relieve the congested housing conditions and shortages which today confront the military and civilian personnel of most military bases. Truly, these families are the forgotten people insofar as housing facilities are concerned.
The Senate passed Senate bill 1070, which the chairman remembers very distinctly and also the Senator from Washington, and no doubt the House will approve the legislation. That is, we hope they will, don't we Mr. McMurray? We have taken care of everybody except the military base personnel of our armed forces. The chaotic housing condition for families of civilian, enlisted and officer personnel, speaking of those enlisted that are married, exists because most military bases are located several miles from cities. The only real demand for housing on or near a military base comes from the base personnel. It makes an entirely different situation.
Builders naturally are reluctant to risk large investments to construct rental units for this group because appropriations for military activities may be reduced or units shifted. That is what happened at Kearney. Thus necessitating a closing of the base. So insecure has been the risk of building such rental units that even FHA refuses to insure mortgages on homes built in nonindustry areas. Remember, that is a blanket statement. There might be some exceptions but that is their policy. And most military bases fall in this category. And under existing legislation I think the Federal Housing Administration is correct in that decision.
A recent survey of housing conditions on military bases revealed that the Army, Navy, Air Force, and Marine Corps bases are short
something like 250,000 housing units, and, worst of all, no legislation has been passed by Congress which provides the encouragement and protection builders must have to warrent construction of the necessary units to meet the demands of this group.
Military authorities report that the principal reason why trained and skilled commissioned officers and enlisted personnel leave the service is the lack of some semblance of adequate housing for these men and their families.
Representatives of the Air Force, the Army and the Navy who follow me, and I see the Secretary of Air, Mr. Symington, is here, I feel sure will testify, not having seen their testimony and not having conferred with them recently but having talked to them about this legislation, that men by the thousands on whom the Government has spent millions of dollars in education and training leave the service for private industry. They leave the service because they are unable to find housing suitable for themselves and their families. All of this results in a great loss to our Government and an impairment, if not outright weakening, I say, of the national defense.
For many months, Senators, including Senator Maybank, Senator Tydings, Senator Cain here, and myself have been working on legislation to improve these housing conditions. I am speaking only of military at this point. Two months ago we combined our efforts and introduced Senate 1184. A few days ago we introduced an amendment in the nature of a substitute to S. 1184, as I have already told you. This was made necessary because of further advice from the Government agencies and the military.
Many military and housing experts assisted in drafting this bill, and except for a few features, I say a "few features," the bill has the support of all the military agencies. The statement of the Federal Housing Administration made by the chairman confirms that.
The CHAIRMAN. There are some proposed amendments which I have not yet read.
Senator WHERRY. What I meant was the observation made as to the objectives.
The CHAIRMAN. It was only prepared this morning.
Senator WHERRY. They would administer the act. And also the Bureau of the Budget.
It is axiomatic that housing accommodations for military men and their families is a national defense problem. It is more than a housing problem. I hope we are all agreed that we should practice economy in Federal spending. At least, I am. But it is absolutely necessary that funds be provided for housing on military bases.
Therefore, we are confronted with two choices: Either provide the housing by public spending or else encourage private capital to invest in such facilities. We have appropriated billions for airplanes, ships, atomic energy experiments, guns, and so forth, and are now asked to appropriate more billions to arm other countries of the world. But we have overlooked the housing needs of our fighting men who are ordinary humans like the rest of us.
These men, as I say, want to marry; they want to settle down. They want to have their families with them. And they have a right to expect a decent place in which to live so they can bring up their youngsters to be good Americans.
Every time you give serious thought to the problem of providing these people with homes, especially is this true on the Appropriations Committee, you are confronted with the fact that it takes so much money to do the job. Even in these days of billion-dollar appropriations this is true. One by one other military appropriations crowd this item out, and we put it off from one year to another. Each year housing conditions for the military get worse instead of better. They are so bad that newspapers consider the dilapidated housing conditions of our fighting men as big news copy today.
A few weeks ago Life magazine ran a six-page series of pictures showing some of the squalor and unsanitary conditions under which the families of military men are forced to live. The exposé was shocking, at least to me, and I am sure the pictures were not unusual. You can find the same conditions adjacent to many military bases. Every section of the country is involved and I think almost every State. The pictures showed the filthy conditions where soldiers were forced to bring up their youngsters.
Senate bill 1184 provides that private industry be given the opportunity to solve this housing shortage, and private industry has promised to provide the necessary rental housing if assured against losses resulting from some governmental action, especially the transfer of military personnel or the closing of bases.
Briefly, our bill proposes the following:
1. To insure mortgages by FHA up to 95 percent based on appraised current costs at 4 percent interest.
2. To authorize the military to lease land on military bases at nominal cost to builders willing to construct rental housing units on the bases.
3. To authorize the military to lease utilities such as water, gas, light and heat to housing projects built on the adjacent military bases where the personnel of the base is given first priority to lease such quarters. 4. To place supervision of cost, construction standards and so forth under the jurisdiction of the Federal Housing Administration.
5. Provides that the military must certify that it does not intend to deactivate the base or substanially reduce its personnel beyond a given level before FHA is authorized to insure the mortgages. That is a very important provision. I hope Senator Cain got that.
6. Provides that the rental housing projects may be insured for 95 percent of an average cost of $9,000. This will enable builders to produce housing units for families of the men who are in the lower pay brackets as well as in the upper pay brackets.
Senator CAIN. Is the $9,000 to which you referred the insured percentage of the total house, or the total house itself?
Senator WHERRY. The 95 percent is the total insurance on the project. The $9,000 is the average mortgage on a housing unit-the maximum insurable figure.
Senator CAIN. Thank you.
Senator WHERRY. I might say now that the average allowable mortgage under S. 608 is $8,100. There are two points at issue here really in this bill. One is the 95 percent total insurance upon the entire project. The other is: Do you want to raise the ceiling to $9,000? I say the first one is absolutely mandatory. If we cannot get the 95 percent insurance, you will not get the private builders to go in and make these con
structions. The $9,000 item is a debatable question, and I will tell you why it is debatable.
We got these figures together 2 months ago, and I have been told by some builders now that prices have leveled off to some degree, and there are those who are very friendly to this bill who feel that if the 95 percent provision is maintained, and I think the Housing Authority would be inclined to go along with that; I am not talking for them now but I am giving you my judgment, the maximum units could be dropped to 8,100.
I do think that issue is debatable, this $9,000, if it is true that building costs are being reduced. I will go into that a little later, but I want to get this picture before you, because to me those are the two salient points which must be debated if the bill gets approval of this committee.
No. 7 provides for an accelerated rate for amortization for tax purposes by providing the cost of the project may be written off in 25 years' time. The average time, I think, runs about-Senator Sparkman knows better than anyone. I think it runs around 30 or 35 years, does it not, on the amortization? Is that not about the average?
Senator SPARKMAN. Ordinarily 3 percent, depending on construction.
Senator WHERRY. It runs about 35 years?
Senator SPARKMAN. Yes.
Senator WHERRY. I will say 30 to 40 years; on the average about 35 years.
Senator SPARKMAN. That is right.
Senator WHERRY. This is a reduction, and it is an inducement to permit a builder who will take this chance to get his money out 10 years sooner than would one who would not have to take a chance on building in an isolated area.
But it is, I think, a sound proposition. It is not a subsidy. It is just a question of helping a man get his equity capital out so he can build some other place.
We are placing a deadline of July 1, 1950, for the starting of the housing projects which can be insured under this legislation. Some have suggested this will not give the builders time to get their plans completed and the projects started, but we believe that the longer time given developers, the longer time they will take. If developers know they must get their plans approved within a year, we feel they will get them in proper shape by that time.
However, if next January or February the Congress feels that the time should be extended, I am sure Congress will grant the necessary extension, and I am confident the proper governmental agencies will make such recommendations. If we keep the time limit for starting the projects as of July 1, 1950, I feel certain we will get more houses built in less time than if we extended the time to 1951 or to 1952.
Now, members of this committee, I want you to know that a great deal of study on the percentage of the mortgage to be guaranteed has been made by the Government agencies, and I want to say they have given me splendid cooperation. While there was some difference of opinion, they have been mighty fine about it. Not only has there been a study by the agencies, but there has been an exhaustive study made
by the military, and that is especially true of the Secretary of Air and by those others interested in this legislation.
First, the figure of 100 percent insurance was set, and a guaranty against that 100 percent ran solely to the removal or the closing of the military installation. That has now been taken out of the bill, and the guaranty has been placed at 95 percent, with a guaranty for losses on a similar basis with the same guaranty on 90 percent in any other housing.
Even now the Bureau of the Budget and the FHA feel-I suppose they will testify-that 90 percent insurance is adequate, but on that statement I will certainly disagree. I think that they, as I have said before, would be inclined maybe to go along with that feature if we dropped the maximum amount of insurance for a mortgage to $8,100. With this figure I am sure the proponents of this legislation disagree, and I only hope that as the testimony is adduced, that the very nature of the evidence taken during the hearings will influence the committee's action affirmatively on this item. Frankly, our studies indicate that something more than 90 percent must be made available. If not, the inducement to private enterprise will not be sufficient, and the incentive will have to come from some other angle.
In support of a 95-percent insurance feature, let me state that the present law is, as you all know, for 90 percent insurance for projects built right here, say, in Washington, or in the adjoining suburbs, and in every other desirable neighborhood not only here but in many cities of the country. Since this is something more than a construction problem, an inducement must be made to the builder to go, for example, to southern Maryland or to the middle of Texas or to Nebraska, miles away from the nearest residential area, miles away, and construct rental housing where it is so badly needed.
In adjacent Washington builders are helped by the very location itself, as in other cities. The builder purchases a raw tract of land. The day his plans are approved for a housing project, the land increases in value to him many, manyfold. You all know that. This is so because it is being transformed from an unimproved tract of land of less value to one of greater value, because the building project is to be placed upon it in an area where there is a continuous, if you please, and a diversified demand for housing.
The price appreciation of the land alone will give the builder a substantial profit. And because of that fact, he is able to get the necessary loan and guaranty on the project. Under existing procedure, his equity could be the price appreciation of the land plus his allowable builders', engineers, and architects' fees provided the builder leaves these in the project.
But, the contractor who builds on a military base or near a military base, where most of these projects will be erected, merely leases the land. He has no price appreciation on the land. His equity is the money he puts into the project himself plus his builders' fee if he builds on his own account.
Senator CAIN. Houses can be built on and off site?
Senator WHERRY. That's right.
The CHAIRMAN. That is one thing I wanted to ask the Senator right here. There is no proposal to bring up a District bill, is there? Senator WHERRY. NO.