military personnel in adjoining military camps. Los Angeles has Fort MacArthur nearby, Ventura has Port Hueneme, a Seabee base as well as Point Mugu, a naval rocket testing station, both within a few miles of the city. March Field is a short distance from Riverside, Calif., yet there is no hue or cry for rents to be recontrolled in that area. The same is true of the other areas I mentioned. No discussion of rent decontrol would be complete without talking about Los Angeles, Calif. Before the decontrol of rents in Los Angeles, on December 20, 1950, the proponents of rent control made many preposterous claims such as "mass eviction," "chaos," "300 percent rent increases," "gouging, and so forth. It has been over 3 months since the rent lid was lifted here and not one of these claims has come to pass. Has there been gouging and 300 percent rent increases? Definitely not. A survey taken January 15, 1951, by allied groups in the rental field divulged the following information: Number of units surveyed.. Number of units unchanged.. Gross monthly rent before decontrol. Average monthly rent before decontrol. Average increase since decontrol. 9, 462 6, 013 227 3. 222 $435, 162. 55 $457,091. 18 $45.99 $48. 28 $2. 29 5. 5 The Bureau of Labor Statistics for the western region, in a release issued March 26, 1951, stated that for the period from November 15, 1950, to February 15, 1951, rents increased only 6.1 percent. Further, they show an increase of only 8.5 percent from June 15, 1950, to February 15, 1951. For this same period (June 15, 1950, to February 15, 1951) food increased 12.5 percent and housefurnishings moved upward 10.7 percent. On the Consumers' Price Index (1935-39 equals 100) the rent index is less than all other items except fuel and ice. It is 67.5 points under the index for food and 42.2 points under the index for housefurnishing. It is interesting to note that according to the California Department of Industrial Relations the average hourly earnings of all manufacturing production workers in the Los Angeles area was $1.71 per hour in January 1951. On the basis of a 40-hour week, these employees. earned $68.40. On the basis that 20 to 25 percent of a month's wages should normally be set aside for rent payments, the average worker in Los Angeles who rents, enjoys a distinct position when comparison of his weekly wages is made with the average monthly rent of $45.99. Apropos of rental increases, it is strongly rumored that the city housing authority of the city of Los Angeles is considering increasing rents in the units under its jurisdiction an average of 30 to 40 percent. Compare this with the 6.1 percent reported by the Bureau of Labor Statistics. Many claims were made and are still being made, that a housing shortage exists in the city of Los Angeles. Nothing could be further from the truth. The Peacock survey, taken during the latter part of March and early April of 1950, showed a vacancy factor in rental housing accommodations of over 4.5 percent. In order to show that an increased vacancy percentage now exists, one only has to compare the number of classified ads in the Los Angeles Times on April 2, 1950 (during the time Peacock survey was taken) with the number on April 1, 1951. Mr. Spaulding, manager of the classified sections, states that there were 60 wanted-to-rent ads run on Sunday, April 2, 1950, and only 35 such ads on Sunday April 1, 1951, a decrease of 41.6 percent. A total of 644 ads offering apartments, flats, and houses for rent were run in the paper on April 2, 1950, while 1,065 such ads appeared a year later. This represents an increase of 39.5 percent in units offered for rent. Preliminary figures from a survey now being taken by the Apartment Association of Los Angeles County, Inc., shows a vacancy factor in excess of 7 percent. The survey covers all areas of the community, all types of rental housing, and units in every rental range. It is interesting to note that, in connection with this survey, owners indicate that many units remain vacant for lengthy periods of time. An interesting case involves a double apartment in the 700 block on South Carondolet which, when vacated by the tenant, was rehabilitated at a cost in excess of $400. The rental approved by the Office of Housing Expediter was $75.30 per month. It was vacant for over 1 month during which time it was offered for $75 per month. Another example of the present vacancy trend involves a building on Pico Boulevard. This structure contains 87 units. In excess of $100,000 was spent on rehabilitation-yet 46 apartments were vacant at the start of the survey. A third example, involving another class A building of 63 units, shows an expenditure of over $60,000, yet there are at present 20 percent of the units vacant. You will note that one of the questions in the survey relates to the amount spent on rehabilitation since rents were decontrolled in this area. This question was asked in order to determine the approximate amount of money which accrued to the benefit of various types of business. The preliminary figures show that in 2,030 units (including the preceding examples) a total of $261,448.28 was spent by the property owners-in less than 4 months. The matter of evictions was a matter of great concern to those groups advocating continuation of rent control. Claims were made that thousands of persons would be forced into the streets. Let us see what actually happened. In the 3 months preceding decontrol a total of 721 filings were made with the clerk of the municipal court, as follows: On the basis of 67 actual working days there were 10.7 eviction cases filed each day. In the 3 months following decontrol a total of 1,316 filings were made with the court as follows: There being 72 actual working days during this period, an average of 18.3 filings were made per day. It is interesting to note from these figures that from a peak of 553 in the month of February, the activity dropped to 351 in March. Included in the filings are a number of unlawful detainers filed by the city housing authority. A check with the county marshal's office discloses that 14 writs of possession were actually issued in October 1950 despite the fact that 229 unlawful detainers were filed. In other words, the marshal was required to actually move in on these people and move their furnishings to some other location. They refused to go even on order of the court. In March 1951, 31 writs were handled by the marshal's office. while 351 eviction filings were made. The ratio of writs to filings appears to be nearly the same before and after rent control. As an indication of the general feeling of the voters in this city, rent control was not an issue in any of the councilmanic races at the recent primary election. Nine of the ten councilmen who voted for decontrol were re-elected at the primaries while the tenth was defeated for other reasons. In the fourth largest city in the country, and the largest yet decontrolled, rent control has become just a memory. From the foregoing facts one, and only one conclusion, can be made. The citizens of this community benefited from the decontrol of rents. Tenants' rents were not increased exorbitantly. Where increases occurred, in almost every instance, rehabilitation took place making the rental accommodation more desirable. Tenants, because of the increased vacancy rate, can shop around. Painters, plumbers, roofers, upholsterers, furniture and carpet distributors, and so forth, were benefited from the money spent on refurnishing. Owners, once again, operate their properties without Government interference under the time-proven law of supply and demand. Attached hereto are charts, showing rents, as related to various items in the cost of living. Also attached are editorials and reports from: Bureau of Labor Statistics, Los Angeles Times, and the Long Beach Independent. Gentlemen, I would like to introduce in the record a letter from Mr. John Cotton of San Diego, in which he outlines approximately the same type of story as I have given you for Los Angeles. He is past president of the California State Apartment Conference and is on the legislative committee of the National Apartment Owners Association. The company has been in existence in San Diego, according to the letterhead, since 1903. They have quite a number of units that they manage for various individuals as well as owning outright quite a number of units, and I would like, with your permission, to introduce into the record his statement. The CHAIRMAN. How long is that statement? Mr. O'DONOVAN. Two and a half pages, sir. The CHAIRMAN. Without objection, that and your exhibits may be introduced in the record. (The statement and exhibits are as follows:) Mr. WILLIAM RUSSELL, O. W. COTTON Co., Care of National Apartment Owner's Association, Inc. DEAR BILL: I have before me a preliminary tabulation on a survey which the Apartment Owners is taking by mail. While not completed, I have a tabulation of certain results on the first 589 units reported. These show an increase of from -0.7 percent. The weighted average increase for the entire 589 units was 11.8 percent. Of these 589 units there were increases after decontrol on 471. The rent was decreased on 5 and rents remained the same on 113. In order to conform to the type of reporting in which Tighe Woods would resort, I might say that the average increase in those units, which were increased, was 14.8 percent. It is interesting to me to review some of the individual reports and I will mention some of the things which were indicated in the reports. The preliminary returns show seven units vacant and for rent on May 1 and others available which will be vacant within a few days from that date. Probably 7 actual vacancies represent one and a fraction percent in the vacancy market. When added to the units which will be coming up in natural turnover they are enough to lend stability to the rental market. Of the units actually vacant and for rent, 4 are offered at rents from $40 to $50, the balance at $55, $70, and $85. A condition of which we are keenly aware is emphasized in these preliminary returns, which indicate a great expenditure in capital improvements of all kinds and the percentage increases referred to above are before making any deductions from increased rents for a true comparison with the base at the time of decontrol. As a matter of interest one of the larger percentage increases-to wit, 33% percent is found in a good subcenter rental neighborhood, a four-unit building each with living room, two bedrooms, kitchen, and bath was rented at $45 per apartment and has been raised to $60 per unit. The highest increase listed (a 50 percent increase) comes with little information other than that it is in a very popular rental neighborhood with a new rent ceiling with garages of $65 and $85 for two apartments and $95 for a two-bedroom furnished house. An increase of 38.7 percent indicates separate houses with dinettes in a fairly new rental section at $70 and $80. A complete tabulation of these returns would show a great percentage of the rental housing in San Diego after decontrol renting below $50. It should not be forgotten that the rent-control office before it went out of business in San Diego was grinding out increases of a flat 30 percent over the original base freeze upon petition. They had, however, only begun to grant these increases before we voted decontrol. While some of these increases of 30 percent over the base were only a small increase over the rent at the time of the petition, they only amounted to 30 per cent increase at that time and there is every indication that the rent level in San Diego may have been higher under the new ceilings that were being established than they are today. In the 7 months since decontrol in San Diego hundreds of thousands of dollars, possibly millions, have been spent on capital investment, replacements of new equipment, modernization, decorating, rehabilitation to hold the rent level at the present higher scale. Any reduction in rents through a roll-back order is going to wash out this stupendous investment. In San Diego a semiofficial census in 1948 showed the population at 380,000 persons. In April 1950 it was shown as 321,000 persons, a decrease of 59,000 from our high peaks. Today there has been an influx of from 30,000 to 40,000, probably since the official census. However, during the same period from 1948 to the present there have been constructed within the city of San Diego over 20,000 private housing units of all kinds, which could provide accommodation for an additional 50,000 people. It is because of this great potential in additional housing that we have been able to absorb the influx of population without any acute conditions arising. It is my considered opinion that prices and wages are higher today than they would be without the War Stabilization Act and, if the act is allowed to expire, that wages and prices in the next 6 months will be lower than they will under the operntion of the act and, therefore, I am opposed to any extension of wage, price, or rent control under the War Stabilization Act. We The great shortages which have been ballyhooed actually do not exist. have this week in our management office purchased a large quantity of new apartment ranges at the lowest price we have had in more than 2 years. In my opinion the effect of price control now is to force a continual rise in retail price and drive a volume of merchandise out of the retail trade through wholesale channels. I think in our work on the bill we should stress the fact that our opponenst are saying, "The rents were increased in 78 percent of the rentals in such and such community after decontrol." In these days of rising wages and rising taxes it amazes me to know that in such and such community 22 percent of the rents did not go up at all. We should separately refute every witness on this point and call attention to the fact that rents have their own built-in controls, that a certain percentage of our people will not pay as much for rent as they will on installments on cars, television sets, or something else. The very fact that 22 percent of all rents in a given community did not rise at all upon decontrol is proof of the fact that rents are not getting out of hand. If there are some few military installations in a cross-road village in which there is only a handful of houses and a monopoly is created by a vast military installation close by there is surely something other than rent control which is going to do something to alleviate the situation. As a matter of fact, I believe the Office of the Housing Expediter should name such types of military camps on the fingers of his two hands and if that is what is making a control bill necessary, maybe Congress should provide a control for those 8 or 10 villages and nothing else. Let me know if there is any specific information I can get for you here in San Diego. Sincerely, JOHN COTTON. |