January 12, 13, 16-18, 1950. 354 p

Senator LONG. What you have suffered from, I take it, is a prejudice of private capital against a form of organization that eliminates the customary fees of the real-estate groups and the banking people in the ordinary type of enterprise?

Mr. WILSON. Senator, it is the same thing you have been talking about all afternoon. The builder is interested only in an FHA appraisal. He is going to build it at that FHA appraisal and we know it. Senator LONG. Have you had an experience with these rental

projects?

Mr. WILSON. We have not gone into rental because of the fact that we want to be individual home owners. The rental problem that we have had is keeping apartments for ourselves, and that has been à big

one.

Senator LONG. And you feel you could get a lot more value for the money you invest if you could build them for yourselves rather than to have someone else build them for you?

Mr. WILSON. We definitely know we can. We have run costs on these plans. The cost run by our own tradesmen within our own organization would run between $6,700 and $9,200. Then we go to subcontractors with the blueprints asking for charges for certain amounts of work. They run about a thousand dollars higher than ours, but when we go to a general contractor who takes it all, they run as much as $4,000 higher.

Senator LONG. I voted for the direct-loan provisions of the bill in the first session of the Eighty-first Congress. I felt that 212-percent interest would be a fair rate on this type of loan. I felt that you. probably would not be able to find private capital that would make that loan to this type of housing. Obviously you have suffered from prejudice against a cooperative-type venture.

Mr. WILSON. That is correct.

Senator LONG. Do you feel that private capital will come forward under this type of bill and make the loans that you would need to have made to the housing corporation in order that this type of housing could be built?

Mr. WILSON. They may and we may run across the same resentment that we ran across before. Our efforts all tended to bring the price of the home down. The contractors who would enter into this will still have a tendency to raise it up. The profit element is so great in the real-estate business in and around Washington that I feel that we may fail even under this bill in getting money from the private lending agencies.

Senator LONG. If we approve these amendments and put these amendments on the bill that are presently on the calendar, we will wipe out the proposal to have direct loans by the Federal Government for cooperative housing and we will be seeking loans on the open market from private capital. I wonder what your opinion would be, as to whether it is a good idea for us to rely completely upon private capital to make the loans.

Mr. WILSON. In our case it could not be a good idea. I do think that your bill would be improved if you had some method of releasing these individual homes to the individual home owners, financing them by private lending institutions. I think it would strengthen a cooperative movement such as ours, which is individual dwellings.

We are not after a large apartment house. We want individual homes.

Senator LONG. In other words, your idea is to build individual dwellings, I take it, all in the same area on the theory that by building a group of dwellings you could get the price down far below what it would cost to build each individual one.

Mr. WILSON. Mass production would do that for us.

Senator LONG. Thank you very much. I believe you have given us some idea of the problems involved in getting the loans for the cooperatives.

Senator SPARKMAN. It is a very practical presentation that he has given us.

Senator LONG. You did not find any bank that would give you the aid this New York bank offered?

Mr. WILSON. I did not; not after the first withdrawal of the initial commitment. The first commitment was fine. That went along for 6 months and we spent money developing this thing. After this meeting, where the real-estate interests came out publicly in opposition to it, the willingness of the banks vanished.

Senator LONG. How did you manage to hold your group together during that time?

Mr. WILSON. We invested our money in blueprints and so on. We went out and cleared the ground ourselves. That is how we held them together. And we have money invested in it. We have to stay there. Senator LONG. Your members just stuck together because they had their money invested?

Mr. WILSON. It is not only money. They still need homes. Around Washington there is still the problem of getting a livable home for the veteran with one, two, or three children within a price range that he can pay

Senator LONG. About what would you estimate it would cost to build a decent home of three bedrooms now?

Mr. WILSON. We can build a three bedroom home for $8,500. Senator LONG. What do you think you would have to pay for it under ordinary private financing if you bought a similar home in town?

Mr. WILSON. The same type home will run $12,000.

Senator SPARKMAN. Mr. Wilson, do you understand that this bill does not allow for individual homes?

Mr. WILSON. Yes, we do.

Senator SPARKMAN. I think you are in error.

Mr. WILSON. It allows for individual homes but not individual home ownership. It still has to be held by a cooperative, does it not? Senator SPARKMAN. I think it would certainly contemplate that when the indebtedness is retired there would be individual ownership. During that time you must retain a cooperative responsibility for the total indebtedness.

Mr. WILSON. Senator, that is one thing that I have to apologize for. I am not too familiar with the details. I hurriedly read the bill over today.

Senator SPARKMAN. I think if you will read it you will find that is the case.

Mr. WILSON. I am up here because I thought our experience would be of some assistance to you gentlemen.

Senator SPARKMAN. We are very glad to have you with us and you have given us a very fine presentation. I have a letter from Mr. B. G. Maguire, of Washington, for insertion in the record.

Mr. A. LEE PARSONS,

Clerk, Senate Committee on Banking and Currency,

Senate Office Building, Washington 25, D. C.

JANUARY 17, 1950.

DEAR MR. PARSONS: In connection with the staff's study of cooperative housing in this country, I wish to submit the following report and request that it be filed in any hearings held on the subject by the Subcommittee on Housing and Rents.

In 1934 a group of individuals, principally Government employees, formed a nonprofit corporation under the laws of Delaware. This was to be a cooperative endeavor by these individuals to obtain a tract of land, subdivide it, and build houses thereon for the stockholders, if practicable. This corporation was known as Hollywood Park Corp. All the officers and directors were from the group and served voluntarily with no salary.

A tract of land known as the Baker tract (situated in the District of Columbia near Pennsylvania and Alabama Avenues SE.) was purchased, subdivided, and two streets graded by the corporation. The individuals were then given title to the lot selected by them. In this manner a lot was obtained for about $400. Lots of the same size in the same general area at that time were selling for about $1,000. Today these same lots are worth about $3,000.

The attempt to build houses collectively was not successful. The construction prices were too high for a great many of the individuals and finances were diffi 'cult to obtain. A portion of the people contracted for their houses individually and thus obtained a home.

This attempt by individuals in cooperative purchase of land and housing was partially successful. I feel that it would have been a greater success if the Government had an agency that would be in a position to assist such endeavors with advice and finances (secured by mortgages on the homes) at a very low rate of interest. This cooperative endeavor suffered greatly by being misinformed and in one instance by being cheated by an individual. I was president of this corporation for 2 years and know that such assistance would have been a great help to me at that time.

Senator SPARKMAN. That concludes the hearings.

B. J. MAGUIRE.

(Whereupon, at 5: 35 o'clock p. m., the hearings were closed and the committee adjourned.)