STATEMENT OF RALPH A. BROOKS, SECRETARY OF THE FIVE BORO TAXPAYERS' DEFENSE OF NEW YORK CITY Mr. BROOKS. My name is Ralph A. Brooks. I am executive secretary of the Five Boro Taxpayers' Defense of New York City. Our organization is a federation of civic and home-owner associations. whose membership, in turn, is made up of a large portion of New York City's half a million owners of one- and two-family houses. Our approach to this bill is necessarily that of local interests, and our position on the low-rent title of this bill derives from our local experience, and it is only on the low-rent features of this bill that I am testifying today. Now, as to public housing in New York City. The New York City Housing Authority has now in operation, under construction, or in the planning stage nearly 70,000 dwelling units. This total includes 10,000 temporary veterans' emergency projects and altogether will house close to a quarter of a million people. Until the war emergency arose, the city-operated housing was limited in its availability to low-income groups. With the advent of the war, the income limitations were relaxed; and, according to theauthority's report for 1946, the then operating projects had emergency income limits of $3,000 per year; and, so far as we can determine, these limits still apply. Early this year, the city administration announced a city-aided program of public housing. This program, costing an estimated $200,000,000, will create 17,000 units of housing for families with incomes up to $4,000 annually, and I would like to give you some of the background on that. I was originally scheduled to testify here a week ago. At that time that would have read $4,500 instead of $4,000. This program, when it was first announced, back in the latter part of the winter, was to be for housing for families with incomes up to $7,900 per year for veterans, and families with incomes up to $5,900 for a year as to nonveterans. The real-estate people, and particularly the small-home owners, with relatively low incomes of their own, raised a terrific howl in New York City, and subsequently in New York City Housing Authority announced that as a matter of policy it would fix the maximum income limit at $4,500 per year. In getting it through the last stage, throughout the Board of Estimates of the City of New York, a week ago yesterday, Mayor O'Dwyer said that he felt that a reasonable limit would be $3,984, which I have used here as $4,000; $4.983 would be a reasonable maximum income for veterans' families and $2,984 for nonveteran families, and that is where the situation stands today as to 5 units out of 17 which are incorporated in this program. Rents will range up to $16 per room per month. All will be exempt from local real-estate taxes. The estimated cost per dwelling unit of this tax-exempt and subsidized housing will be $14,900, according to latest figures issued by the city. That figure was based on a calculation made from the figures of the board of estimates. The small-home owners of New York City, who pay full real-estate taxes, were understandably aroused. An action to stop the authority's program was filed in the supreme court on the ground that the income limits did not truly constitute low incomes. The action was lost and the authority's program upheld. Because this decision so graphically reveals the distorted thinking on public housing, I will quote in part from it, and this bears directly on your previous question as to where the low-income line should be drawn. Discussing the question as to what is a low income, the court said this: Assuming, however, that eligibility to tenancy will be extended to persons or families with incomes of more than $4,500 per annum, it does not necessarily follow therefrom that the project is illegal or unconstitutional. Even families with incomes of that amount are "families of low income" within the meaning of subdivision 18 of section 3 of the public-housing law if they cannot afford to pay enough to cause private enterprise in their municipality to build a sufficient supply of adequate, safe, and sanitary dwellings. On the basis of that reasoning, approximately 60 percent of New York's families qualify for low-rent housing, for that is the number of families who have incomes under $4,000. In other words, 1,200,000 families in New York City are entitled to a $14,900 subsidized housing unit; 1,200,000 multiplied by $14,900 is $17,800,000,000; and, in fairness to our citizens, this is the amount which must be expended on a subsidized housing program if the court's decision stands. When the court rendered its decision, the home owners of New York City naturally looked to other means of relief. And logically they came up with this proposition: If families with incomes of $4,000 per year are entitled to tax-exempt dwelling units of $14,900, why shouldn't the present owner of a home get the same consideration? The result is that there is now a strong movement a foot for amending the tax laws by providing that the first $10,000 of assessed valuation of one- and two-family houses shall be exempt from real-estate taxes. The small property owner with an annual income of less than $4,000 can see no reason why, through payment of his full real-estate taxes, he should subsidize the housing of others equally situated as to income. Now, in addition, S. 866, according to Mayor O'Dwyer's estimates, will enable the construction of 30,000 more tax-exempt dwelling units in New York City, bringing the total number of families receiving housing subsidy to 100,000, or a total population of 350,000 persons. If you add this 100,000 families to the total 500,000 one- and twofamily owners who are demanding tax exemption, you find that close to 30 percent of New York's population will be paying nothing for the cost of municipal services in the form of real-estate taxes. If S. 866 passes, I predict that in a few years the city administration will come down here to Washington and demand direct grants-in-aid to help defray the costs of general local government. And, with some justice, they can lay the fault at the feet of Congress, which encouraged the city to place unwittingly around its neck the rope of the public housing program. One of the most popular arguments advanced in favor of the lowrent provisions of S. 866 is the veterans' need for housing. This need is unquestioned. But, if the interests of one segment of veterans are to be presented in justification of this program, then in all fairness the interests of other veterans may properly be advanced in rebuttal. By Mayor O'Dwyer's estimate, 30,000 units enabled by S. 866 are expected to be built in New York. It is quite unlikely all these would be rented to veterans but, for the sake of his discussion, let us say they were. Against this is the fact that in New York City alone, 50,196 veterans have bought homes with the aid of the Veterans' Administration loan guaranties. And every one of these veterans is paying full realestate taxes. Are they, too, not entitled to consideration when Congress is weiging the advisability of enabling tax-exempt subsidized housing which will add to the home-owning veterans' costs? If I may, I would like to interpolate the figures of the Veterans' Administration on a national basis. As of April 25, 1948, a total of 1,183,407 home loans had been approved for guaranty or insurance by all Veterans' Administration regional offices. The original principal amount of these loans was $6,811,687,477. Of this total, $3,228,964,676 was guaranteed or insured by the Veterans' Administration. It is suggested that one interest balances the other, and Congress should consider this program on its merits and not as it will serve any one interest or segment of our population. The public housing program has also been opposed as tending toward socialization of our national economy, and particularly socialization of the land. The tendency has been to dismiss this argument as the opinion of alarmists. Here are some facts with regard to New York City: Over the 25-year period between 1920 and 1945, taxable assessed values increased only 85 percent, while tax-exempt totals increased 133 percent. The per capita value of exempt real estate in 1920 was $413; in 1945 $700. In 1920, the ratio of exempts to taxables was 1 to 4; today it is nearly 1 to 3. All these point to one fact-if the present trend is not arrested, the time will come when exempts will exceed taxables-and when that happens we have, to all practical purposes, socialized our real estate. Public housing in New York City will represent close to $1,000,000,000 of exempt values if all programs are carried out and S. 866 is passed. In closing, I would like to quote from a recent speech regarding New York's housing program: New York now has a well-rounded program with enough variety to give flexibility in placing tenants. The $25 to $30 a week family can go into prewar projects and pay rents from $6 to $7 per room per month. The $35 and $40 a week family can afford the postwar subsidized projects where rents average $8 and $9 per room. The $50 a week veteran will be eligible for the $12.50 rental-limited subsidy housing, and the $60 to $80 a week veteran can afford the $16 per room in the projects which will be operated without cash subsidy and, later on, the same speaker says this: When all projects on the program today are completed, more than 67,000 apartments in new permanent projects will be available for New York City's lowincome families. There you have it-a low income ranges from $25 to $80 a week in the view of the chairman of the New York Housing Authority, Thomas F. Farrell, and the excerpts I have quoted are from a speech he delivered to the seventeenth annual meeting of the National Public Housing Conference on May 3. In the view of this official, 60 percent of New York's families are qualified for low-rent housing. And, S. 866 will allow the New York 75674- 48- -59 City Housing Authority to give additional play to its socialistic philosophy by enabling 30,000 more dwelling units to be constructed with public funds. On May 6, this committee heard a statement from Mayor O'Dwyer, and it was reported in the New York statement, and I quote from it: O'Dwyer told the committee that the public-housing and slum-clearance sections of the bill are the special target of real-estate lobbies and other reactionary forces. Gentlemen, I submit that in the city of New York alone there are, as I said before, 500,000 owners of one- and two-family homes. I do not think that they are identified with any real-estate lobby, whatever that may be, and if they are a special interest, they are a very substantial one, representing as they do, close to a million votes, and I think they are entitled to consideration, even though the inference. here is that, by calling them a special interest, you can dismiss their claims to the attention of this committee. We sincerely trust that your committee will eliminate the low rent and slum-clearance titles of this bill before reporting it to the House, and lest anybody misunderstand, I do not want that to be misconstrued as endorsing any of the other provisions of the bill. The CHAIRMAN. Are there questions of Mr. Brooks? Mr. SMITH. I just want to congratulate Mr. Brooks on his forthright and factual statement. It is refreshing to this committee to have you come here, Mr. Brooks, and state these facts, especially since you represent the group of people who have that spirit which made America. Mr. BROOKS. Thank you, sir. The CHAIRMAN. Are there further questions? If not, thank you, Mr. Brooks. Mr. BROOKS. Thank you, sir. The CHAIRMAN. If the House is in session tomorrow, the committee will probably meet. If not, the committee will not meet. We will stand in recess until the call of the Chair. (Whereupon, at 5: 45 p. m., Friday, June 4, 1948, the committee was adjourned, to reconvene at the call of the Chair.) The committee reconvened at 10:30 a. m., the Honorable Jesse P. Wolcott, chairman, presiding. Present: Messrs. Wolcott, Smith, Kunkel, Talle, Kilburn, Cole, Hull, Banta, Fletcher, Nicholson, Spence, Brown, Patman, Monroney, Folger, Rains, Buchanan, and Multer. The CHAIRMAN. The committee will come to order. We have a statement by Congressman Grant, of Indiana, our next witness. You may proceed, Congressman Grant. STATEMENT OF HON. ROBERT A. GRANT, A REPRESENTATIVE FROM THE THIRD DISTRICT OF INDIANA Mr. GRANT. My name is Robert A. Grant. I am a Member of Congress from the Third District of Indiana. Mr. Chairman, at the outset may I thank you for the privilege of these few moments before the committee, and also may I commend the committee on the painstaking effort and study and care with which it has approached this problem of housing for America. At the present time the house trailer industry is carrying the burden of a discriminatory "housing" tax, not shared by other types of dwellings, which is a considerable deterrent toward providing additional shelter for our people during the current housing shortage. It is the 7 percent excise tax, charged on the purchase of a new house trailer under the automotive equipment section of the Internal Revenue Code. It strikes the particular group of home seekers who can least afford the tax, those who cannot purchase more expensive homes, and who are having the hardest struggle among all the population groups in finding adequate shelter. The house trailer industry is the largest segment of the prefabricated housing industry. There are some 250 manufacturers of house trailers, compared to 60 manufacturers of prefabricated, or factory-built, locally assembled conventional homes. The output of the house trailer industry numbers some 70,000 units a year-last year, it produced 72,000, and expects to manufacture 100,000 units this year, if the industry can hold its market. The total output of other manufacturers of prefabricated homes is less than 10,000 houses a year. So the house trailer industry is an important factor in the housing field. It has been estimated that more than 300,000 trailer-coaches, as |