This provision is needed to create some vacancies in the conservation area in order to move in families displaced from nearby redevelopment areas, a move which would be in conformity with the natural disposition of many families to remain in the general neighborhood where they live. We suggest specific language in appendix A.

May I also state that we are very much in favor of the proposed amendments to sections 102 (d), 110 ̊(b) (2), and 110 (c) of the Housing Act of 1949, as amended, full text of which is attached as appendix B. These amendments have been prepared by the National Association of Housing and Redevelopment Officials, who made a thorough study of the subject.

Attached to this testimony, as appendix C, are also two other proposed amendments to sections 220 and 221. These were prepared by one of my officials who has made a special study of the operation of these two sections, and has actually tried to put them to use. I commend them to your consideration. While I am unfamiliar with the details of these proposals, I can see how they might be helpful.

In behalf of the American Municipal Association, and myself, may I express my deep appreciation to you for listening to our views on this important legislation.

APPENDIX A

PROPOSED AMENDMENT TO SECTION 221 (A) oF THE NATIONAL HOUSING ACT

OF 1949, AS AMENDED

Insert after the words "in order to assist relocating families" the following: "from urban renewal areas and in relocating families".

Delete the words "to be so displaced" after the words "in his judgment are necessary to secure to the families" in the first proviso of the second sentence of this subsection.

Delete the word "so" after the words "to be needed for the relocation of families to be" and insert after the word "displaced" the words "because of governmental action" in the second proviso of the second sentence of this subsection.

APPENDIX B

Section 110 (c) of the Housing Act of 1949, as amended, is hereby amended by inserting after the word "improvements" and before the semicolon in clause (2) of the second sentence of this subsection: "and the provision of technical assistance to owners and tenants for repairs and rehabilitation of buildings or other improvements".

Section 110 (c) of the Housing Act of 1949, as amended, is hereby amended by striking the word "voluntary" in clause (1) of the third sentence of this subsection and by inserting after the words "urban renewal plan" and before the semicolon in clause (1) of the third sentence of this subsection: “including the provision of technical assistance to owners and tenants for such repairs and rehabilitation".

APPENDIX C

PROPOSED AMENDMENTS TO SECTIONS 220 and 221 OF THE NATIONAL HOUSING ACT INCREASING MORTGAGE INSURANCE LIMITS FOR NONFROFIT CORPORATIONS TO 100 PERCENT OF VALUE OF COST

It is recommended that section 220 of the National Housing Act (as added by the Housing Act of 1954) be amended by adding at the end of paragraph (3) (B) (ii) of subsection (d) the following: "not to exceed 100 per centum of the total actual development cost of the project as determined by the Commissioner, in case such project is undertaken by a mortgagor of the type described in paragraphs (2) (B) of subsection (d) and the mortgaged property is held by such type of mortgagor; and * *

It is also recommended that section 221 of the National Housing Act be amended by deleting from paragraph (d) (3) the words: "$6,600 per family unit for such part of such property or project as may be attributable to dwelling use, except that the Commissioner may by regulation increase this amount to not to exceed $8,600 in any geographical area where he finds that cost levels so require, and not in excess of 95 per centum ***" and by inserting the words: "$8,000 per family unit for such part of such property or project as may be attributable to dwelling use, except that the Commissioner may by regulation increase this amount to not to exceed $9,000 in any geographical area where he finds that cost levels so require, and not in excess of 100 per centum * * *.”

EXPLANATIONS

There is an obvious need for improvement of the plan for rehabilitation of existing dwellings and construction of new ones in renewal areas under section 220 of the National Housing Act, and for rehabilitation and new construction of homes under section 221 of the above act for relocation of families displaced by governmental action.

A series of previously proposed amendments to both sections should help overcome the deficiencies in the existing plan. However, without the amendments described above, they are unlikely to be sufficient to achieve full use of the benefits of sections 220 and 221 in cities like Syracuse or smaller communities. The present law (Housing Act of 1954) provides for not to exceed 90 percent mortgage insurance when mortgagor is a body qualifying under paragraph (2) (B) of subsection (d) of section 220; and not to exceed 95 percent of mortgage insurance on projects of at least 10 dwelling units where mortgagor is a nonprofit corporation qualified under paragraph (3) of subsection (d) of section 221. Not enough incentive is provided for private builders and developers to construct new homes under these sections, as long as they can build in their accustomed fashion under other sections of the National Housing Act. Only special civic-minded organizations and nonprivate corporations can afford to work for achievement of the purposes of sections 220 and 221. Such nonprofit corporations would be impeded by lack of equity, since they have no profits in the venture to invest in an equity. Neither can they obtain equity by utilizing such devices as claiming an "increment" in land value due to development of the project. Cash equity can be obtained by nonprofit corporations only through donations or stock subscriptions of charitable nature. This is not easy.

The prospect of ordinary builders or developers making wide use of section 220 is further diminished by the additional risk involved in building or rehabilitating existing structures in renewal areas. In a city like Syracuse, the demand for residential land in the renewal areas is offset by the availability of land in nearby good, old-fashioned, residential areas containing many extra large lots originally developed for large homes.

The conservation and rehabilitation sections of the renewal areas adjacent to the sections to be cleared are naturals for relocation of families displaced by clearance. Yet future demand for residential use in such areas is affected by continued private residential construction on the periphery of the city.

The most that can be accomplished in the conservation and rehabilitation areas is to bring them up to a reasonable standard and to keep them in such condition for a limited period of time, say 20-25, or 30 years at the outside. It will then be necessary to liquidate and rebuild them as is to be done with our slums, excepting that there may be a chance of preventing the creation of future slums, in the present sense of the word. This chance may be greater if these conservation areas, occupied by outmoded dwellings now 50 to 80 years old, are, to some extent at least, in the hands of nonprofit corporations. Such owners would maintain the conservation areas in proper condition even if some tenants could not or would not pay enough rent to enable private owners to maintain the property. Code enforcement may not be effected where sound economics interfere.

Nonprofit corporations can be most effective in overcoming this situation, since they may, under special conditions, obtain some public aid not available to private owners.

The effective use of nonprofit corporations in conservation areas seems to be the only practicable way of slum prevention by economic means. The encouragement for such corporations to establish and undertake projects under section 220 should be a part of a renewal plan. Giving the advantages of 100 percent

mortgage insurance to private enterprise devoted to a public purpose is little different from 100 percent loan guaranties to a public housing authority.

Who knows but what section 220-properly amended-may hold the answer to the problem of adequate housing for low-income families through utilization By this device, we of obsolete-but-wholesome housing in conservation areas.

may be able to take advantage of the flexibility of private enterprise-which a private nonprofit corporation should retain-while safeguarding the public interest.

Mr. BROWN. Mr. Multer?

Mr. MULTER. Just very very briefly, Mr. Mayor, I am sure that your suggestions will receive the consideration of the full committee, and we are very happy to have them.

Mr. MEAD. Thank you.

Mr. MULTER. May I ask to what extent your city has been able to build public housing and, if so, how many units?

Mr. MEAD. We have 4 public housing developments in our city, 2 Federal and 2 State, totaling approximately 1,400 units, and we have just recently contracted with the State of New York for an additional 400 units.

Mr. MULTER. Is it not a fact that you find that public housing helps eliminate juvenile delinquency and other crime incidence?

Mr. MEAD. Yes, sir, I think it does; but I think it is related to clearing up a blighted and slum area. It is rather difficult to evaluate just how much money you spend in those areas.

Mr. MULTER. Is it not a fact that your biggest policing problems are in the slum areas?

Mr. MEAD. No question about that, sir. I think that is true of fires, too. I think most of our fire alarms come from those areas.

Mr. MULTER. I used the word "policing" in its most general public sense, referring to all of the protective services that a city must give to its people. You will find the largest amount of money spent and the greatest amount of manpower is used in the slum areas, not only for the protection of the slum areas themselves, but the entire city, from the crime viewpoint and the fire and sanitation viewpoint? Mr. MEAD. No question about that.

Mr. MULTER. Thank you.

Mr. BROWN. Dr. Talle?

Mr. TALLE. No questions.

Mr. BROWN. Mr. Vanik?

Mr. VANIK. No questions. I concur in the recommendations made by the Mayor.

Mr. BROWN. Mr. Bass?

Mr. BASS. No questions.

Mr. BROWN. Mr. Mayor, we are delighted to have your statement. Mr. MEAD. Thank you, Mr. Chairman.

Mr. BROWN. The committee will recess, to reconvene next Thursday at 10 o'clock.

(Whereupon, at 12: 12 p. m., the committee recessed, to reconvene at 10 a. m., Thursday, June 2, 1955.)

HOUSING AMENDMENTS OF 1955

THURSDAY, JUNE 2, 1955

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met at 10 a. m., Hon. Brent Spence (chairman) presiding.

Present Chairman Spence and Messrs. Brown, Patman, Multer, Barrett, O'Hara, Mrs. Buchanan, Mrs. Sullivan, Fountain, Vanik, Davidson, Talle, McDonough, Widnall, Hiestand, Nicholson, and Bass.

The CHAIRMAN. The committee will come to order.

We will resume hearings on H. R. 5827.

The clerk will call the first witness.

Mr. HALLAHAN. Mr. Bert Seidman, representing the American Federation of Labor. Mr. Seidman had completed his prepared statement at the last session of the committee, and is here to answer any further questions that the committee might have.

The CHAIRMAN. I regret very much that I will be compelled to leave shortly. I have taken pleasure in reading your statement, Mr. Seidman.

Mr. SEIDMAN. Thank you very much, Mr. Chairman. I shall be glad to answer any questions the members of the committee may have. The CHAIRMAN. Are there any questions?

If not, you may stand aside. Thank you very much, Mr. Seidman. Call the next witness, Mr. Clerk.

Mr. HALLAHAN. The next witness is Mr. Henry Bubb, representing the United States Savings & Loan League.

The CHAIRMAN. Mr. Bubb, you may proceed as you desire.

STATEMENT OF HENRY A. BUBB, CHAIRMAN, LEGISLATIVE

COMMITTEE, UNITED STATES SAVINGS & LOAN LEAGUE

Mr. BUBB. Thank you, Mr. Chairman and members of the committee, I am Henry A. Bubb of Topeka, Kans., president of the Capitol Federal Savings & Loan Association of Topeka, and chairman of the board of directors of the Federal Home Loan Bank of Topeka. appear as chairman of the legislative committee of the United States Savings & Loan League.

I

On behalf of the officers and members of the league, I wish to express my appreciation to the committee for the opportunity to state our views on legislation dealing with housing, and with the Federal statutes which affect our savings and loan institutions. The league is the 63-year-old nationwide organization of the savings and loan institu