Rental projects

FEDERAL HOUSING ADMINISTRATION

FHA insures mortgages under section 231 of the National Housing Act on new or rehabilitated rental housing projects specially designed for occupancy by persons 62 years or over, or by the handicapped. The projects must contain at least

eight dwelling units.

The projects may be developed by either nonprofit or profit-motivated sponsors. For nonprofit private corporations or instrumentalities, the insured mortgage may cover 100 percent of the FHA-estimated replacement cost for new construction, or 100 percent of the FHA-estimated value of a converted structure at completion. The maximum mortgage amount may not exceed $12.5 million for a nonprofit private mortgagor, and is limited to $50 million if the mortgagor is a public instrumentality.

To further assist in providing housing, the Federal National Mortgage Association is authorized under its special assistance functions to make advance commitments to purchase the FHA-insured mortgages for nonprofit sponsored projects at time of completion.

Mortgages of profit-motivated groups may be insured which finance up to 90 percent of the FHA-estimated replacement cost for new construction, or 90 percent of the FHA-estimated value of a converted structure at completion. The maximum mortgage amount is limited to $12.5 million.

The insured loans of both private and profit-motivated sponsors can be repaid over a period of years (not exceeding 40) approved by the FHA and can bear interest up to a current rate of 54 percent plus one-half of 1 percent mortgage insurance premium.

Rental housing developed under the FHA program can be occupied by older and handicapped persons of all incomes, and the projects may offer more extensive services and facilities than generally is the case under the low-rent and direct loan program.

Single family home purchases

FHA is authorized under section 203 to insure mortgages on homes purchased by families or persons 62 or over. Downpayments may be borrowed and cosigners are permitted if the elderly person is not an acceptable mortgage risk. For the first time, the 1964 Housing Act permits single persons 62 and over and handicapped persons with moderate incomes to buy homes with mortgages insured under the section 221 program. The maximum mortgage amount for a single family home is $11,000 except in high cost areas and 40-year mortgages may be permitted. The low downpayment can be applied to closing costs and other prepaid items which is not permitted under section 203. Although cosigners are permitted under section 221, downpayments may not be borrowed. Nursing homes

Nursing requirements frequently are connected with problems of the elderly and a large proportion of nursing home patients are aged persons. The FHA mortgage insurance program for nursing homes, however, is not limited to the needs of the elderly.

Under this program, FHA may insure mortgages to finance new or rehabilitated nursing homes. The Housing Act of 1964 authorized nonprofit sponsors, in addition to for-profit corporations, to apply for mortgage insurance. To be eligible, a nursing home must be needed for the care and treatment of those who do not need hospitalization, but require skilled nursing care and related medical services.

FHA cannot insure a nursing home mortgage unless the designated State agency has certified that the home is needed. The State agency must also certify that reasonable minimum standards for licensing and operating such establishments are in force.

The amount of a mortgage cannot exceed $12.5 million, nor 90 percent of the estimated value of the property.

REGIONAL OFFICES

Region I: 346 Broadway, New York, N.Y. 10013 (Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont).

Region II: 1004 Widener Building, Chestnut and Juniper Streets, Philadelphia, Pa. (Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia).

Region III: 645 Peachtree-Seventh Building, Atlanta, Ga. (Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee). Region IV: Room 1500, 360 North Michigan Avenue, Chicago, Ill. (Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin).

Region V Federal Center, 300 West Vickery Boulevard, Fort Worth, Tex. (Arkansas, Colorado, Kansas, Louisiana, Missouri, New Mexico, Oklahoma, Texas).

Region VI: 450 Golden Gate Avenue, Post Office Box 36003, San Francisco, Calif. (Arizona, California, Guam, Hawaii, Nevada, Southern Idaho, Utah, Wyoming) area office: 909 First Avenue, Seatttle, Washington 98104 (Alaska, Montana, Northern Idaho, Oregon, Washington).

Region VII: 1608 Ponce de Leon Avenue, Post Office Box 9093, fourth floor, Garraton Building, Santurce, P.R. (Puerto Rico and the Virgin Islands).

FEDERAL-LOCAL CONTACT MUST BE IMPROVED

Senator RIBICOFF. I was curious. If a city or group or person is interested in one of these programs, who does he go to?

Mr. ROBBINS. He runs all over Washington at great time and expense and frustration.

Senator RIBICOFF. What happens if he is turned down by Agency A? Then does he go to Agency B?

Mr. ROBBINS. Certainly.

Senator RIBICOFF. And sometimes B grants him a loan when A would not?

Mr. ROBBINS. Well, sometimes it is a loan, sometimes it is insurance of a loan, sometimes a grant for public housing development.

Senator RIBICOFF. So, in other words, not only do you have governmental duplication in effort but you have great frustration and lack of knowledge and difficulty for the people involved back home.

Mr. ROBBINS. I might also say, Senator, that they do not always run to the other agencies because they may not want to take advantage of some of these other programs which can create complications for them. There are some communities that are going in very heavily for public housing for the elderly. Public housing for the elderly does not run into the social problems that public housing for families have. There are a great many, on the other hand, the so-called nonprofit groups that do not want public housing. That they prefer to have their own little housing project for the elderly and choose their

own tenants.

I think the day will come, not far off, too, when these programs are merged. There will have to be a policy which provides for equality of opportunity on the part of those of all income levels who need the housing, and I am now talking about housing for the elderly, rather than the sponsor having sole responsibility to make the choices as to tenancy.

We would like to see the agency staffed and structured in such a way that Federal-local contacts could be quick and handled with a minimum number of contacts. We would like an administrative arrangement under which local officials could obtain assistance easily from the Department, without shuttling back and forth between bureaus that differ in their approach to basic policies.

Senator SIMPSON. Mr. Robbins, may I interrupt you right there?

Mr. ROBBINS. Yes.

AGENCY COMPETITION

Senator SIMPSON. I am very interested in what you say. Does it also cause the agencies to vie, one with the other, to get this job done? Mr. ROBBINS. I do not think there is any secret, Senator, that the constituent agencies in the HHFA do not always see eye to eye on the advantages of the other fellow's program. In other words, there is a form of competition and in some cases denigration of the program of another agency.

Senator SIMPSON. Say that again.

Mr. ROBBINS. I say, in other words, there is a form of competition between agencies and in some instances a form of denigration of the program of another agency.

I am laying it on the line, Senator. It is common knowledge that in the past there have been many FHA officials who have been totally unsympathetic to the public housing movement as one typical example of the kind of thing that has taken place in the past.

I think in recent years, under the leadership of HHFA Administrator Weaver, there has been some attempt to alleviate that kind of competition.

I will now give an example of the difficulties of dealing with a number of agencies that have jurisdiction over one type of develop

ment.

For instance, the director of a local public housing agency building in an urban renewal area must presently deal with at least two constituents, that is, the Urban Renewal Administration and the Public Housing Administration: two sets of attorneys, land planners, financial officers, secretaries, auditors, accountants-and so forth, all up and down the line, and bears out the statement Mr. Kermit Gordon, the Budget Director, made this morning. In a situation such as the one I have just given, you can get the Federal Housing Administration in the picture, too.

The FHA provides mortgage insurance for a great many housing developments in an urban renewal area.

To sum up, in the period of transition, as the new Department seeks the best organization plan of action, it would be our hope that the Institute of Urban Development that the President recommended in his "message on the cities" would be created and set to work studying the organizational structure for housing and urban development, consulting with States and cities on these questions. We would hope that our members' interest might be represented in these Institute studies and discussions. In the end, under such a procedure, we think we would have a Department of Housing and Urban Development that would bring not only consistency and strength to national policy but would be flexible in the administration of that policy, out of its understanding of the diversity and richness of local ways of life.

The reasons for translating this long-debated proposal from a bill into a law have become stronger and more obvious as the years have passed. This bill has widespread support. We urge this committee to give it prompt approval.

Senator RIBICOFF. Thank you very much for your excellent statement and your frankness with the committee, Mr. Robbins.

Senator Harris, do you have any questions?

Senator HARRIS. I do not believe so, Mr. Chairman.

Senator RIBICOFF. Senator Simpson?

Senator SIMPSON. I do have a question. I want to compliment you on your statement

Mr. ROBBINS. Yes, sir.

Senator SIMPSON (continuing). The way you gave it. I am looking for some knowledgeable person such as yourself to tell me.

I notice on page 4 of your statement, Mr. Robbins, that you say:

In our case, we strongly approve of section 5(a) provisions, which transfer to and vest in the new Secretary "all of the functions, powers, and duties of the Housing and Home Finance Agency, of the Federal Housing Administration, and the Public Housing Administration.

FEDERAL HOME LOAN BANK SYSTEM

Now, what makes this Federal Home Loan Bank System so sacrosanct? Why do you leave it out of that? Do you not think it should be in there? It loans three times as much money as FHA.

Mr. ROBBINS. This is one of the issues that I think was raised during Senator Ribicoff's questioning of the Budget Director. In many respects the Home Loan Bank Board is a regulatory agency, sort of a banking agency rather than a housing agency. We leave the decisions on this issue to the Congress. We really do not take any sides. do not feel expert enough to take a position on it.

We

I think you can get support for both positions. I think you might even find people who say that Home Loan Bank Board operation belongs in the Treasury Department with its influence on fiscal policies all over the United States. There are a number of important national programs which could well and logically be fitted in a number of Cabinet departments.

Senator SIMPSON. In a reorganization do you not believe that there should be as much coordination and compaction of these agencies under the proper head than to leave them vacant on the outside?

Mr. ROBBINS. Yes, I do. And because of my lack of knowledge on this point, I do not want to advise the committee, but it seems to me that the committee might be justified in asking the officials of the Home Loan Bank Board why they should not be incorporated into this new structure.

Senator SIMPSON. I agree with you and probably might ask the various savings and loan associations who are bitterly opposed to their inclusion.

Mr. ROBBINS. I think so.

Senator SIMPSON. That is all, Mr. Chairman.

Senator RIBICOFF. Thank you very much, Mr. Robbins.

Are there any further questions?

Senator HARRIS. I do not have any.

Senator RIBICOFF. Thank you very much Mr. Robbins. We do appreciate your coming.

I understand that Mayor Herman Goldner of St. Petersburg, Fla., is here to present testimony and also Mr. Julius Edelstein, administrative assistant to Mayor Wagner is here to present the statement of Mayor Wagner to the committee.

Mr. EDELSTEIN. Mr. Chairman, my name is Julius Edelstein. I am the executive assistant for planning and policy programing of the city of New York.

I am merely submitting, with your permission, for the record the testimony that Mayor Wagner would have submitted on behalf of the U.S. Conference of Mayors as well as the city of New York and ask that it be printed in the record. He could not come because of the newspaper strike which he is mediating, and he asked me particularly to excuse myself for his good friend, the Senator from Connecticut. Senator RIBICOFF. We understand, and I thank you very much. I saw the mayor yesterday, and he told me that he anticipated some difficulties that would take him back to New York and he did give me his apologies in advance. I am sorry, too, that my good friend, Mayor Wagner, is not here to present his testimony personally, but without objection, Mayor Wagner's testimony will go in the record as if read. STATEMENT OF HON. ROBERT F. WAGNER, MAYOR OF THE CITY OF NEW YORK, AS PRESENTED BY JULIUS EDELSTEIN, EXECUTIVE ASSISTANT FOR PLANNING AND POLICY PROGRAMING OF THE CITY OF NEW YORK

Mr. EDELSTEIN (reading Mayor Wagner's statement). Mr. Chairman and members of the subcommittee, it is a privilege to appear here before you today in support of President Johnson's proposed legislation to create a Department of Housing and Urban Development. I am here today not only on behalf of the city of New York but also as the spokesman for the U.S. Conference of Mayors. I might mention, for the record, that I am a past president of the Conference of Mayors, and also of the National League of Cities-formerly the American Municipal Association. I continue to serve as chairman of the Metropolitan Regional Council of the New York Metropolitan Area.

Today, however, I speak for New York City and for the Conference of Mayors and the cities it represents. The conference and these cities from coast to coast, strongly support the creation of a Department of Housing and Urban Development. This has been the position of the mayors, and my own, ever since the proposal was first made in 1954 during the 83d Congress.

The Conference of Mayors has passed many policy resolutions in support of this crucial proposal. For the record, I would like to submit the attached resolution, passed at the 1963 annual meeting of the Conference of Mayors in Honolulu.

Probably the most forceful recent declaration on the tremendous need and urgency for a Federal department to cope with urban problems and therefore the country's most pressing problems-was in the President's message on the cities which was sent to the Congress on March 2, 1965. That message made it abundantly clear that President Johnson and his administration are fully aware of the great complexity of problems facing urban America today. It demonstrates a thorough conviction that it will take the full and coordinated resources of all levels of government to assure the continuing improvement of urban life in the United States. This must be achieved. Urban life is American life to an increasing extent today.