CONGRESS OF THE UNITED STATES, JOINT ECONOMIC COMMITTEE Chairman Bolling Announces Hearings on Industrialized Housing by the Subcommittee on Urban Affairs Representative Richard Bolling (D., Mo.), Chairman of the Subcommittee on Urban Affairs of the Joint Economic Committee, today announced that the subcommittee will hold public hearings on industrialized housing, July 9, 23, and 24. In announcing the hearings, Chairman Bolling said: "These hearings will supplement the compendium of papers by experts on the subjects of Industrialized Housing,' which the subcommittee released on April 28 of this year. We have planned to receive testimony from the Department of Housing and Urban Development as well as from those in the industry actually working to put housing production on an industrialized basis. The hearings should develop valuable background for the subcommittee's further studies of long-range urban planning both here and abroad." A list of witnesses, together with the time and place of the hearings, is given below. Additional witnesses may be announced later. SCHEDULE OF HEARINGS Wednesday, July 9, 10:00 a.m., Room 6226 New Senate Office Building Assistant Secretary for Research and Technology, Department of Housing and Urban Development Charles L. Biederman Vice President, Technical Services, Levitt & Sons Corp., New York Wednesday, July 23, 10:00 a.m., Auditorium, New Senate Office Building (G-308) Ezra Ehrenkrantz President, Building Systems Development Inc., and Associate Professor of Architecture, University of California, Berkeley Peter Terzick General Treasurer, United Brotherhood of Carpenters, AFL-CIO Thursday, July 24, 10:00 a.m., Auditorium, New Senate Office Building (G-308) James R. Price Chairman of Board, and George E. Price President, National Homes Corporation, Lafayette, Ind. Richard Rosen President, Urban Systems, Inc., Boston, Mass. INDUSTRIALIZED HOUSING WEDNESDAY, JULY 9, 1969 CONGRESS OF THE UNITED STATES, OF THE JOINT ECONOMIC COMMITTEE, Washington, D.C. The Subcommittee on Urban Affairs met, pursuant to call, at 10 a.m., in room 6226, New Senate Office Building, Hon. Richard Bolling (chairman of the subcommittee) presiding. Present: Representatives Bolling, Moorhead, Widnall, and Brown; and Senator Percy. Also present: James W. Knowles, director of research; George D. Krumbhaar, Jr., senior minority economist. Chairman BOLLING. The subcommittee will be in order. Today, the Subcommittee on Urban Affairs of the Joint Economic Committee begins public hearings on industrialized housing to provide information supplementing that contained in the compendium of expert papers on this subject which the subcommittee released on April 28 of this year. During these hearings we will receive testimony from the Department of Housing and Urban Development as well as from a number of those actually working in the industry to put housing production on an industrialized basis. At the outset, I wish to express complete confidence that the architects, engineers, management experts, and other experts of this country are fully capable of solving the technical problems involved in industrializing housing production. Indeed, I suspect most people would think it rather silly to express any doubts on this subject in a nation whose skills are sufficient to transport astronauts to the moon and return. We, therefore, assume that there will be technical problems to solve but that they can be solved if we have the will and devote the needed organization and resources to the effort. There will be some problems, of course, connected with institutional and organizational barriers for success. Among other areas, these probably will concern building codes, zoning legislation, financial arrangements, and tax structures. In this general line of thought we will be interested especially in the kind of organizational or institutional innovations which might be suggested to produce improved results in the long run. For example, will success depend upon evolving new communitywide development corporations to take on the problems of organizing and financing a complete program for the entire area, including the necessary housing? Most of the attention in the past seems to have been given to the technical and institutional or organization problems, but this subcommittee's emphasis on the longer-run and on a more rounded view (1) of the urban complex of problems suggests the importance of taking a close look at the sociological, psychological, and esthetic or cultural aspects of community development on a large scale. We must ask ourselves what kind of community will be created, not merely how many houses we can or should build. Finally, on a more mundane level, there are some practical questions about costs: How much does it cost by present techniques to make available a modern, clean, appropriately equipped dwelling unit for a typical family? What does this require by way of a monthly charge on the budget of the occupant family, whether they are owners or renters? How much can this charge be reduced by industrializing the process of producing houses? How much of the monthly cost for housing services goes to provide the site on which the structure is to be erected? How much for financing, for taxes, for insurance, for labor and materials that go into the structure, and for the capital employed in the construction cycle? How would each of these be affected by a different system of housing production? What are the barriers to achieving reductions in each of these categories of cost? How would the whole process be affected by taking a longer perspective and a communitywide view of the home production process? Our first witness this morning is Mr. Harold B. Finger, Assistant Secretary for Research and Technology, Department of Housing and Urban Development; he will be followed by the vice president for technical services of Levitt & Sons Corp., Mr. Charles L. Biederman. We are grateful to both of you for taking the time to appear as our first witnesses in these hearings. Mr. Finger, we will hear from you first. You may proceed in your own way. STATEMENT OF HAROLD B. FINGER, ASSISTANT SECRETARY FOR RESEARCH AND TECHNOLOGY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Mr. FINGER. Thank you very much, Mr. Chairman. We sent to the committee this morning copies of the statement I will present. I understand that they are being brought up now. I am pleased to appear before you today to discuss industrialized housing. This is a subject that I find generates very clear reactionspro and con-in industry, in labor, in user groups, in communities, among governmental officials. Over the years, there has been movement toward increased reliance on industrialization, even in what we still refer to as our conventional home building systems. By industrialization here, I mean factory-built components and subsystems. Roof trusses, preassembled window systems, kitchen cabinets, prefitted and preassembled doors are examples. Precast concrete wall sections such as those used to form the outside skin of the building in which the Department of Housing and Urban Development, for example, is located are also seeing increased use. Mobile homes and sectionalized modules made of either wood or of concrete are receiving increased attention in the marketplace. Numerous examples exist in the FHA files of Structural Engineering Bulletins on systems developed through the mobile home industry concepts, of panelized systems, and of sectionalized housing. If this is a trend-and I believe it is-why doesn't it develop faster, particularly in view of the deficit in housing that we now face and the urgent housing needs that are apparent for the future? The Housing Act of 1968 defines the need for 26 million housing units over the next decade, with 6 million of those needed for our low- and moderateincome families. Some estimates that I have seen indicate that the need may be even greater than this. This statement of need also does not reflect the volume of housing that will be necessary to properly shelter the 300 million people that are anticipated in this country by the year 2000. Estimates have been made to indicate that over the next 30 years we will have to build again about as many housing units as now exists, and we have something like 66 million housing units today. Our total system of providing housing must be made more effective to assure that we satisfy these needs. We must be able to produce and deliver housing in larger volumes than we have ever done before. One of the major limitations to satisfying these needs is generally associated with the fragmentation of our housing market. Orders for housing are placed in small quantities and the response to those fragmented orders is a fragmented industry. Fragmentation of the market is associated with local variations in building codes, with codes that do not encourage and in some cases do not allow for improvements in the homebuilding system, with difficulty in procurement of land in sufficient quantity and at reasonable cost and far enough in advance of the actual project development to be effective; with local zoning that inhibits effective use of land and frequently relies on very low density zoning as a means of restricting the introduction of a mix of housing types and economic levels, and income levels of the families to use those housing units; it is frequently associated with the scarcity of skilled labor needed for our present building systems, and, of course, with the problems that the industry has faced in obtaining regular access to the financial markets. All of these have contributed to the fragmentation of the housing industry. The financing problem is seriously aggravated in today's market by the inflationary pressures that exist. These pressures must be brought under control in order to assure the flow of funds necessary to the mortgage market. It is in recognition of the need for developing an improved housing system process and improved housing system concepts that will help to meet our needs that suggested the initiation of Operation Breakthrough by Secretary Romney. Operation Breakthrough is a multifaceted program aimed at: 1. Encouraging industry to propose the ideas available for volume production methods, including those that they have had difficulty applying in the past; 2. Encouraging continual housing system advancement through support of applied research and development; 3. Pooling or aggregating the market for housing, including both the demand for housing and the available land for such housing; 4. Encouraging State and local adjustments in building codes and zoning codes that now contribute to fragmentation, high cost, and the difficulty of producing for a broad market; 5. Improving methods of financing, including the processing of FHA insurance applications; 6. Making more effective use of our total work force; 7. Conducting tests and evaluations with authoritative test validation that will serve as a basis for approval of advanced housing concepts and for development of performance standards for housing systems. Operation Breakthrough is, therefore, not only directed at technological advancement of housing, but also at breaking through the various nonhardware constraints to more efficient production of housing. As you pointed out, Mr. Chairman, we agree that the technology requirements can be met. There are many other blocks in the way of providing housing in the volume that we need and at reasonable costs. Operation Breakthrough is aimed at more effective and timely delivery of housing to those who need it. It seeks to establish an improved process that develops and brings together volume production and a volume market (including pooled housing orders and identified land) in a total environment that encourages industrial investment and the best of our commercial marketing methods and management techniques. A copy of a writeup on Operation Breakthrough that was prepared as a basis for meetings held early in May with industry, labor, Governors, mayors, and county officials is attached to this statement for the subcommittee's information. (See p. 53.) Also attached is a copy of the Request for Proposals that we have sent to industry and other private organizations involved with housing. (See p. 82.) These requests for proposals were sent out starting late in June. We have had continued and very high interest expressed on that Request for Proposals which invites ideas, new ideas, for improved high-volume production of housing, and the number that we have now sent out is something over 2,000. We are having a meeting on Friday to discuss this Request for Proposals with the industry people, and I expect we will have over a thousand representatives of the industry present at that meeting. This Request for Proposals offers to the industry an opportunity to submit to us their ideas for improved, high volume production systems so that we may encourage and support the application of the most promising of the concepts submitted. Of the various factors defined in Operation Breakthrough, I believe that the lack of an aggregated, large, continuous, deliverable market is the greatest obstacle to significant change in our housing systems methods and to accelerating the application of industrialized housing and of improvements in our traditional building methods. Therefore, an essential ingredient of Operation Breakthrough is the effort to pool the various parts of the housing market to provide the large volume which will encourage improved production methods for all building types. In this regard, we have asked State and local officials to work with local housing authorities, private developers, nonprofit and limited dividend sponsors, and others, to pool the market, to pool their needs for housing, and to pool the land available to them so that orders can be placed in larger volume. We are prepared in HUD to provide assistance through the various planning and other grant programs that we have, as well as staff support that may be needed by these State and local officials in aggregating such a large-volume market. We should not, in considering industrialized housing, however, eliminate from consideration the benefits that can be provided to our tradi |