a year in taxes. The people living in Capehart will be using many of the facilities of the community and will not pay for these same facilities.

From the facts we have airmen do not pay personal property taxes. It is our understanding that an airman will pay only $8 to $12 license fee on the car which he owns. The average civilian will not only pay this fee, but a personal property tax which might run as high as $150. The community cannot well afford to lose both the real estate tax and the personal property tax.

WHAT WILL CAPEHART DO TO THE ECONOMY OF THE OFFUTT AREA? Obviously, no one has a clear crystal ball and the field of prognostication is indeed a perilous one but certain facts stand out clearly and should be mentioned.

It has already been demonstrated that the very threat of Capehart has kept down the construction of housing units, particularly rental units, in the Sarpy County area.

The construction of additional Capehart units to those now building will most certainly bring into operation the law of supply and demand. The more units that are built on the Capehart site, the less demand there will be for construction in the entire area around the base.

Further, as the demand for rental and sale housing units decreases the values of all real estate property in the surrounding area will decline. Homeowners, both military and civilian, will feel the effect. We feel that more Capehart units could cause a considerable depression in real estate in this area.

To point out the seriousness of this situation, from figures released by the base, there are now 1,200 military personnel living in Bellevue, 1,600 in Omaha, 250 in Plattsmouth (to the south), and 100 in Council Bluffs. What would happen if these families were forced to move into Capehart units? We understand that, according to present requirements, Capehart must be kept 100 percent occupied.

The present commander states that he will never issue an order forcing people to sell their homes or break their leases and move into Capehart. But we have been informed that such orders have been issued by other commanders in other Capehart areas. Further, there is nothing to guarantee that the fine commander at Offutt will remain there permanently. A tour of duty is usually about 3 years and the present commander of the post has already been there approximately that length of time.

But this is not all. Let us suppose that many military families now living off base either were ordered to move into Capehart housing or decided to move of their own volition. Most of the houses in the area have mortgages on them and as many of these houses are nearly new, many of the mortgages are large. Certainly most of the houses now occupied by the military are mortgaged. Most of these mortgages are guaranteed by one or more of the agencies of the Federal Government (such as FHA). Thus, any serious dislocation of housing would reflect immediately on the Government and thus inevitably on the poor taxpayer. The taxpayer would have to foot the bill. Certainly this is not the desire of the Congress.

According to the figures released by the base there are now 3,700 families at Offutt living off the base. A very large part of these families live in homes that they have purchased. Almost any change which will lessen the demand for housing will mean that hundreds of servicemen will lose their equities in their homes. If the Congress honestly desires to protect the serviceman, they certainly will do nothing to endanger his equity in his own home. Capehart, we certainly believe, is a real danger not only to the civilian, but also to the fine airmen stationed at the base. Many of the military people we have talked to realize this. Many of them, off the record, oppose Capehart.

The base commander is most certainly aware of the possible economic effects of Capehart but he states that there will never be too many housing units be cause the airbase will continue to grow as it has in the past. He predicts that by 1962 there will be an increase of at least 1,000 families that, he can prove. and that other plans which are now classified will raise this number appreciably. We would be inclined to agree entirely with the commander were it not for several facts. First, we doubt if the Defense Department moves its people from one place to another on the basis of adequate housing. We believe rather, it is for the tactical security of the country. Thus Offutt may or may not grow depending on the defense needs of the military. Secondly, the plans of the milltary have an astonishing way of changing rapidly. We presume that all of the

Wherry projects were requested by the military and at the time the requests were made, such housing was declared to be absolutely necessary. However, a review of the condition of Wherry housing just a few short years after it was built shows that much of it was absolutely unnecessary. Many of the projects were in default, some foreclosed, and a considerable number only 50 to 75 percent occupied. Can we assume that the military authorities are any better at estimating the needs today than they were in the days of Wherry? The Offutt commander is undoubtedly completely sincere in his expectation of growth at Offutt, but does he know? And for that matter, in this rapidly changing world does anyone else know what the housing needs are going to be in 3, 4, or 5 years? One thing is certain, private builders can meet the needs faster and with less redtape. Capehart has been part of the law of the land for several years but the units authorized are not yet built at Offutt.

We object further to Capehart because only a few of the largest builders in the country are qualified to bid on such mammoth projects. Local builders, local suppliers, and even local labor has little opportunity to participate in the construction, yet it is local small business that is the backbone of the American way of life. One committee of the Congress strives to help small business. Another takes business away from the little fellow by the very creation of such mammoth projects as Capehart housing.

SUMMARY

We believe that we have shown that the building of additional Capehart units at Offutt at the present time might cause a serious economic dislocation affecting the entire population, both military and civilian. Predictions of growth, to offset such new housing, are certainly precarious at best. Thus we believe that at this time authorization of additional Capehart units at this base is dangerous.

COST OF PRIVATE HOUSING VERSUS COST OF CAPEHART

We believe that we have established from the results of the survey that Capehart housing is not necessary at Offutt, that such housing as needed, can best be built by private contractors. However, the question naturally arises as to whether private contractors can compete with Capehart housing. Can they produce adequate homes for airmen at a cost equal to or below the cost of Capehart. We understand the proposed Capehart unit at Offutt will cost $16,500. Many of these will be three- and four-bedroom homes with one or two baths. At first thought, any competent builder would admit that to build such units at that cost would be impossible. But is the cost of a Capehart unit $16,500?

The Government buys and furnishes the land. The Government also brings the utilities to the site. These costs are paid by the taxpayers. The Government will pay for the cost of the land survey, the subdividing, they will pay for getting the financing and for the administration of the units. The project will be tax free.

In other words, many of the costs of a Capehart unit are hidden. In Capehart housing what we are really talking about is a house that if properly priced would be in the neighborhood of over $20,000 rather than $16,500. These hidden costs will be paid for by the taxpayer. Surely they make Capehart look inexpensive, but is it?

If all of these hidden costs were properly assessed against a Capehart unit, we believe that private contractors could build very similar units even at a lower cost than under Capehart.

Recent stories in the press and the history of Government spending have never shown that the Government can do things cheaper than private business.

We firmly believe that if these subsidies to Capehart are eliminated, or, to put it another way, if the private builder was subsidized to the same extent, he too could build even better homes for the military than under the Capehart plan. It must be readily admitted that Capehart housing is luxury housing. We do not altogether quarrel with the Congress for the decision that the men in the Air Force deserve luxury housing. But the argument is frequently heard that the only way such housing can be secured for the rental allowance that has been fixed is through building Capehart housing. We wish to state that we would not necessarily quarrel with the idea that living allowances should be increased, but we think it quite unwise to hide costs to such an extent that an airman can get a much better house for the same money than a civilian. Salaries of airmen compare quite favorably with the income of many American citizens. Military men may deserve luxury living, but if they do let's be honest and admit it.

CAPEHART HOUSING AT OTHER BASES

Only time has prevented us from making a careful study of the effect of Capehart housing on the surrounding communities at other military installstions. However, we have been in touch with a number of such bases throughout the country and we find a distinct similarity in the pattern of Capehar: housing.

Most civilian populations near bases are acutely aware of the importance of the military to our national safety. This is particularly true of the Air Fore In many places the civilian population has outdone itself to create good publi relations with the base. They recognize the economic value to the community of a military installation. They know that Air Force people have money and will trade with local merchants.

The Air Force itself has done a splendid job in improving community relations. Speakers are gladly furnished for chambers of commerce, service clubs, and the like. Probably hundreds of thousands of tax dollars are spent each year by the Air Force to improve public relations. Thus it is only natural that when a request for additional housing is made at a local base, much public support can be easily generated.

Great to-do has been made of the fact that the additional 800 units requested at Offutt have been endorsed by the Omaha Chamber of Commerce, the mayer and City Council of Omaha and other civic organizations. We were thus not surprised to learn that other bases had the support of such organizations in the early days of Capehart.

However, we find that at bases where Capehart has existed for a year or so, that the same organizations are now actively opposed to additional Capehart housing. There must be some reason for this change of heart. We cannot help but believe that they have discovered that Capehart housing has had a bad effect on the whole community.

We are informed for instance that at Fairfield, Calif., almost all civic groups are now joined together to fight additional Capehart housing.

Raymond E. Block, president of the Little Rock, Ark., Real Estate Board wrote us as follows, "The writer from personal experience would advise you to use every means within your power to prevent the flooding of your market mith a similar (Capehart) project." They seem to be bitterly opposed to Cape hart at Little Rock.

We have been informed that at many installations around the country, organizations such as ours have been formed to fight Capehart. The members of your committee undoubtedly have from personal experience, more knowledge of the extent of such opposition than have we. But it stands to reason that if there is opposition to Capehart at bases where it has been in operation for some time that there must be something radically wrong with this type of military housing. Thus, from the expressions of opposition to Capehart that we have had from other places, the Association of Private Industry earnestly requests further study into this matter before granting the request of the Defense Department.

OFFUTT AIRBASE IS ONLY A FEW MINUTES FROM OMAHA

We have pointed out our opposition to Capehart housing at Offutt Air Force Base. It must be admitted that the situation here is entirely different than at some isolated bases. Offutt's proximity to Omaha, a metropolitan center of more than 300,000 people must not be overlooked.

We have talked about the group of builders located and doing business in the Sarpy County area. Actually they are only a part of the home building industry in this community. Many Omaha builders avoid the Offutt area because of the great risk involved. However if it were made clear that there is a need and that there would be no competition from the Government, undoubtedly other builders would rapidly move into the area. The uncertainty, the fear of having to compete with the Government has kept many able and successful builders away.

Omaha is not destitute of housing. Much of the southern part of the city is well within the prescribed 20 minutes from the base. While we believe that there will be a sufficiency of private housing within 10 to 12 minutes of the main gate at the base it should not be forgotten that Omaha itself can provide housing to meet almost any need. We believe the argument of the military people to be entirely falacious. This community can and will provide housing

for the military without resorting to the establishment of military owned and managed cantonments."

SUMMARY AND CONCLUSION

1. We have shown that the building of the Wherry housing project and the constant threat of Capehart housing has caused the builders of homes in the Offutt area to be cautious. Financing, of additional units and particularly rental units has been especially difficult.

2. We have shown that if the threat of construction of the Capehart housing is removed that local builders will more than double the number of homes that are now being built.

3. Our survey shows that 958 housing units are planned for 1959 almost enough to take care of the anticipated increase in personnel at the base until 1962. And that if more Capehart units are not authorized this number will increase to 1,88€ in 1959-60.

4. Our survey shows that the projected housing is in many areas closer to the base than the Capehart project. The development farthest away is only 11 minutes and 10 seconds from the main gate of the base.

5. Our survey demonstrates that builders are planning and will build rental units but only if the threat of Capehart is removed.

6. We have shown that local builders can compete with Capehart housing in cost if the hidden costs in Capehart are eliminated or if private builders are financed to the same extent as Capehart.

7. We have shown that many military men would rather be integrated with the community than be forced to live in row houses run by the military. We believe that there is grave danger of military towns built on the Prussian military pattern.

8. We have shown that Capehart housing brings about a great loss in tax dollars to the community which the community cannot afford. Civilians are forced to pay for services which the military enjoy without cost and yet the pay of the military is enough so that they can afford to pay taxes as well as the civilian.

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9. We have shown that additional Capehart construction might cause an excess of housing in the area. That this would cause many military people to lose the equity in their homes. That because mortgages in the area are guaranteed by FHA and other lending agencies, that a depression in real estate would hurt the Government and through it the taxpayer.

10. We have shown that Capehart construction hurts local builders, suppliers of building material, labor, in fact the whole economy of the area.

11. We have discovered that at many areas where Capehart housing has been in effect for a year or so serious dislocations in the community have resulted. We believe that the 800 Capehart units now requested will cause similar problems at Offutt.

12. We find that local chambers of commerce at other bases who once approved Capehart projects have changed their attitude completely after they have experienced the installation of such socialistic housing communities.

13. We have shown that military authorities glibly predict the need for housing but that after many Wherry housing projects were built they were found to be unnecessary.

14. We have found that many of the substandard accommodations are substandard only because the standards have been raised since the units were built. We now discover that the Wherry units that once were demanded by the Air Force are now substandard. Many of the people that the Air Force says are inadequately housed would not be eligible for Capehart housing.

15. Although the officials at the airbase can claim isolated instances where housing is inadequate, there are no men living in tents and few in trailers. Many of the folks in the trailers live in them because of choice. Certainly many civilians in this country are inadequately housed. This problem is not only one found by the military.

16. We have discussed the fact that cooperation between the base and local builders, contractors, and suppliers has been almost nonexistent. Had there been such cooperation, temporary housing shortages in the past might easily have been eliminated.

17. We have pointed out that there has been no opposition to the first 616 Capehart units but that many people in the community feel that before additional units are authorized there should be some lapse of time to see what effect if any this new housing will have on the community.

18. We have shown that local builders have done a good job in the area for in the past 5 years they have constructed 1,719 housing units. We believe they will continue to supply adequate housing in the future.

TO THE COMMITTEE OF THE U.S. SENATE AND TO CONGRESS

We earnestly request that the application of the Defense Department for 800 additional units of Capehart housing for Offutt Air Force Base at Omaha, Nebr., be denied and that the 300 units now a part of the bill passed by the House of Representatives be striken from that measure.

Senator CANNON.. We will now call on Mr. Fraser.

TESTIMONY OF W. C. FRASER, ATTORNEY, OMAHA, NEBR Mr. FRASER. Gentlemen, my name is W. C. Fraser of Omaha. I am a lawyer by profession, but I am not appearing here as a lawyer