detached type of dwellings. The Greenmont Mutual Housing Corp. began operating the project as owner in December 1947. While the Administrator has expressed the feeling that this mutual is performing satisfactorily, it should be noted that it has been in operation for a very short time, and the subcommittee feels that no conclusion covering long-time operation of the organization is possible. The Administrator admits that the experience of the Public Housing Administration with mutual associations is limited and that it is therefore impossible to estimate the maximum number of units which can be successfully operated by a mutual-ownership corporation. Some of the factors determining the likelihood of success of such an organization are (1) the type of members, (2) quality of leadership, (3) kinds and diversification of employment, (4) location of the project, (5) economic stability of the locality, and (6) physical condition of the property.

At the present time a number of mutual-ownership corporations are contemplating the purchase of large projects and the Public Housing Administration is pursuing negotiations looking toward the consummation of contracts with these mutuals.

For information regarding the efforts made to sell a 2,600-unit project to a mutual-ownership corporation, see Appendix II for report on Board Creek Village project.

IV. PAYMENTS IN LIEU OF TAXES TO STATE AND LOCAL GOVERNMENTS

Section 306 of the Lanham Act, as amended, provides that:

The

The Administrator shall pay from rentals annua sums in lieu of taxes to any State and/or political subdivision thereof, with respect to any real property acquired or held by him under this act, including improvements thereon. amount so paid for any year upon such property shall approximate the taxes which would be paid to the State and/or subdivision, as the case may be, upon such property if it were not exempt from taxation, with such allowance as may be considered by him to be appropriate for expenditures by the Government for streets, utilities, or other public services to serve such property

The reason for this provision is, of course, very obvious and very simple. The Federal Government is exempt from taxation in any form by any of the States and their political subdivisions. However, the Congress recognized as far back as 1936 when it passed the Bankhead-Black Act (Public Law 11, 74th Cong.) that when an agency of the Federal Government builds a housing project in a locality the project adds considerable expense to the State and local governments which are required to furnish to the residents of the project certain State and local governmental services, such as schools, publichealth services, law enforcement. judicial services, public welfare, certain types of institutional care, etc. The addition of from 100 to several thousand families concentrated in one community places a heavy financial burden on the local government. As stated above, Congress recognized this problem 13 years ago when it enacted the Bankhead-Black Act, and this accepted principle of making payments in lieu of taxes was also extended to the war-housing projects through section 306 of the Lanham Act, as amended.

PROJECTS TRANSFERRED TO ARMY AND NAVY

Effects on local governments

Section 4 of the Lanham Act, as amended, provides that the Administrator of the Housing and Home Finance Agency may, upon

the request of the Secretary of the Army or the Secretary of the Navy, transfer war housing projects to the Department of National Defense when such projects would be permanently useful to the Army or Navy. Under this provision, a large number of projects containing thousands of dwelling units have been transferred to the Army and Navy.

However, the Army and Navy are not authorized to make payments in lieu of taxes on properties which they own, and once title to the projects passes from the Public Housing Administration to the Army or Navy, no further payments in lieu of taxes can be paid even though the same local governmental services are still required by the residents of the war housing projects. This has created some rather serious problems for some communities, particularly the smaller cities.

PROPOSED PAYMENTS IN LIEU OF TAXES ON CERTAIN MILITARY HOUSING H. R. 2979 and S. 1053

In order to correct this situation proposed bills (H. R. 2979 and S. 1053) have been introduced in the House and Senate to authorize the Secretaries of the Army, Navy, and Air Force to use funds derived from the rental and operation of the transferred war housing projects to make annual payments in lieu of taxes to States and their political subdivisions. Under the proposed bills, the payments would be approximately the same as would be paid if the property were not exempt from taxes. While congressional action of this nature would provide material relief to local political units, certain municipalities have pointed out that because of the relatively low valuation of public housing properties, revenues derived in this manner are frequently insufficient to meet the actual cost of services provided. Congressional action along the lines proposed in H. R. 2979 would appear to be urgent, even though inadequate.

The following list gives the names of cities, number of units transferred, dates of transfer, branch of service to which transferred, and the amounts of payments in lieu of taxes paid for the year preceding transfer of the war housing projects transferred from the Public Housing Administration to the Army and Navy:

The following list shows the location of additional war housing projects which have been requested for transfer to the Army or Navy. The number of units and payments-in-lieu of taxes for the last tax year are also shown:

As pointed out earlier in this report, most of the public war housing programed during the national defense period of 1940 and 1941 was of permanent construction and was designed and constructed to serve a long-term useful life in localities where there were strong indications that it would fill a post-defense or postwar need. This housing was of standard construction and was intended to remain on the same site throughout its useful life.

While definite plans for the ultimate disposition of this permanent war housing were not made before or during construction, it was generally understood that it would either be transferred to local housing authorities for low-rent use or would be sold to private purchasers or investors to take its place in the permanent supply of housing of the particular cities in which it was located. The subcommittee did not determine whether any commitments were made to local communities regarding eventual disposal plans for this permanent housing.

COMMITMENTS REGARDING DISPOSITION OF DEMOUNTABLE WAR

HOUSING

As the need for housing for defense workers increased, the Federal Works Agency, which was then responsible for the defense-housing program, let contracts for the construction of a considerable number of so-called demountable family dwellings. These demountable units were supposedly built to permanent standards but were so designed that they could be taken down and moved from one site to another.

The structural members of "demountable" dwelling buildings were fabricated so as to permit sectionalizing in units of 4-foot widths or multiples of 4 feet.

Many cities and localities were opposed to these so-called demountable dwellings because they did not always comply with local building code standards and zoning regulations. In many instances the opposition was so strong that the Federal Government agencies made written commitments to remove the demountable war housing after the emergency and in other cities claims are now advanced that similar commitments, although not in writing, were made to the local communities.

Whether or not such commitments were made in all instances or if the officials making such commitments had the legal authority to do so is difficult to determine at this late date. However, one fact does appear to be clear. The greatest and at times the bitterest local opposition to the disposal policies of the Public Housing Administration appears to arise in connection with the proposed sale of demountable dwelling units for continued on-site use. An example of this intense local opposition is given in the Appendix I of this report.

All early war housing, or defense housing as it was originally called, was of permanent construction. However, the critical shortage of materials and labor and the acute need for additional war housing after Pearl Harbor led to the amendment of the Lanham Act to permit the construction of housing that was far below standards. In recognition of the temporary nature of many of these wartime accommodations and the danger of their degenerating into slums if allowed to remain in use indefinitely, the Congress in 1943 added section 313 to the Lanham Act. This section provided, in part, as follows:

SEC. 313. The Administrator shall, as promptly as may be practicable and in the public interest, remove all housing under his jurisdiction which is of a temporary character, as determined by him

* * *

It was not until after the passage of this amendment that the "demountable" and truly permanent war housing were grouped together in the same category as "not temporary" war housing as distinguished from admittedly "temporary" war housing. Unfortunately, these two major groupings of types of war housing have come more and more to be spoken of as "temporary" and "permanent," and even within the Public Housing Administration itself, it appears that many officials and employees regard the "demountable" war housing units as being no different from truly "permanent" war housing units. This attitude, coupled with the urgent and constant pressure exerted on the agency during the past 2 years urging faster and faster disposition, has apparently caused the agency to attempt to sell "demountable" war housing projects for permanent on-site use in some areas which are opposed to their remaining permanently in use and where local officials claim that commitments were made to remove the demountable dwellings when they were no longer needed because of the emergency. On the other hand, there are instances where the FHA has made mortgage loan insurance commitments on demountable type dwellings and other instances where local housing authorities have requested the transfer of demountables for low-rent use.

For further information see appendix I for report on Wichita, Kans.