Alamos. The priority regulations for the disposal of the community property at Los Alamos were published by the Commission in the Federal Register on August 2, 1963. (10 CFR Part 130, Subpart B.) With respect to apartment houses the priority regulations provide as follows:

"(1) First Priority; any cooperative the membership of which includes a majority of the occupants of the apartment house in question;

"(2) Second Priority; any cooperative, the membership of which includes less than a majority of the occupants of the apartment house in question." In the Spring of 1966 representatives of the Commission and the Department of Housing and Urban Development began preparation for the offering of the apartment houses for sale under the priority regulation. On August 31, 1966, an information package on cooperatives indicating the conditions that would have to be met by cooperatives in order to qualify for the priorities was announced by the Los Alamos Area Office and copies mailed to occupants of all apartment units. In September a representative of the Cooperative Division of the Federal Housing Administration spent three days at Los Alamos providing information concerning cooperatives and responding to inquiries with respect to formulation of cooperative organizations. Early in October it was announced that the apartment houses would be offered for sale on October 21, 1966. However, on October 20 the proposed offering was postponed. The Deputy Area Manager of the Los Alamos Area office informed the Committee that this action was taken because of numerous complaints he received protesting the proposed offering. On October 25, Commissioner Wilfrid Johnson and General Manager Robert Hollingsworth visited the Los Alamos community and met with several individuals and groups of residents who were concerned about problems that had developed in the disposal program. Following that meeting this Committee was created. The Committee visited the community on December 12 and 13, 1966, inspected units of the various types of apartment houses and obtained background information on the proposed disposal of the apartment houses. The Committee announced the following as problem areas it had identified:

1. Dislocation that may be created by the large professionally-operated cooperatives.

2. The organization problems of the smaller cooperatives.

3. Lack of provision for priority sales to cooperatives composed of occupants of four-dwelling units or sales into condominium ownership, to the senior tenant or to the tenants jointly.

4. Lack of specific provision for short-term renters who are not in a position to undertake long-term commitments.

5. Lack of specific provision for non-project-connected occupants.

6. Complaints that insufficient authoritative guidance and advice on legal and financial assistance has been provided to individuals affected by the proposed sales.

The Committee returned to Los Alamos for a public meeting on January 12, 1967. In the meantime, the Board of Commissioners of Los Alamos County had conducted a survey among the occupants of the apartment houses. The surrey sought to determine the preferences of the occupants as to how the apartment buildings should be disposed of by the Commission. The Board of Commissioners has made the results of its survey available to the Committee. Commissioner Gursky, who met with the Committee, identified the concern of the Commissioners as being the need to resolve at an early date the insecurity that was prevalent in the community. The returns from the survey indicated interest on the part of the residents who responded in a variety of methods of acquisition. For example, of 328 residents who had responded (out of the 940 who were furnished the survey form) the principal preferences indicated were as follows: 89 indicated a preference for some type of cooperative ownership; 69 preferred condominium ownership; 59 preferred purchase by an entity of occupants of a building; and 37 preferred sale to the senior tenant.

The principal points made during the January 12 meeting by residents of the apartment buildings who were opposed to cooperatives were that:

1. The quadruplexes should be split into single family units and sold to the occupants in the same manner as the detached single family homes. 2. Condominium ownership should be available to occupants of quadru plexes.

3. Occupants of buildings were being forced to join proposed cooperatives against their will in order to avoid eviction.

4. Occupants of apartment houses were being discriminated against in comparison to occupants of detached single family units because they

were not being given an opportunity to purchase their housing units, in addition, they would be subjected to rent increases when their buildings were sold to investors unless preventative action was taken. Representatives of cooperatives complained (1) that while they had complied with the requirements of the Act and the Commission's regulations they were being subjected to an unreasonable delay in the purchase of the units they were interested in; and (2) that the requirement of the Act, namely, that a cooperative have a project-connected member for each housing unit it planned to acquire was unreasonable.

The Board of County Commissioners also recommended correction of an inequity stemming from the wording of the Act which made it impossible for a cooperative to qualify for a priority purchase if any of its members were not project-connected persons. Retired persons and widows of former project-connected persons do not so qualify although they did qualify under other provisions of the Act for purchase of detached single family units. The Committee has been informed that there are less than twenty known non-project-connected persons occupying apartments and in each of these cases the person is either a widow or a retired project-connected person.

Representatives of the Board of Education expressed their concern over the possibility that in the future there might not be sufficient rental housing of a suitable type available for the approximately 55 new teachers who require rental housing each Fall.

There was also dissatisfaction expressed over the statutory requirement that a cooperative have at least five members. As a practical matter this meant that the residents of two quadruplexes would have to band together in order to form the minimum acceptable cooperative. In addition, dissatisfaction was expressed over the FHA requirement that in order to qualify for FHA insurance a cooperative would have to demonstrate that it had established an adequate management program.

The apartment house disposal program which was adopted based on the provisions of Public Law 87-719 has been indefinitely postponed. The Committee was informed that Los Alamos Community Homes, Inc., a cooperative, was budgeting on the basis of ultimately having a membership of 600. The Committee was also informed of 13 other cooperatives in various stages of formation with an expected total membership of 160. If all of these cooperatives had succeeded in purchasing the apartment units represented by their membership approximately 75% of the 1108 apartment housing units would have been in cooperative ownership. A significant feature of the apartment house disposal program was the priority procedure established by the Commission. Under that procedure a cooperative could qualify for a first priority on an apartment building by demonstrating that its membership included a majority of the occupants of the apartment property. However, the cooperative could not acquire that property unless it could demonstrate that it had members for each housing unit in the apartment property and, under the provisions of the law, all members had to be project-connected persons. This could have led to dislocation of residents in apartment house units who did not wish to join the cooperative or who did not qualify as "project-connected persons"; for example, retired persons, widows, or persons not regularly employed for more than 20 hours a week. The dislocation problem could have been greatly aggravated by the second priority for which a cooperative could qualify under the Commission regulations. Under the second priority it would have been possible for a cooperative to recruit project-connected persons as members and establish its right to any apartment property not acquired under the first priority procedure. This meant, for example, that four residents of a quadruplex who did not wish to become members of a cooperative could be forced out of their apartment units. This could occur under a second priority if a cooperative decided it wished to own the apartment property they occupied and could demonstrate it had four project-connected person members who had signed occupancy agreements under which they agreed to occupy the units in the quadruplex in question. Because residents of apartment units occupy them under month-to-month tenancies they could be evicted by the cooperative following 30 days' notice.

The potential for dislocation of residents in this program seems excessive in view of the several objectives of the Atomic Energy Community Act.

From all information now available, it seems clear that there are diverse interests competing for the future use or ownership of the multifamily housing at Los Alamos. These include:

1. Those who want to own the apartment premises they now occupy as tenants. They feel an injustice is being done in providing them no alternative to joining a cooperative. They desire the same treatment accorded purchasers of single and duplex houses.

2. Occupants organizing small cooperatives.

3. Members of large cooperatives which believe they are fully qualified under the original sales procedures and are objecting to further delay.

4. Senior tenants of apartments who urge that they be afforded the same rights as senior tenants of duplexes.

5. Those interested in the continued existence of rental property at reasonable rates. This group includes individuals as well as the Board of Education and the major employers who are concerned with housing for newlyarriving employees.

ANALYSIS AND PROPOSED PROCEDURE

The primary objectives of the Atomic Energy Community Act of 1955, as amended, were to terminate Government ownership and management of the communities in an expeditious manner and to dispose of property with a minimum of dislocation. In addition, with respect to Los Alamos, the report of the Joint Committee on Atomic Energy to accompany S. 3580 which became Public Law 87-719 (Sen. Rept. No. 1792, 87th Cong., 2d Sess.) indicated that the authority to split duplex and other multi-family houses into single family units and to sell apartment houses to cooperatives was to provide a means of enabling a greater number of project-connected persons at Los Alamos to participate in home ownership.

These three objectives can overlap and one may interfere with the others. The situation tends to become even more complicated when attempting to develop a program that will serve these objectives as well as the overriding purpose of serving the public interest by minimizing costs to the Government while launching a privately-owned community that will be as nearly normal, attractive and economically healthy as circumstances permit.

What is needed is a disposal program that will achieve an acceptable balancing of the objectives of the Act, namely, expeditious disposal, with a minimum of dislocation of residents and resulting in as much resident home ownership as possible.

It is unfortunate that the high hopes for splitting quadruplexes failed to materialize. The Committee was impressed with the interest expressed by residents in splitting these buildings and if that could have been done some of the present problems would not have developed. However, the Committee is satisfied that the decision in 1963 not to split these buildings was correct. Necessary modifications would have been impractical and prohibitively expensive. The understandable disappointment over that decision was followed by a realization that the procedures adopted under which cooperatives could purchase apartment buildings on a priority basis could result in the eviction of apartment unit residents who could not or did not wish to join cooperatives. One of the main objections to the proposed disposal plan then was the lack of alternative choices.

In view of this concern, the diverse interests competing for the apartment housing units (see the end of the preceding section) and the objectives of the Act, the Committee believes that a procedure can be adopted which will: (a) pursuant to the Act provide an acceptable balance among expeditious disposal, minimizing dislocation of residents and maximizing home ownership and (b) provide a choice of methods of home ownership as well as reasonable expectation of more future rental units.

While it is possible to achieve some more realistic balancing of the objectives of the Act and some alleviation of the matters complained of by the residents within the framework of the present Act a much improved disposal program could be achieved with a few amendments of the Act.

The Committee believes the following program which it recommends would be such a program:

1. Extend to each occupant (defined in Section 21 g.) of an apartment property (apartment sales lot), at the time it is offered for sale, a priority interest in its purchase (by extending this to occupants, the current discrimination against retirees and widows of project-connected persons is eliminated);

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2. Authorize assignment by an occupant of his priority interest to (i) another occupant of the sales lot; or (ii) an entity (as used herein this includes a group of occupants who would purchase as tenants in common) composed solely of occupants of the sales lot, project-connected persons and other persons residing in the community. (This will preclude more than one outstanding assignment.)

3. Award tentative priority of purchase to that occupant or entity demonstrating that he or it represents the priority interest of more occupants of the apartment sales lot in question than any other occupant or entities to be determined by lot.

4. Award final priority of purchase to that occupant or entity granted tentative priority of purchase provided that (a) in the case of an occupant he demonstrates that after receiving tentative priority of purchase he has offered to accept assignment of priorities from all other occupants on the same terms and that he represents the priority interests of occupants of 70 per centum of the housing units in the apartment sales lot and (b) in the case of an entity it demonstrates that after receiving tentative priority of purchase it has offered membership or association to all occupants of the apartment sales lot in question and that it represents the priority interests of occupants of 70 per centum of the housing units in the apartment sales lot.

5. Within 30 days of the award of final priority of purchase (as provided in 4. above) any occupant of the apartment sales lot whose priority interest is not represented by the occupant or entity receiving the final priority of purchase may request from the Commission (or its agent) a lease to the housing unit he occupies, such lease to extend for not more than 15 months from the date the property was first offered for sale. The Commission at the time of closing the priority sale shall execute such a lease if so requested. (The Commission would, in a manner similar to that provided in Section 56 of the Act, guarantee the lessee's performance to the purchaser.)

6. In the event the occupant or entity awarded tentative priority of purchase (as provided in 3, above) is unable to qualify for award of final priority of purchase under 4, above, or having so qualified is unable to consummate the purchase within such time as the Commission prescribes, his, or its, tentative rights will terminate and all assignments of priority interests thereto will expire.

7. At this time, a second priority offering will be made in accordance with the procedures 2 through 6, above, except that the final priority award will not be made to an individual but will be made only to an entity which has demonstrated that its members (who need not be occupants) have agreed to occupy at least 70 percent of the housing units of the apartment sales lot.

8. In the event the occupant or entity awarded tentative priority of purchase pursuant to 7. above is unable to qualify for final priority of purchase or having so qualified is unable to consummate the purchase within such time as the Commission prescribes (or in the event no occupant or entity qualifies for tentative priority of purchase) the apartment sales lot in question should be offered to the highest bidder in a manner consistent with Sections 53 b. and 53 c. Providing further alternative procedures would be inconsistent with the objective of expeditious termination of the Government's interest in the property.

9. Finally, a person who has exercised a priority in the purchase of a housing unit at Los Alamos would not be permitted to consummate a priority purchase under the program outlined in paragraphs 1 through 8 above, nor would such a person be considered in qualifying any occupant or entity for a priority award.

ADVANTAGES OF THE PROPOSED PROCEDURE

The Committee believes a procedure such as that described above will accommodate in the greatest degree the objectives of the Act and at the same time provide the greatest acceptable degree of choice and flexibility in methods of ownership to the occupants of apartment properties. It is apparent that under the first round (through step 4. above) "occupants" will enjoy control of their future. This will serve the statutory objective of minimizing dislocation of residents. If "occupants" permit step 7. above to be invoked then the objective of additional home ownership by project-connected persons is served. Dislocation of present residents is in any event minimized by the provision under which they may request a lease from the Commission on their housing units for a period of not more than 15 months from the date the property was first offered for sale. At

the same time the entity or occupant purchasing would be guaranteed performance of the lease by the Commission. It is intended that this procedure parallel that provided in Section 56 for junior tenants in unsplittable duplex buildings except for the time of entering into the lease and the term of the lease. However, neither the lease nor the guarantee would be available in the event of sale to the highest bidder on the theory that such a purchaser will continue to operate the property as rental property.

Moreover, this procedure would present occupants of apartment sales lots with the maximum flexibility in determining how the sales lot would be purchased. For example, two or three occupants of a quadruplex could assign their priority interests to one occupant and he could purchase as an individual. Or, they could assign their priority interests to a corporation they formed or to a cooperative which was large, medium or small. They could even assign their priority interests to a corporation they formed which could, after purchase, take the necessary steps to convert the property to condominium ownership if that was the desire of the occupants and permissible under State law.

Finally, as only 70 per centum of the occupants of an apartment sales lot acting in concert would be required to effect a purchase on the first round and only 70 percent of the housing units (including the initial qualifying occupants) need be represented on the second round (paragraph 7. above) it is possible that a substantial number of rental units will remain in the apartment properties so purchased.

It is intended that the 15 percent deduction specified in subsection 35 a., the deduction provided in subsection 36 d., the financing provisions of Section 62 and the indemnity provided in Sections 63 to 66 be applicable to any priority purchaser under this procedure (but not a high bid purchaser).

Allowing 70 percent of the occupants of an apartment property (or occupants plus project-connected persons) to obtain the full deductions for the entire property is comparable to the situation in which the senior tenant of an unsplitable duplex qualified for the full discount on both units. In addition, no occupant of an apartment building would lose his priority to share in the purchase until he had rejected membership in or association with the purchaser representing 70 per centum of the housing units in the property.

WHAT PROPOSED PROCEDURE DOES NOT DO

The Committee recognizes that the procedure described above does not fully meet the wishes expressed by a number of the residents. In particular, it does not provide for splitting of the quadruplexes for the reasons that have been mentioned, nor for sale of individual units into condominium ownership. The fundamental difference between the latter type of sale and all others is that it cannot be a simple transfer of an entire sales lot from one owner, the Government, to another, the entity which assumes responsibility for the entire sales lot. Each housing unit and all common areas in each apartment property that might be sold into condominium ownership would have to be platted. From the viewpoint of the public interest this could be time consuming and quite expensive. In addition, under New Mexico law the Government would have to prepare and record a declaration identifying the property to be converted to condominium ownership. With the declaration the Government would have to prepare and record a set of by-laws which would establish rules for the association of condominium owners. Finally, the Government would be forced into continuing partial ownership of a structure until all units were sold. This alone would almost certainly not contribute to expeditious termination of Government ownership in the community. Also, owners in condominiums have to join with other such owners in the formation of management procedures, applicable to common areas, which are acceptable to the financing agency. The problems of selling property into condominium ownership are further complicated by the minimum number of units required under State law and the availability of FHA insurance only with respect to new construction, substantial rehabilitation or property now or formerly under a FHA insured mortgage. For all these reasons the Committee does not favor and has not provided for, sale by the Government into condominium ownership. This does not preclude residents from acquiring an apartment sales lot and thereafter, if they so wish, converting it into condominium ownership.

The third procedure with support in the community that the Committee cannot recommend is the sale of each quadruplex to the senior tenant. This was the procedure employed in disposal of the unsplittable duplexes. It accomplishes the