from The Cooperative League of the USA as a "wholly-owned non-profit subsidiary" of The Foundation for Cooperative Housing. I understood from your testimony on August 11th that FCH Company, Inc. is a profit-making organization. Please clarify this matter. Thank you for your assistance. THOMAS G. MORRIS, Chairman, Subcommittee on Communities. FOUNDATION FOR COOPERATIVE HOUSING, Mr. THOMAS G. MORRIS, Chairman, Subcommittee on Communities, Joint Committee on Atomic Energy, Congress of the United States, Washington, D.C. DEAR MR. MORRIS. This is in reply to your recent letter addressed to Mr. Philip R. Thompson, Southwest Representative of the FCH Services, Inc. In answer to your first three questions, we are pleased to submit the following information which we furnish to the Federal Housing Administration in each case. Sponsoring Group: The Foundation for Cooperative Housing, Inc., is a nonprofit membership organization which received its Charter on October 29, 1952. pursuant to Title 15 of the laws of the State of New Jersey. It is a member of the Cooperative League of the U.S.A. Sponsor's Purpose: The purpose for which the Foundation for Cooperative Housing was formed is stated in its Charter to "conduct scientific research into all phases of housing designed to accommodate adequately persons of average or lower-than-average income and particuJarly all phases of cooperative housing, for the purpose of improving the quality of such housing, increasing the availability thereof, and decreasing the cost to the occupants thereof, and to disseminate the results of such research to all persons interested therein." Sponsor's Motivation: The motivation of the sponsoring group with respect to the proposed project is to benefit the consumer and to provide housing at lower charges than would otherwise be available. In more than 150 cases, the Trustees of the Foundation for Cooperative Housing have provided the initial sponsorship for cooperative housing developments organized under Section 221 (d) (3) or 213 of the National Housing Act. Wherever necessary, the Trustees have received a certification by the Federal Housing Commissioner that the cooperative they were sponsoring was a consumer-sponsored cooperative eligible to secure Federal National Mortgage Association permanent financing when private financing is not available at comparable cost, or to receive whatever other special benefits a consumer-sponsored cooperative was entitled to obtain. These past determinations confirm FHA's approval of such consumer cooperatives as non-profit mortgagors eligible under Sections 221 (d) (3) or 213 of the National Housing Act. Organization of Mortgagor Corporation: The proposed mortgagor corporation will be organized as a non-profit consumer cooperative, utilizing the FHA Model Form of Articles of Incorporation, by five Trustees of the Foundation who will be designated to serve as the initial Board of Directors of the corporation. They will serve without compensation or remuneration of any kind. Non-Identity Between Cooperative and Developers: A complete non-identity of interest is maintained in the transaction between : (a) The Foundation, its Trustees, its wholly-owned operating subsidiaries, the FCH Services, Inc., and FC Housing Company, Inc., and Krooth & Altman (including any local counsel retained by them) all of whom act on behalf of the cooperative on the one hand; and (b) builder, land owner, counsel for each, and the others who act on behalf of the developers of the proposed project, on the other. Description of Program: The arrangements for the development of the proposed project from the standpoint of the cooperative mortgagor and FCH Services, Inc., are as follows: (a) The land for the project is to be purchased by the proposed mortgagor corporation at a price not to exceed its fair market value as established by FHA. (b) The FCH Services, Inc., and associated counsel, Krooth & Altman, (c) The financing of the project is contemplated under Section 221 (d) (3) (d) The management of the project will initially be by the FCH Services, Sources of Income for the Foundation and FCH Services: The Foundation for The working capital of the FCH Services, Inc., was provided by some of the The proposed mortgagor corporation will receive no direct financial subsidy Officers and Trustees of the Foundation and FCH Services: The Trustees of the non-profit Foundation, together with their affiliations for Shirley F. Boden: President, Association for Middle Income Housing, Inc., Wallace J. Campbell: President, Foundation for Cooperative Housing, 1012- Eric Carlson: Chief of the Housing Section of the Housing, Building and Winslow Carlton: Chairman of the Board, Group Health Insurance, Inc., 221 Jack T. Conway: Executive Director, Industrial Union Department, AFL-CIO, Howard A. Cowden: Consultant, Nationwide Mutual Insurance Company, Rev. Dr. Henry Hitt Crane: 671 Edison Avenue, Detroit, Michigan; President, John W. Edelman: Acting President, National Council of Senior Citizens, Inc., Rt. Rev. Msgr. Léo A. Geary: Former Chairman, Buffalo Municipal Housing Abimael Hernandez: Administrator, Puerto Rico Cooperative Development Ad- Lee F. Johnson: 2401 South Dahlia Lane, Denver, Colorado 80222; Administra- Reginald A. Johnson: Administrative Director of the National Urban League, Joseph D. Keenan: International Secretary of the International Brotherhood Nathaniel Keith: President, National Housing Conference, 1250 Connecticut John D. Lange: Executive Director, National Association of Housing and Re- Ira S. Robbins: Vice Chairman, New York City Housing Authority, 250 Broad- Boris Shishkin: Secretary, Housing Committee, American Federation of Labor Clarence S. Stein, F.A.I.A.: One West 64th Street, New York, New York 10023; Dwight D. Townsend: Washington Director, The Cooperative League of the Rev. C. T. Vivian: Director, Urban Training Institute for Christian Mission, Jerry Voorhis: 53 West Jackson Boulevard, Chicago, Illinois 60604; Former Edward F. Wagner: Vice President and General Manager, Nationwide De- John O. Walker: 3200 Circle Hill Road, Alexandria, Virginia; Formerly Gen. Julian H. Whittlesey, F.A.I.A.: Architect, Engineer and Planner; Consulting Roger Willcox: President, FCH Services, Inc., 322 Main Street, Stamford, Name PRINCIPAL OFFICERS AND BOARD MEMBERS OF FCH SERVICES, INC. Title Address 10 Gracie Sq., New York City. 36 Dock Rd., South Norwalk, Conn. 1802 Rollins Dr., Alexandria, Va. 9910 Tracy, Kansas City, Mo. 210 Puritan Bldg., Kansas City, Mo. 69 West Washington, Chicago, Ill. 2600 North Saratoga St., Tempe, Ariz. With reference to the fourth unnumbered paragraph, we are pleased to furnish the following information. When we learned of the AEC disposition program for apartment dwellings at Los Alamos including a legal priority to a housing cooperative, we sent a representative to confer with residents and interested groups in Los Alamos. Our purpose was to determine whether eligible persons were interested in joining a housing cooperative which could qualify for a priority as a purchaser of apartment buildings in Los Alamos. We found that many residents were interested in joining such a cooperative. We then conferred with officials of the Federal Housing Administration to ascertain whether it would be prepared to provide the mortgage insurance needed under Section 213 to finance the acquisition of apartment buildings by a housing cooperative consisting of residents. FHA indicated that it was desirous of providing such mortgage insurance as contemplated by the applicable Federal statutes. In view of these facts, an office was opened in Los Alamos by FCH Services, Inc. ("FCH"), the wholly-owned subsidiary of The Foundation for Cooperative Housing ("Foundation"). The general complexity of multifamily housing programs and financing has demonstrated that it is unwise for amateurs to undertake such programs involving cooperatives. Competent technical services are needed from those who have had experience with successful cooperative programs. Since there were few experts and guidelines for the establishment of sound cooperatives, the Foundation was organized over 15 years ago to undertake the task of initiating and sponsoring cooperatives to develop or acquire housing communities for occupancy by members. To provide necessary services in the development of cooperative housing programs and the conduct of membership sales programs, FCH Services, Inc. (FCH) was organized as a wholly-owned subsidiary which would operate on a nonprofit basis. FCH is the operating arm of the Foundation. It has assembled a staff of specialists in all aspects of cooperative housing, so that it can provide the technical knowledge and experience which is necessary to help assure that cooperative housing programs are efficiently and economically developed and soundly managed. FCH has helped organize, manage and maintain cooperatives in over 24 states. Since its inception, the Foundation and FCH has assisted in the development of more than $350 million of cooperative housing projects in the United States. All of these projects are owned and controlled by the members. The payment record on cooperative mortgages under Section 213 is the best of any program under FHA. On the cooperative program for lower income families under Section 221(d)(3), there has not been a single default in any cooperative mortgage insured by FHA. This success of cooperatives is due to many factors, including the basic advantages of cooperatives. Through cooperative housing, a family can achieve many of the advantages of both home ownership and renting while avoiding the disadvantage of either. Thus, in a cooperative, a family actually pays only its proportionate share of what it costs to own and operate the project. In this respect and in allowable deductions for income-tax purposes, it is like individual home ownership. At the same time, when a family needs to move to another city, it can do so almost as easily as if it were simply renting a home. A cooperative usually handles the resale for a withdrawing member at a charge which covers only the actual costs of the services. These costs are nominal since it does not involve new title examinations and insurance, new financing or brokerage fees that are involved in individual home sales. The housing cooperative provides members the same freedom from maintenance worries as rental housing, since the cooperative customarily handles all major repairs, insurance and maintenance of the common grounds and facilities. There is a special advantage in a cooperative, since its members exercise a large measure of community control which assures that their neighborhood continues to be a pleasant, safe and decent place to live; also, that it provides many benefits to its members besides good housing, such as recreational, educational and other group activities of the cooperative. With respect to the fifth unnumbered paragraph, we are pleased to furnish the following information. Although FCH was organized under the General Stock Corporation law of the State of New York in order to get the broader powers necessary for its operation, FCH has always been operated on a nonprofit basis. In its 15 years of operation, it has not made profits from its operations and does not intend to. Its charges for its services are computed on a cost-for-services basis. Moreover, if FCH were ever to derive a profit from its operations, its Certification of Incorporation provides that any such profits are to be paid only to such nonprofit organization as is the stockholder of FCH, namely the Foundation for Cooperative Housing. It further provides that no dividends are to be paid to any other stockholder or person, except to a nonprofit organization which owns the stock of FCH. The stock of FCH is owned by the Foundation for Cooperative Housing which was organized as a nonprofit corporation to undertake studies and educational work and otherwise assist in developing a cooperative approach to home ownership for families of moderate income. FCH supports itself with fees approved by FHA earned from services which it renders to housing cooperatives; such fees are computed on a basis to reimburse FCH for its costs. As stated above, FCH has not earned any profits since the time of its creation. Nor are there any large indirect financial benefits to those involved in FCH or the Foundation. In initiating and sponsoring cooperatives, the Trustees of the Foundation serve without compensation. In providing services and technical assistance. FCH has a staff who are paid salaries comparable to those of the Government. Even though the volume of FCH's cooperative housing activities has exceeded $60 million in each of the past couple of years, its highest salary is $25,000 which is paid to its President, Executive Vice President and one Vice President. This is less than the salary for comparable positions in the Federal Government. Correspondingly, as to its other employees who number about 200, they are paid at classification rates comparable to those in the Government, based upon the duties and responsibilities of each position. Such compensation recognizes the public-service character of FCH. If there is any additional information you desire, please be in contact with us. Sincerely yours, WJC:jmb WALLACE J. CAMPBELL, President. Mr. THOMPSON. I would like to read parts of these letters, not in their entirety, but parts which I think should be reviewed at this time. Representative MORRIS. Certainly, but they will appear in full in the record. Mr. THOMPSON. Fine. Thank you. |