CONGRESSIONAL RECORD -- SENATE

August 11, 1966

Page 19060

Mr. JAVITS. Madam President, I send an amendment to the desk.

The PRESIDING OFFICER. The amendment will be stated.

The legislative clerk read as follows:

On page 6, after line 21, insert "That section 101(b) of the Housing and Urban Development Act of 1965 is amended by inserting after the first sentence the following: 'Such term also includes a private nonprofit corporation or other private nonprofit legal entity, a limited dividend corporation or other limited dividend legal entity, or a cooperative housing corporation, which constructs, owns and operates rental or cooperative housing financed under a State or local program providing assistance through loans, loan insurance, or tax abatements, and which is approved for receiving the benefits of this section'."

Mr. JAVITS. Madam President, I wish to explain this amendment, as follows. This concerns one of the questions I was about to ask the Senator from Maine.

In the State of New York and, I understand, in the States of Illinois, Pennsylvania, Massachusetts, and Connecticut also, are many multifamily structures which have been constructed by limited dividend housing corporations, cooperatives, and similar organizations. In New York we have a State program called the Mitchell Lama program, which makes available money at a much lower rate of interest than is otherwise available in the way of mortgages to cooperatives, and so forth.

The rent supplement program -- I do not know what the committee's explanation would be -- has no substantive base for making the distinction and does not allow the rent supplement to extend to structures of this character. In order to qualify them, without in any way compelling the housing authorities to use the rent supplements for this purpose, but just to qualify them legally so that they could be considered for that purpose although they may not necessarily be included, I have offered this amendment.

The question I was about to ask the Senator from Maine is this: Is there any reason why they should not be eligible? They may not get it. They may not find the program applies to them, but at least they ought to be eligible.

Mr. MUSKIE. May I say to the Senator from New York, first, with respect to the mandate of the floor manager of the bill, that when the Senator from Alabama [Mr. SPARKMAN] turned the bill over to me, he said that I would undertake to answer all questions. I can only say to the Senator, and to the Senate as a whole, that I will only try to answer questions to which I have an answer.

My answer to this question is the only one which I can give explaining the position of the committee on the Senator's problem. The committee felt that this would open up the rental supplement question and that we ought to avoid doing so in light of the controversial aspect of that question in the last year and a half. Beyond that I could not comment on the question of the Senator as to why these projects are not eligible.

I can attempt to get a more informed answer to the question of the Senator before we dispose of the bill, if he will give us time.

Mr. JAVITS. I will be happy to give the Senator the time to do so. I shall pass on to the next question which is the question which I asked the Senator before, if the Senator is ready to answer now. That question is why the cooperatives are not eligible because of their actuarial experience, and notwithstanding our own decision that that was the right thing to do

The PRESIDING OFFICER. The Senate is not in order. The Senate will be in order.

Mr. JAVITS. We made that decision in 1965 in the Committee on Banking and Currency. Why is it that a lower premium rate has not been extended by FHA to these cooperatives even now?

Mr. MUSKIE. As I understand the position of the agency, with which the committee itself is not in agreement, it is that all of the experience of some of these programs has been not favorable from an actuarial point of view, that there have been failures, and the agency would prefer to retain discretion and deal with all programs under one premium rate rather than categorize them on the basis of their favorable or unfavorable experience or the nature of the risk involved.

This is the explanation, and the committee chose in this case to continue the flexibility of the agency to deal with the problem.

Mr. JAVITS. It is a fact that we gave the mandate to treat these premises in actuarial experience separately. They have not done it.

In 1965 we came to the conclusion that these cooperatives should be considered separately but we did not mandate the reduction on the agency.

I want to be fair with the committee. I served on the committee. I wish to serve notice now that on the next housing bill I will move to amend it to mandate the one-fourth of 1 percent. We have tried to make it clear to the agency how we felt. We authorized them to keep separate the insurance funds for this program.

As the colloquial saying goes, they apparently cannot take the hint. It seems clear to me that nothing is going to happen unless Congress mandates it. A large prairie fire can be lit among the coops. When we have before us the next housing bill, whenever that may be and it may not be too far off now, it will be my intention to move to mandate the one-fourth of 1 percent premium.

This is not a satisfactory way to handle the matter. The agency should have flexibility, but the agency misused its flexibility to cause its inflexibility in defiance of the views of Congress. I do not think that that is playing the game.

So most reluctantly I will make an effort to make them do it. The experience has been exemplary.

If, having expressed our will, we are not going to reward people who have had such excellent experience with mortgage insurance, we are not rewarding that kind of experience and success. There is no alternative left.

I hope that the committee will face the FHA with this situation. We have done it before but I must tell the Senator that I think that reasonable patience is about at an end and the matter has to be brought to a showdown.

I can assure the Senator that I am going to do everything that I can to bring it to a showdown here and in the other body. I hope the committee will make that clear if they go to the FHA, in the hope that they may handle the matter much more wisely than they have, by not responding to what was a very clear expression of congressional will a year ago.

Mr. MUSKIE. The Senator's persistence, I trust, will have a salutary effect on the disposition of the agency to consider this problem. I think that the Senator will find there is considerable sympathy in the committee toward his view on this problem. This discussion should raise the subject to the level of greater attention on the part of the committee when the matter comes up again.

Mr. JAVITS. On the rent supplement issue, may I point out that the amendment that I have sent to the desk in no way increases or changes all conditions of the rent supplement. It makes additional multifamily structures available for that kind of treatment as the administration decides is desirable.

It seems to me that to make more housing available as a matter of choice for the program is very constructive and in no way jeopardizes or embarrasses the program. On the contrary it gives the program a greater opportunity to do its job. If it is taken to conference and bugs are found in it I will understand if it cannot be done.

But as far as I know it is a very simple mechanical matter of broadening the opportunity for housing to which rent supplements will be applied.

There are many such structures in my State and in the various other States I mentioned earlier. There is no reason in logic why they should be excluded from the operation of the program, if for other reasons of criteria they could properly qualify.

Madam President, I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the roll.

The assistant legislative clerk proceeded to call the roll.

Mr. JAVITS. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. JAVITS. Madam President, I wish to state for the record, so that it will be clear for purposes of taking my amendment to conference, if it is agreed to, as I hope it will be, that the only entities to which the amendment applies are to private entities. These private entities, whether cooperatives or what we call limited dividend corporations or voluntary corporations, and occasionally trade unions and civic organizations in the State of New York, are for the benefit of a State mortgage institution which sells bonds for this kind of mortgage or makes a loan in a way to get them the lower interest rate. But the project is completely private. This is not public housing, State, municipal, or Federal. It is strictly private, except that it has the benefit of tax abatement and this pooling way of raising the mortgage funds in order to get a lower interest rate.

On that representation only lies the basis upon which I would ask the Senate to agree to my amendment.

Mr. MUSKIE. Madam President, let me say that the Senator has touched upon the point to which the committee was sensitive. We did not think that the rent supplement program should be anything but private enterprise. The Senator has clarified that point and therefore, on that basis, I am willing to accept the amendment and take it to conference.

The PRESIDING OFFICER. The question is on agreeing to the amendment of the Senator from

New York. The amendment was agreed to.