[Legal Problems in the Housing Field] [From the U.S. Government Publishing Office, www.gpo.gov] HOUSING MONOGRAPH SERIES, NO. 2 LEGAL PROBLEMS IN THE HOUSING FIELD PART 1. PRIVATE HOUSING LEGAL PROBLEMS BY HORACE RUSSELL PART 2. LEGAL ASPECTS OF PUBLIC HOUSING BY LEON H. KEYSERLING A TECHNICAL MONOGRAPH ON ONE PHASE OF HOUSING PREPARED FOR THE INDUSTRIAL COMMITTEE OF THE NATIONAL RESOURCES COMMITTEE The National Resources Committee Assumes No Responsibility For the Views and Opinions Expressed Herein UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1939 For sale by the Superintendent of Documents, Washington, D. C. Price 25 cents FOREWORD The general business depression which dominated American life following the boom years of 1926-29 was characterized by a cessation of residential building activities along with the decline of other business. Attempts were made from 1931 on to produce more healthy conditions, so that a revival might come about. Private industry alone, Government alone, and Government and industry together—all have attempted to raise the volume of home construction. All these efforts have resulted in progress but still fall far short of actually producing the number of new houses needed. The National Resources Committee has been thrown in contact with these problems from time to time in connection with various studies.1 During 1936-37 the Committee felt the necessity for securing more detailed information concerning a number of phases of the problems closely related to housing. Technicians in the various branches of the Government were asked to present monographs touching these particular problems. Naturally the men who prepared these documents drew on their own experience and presented their personal views which in no way represent the opinions of the agencies with which they are connected. It was intended originally to try to develop from these individual contributions a comprehensive report on the subject of housing. The natural variety of opinions and approaches to the subject as a whole has made a single report difficult to complete at the present stage of the study. Because, however, certain of the individual contributions are timely in nature and also afford valuable material for technicians in the field, it is felt desirable to make some of them available as soon as possible in the form of technical reports. It should be held clearly in mind that these are individual ex 1 Cf. Technological Trends and National Policy. Our Cities—Their Role in the National Economy, Farm Tenancy, Problems of a Changing Population, and Consumer Incomes in the United States, etc. pressions and that the opinions stated are those of the authors and that the National Resources Committee is not responsible for such opinions. Part I of the document presented here was prepared by Mr. Horace Russell, General Counsel for the United States Building and Loan League. It discusses some of the underlying legal difficulties which private builders have to face. Federal legislation passed with the aim of stimulating residential construction by private enterprise has produced other problems which are not discussed in this section. Part II of this document was prepared by Mr. Leon H. Keyserling, Deputy Administrator and General Counsel of the United States Housing Authority, and is an analysis of the United States Housing Act and the complementary State legislation, together with a discussion of the legal problems raised by this public housing program. The line of demarcation that divides policy and law and makes a question one of policy or one of law is a faint line indeed. All policy questions have their legal implication. Likewise, all legal questions have their policy aspect. In the following pages, there is frank encroachment upon the field of policy because it is impossible to discuss legal problems without reference to their basis in fact and policy. In some instances, there is analysis of the legal problems to be solved in order to implement what appears to be accepted policy. In other cases, proposals are made for the reform of cumbersome legal procedures which tend to defeat public policies already enunciated in law. To deal with some matters, new legislation is suggested. Since the objectives of the Federal housing program cannot be fully realized without complementary action by the States, and until the legal difficulties in the way of public housing undertakings have been resolved, these two studies by Mr. Russell and Mr. Keyserling are being made more generally available in the hope that they may contribute to the practical solution of these problems. Mr. Frederic A. Delano, Chairman, Advisory Committee, National Resources Committee, Washington, D. C. Dear Mr. Delano: October 22, 1938. The Industrial Committee transmits herewith the second of a series of monographs on housing prepared at the request of the President by numerous collaborators from various agencies and assisted by a technical staff. A study in this field was recommended by the Industrial Committee last spring, in connection with investigations of the larger problems of the construction industry. A subcommittee, consisting of Thomas C. Blaisdell, Jr., Lauchlin Currie, and C. R. Chambers (resigned Aug. 1, 1937), outlined the proposal and has given advice in the preparation of the reports under Mr. Blaisdell’s direction. Sincerely yours, Lauchlin Currie Charles W. Eliot, 2d Thomas C. Blaisdell, Jr., Chairman Mordecai Ezekiel Isador Lubin Leon Henderson Gardiner C. Means Harry D. White hi LEGAL PROBLEMS IN THE HOUSING FIELD PART 1. PRIVATE HOUSING LEGAL PROBLEMS By Horace Russell1 Successful operation of Federal legislation in aid of private housing finance requires complementary action by the states. Analysis of state laws on mortgages, foreclosures, mechanics’ liens and methods of title proof indicates thè need for less expensive and cumbersome procedures. The diversity of such legislation hampers the development of a national mortgage market. State supervision of home financing institutions needs study, as do the levying and collecting of taxes. Federal Legislation to Facilitate Private Housing Prior to the passage of the Federal Home Loan Bank Act of 1932, the interest of the Federal Government in the financing of private housing was slight and sporadic. The Commissioner of Labor, for example, in 1893 made a survey of the building and loan industry at the direction of Congress.2 The War Finance Corporation, created in 1918, was authorized to make loans to building and loan associations, but only two loans in a total amount of $300,000 were made under this authorization. The United States Housing Corporation, another war-time agency, was created to build, for rent or resale, housing to accommodate those persons engaged in war industries. A number of problems resulting from the World War brought forth the suggestion of permanent Federal assistance for housing and housing finance. There was a shortage in urban housing, and rents were high. There was a shortage in long-term mortgage credit for purposes of home financing. A third problem was the unemployment incident to industrial and military demobilization. The Department of Labor felt that a possible solution of all three lay in making credit available to prospective home builders. If credit could be obtained, homes might be built, the shortage in homes diminished, rents lowered, and the unemployed put to work. Subsequently, the Department of Commerce prepared a bill to establish Federal Home Loan Banks, which would offer a credit reservoir for private home financing institutions. This bill was introduced by Senator Calder in 1919. Opposition centered on the exemption from taxation of the bonds of the proposed banks and on the competitive advantages which the proposal would give to building and loan associations. 1 Horace Russell is General Counsel for the United States Building and Loan League. When this manuscript was prepared, he was General Counsel of the Federal Home Loan Bank Board. ! For a discussion of the various ways in whicji building and loan associations have been favored by Federal legislation, see H. M. Bodfish, ed., History of Building and Loan in the United States (Chicago: U. S. Building and Loan League, 1931), ch. XIII. The bill failed of enactment although it was reintroduced in several succeeding congressional sessions. While Secretary of Commerce, from 1921 to 1928, Herbert Hoover developed an interest in the proposed Federal Home Loan Bank System. When a candidate for the Presidency in 1928, he pledged himself to sponsor legislation directed to this end. In 1931, he called the National Conference on Home Building and Home Ownership in order to arouse public support for the proposal and create a better understanding of the problems involved. This conference unanimously endorsed the proposal to establish a system of home loan discount banks, and in his message to Congress in December 1931 the President recommended the establishment of such a system. A bill to effectuate the recommendations of the President became law on July 22, 1932.3 It was just at this time that the full force of the depression was being felt. By March 1933, more than 500,000 families had lost their homes through foreclosure, and a million others were faced with the same fate. The same conditions that had brought about these results had prostrated the home financing institutions. Back of the collapse of home ownership and home finance were conditions more fundamental than the depression itself. The basic defects were in the mortgage structure and the sense of insecurity which those weaknesses gave both to home owners and to those whose small savings were invested in mortgages, directly or indirectly. The depression simply revealed the defects and showed the need of safeguard against panic in mortgage finance. There were eight main defects which undermined the mortgage system prior to 1932. First was the general use of short-term mortgage loans, which had to be refinanced every few years with high commissions and financing charges. Second was the general practice of lending only a small amount on the security of the 3 Federal Home Loan Bank Act, Public, No. 304, 72d Cong. 1 2 first mortgage, which necessitated junior financing with all the hazards to the borrower which that practice involved. Third was the general use of lump-sum rather than amortized mortgages, which necessitated the borrower repaying the entire amount of the mortgage at one time or refinancing it. Fourth was the prevailing high interest rates generally charged on all such mortgage loans in contradistinction to the low interest rates charged on railroad, public utility, and other types of long-term loans. Fifth was the absence of a steady market for mortgages as a preferred type of investment, due to the lack of facilities for insuring the repayment of mortgage loans and to the lack of a sufficient number of sound mortgage associations operating on a national basis, which would create a market for this type of investment. Sixth was the lack of any credit facilities for home-financing institutions from which such institutions could borrow in order to meet reasonable withdrawal requests of their investors during times of emergency and to meet the usual requirements of their borrowers. Seventh was the lack of any insurance facilities whereby shareholders and depositors in home-financing institutions might be assured of the repayment of their invested funds. Eighth was the absence of proper lending and appraisal practices and procedure and the impossibility of obtaining uniform, cooperative action among thousands of widely scattered local home-financing institutions. From the first stages of the depression, all these factors worked toward the demoralization of home finance and the destruction of home ownership among the masses of people of small and moderate means. The urgent task before the private and public authorities, however, when President Roosevelt took office, was to halt the accelerating deflation and thus stabilize the underlying situation. Only when that was done, would it be possible to correct the underlying defects in the structure of home finance. To deal with this situation, Congress set up the Home Owners’ Loan Corporation 4 as an emergency agency to refinance the thousands of mortgages upon which financial institutions would otherwise have been forced to foreclose. This agency saved the homes of over a million people, who were unable to meet the payments on their mortgages during the depression period. Over 3 billion dollars worth of mortgates were refinanced on a 12- to 16-year repayment basis, with amortized monthly payments that the mortgagor could easily meet. Congress also provided 300 million dollars to enable the Corporation to invest in shares or deposits of either State or Federal savings and loan associations. The work of the Home Owners’ Loan Corporation has been solely of an emergency character. A more National Resources Committee far-reaching and remedial influence on the mortgage structure has been exerted by the permanent Federal establishments, such as the Federal Home Loan Bank System, the Federal Savings and Loan System, the Federal Savings and Loan Insurance Corporation, and the Federal Housing Administration. The Federal Home Loan Bank System was set up pursuant to the Federal Home Loan Bank Act discussed above. This bank system provides a place where building and loan associations, savings banks, insurance companies and other institutions, lending upon the security of long-term, amortized home mortgages, may pledge their mortgage paper, and secure additional funds with which to make loans to home owners and meet the withdrawal requests of their investors. It performs a service for institutions dealing in home mortgages similar to that of the Federal Reserve System for commercial banks. This flexibility provides greater liquidity to all home mortgages and at the same time encourages financial institutions to make long-term, amortized loans which the borrowers can more easily repay. The legislation which set up the Home Owners’ Loan Corporation established the Federal Savings and Loan System. The purpose was to create a system of home mortgage lending and saving institutions, under regulation of the Federal Government, which would lend to individuals interested in building homes at the lowest rate of interest and under the most approved long-term amortized lending procedure. At the same time, it was hoped to offer the public sound institutions in which to invest funds which would later be used in the purchase or construction of a home. By August 31, 1938, charters had been granted to more than 1,350 Federal Savings and Loan Associations, which have assets totaling more than one billion two hundred million dollars. The Government has also provided for the insuring of shares and deposits in associations of the building and loan type through the Federal Savings and Loan Insurance Corporation.5 It is modeled after the Federal Deposit Insurance Corporation and performs for investors and depositors in savings and loan institutions the same function that the Federal Deposit Insurance Corporation does for bank depositors. By August 31, 1938, total savings accounts up to a maximum of $5,000 for each saver in more than 2,040 savings and loan associations are now insured. By this means, the possibility of another panic in this field of finance has been minimized. The Federal Government not only took the steps outlined above to assist private institutions in meeting the mortgage demands of the country but went further to stimulate the long-neglected modernization of homes «Home Owners’ Loan Act of 1933, Public, No. 43, 73d Cong. 5 Created by the National Housing Act of 1934, Public, No. 479, 73d Cong. Housing Monograph 3 and to provide for greater liquidity in the mortgage market by making possible the insurance of long-term, amortized mortgages, and the chartering of national mortgage associations by the Federal Housing Administration, created in 1934. Through the Federal Housing Administration, private institutions advancing money for modernization and repair were guaranteed against loss to the extent of 20 percent of their loans made to April 1, 1937. Some one and a half million modernization loans totaling approximately $543,000,000 were guaranteed up to that time. In February 1938, Congress renewed the authority of the F. H. A. to guarantee against losses on modernization loans. The reenactment, however, provided against loss only up to 10 percent of total loans and made other slight changes. Up to March 1, 1938, more than 215,000 home mortgages amounting to over 880 million dollars had been insured by the Federal Housing Administration. In February 1938, the terms of title II of the National Housing Act, under which mortgages are insured, were liberalized.6 The mortgage insurance limit was raised on single-family homes costing $6,000 or less from 80 to 90 percent of the appraised value of the property, and on single-family homes costing $10,000 or less to 90 percent of the first $6,000 of value and 80 percent of the remainder, which means, in effect, that the minimum down-payment required of a prospective home owner is reduced from 20 percent to approximately 10 percent of the sale price. The insurance premium was reduced on mortgages covering single-family homes costing $6,000 or less, the mortgages on which are insured before July 1, 1939, from the minimum of one-half percent authorized by the National Housing Act of 1934 to one-fourth percent. The insurance of mortgages on certain large-scale rental properties was authorized. The amendments of 1938 also permitted the insurance of mortgages covering property upon which there is to be constructed one or more multifamily dwellings, or a group of not less than 25 single-family dwellings under certain conditions. As amended, the act requires the insurance premium on all mortgages to be calculated on the basis of the “diminishing balance” of the unpaid principal instead of the original face value of the mortgage.7 Through all of this legislation, an effort has been made to remedy the long-existing defects in the mortgage structure by (1) making the long-term, amortized mortgage “the rule instead of the exception,” (2) making mortgages more liquid by offering rediscount and insurance facilities to private home finance institutions, and (3) bringing about uniformity in lending procedure. 6 Public, No. 424, 75th Cong. ’ The amendments to the housing legislation in 1938 also liberalized title III of the National Housing Act providing for the chartering and operation of national mortgage associations. For a discussion of these changes, see p. 27. However, in order effectively to carry out the private housing credit program embodied in the various Federal acts, many changes in State law will be required. For instance, the mortgage and foreclosure laws of the various States must be amended to provide a more simple, uniform, inexpensive, and expeditious procedure ; the mechanics’ lien laws of the various States must be amended to provide a more simple, definite procedure, which will facilitate rather than impede housing construction, and, at the same time, afford adequate protection to home owners as well as to contractors, subcontractors, architects, engineers, building material-men, and laborers; a more inexpensive, expeditious method of title examination or proof must be devised; the tax laws of the various States must be amended to prevent these laws from impeding the financing and ownership of homes; and provision must be made for more adequate State supervision of institutions making home mortgage loans so as to protect both investors and borrowers. A discussion of the ways in which State legislation should be amended to facilitate this Federal private housing credit program will be presented in the following pages. Mortgage and Foreclosure Law It has long been recognized that the costly, timeconsuming, and often unnecessary procedures required in many States by the mortgage and foreclosure laws have hampered mortgage lending and increased the operating expenses of mortgage institutions and, at the same time, have imposed a burden on borrowers by forcing the lenders to charge higher interest rates and lend a smaller amount on the security of properties than would have been necessary under more expeditious and equitable statutes. These procedures and the diversity between the mortgage and foreclosure laws of the various States have greatly impeded the flow of mortgage money across State lines, thereby fostering high interest rates in those States where there is a demand for mortgage money. The participation of the Federal housing finance agencies 8 in the field of mortgage lending on a Nationwide basis during the past few years, with their emphasis on long-term, amortized, single mortgages, has brought a clearer recognition of the costly and unnecessary procedures required by the mortgage and foreclosure laws of many of the States, the diversity among them, and their effect on mortgage lending. 8 Federal agencies which made mortgage loans prior to 1938 are the Home Owners’ Loan Corporation, the Farm Credit Administration, the Reconstruction Finance Corporation, and the Farm Security Administration (formerly the Resettlement Administration). Federal agencies, in addition to these, which are vitally interested in mortgage lending are the Federal Home Loan Bank Board, by reason of its super- vision of private home mortgage lending institutions; the Federal Savings and Loan Insurance Corporation, by reason of its insurance of the shares of private home financing institutions; the Federal Housing Administration, by reason of its insurance of mortgage loans made by private institutions; and the R. F. C. Mortgage Company, by reason of the fact that it purchases F. H. A. insured mortgages from private lending institutions, which originate and service the loans. National Resources Committee 4 Diversity in Mortgage and Foreclosure Laws The accompanying maps, figures 1 and 2, based on the lending and foreclosure experience of the Home Owners’ Loan Corporation, indicate the diversity in the more important aspects of the mortgage and foreclosure laws of the various States. The map in figure 1 indicates the type of security instrument generally used in each State. It is to be noted that, in 9 States,9 the type of instrument in general use is a deed of trust; in 38 States,10 a mortgage; and, in one, (Georgia) an outright deed. The map entitled “Real Estate Foreclosure Map,” figure 2, indicates the type of foreclosure action in general use in each State. In 29 States,11 foreclosure 9 California, Colorado, Mississippi, Missouri, North Carolina, Tennessee, Texas, Virginia, West Virginia. 19 Alabama, Arizona, Arkansas, Connecticut, Delaware, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Maryland, Michigan, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Washington, Wisconsin, Wyonjing. is generally accomplished by court action,12 and in 18 13 States and the District of Columbia, it is generally accomplished by power of sale.14 In one (Maine), it is accomplished by notice or publication. The map entitled “Real Estate Foreclosure Redemption Map,” figure 3, indicates the length of the redemption period allowed by the laws of the various States and whether the foreclosed mortgagor-owner or the purchaser at the foreclosure sale is entitled to the possession of the property during the period of redemption. 11 Arizona, Arkansas, Connecticut, Delaware, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Utah, Vermont, Washington, Wisconsin, Wyoming. 12 In 12 of these States, foreclosure in court is required by statute; while in the remaining 17, though not required by statute, this is the customary method usually followed. 13 Alabama, Georgia, Colorado, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, North Carolina, Rhode Island, South Dakota, Tennessee, Texas, Virginia, West Virginia. 14 In 11 of these States, no period of redemption follows the sale; while in 7 there is such period. Housing Monograph It may be seen from this map that there is no redemption period in 20 States, while in the remaining States the period for redemption ranges up to 24 months. It is also to be noted that in four States,15 the purchaser at the foreclosure sale is entitled to the possession of the property during the period of redemption; and that in the remaining 24,16 of the 28 States which provide a redemption period, the foreclosed mortgagorowner is entitled to the possession of the property during the period of redemption. It was impossible to bring out in these maps the many other variations in the substantive law of mortgages and foreclosure which affect mortgage lending, such as the interest created by a mortgage and the period of limitations. Nor was it possible to show the extent of, and diversity in, the emergency moratoria 18 Alabama, New Mexico, Oregon. 18 Arizona, Arkansas, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Oklahoma, South Dakota, Utah, Vermont, Washington, Wisconsin, Wyoming. 5 legislation passed during the depression, some of which is still in effect or has been reenacted.17 Effect of Foreclosure Laws on Mortgage Lending Tables I and II,18 which are based on statistics gathered in a recent “Survey of the Foreclosure Operations” of the Home Owners’ Loan Corporation,19 demonstrate the effect which the existing mortgage and foreclosure procedures of the various States have on the cost and time elements involved in foreclosure.20 w This legislation may be classified as follows: Laws prohibiting foreclosures and sales thereunder until a certain date or for a reasonable time in the discretion of the courts; laws extending the period of redemption or mortgages in process of foreclosure; and laws either abolishing deficiency judgments after foreclosure or limiting the right to such judgments by requiring the sale price of the mortgaged property to be based on the “fair,” “reasonable,” “just,” or “equitable” value of the property. See 128 CCH 17501. 18 Reprinted with permission from the Federal Home Loan Bank Review, November 1937. 19 A copy of this survey, which was made by Mr. Henry Beaman, senior attorney, Foreclosure Section, may be obtained on request from the General Counsel, Home Owners’ Loan Corporation, Washington, D. C. 29 One of the most striking examples of the existing diversity in the mortgage and 119119—39---2 Figure 2.—Real estate foreclosure map indicating the foreclosure procedure generally used in each State. 6 National Resources Committee In this survey, a sample of approximately 100 foreclosures was taken in every State and the average cost and time necessary to foreclose computed. Because the Home Owners’ Loan Corporation chose, whenever possible, the least expensive and the shortest method of foreclosure, because computed costs did not include the cost to the Corporation of its salaried personnel who supervised the foreclosure proceedings, and because the practicing attorneys who handled the foreclosures agreed to a reasonably small fee because of the volu me of business given them, the time and cost elements were probably less than those of privately instituted foreclosures.21 foreclosure laws of the various States is found in a metropolitan area which is half in one State and half in another, i. e., Kansas City, Mo., and Kansas City, Kans. In the former city, foreclosure is by exercise of power of sale after 3 weeks’ notice by publication. A deed to the property is immediately given to the purchaser at the sale as there is no redemption period unless the mortgagor gives notice that he wishes to exercise such right at the sale and guarantees the purchaser against loss by posting bond, in which event the mortgagor has 1 year in which to redeem. The total cost of foreclosure under this procedure averages about $40. On the other hand, in Kansas City, Kans., there is no provision for power of sale. The action must take place in court and the mortgagor is allowed from 6 to 18 months after the sale to redeem the property. The total cost of this action is approximately $100. n For instance, in a recent Report of Investigation on Cost and Procedure in Mortgage Table I sets forth the type of foreclosure action used in each State, the average cost of foreclosure per case, the average cost of foreclosure as a percentage of the total loan amount, and a breakdown of the various elements of cost.22 The variations in cost are also indicated in figure 4. Foreclosure, which was a part of a Survey of Real Estate Laws, conducted in 1936 by the Works Progress Administration of New York City as Project No. 352, it was revealed that the average cost of foreclosure in the borough of Queens, City of New York, during the years 1930-35, based on a study of 1,800 typical cases, was $576.03; in Kings County, N. Y., 1933-35, based on 255 typical cases, it was $663.38; in New York County during the same years, based on 433 typical cases, it was $842.08. On the other hand, according to the survey of the foreclosure operations of the Home Owners’ Loan Corporation, the average cost of foreclosure in New York City was $380.37, approximately half the average cost given in the Works Progress Administration study of privately instituted foreclosures. 22 The percentages shown in this table are based upon the total cost of foreclosing on mortgages in each particular State, rather than the average cost. Although the average costs would be preferred in showing the extent to which each item went to make up the total cost, it was impossible to show percentages of the average cost because foreclosures within a State did not always include the same items. Thus in New York, only 23 percent of the total sample included costs for auctioneers’ fees or trustees’ fees, because in the upstate districts no such fees are charged. In studying this table, it should also be borne in mind that, since the various elements of cost are expressed in terms of percentages, in some cases certain items might be disproportionately high by reason of the fact that the total cost of foreclosure REAL ESTATE FORECLOSURE REDEMPTION MAP INDICATING THE LENGTH OF THE PERIOD OF REDEMPTION IN EACH STATE Figure 3.—Real estate foreclosure redemption map indicating the length of the period of redemption in each State. Housing Monograph 1 Table 1.—H. O. L. C. foreclosure costs and the type of foreclosure action, by States [Based on as near 100 foreclosures as possible for each State] State Type of action 1 Percent of total loan amount Principal items as a percentage of total costs to H. O. L. C. Average cost of foreclosure Attorney’s fees3 Advertising cost Commissioner’s, trustee’s, and/or sheriff’s fees Court costs Title search Auctioneer’s fees Recording fees Revenue stamps Master in chancery’s fees Other Alabama,,. __ P 1.2 69.9 25.0 2.7 2.3 $47.95 Arizona C 5.4 58.6 18.1 13.4 5.3 1.5 0.8 202.38 Arkansas C 5.6 40.6 0.8 37.0 18.6 1.1 1.9 123.18 California.. C 4.0 49.9 26.1 8.5 9.4 1.7 3.0 1.4 161.34 Colorado P 3.6 50.2 0,4 5.0 31.0 1.5 2.9 102.65 Connecticut ....... c 1.9 63.6 3 36.4 111.00 Delaware.. c 2.9 52.3 39.6 2.5 1.0 4.6 120.93 District of Columbia P 1.0 64.7 22.0 3.1 9.1 1.1 68.75 Florida,. c 5.2 60.8 7.9 3.6 6.8 9.8 1.1 0.5 9.5 158.16 Georgia .... p 1.9 52.5 42.5 2.7 2.3 56.70 Idaho.................... c 6.0 50.1 29.7 13.1 3.8 0.9 2.1 0.3 170. 98 Illinois.. ... G 6.3 34.7 4.8 7.9 13.5 0.3 1.8 34.8 2.2 354.30 Indiana.... c 4.6 48.1 ’31.1 5.8 0.7 2.7 11.6 185.61 Iowa C 4.0 59.7 0.5 ’30.0 5.5 1.0 3.0 0.3 129.35 Kansas c 3.7 55.1 34. 8 5.4 3.3 1.4 90.88 Kentucky. C 4.2 50.3 36.4 10.0 1.1 1.9 0.3 149.23 Louisiana... c 2.7 31.1 28.0 18.8 11.8 0.9 9.4 116.48 Maine s Q. 6 4.4 46.9 47.8 4.9 0.4 21.32 Maryland.. p 31.7 21.9 6.3 22.0 2.5 2.2 5.9 7.5 157. 56 Massachusetts p 0.5 56.9 27.8 15.3 29.08 Michigan p 1.9 50.3 34.6 3.3 0.1 4.6 6.5 0.6 90.52 Minnesota — p 2.6 61.2 21.4 16.6 0.7 0.1 96.11 Mississippi p 1.8 59.5 33.4 2.8 4.3 58.81 Missouri p 0.7 78.5 11.3 10.2 48.40 Montana c 5.8 75.6 7.6 8.9 4.6 0.9 2.3 0.1 161.74 Nebraska c 5.4 45.0 47.1 7.1 0.2 0.6 112.19 Nevada c 3.8 59.8 18.3 13.2 4.4 1.3 2.8 0.2 223.01 New Hampshire p 2.0 60.6 21.2 7.8 5.8 4.6 70.82 New Jersey c 4.7 38.0 ’62.0 222.29 New Mexico c 6.9 54.0 11.4 6.8 12.1 0.9 1.5 7.8 5.5 175.38 New York c 5.9 40.0 17.5 2.3 5.4 2.0 0.7 1.3 29.1 1.7 312. 54 North Carolina p 1.4 55.5 22.5 2.4 212.8 6.8 64.07 North Dakota c 4.1 51.8 13.5 13.3 5.7 5.5 4.2 3.0 3.0 114.94 Ohio c 2.9 39.5 0.2 2 49.6 3.6 1.1 3.1 2.9 125.46 Oklahoma c 4.2 30.7 12.9 10.7 11.3 26.0 1.5 2.1 . 4.8 130.97 Oregon c 4.6 56.5 9.7 16.2 12.0 1.5 2.6 1.5 130.37 Pennsylvania c 3.6 31.8 41.5 4.2 2 21.7 0.4 0.4 158.27 Rhode Island p 0.8 56.4 23.0 10.7 9.9 44.72 South Carolina __ c 4.7 50.0 14.0 23. 5 10.0 1.2 1.1 0.2 123.25 South Dakota.. . p 3.1 45.5 43.4 0.7 10.4 70.84 Tennessee.. , p 2.4 64.5 28.4 3.3 3.6 0.2 77.51 Texas... p 0.2 65.2 34.8 5.18 Utah c 4.9 66.2 12.8 12.7 3.9 1.4 2.6 0.4 158.33 Vermont — c 2.2 64.4 35.6 97.14 Virginia.. - p 1.7 42.3 33.0 14.1 0.1 5.4 4.8 0.2 94.48 Washington c 5.4 55.1 17.1 16.9 7.1 2.4 0.3 134.40 West Virginia. p 1.2 39.8 46.7 2.6 4.8 6.1 56.93 Wisconsin c 3.1 52.7 ’ 33.3 10.2 2.9 0.9 169.94 Wyoming c 7.2 61.7 23.9 3.1 7.9 1.2 1.8 0.4 174.11 1 Consists of power of sale (P), court action (C), or (S) strict foreclosure by publication with no sale. When any one of these is allowed, that listed has been used principally by the Home Owners’ Loan Corporation. ’ Extra items included in court costs: Connecticut—all items; Indiana—sheriff’s fees, advertising cost; Iowa—sheriff’s fees and some advertising costs; New Jersey—all items; North Carolina—recording fees; Ohio—advertising fees; Pennsylvania—most recording fees; and Wisconsin—publication for sale, sheriff’s fees, recording fees. 8 Average foreclosure costs do not include attorneys’ fees in Texas, Massachusetts, Delaware, District of Columbia, and Rhode Island as foreclosure was handled by H. O. L. C. salaried personnel. Average foreclosure costs do not include a full charge for attorneys’ fees in Louisiana, Missouri, Nevada, and Oklahoma as work was partially done by salaried personnel. Table II sets forth the average time required to complete foreclosure in each of the states, the time being computed from the date the petition to foreclose was filed in court, or the first advertisement published (depending upon whether it was a court or power of is quite nominal. For instance, since foreclosure is handled by the H. O. L. C.’s salaried attorneys in Texas as a part of their business routine, and since the total cost of foreclosure in that State is therefore but $5.18, the cost of revenue stamps and the recording of the deed make up 99 percent of the total foreclosure costs. sale foreclosure), until the period of redemption, if any, had expired and the Home Owners’ Loan Corporation had gained an indefeasible title. The map, in figure 5, shows graphically the differences in time required to foreclose from State to State. From these tables, it is to be noted that, with respect to the time required for foreclosure and the costs involved, the States may be roughly classified into three 8 National Resources Committee Table II.—Average time required to complete H. 0. L. C. foreclosures 1 [Based on as near 100 foreclosures as possible for each State] State Total time Period of redemption 2 Explanation State Total time Period of redemption 2 Explanation Months Days Months Months Days Months Alabama 25 8 5 14 7 4 3 1 3 0 15 19 14 15 11 6 4 12 1 2 15 13 3 27 4 26 18 4 12 3 22 27 1 16 0 14 14 3 11 25 11 6 1 25 24 6 Redemption period of 12 months permitted but waived in H, O, L. O. mortgages. Debtor has 12 months for redemption; creditors, additional 3 months. Redemption period may be 6 or 18 months depending on type and status of mortgage. If sale does not bring % of appraised value, mortgagor may have 12 months redemption. Total time refers from date of dispatch to State counsel. No redemption after foreclosure by sale; a 3-year redemption after foreclosure by entry. Latter rarely used by H. O. L. C. 6 months redemption if foreclosur e by court action; 12 months if by advertisement. Mississippi 1 1 15 5 15 1 4 13 3 1 16 3 9 15 1 2 2 13 1 0 14 8 0 16 1 16 15 24 16 2 26 12 27 21 0 17 16 4 24 20 10 19 10 28 25 11 22 23 27 8 6 6 0 1 0 Written notice by mortgagor at sale or 10 days before, gives him 12 months redemption following sale. Redemption period of 24 months permitted but waived in H. O. L. C. deeds of trust. Redemption period is 12 months but chancellor may shorten if security is insufficient. Debtor has 6 months for redemption; creditors 9 months. Arizona Missouri Arkansas Montana 12 (’) 12 0 0 9 0 0 12 0 6 12 0 0 0 12 California 12 6 0 0 0 0 0 12 15 12 12 Colorado Nebraska Connecticut Nevada Delaware New Hampshire- New Jersey District of Columbia. Florida New Mexico New York Georgia North Carolina. . North Dakota.... Ohio Idaho Illinois Indiana Oklahoma Oregon. Iowa Pennsylvania .... Rhode Island South Carolina... South Dakota.... Tennessee Kansas - Kentucky. .-. Louisiana — 0 12 0 Texas. ; 0 6 Utah .. Maine Vermont .. Maryland Virginia 0 12 0 12 9 Massachusetts Michigan Washington West Virginia Wisconsin Wyoming Minnesota. 12 i In case of foreclosure in court, the time has been computed from the date of the filing of the petition to foreclose to the date of acquisition of title, free of redemption. In case of foreclosure under power of sale contained in the mortgage or deed of trust, the time has been computed from the date of the first publication of notice of sale or of intention to foreclose, where such is required, to the date of acquisition of title, free of all rights of redemption. 2 “Redemption period” is generally defined as the period from date of foreclosure sale until final acquisition of title during which the mortgagor may redeem the property. ,In 4 States the statutory time allowed the mortgagor is not strictly a redemption period but is often described as such. The provisions in these States are: In Indiana 12 months from date of filing foreclosure petition until date of sale. In Wisconsin 1 year from date of judgment to date of sale. In Oklahoma 6 months from date of judgment to date of sale. In Nebraska 9 months (at request of mortgagor) from date of judgment to date of sale. groups: (1) Those in which cost of foreclosure is low (less than $100) and the time required in most instances short (less than 3 months)23 ; (2) those where cost of foreclosure is high and the time to foreclose in many instances is unnecessarily long 24 ; and (3) where cost of foreclosure is not only high and the time to foreclose in many instances unnecessarily long, but where there is also a period of redemption of 6 months or more during which in most cases thé mortgagor is entitled to 22 Georgia, Massachusetts, Mississippi, New Hampshire, North Carolina, Rhode Island, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia. Maine and Missouri should probably also be included in this group as the average cost of foreclosure in each of these States is less than $45. On the other hand, in both of these States there is a 12 months’ redemption period during which the debtor is entitled to the possession of the property. Alabama should probably also be included in this group, even though the period of redemption is 2 years, since the cost of foreclosure is less than $50 and since the purchaser and not the debtor is entitled to the possession of the property during the running of the period of redemption. 24 Connecticut, Delaware, Florida, Louisiana, Maryland, New Jersey, New Mexico, New York, .Ohio, Pennsylvania, South Carolina. possession of the property.25 Study of the costs incurred by the Home Owners’ Loan Corporation in foreclosing mortgages in the various States reveals that the average cost in States in the first group was approximately $55; whereas in States in the second and third groups it was approximately $155. In other words, in the States in the second and third groups approximately $100 more was paid for foreclosure of a mortgage than in States in the first group. This $100 per foreclosure might well be considered a useless expense or waste, since it is to be assumed that in all States an equally indefeasible title is gained by foreclosure proceedings. 22 Arizona, California, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Montana, Nebraska, Nevada, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Vermont, Washington, Wisconsin, Wyoming. Arkansas should probably also be included in this group because of the cost of foreclosure and the 12 months’ redemption period during which the debtor is entitled to the possession of the property unless the period of redemption is waived. Housing Monograph 9 If approximately 1,000,000 mortgages have been foreclosed during the past 10 years,28 then at an average cost of $124 each, as found by the Home Owners’ Loan Corporation $124,000,000 would have been expended for mortgage foreclosures. Assuming that $55, the approximate average cost of foreclosure in States in the first group, is sufficient to cover the cost of foreclosure, it appears that during the past 10 years approximately $70,000,000 has been spent unnecessarily because fore 26 Holden, “The Menace of Mortgage Debt,” 166 Harper’s 575 (1933), estimates that the number of foreclosures in the United States in 1931, 1932, and 1933, was probably well over 500,000; According to the Report of Investigation on Cost and Procedure in Mortgage Foreclosure, supra, there were 32,922 notices of foreclosure lis pendens filed in the borough of Queens, city of New York from 1930 to 1935. According to figures released by the tax .department of the State of New York, there are approximately 175,000 one- and two-family homes in this borough. In other words, during the period of 1930 to 1935, more than 1 out of every 10 homes was in the process of foreclosure in that borough. H. O. L. C. Summary (July 22, 1936) estimates that in a normal year, like 1926, approximately 68,000 homes are foreclosed; that, in 1932, this figure had increased to 248,700 per annum; and then, by June 1933, foreclosures were occurring at an estimated rate of 24,000 a month. In the House hearing on the National Housing Act of 1934, H. R. 9620, 73d Cong., 2d sess., p. 63, figures averaging about 8 percent higher than these may be found. From these estimates, it is safe to conclude that at least 1,000,000 foreclosures have taken place over the last 10-year period. closure procedures in all States were not as simple, inexpensive, and expeditious as in States in that group.27 Furthermore, it is estimated that the cost of the delay to the lender due to the redemption period, which cost includes the loss of interest on the investment, accruing taxes, insurance, and depreciation, averages at least $2 per day on a $5,000 mortgage. From this estimate, it is apparent that an enormous waste occurs in those States in the third group, which have a redemption period of a year or more, and in some of those in the second, which require over a year for foreclosure. The effect of these time and cost elements upon mortgage lending is obvious. In the first group of States, where the cost averages $55 and the time less than 3 months, it is obvious that a lending institution can afford to lend as high as 90 percent on the value of the property at a low rate of interest as it does not have to 27 See Russell, “Foreclosure Costs in New York,” Journal of Land and Public Utility Economics, August 1937, in which it is estimated that 80 percent of the $5,000,000 which the H. O. L. C. will spend in the foreclosure of mortgages in New York State is a kind of “legalized waste.” Figure 4.—Real estate foreclosure cost map indicating the average cost of foreclosure in each State based on H. O. L. C. experience. 10 National Resources Committee deduct such a large amount from the value of the property or increase its interest rate to balance the costs which might arise if it became necessary to foreclose. On the other hand, in those States in the second and third groups, where the average cost is $155, and the time, including the period of redemption, is greater than 1 year, it is apparent that a lending institution could not afford to lend with safety an amount in excess of 65 percent of the value of the property, which would prevent a borrower from securing a loan in many instances or necessitate his resorting to the dangerous practice of junior financing. If the lending institution did lend in excess of that percentage of the value of the property, it would be required to charge a high interest rate to compensate it for the risk involved. A lending institution in a State in the first group, which has loaned $4,000 on a $5,000 home, is able to carry the borrower for many months after a default, during which time he may rehabilitate himself, before the accumulated interest, taxes, insurance and other carrying charges have brought the total debt up to a point where it becomes imperative that the lending institution foreclose to protect itself against loss. On the other hand, a lending institution in a State in the second or third group, which has loaned $4,000 on a $5,000 home, would find it necessary to foreclose immediately in order to protect itself from loss when the accumulated interest, taxes, insurance, and other carrying charges had raised the borrower’s debt to $4,500 by reason of the high cost of foreclosure or the cost of the delay caused by the long redemption period. Therefore, in these latter States, a lending institution is prevented from granting voluntary short moratoria to the borrower, during which time he might rehabilitate himself. During the past 6 years, the Federal Government has been doing all in its power to sponsor long-term, amortized, single-mortgage lending on home properties28 28 The H. O. L. C., during its lending operations, refinanced 1,018,390 home mortgage loans, or approximately 1 out of every 10 mortgages in the country, on a longterm (12- to 15-year), amortized (approximately $9 a month installment payment REAL ESTATE FORECLOSURE TIME MAP INDICATING THE AVERAGE LENGTH OF TIME REQUIRED TO FORECLOSE IN EACH STATE Figure 5.—Real estate foreclosure time map indicating the average length of time required to foreclose in each State based on H. O. L. O. experience. Housing Monograph 11 instead of the short-term, lump-sum, multiple-mortgage lending, which was prevalent prior to that time.29 The foreclosure laws and procedures of many of the States today prevent the complete realization of this program. Furthermore, the raising of the Federal Housing Administration mortgage insurance limit as provided by the National Housing Amendments of 1938,30 which means, in effect, that the minimum down payment required of a home owner is reduced from approximately 20 percent to 10 percent of the price of the property, makes imperative the revision of the mortgage and foreclosure laws in many of the States, for the minimum down payment is thus reduced in many States below the cost of foreclosure and the cost of the delay to the mortgagee in securing title to the property. By way of illustration, the minimum down payment on a $3,000 home financed by a Federal Housing Administration insured mortgage would be $300; and, according to Home Owners’ Loan Corporation experience, foreclosure cost, together with the cost of the delay to the lender (which may amount to $2 a day), would more than cancel out this down payment. Consequently, in those States where the cost of foreclosure is in excess of $200, or where the mortgagor is entitled to a period of redemption of 1 year or longer, a 90 percent loan would be unattractive regardless of the fact that the Federal Housing Administration will insure a mortgage loan up to that amount of the appraised value. In addition, the liberalization of title III of the National Housing Act of 1934 so as to make more attractive the incorporation of national mortgage associations also makes imperative the revision of the per thousand dollars of loan) basis, with one mortgage securing all debts refinanced. This refinancing operation not only relieved home owners in distress and helped liquefy the frozen mortgage assets of lending institutions, but placed at least the 1 out of every 10 mortgages refinanced on a sound repayment basis. The Federal Home Loan Bank Board and Bank System, by requiring as a condition to membership in its system, that the home-financing institution deal principally in long-term, amortized lending on the security of first liens; the Federal Savings and Loan System, by requiring as a condition to the granting of a charter that the institution deal principally in long-term, amortized lending on the security of first liens; the Federal Savings and Loan Insurance Corporation, by requiring as a condition to its insurance of accounts of a savings and loan institution that it deal principally in long-term, amortized lending on the security of first liens; and the Federal Housing Administration, by requiring as a condition to its insurance of a mortgage that it be on a longterm, amortized basis—have all given further impetus to the long-term, amortized, single-mortgage lending movement. 29 Short-term mortgage loans on home properties are generally bad practice as they must be refinanced every few years with the high commissions and financing charges which that operation entails. Lump-sum mortgage loans are generally bad practice as they require repayment of the entire amount of the loan at one time or refinancing the loan with the high fees which that operation entails. Multiple mortgage financing of a single property is generally bad practice not only because of the high fees incident to the procurement of each mortgage, but of the increased dangers of default. It may be estimated that, prior to the depression, approximately 50 percent of the home-mortgage financing of the country was on a short-term, lump-sum basis, with many properties securing more than one mortgage. With the greater part of this percentage of the home-mortgage debt of the country falling due during the depression years, with lenders clamoring for repayment and refusing to grant extensions or renewals, and with borrowers unable to repay the large lump-sum payments required by their mortgage contracts because of their reduced incomes, the evils in this system of mortgage financing were laid open to scrutiny. 80 On homes costing $6,000 or less, from 80 to 90 percent of the appraised value of the property, and on homes costing $10,000 or less, to 90 percent of the first $6,000 of value and 80 percent of the remainder. Public, No. 424, 75th Cong. mortgage and foreclosure laws of the various States, if such institutions are to function smoothly. It is obvious that the more uniform, simple, inexpensive, and expeditious the mortgage and foreclosure laws of the various States are, the easier it will be for such associations to transact their business of buying and selling mortgages on a nation-wide basis. Unnecessary Foreclosure Procedures and Costs A study of the particular elements of cost (table I) which go to make up the total cost of foreclosure demonstrates that many useless expenses are incurred in foreclosure by reason of the unnecessary procedures required by the laws of the various States. Tables III and IV also set forth a break-down of the averages of the various elements of cost which make up the total cost of foreclosure in the four counties comprising the metropolitan area of New York City.31 For instance, from table I it is to be noted that the cost of publishing in a newspaper a notice of the foreclosure action accounts for approximately 29 percent of the average total cost of foreclosure in those States which require this method of notice. From table III, it is to be noted that average cost to the Home Owners’ Loan Corporation of this method of notice in the city of New York ranges from $124.30 in Bronx County to $45.47 in Queens County. The publication of notice does not bring buyers to the sale and benefits no one except the newspaper obtaining the advertisement. Rarely does a person other than the mortgagee, or his nominee or a subordinate lienor, purchase at the sale, and such persons have direct knowledge of the pendency of the sale. Publication of notice in excess of once or twice (to meet the requirements of due process of law in case no other notice is given) is an unnecessary expense. Table III.—Elements of cost in total cost of foreclosure in the 4 counties comprising the metropolitan area of New York City, based on H. O. L. C. experience Foreclosure fees and costs Queens County1 New York County8 Kings County1 Bronx County1 Referee to compute $24.00 $25.00 $25.00 $25 00 Referee to sell - 75.00 74.31 75. 00 75. 00 Advertising bill ____ 45.47 105.73 74. 52 124. 30 Auctioneer’s fee 1.80 30.00 28.20 28 80 Attorney’s fees 8 120.00 8109.38 125. 00 125. 00 Miscellaneous Total 50.50 317.66 52.39 396.86 49.91 376.84 51. 30 430 12 Average loan amount 6,735.40 9,907.21 6,738.95 8, 070. 74 Time to complete ..months.. 5.8 5.4 5.2 4.9 i Averages based on the actual fees and costs incurred by H. O. L. C. in 25 representative foreclosure cases in each county. 2 Averages based on the actual fees and costs incurred by H. O. L. C. in 8 representative foreclosure cases. 8 The fact that the average attorney’s fee in Queens and New York Counties was less than that in Kings and Bronx Counties is due to the fact that H. O. L. C. salaried attorneys were used in one case in each county. 81 For an excellent analysis of the excessive costs and uncertainties in the present New York foreclosure procedure, see an article by Walter Fairchild in the Brooklyn Law Review, vol. VII, No. 1 (October 1937), pp. 1-14. 12 Table IV.—Elements of cost in total cost of foreclosure in New York City, based on a study of privately instituted foreclosures 1 Items of fees and costs Queens County 3 New York County 3 Kings County4 Referee’s fees $89.70 $97. 31 $83.15 Advertising bill 70.46 191. 22 99.87 Auctioneer’s fee 21.67 47.11 33. 51 Statutory costs 36.06 43.96 40.09 Total disbursements 81.96 92.81 86.54 Interest on costs 1.35 2. 27 .45 Guardian fees 1.21 .74 .43 Allowance6 148.16 176.41 163. 02 Extra allowance 6 125.46 190. 25 156.32 Total. 576.03 842.03 663.38 i The average elements of cost are taken from the Report of Investigation on the Cost and Procedure in Mortgage Foreclosure, a part of a Survey of Real Estate Laws conducted in 1936 by the Works Progress Administration of New York City as project No. 352. 3 Averages based on the actual fees and costs incurred in 1,800 privately instituted foreclosure actions during the years 1930-35. 3 Averages based on the actual fees and costs incurred in 433 privately instituted foreclosure actions during the years 1930-35. * Averages based on the actual fees and costs incurred in 255 typical privately instituted foreclosure actions during the years 1933-35. 8 Allowances under sec. 1512, C. P. A. are determined by the amount of the judgment of foreclosure. 3 Extra allowances are granted pursuant to sec. 1513, C. P. A. Although the allowance is discretionary, it is granted by the court almost as a matter of routine. From table I, it is also to be noted that auctioneers’ and master in chancery fees account for approximately 14 percent and 17 percent, respectively, of the average total cost of foreclosure in those States which require such methods of sale. From table III, it is to be noted that the average cost to the Home Owners’ Loan Corporation of a public auctioneer at the foreclosure sale in three of the four metropolitan counties comprising the city of New York was approximately $28. The requirement that a public auctioneer or a master auction the property is superfluous, since rarely does anyone bid at the sale except the mortgagee or his nominee. Furthermore, the fees allowed for these services are probably excessive for the services usually rendered, i. e., reading the terms of the sale and recording the bids. Likewise, the appointment of referees to compute the amount of the debt and to supervise the sale, as is required in a few States, merely adds fees for which there is little or no justification. To perform the first duty, the referee rarely does anything but sign his name to the computations of the debt made by the mortgagee; and to perform the second duty, he rarely does more than engage an auctioneer, attend the sale, and sign the report of the sale and the deed to the purchaser, which are usually prepared by the mortgagee’s attorney. From table III, it is to be noted that the average cost to the Home Owners’ Loan Corporation of having a referee compute the amount of the debt and supervise the sale in the metropolitan counties comprising the city of New York was approximately $25 and $75, respectively, per case. National Resources Committee Furthermore, it is also to be noted from table I that attorneys’ fees account for approximately 52 percent of the total foreclosure costs in those States where fee attorneys were employed. There is a close correlation between the size of the attorneys’ fees and the work and detail involved in the foreclosure. In those States where the foreclosure statutes are cumbersome and require a great amount of detail and time, attorneys’ fees run high. On the other hand, where the statutes provide for a simple procedure, the fees are low. One of the most interesting over-all conclusions with regard to the useless expense involved in foreclosure that may be drawn from a study of the statistics gathered by the Home Owners’ Loan Corporation in its survey of its foreclosure operations is that the cost of foreclosure in those States which proceed under power of sale is far less than in those which proceed under court action. Out of the 13 States classified under the first group, i. e., where the cost of foreclosure is low (less than $100) and the time required to foreclose is in most instances short (less than 3 months), the foreclosure procedure followed in 12 was by an exercise of the power of sale contained in the security instrument. While in the thirteenth, i. e., Maine, foreclosure by power of sale was not available, yet the foreclosure process was exceedingly simple and required no court action. In the 35 States, which were classified in the second and third groups, i. e., where the cost of foreclosure is high and the time to foreclose in many instances unnecessarily long, foreclosure was effected by court action in all but 6 of the 35 States. This would indicate that the practice of foreclosing by court action, whether required by statute or by necessity in order to secure good title after foreclosure, is extremely costly and that the States wherein this method is followed would do well to provide by statute for a well-regulated power of sale foreclosure procedure. The aforementioned unnecessary foreclosure procedures and many others were originally devised in most States to protect the helpless borrower against the supposed greed of the money-lender. They have served as a boomerang in most cases, however, by preventing a prospective borrower from obtaining a loan on as advantageous terms as he otherwise might if such procedures were not required by the law of his State. Cumbersome and Costly Mortgage Instruments Turning now to the archaic, costly procedures involved in the drafting, execution, and recording of instruments, it is apparent that the type of loan instrument used and its wording must vary in each State according to its substantive mortgage and foreclosure law. The form of instrument ordinarily used might be that of a mortgage with a power of sale or a mort Housing Monograph 13 gage without a power of sale; in other States it might be a deed of trust with a power of sale or a deed of trust without a power of sale.32 To be certain that a loan instrument conforms to the mortgage and foreclosure law of the State, it is almost essential that a lawyer draft the mortgage or deed of trust so as to fit the facts of each particular case. The fees paid attorneys each year for such drafting of loan instruments run into millions of dollars. Since it is the mortgagor who in the end bears the cost, he is penalized by the archaic mortgage law which requires such metic- • ulous care in the drafting of loan instruments. In addition, the average mortgage or deed of trust form now in use is unduly long and detailed. The average form used by lending institutions contains from 1,000 to 4,000 words. It is, of course, true that in at least 22 33 jurisdictions there are statutory short forms of mortgage or deed of trust. However, these short forms are rarely used due to the absence of provision for the various covenants and conditions usually incorporated in such instruments, Since the long 1,000 to 4,000 word instruments which are in general use must be recorded to be valid against purchasers, subsequent lienors and judgment creditors, and since the fee for recording varies with the length of the instrument, the mortgagor, who must bear the cost of recording, is further penalized. The recording fee for mortgages or deeds of trust in most States now runs from $4 to $10. Proposed Standard Real Estate Mortgage Act Many years of study have been given to the mortgage and foreclosure laws and procedures in the various States, to the costs incident to mortgage lending and foreclosure, and'to the desirability of uniform mortgage and foreclosure legislation throughout the country which would be as fair to the mortgagee as to the mortgagor and which would reduce the excessive costs incident to mortgage lending and foreclosure. The National Conference of Commissioners on Uniform State Laws, after investigating the subject for more than 15 years, adopted a uniform real estate mortgage and foreclosure act in 1927 which was later approved by the American Bar Association. The principle of the uniform act met with the general approval of the American Title Association, the National Association of Real Estate Boards, the Association of Life Insurance Counsel, and counsel for Federal and Joint Stock Land Banks, as well as of the professors of 82 See fig. 1. The H. O. L. O, used a mortgage in nine States, an outright deed in one, and a deed of trust in the remaining States. 38 Arizona, California, District of Columbia, Georgia, Illinois, Indiana, Iowa, Kansas, Maryland, Michigan, Mississippi, Montana, New York, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, Virginia, West Virginia, Wisconsin, and Wyoming. mortgage law and the deans of the leading law schools.34 However, objections to details were raised, and the draft has not been adopted in its entirety in any State. The participation of the Federal housing finance agencies in the field of mortgage lending on a Nationwide basis during the past few years has brought a sharper recognition of the need for reform of mortgage and foreclosure laws. Consequently, one of the first tasks assigned by the Central Housing Committee 35 to its Subcommittee on Law and Legislation 36 was the study of the mortgage and foreclosure laws of the various States to the end that they might be amended to provide a procedure to facilitate long-term amortized, single-mortgage lending. The Subcommittee made a study of the uniform act prepared by the National Conference of Commissioners on Uniform State Laws. The vast experience of the Federal agencies in mortgage credit since 1927 suggested the advisability of completely rewriting the proposed act. After receiving the advice of many experts in the mortgage lending field and after drafting and redrafting the act many times in 2 years, the Subcommittee finally issued a preliminary draft on August 31, 1937.37 Since that date, this draft has been submitted to the Central Housing Committee, the National Conference of Commissioners on Uniform State Laws, the American Bar Association,38 the United States Building and Loan League, and the officials of most of the Federal agencies and private lending institutions interested in mortgage finance for their comment before it is finally revised. The proposed standard reahestate mortgage and foreclosure act of the Subcommittee has-been drafted to remedy the defects pointed5, .pqi above. Briefly, this ■.......... 1 ~ 3 O o ® ° d 84 See the introductory statement in the'p^phlet%Z«($6. 58 — 40.43 Minnesota 29.93 10.97 — 16.31 4.50 0.76 — 34.20 New York ... 14.08 — 6.39 6.59 16.70 59. 96 Texas -—.— 12.26 3.25 2.38 4.13 $6.57 37.00 Attorney.... Georgia 6.45 1.15 2 $30.03 42.00 Massachusetts... — 24.86 3 6.32 — 9.17 39.39 New York — 33.53 4.10 1.79 8.88 — 39.50 Virginia 4 .... — 34.15 4.62 0.62 ..... 7.10 $9.48 — 57.81 /California 4. 55 3.16 — 20.80 $7.53 — 35.35 Title company Illinois 5.26 2.39 18.65 ... 25.47 — $3.90 ----- 54.33 New York 3... x — 8 33.81 6.35 6.18 15.84 — 14.95 62.13 Texas 3.20 2.01 5.00 — 28.73 35.67 Washington..., 39.89 12.02 2.00 — 6.17 1.09 — 9. 14 19.98 7.69 — 36.44 Torrens... Illinois ... — 3.05 7.05 18.65 — 3. 81 1 $3.13 38.50 Massachusetts — 20.12 3 5. 23 _—.— 8.94 31. 82 - ' • (Minnesota — 14.23 3.88 0.62 — 5.67 25.00 1 Includes fee escrow service costs. 2 Includes abstract, certificate, closing, and title insurance fees. 3 Average of recording fees both for original papers and release. 4 These titles are also insured. 6 These titles are not insured. 6 Average title certificate fee. 2 For continuation of owner’s duplicate certificate of title. 8 It should be noted that the table includes only the major elements in title cost, expressed as averages. Furthermore, the figures in the last column are average total costs, and not the sum of the major elements in the preceding columns. Therefore, these figures merely serve to indicate the relative importance of each major element in total cost. 24 National Resources Committee since the certification of the average abstract company is so drafted as substantially to limit its liability for errors in the abstract, it is apparent that there is even less possibility of recoupment in case of loss through defective title. Furthermore, the average title insurance certificate or policy is usually so couched with exceptions as to limit substantially the liability of the issuing company in case of a defective title. The Subcommittee on Law and Legislation, in an endeavor to remedy to some extent the above defects in the first three methods of title proof, has collected a set of forms 46 which have been approved and used by Federal agencies when securing proof of the marketability of title, which it recommends for the consideration of lending institutions. Those systems of title proof which involve an examination of the public records are also subject to a criticism which is directed not so much at the method of title proof as at the extent to which the examination covers recorded evidence which might affect the title. In most States, conveyances and liens are required to be recorded in the recording office of the political subdivision in which the real property affected is situated, to be binding upon subsequent purchasers or mortgagees of the property. On the other hand, liens or changes in titles arising by virtue of decrees rendered in Federal courts and liens arising by virtue of Federal law, such as those for nonpayment of certain Federal taxes, are not in all cases required by Federal law to be recorded in the recording office where the real property is situated in order to constitute notice and be binding upon subsequent purchasers or mortgagees.47 This fact prevents the records of the various local recording offices from properly reflecting the status of title of property within their jurisdiction. Consequently, to be absolutely certain of the status of the title to any piece of real estate, it is necessary that a search be made of both the records of the local recording office and those of the Federal district court for the district in which the real estate is located. Since the records of the local recording offices in all States do not contain notice of these Federal liens and since in some cases title examination under 46 These forms are contained in the Subcommittee’s Report Number 6, entitled Forms of Title Evidence. 47 It is true, of course, that sec. 3186, U. S. Revised Statutes, does provide that a lien in favor of the United States, arising by virtue of nonpayment of Federal taxes, shall not “be valid as against any mortgagee, purchase, or judgment creditor until notice thereof has been filed by the collector (1) in accordance with the law of the State or Territory in which the property subject to the lien is situated, wherever the State or Territory has by law provided for the filing of such notice; or (2) in the office of the clerk of the United States District Court for the judicial district in which the property subject to the lien is situated, whenever the State or Territory has not by law provided for the filing of such notice; * * *” However as all States have not passed statutes providing for the filing of notice of such United States liens, the Federal Government has not been able to adopt the procedure of filing notice of its liens in the local recording offices in States other than those which have passed such statutes. Consequently, the records of the local recording offices of all States do not contain notice of such United States liens for nonpayment of taxes. those systems which involve a search of the public records is based entirely upon a search of the local records, in some instances, at least, the title search may not cover all matters which may affect title. The Subcommittee on Law and Legislation has drafted a proposed Federal act which would require notice of liens arising by virtue of Federal law in favor of the United States, or any department, agency or instrumentality thereof, to be filed in the recording office of the political subdivision where any real property affected by such liens or decrees is situated in order to be valid against subsequent purchasers, mortgagees, or judgment creditors. Enactment by Congress of such a proposal would mean the consolidation in the various recording offices of notice of practically all liens, whether arising by virtue of Federal or State law, affecting real property located within the jurisdiction of the recording office. Such consolidation would, of course, decrease the risk and expense of title examination under all methods involving a search of public records. Land Title Registration System It was pointed out above that the Torrens or Land Title Registration System is the most economical method of title proof, the average cost being roughly only three-fourths that of the three other methods. Furthermore, according to the study, the Torrens system is probably the most efficient and one of the two most expeditious. Under the Torrens system, there is, of course, practically no possibility of loss arising through defective title as the State land court or other body having charge of the registration gives the owner a certificate of title which is good against everyone, any subsequent claimant who is able to show a better title than the registrant being compensated from the registration funds. After the original registration, all subsequent dealings with the land are entered on the certificate, and no new examination is needed. Torrens, or similar land title registration laws, are now in effect in 16 States,48 and in four jurisdictions under the sovereignty of the United States.49 However, the land title registration system has not been a great success in any of these jurisdictions with the exception of Illinois, Massachusetts, Minnesota, and Hawaii. The extent to which the Home Owners’ Loan Corporation made loans on Torrens titles, expressed in percentages of the total loans made in each jurisdiction, is as follows: Hawaii, 31; Minnesota, 12.5; Illinois, 8; Massachusetts, 6; Ohio, 3; Washington, 0.2; Colorado, 0.1; South Dakota, 0.03. 48 California, Colorado, Georgia, Illinois, Massachusetts, Minnesota, Nebraska, New York, North Carolina, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Virginia, Washington. 48 Hawaii, Philippine Islands, Puerto Rico, and Guam. Housing Monograph 25 From these percentages, it is apparent that in only 8 of the 17 jurisdictions in which land title registration laws are in effect has the Home Owners’ Loan Corporation made any use of Torrens certificates, and in only 4 jurisdictions can the use of Torrens certificates be said to amount to any considerable portion of the total. The probable reasons why the land title registration system has not proved successful are as follows: (1) The legislation providing for such system may be unworkable either because the laws were poorly drafted or because provisions inserted by adverse interests at the time of enactment make them impracticable. (2) The expense of the original registration of title, which ranges from $50 to $150, including attorney’s fees, may be too excessive to justify greater demand for such registration, especially on the part of small home owners. (3) The credit of the State may not have been pledged or a sufficient assurance fund may not have been accumulated to assure prospective registrants of the ability of the fund to satisfy any claims which may arise in case of defective title. Although the Subcommittee’s report points out that the original cost of land title registration is considered commensurate with the protection received in Hawaii, Illinois, Massachusetts, and Minnesota, it further indicates that the initial cost of registration can and should be reduced in those States where the system is in successful operation. Even in those States where the system has not been in operation sufficiently long to build up an assurance fund, the original fee could well be reduced if the credit of the State were pledged. Substantial assurance funds have been accumulated in Massachusetts, Illinois, and Minnesota. Although there is no assurance fund in Hawaii, the credit of the Territory of Hawaii is pledged to guarantee the titles. During 38 years of successful operation of the Torrens law in Massachusetts, an assurance fund in excess of $250,000 has been accumulated.50 A registered title is furnished, which is backed not only by the assurance fund but also by the credit of the Commonwealth. During this entire period, only three claims in a total amount of $2,300 have been filed against the Massachusetts fund. The National Conference of Commissioners on Uniform State Laws has drafted a uniform land title registration law which has been recommended to the various States for enactment. The Subcommittee on Law and Legislation of the Central Housing Committee is of the opinion that the proposed act can be improved and 80 The Massachusetts law provides that after the fund has reached $200,000, the income therefrom shall be credited to the general fund for the purpose of defraying, as far as possible, the expenses of the administration of the law relative to the land court and the registration of title to land. For a discussion of the operation of the land title system in Massachusetts, see a pamphlet, Land Title Registration in Massachusetts (1937), by Clarence B. Hemphrey, Engineer for the Court, a copy of which may be obtained from the Land Court, Boston, Mass. made more workable, and has undertaken the task of redrafting it. The major improvement in the new draft will be the reduction of the high average initial cost which at present makes land title registration virtually out of the question for small-home owners. Another change will be the elimination of all exceptions from the certificates of title. Three methods will be provided under which land titles may be registered: 1. A long, expensive method such as that now in effect in some States and that provided for by the uniform land title registration act approved by the National Conference of Commissioners on Uniform State Laws, i. e., State examination of title with court confirmation prior to registration, which would necessitate a high initial cost for registration, but would insure the title against all defects both prior to and after registration. 2. A shorter and less expensive method whereby the land would be registered by the State on the basis of a responsible title certificate or of an attorney’s opinion, with a fee approximately half of that required by the first method, but which would cover, in addition to registration, the insurance 51 of the title up to a designated maximum amount against all defects both prior to and after registration. 3. A still shorter and less expensive method whereby the land would merely be registered by the State on the basis of a responsible title certificate or an attorney’s opinion, with no provision for insurance. After the expiration of the statute of limitations provided for in the act, a title registered under the second and third methods would be as perfect as those registered under the first method. Although the expense of the original registration of land under the first system might be too high for the ordinary purchaser of a home, the new act provides the alternatives of the two more economical methods. On the other hand, if a developer of a new subdivision gets his whole tract registered under the first system, before any subdivision takes place, the cost of registered title per lot would be nominal and the purchasers would be saved the expense of getting an absolutely guaranteed title or of being forced to take a certificate which is not absolutely guaranteed. It is believed that a land title registration system can be developed which would materially reduce the cost of proving title in the purchase, mortgage, or sale of real estate, provide a reliable system under which there would be no risk of loss through defective title in such transactions, and make for better and more stable title to real estate. 81 It is interesting to note, in this con nection, that out of a total premium income to title insurance companies of $12,091,125 in 1919 only $298,738 was paid for losses sustained by the assured. See Huebner, Property Insurance (New York, 1922), p. 479. National Resources Committee 26 - Supervision of Private Home Mortgage Financing Institutions During the depression of 1930-35, there was a complete breakdown of the corporate home-financing structure. Building and loan associations were unable to meet their shareholders’ applications for withdrawals. Insurance companies were unable in many instances to grant the loans applied for by their policy holders. Other mortgage lending institutions were unable to attain the degree of liquidity necessary to maintain their solvency. This breakdown was due largely to the fact that the assets of such institutions had been invested in home mortgage loans, which could not at that time be liquidated quickly, and to the inadequate regulation of building and loan associations, banks, insurance companies, and other mortgage-lending institutions by the various States. To relieve these mortgage-lending institutions of some of their “frozen” home mortgage investments and thereby enable them to attain some degree of liquidity, as well as to relieve home owners in distress and to place home mortgage financing upon a sounder basis, the Federal Government enacted the legislation and set up the Federal agencies discussed in the first part of this section. Through the supervision exercised and the rules and regulations promulgated by all of these Federal housing agencies, the Federal Government has given impetus to the movement toward long-term amortized, single mortgage lending and made mortgage loans a liquid, preferred type of investment. Furthermore, through supervision by various Federal agencies, the improper practices which accentuated the chaotic conditions in the home mortgage financing field have to a great extent been eradicated. The Federal Home Loan Bank Board charters and closely regulates and supervises Federal savings and loan associations. The same Board, acting as the Board of Trustees of the Federal Savings and Loan Insurance Corporation, exercises a degree of influence over insured Federal and State-chartered savings and loan associations. This Corporation, through its authorization to insure State-chartered savings and loan associations, subject to certain conditions, has instituted a number of improvements in the corporate structure and financing methods of these institutions. For instance, it has brought the corporate structure of insured State-chartered institutions into strict accord with the statutory requirements of their State and the charter provisions under which they operate. It has simplified and made more definite the form of share or investment contracts issued by such institutions. It has materially assisted in the present movement toward the elimination of the practices of charging fines and penalties and allowing forfeitures which made hazardous share investment in such institutions. However, the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation are able to supervise only a part of those institutions which make home mortgage loans. In the case of State-chartered savings and loan associations, whether or not they be members of the Federal Home Loan Banks or insured by the Federal Savings and Loan Insurance Corporation, it is impossible for those Federal agencies to exercise the control which is necessary to insure proper functioning at all times, since such control is vested in the State savings and loan authorities. In many instances, of course, the basic difficulty in the State-chartered savings and loan field is in the legislation authorizing the creation of State-chartered savings and loan associations and their supervision by the State building and loan supervisory authorities. In many instances, this legislation is now obsolete in the light of good mortgage lending practice. To serve as an illustrative guide for those States adopting a new law or revising their old laws in accordance with present day conditions, the legal department of the Federal Home Loan Bank Board and a committee of the United States Building and Loan League, working together, have prepared a standard savings and loan act,52 which has been made available to all State savings and loan supervisory authorities and to the various State legislatures.53 In addition, there are institutions other than Federal and State-chartered savings and loan associations which make home mortgage loans, such as savings banks, trust companies, life insurance companies, mortgage companies, commercial banks, as well as individuals. Although there is some supervision exercised over the aforementioned institutions by the appropriate State authorities, there is not in all cases sufficient supervision to assure proper practices. The State legislation authorizing this supervision and the efficacy of the supervision require review in the light of sound present day practice. Supervision of Private Large-Scale Housing Mortgage Financing Corporations Due to the large amount of funds required, the financing of the construction of apartment houses and other large-scale commercial housing facilities has been one of the most difficult problems in the entire housing field. Few individuals, groups of individuals, or corporations have had sufficient capital to meet the initial cost of such projects. M A copy of this act may bo obtained upon request from the United States Building and Loan League, Chicago, Ill. 53 The substance of the provisions of this act which relate to supervision have recently been enacted into law by the State of Georgia. Housing Monograph The usual practice in financing such developments has, of course, been to charter a corporation and sell to the public its stock, or to sell its bonds secured by mortgages on the property, which bonds were retired from the income received from the property, after payment of taxes, assessments, insurance and operating expenses. As such companies could be chartered under the laws of any State, the organizers would naturally choose the State where the least supervision was exercised. To meet such competition other States likewise provided for little supervision even though they realized the need for more stringent regulation. Consequently, little or no State supervision of such corporations became the rule rather than the exception, and many frauds were perpetrated upon the investing public. Furthermore, the depression period also brought to light certain other fundamental weaknesses in this method of financing. When the incomes of people were reduced so that they were unable to pay their rents, the income from these properties securing a bond issue would thereby be decreased, and there would be a default in interest and principal payments. It would thereupon become the duty of the trustee to exercise the power of sale contained in the deed of trust or mortgage instrument and foreclose upon the property, and the property would often be sold for from one-third to one-half of its “real” value. In thus realizing upon the security which underlay a bond issue during a depression period, the bondholders would lose anywhere from one-half to two-thirds of their investment. If, upon default in the terms of the contract, the privilege of foreclosure or power of sale was not immediately exercised, a lengthy and costly legal proceeding often arose on the part of the bondholders’ protective committee to have a receiver appointed and the possession of and the rents and profits from the property turned over to him for the benefit of the bondholders, pending foreclosure. In view of the need for expansion in this type of housing finance, for development of some effective form of supervision over the corporate structure and financial methods of such corporations, and for prevention of the distress sale of such housing properties during depression periods, it appeared necessary for the Federal Government to take some steps in this field of mortgage financing. Consequently, provision was made in title III of the National Housing Act of 1934 for the chartering of national mortgage associations by the Federal Housing Administrator. These associations were authorized to purchase and sell first mortgages and such other first liens as are commonly given to secure advances on real estate held m fee simple or under a lease for not less than 99 years, under the laws of the State in which the real estate is 27 located, together with the credit instruments, if any, secured hereby, and to borrow money for such purposes through the issuance of notes, bonds, debentures, or other such obligations. Insured mortgages on both single-family homes and on large-scale commercial housing projects, including limited-dividend corporations, were authdrized to be purchased by such associations and their bonds and debentures issued on the security thereof. These associations were to be under strict supervision by the Federal Housing Administrator. Therefore, in the National Housing Act Amendments of 1938, title HI of the National Housing Act of 1934 was amended by liberalizing the provisions for the chartering and operation of national mortgage associations so as to enable such institutions to begin operations when 25 percent of the required $2,000,000 minimum subscription to the capital stock had been paid in. Payments upon stock were permitted to be made in insured mortgages or uninsured first mortgages, the principal amount of which did not exceed 60 percent of the appraised value of the property at the time of subscription. The act was further amended to enable such institutions to issue debentures in an amount not to exceed 20 times the par value of the outstanding capital stock of such associations (rather than 12 times the par value as previously provided); to accept, at par and accrued interest, debentures issued by them in payment of obligations due them, provided such debentures were canceled and not re-issued; to purchase on the open market their own or other associations’ debentures; and to initiate, purchase, or sell mortgage loans covering single-family homes, large-scale rental properties, multifamily dwellings, or groups of single-family dwellings, which mortgage loans were acceptable for insurance under title II, whether the mortgages were actually insured or not, provided that the principal amount of an uninsured mortgage did not exceed 60 percent of the appraised value of the property. The act was also amended so as to provide that the debentures issued by such associations should be exempted from all taxation, Federal, State, or local (except surtaxes, estate, inheritance, and gift taxes), and that the associations themselves, including their franchises, capital, reserves, surplus, mortgage loans, income, and stock (but not including real property held by them), should likewise be exempted from all taxation. Although these national mortgage associations, when a sufficient number have been chartered, will facilitate the financing of large-scale private housing projects and be able to exercise a salutary control over the financing methods of companies initiating such projects, there still remains a need for greater State supervision over the initiating companies. National Resources Committee 28 Administration of Tax Collection Excluding State governments, there are in the United States 182,000 taxing jurisdictions, of which about 128,000 are school districts, about 3,000 are counties, about 14,000 are minor units, and the remainder are cities, townships, and other municipal governments. This large number of taxing jurisdictions is due to the fact that in most States, real property taxes are collected through small local units; and to the fact that, where the local unit is large enough to levy more than one kind of tax, there is often a separate collector for each tax. In such units, State, county, city, school, poor, road and other taxes may each be collected by a different tax collector. Likewise, special improvement districts usually have their own collectors. The multiplicity of tax collection agencies, acting for overlapping or coterminous jurisdictions, makes collection costs unnecessarily high and thereby increases the burden borne by home owners as well as all real estate owners. In addition, such a decentralization of tax collection makes more difficult the ascertainment of whether all taxes and assessments on a given piece of real estate are paid when due. B. E. Nicholson, in his study of the Collection of Local Tares in Pennsylvania, 54 estimates that from 5 to 6 cents of each dollar collected for taxes in that State are consumed by the costs of collection; that the people of Pennsylvania pay four or five times more for tax collection than do the people of Ohio, where there is a unified system of collection under the supervision of salaried county officials. He further estimates that an annual saving of from $2,000,000 to $3,000,000 would result should Pennsylvania adopt a system similar to that of Ohio. Under our present generally haphazard system of tax administration, mortgagees and other lienors are unable conveniently to keep a current check upon the payment of local taxes by the mortgagor, and are thereby put to considerable expense to see that their lien is not jeopardized by nonpayment of taxes and assessments. By way of illustration of this problem, it may be pointed out that it costs the Home Owners’ Loan Corporation approximately $350,000 a year to keep a check on the payment of taxes and assessments on properties on which it holds mortgages. There is no one office to which an inquiry may be addressed concerning the status of all taxes on a specific piece of property, so long as each taxing and special assessment unit has its own collector. Nor can one rely upon information obtained from the owner, for even though honest, he may be mistaken due to misinformation, error, or oversight. Furthermore, if the mortgagee is not a local resident, personal local supervision is impossible except through a paid agent. It is apparent that any system designed to afford current information to the mortgagee or other lienor must be premised upon a centralization of tax and special assessment collection. Provision could then be made as is the practice in some States whereby, on payment of a nominal fee, notice would be given interested parties of any delinquencies on land on which they held a lien. Provision could also be made for notice to those having an interest in real estate of the possibility of and the date of a sale of the realty to satisfy a tax lien. The Subcommittee on Law and Legislation, in a recent report on the “Administration of the Payment of Taxes on Real Estate,” 55 has made recommendations that State laws be advocated: (1) which would provide for a centralized system of tax collection under a single official, with the county or some other convenient geographical subdivision as the unit of operation, the official to be paid a salary rather than fees or commissions; (2) which would require the collectors of taxes and assessments to furnish for a small charge notice to mortgagees and other inquiring parties of delinquencies in tax payments; and (3) which would impose on purchasers of tax certificates or liens the duty of giving notice to those having an interest in or lien on the real estate affected prior to the foreclosure of such tax certificate or lien. At the request of the Central Housing Committee, the Subcommittee is now drafting a standard real estate tax collection act which will embody the above recommendations. A centralized system of tax collection would not only reduce the cost of tax collection but would also be far more efficient and convenient to the taxpayer. Furthermore, if notice is given mortgagees and other interested inquiring parties as to delinquency in taxes and special assessments, and as to the pendency of a sale to foreclose a tax lien, the cost and inconvenience of mortgage lending would be considerably reduced, and greater protection would be afforded both owners and lienors of property. Taxation of Private Housing Census figures show that, between 1921 and 1932, the average per capita general property tax levy by all States, their subdivisions, and the District of Columbia rose from $13.91 to $40.37. This average per capita levy is estimated to have increased to $45.17 in 1934, to $46.72 in 1935 and to $48.72 in 1936. This would represent an adjusted tax rate at present of about $26.30 per thousand dollars of property value. From 1912 to 1932, the net debt of cities, towns, villages, and boroughs increased 207.9 percent and that of school districts, townships, and other civil divisions m Thesis, University of Pennsylvania., 1932. M Special Report No. 4, Housing Monograph 29 increased 1,611 percent. These debts will probably be paid largely from additional taxes upon real property. Depression conditions brought an insistent demand for alterations in the system of general property taxation. It had long been known that personal property escaped assessment to a much larger degree than real property. As between different types of real property, it was found that in some jurisdictions homes bore a relatively larger proportion of the real property tax burden than did business and commercial properties. In other jurisdictions, the situation was reversed. Emergency conditions did not result in agitation for more equitable assessment under existing legislation but in action leading to arbitrary limitations on property tax rates and exemptions of certain types of real property. The swing toward exemption of homesteads from taxation has been the principal development in property taxation of interest to home owners. In recent years, the homestead tax exemption movement has grown by leaps and bounds. In 1933, eight States considered homestead tax exemption laws, and the States of Texas and West Virginia adopted such laws through constitutional amendment. During the following years, bills were brought before State legislatures in quick succession: in 1934, in three legislatures; in 1935, in 13; in 1936, in 5; and in 1937, in 18. By 1938, 13 States had passed laws providing for exemption or for a reduced tax rate on homesteads,68 2 States have passed constitutional amendments making such laws possible,67 and in 3 States constitutional amendments were awaiting action by the voters.68 The majority of the States restrict the exemption to owner-occupied properties. In some cases, the exemption applies only to State property taxes, and in other cases to all forms of ad valorem or general property taxation, including taxation by municipalities and special taxing jurisdictions. However, in all States having exemption laws, except Arkansas and Oklahoma, the homesteads are not exempt from taxation for preexisting bonded indebtedness.69 86Alabama, Arkansas, Georgia, Louisiana, Minnesota, Mississippi, Oklahoma. South Dakota, Texas, Vermont, Wyoming, Iowa, West Virginia. w North Carolina, Utah. «Florida, Pennsylvania, Rhode Island. 50 A tabular summary of the homestead tax exemption laws and constitutional amendments appears in the Federal Home Loan Bank Review, October 1937, pp. 7-10. The widespread growth of homestead tax exemptions raises general problems of who shall be exempt, how this exemption will affect other forms of taxes, and how it will burden other taxpayers. Opinion as to the desirability of homestead tax exemption has been sharply divided. Advocates of exemption cite the handicap that taxation places on home ownership and argue that homestead exemption would have several beneficial effects. ' These effects have been summarized to the 1934 Convention of the United States Building and Loan League, as follows: First, and most obvious, will be a rise in home values. Fol. lowing it, no doubt, there will be a period of new construction by those people who have been deterred from building their own homes because of the tax load which they have considered as being too great. That this is true is shown in the case of the State of Ohio where the decrease in taxation through limitation has been an important factor in the rise of real property values. Financing of homes will be easier, because the uncertainty of risk which makes up a part of the financing charge will be clarified. Lenders will be more willing to extend credit, and at higher ratios, since they will be assured that their first mortgage is in reality a first lien and not one subject to prior lien indefinite in amount. Since the cost of the money is also one of the factors making up the price of property, a tax reduction will result in substantial improvement in the home realty market. The final effect of such a homestead exemption will then transfer a large mass of individuals who are now in the tenant class to the home owning group, where previously the confiscatory nature of taxation on homes was the chief reason for their not undertaking home ownership. On the other hand, the Twentieth Century Fund’s recent study entitled Facing the Tax Problem denounces homestead tax exemptions, saying: . From the point of view of a just distribution of the tax burden we can see no merit in the homestead exemptions recently adopted in Florida and several other States. The most obvious injustice in such exemptions is that they discriminate against the tenant, who must bear in his rent at least part of the real estate tax burden on his dwelling, and favor the person who happens to be able and willing to own his home. It argues, furthermore, that the families which benefit from homestead exemptions are usually forced to pay an equal amount through some other form of taxation. In view of the conflict of opinion as to the prac-. ticability of the policy, careful study should be given this type of exemption before it is extended. 119119—39---------3 30 National Resources Committee PART 2. LEGAL ASPEGTS OF PUBLIC HOUSING By Leon H. Keyserling60 The United States Housing Act of 1937, complemented by State legislation, provides the legal mechanism for a national, public, low-rent housing program. > Within this framework, local housing authorities, cooperating with the United States Housing Authority, can move actively to deal with their local problems. The State laws, providing for tax-exempt, non-profit projects available for low-income families, have been sustained by the State courts. Restrictive Nature of Early Housing Legislation In the past, progress in resolving the housing problem, as reflected in local and Federal legislation, has been slow and groping. In the States, remedial measures have been predominantly of a restrictive character in the form of building and health codes dealing generally with construction, housing occupancy and maintenance, and zoning; or, more specifically, with sanitation, prevention of room overcrowding, structural safety and materials, room arrangements, plumbing, standards of maintenance, uses of property, fight, air, and access, fire protection, and similar subjects. These codes have been, at best, only guides to prospective builders and, however necessary to prevent the repetition in new construction of existing hazardous conditions, are no more than a negative approach to the housing problem. A second and supplementary approach has been by way of laws requiring the repair or demolition of existing unsafe and insanitary dwellings. But such steps as have been taken in this direction have been only mildly effective. Dangerous and unhealthful buildings comprising large slum areas still stand. This has been due, not so much to the absence of local authority or to the lack of constitutional power to grant such authority, as to the weaknesses inherent in the existing legislative schemes. In many instances, there has been too much and too diversified legislation with an absence of centralized responsibility—with the powers relating to the elimination of unfit dwellings distributed, for example, in many such uncorrelated public offices and bureaus as the fire marshal, building engineer, health officer, building inspector, tenement commission, safety commission and board of public works, or among State as well as local officials. Added to this defect have been such other factors as: a procedure which is too cumbersome, which involves too much expense, or which is too slow; defects relating to the powers of responsible officers and to the standards necessary to guide them in the enforcement of the laws and thus to protect them against criticism or liability; an understaffed or underpaid office responsible for enforcement; an apathy oh the part of those charged with the administration of the laws; political intervention by affected owners; and public indifference. In more recent years, some demolition of unfit houses by consent of owners has been accomplished through the use of Federal relief labor. Demolition by consent, however, is not a method upon which too much reliance can be placed. Unwillingness to demolish revenue-producing property irrespective of its condition, absentee ownership, reluctance of owners to advance what little cash may be required for repairs, and indifference of owners to the condition of their property all conspire to make this method of doubtful value in any long-range program for the elimination of unfit housing. Finally, the housing shortage which prevails in many of the larger cities has presented a practical obstacle to the elimination of substandard buildings. An illustration of this situation exists in New York City, where it has been virtually impossible to enforce demolition under the Multiple Dwelling Act, for if the public officers were to demolish the “old-law tenements” which violate that law, thousands of people would be unable to obtain quarters elsewhere at rentals they could afford. This latter fact points to the crux of the housing problem—that restrictive housing legislation of the types just mentioned, no matter how mechanically perfect or how energetically enforced, is alone impotent to remedy bad housing conditions; that at most it can ameliorate but cannot cure the evils of the slum. Constructive Legislation Isolated efforts have been made in the direction of State housing enterprises, through which homes are constructed by or on behalf of the State for sale or rent to such persons as industrial workers, veterans, or farmers, first, in 1917 under the Massachusetts Homestead Commission Act, followed in North Dakota by the passage of the Home Building Act and in Washington and California by the inauguration of land resettlement programs. Attempts also have been made to extend public aid to private housing enterprise either by State housing loans, as in Oklahoma, by tax exemption to limited-dividend housing corporation enterprises, as in New York, or by municipal cooperation, as in New Jersey (where cities have been authorized to exert the power of eminent domain on behalf of private housing projects) and in Wisconsin (where cities have been authorized to invest in cooperative housing corporations). These local efforts in constructive housing, «° Leon H. Keyserling is Deputy Administrator and General Counsel of the United States Housing Authority. Housing Monograph 31 however, have fallen short of their intended purpose, that is, to produce housing within the financial reach of the low income groups sought to be benefited. They are significant only as the beginnings of legislative recognition of the need for public housing aid. Housing by the Federal Government Prior to 1937 War Time Measures Almost simultaneously with the initial State ventures into the field of constructive housing, the Federal Government in 1918 first undertook direct home construction as a war measure through the United States Housing Corporation and the United States Shipping Board Emergency Fleet Corporation. With the signing of the armistice, this experiment was abandoned; and it was not until the recent depression years that the Federal Government again played a role in public housing—again as an emergency expedient, this time as an unemployment relief measure. Aids to Limited-Dividend Companies Under the Emergency Relief and Construction Act of 1932 and under title II of the National Industrial Recovery Act of 1933, first the Reconstruction Finance Corporation and then the Public Works Administration were authorized to make loans to limited-dividend housing corporations for low-rent housing projects. Mortgages on such projects, moreover, were authorized to be insured by the Federal Housing Administration under the National Housing Act (1934), as amended. These were complementary means of encouraging reem-ployment through the private construction of homes for persons in the low economic levels—persons for whom private enterprise had not previously been tempted to build and for whom there was a dearth of decent housing. The experience under these acts, like that under analogous State acts, demonstrated quite conclusively that dwellings within the reach of persons in the low economic levels could not be provided without the aid of Government subsidies (such as direct grants, tax exemption, etc.) and the use of the power of eminent domain. Private enterprise, being generally ineligible for such aid and, moreover, demanding some profit even though limited, could not be depended upon to meet the need for a constructive housing program. Thus, the Public Works Administration suspended the limiteddividend-loan policy early in 1934 and decided that the remainder of the funds then available under the National Industrial Recovery Act would be used only for public low-rent housing and slum clearance. That act permitted two possible methods of effecting this purpose: either construction by local public agencies with the aid of Federal loans and grants, or direct construction by the Federal Government. Direct Construction by the Public Works Administration and Farm Security Administration Due to the absence at that time of adequate State laws authorizing local public bodies to engage in housing activities, the Public Works Administration turned to the only method then available, namely, direct Federal construction. In the Emergency Relief Appropriation Act of 1935, Congress extended the life of the Public Works Administration including its power to engage in housing. Under that act, also, the President, by Executive order, established the Resettlement Administration (now the Farm Security Administration in the Department of Agriculture) and authorized it to engage in suburban and rural housing. However, the curtailment of the Federal relief program in 1936 once more brought these Federal housing activities to an end. Of all of the public housing activities prior to 1937, State or Federal, that of the Public Works Administration is by far the most outstanding. It was the first intensive public housing program the country had known. Fifty-one projects were undertaken in 36 cities as well as in Puerto Rico and the Virgin Islands, providing approximately 21,770 dwelling units for an estimated total of 87,000 persons. It was the first real attempt to correlate slum clearance and the construction of new dwellings for the low-income groups compelled to live under slum conditions, that is, the restrictive and the constructive phases of housing reform. It stimulated the enactment of State enabling housing laws; it gave impetus and direction to the long-existent demand for the Nation-wide housing program which was to follow; and finally, it provided the practical and legal background for the development of such a program. Certain legal questions arose when direct construction was undertaken by the Federal Government. Acquisition of property for low-rent housing projects brought with it the question of whether persons occupying such premises would be under the exclusive jurisdiction and control of the Federal Government. Questions arose as to whether such tenants were entitled to vote in the State wherein the projects were located, were subject to the civil and criminal laws of the State or local government, were entitled to seek redress from the courts in the State, and could take advantage of the schooling and other privileges accorded other residents of the community. These questions were resolved when Congress enacted two laws, one relating to the Public Works Administration housing projects (49 Stat. 2025) and one relating to the Resettlement Administration housing projects (49 Stat. 2035). These laws expressly declared that the civil and criminal jurisdiction of the State wherein a Federal housing project was located should not be impaired by the acquisition of property therein by the Federal Government for a hous 32 National Resources Committee ing project and that the civil rights of persons residing on such property should not be affected. Furthermore, these two acts disposed of another legal question which had arisen as a result of the Comptroller General’s decision dealing with the power of the Federal Government to make payments in lieu of taxes which would have been levied on the projects had they not been owned by the Federal Government. Both acts specifically authorized the respective agencies to make payments to the local taxing body of sums in lieu of taxes, based upon the cost of the public or municipal services to be supplied for the benefit of the project. There were even more serious legal issues, principally those relating to the power of the Federal Government to undertake direct home construction and the right to exercise the power of eminent domain therefor. The most fundamental of these questions is, naturally, that which relates to the power of the Federal Government to undertake housing and slum clearance projects. Several actions were instituted for the purpose of presenting this question to the courts, one of the most important being that in the case of Township of Franklin v. Tugwell, decided by the United States Court of Appeals for the District of Columbia (85 F. (2d) 208, 1936). Suit was brought to enjoin the expenditure of Federal funds for the purchase of lands for a Resettlement Administration project. The court held that insofar as the Emergency Relief Appropriation Act of 1935 purported to authorize the particular project contemplated, it was unconstitutional for the reason that Congress lacked the power to authorize such projects. In short, the court found that there was no relationship between the housing projects of the Resettlement Administration and the general welfare. The question with regard to eminent domain arose in condemnation suits instituted for the purpose of clearing titles in areas contemplated as sites for Public Works Administration housing projects. In three such suits, arising in Louisville, Ky., Detroit, Mich., and the District of Columbia, the power of the Federal Government to condemn land for low-rent housing was denied on the ground that the taking of land for such purpose by the Federal Government was not a taking for a public use. {United States v. Certain Lands in City of Louisville, 78 F. (2d) 684, 1935; United States v. Certain Lands in City of Detroit, 12 Fed. Supp. 345, 1935; In the Matter of the Acquisition of all Privately Owned Land, Etc., 63 Wash. Law Rep. 822, 1935.) It should be noted that these three cases, as well as the Tugwell case, were lower Federal court decisions and that the United States Supreme Court did not pass on the issues raised. Alley Dwelling Authority No discussion of direct Federal construction would be complete without some mention of the entrance by the Federal Government in this field through the Alley Dwelling Authority. This agency was authorized by Congress in 1934 to rid the District of Columbia of its inhabited alleys. (By amendments to the Alley Dwelling Act in 1938, the Alley Dwelling Authority was authorized to borrow money from the United States Housing Authority to undertake a general program of low-rent housing in the District of Columbia.) The constitutionality of the Alley Dwelling Authority’s power to condemn has been sustained. It should be noted, in this connection, that in sustaining the power of the Alley Dwelling Authority to condemn, the courts were not inconsistent with decisions holding that the Federal Government did not have the power to condemn for housing purposes, inasmuch as the Alley Dwelling Authority cases were, to a large extent, decided on the basis that Congress, in the exercise of its exclusive legislative power over the District of Columbia, could authorize the use of eminent domain to correct an evil which could not be treated adequately by the use of the police power. The United States Housing Act of 1937 The decisions holding that the Federal Government lacked the power to condemn for housing purposes, the realization that many aspects of housing are local problems and that the Federal Government should act only in a financing and advisory capacity, and the gradual growth in the number of States having local enabling housing legislation pointed the legal way for the decentralized housing program for which Congress made provision in the United States Housing Act of 1937. That act creates in the Department of the Interior the United States Housing Authority as a permanent corporation, beaded by an Administrator appointed by the President for a term of 5 years. It authorizes this corporation to lend and to make grants to public housing agencies to aid in the development of their low-rent housing and slum-clearance programs. A public housing agency means any State, Territory, dependency, and possession of the United States, the District of Columbia, the District of Columbia Alley Dwelling Authority, and any county, municipality, political subdivision, public body or public corporation which is authorized by law to engage in the development or administration of low-rent housing or slum clearance. Broadly speaking, the aid which public housing agencies may receive may be divided into two types: grants and loans. The grants, in turn, are of two types. The first, and the more important, is the annual contributions type, by which the Authority may pay to a public Housing Monograph 33 housing agency annually for a period not to exceed 60 years, and pursuant to an annual-contributions contract, a sum equivalent to the going Federal rate of interest plus one percent of the development cost of a project. (The going Federal rate of interest is defined in the act as being the rate of interest specified in the then most recently issued bonds of the Federal Government having a maturity of 10 years or more.) By virtue of the amendments to the United States Housing Act adopted in June 1938, the annual-contributions contracts into which the Authority may enter are limited to those calling for payments of not more than $28,000,000 per year. The other form of Federal subsidy is the capital grant. Where a public housing agency can demonstrate that the capital-grant method is better suited to the purpose of achieving low rentals than the annual contributions method, the Authority may make a capital grant to aid in financing the construction of a project, but this capital grant may not exceed 25 percent of the project’s development cost. To supplement this capital grant, the President may allocate to the Authority, from any funds available for the relief of unemployment, an additional capital grant of not to exceed 15 percent of the project’s development cost, to be expended for the payment of labor. The total capital grants which the Authority may agree to make may not aggregate more than $30,000,000, of which $20,000,000 may be made after July 1, 1938, and an additional $10,000,000 after July 1, 1939. Funds for the purpose of making either the annual contributions or the capital grants are to be available to the Authority from appropriations authorized to be made by Congress. It is important to note, in this connection, that with reference to the annual contributions, the faith of the United States is “solemnly pledged” to their payment. The Authority may make to public housing agencies loans bearing interest at not less than the going Federal rate of interest plus one-half of 1 percent, these loans to mature in not more than 60 years and, where annual contributions are made, not to exceed 90 percent of a project’s development cost. These obligations and the interest thereon are exempt from taxation now or hereafter imposed by the United States. The loan authorization program of the Authority is, by virtue of the 1938 amendments, $800,000,000. Funds for these loans are derived by the Authority from the proceeds of the sale of its own Federally guaranteed tax-exempt bonds. It is to be observed that the payments under annual contributions contracts must be pledged as security for any loans obtained by a public housing agency, although annual contributions must first be used to apply toward the payment of interest or principal on any loans due to the Authority from the public housing agencies. The term “any loan due to the Authority,” as just used, means any loan made by the Authority to assist in the development of a project, including any bonds or other evidences of such loan which the Authority has resold. Not more than 10 percent of the funds provided for in the act may be expended within any one State. The provisions of the act which thus far have been described relate, essentially, to the powers of the Federal Authority. The act, however, conditions financial assistance from the Authority upon the observance of obligations which the local public housing agencies must discharge if they are to be eligible to receive this aid. These obligations are several: First, to raise at least 10 percent of a project’s cost; second, to see that the State, county, city, or other political subdivision in which the project is located contributes in the form of cash, tax exemptions or tax remissions at least 20 percent of the Federal annual contributions; third, to observe the limitations, upon the construction cost of the dwelling facilities’ portion of a project of $4,000 per dwelling unit and $1,000 per room in cities where the population is 500,000 or less and $5,000 per dwelling unit and $1,250 per room in cities where the population exceeds 500,000; fourth, in the development and administration of the projects, to require the payment to all architects, technical engineers, draftsmen, technicians, laborers, and mechanics of wages or fees prevailing in the locality; and fifth, to rent the completed projects only to families of low income, which, by the terms of the act means families in the lowest income group, who cannot afford to pay enough to cause private enterprise in their locality or metropolitan area to supply them adequately with decent, safe and sanitary dwellings, and whose net income at the time of admission does not exceed five times the rental (including the value or cost to them of utility services), or in the case of families with three or more minor dependents, six times such rental. The Constitutionality of the United States Housing Act In discussing this act from a legal point of view, the paramount question is: Can it resist attacks upon its constitutionality in the courts? It is apparent, from the general review of the act, that consideration of the validity of this measure must be directed to the following issues: . 1. Does Congress have power to appropriate in aid of slum clearance and low-rent housing and for the employment relief which such action produces? 2. If Congress has this power, do any attendant purposes or methods or consequences of the United States Housing Act violate the Tenth Amendment? 34 National liesources Committee 3. Is there an improper delegation of legislative power under the act? 4. Does a prospective litigant have a standing in court to question the validity of the act? The power of Congress to appropriate money for slum clearance and low-rent housing, if it resides anywhere, must reside in the right to “provide for the general welfare.” Three important views have been taken with respect to the general welfare clause. The first view is that it confers an entirely independent and plenary power upon Congress. The second view, advanced by Madison, is that the general welfare clause has no separate significance whatsoever, but is strictly limited by subsequent direct grants of specific powers to Congress. The third view, supported by Hamilton and Story, is that the general welfare clause is a limitation upon the taxing power, and by impheation upon the spending power, but that it is not limited by the subsequent direct grants of power to Congress. The opinion of Mr. Justice Roberts, written for the Supreme Court in the case of United States v. Butler (297 U. S. 1, 1936), involving the constitutionality of the Agricultural Adjustment Act,decided unequivo-cably in favor of the third view—that the right of Congress to spend for the general welfare is not limited by the other enumerated powers of Congress. That expenditures for unemployment relief fall within the welfare clause can hardly be questioned after the opinion of Mr. Justice Cardozo for the Supreme Court in Steward Machine Co. v. Davis (301 U. S. 548, 1937), sustaining parts of the Social Security Act. While it is impossible to conceive of a Nationwide building program that would not substantially and directly relieve unemployment, it seems clear that low-rent housing and slum clearance standing on their own feet can be brought under the general welfare clause. In Green v. Frazier (253 U. S. 233, 1920), the Supreme Court upheld the power of the State of North Dakota to provide homes for its residents. While this decision merely held that housing was a public purpose, the only additional feature necessary to bring housing under the general welfare clause would be to regard it as a public purpose national in scope. In terms of the wide-spread character of the evil, its effect upon the national health, morals and security, and the inability of the localities themselves to handle the problem, it is hard to see how slum clearance is any less a matter of the general welfare than unemployment relief. The second question is whether any attendant purposes or methods or consequences of the United States Housing Act violate the Tenth Amendment. In the Butler case, Mr. Justice Roberts did not hold clearly that Congress could not appropriate money for agricultural subsidies under the general welfare clause. If he had so held, there would have been no need for the Court to go into the question of the limitations imposed by the Tenth Amendment. But Mr. Justice Roberts did hold clearly that even a valid expenditure under the welfare clause would be invalid if made a vehicle for the regulation in substance by Congress of an activity which he held to be reserved to the States by the Tenth Amendment—namely, agricultural production. This decision was not dissimilar in its broad, essential constitutional philosophy to Hammer v. Dagenhart (247 U. S. 251), decided in 1917. In that case, the Supreme Court had held that the power of Congress to regulate interstate commerce could not be used to implement regulation in substance by Congress of a matter supposedly reserved to the States—the employment of child labor. The strongest protestant against the view that a specific grant of power to Congress could be cut down because of its incidental purposes or effects was Mr. Justice Holmes. Dissenting in Hammer v. Dagenhart, he said that a specific grant of power to Congress was plenary, and insofar as the exercise of the power satisfied due process, he argued that it could not be restricted because of any effect which it might have upon matters within the borders of the several States. No one on the Court has yet gone quite as far as Mr. Justice Holmes in this direction. The dissent of Mr. Justice Stone in the Butler case was based largely on the view that the agricultural benefits constituted a mere inducement to farmers and not coercion. It may be difficult in future cases, however, to determine where inducement ends and coercion begins. For real clarification of this difficult question, attention must be focused on the opinion of Mr. Justice Cardozo in the Steward case. Here, the Court held that where the conditions exacted of the State in return for a receipt of money were conditions incidental to the proper devotion of the money to the purposes for which it was intended, then the conditions did not violate the Tenth Amendment. It was otherwise in the Butler case, where the restriction of production was held to be a regulatory matter unrelated to the use of the money Congress was spending. In other words, the Court has drawn a distinction between the use of money in connection with a plan of regulation, and a mere insistence that the agent through whom the money is spent spend it in accordance with the purposes which called it forth. The first was held unconstitutional, the second was not. To hold otherwise as to the second would overthrow the entire system of Federal grants-in-aid. While the distinction drawn by the Court is certainly not without meaning, it is not clear that it will be easy to apply the distinction in all future cases. The Court may be driven either in the direction of more general Housing Monograph 35 application of the Butler and Dagenhart cases, or to full acceptance of the principles enunciated by Mr. Justice Holmes years ago. In any event, the Steward case seems to remove the likelihood that the Tenth Amendment presents any bar to the United States Housing Act. For in that act, there is no regulation whatsoever imposed upon the local housing authorities, but only conditions incidental to the devotion of money to the public purposes for which Congress intended it. There is no coercion whatsoever, because no State is brought into the picture unless it voluntarily enacts a public housing law. The voluntaryism here is far greater than the voluntaryism of State action which Mr. Justice Cardozo held sufficient. A more recent case, United States v. Bekins (82 L. Ed. 751, 1938), sustaining the so-called Second Municipal Bankruptcy Act, makes it even clearer that the Tenth Amendment does not prohibit the States from contracting voluntarily to assent to conditions that in the words of the Supreme Court “will assure a fair and just requital for benefits received.” The third question is whether there is an unconstitutional delegation of power under the act. The exactitude of standards and limitations set forth in the United States Housing Act seem beyond question to remove the statute from the criticism which struck down the National Recovery Administration in the “Hot Oil” (Panama Refining Co. v. Ryan, 293 U. S. 388, 1935) and “Sick Chicken” (Schechter Poultry Corp. v. United States, 295 U. S. 495, 1935) cases. A mere enumeration of the standards imposed upon the Administration by the act, in fact, will show them to be more precise than in many of the Federal statutes which have been sustained by the Supreme Court. Thus, loans and subsidies are specifically limited as to time and amounts and conditions; “public housing agencies” are defined and financial aid restricted to such agencies; the amount to be expended in any one State is fixed; “slum clearance” and “low-rent housing” and “families of low income” are defined; and maximum construction costs of housing projects and definite labor standards are prescribed. The fourth question is whether a prospective litigant has a standing in court to question the validity of the act. The constitutionality of the act might be challenged by a bill to enjoin the consummation of financial transactions, such as contracts for loans and annual contributions entered into between the United States Housing Authority and local housing agencies. The two types of persons who might attain a standing to sue by virtue of action affecting their interests would be: first, taxpayers whose future tax burdens might allegedly be increased; and second, persons engaged in private housing for profit with whom public housing might allegedly be in competition. As to taxpayers, it is well established that a taxpayer cannot prevent enforcement of a Federal statute on the basis of remote and uncertain fluctuations or increases in future taxation. (See Frothingham v. Mellon, 262 U. S. 447, 1923, and Franklin v. Tugwell, 85 F. (2d) 208, 1936.) As to those alleging the competition of public housing, the recent decision in the case of Alabama Power Co. v. Ickes (302 U. S. 464, 1938) settled the point that a private citizen has no legal standing to complain against lawful competition arising from a lawful public enterprise financed with the aid of public moneys. Besides, on the facts, it is generally conceded that public housing does not compete with private enterprise. Legal Effect of Federal Annual Contribution Contracts Apart from the question of the constitutionality of the United States Housing Act, there is a further legal problem arising out of the act: that of the legal effect of contracts entered into between the United States Housing Authority and local housing agencies for the payment of annual contributions. In considering the legal effect of such contracts, two lines of inquiry should be pursued: (a) are annual contributions contracts binding obligations of the United States Housing Authority and of the Federal Government, and if so (6) are these contracts legally enforceable? Annual contributions, as previously mentioned, are those Federal subsidies which may be paid to assist in achieving and maintaining the low-rent character of local public housing projects, over such periods of time, not in excess of 60 years, and in such amounts as the Authority may determine. Specifically, it is to be noted that Congress has expressly required that the Authority “embody the provisions for such annual contributions in a contract guaranteeing their payment;” that the aggregate amount payable per annum under these contracts be limited to $28,000,000; and that these contracts be approved by the President. It is to be noted, further, that Congress has provided that “all payments of annual contributions shall be made out of any funds available to the Authority [except its capital and the proceeds from its bonds] when such payments are due;” that “the faith of the United States is solemnly pledged to the payment of all annual contributions contracted for;” and that there is “authorized to be appropriated in each fiscal year, out of any money in the Treasury not otherwise appropriated, the amount necessary to provide for such payments.” From these provisions and from the legislative history ot the act, it seems clear that Congress intended the Authority as well as the United States Government to be legally obligated to fulfill the contributions contracts. 36 National Resources Committee Nor is this any the less true because the Authority, in contracting for the payment of annual contributions, must necessarily undertake to contract for an expenditure in the future for which appropriations have not yet been made by Congress. There is statutory foundation as well as case authority for the proposition that contracts may be entered into by Federal instrumentalities for payments in excess of moneys then appropriated, provided only that the making of such contracts has been specifically authorized.61 Assuming the validity of annual contributions contracts, are they legally enforceable? By the terms of the United States Housing Act, the Authority is a “body corporate of perpetual duration” which may sue and be sued in its own name and be represented in all litigated matters by the Attorney General. Accordingly, the Authority is open to suit, in the event of default, by a contracting local housing agency. This being true, the United States Government, on the agency theory, may be joined in such a suit against the Authority or (by virtue of U. S. C., Title 28, Secs. 25 and 41, giving the Court of Claims jurisdiction over all legal liabilities incurred by the United States under contracts, express or implied, laws of Congress or regulations of Executive Departments, and giving the district courts concurrent jurisdiction over all such claims not exceeding $10,000) may be sued separately. Of course, there is no means of compelling Congress to appropriate money to the Authority for the payment of judgments rendered against it, or to appropriate money to meet a proper judgment against the United States. However, statutory provision has been made for the submission of a judgment of the United States Courts to Congress for payment (U. S. C., Title 31, Sec. 583); and, as a matter of fact, Congress has never failed to appropriate sufficient funds to meet such judgments. Moreover, to the extent that the Authority itself might have funds on hand available for the payment of annual contributions, there is little doubt that a judgment against the Authority would be subject to enforcement by way of mandamus. For the foregoing reasons, it seems clear, as a legal matter, that annual contributions contracts entered into pursuant to the United States Housing Act are binding obligations, which, as a practical matter, are enforceable against the Authority as well as the Federal Government. Analysis of State Housing Legislation State Enabling Legislation As previously stated, the United States Housing 61 See U. S. O., Title 31, Sec. 627 and ibid., Title 41, Sec. 11. Also, Bradley v. United States, 98 U. S. 104, 113, affirming 13 Ct. Cl. 166, 1878; Sutton v. United States, 266 U. S. 676, affirming and modifying 65 Ct. Cl. 193, 1921; Collins v. United States, 15 Ct. Cl. 22,25; and Shipman v United States, 18 Ct. Cl. 138.147. Act contemplates a decentralized program, with Federal participation limited to financial assistance for the construction of low-rent housing projects and the clearance of slums undertaken by local public bodies. Accordingly, State legislation enabling such bodies to engage in housing is a prerequisite to local participation in the benefits of the Federal Act. As of October 1938, 33 States 62 and the two territories of Hawaii and Puerto Rico had such legislation. The form which State enabling housing legislation has taken has not been uniform. Nor has there been any uniformity in the number of laws adopted in any one State in order to round Out its enabling legislation. Thus, in some States there is merely the housing authorities law; in others, there are housing authorities and housing cooperation laws; in addition, in some States there are one or more of the following: State housing board, tax exemption, police power, eminent domain, and validating laws. Citations to these various housing laws are contained in chart I. Although it is true that there is no uniformity in the various laws, running through practically all of them is one common feature: the creation of or the authorization to create local housing authorities. These local housing authorities are corporate entities, separate and distinct from the State itself as well as from the counties and municipalities of the State. Their sole function is that of financing, constructing, and operating low-rent housing projects in order to further a local low-rent housing and slum clearance program. They do not have the power to levy taxes or to exercise the police power. They depend for their revenues on the income-producing capacities of the projects they undertake and on subsidies received from the Federal and local governments. They do have the power to issue bonds to finance their projects, secured only by such revenues and, in some instances, by a mortgage on the project. In no case, can they issue a bond which would be an obligation of the State or municipality in which they operate. The use of the housing authority as an instrumentality for effecting a local housing program, rather than the direct undertaking of such a program by the municipalities or other local governments themselves, prevails for legal as well as practical reasons. The constitutions of many of the States contain limitations and restrictions on the incurring of indebtedness by the States and their political subdivisions. Moreover, the financial and tax conditions of the States are such that it would be impractical to obtain laws providing for the use of tax moneys to finance public housing projects. The use of the authority obviates these difficulties. The legal problems which would be faced in an 82 See charts, infra. Housing Monograph, 37 attempt to authorize the municipalities or other public bodies themselves to undertake a local low-rent housing or slum clearance program, particularly in terms of constitutional debt limitations, are shown in a table in the Municipal Year Book for 1936, to which the reader is referred.63 Moreover, the authority can be managed by experts trained in this highly specialized and technical field. Its lack of power to tax, to exercise police power, to enact penal ordinances, to regulate the use of streets, and to license are all factors which meet with the approval of those who are concerned with the threat of rising taxes and overlapping governmental functions. It qualifies, when properly set up, as a public body eligible for financial and other assistance from the State and municipal governments, and has the necessary statutory power to participate in the program of Federal aid under the United States Housing Act. Jurisdiction of State Agency or State Officer In many of the States, the housing legislation, in addition to creating or authorizing the creation of local housing authorities, provides for some type of jurisdiction over the operation of these local authorities by a State board or State officer. In general, this type of legislation falls into three classes: the creation of a State housing board which, from State to State, has varying degrees of regulatory and supervisory powers over the local housing authorities; the requirement that certain activities of the local housing authority must be approved by a State agency, other than the State housing board; and the imposition of additional duties upon some State officer in connection with certain aspects of a local housing authority’s activities. Distribution of these powers is shown in chart II. State Housing Authorities It is important to distinguish between State housing boards and State housing authorities. The former are intended to have varying amounts of jurisdiction over local housing authorities; the latter are intended to have power, themselves, to undertake a housing program. Aside from practical considerations, the desirability of one type of authority over the other often depends not on the size of the State, the population of any particular city in the State, or similar practical aspects of the problem but rather on the legal framework of the State in which the particular authority will have to function. Where there are constitutional limitations and restrictions on the incurring of indebtedness by the States, the creation of a State authority raises a serious 63 Table VIII. Constitutional and Statutory Debt Limits; General Provisions as of January 1, J9S6, pp. 319-324, International City Managers’ Association, Chicago. 119119—39----------4 constitutional question as to the validity of bonds issued by such an authority. For example, the highest court of New Jersey has held the obligations of a State Commission to be debts of the State, subject to the constitutional restriction prohibiting any State indebtedness in excess of $100,000 without a State-wide election. (Wilson v. State Water Supply Commission, 84 N. J. Eq. 150, 93 Atl. 732,1915.) As a result of this decision, it was believed that the State housing authority would have difficulty in selling its bonds, either to the Federal Government or to private investors. Since this constitutional debt restriction in New Jersey applies only to the State and not to the local public bodies, the New Jersey housing law was amended, at the 1938 session, to provide for the use of local housing authorities in order to avoid the legal questions which would otherwise arise with regard to bonds issued for housing in that State. In Maryland, a similar question existed regarding the validity of the bonds of a State housing authority. Consequently, although legislation existed which provided for a State housing authority, the Maryland legislature, like the New Jersey legislature, amended its housing law in 1937 to provide for local housing authorities. Territorial, Organizational, and Administrative Provisions As has been noted, there are substantial variations from housing law to housing law. This is particularly true with reference to the public bodies within a State which may authorize the authority to function. In some States, only cities of certain classes may authorize an authority to function; in some, only cities above a certain population; in some, towns may also authorize authorities to function; and in some, the governing body of a county may authorize housing authorities to function within the county. As a general rule, county housing authorities may not operate in cities which have already created housing authorities. Housing problems, of course, know no geographic boundaries, but generally the greatest blighted areas are found in metropolitan centers. It is this situation which accounts for the fact that the area of operation of a local housing authority is usually the area of the public body which has authorized it to function, plus the territory within a radius of 5 or 10 miles beyond its boundaries. Although there is no absolute uniformity as to the terms of the members of an authority, the term is generally fixed at 5 years, and on a staggered basis. Similarly, it is interesting to note that in most of the States, a housing authority commissioner receives no compensation, although he is entitled to necessary expenses. A few other generalizations concerning the personnel of housing authorities would include the fact that seldom 38 National Resources Committee may housing authority members be city officials; that authorities may employ a secretary and such technical experts, attorneys, and other officers as they may require; that commissioners are ordinarily removable for stated reasons, including inefficiency, neglect of duty, or misconduct in office. Chart III contains an analysis of the various territorial, organizational, and administrative provisions appearing in the State housing enabling laws. Tenant Selection Most of the acts provide that the projects may be rented only to persons of low income and that these projects must be such as will provide safe and sanitary quarters without overcrowding. It will be recalled that under the United States Housing Act only the lowest income families are eligible as tenants in Federally financed projects, whose income at the time of admission does not exceed five times the rental of the quarters to be furnished (or for families with three or more minor dependents, six times the rental). Naturally, since most of the housing laws were adopted before the United States Housing Authority Act, they do not embody corresponding tenant-selection provisions. Nevertheless, it is true that either in the late acts or by virtue of amendments to older laws, in more than half of the States and in Puerto Rico, provisions relating to the ratio between the rental and the tenants’ incomes correspond to the similar provisions in the United States Housing Act. Chart IV contains an analysis of the tenant selection and occupancy restrictions. Rentals Consistent with the purpose of the local housing legislation, the predominant characteristic with reference to rentals is that they must be the lowest possible rates obtainable for soundly-constructed and soundly-financed dwellings. These low rentals are assured in most of the laws by provisions for Federal and local subsidies, by limitations upon construction costs per room and per dwelling unit, by provision for the financing and maintenance items which rentals must be high enough to meet but not exceed, and also by provisions restricting the housing authorities to strictly nonprofit operations. An analysis of the rental provisions appears in chart V. Cooperation Provisions For the States to be properly prepared to participate in the Federal housing program, certain cooperation powers are necessary. Where Federal annual contributions are made, Federal loans under the United States Housing Act are limited to 90 percent of the development cost of a project, and Federal subsidies are contingent upon a local contribution, equivalent to 20 percent of the Federal contributions, and upon the repair or demolition of substandard dwellings equal in number to the new dwellings to be constructed. Finally, any Federal assistance is conditioned upon the ability of the local authority to construct projects upon which rentals will in fact be sufficiently low to make them available to those families whose incomes are so low as to compel them now to live under slum conditions. Because the authority is a body with limited powers—powers inadequate to enable it alone to meet the requirements of the Federal act—other local bodies must be authorized to grant various forms of aid and assistance to the housing authorities. To that end, practically all of the States, either through housing authority legislation or through separate housing cooperation laws (see chart VI), confer upon cities, towns, counties, commissions, districts, and other political subdivisions and public bodies of the State some or all of the following powers: 1. To dedicate, sell, convey, or lease any property to a housing authority. 2. To provide and maintain parks, sewerage, water, and other facilities adjacent to or in connection with housing projects. 3. To enter into any agreement to open, close, pave, install, or change the grade of streets, roads, roadways, alleys, sidewalks, or other such facilities. 4. To incur the entire expense (subject to reimbursement by the authority) of any public improvements without assessment against abutting property owners. 5. To make any sale, conveyance, or lease without appraisal, public notice, advertisement, or public bidding. 6. To donate or loan money to a housing authority. 7. To invest in authority bonds. 8. To plan or replan, zone or rezone any part of such State subdivision. 9. To make exceptions from building regulations and ordinances. 10. In the case of a city, to change its map. 11. To enter into agreements with a housing authority or the Federal Government respecting action to be taken by such public body pursuant to any of the powers granted. 12. To grant easements, licenses, or any other rights or privileges to a housing authority. 13. To provide the customary services for the benefit of the occupants of housing projects. 14. In the case of a municipal corporation, to contract with a housing authority with respect to a sum or sums (if any) which the housing authority or Federal Government may agree to pay during any year or period of years for any improvements or services to be furnished by said municipal corporation. (This provision, of course, is complementary to the provisions in the housing authorities law relating to tax exemption.) Housing Monograph 39 15. To make appropriations for preliminary and overhead expenses of an authority. 16. To acquire land by eminent domain for an authority. 17. To enter into agreements with a housing authority with respect to their exercise of the powers relating to the repair, eliminating, or closing of unsafe, insanitary, or unfit dwellings. 18. To do any and all things necessary or convenient to aid and cooperate in the planning, undertaking, construction, or operation of housing projects. Bonds Provisions in the State laws relating to the investment of public funds (as well as private trust funds) in the bonds of local housing authorities are designed to facilitate the financing of housing projects, particularly the 10 percent of a project’s development cost which is required by the Federal act to be raised locally. These provisions are widely variant, some being very broad, others too restrictive. Some of the laws specify that any bonds of a housing authority may be purchased by the state or local governments; other laws require that the bonds be a first lien upon the revenues; other laws contain the additional requirement that the total amount of the bonds outstanding shall not exceed a certain percentage of the value of the property, usually 66% percent; while still other laws which impose a percentage or lien limitation except from this limitation the state and municipalities located within the area of the housing authority (such an exception being a desirable means of enabling greater cooperation by the state and by municipalities which are immediately concerned with the activities of the particular authority). In considering the provisions limiting investments to bonds which do not exceed a percentage of the value of the property, it should be noted that these were enacted at a time when the capital grant method of providing the Federal subsidy was contemplated. Now that the United States Housing Act provides for annual contributions by the Federal Government, these provisions of the State laws may have to be amended so as to permit local governments to invest in any bonds of local authorities which are additionally secured by a pledge of the Federal annual contributions. These provisions, insofar as they relate to the investment of other than public funds, are important because they tend to enlist private capital in a low-rent housing program. The system of financing under the Federal act is peculiarly well adapted to the inducement of private capital into the housing field. The annual contributions, by increasing the revenues of the project, add so much to the security of the capital loans that private capital is now willing to enter this field at surprisingly low interest rates. The question of the local housing authority’s bonds must, of course, be considered in more aspects than those relating to their purchase by other public bodies. An analysis of the various provisions relating to housing authority bonds appears in chart VII. An interesting feature concerning the security of these bonds is the attention given in most of the laws to the power to mortgage housing authority property and to provisions relating to liens and executions upon such property. An analysis of these provisions appears in chart XI. Equivalent Elimination Of further importance from the standpoint of compliance with the United States Housing Act are the provisions in the housing laws empowering the local government within whose boundaries or vicinity a housing project is undertaken to exercise its police power on behalf of the local authority for the repair or demolition of a number of unfit buildings equivalent to the number of dwellings in the new project. Of course, this type of assistance is not required where the project includes the elimination on the same site of the necessary number of unsafe and insanitary dwellings. But, because of the present acute housing shortage and the relatively high cost of property in densely populated sections of metropolitan areas, many of the low-rent housing projects will be constructed on vacant sites or on sites occupied by few unsafe or insanitary dwellings. In such situations, arrangements must be made by the local authority for the equivalent elimination of unsafe or insanitary dwellings on other sites in the same area. Since the expense of buying such other sites on which the buildings are to be demolished would be prohibitive, the required elimination usually will be accomplished by one or more of the following methods: 1. By voluntary action of private owners of unsafe and insanitary dwellings in cooperation with public officers charged with the enforcement of “police” regulations. 2. In connection with public works, whereby other local public agencies, such as the park departments, public works departments, school boards, etc., cooperate to arrange for the elimination of unsafe or insanitary dwellings by acquiring and clearing sites on which such dwellings are located in connection with the planning of new developments in the locality. 3. By the exercise of the police power by the proper State, county, and municipal officials in the area of the new low-rent housing project. The third method will undoubtedly be most frequently relied upon. It is by far the most practicable and reliable one for meeting slum clearance problems. It is more practicable, on the one hand, than the use of the power of eminent domain which necessarily involves 40 National Resources Committee the outlay of large sums of money not only for the property condemned but usually for the development of a public improvement thereon, which the cities may or may not now be in a position to afford. It is more reliable, on the other hand, than voluntary action dependent upon the whims of private owners. Since most of the local authorities operate in metropolitan areas, they will have to arrange for the compulsory repair, improvement, closing, and demolition of unsafe and insanitary dwellings by municipal officers. It is clear that the municipalities of the 48 States as well as of the two territories of Hawaii and Puerto Rico are authorized to exercise the police power for the protection of the health, safety, welfare, and morals of their inhabitants. It is clear, too, that these municipalities may abate nuisances in the municipal areas. In all of the States and territories having housing legislation, moreover, there is statutory foundation for this use of the police power for the specific purpose of requiring the repair, improvement, closing, and demolition of unsafe and insanitary dwellings. (See chart VIII.) From a practical standpoint, however, this legislation presents difficulties of enforcement, being, as it frequently is, haphazard and piecemeal and lacking in adequate administrative machinery. Mississippi, Louisiana, and Puerto Rico have enacted well-formulated statutes designed to overcome such difficulties. By these laws, the governing body of a municipality is authorized to adopt ordinances relating to dwellings unfit for human habitation. A public officer is designated to exercise the powers prescribed by such ordinances. If, after notice and hearing, the public officer determines that the dwelling under consideration is unfit, he notifies the owner and orders him to repair, alter, or improve the dwelling to render it fit, or, at the option of the owner, to vacate and close the dwelling as a human habitation. If the owner fails to comply with such an order, the public officer may cause the dwelling to be vacated and closed. If, after notice and hearing, the public officer determines that a dwelling is in such condition (because of dilapidation, disrepair, structural defects, or otherwise) that it is dangerous or injurious to the health or safety of the public or the occupants of such a dwelling or the occupants of neighboring dwellings, the public officer may order the owner to repair, alter, or improve the dwelling or, at the option of the owner, to remove or demolish it. If the owner fails to comply with such an order, the public officer may cause the dwelling to be repaired, altered, or improved, or, if such repairs, alterations or improvements cannot be made at a reasonable cost in relation to the value of the dwelling, the public officer may cause the dwelling to be removed or demolished. The cost of such repairs, alterations, improvements, removal, or demolition constitute a lien against the real estate, and is assessed and collected as a special tax. If the building is removed or demolished by the public officer, he may sell the materials of such dwelling and credit the proceeds of the sale against the cost of removal or demolition. Tax Exemption The United States Housing Act provides that before Federal annual contributions shall be made available for any local housing project, the State, city, county, or other political subdivision in which the project is located must contribute at least 20 percent of the Federal contributions; in other words, for every $5 of the annual Federal subsidy, the local community must contribute $1. This is the minimum local contribution, however. In fact, the local contributions must be sufficient, together with the Federal contributions, to provide housing at rentals within the reach of persons in the lowest third of the income groups now living under slum conditions. By the terms of the Federal act, these local contributions may take the form either of (a) cash, or (6) tax remissions, general or special, or (c) tax exemptions. Despite the cogent arguments which are advanced against tax exemption as the more desirable type of subsidy and despite the drive which should be made to develop more direct forms of local aid, for most communities tax exemption is the only form of contribution within the realm of the obtainable. It does not entail the direct immediate withdrawals from public funds incident to the making of cash Contributions or the difficulties inherent in the tax remission type of contribution, particularly where there are many overlapping taxing districts. Moreover, adequately low rentals usually may be secured only where the local contribution exceeds the minimum statutory 20 percent level, and tax exemption affords a very substantial contribution, as is evidenced by the fact that for contracts already entered into by the Federal Authority, local contributions by way of tax exemption average 60 percent of the Federal annual contributions. Of course, the form of the local contributions is a matter of policy to be determined by the States. If they are to take the form of tax exemption, it must be remembered that tax exemption is always a matter of privilege and not of right and that unless the property of housing authorities is expressly exempted by State law, constitutional or statutory, it will be subject to normal real estate taxes. Of the 33 States, and 2 possessions having enabling housing legislation (October 1938), 29 in all have made specific provision for full, or at least partial, tax exemption, either in the housing authorities law or in a separate statute. For an analysis of tax exemption provisions, see chart IX. Housing Monograph, 41 These States usually offer, beside tax exemption, any one of the following supplementary types of cooperation: 1. Remission of or exemptions for utilities and services, such as schools, street maintenance, police and fire protection, furnished by the taxing agency and financed by charges or assessments. 2. Services, such as upkeep of project grounds or buildings, ordinarily paid for by property owners themselves, but which, through special arrangements, are furnished to the project by the municipality or other taxing agency without cost. 3. Annual cash payments, or 4. Outright contributions to the development cost of a project, in the form of land, services or improvements, which may be considered as annual contributions equal to the annuity which their fair value to the project would produce at 3 percent over the estimated period of the useful life of the project but not below the number of years during which bonds issued to finance the project remain outstanding. The situation with respect to tax exemption in Illinois is so peculiar that it deserves special mention. In that State, prior to the special session in 1938, the land and improvements of a housing authority were not tax exempt. At the special session, after considerable discussion, a bill was enacted (S. B. 38) which granted exemption only where the project was constructed or would thereafter be constructed on land acquired from the Federal Government or any agency of the Federal Government. This bill became law without the Governor’s signature. In this connection, it should be observed that since one of the bills adopted at the special session (S. B. 37) made the housing authorities municipal corporations and hence qualified them for tax exemption under the State constitution, there is at least the implication that all projects of an authority would be exempt from taxes under an old general law in Illinois which exempts “public grounds used for public purposes.” Another ground for the present existence of tax exemptions would be based on the “repeal by implication” theory, since S. B. 39 authorizes payments in lieu of taxes and provides for a new method of levy, collection and apportionment of these payments.64 In the remaining six States where there is enabling housing legislation but no express provision for the tax exemption of property of local housing authorities, namely, Alabama, Delaware, Kentucky, Montana, Ohio, and Virginia, adequate exemption, nevertheless, appears to be furnished by the general laws and State constitutional provisions, or by decisions, except perhaps in Delaware where it is not so clear that tax exemption is thus available. 64 Since this section was written, the Supreme Court of Illinois, in Krause et al., v. Peoria Housing Authority, et al.,-Ill.,-, N. E. (January 1939) has held that projects of local authorities are entitled to tax-exemption. Alabama is unique in that the State Supreme Court, by declaring housing authorities to be municipal agencies (in an advisory opinion to the Governor), brought their property within the purview of the general proviso in the State constitution which guarantees exemption for the property of municipal corporations. Kentucky, both by general statute and constitutional provision, exempts “public property used for public purposes.” An authority’s property has been construed by the Supreme Court of the State to be exempt by virtue of this provision. Ohio, though chary of long-time commitments, regards its housing property as “public property for public use,” which by general code and constitutional proviso is tax exempt. This view has been substantiated by an opinion of the Attorney General, in 1934, as to property acquired by the Cincinnati Housing Authority, through the aid of the Public Works Administration. Montana, by general code and constitutional provision, exempts the property of municipal corporations and of the State. Housing authorities are merely declared by the legislature to be “public bodies, corporate and politic,” yet the Supreme Court of Montana has held the property of housing authorities to be exempt from taxation under the State Constitution as “public property.” Virginia, through the medium of a constitutional provision giving tax exemption to “political subdivisions” of the State, may reasonably consider the property of an authority to be tax-exempt, since the State housing authorities law declares a housing authority to be a “political subdivision.” In Delaware, however, though the constitution permits the exemption of such property as “will best promote the public welfare,” the legislature has merely declared, without expressly granting exemption, that all property of an authority “shall be deemed public property for public use.” Payments in Lieu of Taxes In most of the State housing laws where tax exemption is expressly granted to the property of local housing authorities, the authorities and the cities are authorized to fix, or enter into contracts for, payments by the local authority to the city for services in lieu of taxes. In other words, while tax exemption is granted, these laws permit the local authority and the city to enter into contracts calling for payments for public services, including fire and police protection, educational facilities, street lighting and cleaning, and garbage and trash removal, rendered for the benefit of a project. To the extent that these payments are made, the value of tax exemption will be correspondingly reduced, but in order that the low rentals which tax exemption affords may not be jeopardized, these payments have been expressly 42 National Resources Committee limited by statute in some cases. An analysis of provisions for payments in lieu of taxes in chart X demonstrates that while existing provisions for “payments in lieu of taxes” or “contracts for payments for services” are similar in principle, they show great variety from State to State, both in wording and mechanics. It is significant, in this connection, that in 18 of the cities where the United States Housing Authority contracts have been signed (as of July 1938), complete tax exemption is being granted. The average payments in all cities, in fact, is only about 1.4 percent of the shelter rents. Eminent Domain As previously stated, local housing authorities have been given, among other powers, the power of eminent domain. This power is needed in order that the authorities may assemble the tracts of land required for their projects or, if necessary, clear title to some of the parcels included in a site. Even though this power may not always be exercised, its mere existence will be a great aid to a housing authority in acquiring land at a reasonable price. In the construction of housing facilities for persons of low income, it is imperative that all excessive costs for land and construction be avoided, as such costs are bound to be reflected in the rentals. Under the archaic provisions of many of the State constitutions and statutes, however, the exercise of this power of eminent domain involves a slow and cumbersome procedure which may sometimes take years. In such States, the local housing authority may be confronted with two horns of a dilemma: either to pay unreasonable prices for property or to endeavor to acquire land by the exercise of the power of eminent domain under a procedure which is time-consuming and which may involve protracted litigation, with uncertainty as to its ultimate outcome. The constitutions of the States contain various types of provisions relating to the procedure for the exercise of the power of eminent domain. Thus, some of the constitutions require the actual payment of compensation prior to the taking of title or possession; other constitutions require a prior determination of compensation; still other constitutions require the tender or deposit of compensation, or security therefor, prior to taking; and, finally, there are a number of constitutions which are silent regarding these procedural requirements. The following States have constitutions which do not contain such provisions for payment, assessment, tender, deposit or security, prior to the taking of title by the public body: Connecticut, Delaware, Maine, Massachusetts, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Rhode Island, Tennessee, Utah, Vermont, Virginia, and Wyoming. In these States (as well as a few others where the con stitutional restraints are not too rigid), it is possible to provide for the acquisition of title through the filing of a declaration of taking. This procedure, generally speaking, permits the taking of possession or title prior to the award or payment of damages, upon the filing of a declaration of taking in the proper court, together with the deposit of a sum estimated by the public agency to be just compensation for the property. Several States have enacted laws providing for a declaration of taking. Similar legislation could be enacted in those States where the constitutions are sufficiently broad to permit it. Legal Problems Arising Under State Enabling Housing Legislation The entry of the States into the field of public housing under the United States Housing Act presents manifold legal implications, of which the following are deemed to be the most fundamental: 1. Low-rent housing and slum clearance as a valid public purpose. 2. The authority as a legal concept. 3. The debt question arising out of State constitutional debt limitations. 4. The validity of State and municipal assistance to local housing authorities. 5. The validity of tax exemption for public housing purposes. 6. Elimination of unfit dwellings by way of the police power. 7. Low-rent housing and slum clearance as a public use for the purposes of eminent domain. Low-Rent Housing and Slum Clearance as a Valid Public Purpose State enabling housing legislation is based in every instance upon a legislative finding and determination to the effect that there exist in the State insanitary or unsafe dwelling accommodations and that persons of low income are forced to reside in such insanitary and unsafe accommodations; that within the State there is a shortage of safe or sanitary dwelling accommodations available at rents which persons of low income can afford and that such persons are forced to occupy overcrowded and congested dwelling accommodations; that these conditions cause an increase in and spread of disease and crime and constitute a menace to the health, safety, morals, and welfare of the residents of the State and impair economic values; that these conditions necessitate excessive and disproportionate expenditures of public funds for crime prevention and punishment, public health and safety, fire and accident protection, and other public service and facilities; that these areas in the State cannot be cleared, nor can the shortage of safe and sanitary dwellings for persons of Housing Monograph 43 low income be relieved, through the operation of private enterprise, and that the construction of housing projects for persons of low income would therefore not be competitive with private enterprise; that the clearance, replanning, and reconstruction of the areas in which insanitary or unsafe housing conditions exist and the. providing of safe and sanitary dwelling accommodations for persons of low income are “public uses and purposes for which public money may be spent and private property acquired and are governmental junctions of state concern.” [Italics supplied.] The legislatures having so declared, the question then is whether the object of this legislation—low-rent housing .and slum clearance—is a “public purpose” within the law. It is an acknowledged principle under our jurisprudence that a legislative determination of public use, though not conclusive on the courts, is entitled to great respect—is not to be overruled except in clear cases of abuse of legislative discretion. Applying this principle, housing has been sustained, prior to the inauguration of the present program under the United States Housing Act, as a public purpose in the furtherance of which State and local governments might properly exercise the spending, taxing, and police powers.65 Likewise, the present program has been given judicial sanction in those few cases which have already arisen. The first of these cases was that of New York City Housing Authority v. Muller (270 N. Y. 333, 1 N. E. (2) 153, 1936), sustaining the Municipal Housing Authorities Act of New York, at least as to the condemnation of private property for slum clearance projects. There, the defendant resisted condemnation of his property by the authority on the ground that the taking was for a private, not a public, use. In holding the proposed use to be for the public benefit and hence a public use, the court recounted the evils of the slum and argued that since government exists to protect the public health, safety, morals, and general welfare, government must have the power to deal with a situation which so menaces the health, safety, morals, and general welfare of the community; that the housing program was a reasonable method of dealing with the problem; and that it was immaterial which of the trinity of governmental powers—taxation, police power, and eminent domain—was used for this purpose. The fact that private enterprise ordinarily provided housing facilities was treated as of no importance in an era when municipalities were engaged in enterprises formerly and presently supplied by private business. Finally, the court dismissed the argument that the act was “class legislation,” saying: 85 Green v. Frazier, supra; Willman v. Powell, 91 Cal. App. 1, 266 Pac. 1029,1928; State ex rel. Reclamation Board v. Clausen, 110 Wash. 525, 188 Pac. 538, 1920; Block v. Hirsh, 256 U. S. 135,1921; Simon v. O’ Toole, 108 N. J. L.*32,155 Atl. 449,1931. Contra. Lowell v. Boston, 111 Mass. 454,1873; Opinion oj the Justices, 211 Mass. 624, 98 N. E. 611,1912. Cf. Stell v. Mayor and Aidermen oj Jersey City, 95 N. J. L. 38, 111 A. 274, 1920. * * * This objection disregards the primary purpose of the legislation. Use of a proposed structure, facility, or service by everybody and anybody is one of the abandoned universal tests of a public use. (Citing cases.) The designated class to whom incidental benefits will come are persons with an income under $2,500 a year, and it consists of two-thirds of the city’s population. But the essential purpose of the legislation is not to benefit that class or any class; it is to protect and safeguard the entire public from the menace of the slums. * * * Nothing is better settled than that the property of one individual cannot, without his consent, be devoted to the private use of another, even when there is an incidental or colorable benefit to the public. The facts here present no such case. In a matter of far-reaching public concern, the public is seeking to take the defendant’s property and to administer it as part of a project conceived and to be carried out in its own interest and for its own protection. That is a public benefit, and, therefore, at least as far as this case is concerned, a public use. Following the Muller case, both in principle and in time, came the case of Spahn v. Stewart (268 Ky. 97, 103 S. W. (2d) 651, 1937), upholding the Kentucky act authorizing certain cities to engage in municipal housing. Seeking to enjoin further proceedings in preparation for the construction of a slum clearance project under the act, the petitioners contended that the act would deprive them, as taxpayers, of property without due process of law, would permit condemnation for a use, and exemption of bonds for a purpose, not “governmental”, and would benefit one class of citizens to the exclusion of all others. Conceiving all of these contentions to turn “upon the question as to whether ‘or not the ultimate result sought constitutes a public use or purpose”, the court disposed of them jointly by deciding this single question affirmatively. In so doing, the court pointed to the facts making the housing problem acute; from these facts, it inferred that private initiative was unable to cope with the situation and, relying on the Muller case, concluded that the amelioration of such conditions was necessary to protect the public interest and, therefore, public not private, general not special, in purpose. Specifically, the argument as to class legislation was dismissed with these words: The use here proposed, as argued by appellee and admitted by appellants, may be more beneficial in the way of direct aid to a particular class, but it also operates to the benefit of the general public and its welfare. The act limits the ultimate use of the improved property to such persons as may be selected to occupy. This does not brand the purpose as class or special legislation. Whether or not the persons chosen to occupy are to be ultimately benefited more than those who are not, is a sociological question because of differing circumstances. Who can say that in the long run those who live in sumptuous residences environed by the elite may not account themselves still more blessed if by improved conditions of housing in another section they are relieved from the probabilities or possibilities of an epidemic of smallpox, typhoid fever, or other diseases, or that they may sleep more serenely because of a lessened fear of the commission of crime against their persons or property? r In close succession come the five most recent decisions in Wells v. Housing Authority of the City of Wil 44 mington (213 N. C. 744, 197 S. E. 693, June 1938), State ex rel. Porterie n. Housing Authority of New Orleans (190 La. 710, 182 So. 725, June 1938), and Dornan v. Philadelphia Housing Authority (______________________________________Pa. _____________________________________________________, 200 Atl. 834, June 1938); Marvin v. Housing Authority of Jacksonville, Fla. (____________________Fla._183 So. 145, July 1938); Williamson v. Housing Authority of Augusta (____________________________________________Ga._, 199 S. E. 43, September 21, 1938).66 In the Wells case, the plaintiff attacked the constitutionality of the North Carolina housing laws principally on the ground that the purposes sought to be accomplished were not of a public nature justifying the exercise of governmental functions. Refusing to concede this argument, the court said: * * * The Housing Authorities Act depends for its validity, as a proper exercise of governmental authority, upon its declared objective in removing a serious menace to society, not disconnected with political exigency, in the populous areas to which it applies. * * ♦ The State cannot enact laws, and cities and towns cannot pass effective ordinances, forbidding disease, vice, and crime to enter into the slums of overcrowded areas, there defeating every purpose for which civilized government exists, and spreading influences detrimental to law and order; but experience has shown that this result can be more effectively brought about by the removal of physical surroundings conducive to these conditions. This is the objective of the Act, and these are the means by which it is intended to accomplish it. * * * Applying again the principle that courts may not declare an act of the Legislature unconstitutional in a case of doubt, we* find that the Housing Authorities Act under consideration is a constitutional exercise of a legislative power. * * * It follows as a corollary, the court continued, that real and personal property of an authority is held and maintained for a public purpose and as such is exempt by the State constitution from all State, county, and local ad valorem taxes. In the New Orleans case where the validity of the Louisiana housing laws was at issue, the Supreme Court of Louisiana, admitting the legislative declarations to be persuasive, held that housing authorities whose purposes are clearly limited to the clearance of the slums and the eradication of slum evils, subserve a public interest and that the housing activities of the local authorities constitute a public purpose justifying the condemnation of land by an authority, the classification of property of an authority as public property for the purposes of tax exemption under the State constitution, and the expenditure of public funds by a city in aiding an authority which is operating on its behalf. m Since the preparation of this study, additional favorable decisions have been rendered by the Supreme Courts of: South Carolina {McNulty v. Owens et al., .... S. C. „199 S. B. 425 (October 1938)); Montana (Rutherford v. City of Great Falls et al.,.... Mont.Pac. (2d) .... (January 1939)); Tennessee (Knoxville Housing Authority, Inc. v. City of Knoxville et al., Tenn....., S. W (January 1939)); and Illinois (Krause et al., v. Peoria Housing Authroity et al.,.... Ill......._N. E., (January 1939)), National Resources Committee In the Dornan case, a taxpayer’s bill in equity to test the constitutionality of the Pennsylvania housing laws, the court accorded a prima facie presumption of correctness to the factual declarations of the legislature and, after reiterating the deleterious public effect of the slum and pointing to the relation between slum elimination and low-rent housing, held the use to which housing projects are devoted to be a public use for the purposes of eminent domain and tax exemption under the Pennsylvania constitution. Similarly, in the Florida case, the State Supreme Court held that low-rent housing and slum clearance were public purposes. In the latest case, the Williamson case, where the petitioner taxpayer sought to enjoin the local housing authority and the city of Augusta from proceeding with the development of a housing project for that city on the ground that the State housing authorities and cooperation laws were unconstitutional, the Supreme Court of Georgia reconsidered and reaffirmed all of the several issues which had been raised and decided in the foregoing cases. The court held low-rent housing and slum-clearance to be not only a public purpose but a charitable purpose in the furtherance of tax exemption and municipal donations were allowable under the Georgia constitution. . Governmental housing projects contemplated under the present program constitute a relatively new approach to the problem of bad housing. It is an approach which, if to be sustained generally, must be appraised, as in the foregoing cases, in the light of the compelling public need for the elimination of the slum and the necessary relation between slum clearance and rehousing. These judicial precedents should carry much weight in those jurisdictions where the validity of local public housing legislation has not been challenged. The Authority as a Valid Legal Concept The authority concept is not new to the field of public law. It developed as a vehicle of public revenue financing long before its use for low-rent housing and slum clearance purposes. It first appeared in this country in the form of the Port of New York Authority; and since then has been used as the instrumentality for the undertaking and financing of such types of improvements as State electrification and power, water conservation, hydro-electric, navigation and flood control projects, toll bridges, and State educational institutions. Many such authorities have withstood, moreover, the rigid tests of judicial scrutiny and have been able successfully to construct needed improvements and to finance them by the sale of marketable securities. It appears from the decisions that the creation of a local authority or the power to create such an authority Housing Monograph 45 must first be authorized by an express statutory enactment of the State. Once this enactment appears on the books, there seems to be no legal obstacle to the creation of a local authority, for the decisions of the courts have established (certainly in those jurisdictions where the issue has been raised) that the legislature has the constitutional power to create or authorize the creation of such authorities. So far as housing is concerned, however, the concept is a relatively novel one, but already it has been recognized as a proper instrumentality for the undertaking of low-rent housing and slum clearance projects.67 Questions Arising Out of State Constitutional Debt Limitations The precise question is whether obligations of a housing authority are debts of the State or of the municipality in which it operates, within the meaning of applicable provisions of the State constitution relating to State or municipal indebtedness. It is believed that they are not. In the first place, the constitutional provisions involved refer to the State and to counties and cities but do not generally refer to instrumentalities of the State such as a local authority. It has already been pointed out that housing authorities are created as separate legal entities, distinct from the State itself and from the political and civil subdivisions of the State. For this reason, the obligations of the authority, if they are to be considered debts at all, can only be debts of the authority. The authority is the only obb’gor on its bonds or other forms of indebtedness. Its obligations are by express statutory terms made enforceable against the authority only and are in no case enforceable against the State or any other public body of the State. There are numerous judicial precedents holding that obligations of such a separate public corporation are not debts of the States which have created them or of the public bodies in which they operate or which they may overlap. The second line of reasoning in support of the proposition that obligations of an authority are not debts within the meaning of any constitutional provision is founded upon the so-called special fund doctrine. Under this doctrine, obligations of a public body which are not payable from taxes do not constitute debts of such a public body within the meaning of a constitutional debt limitation or restriction The special fund doctrine has been adopted by courts in practically every State in which constitutional debt questions have arisen with respect to the issuance of revenue obligations. 67 {Spahn v. Stewart, supra; Wells v. Housing Authority oj the City oj Wilmington, supra; State ex rel Porterie v. Housing Authority of New Orleans, supra; and Dornan v. Philadelphia Housing Authority, supra); Manin v. Housing Authority oj Jacksonville, Fla., supra. Specifically, with regard to housing authority bonds, either or both of the foregoing theories have been adhered to—in the cases of Spahn v. Stewart, supra; Wells n. Housing Authority of the City of Wilmington, supra; State ex rel. Porterie v. Housing Authority of New Orleans, supra; Dornan v. Philadelphia Housing Authority, supra; Marvin v. Housing Authority of Jacksonville, Fla., supra; Williamson v. Housing Authority of Augusta, supra. Whether or not a revenue bond of a housing authority additionally secured by a foreclosable mortgage would constitute a debt of a State or of the municipal corporation in which the authority is operating; notwithstanding provisions in the enabling act prohibiting the authority from creating such a debt, has not been expressly decided by any court. If an authority’s bonds are secured solely by a pledge of revenues (or revenues plus Federal contributions), there is no question but that such a debt would not be created in those states which adopt the special fund doctrine. It is only the mortgage which makes the legality of the bonds of a housing authority an unsettled question. A few courts have held that a foreclosable mortgage on State or municipal property as additional security for a revenue bond will create a debt within the meaning of a constitutional provision relating to municipal or State indebtedness. These decisions, however, should not be controlling as to bonds issued by a housing authority for the reason that the property of such an authority is not property of the State or of any municipal corporation, but property of an entity separate and distinct from the State or any municipal corporation. Moreover, so Jong as the mortgage covers property acquired by the authority with the proceeds of obligations which it issues, no question of State or municipal debt should arise because the mortgage in such a case would be in the nature of a purchase money mortgage, which is generally considered as coming within the purview of the special fund doctrine. Validity of State and Municipal Assistance to Local Housing Authorities Of the various types of State and municipal aid provided for under the housing cooperation laws, previously alluded to, those relating to the donation or loan of money and the donation or sale of land are most apt to be drawn into issue. Objection thereto arises out of State constitutional prohibitions against, first, the use of State or municipal funds or property for other than State or municipal purposes and, second, the loaning or donating of State or city funds or credit. This objection, in effect, turns upon the question as to whether or not housing undertaken by local housing authorities serves a State or municipal purpose. In the cases which have decided this point, the courts. 46 National Resources Committee having found the housing activities of local housing authorities to be for a public purpose, have reasoned that they could therefore have been undertaken directly by the State or the municipalities themselves and that (to the extent that they benefit the cooperating States or municipal government) they are no less a proper State or municipal purpose though undertaken by a housing authority. Thus, in the case of Wells v. Housing Authority of the City of Wilmington, supra, the court observed: “The powers given to the agency created under the Housing Authorities Act are not dissimilar to those given to towns and cities in the Constitution and Laws” and after enumerating certain such powers, continued: * * * Any or all of these powers might be vested in a separate municipal authority, if convenience required, without offending against any constitutional principle of which we are aware. The same necessity that prompted the subdivision of political authority, in the creation of cities and towns, to the end that government should be brought closer to the people in congested areas, and thus be able to deal more directly with problems of health, safety, police protection, and public convenience, progressively demands that government should be further refined and subdivided, within the limits of its general powers and purposes, to deal with new conditions, constantly appearing in sharper outline, where community initiative has failed and authority alone can prevail. And in State ex rel. Porterie v. Housing Authority of New Orleans, the court said: The primary purpose of housing authorities is to eradicate the slum menace. In doing so, they lighten the burden of cities in discharging the municipal duty of protecting all citizens indiscriminately against disease, crime, and immorality. It is, therefore, perfectly clear that, when a city uses public funds for the establishment of a housing authority, whether the funds be used for organization expenses or in the purchase of a small percentage of the housing authority’s bonds, the city is performing, indirectly through a public agency created by the State and sanctioned by its own governing authority, one of the primary functions of municipal government. It is not suggested in this case that the amounts already used by the city and that to be used for these purposes are out of proportion to the benefits to be received. Nor is it suggested that these amounts are in excess of the amounts the City would have to expend during the next few years to accomplish the same purposes. In these and other recent housing cases, the courts have specifically upheld the power of a city to assist a local authority operating within its boundaries by way of an appropriation or loan to enable the authority to meet its preliminary functioning expenses (Spahn v. Stewart, supra; State ex rel. Porterie v. Housing Authority of New Orleans, supra; Williamson v. Housing Authority of Augusta, supra), by conveying or leasing property with or without consideration (Wells v. Housing Authority of the City of Wilmington, supra), by entering into service contracts (Williamson v. Housing Authority of Augusta, supra), by closing certain streets of the city within the area of a housing project which are no longer necessary for the public use to which they were originally dedicated and selling the land comprised therein to the housing authority (State ex rel. Porterie v. Housing Authority of New Orleans, supra), and the power of a city or the State to invest in bonds of a housing authority (State ex rel. Porterie v. Housing Authority of New Orleans, supra). Validity of Tax Exemption for Public Housing Purposes This question will arise out of the specific provisions, previously alluded to, for the tax exemption of property of local housing authorities or, in the absence of such provisions, out of attempts to exempt such property under general provisions in the State constitution or general laws. There is a variety of constitutional provisions pursuant to which the States are authorized to exempt from taxation various types of property. Thus, some constitutions are silent on the subject of tax exemption, some name the purposes for which exemption may be granted, some authorize the legislature to grant exemption for certain purposes, some authorize exemption for public, municipal, governmental or charitable purposes, some are self-executing, some require positive legislation, and some grant exemption not in the terms of purpose but in terms of ownership. This variation in constitutional provisions relating to tax exemption may raise various legal questions, such as: Is property of a housing authority used for a public, municipal, governmental, or charitable purpose? May a housing authority be deemed a municipal corporation or political subdivision for the purpose of tax exemption? Is property of a housing authority property of the public body within which an authority operates? Is a constitutional grant of power to the legislature to grant exemption for certain designated purposes exclusive? Can the legislature grant exemption in the absence of specific constitutional authority? These constitutional provisions may lead, and in fact have led, to litigation with respect to the validity of tax exemption in some of the States. In each case, much will depend on the wording and judicial construction of the constitutional provisions. It is believed, however, that the constitutions of the States are broad enough to permit the courts to construe them in a manner which will make it possible to grant tax exemption to housing projects. The first of the recent housing cases involving the tax exemption question is that of Spahn v. Stewart, supra, where it was held that property used by a public corporate housing commission for a slum clearance or housing project was used for a public purpose, within the mean Housing Monograph ing of a constitutional provision exempting from taxation public property used for public purposes. Another, and particularly significant decision is found in Opinion of the Justices (179 So. 535, 1938), an advisory opinion of the Supreme Court of Alabama, to the effect that a local housing authority is an administrative agency of the city, created for the purpose of performing a governmental function on behalf of the city, and that its real and personal property, therefore, is property of a municipal corporation for the purposes of tax exemption under the constitutional provision applying to all property of “the State, counties or other municipal corporations.” Likewise, the Louisiana, North Carolina, Florida, and Georgia courts, in State ex rel. Porterie v. Housing Authority of New Orleans, supra, and Wells v. Housing Authority of Wilmington, supra, Marvin v. Housing Authority of Jacksonville, Fla., supra, and Williamson v. Housing Authority of Augusta, supra, respectively, concluded that property acquired by a housing authority is “public property” within the meaning of the constitutional tax exemption provisions applicable to such property. The Pennsylvania court, in Dornan v. Philadelphia Housing Authority, supra, has gone even further by upholding complete tax exemption, including exemption from school taxes, notwithstanding that the legislature had attempted to exclude school taxes from the exemption but did not affirmatively impose them, the court holding that taxation could not be effected under the State Constitution by indirection. Elimination of Unfit Dwellings; Use of the Police Power As previously pointed out, the equivalent elimination required by the Federal act may be accomplished in one or more of three ways. (a) By the voluntary cooperation of the owners of property requiring attention, (6) By condemnation or excess condemnation as an incident to the development of some municipal improvement, and (c) By compulsory repair or demolition under the police power. The first method is effected merely by using the power of eminent domain in conjunction with the police power as bargaining weapons and, therefore, involves no legal implications. As a practical matter, it will not suffice to effect mass slum clearance. As to the second method, it cannot now be disputed that cities, pursuant either to general State enabling legislation or authorization contained in their charters, may acquire private property through the power of eminent domain for the purposes of creating a park, playground, recreational center, or public building. Therefore, if slum sites were condemned for such pur 47 poses, no legal objection could be raised, and little or no difficulty should be encountered. When properly authorized, municipalities, it would seem, may also acquire title to private property for a fair consideration through the use of the power of excess condemnation in connection with an exercise of the power of eminent domain. Under excess condemnation, the municipality acquires more property than is needed for the specific public improvement and leases or sells the property not needed under restrictions for a use in harmony with the plans for the public improvement. As early as 1812 and 1817, municipalities in the States of New York and South Carolina were authorized by their respective State legislatures to exercise this power of excess condemnation. Since that time, 13 other States, namely, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Virginia, and Wisconsin, have authorized municipalities within their jurisdiction to exercise this power. Eight States (California, Massachusetts, Michigan, New York, Ohio, Rhode Island, Virginia, and Wisconsin) have also amended their constitutions to permit the exercise of this power by municipal corporations. However, there is still a shadow of doubt as to the validity of excess condemnation laws. In 1930, the important case of Cincinnati v. Vester, 281 U. S. 439, squarely raised the issue as to whether a municipality might validly use this power. The case involved the validity of section 10, article 18, of the constitution of the State of Ohio, which provides: In furtherance of such public use (the city may) appropriate or acquire an excess over that actually to be accupied by the improvement, and may sell such excess with such restrictions as shall be appropriate to preserve the improvement made. The United States Supreme Court, instead of passing upon the constitutional question presented, ruled that the city council, upon the city’s excess condemnation of land under the Ohio constitution, should have specified definitely in its resolution the purpose of the excess appropriation. The statutes requiring such statements as to the use for which the land is to be taken, the opinion states, applied to the excess as well as to the principal appropriation. In this way, the court sidestepped the constitutional question involved. Nevertheless, by so ruling, it appears to be impliedly indicated that, when excess condemnation was effected in accordance with constitutional and statutory provisions, such a taking would be upheld. Therefore, it is believed that if an excess condemnation were definitely for, and clearly stated to be for, the specific purpose of protecting the improvement made and for a use in harmony with the plans for the public improvement, it would be sustained. 48 National Resources Committee The third method, that of compulsory repair, vacation or demolition under the police power, as previously stated, is the method which will probably be most commonly employed. That all cities are equipped with the general police power and that this power can be properly exercised to compel the repair, vacation, or demolition of buildings which menace the public health and general welfare is too clear to be questioned. Basic problems of the scope of this application of the police power are not so clear, however, and therefore merit special consideration. In the past, the cases which have arisen have primarily concerned single buildings which were structurally unsafe due to dilapidation or decay so as to be dangerous to passersby, or to the community at large as fire hazards. In such cases, and they have usually been extreme ones where the danger to the public was obvious and imminent, abatement by compulsory repair or, if it would have been unreasonable to repair, by compulsory vacation or demolition has been sustained.68 These cases recognize in a general sort of way that unsafe and insanitary buildings are public nuisances, but beyond that they do not indicate the extent to which the courts will concede an expansion of the police power to include the abatement of buildings which are unsafe and insanitary as measured by minimum legislative standards of light, ventilation, sanitation, fire protection, design and lay-out, privacy, etc., essential directly to the decent living of the occupants and indirectly to the general welfare. For this further refinement, however, there is support in the late decision of Adamec v. Post, 273 N. Y. 250, 7 N. E. (2d) 120 (1937). In the Adamec case, the New York Court of Appeals held constitutional the so-called Multiple Dwelling Law of New York State requiring that buildings used as multiple dwellings, though erected prior to 1901, in accordance with then existing requirements of law, now comply with the new and higher standards of health, sanitation, and safety prescribed by existing statutes. In so holding, the court accepted the legislative declaration that the new requirements were in the furtherance of the general welfare, as measured by present day sociological factors. Discussing the subject of police power, the court said: The power of the State to place reasonable restrictions upon the use of property for the promotion of the general welfare is ’« Gow Why v. City of Marshfield et al., 138 Oreg. 167,5 P. (2d) 696 (1931); Russell v. City of Fargo etal.,26N.'D. 300,148 N. W. 610 (1914); Polsgrove et al. v. Moss, 154 Ky. 408, 157 S. W. 1133 (1913); Davison v. City of Walla Walla, 52 Wash. 453, 100 P. 981 (1909); Theilan v. Porter et al., 82 Tenn. (14 Lea) 622 (1885); Ferguson v. City of Selma, 43 Ala. 398 (1869); Runge v. Glerum, 37N. D. 618,164 N. W.284 (1917); Jackson v. Bell, 143 Tenn. 452, 226 S. W. 207 (1920); York v. Hargardine, 142 Minn. 219,171 N. W. 773 (1919); Commonwealth v. Roberts,-155 Mass. 281, 29 N. E. 522 (1892); Health Department of the City of New York v. Rector, etc., of Trinity Church in City of New York, 145 N. Y. 32, 39 N. E. 833 (1895); City of New Orleans v. Ricker and Beck, 137 La. 843, 69 So. 273 (1915); City of New Orleans v. Beck, 139 La. 595, 71 So. 883 (1916); Tenement House Department of The City of New York v. Moeschen, 179 N. Y. 325, 72 N. E. 231 (1904); and Swett v. Sprague, 55 Maine 190 (1867). no longer subject to challenge and regulations governing the erection or use of buildings as multiple dwellings which are reasonably calculated to safeguard the public health and safety constitute a proper exercise of the power. . . . Because the State has tolerated slum dwellings in the past, it is not precluded from taking appropriate steps to end them in the future. When the building used as a dwelling house is unfit for that use and a source of danger to the community, the Legislature in order to promote the general welfare may require its alteration or require that its use for a purpose which injures the public be discontinued; and, subject to reasonable limitation, the Legislature may determine what alterations should be required and what conditions may constitute a menace to the public welfare and call for remedy. The result, as we have said, may be the closing of many tenement houses and the eviction of the tenants. Commenting upon the order for compulsory repair which was in issue, the court declared: The imposition of the cost of the required alterations as a condition of the continued use of antiquated buildings for multiple dwellings may cause hardship to the plaintiff and other owners of “old law tenements” but, in proper case, the Legislature has the power to enact provisions reasonably calculated to promote the common good even though the result be hardship to the individual. “It is not the hardship of the individual case that determines the question, but rather the general scope and effect of the legislation as an exercise of the police power in protecting health and promoting the welfare of the community at large. It is a well-recognized principle in the decisions of the State and Federal courts that the citizen holds his property subject not only to the exercise of the right of eminent domain by the state, but also subject to the lawful exercise of the police power by the legislature; in the one case property is taken by condemnation and due compensation; in the other the necessary and reasonable expenses and loss of property in making reasonable changes in existing structures, or in erecting additions thereto, are damnum absque injuria.” Tenement House Department of City of New York v. Moeschen, 179 N. Y. 325, 330, 72 N. E. 231, 232 * * *. On the other hand, in Central Sav. Bank n. City of New York, 279 N. Y. 266, 18 N. E. (2d) 151 (December 1938), reversing 254 App. Div. 502, 5 N. Y. S. (2d) 451 (1938), the Court of Appeals of New York held that the “Murray Prior Lien Law” 69 affords the mortgagee no opportunity to be heard as to the reasonableness of the proceedings or the expenses, that the mortgagee must sit idly by and watch his first hen degenerate into a second hen, and therefore, as to the mortgagee, constitutes a taking of property without due process of law and an impairment of contract. Further evidence that the courts are ready to recognize the application of the pohce power, not only to the clearance of isolated slum buildings but to mass slum clearance, as merely the proper apphcation of approved legal principles to a new situation, is to be found in the several cases sustaining State housing authorities laws. w Chapter 353, Laws of New York, 1937. This law authorized the city to make certain repairs upon “old-law” tenements and assess the cost as a lien prior to existing mortgages and other encumbrances against the property improved. Housing Monograph 49 Low-rent Housing as a Public Use for the Purposes of Eminent Domain There are, of course, two methods whereby title to land may be acquired as the site for low-rent housing projects: first, by outright purchase or donation from the owners, and second, by condemnation under the power of eminent domain. As a practical matter of dollars and cents, as well as legal expediency, however, housing experts are unanimously agreed that condemnation, either as a right to be invoked or a threat to be wielded, is necessary to insure low-rent housing. The United States Constitution and practically every State constitution require that the exercise of the power of eminent domain be limited to the acquisition of property for a public use and upon payment of just compensation. The question incident to the exercise of the power of eminent domain by local housing authorities is, then, whether low-rent housing and slum clearance is a “public use.” However, the definition of “public use” has been the subject of the greatest divergence in the courts, the issue being whether the test of public use is use by the public or use for the general welfare. Commenting on these two alternative viewpoints, Nichols in his work Eminent Domain, 2d ed. vol. 1, pp. 129-131, has said: The disagreement over the meaning of “public use” is based largely upon the question of the sense in which the word “use” in the constitution was intended to be understood, and has developed two opposing views, each of which has its ardent supporters among the text writers and courts of last resort. The supporters of one school insist that “public use” means “use by. the public,” that is, public service or employment, and that consequently to make a use public a duty must devolve upon the person or corporation seeking to take property by right of eminent domain to furnish the public with the use intended, and the public must be entitled, as of right, to use or enjoy the property taken * * * On the other hand, the courts that are inclined to go furthest in sustaining public rights at the expense of property rights contend that “public use” means “public advantage,” and that anything which tends to enlarge the resources, increase the industrial energies, and promote the productive power of any considerable number of the inhabitants of a section of the state, or which leads to the growth of towns and the creation of new resources for the employment of capital and labor, manifestly contributes to the general welfare and the prosperity of the whole community, and, giving the constitution a broad and comprehensive interpretation, constitutes a public use. Assuming on the basis of prior discussion that slum clearance and public housing is a public purpose subserving the health, safety, and general welfare of the entire community, the constitutionality of the grant of the power of eminent domain to local housing authorities can easily be sustained under the latter view. However, it is not so easy to sustain the constitutionality of such a grant of power under the former view as it would be harder to show that the ultimate object or use for which the property is taken is one in which the public in general is entitled to share as a matter of right. Nevertheless, it can be argued with some weight that use by the public does not necessarily require use by the entire public, but is satisfied when there is use by the public up to capacity, the tenants being selected on a reasonable basis. That the trend of the State court decisions at the present time, with regard to the condemnation activities of local housing authorities, is toward the “general welfare” theory of “public use” is evidenced by the decisions in New York City Housing Authority v. Muller, supra; Spahn v. Stewart, supra; Wells v. Housing Authority of the City of Wilmington, supra, State ex rel. Porterie v. Housing Authority of City of New Orleans, supra; and Marvin v. Housing Authority of Jacksonville, Fla., supra; and Williamson v. Housing Authority of Augusta, supra. In the Muller case, which is significant as the first case in point, Judge Crouch said: Nothing is better settled than that the property of one individual cannot, without his consent, be devoted to the private use of another, even when there is an incidental or colorable benefit to the public. But, the court continued, this rule did not apply to the taking of land for the clearance, replanning and reconstruction of part of an area * * * wherein there exist * * * unsanitary and substandard housing conditions, which cause an increase and spread of disease and crime and constitute a menace to the health, safety, morals, and welfare of the citizens of the state and impair economic values. Following that decision, in a jurisdiction where it was much less clear that the courts were inclined toward the broader of the two interpretations of “public use,” the supreme court of Pennsylvania in the Dornan case, said: * * * There is, in the legal situation here presented, a factor which conclusively determines that the use for which these housing projects are designed is a public one, namely, that the construction of the new dwellings as authorized by these statutes is to be an aid to, and indeed, a necessary adjunct of, thef demolition of dangerous and unsanitary dwellings, which, in turn, is an exercise of the police power of the Commonwealth * * * It appearing that all previous attempts to rid communities of their unsafe and objectionable dwellings have proven ineffective, it is now found necessary to resort to the more drastic and comprehensive method of demolishing such structures simultaneously and over more extended areas. But, as indicated in the Housing Authorities Law—and indeed it is self-evident—this cannot be done and the ultimate aim be achieved unless at the same time provision is made for sanitary and wholesome accommodations for those who will lose their homes in the process. Certainly such persons cannot be left wholly without shelter, yet their financial resources are insufficient to enable them to lease any existing dwellings outside of 50 National Resources Committee other slum districts, since private industry has not been able to furnish acceptable accommodations at a rental cost as low as that now paid for rooms in slum properties. For the State or a municipality to tear down objectionable houses without providing better ones in their stead would be merely to force those ejected into other slums or compel them to create new ones, and the cardinal purpose of the legislation would thus be frustrated. As a necessary concomitant of slum elimination, therefore, provision is made in the Housing Authorities Law for the erection, without profit, and through the enjoyment of Federal subsidies, of low-cost housing projects in which to shelter the evicted inhabitants of slum areas * * *. What we have here, then, is a situation in which the proposed construction of new housing is vital to the clearance of the slums through the exercise of the police power, but the necessary sites for the housing projects can be justly and practically acquired only by means of the power of eminent domain, and what we now decide is that when the power of eminent domain is thus called into play as a handmaiden to the police power and in order to make its proper exercise effective, it is necessarily for a public use. Obviously, whether future State court decisions will adhere to the view of these above-mentioned cases in passing upon the condemnation activities of local housing authorities will depend upon which of the two definitions of “public use” they will subscribe to. Suffice it to say, however, that under a jurisprudence governed largely by precedent there is every reason to believe that other courts will follow in the trail of the New York, Pennsylvania, North Carolina, Louisiana, and Florida courts. And upon these decisions will largely depend the attitude of the Supreme Court of the United States, for it is well settled that, with regard to State legislation, that Court will accept all reasonable declarations by the local authority, legislative and judicial, as to what is or is not a public use.70 Even assuming the validity of the exercise of the power of eminent domain by a local housing authority, n Green v. Frazier, supra. And see Erie Railroad Co. v. Tompkins, 82 L. Ed. 787, 1938. there remains the necessity for an expeditious and legal way of exercising this power. In attempting to devise a more expeditious procedure for condemnation under existing constitutional provisions, questions may arise regarding the validity of the methods designed to improve and hasten eminent domain procedure. In States where the constitutions do not contain restrictive provisions relating to the payment, assessment or deposit of compensation in advance of the taking of title, it is clearly constitutional to provide for a declaration of taking or a similar method of acquiring title promptly. However, in those States where the constitutions do contain such provisions, legal difficulties will be encountered in endeavoring to expedite condemnation procedure, although it should be possible to improve the existing procedure to some extent, even under these constitutions. Conclusion The legal aspects of public housing are manifold and variant. Only the more fundamental and more common are within the scope of this study. Only the surface has been scratched; below this surface of general issues he many legal questions inherent in the variations in the law from State to State and dependent for their answers upon judicial interpretation of existing statutory and case law or upon the adequacy of present housing and related legislation. In its broader aspects, there is strong precedent for the legality of public housing in the rapidly increasing number of favorable housing decisions; in its more specific aspects, .the legality of public housing depends upon the keenness of foresight and understanding with which it is viewed by the courts and the legislators—therein, from a legal standpoint, rests the future of public housing. Housing Monograph 51 Chart I.—Citations to State public housing legislation 1 1 For the 33 States and 2 Territories having enabling housing legislation as of October 1938. 52 National liesources Committee Chart I.—Citations to State public housing legislation—Continued Housing Monograph 53 Chart I.—Citations to State public housing legislation—Continued CD o State agency having some type of jurisdiction over authority operations ; ; I ! g | ; ■ ! i i i i i i 1 \ State Board of Housing, Public Law 1705, Laws of 1937, approved 6/5/37. & Laws of Nebraska, 1937, Ch. 92, approved 5/18/37. Also in Ch. 14, Sec. 14-1417, 1937, Cumulative Supplement to Compiled Statutes of Nebraska of 1929. Laws of 1935, Ch. 311 (New York); Ch. 312 (Buffalo); Ch. 313 (Schenectady). House Bill No. 576, approved 5/7/37; Baldwin’s Ohio Code Service, January 1938 Number, Secs. 1078-59 and 1078-60. ! ! Eminent domain law Ch. 21, Laws of 1938, approved 3/8/38. Also in Revised Statutes of New Jersey, Sec. 20:1. Ch. 409, Public Laws of North Carolina, 1935, approved 5/10/35. ! ! ! Tax-exemption law Laws of Nebraska, 1937, Ch. 93, approved 5/18/37. Also in Ch. 71, Art. 35, Secs. 71-3510-71-3512, inclusive, Compiled Statutes of Nebraska of 1929, Cumulative Supplement of 1937. ! ! ! ! ! ! : ! ! Housing cooperation law Laws of Nebraska, 1937, Ch. 91, approved 5/18/37. Also in Ch. 71, Art. 35, Secs. 71-3501-71-3509, Compiled Statutes of Nebraska of 1929, Cumulative Supplement of 1937. Ch. 20, Laws of 1938, approved 3/8/38. Also in Revised Statutes of New Jersey, Ch. 14B, Title 55; amended by Ch. 211, Laws of 1938, Regular Session, approved May 24,1938. Oh. 408, Public Laws of North Carolina, 1935, ap-Carolina Code of 1935, Ch. 103-A, Art. 2, Secs. 6243 (30)-6243 (41). 575, Bald bevisi 3 J Ohio i’s Jai Secs. 1937, 12/37 House Bill No. proved 5/7/37; 1934 Certified R Throckmorton’: tated Code of 14A; Baldwii Code Service, 1938 Number £ 51-1078-58. Laws of Oregon, 441, approved 3/ Laws of Pennsylv Public'Law 888 5/26/37. j Also it Annotated, 193* tive Annual Po Title 35, Secs. £ , 1933-l95/7a/37 ’4 and 18 by urther ill No. »roved stated ’erma-.14-1, Bald-JSecs’ ock-¡ode of rtsion, 178-41. h. 442, ££ s i -I® S a 5 S Housing autho O O o o Laws of Ohio, 115-34; House Bill 1 proved 9/5/33; amt by House Bill Ji amended again House Bill No. ' amended by Sens 497, Laws of 1938 7/19/38: Page’s Ohio General Co nent Supplement Secs. 1078-29-107 win’s Ohio Coc January 1938 Nui 1078-30-1078-50; morton’s Annota Ohio, Baldwin’s 1934, Secs. 1078-Laws of Oregon, 19 approved 3/12/37. Laws of Pennsylv Public Law 955, 5/28/37. Also in Pennsylvania Sts notated, 1937 C Annual Pocket ] .35, Secs. 1541-1565 © CQ Nebraska New Jersey.. New York North Carolina North Dakota. Ohio Oregon.... 54 National Resources Committee Chart I.—Citations to State public housing legislation—Continued Housing Monograph 55 Chart I.—Citations to State public housing legislation —Continued 56 National Resources Committee Chart II.—Jurisdiction of State housing boards and other (H. A. L.=Housing Authorities Law; M. H. A. L.=Municipal Housing Authorities Law; M. O. H. A. L.=Metropolitan Cities Agency having jurisdiction Alabama Delaware Georgia Illinois Indiana Massachusetts 8 Montana STATE HOUSING BOARDS 8 State board may prescribe methods for keeping accounts, records, and books. State board may require authority to file reports on its operations and activities. State board may investigate affairs and conditions and inspect property etc., of authority. An authority shall submit to the board data as to the location and cost of property, proposed plans, specifications and estimate of costs and a statement of the proposed methods of financing and operating the projects. Application must be made to board to discontinue operation of projects by an authority. Project approval and changes in project must be approved by board OTHER STATE BOARDS, AGENCIES, OR OFFICIALS5 Utilities Commission has investigatory powers and must approve project. Public Works Board must approve bonds of authority See. 16, H. A. L. dn Sec. 13, H. A. L. rln Sec. 24 (A), H. A. L. do Sec. 26 E. E., H. A. L. dn do dn Sec. 24 (B), H. A. L. Sec. 24 (D), H. A. L. dn Sec. 17, H. A. L? Sec. 19, H. A. L. Sec. 17, H. A. L. Sec. 14, H. A. L.« Sec. 13, S. B. H. L. Sec. 14, H. A. L. —do Sec. 4, H. A. L. Sec. 24 (D), H. A. L. Sec. 26-S. H. A. L. Sec. 10, H. A. L. Department of Internal Affairs must approve bonds All accounting and other transactions of authority shall be subject to the inspection and approval of the Bureau of Inspection and Supervision of Public Offices. Secretary of State approves and issues certificate of incorporation Sec. 4, H. A. L. Sec. 26, M. H. A. L. Sec. 4, H. A. L. Authority may have bonds certified by Attorney General 1 Of the 33 States and 2 Territories having enabling housing legislation as of October 1938, 13 had no specific provision: Arkansas, California, Colorado, Connecticut, Florida, Kentucky, Louisiana, Michigan (but “functions, powers, and duties of State department unaffected,” Sec. 34), Mississippi, Vermont, Virginia, West Virginia, and Wisconsin. 2 One member of Housing Authority is appointed by the State Board. 8 Further provision. South Carolina, Sec. 6, H. A. L.: State Board may extend teiritorial jurisdiction of the housing authority. Chart III.—Enabling housing legislation: Territorial State Public bodies in which authorities may be created Method or methods of creating authority Area of operation of authority Term of members of authority Alabama Housing authority may be created in any city or incorporated town, (Sec. 3, Subsec. 2, and Sec. 4.) 25 residents of city or of area within 10 miles of boundaries thereof may file petition with the City Clerk, who shall call and give notice of public hearing, after which Council adopts a resolution concerning the dwelling accommodations in area. The Council or Mayor thereupon appoints 5 commissioners of an authority, who present application for certificate of incorporation to the Secretary of State of Alabama, who thereupon issues a certificate of incorporation. (Sec. 4.) The city and the area within 10 miles of boundaries thereof. It shall not include any other city with more than 10,000 inhabitants nor area included in another authority. Additional authority may be set up for each 50,000 inhabitants in city. (Sec. 4 as amended by Act No. 445 of 1935.) Members of authority commission, consisting of 5, appointed for terms of 1 to 5 years each. (Sec. 5.) Term of members first appointed 1 to 5 years, respectively. Thereafter 5 years for each term. (Sec. | Arkansas Any city of first-class or any county - in State may create a housing authority. (Sec. 4.) City or county may create a housing authority upon motion of the governing body or upon petition to the governing body by 25 residents of the city or county, asserting the need for an authority. (Sec. 4.) 1. Cities of less than 10,000 and the area within 5 miles of boundaries. 2. Cities of 10,000 or more and area within 10 miles of boundaries. 3. Counties, except that part within boundaries of city. (Sec. 2g.) Term of members first appointed, 1 to 5 years, respectively. There- ' after 5 years for each term, i (Sec. 5.) California Governing body of any city or county may declare need for an authority for ' city or county. (Sec. 4.) After governing body, upon its own motion or upon petition of 25 residents of city or county, determines need for an authority based on investigation of housing conditions, the Mayor of the city may appoint 5 persons as commissioners of authority and, in case of county, governing body makes such appointments. (Secs 4 and 5.) 1. The city and area within 5 miles from boundaries thereof. 2. The county, except that portion within boundaries of city located in said county, for which an authority has been created. Housing authority for county must obtain consent of city in which it is proposed to operate. (Sec. 3f.) 3 commissioners first appointed to serve terms of 1 to 3 years and 2 commissioners first appointed to serve 4-year terms. Thereafter term of office of each of the | 5 commissioners is 4 years. (Sec. 5.) Colorado — Authority may be created by a city and area within 10 miles from boundaries thereof. Not to include whole or part of any other city or area within another authority. (Sec. 4.) 25 residents may petition City Clerk, who shall thereupon calla public hearing, after which the Council, by resolution, shall determine the conditions of the dwelling accommodations in the city and notify the Mayor, who thereupon appoints 5 persons as commissioners of an authority. The Commissioners shall file a certificate with the Secretary of State of Colorado. (Sec. 4.) The city and the area within 10 miles from boundaries thereof, • but shall not include any other city or area included in another authority. (Sec. 4.) First commissioners appointed by the Mayor for terms of 1 to 5 years. Thereafter term shall be 5 years. (Sec. 5.) * For the 33 States and 2 Territories having enabling housing legislation as of July 1938. Unless otherwise indicated, section number refers to State Housing Authorities law. Housing Monograph 57 State boards, agencies, or officials over housing authorities1 Housing Authorities Law; F. C. C. H. A. L.=First Class Cities, Housing Authorities Law; S. B. H. L.=State Board Housing Law] New Jersey New York North Carolina North Dakota Ohio Oregon Pennsylvania Rhode Island Tennessee Texas Puerto Rico Sec. 67, M. H. A. L. Bec. 9, S. B. H. L. dn Sec. 26, H. A. L. Sec. 23, H. A. L. do Sec. 1078-38, H. A. L. Sec. 7, S. B. H. L. Sec. 10, S. B. H. L. Sec. 68, M. H. A. L. Sec. 1078-40, H. A. L. Sec. 1078-36, H. A. L. Sec. 23, H. A. L. Sec. 68, M. H. A. L. Sec. 13, S. B. H. L. Sec. 28, H. A. L„ Sec. 18, H. A. L. Sec. 1078-36, H. A. L. Sec. 4, H. A. L„. Sec. 4, H. A. L. Sec. 4, H. A. L. Sec. 17, H. A. L. Sec. 17, H. A. L. Sec. 17, H. A. L. Sec. 17, H. A. L. 4 These provisions do not apply to projects aided or financed by the Federal Government. 4 Further provision. Maryland, sec. 8 (h), H. A. L.: Location of all housing projects in the City of Baltimore must first be approved by the Board of Estimates of the City of Baltimore. Nebraska, Sec. 17, F. C. C. H. A. L., Sec. 11, M. C. H. A. L.: Bonds must be approved by State Auditor of Public Accounts. Hawaii, Sec. 7978J, Sec. 11, H. A. L.: Bonds must be approved by Governor and President of the United States if they are not sola to the Federal Government. organizational and administrative provisions 1 Compensation of members By whom appointed Limitations on eligibility of members Power to select and pay additional personnel Removal of directors Reasons for removal A commissioner receives no compensation but is entitled to necessary expenses, including traveling expenses. (Sec. 5.) Commissioners are appointed by the Mayor of the .city or the City Council. (Secs. 4 and 5.) None of the commissioners may be city officials. (Sec. 6.) The authority may employ a secretary (executive director), technical experts, attorneys, and other employees required, and shall determine their qualifications, duties, and compensation. (Sec. 5.) Commissioners may be removed by the Mayor of the city after 10 days’ notice, of hearing and opportunity to be heard in person, or by counsel. (Sec. 8.) Inefficiency, neglect of duty, misconduct in office, or willfully violating any law of the state or term, provision or covenant of contract. (Sec. 8.) A commissioner receives no compensation but is entitled to necessary expenses, including traveling expenses. (Sec. 5.) Commissioners appointed by Mayor of city or governing body of county. (Sec. 6.) Officers and employees of city or county are not eligible for appointment to housing authority. (Sec. 6.) Authority may select secretary (executive director), technical experts, officers, agents, and employees, and determine their duties and compensation. (Sec. 5.) An authority may employ a secretary (executive director), technical experts, officers, agents, and employees and determine their qualifications, duties, and compensation. May employ its own counsel or obtain services of chief law officer of city or county. (Sec. 6.) Authority may employ secretary (executive director), technical experts, officers, agents, and employees and determine their duties, qualifications, and compensation. May employ counsel or call upon corporation counsel or chief law officer of the city. (Sec. 6.) Commissioners may be removed by the Mayor of the city or governing body of the county after 10 days’ notice and hearing in person or by coun- Inefficiency, neglect of duty, or misconduct in office. (Sec. 7.) Commissioner receives no compensation but is entitled to necessary expenses, including traveling expenses. (Sec. 5.) Commissioners shall receive no compensation but shall be entitled to the necessary expenses, including traveling expenses. (Sec. 6.) Commissioners of an authority of a city appointed by the Mayor, and those of a county appointed by the governing body. (Sec. 5.) Commissioners appointed by the Mayor of the city. (Sec. 6.) No commissioner may be an officer or employee of the city or county. (Sec. 6.) Not more than one city official may be a commissioner of the authority. (Sec. 6.) sei. (Sec. 7.) Commissioners may be removed by the Mayor of city or governing body of county after 10 days’ notice of hearing and opportunity to be heard in person or by counsel. (Sec. 7.) Commissioners may be removed by the Mayor after notice and hearing and opportunity to be heard in person or by counsel. (Sec. 8.) Inefficiency, neglect of duty, or misconduct in office. (Sec. 7.) Inefficiency, neglect of duty, misconduct in office, or violating any law of the state or any term, provision, or covenant of any contract. (Sec. 8.) 58 National Resources Committee Chart III.—Enabling housing legislation: Territorial State Public bodies in which authorities may be created Method or methods of creating authority Area of operation of authority Term of members of authority Connecticut Each municipality may authorize a housing authority to function. (Secs. 141d and 140d (b).) After governing body of municipality by resolution declares need for authority, upon investigation of dwelling accommodations, and notifies the Mayor to that effect, latter shall appoint 5 persons as commissioners. In case of a town, the commissioners are appointed by the governing body. (Secs. 141d and 142d.) Each municipality (city or borough of more than 10,000 and town having more than 10,000) but excluding any area within a city or borough for which a housing authority has already been created. (Sec. 140d (e).) First commissioners appointed serve 1 to 5 years. Thereafter term of office shall be 5 years. (Sec. 142d.) i Delaware State Board of Housing must determine need for an authority in any county or part thereof and issue certificate to that effect, describing the area of operation. (Sec. 4.) After issuance of State Board of Housing Certificate, 6 commissioners of an authority are appointed, who file certificates with the Secretary of State of Delaware, thus creating authority. (Secs. 4 and 8.) The county or part of the county designated by the State Board of Housing. (Sec. 2 (f) and Sec. 4.) First commissioners appointed for terms of 1 to 6 years. There after term of office 6 years each (Sec. 4.) Florida Governing body of city having more than 5,000 inhabitants declares need for an Authority by resolution on own motion or upon petition of 25 residents of city. (Sec. 4; also Secs. 3 (b) and 3 (c).) If governing body upon investigation finds unsafe or insanitary dwelling accommodations and adopts resolution to that effect, it shall notify mayor who shall appoint members of a housing authority. (Secs. 4 and 5.) For city having population of less than 25,000, the city and area within 5 miles of boundaries thereof; for cities having population of 25,000 and over, such city and area within 10 miles of boundaries. (Sec. 3f.) Three of first 5 commissioners appointed serve 1 to 3 years, respectively. The remaining two members serve 4 years each. Thereafter, all commissioners shall be appointed for a term of 4 years each. (Sec. 5.) Georgia Governing body of city or county may adopt resolution declaring need for authority. (Secs. 4, 3 (b), and 3 (c).) Any governing body declares by resolution, on its own motion or upon petition of 25 residents, need for an authority and notifies Mayor. The latter, with consent of Governor, shall appoint 5 persons as commissioners for city. In case of county, the governing body, with consent of Governor, appoints the commissioners. (Secs. 4 and 5.) For city with population more than 5,000 shall include city and area within 10 miles of boundaries but no part of any other city. In case of county, shall include county, but no part within area of city. (Secs. 3 (b) and 3 (f).) Commissioners first appointed for terms of 1 to 5 years. Thereafter, term of office shall be 5 years each. (Sec. 5.) Illinois- Governing body of city, village, or incorporated town of more than 25,000, or any county in State, may create housing authority. (Sec. 3 as amended.) Need for authority first determined by governing body by resolution, upon adoption of which it is forwarded to State Housing Board. If latter determines need for authority exists, it issues certificate for creation of authority. State Housing Board may also on its own initiative issue certificate creating housing authority. Presiding officer of city, village, incorporated town, or county thereupon appoints, with approval of State Housing Board, 5 persons to act as commissioners. (Sec. 3.) City, village, incorporated town, ana area within 3 miles of boundaries, or county, except area included in city, village, or incorporated town. (Sec. 17b.) First members of authority appointed for 1 to 5 years. Thereafter term is 5 years each. (Sec. 3.) Indiana A housing authority created for each city, town, and county after governing body declares by resolution need for such Authority. (Secs. 4 and 3(c).) After governing body, upon own motion or upon petition of 25 residents of city, town or county, or upon receipt of an order from State Housing Board, by resolution declares need for Authority, it notifies the Mayor, who appoints 5 persons as commissioners. In case of county, governing body itself appoints the commissioners. (Secs. 4 and 5.) In case of city or town, such city or town and area within 10 miles of its boundaries, but no part of any other city or town. In case of county, includes such county except that lying within boundaries of any city or town. (Sec. 3 (g).) Three of first 5 commissioners appointed serve terms of 1 to 3 years. Other 2, terms of 4 years each. Thereafter, all terms 4 years each. (Sec. 5.) Kentucky... Cities of the first, second, third, fourth, and fifth class are authorized to create housing authorities. (Sec. 2, as amended by Sec. 2741X-1.) The mayor of a city of the first, second, third, fourth, or fifth class, with the approval of the legislative body of the city, may appoint four persons who, with the mayor ex-officio, may constitute a municipal housing commission. (Sec. 2, as amended by Sec. 2741X-2.) Cities of the first, second, third, fourth, or fifth class. (Sec. 1, as amended by Sec. 2741X-1.) Term of Commissioners first appointed shall be 4 years each, thereafter, terms shall be 1 to 4 years. At the expiration of which, the terms shall again be 4 years each. (Sec. 2, as amended by Sec. 2741X-2.) Louisiana Housing authorities created for each city having population of more than 20,000. (Sec. 4.) After council, upon petition of 25 residents of city, adopts resolution declaring need for Authority, it notifies mayor, who thereupon appoints 5 persons as commissioners. (Secs. 4 and 5.) The city in which the housing authority is created and the area within 10 miles of the boundaries thereof. Shall not include any part of any other city in such area. (Sec. 3 (e).) First Commissioners appointed for terms of 1 to 5 years; thereafter, terms of office shall be 5 years each. (Sec. 5.) Maryland Housing authorities created for each city or town having a population of more than 1,000 and for each county. (Sec. 1.) The governing body of a city or Board of Commissioners of a county by resolution must determine the need for an Authority and notify the mayor, who shall approve or disapprove of such action. If he approves he appoints 5 persons as commissioners of the Authority. In the case of a county, the commissioners of the Authority are appointed by Board of Commissioners. (Sec. 1.) The city and the area within 10 miles of the boundaries thereof but no part of any other city. In the case of a county, includes the county, except that part lying within boundaries of city for which Authority has been created, unless such city consents to its inclusion in County Authority. (Sec. 1(22)') First Commissioners appointed serve terms of 1 to 5 years; thereafter term of office 5 years each. (Sec. 1 (5) and (22). 59 Housing Monograph organizational and administrative provisions—Continued Compensation of members By whom appointed Limitations on eligibility of members Power to select and pay additional personnel Removal of directors Reasons for removal Commissioners shall re- Commissioners for a munic- No commissioner shall Authority may employ sec- In case of a town, the com- Inefficiency, neglect of ceive no compensation ipality are appointed by hold office in the mimic- retary (executive director), missioners may be re- duty, misconduct in but shall be reimbursed for actual, necessary, ex-• penses. (Sec. 142d.) the Mayor. In case of a town, commissioners are appointed by the governing body. (Sec. 142d.) ipality. (Sec. 142d.) technical experts, agents, and employees and determine qualifications,duties, and compensation. It may also employ its own counsel. (Sec. 142d.) moved by the governing body; and in case of a municipality by the Mayor. 10 days’ notice and copy of the charges and opportunity to be heard by counsel are provided for. (Sec. 144d.) office. (Sec. 144d.) Commissioners receive no 2 commissioners appointed for No limitation on eligibil- Commissioners may employ The Governor, Mayor, and Official misconduct, neg- compensation but are en- 6 and 3 years, respectively, ity of commissioners but officers, employees, direc- Resident Judge may by lect of duty, or incom- titled to reimbursement for necessary expenses. (Sec. 7). by the Governor, 2 commissioners for 5 and 2 years, respectively, appointed by the Mayor of the most populous, incorporated city or town in area; and 2 commissioners for terms of 4 years and 1 year each, respectively, appointed by the Resident Judge of the Superior Court of the county. Successors to the first commissioners likewise appointed for 6-year terms. (Sec. 4.) must reside in area of operation. (Sec. 4.) tor, engineering, architectural, and legal assistants and prescribe their duties and compensation. (Sec. 6.) majority vote, remove a commissioner after the latter shall have been given a copy of the charges and an opportunity to be heard in person or by counsel. (Sec. 4.) petence. (Sec. 4.) Commissioners receive no Commissioners appointed No Commissioner of an An Authority may employ A Commissioner may be re- Inefficiency or neglect compensation but are by mayor of the city. Authority may be an a secretary (executive moved by mayor upon 10 of duty or misconduct entitled to necessary expenses, including traveling expenses. (Sec. 5.) (Sec. 5.) officer or employee of the city. (Sec. 5.) director), technical experts, officers, agents, employees and determine qualifications, duties, and compensation. May employ counsel or call upon chief law officer of the city. (Sec. 5.) days’ notice of hearing, together with copy of charges and an opportunity to be heard in person or by counsel. (Sec. 7.) in office. (Sec. 7.) Commissioners receive no Commissioners of the city No commissioner of an An Authority may employ Commissioners may be re- Inefficiency, neglect of compensation but are appointed by the mayor, authority may be an secretary (executive direc- moved by mayor of city, of duty, or misconduct entitled to necessary expenses, including travelingexpenses. (Sec. 5.) with consent of the governor. Commissioners of county appointed by governing body with consent of governor. (Sec. 5.) officer or employee of the city or county. (Sec. 5.) tor), technical experts, officers, agents, employees, and determine qualifications, duties, and compensation. May employ counsel or call upon chief law officer of city or county. (Sec. 5.) with consent of governor or by governing body of county, with consent of governor, after being given copy of charges and notice of hearing and opportunity of being heard in person or by counsel. (Sec. 7.) in office. (Sec. 7.) Commissioner receives no Members of authority ap- Public officer eligible to Authority may employ of- State Board of Housing may Incompetency, neglect of compensation. Entitled pointed by presiding of- serve as commissioner. fleers, including engineers, remove commissioner after duty, malfeasance. to necessary expenses. (Sec. 7.) fleer of city, village, incorporated town, or county with approval of State Housing Board. (Sec. 3.) No member of Housing Board eligible as commissioner. (Sec. 3.) architects, and legal assistants, and determine their duties and compensation. (Sec. 6.) latter receives copy of charges, notice of hearing, and opportunity to be heard in person or by counsel. (Sec. 4.) (Sec. 4.) Commissioners receive no Commissioner of Authority No commissioner of An Authority may employ Commissioners may be re- Inefficiency, neglect of compensation but are en- for city appointed by Authority may be an secretary (executive direc- moved by the mayor in duty, or misconduct in titled to necessary expenses, including traveling expenses. (Sec. 5.) mayor, for town or county by the governing body. (Sec. 5.) officer of employee of city, town, or county. (Sec. 5.) tor), technical experts, officers, agents, and employees, and determine their duties, qualifications, and compensation. May employ counsel or call upon chief law officer of city, town, or county. (Sec. 5.) the case of a city or by the governing body in the case of town or county, after receiving copy of the charges and notice of hearing and an opportunity to be heard in person or by counsel. (Sec. 7.) office. (Sec. 7.) Members of Authority re- Commissioners appointed No officer or employee of Commissioners may employ Commissioners may be re- Incompetence, neglect of ceive compensation as by Mayor of city, with city eligible for appoint- secretary, treasurer, engi- moved by the mayor after duty, malfeasance. fixed by legislative body of city. Maximum of chairman shall be $2,000 per annum and each member not to exceed $400 per annum. (Sec. 2, as amended by Sec. 2741X-2.) approval of legislative body, mayor ex-offlcio member of Commission. (Sec. 2, as amended by Sec. 2741X-2.) ment as Commissioner. Not more than two appointees from the same political party. (Sec. 2, as amended by Sec. 2741X-2.) neers, architects, experts, attorneys. (Sec. 2, as amended by Sec. 2741X-2.) notice of hearing and an opportunity to be heard in person or by counsel. (Sec. 13.) (Sec. 13.) Commissioners receive no Commissioners of Authority No Commissioner shall be Authority may employ sec- Mayor may remove commis- Inefficiency, neglect of compensation but are entitled to actual and necessary expenses. (Sec. 5.) appointed by the mayor of the city. (Sec. 5.) city official. (Sec. 5.) retary (executive director), technical experts, officers, agents, employees, and determine qualifications, duties and compensation. May employ counsel or call upon chief law officer of city. (Sec. 5.) sioner after commissioner has been given copy of charges and notice of hearing and an opportunity to be heard in person or by counsel. (Sec. 7.) duty, or misconduct in office, or wilfully violating any law of the state or term, provision, or covenant of a contract. (Sec. 7.) Commissioners receive no Commissioners of Authority No Commissioner of the Authority may employ sec- Commissioner of an Author- Inefficiency, neglect of compensation but are for city appointed by May- Authority may be an retary (executive director), ity may be removed by duty, or misconduct in entitled to necessary expenses, including travel-mgexpenses. (Sec. 1 (5).) or of city. Commissioners of Authority for county appointed by Board of Commissioners. (Sec. 1 (5).) officer or employee of the city or county. (Sec. 1 (5) and (22).) technical experts, officers, agents, and employees, and determine compensation, qualifications and duties. May employ counsel or call upon chief law officer of city. (Sec. 1 (5).) mayor of city or Board of Commissioners of county after being given copy of charges and notice of hearing and an opportunity to be heard in person or by counsel. (Sec. 1 (22).) office. (Sec. 1(7).) 60 National Resources Committee Chart III.—Enabling housing legislation: Territorial State Public bodies in which authorities may be created Method or methods of creating authority Area of operation of authority Term of members of authority Massachusetts City Council of city, with approval of Mayor, and town at town meeting, may create housing authority. (Sec. 26L.) Need for housing authority of city determined by vote of city council with approval of Mayor, who with approval of council, appoints 4 members of authority, and 1 is appointed by housing board. In case of towns, need for housing authority determined by vote of town meeting. Selectmen appoint 4 members of authority and 1 is appointed by housing board. City or town clerk then files certificate of appointment or election with housing board, and duplicate with Secretary of State, who issues certificate of organization. (Sec. 26L and 26M.) City or town (Sec. 26L) Eor city, members of authority first appointed by Mayor serve terms of 1, 2, 4, and 5 years; members appointed by housing board, 3 years. Thereafter term : of office 5 years each. For town, j members first appointed by selectmen, serve until next annual j town meeting. Thereafter elected members serve terms of 5, 4, 2, and 1 years according to number of votes received. Members appointed by housing board serve 3 years. Thereafter term of office 6 years each. (Sec. 26L and 26M.) Commissioners first appointed for terms of 1 to 5 years. Thereafter commissioners’ terms are 5 years each. (Sec. 4, Act No. 80, Laws of 1935 amending Sec. 4, Act No. 18, Laws of 1933.) Michigan City or incorporated village (Sec. 3, Act No. 18, Laws of 1933, as amended by Sec. 1 of Act No. 5, Pub. Acts., Ex. Sess., 1938). Housing commission of a city or incorporated village created by appointing 5 persons to act as commissioners. (Sec. 4, Act No. 80, Laws of 1935, amends Sec. 4, Act No. 18, Laws of 1933.) City or incorporated village (Sec. 1 of Act No. 5, Public Acts, Ex. Sess., 1938). Mississippi Governing body of city or county by resolution may authorize housing authority for city or county to function. (Sec. 3.) Upon motion of the governing body or petition of 25 residents of city or county, the governing body by resolution must declare the need for a housing authority to function and notify mayor of the city of such resolution. The mayor thereupon appoints 5 persons as commissioners. In the case of the county, 5 persons appointed by governing body. (Secs. 3 and 4.) Includes the city and area within 5 miles from the boundaries thereof. In the case of county, includes the county except portion lying within boundaries of city. (Sec. 1 (g).) First commissioners appointed serve terms of 1 to 5 years. Thereafter term of office 5 years each. (Sec. 4.) Montana Residents of city of first or second class may create housing authority. (Sec. 4.) 25 residents of city and area within 10 miles may file petition with city clerk setting forth need for authority who thereupon gives notice of public hearing. After hearing the city council by resolution determines the lack of proper dwelling accommodations and must notify mayor of adoption of such resolution who thereupon appoints 5 persons as commissioners. (Sec. 4.) The city and area within 10 miles of the boundaries thereof but no part of any city included within the boundaries of another authority. (Sec. 4.) Commissioners first appointed for terms of 1 to 5 years. Thereafter terms of office 5 years each. (Sec. 5.) Nebraska Governing body of metropolitan city including either city of first class (population of more than 5,000, less than 100,000) or of county may create housing authority. (Sec. 3, Ch. 29, Laws of 1935, and Sec. 4, Oh. 90, Laws of 1937.) Governing body of metropolitan city by ordinance determines need for an authority. Thereupon the mayor with the approval of governing body appoints 5 persons as commissioners. (Secs. 3 and 5, Ch. 29, Laws of 1935; Sec. 16, Ch. 94, Laws of 1937.) In first-class cities and counties, governing body on own motion or upon petition of 25 residents of city or county declare need for authority by resolution and notify mayor of city who may appoint 5 persons as commissioners. In case of county, appointment of commissioners by governing body. (Sec. 4, Ch. 90, Laws of 1937.) Cities of metropolitan class includes the city and the area within 10 miles of the boundaries thereof. (Sec. 2f, Ch. 94, Laws of 1937.) In the case of cities of the first class, includes such city and the area within 5 miles of the boundaries thereof, and in case of county includes county except that portion which lies within boundaries of a city. (Sec. 3f, Ch. 90, Laws of 1937.) For metropolitan cities, term is 1 year each. (Sec. 3, Ch. 29, Laws of 1935.) For first-class cities or counties, term of office of first commissioners appointed, 1 to 5 years. Thereafter term of office 5 years each. (Sec. 5 Ch. 90, Laws of 1937.) New.Jersey Governing body of county by resolution or of city by ordinance may create housing authority, and two or more municipalities may create regional housing authority. (Sec. 5.) The governing body of municipality or of county, after adoption of resolution, may create housing authority and appoint 5 persons as commissioners of authority. In case of regional authority, 2 or more municipalities may join by appointing 2 per-. sons each as commissioners and an additional commissioner appointed by the governing body of the municipality having the largest population. (Sec. 5.) In the case of municipality, includes such municipality; in ease of regional authority, includes 2 or more municipalities; in case of county, includes all of county except portion lying within limits of municipality already having an authority. (Sec. 4e.) For municipalities or counties, commissioners first appointed serve 1 to 5 years; thereafter term of office 5 years each. For regional authority, term of office 5 years each. (Sec. 5.) New York.. Authority may be established by a county, city, or first-class village. (Sec. 63(1).) Local legislative body by resolution may authorize and direct the mayor of a city or village or county executive to file certificate for authority, thereby creating it, or Mayor or county executive may file in office of State board of housing a certificate and copy in office of secretary of state setting forth the need of the authority, etc. (Sec. 63 (1).) City, county, or first-class village for which authority was created. (Sec. 63 sub. (1).) Term of members of first authority 1 to 5 years; thereafter term of office 5 years each. (Sec. 63 (2) and (3).) North Carolina City council and mayor upon petition of 25 residents of city and area within 10 miles may appoint housing authority commissioners. (Sec. 4.) 25 residents of city and area within 10 miles may file petition with city clerk setting forth need for authority. City clerk must give notice of public hearing at which city council by resolution must determine the need for an authority. After adoption of such resolution it shall notify mayor who appoints 5 persons as commissioners who thereupon present application for incorporation to the secretary of state. The latter issues a certificate of incorporation to the commission. (Sec. 4.) A city or town having a population of more than 5,000 and the area within 10 miles of the boundaries thereof. (Secs. 3 and 4 as amended Aug. 13, 1938.) First commissioners appointed by mayor serve terms of 1 to 5 years; thereafter term of office 5 years eacb. (Sec. 5.) North Dakota A housing authority may be created in each city and in each county of the State. (Sec. 4.) Governing body must determine need for authority upon own motion or upon petition of 25 residents of city or county. After adoption of resolution declaring need for authority, governing body must notify mayor who thereupon appoints 5 persons as commissioners. In case of county, commissioners appointed by governing body. (Secs. 4 and 5.) In case of a city of less than 15,000, Includes such city and area within 5 miles of boundaries thereof. In case of city of 15,000 or over, area includes such city together with area within 10 miles thereof; and in case of county, includes all of county except that portion within boundaries of city. (Sec. 3f.) First commissioners appointed serve terms of 1 to 5 years; thereafter term of office 5 years eacb. (Sec. 5.) 61 Housing Monograph organizational and administrative provisions—Continued Compensation of members By whom appointed Limitations on eligibility of members Power to select and pay additional personnel Removal of directors Reasons for removal Members of authority receive no compensation, in any capacity, but are entitled to reimbursement for proper expenses. (Sec. 26P.) For city, 4 members appointed by Mayor with approval of City Council and 1 by housing board. For town, 4 of first authority appointed by selectmen; thereafter elected by town meeting; 1 appointed by housing board. (Sec. 26L and 26M.) No provision is made concerning eligibility of members. Housing Authority may employ counsel, executive director (exofficio-secretary) treasurer, officers, agents, employees, and determine qualifications, duties and compensation. May use services of agencies, officers and employees of city or town. (Sec. 260.) Mayor with approval of city council, or town selectmen, as case may be, may remove a member of authority, after sueh member receives a copy of charges, notice of hearing and opportunity to be heard in person or by counsel. Members of authority appointed by housing board may be removed by housing board in like manner. (Sec. 26N.) Inefficiency, neglect of duty or misconduct in office. (Sec. 26N.) Members of commission receive no compensation. (Sec. 4, Act No. 80, Laws of 1935 amending Sec. 4, Act No. 18, Laws of 1933.) Commissioners receive no compensation but may receive necessary expenses including traveling expenses. (Sec. 4.) Commissioners appointed by chief administrative officer of city or incorporated village. (Sec. 4, Act No. 80, Laws of 1933 amended by Sec. 4, Act No. 18, Laws of 1935.) Commissioners of city appointed by mayor. Commissioners of county appointed by governing body of county. (See. 4.) No. limitation on eligibility. Commissioner may not be an officer or employee of city or county. (Sec. 4.) Commission may appoint director and other officers and employees including engineers, architects, and consultants. (Sec. 5, Act No. 80, Laws of 1935 amending Sec. 5, Act No. 18, Laws of 1933.) Authority may employ sec-= retary (executive director), technical experts, officers, agents, employees, and determine the qualifications, duties, and compensation; may employ counsel or call upon chief law officer of city or county. (Sec. 4.) Authority may employ secretary (executive director), technical experts, officers, agents, employees and determine qualifications, duties and compensation; may employ counsel or call upon chief law officer of city. (Sec. 5.) Members of commission may be removed by appointing authority. (Sec. 4, Act. 80, Laws of 1935 amending Sec. 4, Act No. 18, Laws of 1933.) No provision made for removal of commissioners. No provision is made giving reasons for removal. No provision. Commissioners receive no compensation but may receive necessary expenses including traveling expenses. (Sec. 5.) Commissioners appointed by mayor of city. (Sec. 5.) No commissioner may be city official. (Sec. 5.) Commissioners may be removed by mayor after having been given copy of charges and notice of hearing and an opportunity to be heard in person or by counsel. (Sec. 8.) Inefficiency, neglect of duty, misconduct in office, or willful violation of any law of State, or term, provision, or covenant of contract. (Sec. 8.) Commissioners receive no compensation but may be reimbursed for necessary expenses. (Sec. 3, Ch. 29, Laws of 1935; also Sec. 5, Oh. 90, Laws of 1937.) Commissioner receives no compensation for services but is entitled to necessary expenses including traveling expenses. (Sec. 7.) Members of authority receive no compensation but entitled to necessary expenses including traveling expenses. (Sec. 63 sub. (3).) Commissioners receive no compensation but entitled to necessary ex-penses including traveling expenses. (Sec. 5.) Metropolitan housing authority members appointed by Mayor with approval of governing body. (Sec. 3, Oh. 29, Laws of 1935.) For first-class cities, members of authority appointed by Mayor. For counties, members of authority appointed by governing body. (Sec. 5, Ch. 90, Laws of 1937.) Commissioners of authority for municipality or county appointed by governing body. In case of regional authority, commissioners appointed by respective governing bodies. Executive Director of State housing authority may appoint ex officio member of each authority. (Sec. 5.) Members of authority appointed by mayor or county executive. (Sec. 63 (2).) Commissioners appointed by mayor. (Sec. 5.) No commissioner of authority of first class city or county may be officer or employee of city or county. (Sec. 5, Ch. 90, Laws of 1937.) Commissioner of authority may not be an officer or employee of a municipality or county. (See. 7.) No more than 1 member of authority may be official of municipality. (Sec. 63 (2).) No commissioner may be city official. (Sec. 5.) Authority may employ counsel, director, officers, employees, and fix qualifications, compensation and duties; may Uso call upon chief law officer of city or county for legal services. (Sec. 4, Ch. 29, Laws of 1935, and Sec. 5, Ch. 90, Laws of 1937.) Housing authority may employ secretary (executive director), technical experts, officers, agents, employees and determine qualifications, duties and compensation may employ counsel or call upon chief law officer of municipality or county. (Sec. 7.) Authority may employ secretary (executive director), officers, agents, employees and determine qualifications, duties and compensation; may employ counsel or call upon chief law officer for legal services. (Sec. 64 (1).) Authority may employ secretary (executive director), technical experts, officers, agents, employees, and determine qualifications, duties, and compensation; may employ counsel or call upon chief law officer for legal services. (Sec. 5.) For metropolitan housing authority members no provision is made for removal; for first class cities commissioners may be removed by mayor after being given copy of the charges and notice of hearing and an opportunity to be heard in person or by counsel. For counties, commissioners may be removed by governing body after being given notice as above. (Sec. 7, Ch. 90, Laws of 1937.) Commissioner may be reremoved by governing body which made the appointment, after being given copy of charges with notice of hearing and .an opportunity to be heard in person or by counsel. (Sec. 7.) The mayor or county executive may remove member of authority after - being given copy of charges, notice of hearing, and an opportunity to be heard in person or by counsel. (Sec. 63 (4).) Commissioner may be removed by mayor after being given copy of charges, notice of hearing and an opportunity to be heard in person or by counsel. (Sec. 8.) Inefficiency, neglect of duty, misconduct in office. (Sec. 7, Ch. 90 Laws of 1937.) Inefficiency, neglect of duty, misconduct in office. (Sec. 7.) ■ Inefficiency, neglect of duty, misconduct in office. (See. 63 (4).) Inefficiency, or neglect of' duty, misconduct in. office, or willful violation of any law of State« or term, provision, or covenant of a. contract. (Sec. 8.) Commissioners receive no compensation but are entitled to necessary expenses including traveling expenses. (Sec. 5.) Commissioners of authority of city appointed by mayor after that appointments made by governing body. (Sec. 5.) No commissioner of authority may be officer or employee of city or county. (Sec. 5.) Authority may employ secretary (executive director), technical experts, officers, agents, and employees and determine qualifications, duties, and compensation; may employ counsel or call upon chief law officer for legal services. (Sec. 5.) Commissioner may be removed by mayor of city or governing body of county after such commissioner receives copy of charges, is ’given notice of hearing, and an opportunity to be heard in person or by counsel. (Sec. 7.) Inefficiency, neglect o fl duty, or misconduct in. office. (Sec. 7.) 119119—39----5 62 National Resources Committee Chart III.—Enabling housing legislation: Territorial State Public bodies in which authorities may be created Method or methods of creating authority Area of operation of authority Term of members of authority Ohio Metropolitan housing authorities may be created by State board of housing in any portion of any county comprising 2 or more political subdivisions or portions thereof but less than entire county. (Sec. 1078-30 as amended.) State board must adopt resolution declaring need for authority and forward same to Probate Court, Common Pleas Court, Board of County Commissioners, and . Mayor of most populous city in territory, each of whom appoint 1 member of authority, except Mayor, who appoints 2, and the 5 constitute housing authority. (Sec. 1078-30.) May consist of any portion of any county that comprises 2 or more political subdivisions or portions thereof. State board of housing may enlarge territory. (Sec. 1078-30.) Probate Court appointee, term 4 years. Common Pleas Court, appointee term 3 years. Board of County Commissioners appointee, 2 years. Mayor appointees, terms 1 and 5 years Thereafter terms of each 5 years. (Sec. 1078-30.) Oregon Governing body of city or town having population of more than 5,000, or any county may create housing authority. (Sec. 4.) Upon its own motion or upon petition of 25 residents of city or county, governing body of city or county by resolution determines need for authority and notifies Mayor of adoption cf such resolution who shall appoint 5 persons as commissioners of authority, in case of county commissioners appointed by governing body. (Secs. 4 and 5.) For cities of less than 10,000 such city and area within 5 miles thereof. For cities of 10,000 or more, such city and area within 10 miles of boundary. For counties, such county, except portion lying within boundary of city. (Sec. 3f.) Commissioners first appointed serve terms of 1 to 5 years, thereafter terms of office 5 years each. (Sec. 5.) । Pennsylvania A housing authority may be created in each city of first, second, Governing body of city or county must declare by resolution need for authority; or City of the first, second, second class-A, or third class of 30,000 Terms of members of authority first appointed 1 to 5 years, re- second class-A, or third class of 30,000 or over, and counties, except counties of the first class. (Secs. 3c, e and 4a, P. L. 955, Laws of 1937.) 25 citizens and taxpayers of city or county may submit petition to Governor stating need for authority. The clerk of city or county issues a certificate of adoption of resolution. The governing body or Governor then files triplicate with Department of State and State Board of Housing. Board of County Commissioners of county may issue certificate declaring need for authority in county. (Secs. 4 and 5.) population or over and any county. (Secs. 3c and 4.) spectively, thereafter 5 years each. (Sec, 6.) Rhode Island Council of City upon petition of 25 residents, may create housing authority. (Sec. 4.) 25 residents of city file petition with Clerk declaring need for authority, whereupon Clerk gives notice of public hearing, after which council adopts resolution to that effect and notifies Mayor, who appoints 5 persons as commissioners. Latter presents application to Secretary of State, who issues certificate of incorporation to commissioners. (Sec. 4.) Coterminous with city. (Secs. 3 and 4.) First commissioners appointed for terms of 1 to 5 years. Thereafter, term of office 5 years each. (Sec. 5.) South Carolina.... Each city (city or town, population over 5,000) or county cf State. (Secs. 2 and 3 of Act 783, Laws of 1934, as amended.) Need for authority in cities determined by resolution of council on own motion or upon petition of 25 residents of city. In counties, by legislative delegation. In case of cities Mayor is notified of resolution and appoints 5 commissioners of authority, except Charleston, where 7 are appointed. For counties, commissioners appointed by Senator. (Sec. 3, as amended.) Upon petition of 25 residents of a city filed with Clerk, the latter gives notice of public hearing, after which council determines The city and the county. In case of county, excludes that portion within boundaries of city having its housing authority. State Board of Housing may extend jurisdiction, within limits. (Sec. 3, as amended.) Members first appointed for terms of 1 to 5 years. Thereafter, term of office, 5 years each (Sec. 3, as amended.) Tennessee Any 25 residents of city (city or town with more than 2,000 inhabitants) and area within 10 For city, it includes city and area within 10 miles of boundaries but no part of another city. For First commissioners appointed for terms of 1 to 5 years. Thereafter, term of office, 5 years miles of boundaries. (Sec. 4, Ch. 20, Laws of 1935.) In case of Memphis, Board of Commissioners may determine need for authority. (Sec. 4, Ch. 615 Laws of 1935.) need for an authority by resolution and notifies Mayor, who appoints 5 commissioners, who present application to Secretary of State, who, in turn, issues certificate of incorporation to authority. In case of Memphis, the need is determined by Board of Commissioners, after which the Mayor appoints Commissioners as in other cities. (Sec. 4.) Memphis, the City of Memphis. (Sec. 4.) each. (Sec. 5.) Texas Housing Authority is created in each city of State. (Secs. 3 (b) and 4, as amended.) Need for authority first determined by governing body, by resolution on its own motion, or upon petition of 100 qualified voters and residents of city. It notifies Mayor of adoption of such resolution who appoints 5 persons as commissioners of authority. (Secs. 4 and 5, as amended.) Includes the city and area within 5 miles of boundaries thereof, excluding area of any other city. (Sec. 3 (f), as amended.) 2 commissioners first appointed, for 1 year each, and remaining 3, for 2 years each. Thereafter, term of office shall be 2 years each. (Sec. 5, as amended.) Vermont Governing body of city or town may adopt resolution declaring need for an authority. (Sec. 4.) Need for authority determined by governing body, by resolution, of municipality (city of over 10,000; town of over 10,000) upon own motion or upon petition of 25 residents of municipality. Mayor is notified of adoption of resolution, who appoints 5 persons as comm issioners of authority for city. In case of town, the governing body, after adoption of the resolution, appoints the 5 commissioners. (Secs. 4 and 5.) In case of city, includes city and area within 6 miles of its boundaries. (Sec. 3g.) First members of authority ap pointed for terms of 1 to 5 years Thereafter each term 5 years (Sec. 5.) Virginia Housing authority created in each city and county. (Sec. 4.) Need for authority determined by governing body of city or county, by resolution, upon own motion, or upon petition of 100 freeholders. Mayor is notified of adoption of resolution, who appoints 5 persons as commissioners of authority. In case of county, the 5 commissioners are appointed by the governing body. (Secs. 4 and 5.) In ease of a city, coextensive with boundaries of city; for county, includes all of county except portion within boundaries of city. (Sec. 3f.) First members of authority ai pointed for terms of 1 to 5 years Thereafter term of office, 5 year each. (Sec. 5.) 63 Housing Monograph organizational and administrative provisions—Continued Compensation of members By whom appointed Limitations on eligibility of members Power to select and pay additional personnel Removal of directors Reasons for removal Members of authority receive no compensation but shall be reimbursed for necessary expenses. (Sec. 1078-30.) Members appointed as follows: 1 by Probate Court, 1 by Common Pleas Corn t, 1 by Board of County Commissioners, 2 by Mayor of most populous city in territory. (Sec. 1078-30.) Not more than 2 public officials shall be members of an authority at 1 time. (Sec. 1078-30.) Authority may employ counsel, director (ex-offi-cio secretary) and officers and employees and fix compensation, qualifications. and duties. (Sec. 1078-31.) No provision for removal of housing authority members. No provision. Commissioner receives no compensation for services, but is entitled to expenses, including traveling expenses. (Sec. 5.) Members of housing authority receive no compensation but are entitled to expenses, including traveling expenses. (Sec. 6.) Commissioners receive no compensation, but entitled to necessary expenses, including traveling expenses. (Sec. 5) Commissioner receives no compensation, but is entitled to reimbursement for expenses. (Sec. 7.) Commissioners of authority for city appointed by Mayor of city; and for county appointed by governing body of county. (Sec. 5.) In case of county, members appointed by Board of County Commissioners, • except third-class counties where governing body appoints 2 members and Governor appoints 3 members. In case of cities Mayor appoints 5 members of authority, except first-class cities where Mayor appoints 2 members; City Controller appoints 2 members and the 4 select fifth member. In third-class cities Mayor appoints 2 members, Governor appoints 3 members. (Sec. 5.) Commissioners appointed by Mayor. (Sec. 5.) Members of City Authority, appointed by Mayor. (Sec. 3.) Members of County Authority, appointed by Senator. (Sec. 2, Act. 183, Laws of 1937.) No commissioner of authority may be officer or employee of city or county. (Sec. 5.) Not more than 2 persons holding any other paid public office may be members of housing au-authority at same time. (Sec. 6.) No commissioner may be city official. (Sec. 5.) Authority members may not be officers or' employees of city. (Sec. 3.) Authority may employ secretary (executive director), technical experts, officers, agents, employees, and determine qualifications, duties and compensation. May employ counsel or call upon chief law officer of city or county. (Sec. 5.) Housing-authority may employ counsel, secretary, technical experts, officers, agents, employees and determine qualifications. (Sec. 7.) Housing authority may employ secretary (executive . director), technical experts, agents, officers, employees, and determine duties, qualifications, and compensation. May employ counsel, or call upon chief law officer of city. (Sec. 5 ) Authority may appoint officers, employees, engineers, architects, legal assistants, and fix duties and compensation. (Sec. 5.) Commissioner of authority may be removed by Mayor or by governing body of county after being given a copy of charges and notice of hearing and opportunity to be heard in person or by counsel. (Sec. 7.) No provision made for removal of members of authority but obligee of authority may file charges with appointing power or the State Board of Housing against any member of authority. (Sec 9.) May be removed by Mayor, after receiving copy of charges, notice of hearing, and opportunity to be heard in person or by counsel. (Sec. 8.) Authority member may be removed by Mayor of city or Senator of county after receiving copy of charges, notice of hearing, and op-, portunity to be heard in person or by counsel. (Sec. 3.) Inefficiency, neglect of duty, or misconduct in office. (Sec. 7.) None. Inefficiency., neglect of duty, misconduct in office, wilful violation of term, provision or covenant of contract, or laws of State. (Sec. 8.) Inefficiency, neglect of duty, misconduct in office. (Sec. 3.) Commissioners receive no compensation, but receive necessary expenses, including travelling expenses. (Sec. 5.) Commissioners appointed by Mayor. (Sec. 5.) For cities, except Memphis, no commissioner may be city official. (Sec. 5.) For Memphis, no limitations. Authority may employ secretary (executive director), technical experts, officers, agents, employees, and determine qualifications, duties, and compensation. May employ counsel or call upon chief law officer of city. (Sec. 5.) Memphis authority not authorized to call upon chief law officer of city. Authority may employ secretary (executive director), technical experts, officers, agents, employees, and determine qualifications, duties; and compensation. May employ counsel or call upon chief law officer of the city. (Sec. 5, as amended.) Authority may employ secretary (executive director) technical experts, officers, agents, employees, and deter m 1 n e qualifications, duties, and compensation. May employ counsel or call upon chief law officer of municipality. (Sec. 5.) Mayor may remove commissioner after being given copy of charges, notice of hearing, and opportunity to be heard in person or by counsel. (Sec. 8.) Inefficiency, neglect of duty, misconduct in office, willful violation of any law of State, or any term, provision or covenant of contract. (Sec. 8.) Members of authority receive no compensation, but entitled to expenses, including travelling expenses. (Sec. 5e, as amended.) Members of authority rereceive no compensation but receive necessary expenses, including traveling expenses. (Sec. 5.) Members of authority appointed by Mayor. (Sec. 5, as amended.) For city, members of authority appointed by Mayor. For town, appointed by governing body of town. (Sec. 5.) No member of authority may be officer or employee of city. (Sec. 5, as amended.) No member of authority may be officer or employee of municipality. (Sec. 5.) Member of authority may be removed by Mayor, after receiving copy of charges, notice of hearing, and opportunity to be heard in person or by counsel. (Sec. 7, as amended.) Member of authority may be removed by Mayor of city or governing body of town, after receiving copy of charges, notice of hearing, and opportunity to be heard in person or by counsel. (Sec. 7.) Inefficiency, neglect of duty, or misconduct in office. (Sec. 7, as amended.) Inefficiency, neglect of duty, or misconduct in office. (Sec. 7.) Members of authority receive no compensation, but receive necessary expenses, including traveling expenses. (Sec. 5.) For city, mem bers of authority appointed by Mayor; for county, appointed by governing body. (Sec. 5.) No member of authority may be officer or employee of city or county. (Sec. 5.) Authority may employ secretary (executive director), technical experts, agents, officers, employees, and determine qualifications, duties, and compensation. May employ counsel or call upon city or commonwealth attorneys for legal aid. (Sec. 5.) Mayor of city or governing body of county may remove a member of authority, after receiving copy of charges, notice of hearing, and opportunity to be heaird in person or by counsel. (Sec. 7.) Inefficiency, neglect of duty, or misconduct in office. (Sec. 7.) 64 National Resources Committee Chart III.—Enabling housing legislation: Territorio State Public bodies in which authorities may be created Method or methods of creating authority Area of operation of authority Term of members of authority West Virginia Council of any city may determine need for authority. (Sec. 3.) After council of city determines need for an authority, it notifies Mayor thereof, who appoints 5 persons as commissioners of an authority. (Sec. 3.) City. (Sec. 3) ... First members of authority appointed for terms of 1 to 5 years. Thereafter the term is 5 years each. (Sec. 3.) Wisconsin Council of any city may, by resolution, declare need for an authority. (Sec. 4.) After council, based on investigation of housing conditions, adopts resolution declaring need for authority, it notifies Mayor, who then appoints 5 persons as commissioners of an authority. (Secs. 4 and 5.) The city and area within 5 miles of boundaries thereof, but not beyond county limits where city is located. (Sec. 3e.) First members of authority appointed for terms of 1 to 5 years. Thereafter term of office 5 years each. (Sec. 5b.) Hawaii (Territory of). Legislature of Hawaii created Hawaii Housing Authority for Territory of Hawaii. (Sec. 7978A.) 5 commissioners of housing authority ap-appointed by Governor with the consent of the Senate. (Sec. 7978A.) Territory of Hawaii. (Sec. 7978A.) First commissioners appointed for terms of 1 to 5 years. Thereafter the term of office is 5 years each. (Sec. 7978A.) Puerto Rico (Pos- Law creates “Puerto Rico Hous- Need for an authority in a municipality first For municipality, authority area First commissioners appointed for session of). ing Authority,” and also a housing authority in each municipal-ityjof Puerto Rico. (Sec. 4.) determined by resolution of governing body on own motion, or upon petition of 25 residents of municipality. Resolution must be approved by Executive Council of Puerto Rico. The Mayor is notified of adoption of the resolution and appoints 5 persons as commissioners of authority for municipality. (Secs. 4 and 5.) is co-extensive with municipality. The Puerto Rico Housing Authority does not include any area within municipality having an authority, unless consented to by it. (Sec. 3f.) terms of 1 to 5 years. Thereafter term of offi ce 5 years each. (Sec. 5.) Chart IV.—Enabling housing legislation: Provisions [Citation refers to section of the State Housing Authorities Provision Arkansas California Colorado Connecticut Florida Georgia Illinois Indiana Rent or lease only to persons of low income 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 Rentals within their financial reach 8 10 10 25 25 10 10 Rent or lease only enough rooms (no greater number), to provide safe, sanitary quarters without overcrowding. Tenants’ annual income cannot be more than 5 times annual rent including average annual cost to occupants of heat, water, electricity, gas, cooking range, other necessary facilities (whether or not included in rent). For families with 3 or more minor dependents, the income ratio shall not exceed 6 times rental. Excludes families with aggregate income sufficient to rent sanitary, safe quarters within area, yet maintaining adequate living standards. Subletting prohibited. 8 10 25 10 10 10 10 10 Section, or preceding section, does not limit authority’s power to give obligee right to take possession of project, if default; appoint receiver, acquire foreclosure title free from restrictions. 10 10 8 10 « 25 10 i Of the 33 States and 2 Territories having enabling housing legislation as of October 1938, 9 had no provision: Alabama, Delaware, Kentucky, Montana, New York, North Carolina, Ohio, Rhode Island, and West Virginia. 2 Further provision, Sec. 26AA: No discrimination, but preference to United States citizens, local inhabitants, and families expelled from demolished, condemned dwellings. 65 Housing Monograph organizational and administrative provisions—Continued Compensation of members By whom appointed Limitations on eligibility of members Power to select and pay additional personnel Removal of directors Reasons for removal Members of authority re- Members of authority ap- No provision Authority may appoint offi- Mayor may remove member Official misconduct, neg- ceive no compensation pointed by Mayor. (Sec. cers, employees, engineers, of authority after mem- lect of duty, or ii com- but may be reimbursed for necessary expenditures. (Sec. 6.) 3.) architects, legal assistants, and prescribe duties and compensation. (Sec. 5.) ber receives copy of charges, notice of hearing, and opportunity to be heard in person or by counsel. (Sec. 3.) petence. (Sec. 3.) Members of authority re- Members of authority ap- Member of authority may Authority may employ sec- Mayor may remove member Inefficiency, neglect of receive no compensation; pointed by Mayor and not be officially con- retary (executive director)- of authority after mem- duty, or misconduct in may receive necessary ex- confirmed by council. nected with political technical experts, officers, ber receives copy of office. (Sec. 8.) penses, including traveling expenses. (Sec. 5b.) (Sec. 5a.) party. Not more than 2 members of authority may be officers of city. (Sec. 5a.) agents, employees, and determine qualifications, duties, and compensation. May call upon city attorney for legal services. (Sec. 5c.) charges, notice of hearing, and opportunity to be heard in person or by counsel. Also Sec. 17.16 of Wisconsin Statutes. (Sec. 8.) Commissioners receive no Commissioners appointed Not more than 3 commis- Authority may employ ex- Member of authority may Inefficiency, neglect of compensation. Entitled by Governor with consent sioners shall be of same ecutive secretary, techni- be removed by the Gov- duty, or misconduct in to necessary expenses, in- of Senate.. (Sec. 7978A.) political party. (Sec. cal experts, officers, agents, ernor after the member re- office, or wilful viola- eluding traveling expenses. (Sec. 7978A.) 7978A.) employees, and determine qualifications, duties, and compensation. May employ counsel or call upon Attorney General of Territory for legal services. (Sec. 7978A.) ceives copy of charges, notice of hearing, and opportunity to be beard in person or by counsel. (Sec. 7978E.) tion of any term, provision or covenant of contract or law of Territory. (Sec. 7978E.) Commissioners receive no For Puerto Rico Housing Commissioner may not be Authority may employ sec- Commissioner may be re- Inefficiencyf neglect of compensation. May re- Authority, the commis- employee or officer of retary (executive direc- moved by Governor of duty, misconduct in ceive necessary expenses, sioners are appointed by Puerto Rico or munici- tor), technical experts, Puerto Rico. For munici- office. (Sec. 7.) including traveling expenses. (Sec. 5.) Governor with consent of Senate. For municipality, appointed by Mayor. (Sec. 5.) pality. (Sec. 5.) officers, agents, employees, and determine qualifications, duties, compensation. May employ counsel or call upon Attorney General for legal services. (Sec. 5.) pality, commissioner may be removed by Mayor after he receives copy of charges, notice of hearing, and opportunity to be heard in person or by counsel. (Sec. 7.) for tenant selection—Occupancy restrictions 1 Law except New Jersey=Local Housing Authorities Law] Louisi- Mary- Massa- Michi- Missis- Nebras- New North Oregon Pennsyl- South Tennes- Texas Ver- Vir- Wiscon- Hawaii ana1 land chusetts2 gan sippi ka Jersey Dakota vaniâ Carolina see mont ginia sin Rico 24-B—_ (10) 26AA 44 8 10 9 10 10 3 13 8-C 32 10 10 10 27 10 24-B (10) 44 8 10 9 10 10 13 8-C 32 10 10 10 27 26 10 24-B (10) — - 26AA 44 8 10 9 10 10 13 8-C 32 10 10 10 27 26 10 24-B (10) 26AA 44 8 10 9 10 10 — 8-C 32 10 10 10 27 — 10 24-B 26AA 44 8 — 9 « 13 8-C 10 — 10 27 26 10 (10) 44 10 10 10 24-B (10) 44 8 10 10 10 13 8-C 32 10 10 10 27 26 10 3 Files schedule of rental charges with the State board of housing. ' 4 No provision as to the number of dependents. • “To give bondholder or trustee the right. ***>>. 6 Added by Act No. 276, Sec. 2, Acts of 1938, approved July 6,1938. 66 National Resources Committee Chart V.—Enabling housing legislation: Provisions for rentals—nonprofit operations 1 [Citations refer to Housing Authorities Law unless otherwise noted: Nebraska, F. C. C. H. A. L. = First-Class Cities Housing Authorities Law; New Jersey, L. H. A. L.= Local Housing Authorities Law] State Lowest possible rates to produce safe, sanitary dwellings To reduce rentals as expedient, providing does not violate Authority’s contract with obligee Objectives not profit, revenues to local State body Rentals only high enough to produce (plus other incomes, revenues) revenue to pay bond principal and interest, maintenance, operating costs, insurance, administrative expense Create, maintain reserve during at least 6-year period succeed-ing bond issuance, to meet easonanie largest principal and interest V" anyTyear °“ b°ndS “ tingenci^s Arkansas Sec. 9 Sec. 9 Sec. 9 Sec. 9 California do do do do Colorado Florida Sec. 30--. Sec. 30 Sec. 30, “to meet costs of operation and maintenance, meet ail obligations.” Sec. 9, substitutes term “debentures” for bonds. Sec. 9 Sec. 30. Sec. 9 - Sec. 9 __ Sec. 9 - Georgia Ha Ha _-—_do Illinois 2 Sec. 24 Sec. 24... Sec. 24 Sec. 242 Indiana Sec. 9 Sec. 9 Sec. 9 Sec. 9 Kentucky3 Louisiana Sec. 24-A— Sec. 24-A Sec. 24-A ' Sec. 24-A4 Maryland Sec. 1, Subsec. 9 Sec. 1, Subsec. 9 Sec. 1, Subsec. 9 _ Sec. 1, Subsec. 9 Massachusetts -... Michigan Sec. 26AA Sec. 26AA, “or to commonwealth.” Sec. 27 “no commission shall construct, operate any such project for profit.” Sec. 7 -- i Sec. 26 A A, “And payments in lieu of taxes.” Sec. 27 Sec. 26AA Sec. 27 Sec. 27, plus reserve of 5 percent shelter rentals for payments in lieu of taxes. Sec. 7 Mississippi Sec. 7 Sec. 7 . - . Nebraska Sec. 9, F. C. C. H. A. L. Sec. 9, L. H. A. L — Sec. 9, F. C. C. H. A. L____ Sec. 9, L. H. A. L_______ Sec. 9, F. C. C. H. A. L . See. 9, L. H. A. L Sec. 9, F. C. C. H. A. L Sec. 9, L. H. A. L New Jersey North Dakota Sec. 9 See. 9' Sec. 9 Sec. 9 Oregon do _do do—- do : Pennsylvania Sec. 12 Sec. 12, “no authority shall construct, operate * .* * for profit.” Sec. 8-B Sec. 12, “to make such payments, if any, in lieu of taxes.” Sec. 8-B_________________ Sec. 12 South Carolina—. Tennessee Sec. 8-B Sec. 8-B Sec. 31 Sec. 31 Sec. 31 Sec. 31 Texas Sec. 9. _ Sec. 9__________ Sec. 9 Sec. 9 Vermont. do do— do - do—— ---------------- Virginia . __do do .do _ do Wisconsin Sec. 26 Sec. 26 Sec. 26 — Sec. 26 Hawaii----------- Sec. 25 Sec. 25 to authority or “to the Territory.” Sec. 9, “or to the government of Puerto Rico.” Sec. 25 Sec. 25 - Puerto Rico Sec. 9 Sec. 9 Sec. 9 i Of the 33 States and 2 Territories having enabling housing legislation as of October 1938,9 had no provision: Alabama, Connecticut, Delaware, Montana, New York, North Carolina, Ohio, Rhode ¿land, and West Virginia. 2 Create reserve during at least 10-year period succeeding bond issuance to meet largest principal and interest payments due in any 2 consecutive years; create reasonable reserve solely from contributions, grants from Federal Government or State public body to meet maintenance, operating costs, bond principal, and interest payments. 3 Kentucky, Municipal Housing Commission Law, Sec. 11: Rents and other revenues of housing commission shall be applied (1) to pay interest, principal of bonds issued; (2) costs of maintenance and operation; (3) reserve for depreciation; (4) excess rents for annual period to prepay interest obligations of housing commission when due (in sequence given). * Eight-year period succeeding bond issuance. Chart VI.—Enabling housing legislation: Analysis of housing cooperation provisions (Citation refers to section number of enabling housing law of the 33 States and 2 Territories having such legislation as of July 1938. H. C. L.== Housing Cooperation Law; H. A. L.=Housing Authorities Law; M. H. A. L.=Municipal Housing Authorities Law; E. D. L.=Eminent Domain Law] State Cooperating agencies Dedicate, sell, convey, or lease any property to a housing authority Provide and maintain parks, sewage, water, and other facilities adjacent to or in connection with housing projects Enter into any agreement to open, close, pave, install, or change the grade of streets, roads, roadways, alleys, sidewalks, or other such facilities May incur the entire expense (subject to reimbursement by the Authority) of any public improvements without assessment against abutting property owners To make any sale, conveyance, or lease, without appraisal, public notice, advertisement, or public bidding Donation of money Loan of money Plan or replan, zone or rezone any part of such State public body Make exceptions from building regulations and ordinances Any city or town may change its map Enter into agreements with a housing authority or Federal Government respecting action to be taken by a State public body pursuant to any of the powers granted Do any and all things necessary or convenient to aid and cooperate in the planning, undertaking, construction, or operation of housing projects After any housing project has been found to be constructed so as to promote the pub-. lie interest and afford necessary safety, sanitation, and other protection, no ' city shall require any changes to be made in project or its construction. Grant easements, licenses, or any other rights or privileges Provide customary services for benefit of occupants of housing projects Appropriate administrative expenses and overhead of Authority for first year Power of municipality to acquire land by eminent domain for an Authority Enter into agreements with respect to the exercise by public bodies of powers relating to the repair, elimination, or closing of unsafe, insanitary, or unfit dwellings Alabama State, any county, city, municipality, or agency of the State. City, town, county, municipal corporation, commission, district, authority, other subdivision or other public body of the State. City, city and county, town, county, borough, municipal corporation, commission, district, authority, other subdivision or public body of the State. City, any subdivision, agency, or instrumentality, corporate or otherwise, of either State or 3 (a), H. C. L 3 (2), H. C. L 3 (3), H. C. L 3 (3), H. C. L 3 (3), H. C. L 3 (3), H. C. L 3 (3), H. O. L 3 (1), H. 0. L—. Arkansas.... California 25 (a), H. A. L.... 4 (a), H. C. L 25 (b), H. A. L— 4 (b), H. C. L 25 (c), H. A. L.— 4 (c). H. C. L— 25 (h), H. A. L—. 4 (i), H. C. L 25 (h), H. A. L— 4 (i), H. C. L 26, H. A. L 6, H. C. L 26, H. A. L 6, H. C. L 25 (d), H. A. L—. 4 (d), H. C. L 25 (d), H. A. L.... 4 (d), H. C. L 25 (d), H. A. L— 4 (d), H. C. L—. 25 (e), H. A. L.— 4 (e), H. C. L 25 (f), H. A. L 4 (f), H. C. L 25 (g), H.A.L— 4 (h), H. C. L 24, H. A. L 5, H. C. L._ — 26, H. A. L_ 6, H. C. L— Colorado 2, H. C. L 2, H. C. L 2, H. C. L 2, H. C. L_....... 2, H. C. L— 2, H. C. L— 2, H. C.L.. 2, H. C. L 2, H.C.L.. 2,H. C. L_. — 2, H. C. L Connecticut Delaware Florida Federal Government. City, borough, town, municipal corporation, district, or other subdivision of the State. City, village, and incorporated towns City, town, county, commission, municipal corporation, district, authority, or other subdivi- 20 (a), H. A. L— 9, H. A. L 4 (a), II. C. L 20 (b), H. A. L— 8, H. A. L 4 (b), H. C. L 20 (c), H. A. L— 8, H. A. L... 4 (c), H. C. L 20 (f), H.A.L— 6, H. A. L 4 (i), H. C. L 22, H. A. L. 9, H. A. L_. 4 (i), H. C. L 21, H. A. L.. 6, H. C. L._ 21, H. A. L._ 9, H. A. L. 6, H. C. L— 20 (d), H. A. L.... 8, H. A. L 4 (d), H. C. L 4 (d), H. C. L 20 (d), H. A. L— 4 (d), H. C. L 20 (e), H. A. L— 8, H. A. L 4 (e), H. C. L 20 (f), H. A. L— 8, H.A.L. 4 (f), H. O. L 20(f), H. A.L— A'(h)7H'c"L--l 9, H.A.L 19, H. A. L— — 5, H.C.L 21, H. A. L._ 6, H. C. L - Georgia sion or public body of the State. City, town, county, municipal corporation, commission, district, authority, and other subdivi- do do do 4 (h), II. C. L 4 (h), H. C. L .....do.. do ....... do .....do..... — do .....do .....do 4 (g), H. C. L — do — ——do———— — Illinois sion or public body of the State. City, village, incorporated town, county, mimic- Ho do dn 5 (a), H. C. L 4 (h), H. 0. L..... 4 (e), H. C. L 4 (e), H. C. L 4 (f), H. C. L 4(1), H.C.L 6, H. 0. L 4 (a), H. C. L 4 (j), H. C. L 4 (k), H.C.L. ipal corporation, commission, district, authority, or other subdivision or public body of the Indiana State. City, town, county, commission, district, authority, municipal corporation, and other subdivision or public bodies of the State. 4 (a), H. C.L 4 (a), H. C. L 4 (a), H. C. L 4 (g), H. C. L 4 (b), H. C. L 4 (b), H. C. L —————— 4 (c), H. C. L 4 (d), H. 0. L 4(f),H. 0. L 5, H. C. L 6, H. 0. L- — — Kentucky. Louisiana Maryland Cities of first and second class City, town, incorporated village, parish or other public body of the State.1 Any incorporated city or town, or any county, 4 (a), H. C. L 4 (a), H. C. L 4 fb), H. C. L 4 (b), H. C. L 4M. H. C. A 4 (c), H. C. L 4(c), H. C.L 4 (j), H. C. L 4 (h), H. C. L 4 (k),H. 0. L 4 (h), H. C. L 6, H.C.L - 6, H. C. L 6, H. 0. L„ 6, H. C. L 4 (d), H. C. L 4 (d), H. C. L 4 (d), H. C.L 4 (d), H. C. L 4 (d), H. C. L 4 (d), H. C. L 4 (c), H. C. L 4 (e), H. C. L..... 4 (i), H. 0. L— 4 (f), H. C. L 4(1), H. C.L 4(g), H.C.L 4 (a), H. 0. L 4 (e), H. C. L 5, H.C.L 6, H. 0. L municipal corporation, commission, district, authority, other subdivision or public body of Massachusetts the State. City, town, or appropriate board or officers 26X (a), H. A. L.. 26X (b), H. A. L.. 26X (c), H. A. L.. 26X (e), H. A. L.. 26X (j), H. A. L— 26V, H. A. L 26V, H. A. L 4 (d), H. 0. L..... 22 (d), H. A. L.... 2cX (d), H. A. L.. 26X (d), H. A. L.. 26X (i), H.A.L.. 26X (j), H.A.L.. 26Q, H. A. L 26X (a), H. A. L.. 26X (g), H. A. L._ 26U, H. A. L 26X (i), H.A.L Michigan Mississippi City, town, incorporated village, county, metropolitan district, or other subdivision or public body of the State. City, town, village, county, municipal corpora- 4 (a), H. C. L 22 (a), H. A. L.... 4 (b), H. C. L 22 (b), H. A. L.— 4 (c), H. C. L 22 (c), H. A. L— 4 (i), H. C. L 22 (i), H. A. L 4 (i), H. C. L...... 22 (i), H. A. L.... 6, H. 0. L... 24, H. A. L 6, H. C. L._. 24, H. A. L.. 4 (d), H. C. L 22 (d), H. A. L.... 4 (d), H. 0. L—— 22 (d), H. A. L— 4 (e), H. C. I/----- 22 (j), H. A. L— 4 (f), H. C. L..... 22 (h), H. A. L— 4 (j), H. C. L 22 (k), H. A. L— 22 (a), H. A. L 4 (g), H. C. L.— 22(e),H. A. L..„ 6, H. C. L........ 22 (f), H. A. L. Montana Nebraska New Jersey New York tioh, commission, district, authority, or other subdivision or other public body. State, its subdivision and agencies, and any county, city, or municipality of the State. City, town, village, county, municipal corporation, commission, district, authority, other subdivision or public body of the State. City, town, borough, village, township, county, school district, authority, or other political subdivision of the State. Municipality, county, city or first class village, subdivision, agency or instrumentality, cor- 3 (a), H. C. L 4 (a), H. C. L 5 (a), H. C. L 69 (2), M. H. A. L. 3(b) (2), H.C.L. 4 (b), H. C. L 5 (b), H. C. L 69 (2), M. H. A. L. 3 (b) (3), H. C.L. 4 (c), H. C. L 5 (c), H. C. L 69 (2), M. H. A. L. 3 (b) (3), H. C. L. 4 (i), H. C. L..... 5 (k), H. C. L 69 (2), M. H. A. L. 3(b) (3), H. C. L. 4 (i), H. C. L 5 (k), H. 0. L 69(2), M.H. A.L. 4,H. C. L... 6, H. 0. L 7, H. C. L.._ 65 (1), M. H. A. L. 4, H. C. L 6, H. C. L 7, H. 0. L 65 (2),M.H. A.L. 3 (b), (3) H. C. L. 4 (d), H. 0. L 5 (d), H. 0. L 69 (2), M.H. A.L. 4 (d), H. C. L 5 (d), H. C. L 3(b) (3), H.C.L. 4 (d), H. C. L 5 (d), H. C. L 69 (2), M.H. A. L. 4 (e), H. 0. L 5 (e), H. C. L 6, H.C.L 4(f), H.C.L 5 (f), H. C. L 66, M. H. A. L.— 4 (h), H. 0. L— 5 (j), H. C. L— 3 (b) (1), H. C. L. 5, H. C. L 5 (g), H. 0. L 69 (2), M. H. A. L. 4, H. C. L 6, H. C-. 65, M. H. A. L— 70 (2), M.H. A.L. 5 (h), H. 0. L. North Carolina.... porate or otherwise of the State. State, its subdivisions and agencies, and any county, city, or municipality of the State. 3 (a), H. C. L 3 (b) (2), H. C. L. 3 (b) (3), H. C. L. 3 (b) (3), H. C. L. 3 (b) (3), H. C. L. 4, H. C. L — 4, H. C. L......... 3 (b) (3), H. C. L . — 3 (b) (3),H. 0. L. 7, H. C. L. 3 (b) (1), H. C. L. 4, H. C. L North Dakota City of more than 5,000 inhabitants, and counties. City, village, township, county, municipal corporation, commission, district, authority, other subdivision or public body of the State. City, town, county, municipality, commission, district, authority, other subdivision or public body of the State. City, borough, town, township, county, municipal corporation, commission, district, authority, other subdivision, or public body of the C ommonwealth. Ohio Oregon — Pennsylvania 3 (a), H. C. L 4 (a), H. C. L do 3 (b), H. C. L 4 (b), H. O. L do 3 (C), H. O. L 4 (c), H. C. L..... 4 (c), H. C. L 3 (i), H. C. L 4 (i), H. C. L 4 (g), H. C. L 3 (i), H. C. L 4 (g), H. C. L 5, H. 0. L 6, H. C. L 5, H. O. L......... <1» 6, H. 0. L 3(d), H. 0. L..... 4 (d), H. C. L..... 10 a) (3), H. A. L. 3 (d), H. 0. L..... 4 (d), H. 0. L 4 (d), H. C. L 3 (e), H. 0. L— 4 (e), H. C. L 4 (d), H. C. L 3 (f), H. C. L 4 (f), H. C. L 4 (e), H. 0. L 3 (h), H. 0. L 4 (h), H. C. L 4 (f), H. C. L 10 (h), H. A. L— 4, H. 0. L —. 5, H. 0. L 5, H. C. L 6, H. 0. L 1, E. D. L Rhode Island South Carolina.... Tennessee Texas Vermont State, its subdivisions and agencies, and any county, city, town, or municipality of the State. ... 9, H. A. L 9, H. A. L 9, H. A. L 9, H. A. L y, H. A. L......... State, its subdivisions and agencies, and any county, city, or municipality of the State. City, town, county, municipal corporation, commission, district, authority, other subdivision or public body of the State. City, town, county, municipality, commission, district, authority, other subdivision or other 3 (a>, H. C. L 4 (a), H. C. L 22 (a), H. A. L—. 3 (b) (2), H. C. L. 4 (b), H. C. L 22 (b), H. A. L— 3 (b) (3), H. C. L. 4 (c), H. O. L 22 (c), H. A. L..„ 3 (b), H. C. L 4 (I), H. C. L 22 (g), H. A. L—. 3 (b), H. 0. L 4 (i), H. C. L 22 (g), H. A. L.... 8, H. 0. L......... 23, H. A. L 8, H. C. L........ 6, H. C. L 23, H. A. L 3 (b) (3), H. C. L. 4 (d), H. C. L 22 (d), H. A. L..._ 4 (d), H. C. L 3 (b) (3), H. C. L. 4 (d), H. C. L 22 (d), H. A. L— 9, H.A.L 4 (e), H. C. L 22(e), H.A.L.... 5, H. C. L 4 (f), H. 0. L 22(f), H. A. L._„ 10, H. C. L 4 (h), H. 0. L - 3 (b) (1), H. C. L. 4a (b), H. 0. L— 21, H. A. L— 8, H. 0. L— 6, H. 0. L 23, H. A. L 4a (a), H. 0. L. Virginia West Virginia Wisconsin public body of the State. City, town, county, municipal corporation, commission, district, authority, other subdivision or public body of the Commonwealth. City City, town, incorporated village, county, municipal corporation, commission, district, authority, other subdivision or public body of the State. Counties, city and county, cities, town and village. Government of Puerto Rico, any agency or instrumentality thereof or any municipality including the Capital. 23 (a), H. A. L— 13, H. A. L 28 (a), H. A. L— 23 (b), H. A. L— 28 (b), H. A. L— 23 (c), H. A. L— 7, H. A. L 28 (d), H. A. L.„. 28 (j), H. A. L— £3, H. A. L 28 (j), H.A.L-... 24, H. A. L........ 30, H. A. L 24, H. A. L.. 13, H.A.L........ 30, H. A. L........ 23 (d), H. A. L.... 7, H. A. L 28 (d), H. A. L—. 23 (d), H. A. L.... 23 (d), H. A. L— 23 (i), H. A. L— 28 (f), H. A. L— 23 (h), H. A. L— 28 (g), H. A. L—. 28 (i), H.A.L— 23 (a), H. A. L— 13, H. A. L - 23 (e), H. A. L— 7, H. A. L — 28 (c), H. A. L— 30, H. A. L — - 23 (f), H. A. L Hawaii — 3 (a), H. C. L 3 (b 2), H. C. L— 3 (b 3), H. C. L— 3 (c), H. C. L 3 (c), H. C. L 4, H. 0. L......... 4, H. C. L 3 (b), 4, H. C. L... ——————— 3 (b), (4),H.C.L.. 3(c), H. C. L 6, H. C. L 3 (b), 1, H. 0. L— 4, H. 0. L 3, E. D. L Puerto Rico 4 (a), H. C. L 4 (b), H. C. L 4 (c), H. C. L 4 (i), H. 0. L..... 4 (j), H. C. L 6, H. C. L......... 6, H. C. L......... 4 (d), H. C. L 4 (d), H. C. L — 4 (j), H. C. L 4 (h), H. 0. L 4 (k), H. 0. L 4 (a), H. 0. L 4 (e), H. C. L 6, H. C. L 4 (f). H C. L. * Includes municipal corporation, commission, board, district, authority, other subdivision or public corporation, or municipality. 119119—39 (Face p. 66) 68 National Resources Committee Chart VII.—Enabling housing [For the 33 States and 2 Territories having housing enabling legislation as of October 1938, this table indicates salient provisions with reference to State Bo,nds may be payable— Maximum term Maximum interest rate (percent) Exclusively from income and revenues of project financed by such bonds Exclusively from income and revenues of designated projects From revenues generally Additional security of mortgage on property Additional security of pledge, of revenues Full faith and credit of authority may be pledged Plus additional security of mortgage of property and revenues Plus additional security of pledge of revenues Alabama1 Yes Yes Yes Yes Yes... Yes Yes 40 years 6 Arkansas Yes Yes Yes Yes Yes 6 California2 Yes Yes Yes Yes . Yes 4H Colorado Yes Yes Yes Yes Yes.. Yes 60 years 6 Connecticut 6 Delaware Florida . Yes Yes Yes Yes 6 Georgia Yes Yes Yes Yes 6 Illinois Yes Yes Yes Yes Yes 6 Indiana Yes Yes Yes Yes Yes 6 Kentucky Yes Yes Yes Yes Louisiana Yes Yes. Yes Yes . Yes 6 Maryland Yes Yes Yes Yes Yes 6 Massachusetts... Yes... Michigan Yes Yes (3) 6 Mississippi Yes Yes Yes Yes . . Yes . 6 Montana Yes Yes Yes Yes.. Yes . Yes Yes 60 years 6 Nebraska * Yes Yes Yes Yes Yes.. 6 New Jersey Yes. Yes... Yes Yes .. Yes 6 New York i 6 North Carolina.. Yes Yes Yes.. .... Yes.. Yes.. Yes . Yes Yes 60 years 6 North Dakota Yes Yes. Yes Yes... Yes 6 Ohio Yes Yes Yes Yes Yes 6 Oregon 2 Yes Yes Yes... Yes . Yes.. 6 Pennsylvania ’ Yes Yes Yes Yes Yes.... 6 Rhode Island Yes. Yes... Yes.. Yes Yes Yes Yes... 60 years .. 6 South Carolina Yes Yes Yes Yes.. Yes 6 Tennessee Yes.... Yes Yes Yes Yes Yes Yes 60 years 6 Texas2 Yes Yes Yes Yes . Yes.. . 6 Vermont 6 Virginia10.... Yes Yes Yes Yes Yes 6 West Virginia.. . Yes Yes.. Yes Yes Yes . Yes ..... Wisconsin Yes Yes Yes. Yes 6 Territory of Hawaii u Yes Yes Yes Yes Yes 60 years 6 Puerto Rico12 Yes Yes Yes Yes Yes... 6 i Bonds not to be issued until consent given by Public Works Board of Alabama. * Authority may submit bonds to Attorney General of the State for certification. * Bonds to mature annually, first installment payable in 3 to 5 years, no installment to exceed 2H times smallest previous installment. 4 Act provides that bonds are legal investments when secured by first pledge of revenues or first mortgage lien on property of value not exceeding percent of bonds outstanding. • Authority may submit bonds to Auditor of Public Accounts for certification. • Legal investments when secured by pledge of revenues of housing project and by pledge of annual contributions to be paid by Federal Government, provided that building and loan associations may only invest in them when secured by mortgage not exceeding 80 percent of value of property. Housing Monograph 69 legislation: Bond provisions issuance of local housing authority bonds, no consideration being given to validity thereof or to other State laws affecting issuance of public bonds] Bonds tax exempt Sale Price at which bonds are to be sold Authority may purchase own bonds at not more than principal amount and accrued interest Legal investments Provisions by which governmental agencies may purchase bonds of authorities For enumerated public and private funds For enumerated funds only when secured by first lien on revenues or first mortgage of property and bonds do not exceed 66?i percent of value thereof Public sale, or private if to United States. do Interest cost to maturity not to exceed 6 percent per annum. Not less than par Yes No provision. Yes. See previous columns. Any State public body may purchase. Yes Yes Yes do ¿50 - Yes Interest cost to maturity not to exceed 6 percent per annum. Not less than par Yes — X CS>-.----i«------- Yes Only to Federal Government Yes. (Tax exemption law.) Yes Public sale, or private if to United States. Yes Any State public body may purchase. Yes Not less than par and accrued interest. Any State public body may purchase. Any municipal corporation may purchase. Yes. (Tax Exemption Act.) Vac Public sale, or private if to United States. Yes Yes Public sale, or private if to a government. Public sale, or private if to United States. Not less than par Yes Yes.... Yes. See previous columns. Vac Ye$ x es—.......... do City or town may purchase. Public sale, or private if to United States. do Yes u x es—————— Yes - do -. Yes Yes... Do. Yes. See previous columns. Any State public body may purchase. Any public body may purchase. Municipality or State may purchase. Yes. See previous col-uipn. United States. Interest cost to maturity not to exceed 6 percent per annum. Not less than par. Yes (4) Yes. (Tax exemption law.) Yes Yes. First Class Cities Law. N. P.—Metropolitan Cities Laws. Yes do do («) - Yes Public or private sale--- At such price or prices as authority determines. Interest cost to maturity not to exceed 6 percent per annum. Yes For city and State Yes. For city and State. Yes - Yes13 Public sale or private if to United States. Yes Yes do Not less than par and accrued interest. Not less than par__ . Yes.... Any State public body may purchase. Do. Yes do Yes Not less than par and accrued interest. Interest cost to maturity not to exceed 6 percent per annum. Not less than par Yes Public sale, or private if to United States. Yes Yes... - See previous columns. Yes. See previous column. Any municipality may purchase. Any State public body may purchase. Any county, City, or town may purchase. Yes > Yes.... Yes Public sale, or private if to United States. do Interest cost to maturity not to exceed 6 percent per annum. Not less than par Yes Yes (8) Yes do do Yes Public or private do Yes Yes Yes Interest cost to maturity not to exceed 6 percent per annum. Yes Any state public body may purchase. See previous columns. Any governmental body may purchase. Public sale, or private if to United States. Yes Yes Yes. Yes 7 Approval of Board of Estimate and Apportionment or local legislative body of city required on bonds. .... , . .. «___ 8 When issued in connection with projects financed in whole or in part by Federal Government under act providing for annual contributions or capital grants, or when a mortgage as indicated. * Approval of bonds by Department of Internal Affairs of the State required. i® Bonds may be issued payable solely from annual contributions or grants from Federal Government or other sources. ____ ii Approval of Governor required for issuance of bonds and approval of President of United States on all issues except those to be sold in whole or part to United States. 18 Authority may submit bonds to Attorney General of Puerto Rico for certification. 13 When held by purchase from Federal Government or any one acquiring title from or through such purchaser. 14 Out of any unexpended proceeds of such bonds. 70 National Resources Committee Chart VIII.—Compulsory repair, improvement, closing, and demolition of unsafe and insanitary dwellings by municipalities1 State Political subdivisions to which power is granted Municipal officials designated to carry out existing provisions for the compulsory repair and improvement of unsafe and insanitary dwellings Municipal officials designated to carry out existing provisions for the closing of unsafe and insanitary dwellings Municipal officials designated to carry out exising provisions for the demolition of unsafe and insanitary dwellings Alabama Arkansas California- Colorado Connecticut Delaware... Florida Georgia.. Illinois Indiana. Kentucky Louisiana Maryland Massachusetts Michigan Mississippi Montana .... Nebraska ... New Jersey.. New York.. Municipalities ; do... ’ Municipal corporations of first, second, third, fourth, and fifth classes. Municipal corporations of sixth class... Cities and towns , Villages . ........ Cities and towns do.... do Municipalities Cities and villages Towns , Cities ?. Towns Municipal corporations of the first, fourth, fifth, and sixth classes. Municipal corporations of the second and third classes. Municipalities Villages __ Towns Parishes .... Cities and towns Cities Towns . Cities Villages Municipalities. - Cities and villages—.. Townships— Cities of metropolitan and first class and villages. Cities of second class Towns, townships, villages, and boroughs. Cities do Governing body Board of Health do do do— Governing body Governing body Board of Health do Governing body Municipal-designated official Governing body2 Inspector of buildings2 Board of Health Governing body3 Inspector of buildings3 Board of Health Health officer5 Governing body 6 Health officer3 Municipal-designated official Governing body .. Chief of fire department Justice ofpeace——- ;------- Governing body. Municipal-designated department7 Board of Health do Board of Health... Board of Health Board of Health Governing body Municipal-designated official Board of Health — Board of Health ... Board of Health Board of Health ..... Health officer 8 Health officer 3 Municipal-designated official—--— Governing body— Municipal-designated department7. — Governing body. Do. Do. Board of Health. Do. Do. Do. Governing body. Governing body. Board of Health. Do. Governing body. Do. Board of Health. Do. Municipal-designated official. Board of Health. Governing body. Board of Health. Governing body.2 Inspector of buildings.2 Board of Health.2 4 Governing body.3 Inspector of buildings.3 Health officer.3 Governing body.» Health officer.3 Governing body.» Municipal-designated official. Governing body. Chief of fire department. Justice of peace. Governing body. Do. Board of Fire and Police Commissioners. Superintendent of buildings. Municipal designated depart-ment.7 Towns Villages.— do.» Governing body Municipal-designated department 9___ do. ». Municipal-designated department9... Do.» Governing body. Municipal-designated depart- North Carolina- North Dakota..__ Ohio Oregon Pennsylvania Cities and towns Cities. ...... Villages... — . Townships Municipal corporations Cities and towns Cities of first class Inspector of buildings 10 Governing body : do.. Governing body Fire marshal Inspector of buildings 10 Governing body Governing body . — Governing body ------- Chief of Division of Housing and Sani- Governing body. Do. Do. Do. Fire marshal. Cities of second class Cities of second class A Cities of third class All municipalities except cities of first class, second class, and second class A Department of Public Health Board of Health Department of Labor and Industry... Department of Public Health Board of Health Department of Labor and Industry— Department of Public Health. Board of Health. Rhode Island South Carolina... Tennessee Texas Municipalities . .... Towns Cities and towns Cities do Towns and villages . Governing body Inspector of buildings Insurance commissioner— Chief of fire department —— Chief of police Governing body — -----do.12 Governing body Governing body Inspector of buildings.11 Governing body. ’Powers given to municipalities, and the officials designated by 33 State and 2 Territorial legislatures for the compulsory repair, improvement, closing, and demolition of unsafe and insanitary dwellings by municipalities. Only general legislation is reviewed here. It is also necessary to examine special State and Territorial legislation as well as charter and ordinance provisions to secure a complete presentation of the situation in any particular municipality. In all of these States and Territories the designated political subdivision may exercise ordinance power to provide for the protection of the health, safety, welfare, and morals of inhabitants, and for the abatement of nuisances. 2 Applicable if city accepts statute. 3 Applicable if town accepts statute. ♦ Except Boston. 5 Applicable if 10,000 or more population. 3 Fcurth-class cities only. 7 Applicable if 175,000 or more population or if city accepts statute. ! Applicable if town accepts statute. 9 Applicable if village accepts statute. 10 Applicable if city or town over 1,000 population or if city or town accepts statute. 11 Applicable if city or town over 5,000 population. 12 Applicable if 600 or over population and if city accepts statute. Housing Monograph 71 Chart VIII.—Compulsory repair, improvement, closing, and demolition of unsafe and insanitary dwellings by municipalities—Contd. State Political subdivisions to which power is granted Municipal officials designated to carry out existing provisions for the compulsory repair and improvement of unsafe and insanitary dwellings Municipal officials designated to carry out existing provisions for the closing of unsafe and insanitary dwellings Municipal officials designated to carry out existing provisions for the demolition of unsafe and insanitary dwellings Vermont Virginia Cities, towns, and villages . Cities and towns Building inspector Building inspector Building inspector. Chief of fire department. Governing body, inspector of buildings, or other municipal-designated official. Do. Do. Governing body. Do. Municipal-designated official. West Virginia. do Chief of fire department Wisconsin Cities Governing body, inspector of buildings or other municipal-designated official. . ..do Hawaii Towns.. Villages Fire warden Governing body, inspector of buildings, or other municipal-designated official. Governing body City and county of Honolulu Governing body ... Puerto Rico. . Municipalities do do Municipal-designated official.......... Municipal-designated official-.. . Chart IX.—Enabling housing legislation: Tax exemption provisions [Legend: Unless otherwise specified, citation refers to State H. A. L.=Housing Authorities Law for 33 States and 2 Territories having enabling housing legislation as of October 1938.] L. H. A; L.=Local Housing Authorities Law. M. H. A. L.=Munieipal Housing Authorities Law. T. E. L.=Tax Exemption Law] State Statutory provisions Constitutional provisions: taxation Alabama. No specific provision for tax exemption of property owned by local authorities. (But see Opinion of the Justices, 179 So. 535 (1938).) Article IV. Sec. 91. The legislature shall not tax the property, real or personal, of the State, counties, or other municipal corporations or cemeteries; nor lots in incorporated cities or towns, or within 1 mile of any city or town to the extent of 1 acre; nor lots 1 mile or more distant from such cities or towns, to the extent of 5 acres, with the buildings thereon, when same are used exclusively for religious worship, for schools, or for purposes purely charitable. Arkansas. The property of an authority is declared to be public property used for essential and exclusively public and governmental purposes, and not for profit, and such property and an authority shall be exempt from all taxes and special assessments of the State or any State Public Body thereof * * * (Sec. 23.) Article XVI.. Sec. 5. * * * Provided further. That the following property shall be exempt from taxation: Public property used exclusively for public purposes; churches used as such; cemeteries used exclusively as such; school buildings and apparatus; libraries and grounds used exclusively for school purposes, and buildings and grounds and materials used exclusively for public charity. California ✓ The property of housing authorities shall be exempt from all taxes and special assessments of the State or any city, city and county, county, town, or political subdivision of the State * * * (Sec. 2, T. 1?. L.) Article XIII. Sec. 1. * * * And further provided, That property used for free public libraries and free museums, growing crops, property used exclusively for public schools, and such as may belong to the United States, this State, or to any county, city and county, or municipal corporation within this State shall be exempt from taxation, except such lands and the improvements thereon located outside of the county, city and county, or municipal corporation owning the same as were subject to taxation at the time of the acquisition of the same by said county, city and county, or municipal corporation. Colorado ... The property of an authority shall be exempt from all local and municipal taxes. All property leased to the authority for the purposes of a project shall likewise be exempt from taxation, as shall the income derived from the authority by the lessor under such lease. (Sec. 28, H. A. L.) A housing authority shall be exempt from the payment of any special assessments to the State or any subdivision thereof. The property of a housing authority shall be exempt from all local and municipal special assessments. All property leased to a housing authority shall likewise be exempt from special assessments. (Sec. 5, Chap. 172, Laws of 1937.) Article X. Exemption-county-city-State property.—Sec. 4. The property, real and personal, of the State, counties, cities, towns and other municipal corporations; and public libraries, shall be exempt from taxation. Connecticut „ * * * The property of an authority shall be exempt from all local and municipal taxes * * * (Sec. 18.) None. Delaware No provision is made for the exemption of property of an authority from taxation. Article VIII. Sec. 1. Taxes to be uniform and general.—All taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws, but the General Assembly may by general laws exempt from taxation such property as in the opinion of the General Assembly will best promote the public welfare. Florida ... The housing projects (including all property of housing authorities used for or in connection therewith or appurtenant thereto) of housing authorities shall be exempt from all taxes and special assessments of the State or any city, town, county, or political subdivision of the State, * * *. (gee. 2, T. E. L.) Article XVI. Sec. 16. The property of all corporations, * * * shall be subject to taxation unless such property be held and used exclusively for religious, scientific, municipal, educational, literary, or charitable purposes. Georgia.: ............. The property of an authority is declared to be public property used fcr essential public and governmental purposes and not for purposes of private or corporate benefit and income, and such property and an authority shall be exempt from all taxes and special assessments of the city, the county, the State, or any political 'subdivision thereof; * * *. (Sec. 21.) Article VII. Sec. 2. All taxation shall be uniform upon the same class of subjects, and ad valorem on all property subject to be taxed within the territorial limits of the Authority levying the tax, and shall be levied and collected under general laws * * *. The General Assembly may, by law, exempt from taxation all public property. Illinois All land of housing authorities created under "An Act in relation Article IX. Sec. 3. The property of the State, counties, and other municipal to Housing authorities,” approved March 19, 1934, as amended, title to which land has been or shall be acquired from the United States Government or any agency or instrumentality thereof, and any buildings or improvements now or subsequently erected thereon, insofar as such land, buildings, and improvements are used for low-rent housing purposes, or as an incident thereto; but such land, buildings, and improvements or portions thereof intended or used for stores or other commercial purposes shall ■ not be exempt from taxation. Nothing herein shall be construed as exempting property of housing authorities or any part thereof from special assessments or special taxation for local improvements; and nothing herein contained shall be construed as limiting the power of any political subdivision of this State to sell or furnish a _ housing authority with water, electricity, gas, or' other services and facilities upon the same basis that such services and facilities may be rendered to others under similar circumstances. (See.2, Subsec. 12, S. B. No. 38, First Sp. sess., 1938.) But see Krause et al., v. Peoria Housing Authority et al., 111., N. E. (January 1939.) corporations both real and personal, and such other property as may be used exclusively for agricultural and horticultural societies, for school, religious, cemetery, and charitable purposes, may be exempted from taxation; but such exemption shall be only by general law. In the assessment of real estate incumbered by public easement, any depreciation occasioned by such easement may be deducted in the valuation of such property. 72 National Resources Committee Chart IX.—Enabling housing legislation: Tax exemption provisions—Continued State Statutory provisions Constitutional provisions: taxation Indiana That the property of housing authorities shall be exempt from all taxes and special assessments of the State or any city., town, township, county, or other political subdivision or taxing district; * * *. (Sec. 2, T. E. L.) Article X. Sec. 1. The General Assembly shall provide, by law, for a uniform and equal rate of assessment and taxation,: and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and persona], excepting such only for municipal, educational, literary, scientific, religious, or charitable purposes, as may be specially exempted by law. Kentucky No provisions. (But see Spahn v. Stewart, 268 Ky. 97,103 S. W. (2d), 658 (1937).) Sec. 170. There shall be exempt from taxation public property used for public purposes. * * * Sec. 171. Bonds ofthe State and of counties, municipalities, taxing, and school districts shall not be subject to taxation. Louisiana The property of an authority shall be exempt from all taxes of the city or municipality and from all other local taxes. (Sec. 22.) Article X. Sec. 1. The power of taxation shall be vested in the Legislature; shall never be surrendered, suspended or contracted away; and all taxes shall be uniform upon the same class of subjects throughout the territorial limits of the authority levying the tax, and shall be levied and collected for public purposes only. Sec. 4. The following property, and no other, shall be exempt from taxation: All public property. Maryland The property of an authority is declared to be public property used for essential public and governmental purposes and such property and an authority shall be exempt from all taxes and special assessments of the city, the State or any political sub-divisioh thereof; * * * (Sec. 1, subsec. 21.) Declaration of Rights.—Article 15. * * * The General Assembly shall, by uniform riules, provide for separate assessment of land and classification and subclassifications of improvements on land and personal property, as it may deem proper; and all taxes thereafter provided to be levied by the State for the support of the general State Government, and by the counties and by the City of Baltimore for their respective purposes, shall be uniform as to land within the taxing district, and utaifbrm within the class or subclass, of improvements op land and personal property which the respective taxing powers may have directed to be subjected to the tax levy; * * *. Massachusetts . The real estate and tangible personal property of a housing authority held in connection with a project financed in whole or in part by the Federal Government under the United States Housing Act of 1937 shall be deemed to be public property used for essential public and governmental purposes and shall be exempt from taxation and from betterments and special assessments, * * *, (Sec. 26W.) Chapter I. Sec. 1, Art. IV. And further full power and authority are hereby given and granted to the said General Court, * * * to impose and levy proportional and reasonable assessments, rates, and taxes, upon all the inhabitants of, and persons resident, and estates lying within the said Commonwealth; * * *. Michigan The property of housing authorities is seemingly tax exempt under Sec. 2, Act No. 265, Pub. Acts of 1937, and also under Sec. 2, Act No. 5, Pub. Acts of 1938, Extra Session. Article X. Sec. 3. The legislature shall provide by law a uniform rule, of taxation, except on property paying specific taxes, and taxes shall be levied on such property as shall be prescribed by law: Provided. That the legislature shall provide by law a uniform rule of taxation for such property as shall be assessed by a State Board of Assessors, and the rate of taxation on such property shall be theiate which the State Board of Assessors shall ascertain and determine is the average rate levied upon other property upon which ad valorem taxes are assessed for State, county, township, school and municipal pur- Mississippi The property of an authority is declared to be public property used for essential public and governmental purposes and such property and an authority shall be exempt from all taxes and special assessments of the city, the county, the State or any political subdivision thereof; * * * (Sec. 19.) POSGS • Article 7. Sec. 192. Provision shall be made by general laws whereby cities and towns may be authorized to aid and encourage the establishment, of manufactories, gasworks, waterworks and other enterprises of public utility other than railroads, within the limits of said cities or towns, by exempting all property used for such purposes from municipal taxation for a period not longer than 10 years. Montana No provision. But see Rutherford v. City of Great Falls et al., Mont. ,.... Pac. (2d) , (January 1939). Article XII. Sec. 2. Tax exemption.—The property of the United States, the State, counties, cities, towns, school districts, municipal corporations, public libraries, shall be exempt from taxation; and such other property as may be used exclusively for the agricultural and horticultural societies, for educational purposes, places of actual religious worship, hospitals and places of burial not used or held for private or corporate profit, institutions of purely public cha-ity and evidences of debt secured by mortgages of record upon real or personal property in the State of Montana, may be exempt from taxation. (As amended Nov. 5,1918.) Nebraska .... Sec. 2. The property of housing authorities shall be exempt from all taxes and special assessments of the State or any city, village or political subdivision thereof, * * *. (Sec. 2, T. E. L.) Article VIII. Sec. 1. The necessary revenue of the State and its governmental subdivisions shall be raised by taxation in such manner as the legislature may direct; but taxes shall be levied by valuation uniformly and proportionately upon all tangible property and franchises, and taxes uniform as to class may be levied by valuation upon all other property. Taxes, other than property taxes, may be authorized by law. Existing revenue- laws shall continue in effect until changed by the legislature. Sec. 2. The property of the State and its governmental subdivisions shall be exempt from taxation. The legislature by general law may exempt property owned by and used exclusively for agricultural and horticultural societies, and property owned and used exclusively for educational, religious, charitable or cemetery purposes, when such property is not owned or used for financial gain or profit to either the owner New Jersey All housing projects of housing authority, including all property of the public body or bodies or housing authority or authorities comprising such housing projects, are hereby declared to be public property devoted to an essential public and governmental purpose. All such public property devoted to such a public purpose shall be exempt from all taxes and special assessments of the State or any political subdivision thereof as long as such public property remains under exclusive control and jurisdiction of a housing authority or public body which owns or holds such property; * * *. (Sec. 21. L. H. A. L.) or user • Article IV. Sec. VII. Subsec. 12. Property shall be assessed for taxes under general laws and by uniform laws, according to its true value. New York An Authority shall be exempt from the payment of any taxes or fees to the State or any subdivision thereof, or to any officer or employee of the State or subdivision thereof * * * The property of an authority shall be exempt from all local and municipal taxes. (Sec. 74, M. H. A. L.) Article III. Sec. 18. The legislature shall not pass a private or a local bill * * * granting to any person, association, firm or corporation an exemption from taxation on real or personal property. North Carolina The authority shall be exempt from the payment of any taxes or fees to the State or any subdivision thereof, or to any officer or employee of the State or any subdivision thereof. The property of an authority shall be exempt from all local and municipal taxes and for the purposes of such tax exemption, it is hereby declared as a matter of legislative determination that an authority is and shall be deemed to be a municipal corporation. Bonds, notes, debentures and other evidences of indebtedness of an authority are declared to be issued for a public purpose and to be public instrumentalities and, together with interest thereon, shall be exempt from taxes when same are held by the Federal Government or by any purchaser from the Federal Government or anyone acquiring title from or through such purchaser. (Sec. 26, H. A. L.) Article 5. Sec. 5. Property belonging to the State, or to municipal Corporations, shall be exempt from taxation. The General Assembly may exempt cemeteries and property held for educational, scientific, literary, charitable, or religious purposes. * * * North Dakota The property of an authority is declared to be public property used for essential public and governmental purposes and such property and an authority shall be exempt from all taxes and special assessments of the city, the county, the State or any political subdivision thereof; * * •*. (Sec. 22.) Article XI. Sec. 176. Taxes shall be uniform upon the same class of property including franchises within the territorial limits of the authority levying the tax. The legislature may by law exempt any or all classes of personal property from taxation and within the meaning of this Section, fixtures, buildings, and improvements of every character whatsoever upon land shall be deemed personal property. The property of the United States and the State, Housing Monograph 73 Chart IX.—Enabling housing legislation: Tax exemption provisions—Continued State Statutory provisions Constitutional provisions: taxation Ohio No provision is made exempting the property of an authority from county, and municipal corporations, and property used exclusively for schools, religious, cemetery, charitable or other public purposes shall be exempt from taxation. Except as restricted by this Article, the legislature may provide for raising revenue and fixing the sites of all property for the purpose of taxation provided that all taxes and exemptions in force when this amendment is adopted shall remain in force until otherwise provided by statute. Article XII. Sec. 2. * * * General laws may be passed to exempt burying Oregon taxation. The property of an authority is declared to be public property used grounds, public school houses, houses used exclusively for public worship, institutions used exclusively for charitable purposes, and public property used exclusively for public purpose, but all such laws shall be subject to alteration or repeal; and the value of all property so exempted shall from time to time be ascertained and published as may be directed by law. Article IX. Sec. 1. The legislative assembly shall, and the people through Pennsylvania for essential public and governmental purposes and such property and an authority shall be exempt from all taxes and special assessments of the city, the county, the State or any political subdivision thereof; * * *. (Sec. 22.) The property of an Authority is declared to be public property the initiative may, provide by law uniform rules of assessment and taxation. All taxes shall be levied and collected under general laws operating uniformly throughout the State. Article IX. Sec. 1. All taxes shall be uniform, upon the same class of subjects. Rhode Island used for essential public and governmental purposes and such property and an Authority shall be exempt from all taxes and special assessments, except school taxes, of the city, the county, the Commonwealth, or any political subdivision thereof; * * *, (Sec. 23.) (As to school taxes, see Dornan v. Philadelphia Housing Authority, 200 Atl. 834, 1938.) An authority shall be exempt from the payment of any taxes or fees within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws; but the General Assembly may, by general laws, exempt from taxation public property used for public purposes, actual places of religious worship, places of burial not used or held for private or corporate profit, institutions of purely public charity, and real and personal property owned, occupied, and used by any branch, post, or camp of honorably discharged soldiers, sailors, and marines. (Amendment of Nov 6 1923.) Article IV. Sec. 15. The General Assembly shall, from time to time, provide for making new valuations of property, for the assessments of taxes, in such manner as they deem best. A new estimate of such property shall be taken before the first direct State tax, after the adoption of this Constitution, shall be assessed. Article X. Sec. 4. There shall be exempted from taxation all county, township South Carolina ....... to the State or any subdivision thereof or to any officer or employee of the State or subdivision thereof. • * * * The property of an authority shall be exempt from all local and municipal taxes. (Sec. 25. H. A. L.) The property of an authority is declared to be public property used Tennessee for essential public and governmental purposes and suph property of an authority shall be exempt from all taxes and special assessments of the city, the county, the State, or any political subdivision thereof. * * * (Sec. 11-E.) The property of housing authorities shall be exempt from all taxes and municipal property used exclusively for public purposes and not for revenue, and the property of all schools, colleges, and institutions of learning, all charitable institutions in the nature of asylums for the infirm, deaf and dumb’ blind, idiotic, and indigent persons, except where the profits of such institutions are applied to private use; all public libraries, churches, parsonages and burying grounds, but property of associations and societies, although connected with charitable objects, shall not be exempt from State, county or municipal taxation: Provided, That as to real estate this exemption shall not extend beyond the buildings and premises actually occupied by such schools, colleges, institutions of learning, asylums, libraries, churches, parsonages and burial grounds, although connected with charitable objects. Article II. Sec. 28. All property real, personal, or mixed, shall be taxed but Texas .... and special assessments of the State or any city, town, or political subdivision thereof. * * * (Sec. 2, T. E. L.) The property of an authority is declared to be public property the legislature may except such as may be held by the State, by counties, cities, or towns, and used exclusively for public or corporation purposes, and such as may be held and used for purposes purely religious, charitable, scientific, literary, or educational. Article VIII. Sec. 1. Taxation shall be equal and uniform. All pronertv in Vermont used for essential puoiic and governmental purposes and such property and an authority shall be exempt from all taxes and special assessments of the city, the county, the State, or any political subdivision thereof; * * *. (Sec. 22.) The property of an authority is declared to be public property this State, whether owned by natural persons or corporations, *other than municipal, shall be taxed in proportion to its value, which shall be ascertained as may be provided by law. * * * Sec. 2. All occupation taxes shall be equal and uniform upon the same class of subjects within the limits of the authority levying the tax; but the Legislature may, by general laws, exempt from taxation public property used for public purposes. * * * Chapter II. Sec. 64. Laws for the encouragement of virtue and prevention of Virginia...' used for essential public and governmental purposes and such property and an authority shall be exempt from all taxes and special assessments of the State or any State public body thereof; ♦ * *. (Sec. 20.) No specific provision vice and immorality, ought to be constantly kept in force, and duly executed; and a competent member of schools ought to be maintained in each town, for the convenient instruction of youth; and one or more grammar schools to be incorporated and properly supported, in each county in this State. And all religious societies, or bodies of men that may be united or incorporated for the advancement of religion and learning, or for other pious and charitable purposes, shall be encouraged and protected in the enjoyment of the privileges, immunities, and estates, which they in justice ought to enjoy, under sue regulations as the General Assembly of this State shall direct. Article XIII. Sec. 183. Unless otherwise provided in this Constitution, the following property and no other shall be exempt from taxation, State and local, including inheritance taxes: (a) Property owned directly or indirectly by the United States, the Commonwealth or any political subdivision thereof, and obligations of the Commonwealth issued since February fourteenth, eighteen hundred and eighty-two, or hereafter exempted by law, * * *. Article X. Sec. 1. Subject to the exceptions in this section contained, taxa- West Virginia The authority shall be exempt from the payment of any taxes or Wisconsin fees to the State or any subdivision thereof, or to any officer or employee of the State or any subdivision thereof. The property of an authority shall be exempt from all local and municipal taxes. * * *. (See. 14.) The property of an authority is declared to be public property tion shall be equal and uniform throughout the State, and all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law. * * * property used for educational, literary, scientific, religious, or charitable purposes, all cemeteries, public property, the personal property, including livestock, employed exclusively in agriculture as above defined and the products of agriculture as so defined while owned by the producers may by law be exempted from taxation, * * *. Article VIII. Sec. 1. The rule of taxation shall be uniform, and taxes shall be Hawaii used for essential public and governmental purposes and such property and an authority shall be exempt from all taxes of the State or any State public body; * * *. (Sec. 1 (22).) The authority shall annually pay to the tax commissioner, as real levied upon such property with such classifications as to forests and minerals, including or separate or severed from the land, as the legislature shall prescribe. Taxes may also be imposed on incomes, privileges, and occupations, which taxes may be graduated and progressive, and reasonable exemption may be provided. (As amended April 1927.) Puerto Rico................ property taxes, the amount which was last levied as the annual real property tax upon the property of the authority prior to the time of its acquisition by the authority. The authority shall be exempt from any and all other Territorial taxes of whatsoever nature. Bonds, notes, debentures, and other evidences of indebtedness of an authority are declared to be issued for a public purpose and to be public instrumentalities and, together with interest thereon, shall be exempt from taxes. (Sec. 20.) The property of an authority is declared to be public property of public utility used for essential public and governmental purposes and such property and an authority shall be exempt from all taxes and special assessments of the government of Puerto Rico, its municipalities, and other subdivisions; * * *. (Sec.22.) 74 National Resources Committee Chart X.—Enabling housing legislation1 : [Unless otherwise noted, citation refers to section number of State Housing Authorities Law. L. H. A. L. = Local Housing Authorities Provision Ars^n‘ California Colorado Connecticut Florida Georgia Indiana Louisiana Maryland Michigan Local authority may agree to make payments to State public body for improvements, services, facilities furnished for housing project: But payments shall not exceed estimated cost to State public 23 body (municipality, city, town, township, county, or political subdivision). But payments shall not exceed last annual tax levy of political 2 T. E. L 2 T. E. L„ 21 2T.E.L. (») subdivision on property before acquired by authority. State public body (municipality, city, town, township, county, or political subdivision) may- Fix sum to be paid annually by local authority to State public 18 22 body for each project. Waive payment by agreement for 1 or more projects for 1 or .do 22 more years. Agree with authority or government upon sum to be paid by ___do 22 authority for any year or years, for project, or accept, agree upon fixed sum, consideration in lieu of payment, but fixed or agreed sum shall not exceed last assessed annual tax on property before acquired by authority.8 Payment by local authority to the city or State political subdivision; Sum fixed by political subdivision for annual payment for each _ 8 1 (21) project. Sum shall not exceed, in any year, last annual tax levy upon authority’s property before acquired by authority. State public body has duty to furnish usual services in absence of 24 contract for service fee.7 5 H. C. L. 2H. C. L. 19 5 H. C. L. 5H.C. L. 5H.C.L- — 5 H. C. L. i Of the 33 States and 2 Territories which had enabling housing legislation as of October 1938, 7 had no specific provision: Alabama, Delaware, Kentucky, Montana, North Carolina, Virginia, and West Virginia. ♦ 2 State public body may contract with housing commission authority or Federal Government respecting sums, if any, * * * which the housing body may agree to pay, during any year or period (Sec. 5, H. C. L.). Nonprofit operation.—For each project, reserve shall be created for taxation purposes, 5 percent of shelter rentals for year shall be paid to municipality and taxing units in proportion to amount of taxes received for unit in year before housing site acquired (H. A. L., Sec. 27 (d) (1)); or to pay to taxing units annual sum equal to taxes received from previous levy before site acquired (Sec. 27 (d) (2)). (Amended by Act No. 5, Sec. 1, Pub. Acts of 1938, Extra Session.) 3 State public body may contract with housing authority or Federal Government respecting sums, if any, “which the public body may agree to pay during any year or period * * 3 Amended by Chap. 218, Sec. 11, Laws of 1938. Housing Monograph Provision for payments in lieu of taxes Law; M. H. A. L. = Munieipal Housing Authorities Law; H. C. L.=Housing Cooperation Law; T. E. L.=Tax Exemption Law] Mississippi Nebraska New Jersey New York North Dakota Ohio Oregon Pennsylvania Rhode Island South Carolina Tennessee Texas Vermont Wisconsin Hawaii Puerto Rico 19 2T. E. L— 22 4H.C.L.3. 22 23 — 11 (e) 2T. E. L 22 20 22 H.A.L. 74 (3) M H, A. L 25 1 (22) 25 1 (29) 5H.C.L 25 1 (22) 25 25 20 — 5H. C. L— — ..... ------ 4H. C. L. — 5 H. C. L. — 5H. C. L. 21 — « Massachusetts, Sec. 26W: Agree with housing authority upon annual sum to be paid to city or town, for year or years on realty used, or to be used for project—not over amount levied at current tax rate on average of assessed values of such realty, buildings for 3 years preceding acquisition. (Valuation in each year reduced by amount given to city for furnishing improvements, services—excluding gas, water, electricity.) . . ± \ , 9 Maryland has additional provision as follows: Sum, if any, which political subdivision agreed to accept for each project, or projects; but sum paid shall not exceed amount equal to regular tax levy on similar property. (Sec. 1 (21).) (Sec. 5, H. C. L.) i Illinois, S. B. No. 39,60th G. A., First Special Session, 1938, Sec. 29. Housing authority files, after project occupied, statement of aggregate shelter rentals of project, collected preceding year, unless different amount agreed upon between authority and state public body, 5 percent of aggregate shelter rentals collected as service charge for services furnished, amount collected distributed to taxing bodies in proportion to tax rate if not tax exempt. Public body may agree for service charge, greater or less than 5 percent of aggregate annual shelter rentals, but not exceeding amount payable if property not tax exempt; this amount distributed in manner provided above. (Shelter rent equals total rentals of property, exclusive of charge for utilities as heat, water, electricity, and gas.) 76 National Resources Committee Chart XI.—Enabling housing legislation: Mortgage and lien provisions < 'iiation refers to section of the State Housing Authorities Law of the 33 States and 2 Territories having enabling housing legislation as of October 1938, except as follows: Kentucky=Municipal Housing Commission Law; Nebraska=M. C., Metropolitan Cities Housing Authorities Law; and F. C., First-Class Cities Housing Authorities Law; New Jersey=Local Housing Authorities Law New York=Municipal.Housing Authorities Law] Provision Alabama Arkansas California Colorado Connecticut Delaware 1 Florida 2 Georgia Illinois3 Indiana Kentucky 4 Louisiana Massachusetts Maryland Michigan Mississippi 8 Montana Nebraska New Jersey New York » North Carolina North Dakota Ohio Oregon Pennsylvania Rhode Island South Carolina Tennessee Texas Vermont Virginia 8 West Virginia 1 Wisconsin Hawaii Puerto Rico Definition of “bonds” as “any bonds, notes, interim certificates, debentures or other obligations.” 3 (12) 3(1) 3(k) 3(9) 2 a) — 3 (k) 3 (k) — 3(1) — 3 (k) - 3 (k) — 1 (1) 3(12) M. C. 2 (k); F. C. 3 (k) 4 (k) 62 (9) 3(12) 3 (k) — 3 (k) 3(b) 3 (12) 1(1) 3(12) 3 (k) 3(1) 3 (k) — 3(1) 3(10) 3 (k ) Power of authority “to sell, exchange, transfer, assign or pledge any property, real or personal, or any interest therein.” 9 8 (d) 8(d) 9 8 8(d) 8(d) 8(d) — 8(d) ----- 8(d) 7(b) 6(d) 9(c) M. C. ’35, 5 (b); F. C. 8 (d)_ 8(d) 66 9 8(d) 1078-34 (b) 8 (d) 10(o) 9 8 (3) 9 8 (d) 8(d) 8 (d) 7 -------- 7 8(d) Power of authority to borrow money on its bonds, notes, warrants, debentures or other evidence of indebted- 9 — 9 8 38 26R (b) — (0 — ...do.. M. C. ’35, 5 (b) 66 9 1078-34 fc) — 9 — 9 — 7 — ness and to secure same by pledges of its revenues, and (as limited) by mortgages upon the property held or to be held by it. Limitations on operation and tenant selection not to limit right of obligee upon default to take possession of housing project, cause the appointment of a receiver or acquire title thereto thru foreclosure. 10 10 8 (!) 10 3 25 10 — 10 (’) M. C. ’37, 5 (e); F. O. 10 (e). 10 — 10 1078-42 10 13 ------- 8-C -------- 10 10 — 27 26 10 Bonds to be issued by authority may be additionally secured by a mortgage of the property. In connection with issuance of bonds or incurring of obligations, authority to have power “to mortgage all or any part of its real or personal property, then owned or thereafter acquired.” 15 14 16 (b) 14 16(b) 14 (b) 14(b) 14 16 (b) — 14 16(b) — 13 15 (b) 14 16 (b) 48(b) 12 14(b) 14 M. C. ’37.8; F. C. 14 M. O. ’37,10(b); F. C. 16 (b). 13 16 (b) 72 (6b) 14 14 16 (b) 1078-44 1078-46 (b) 14 16 (b) 17 19 (b) 13 11 11-B (b) 14 14 16 (b) 16(b) 14 16 (b) — 13 11 14(b) 14 16(b) Authority to have power to covenant to vest in trustee or obligee of bonds right in event of default to take 17 (21) 16 (i) 16 (i) 16 (21) 14 (i) — 16 (h) 16 (i) 21 (h) 16 (i) — 15 (j) 16 (i) 48 (j) 14 (i) 16 (21) M. C. '37,10 (i); F. C. 16 (i). 16 (i) 72 (6t) 16 (21) 16 (i) 1078-46 (i) 16 (i) 19 (i) 15 (21) 11-B (i) 16 (21) 16 (i) 16 (i) 16 (i) — 15 (t) 14 (t) 16 (i) possession and use, operate, and manage project or part thereof. Power to mortgage when project financed in whole or part by a government and to vest right to foreclose thru judicial proceedings or exercise of power of sale without judicial proceedings. Power to confer upon obligee right on default to bring suit, to cause possession of project to be surrendered to such obligee, to obtain appointment of a receiver to manage project, or to have authority account as trustee. Exemption of property from execution sale, not to apply to or limit right of obligees to foreclose or enforce mortgage of property. (Where provisions exist under section 8 above, “Power to mortgage when project financed * * *,” only such mortgages are excepted from exemption.) 18 20 18 19 17 19 16 — 19 18 23 18 — 17 — 18 — 16 17 19 M. C. '37, 13; F. C. 19 18 75(2) 17 19 19 1078-48 19 21 16 18 11-D 17 19 19 18 19 — 16 18 17 14 (x) 19 22 19 20 22 ------- 19 19 19 —------ 19 •------- 17 21 M. C. ’37, 14; F. C. 20 19 — 21 20 20 - — 20 — 21 20 23 Mortgage or foreclosure sale subject to agreement of authority with government. Purpose and intent of act to authorize all things necessary to secure financial aid by Federal Government. 23 24 20 21 22 23 17 — 21 20 27 20 20 20 46 18 22 23 M. C.’37, 15; F. C. 21 20 22 23 21 21 22 21 22 22 23 21 19 20 11 20 21 16 17 21 1 Subject to restrictions of this act an authority may incur any indebtedness and issue any obligations and give any security therefor which it may deem necessary or advisable. (Sec. 13.) 2 Limitations on operation and tenant selection not to limit right of obligee upon default to take possession of housing project or cause the appointment of a receiver. (Sec. 10.) Exemption of property from execution sale not to apply to or limit right of obligee to enforce pledge on its rents, fees, or revenues. (Sec. 20). 2 Mortgage and foreclosure powers given in Acts of 1933-34, Third Special Session, H. B. No. 5, expressly deleted by Acts of 1937, S. B. No. 408. 4 Subject to restrictions of this act a housing commission may incur any indebtedness and issue any obligations and give any security it may deem necessary or advisable and may pledge or mortgage specific property. (Sec. 10.) 4 Limitations on operation and tenant selection not to limit right of obligee upon default to take possession of housing project or cause the appointment of a receiver. (Sec. 10.) • Authority may vest in an obligee a right to foreclose any mortgage. (Sec. 72 (6x).) Authority and municipality to be made defendants in any action to foreclose mortgage on real property of an authority. (Sec. 75.) 7 Borrower may borrow money and issue revenue bonds therefor. (Sec. 17.) 4 Limitations on operation and tenant selection not to limit power to vest in obligee or trustee right in event of default to cause appointment of receiver. (Sec. 44.) 119119—39 (Face p. 76) KßifeSIw g Ol w £ 5 *k'^VwA't * *! . .. 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