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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Reagan, Ronald: Gubernatorial Papers,
1966-74: Press Unit
Folder Title: Issue Papers - Housing
[includes Rumford Act]
Box: P30
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
LAW OFFICES
COMMITTEES
SUITE 229, 1003 PLAZA BOULEVARD
Transportation and Commerce
SOUTH BAY PLAZA OFFICE BUILDING
Vice Chairman
NATIONAL CITY, CALIFORNIA
Criminal Procedure
474-2245
Assembly
Government Organization
Revenue and Taxation
SACRAMENTO ADDRESS
Legislative Representation
STATE CAPITOL
ROOM 4004
California Legislature
HI 5-4711, EXT. 6095
RICHARD J. DONOVAN
MEMBER OF THE ASSEMBLY, SEVENTY-SEVENTH DISTRICT
Dear Fellow Legislator:
The attached opinion was requested
by me to help me answer the many questions
that I receive on the status of Civil Rights
in California and the relationship of the
State Act, the Federal Act and the effect
of Proposition #14.
I found it so informative that I
felt that each member of our legislature
should have a copy. It has been released
to the public, so if any of your newspaper
people wish copies, they can get them from
Legislative Counsel.
To those of you who are running
this year, my sincere wishes for good luck,
and I hope to see all of you in January.
Richard J. Donovan
ANGUS C. MORRISON
GREAT
TERRY L. BAUM
LEGISLATIVE COUNSEL
BARBARA C. CALAIS
GEORGE H. MURPHY
VIRGINIA COKER
CHIEF DEPUTY
KENT L. DECHAMBEAU
BERNARD CZEBLA
ROBERT A. GALGANI
J. GOULD
ROSE M. JACOBSON
PRINCIPAL DEPUTIES
STATE OF CALIFORNIA
L. DOUGLAS KINNEY
TAKETSUGU TAKEI
OWEN K. KUNS
DEPUTY IN CHARGE
Low ANGELES OFFICE
Office of Legislative Commsel
ERNEST H. KUNZI
STANLEY M. LOURIMORE
3021 STATE CAPITOL. SACRAMENTO 95814
SHERWIN C. MACKENZIE JR.
110 STATE BUILDING. LOS ANGELES 90012
ANN M. MACKEY
RUSE OLIVER
JOHN R. PIERCE
Sacramento, California
EDWARD K. PURCELL
August 26, 1964
RUSSELL L. SPARLING
DON VICKERS
RAY H. WHITAKER
DEPUTIES
Honorable Richard J. Donovan
1003 Plaza Boulevard
National City, California
Civil Rights - #6540
Dear Mr. Donovan:
You have asked several questions concerning the Federal
Civil Rights Act of 1964 (Public Law 88-352) 1 and the California
laws relating to discrimination based on race, color, religion,
national origin or ancestry.
QUESTION NO. 1
To what extent, if any, is there an overlap between the
provisions of the Federal Civil Rights Act and the so-called
Rumford Fair Housing Act (Ch. 1853, Stats. 1963) 2?
OPINION AND ANALYSIS NO. 1
Generally speaking, the Federal Civil Rights Act relates
to voting rights and discrimination in public accommodations,
public facilities, public education, federally assisted programs,
and employment practices.
Title I of the federal act enacts various provisions
designed to protect against the denial of voting rights and makes
certain provisions for enforcement of voting rights through a
three-judge federal court.
Title II bars discrimination on the grounds of race,
color, religion, or national origin in certain enumerated public
accommodations if the discrimination or segregation in such
accommodations is supported by state law or official act, if
lodgings are provided to transient guests or interstate travelers
1 Hereafter referred to as the Federal Civil Rights Act or the
federal act.
2 Hereafter referred to as the Rumford Act or the act.
Honorable Richard J. Donovan - p. 2 - 6540
are served, or if a substantial portion of the goods sold, or
entertainment presented, moves in interstate commerce. The title
authorizes suit by anyone denied his rights (and authorizes the
court to permit intervention therein by the Attorney General if
he certifies the case is of general public importance), and permits
the United States Attorney General to bring an action where he has
reasonable cause to believe that a person or group of persons is
engaged in a pattern or practice of resistance to granting the
rights under the title. The title further provides that if state
law authorizes relief from such discrimination no civil action
under the federal act may be brought until 30 days after notice
of the discrimination has been furnished appropriate state
authority, and it authorizes a federal court in which such a
civil action has been brought to stay the proceedings pending
the termination of state or local enforcement proceedings.
Finally, the title provides that it shall not preclude action
under other laws not inconsistent with the title.
Title III permits, upon written complaint of an aggrieved
individual, suit by the Attorney General under specified circum-
stances to secure desegregation of state or locally owned,
operated, or managed public facilities. The title further
provides that nothing therein shall affect adversely the right
of any person to sue to obtain relief in any court against
discrimination covered by the title.
Title IV requires the United States Commissioner of
Education to make certain surveys and reports and authorizes
him to give certain technical and financial assistance to state
or local public school systems relating to segregation. The
title also authorizes the Attorney General to file a suit for the
desegregation of public schools and colleges under certain
specified circumstances. The title further provides that nothing
therein shall affect adversely the right of any person to sue to
obtain relief in any court against discrimination covered by the
title.
Title V extends the life of the Federal Civil Rights
Commission for four years and makes various provisions with
respect to the duties of the commission and enacts various
requirements regarding commission procedures.
Title VI bars discrimination under any program or
activity receiving federal assistance against any person
because of his race, color, or national origin and directs
every federal department and agency extending financial
assistance to any program or activity by way of grant, loan
or contract, other than a contract of insurance or guaranty,
to issue rules and regulations approved by the President to
Honorable Richard J. Donovan - p. 3 - #6540
carry out the purposes of the title. The title also provides for
various procedural requirements relating to denial of federal
assistance because of failure to comply with the requirements of
any such rule or regulation, including the right to judicial
review of the action of the federal department or agency involved.
Title VII prohibits various specified unfair employment
practices involving, generally speaking, discrimination against
employees or applicants based upon race, color, religion, sex,
or national origin. The title creates a five member Equal
Employment Opportunity Commission and authorizes the commission
to investigate charges of such unlawful employment practices and
to attempt to settle problems by informal methods of conference,
conciliation and persuasion. The title further authorizes civil
suits, in federal court, if commission action is unsuccessful, by
persons aggrieved, in which the Attorney General may be permitted
to intervene. The title also authorizes suits by the Attorney
General whenever he has reasonable cause to believe that a person
or group of persons is engaging in a pattern or practice of
resistance to the title with intent to deny the rights guaranteed.
The title makes certain provision for priority for state actions
under state laws concerning unfair employment practices, provides
that the title shall not relieve any person from state laws other
than those purporting to require or permit unlawful employment
practices, and authorizes cooperation and agreements between the
commission and state and local fair employment practices agencies.
Title VIII directs the Secretary of Commerce to gather
certain registration and voting information based on race, color
and national origin.
Title IX makes provision for judicial review in civil
rights cases and authorizes the Attorney General to intervene in
certain private civil rights suits.
Title X creates a Community Relations Service in the
Department of Commerce to aid communities in resolving disputes
relating to discriminatory practices based on race, color or
national origin, and authorizes the Service to take various
actions in this regard.
Title XI enacts various miscellaneous provisions
relating to criminal contempt proceedings under the federal
act, including the granting of the right to a jury trial, and
the powers of the Attorney General and the government. The title
states that it is not the intent of the federal act to occupy the
field to the exclusion of state laws or to invalidate state laws
unless they are inconsistent with any of the purposes of the
federal act.
Honorable Richard J. Donovan - p. 4 - #6540
The Rumford Act, on the other hand, prohibits,
generally speaking, discrimination with respect to the sale,
lease, rental, terms, conditions, privileges, facilities or
services in housing accommodations on the basis of race, color,
religion, national origin or ancestry. The act covers three
types of owners of housing accommodations:
1. An owner of a publicly assisted housing accommodation
which is in, or is to be used for, a multiple dwelling (subds. 1,
2, and 3, Sec. 35720) 3.
2. An owner of a publicly assisted housing accommodation
which is a single family dwelling occupied by the owner (subd. 4,
Sec. 35720).
3. An owner of any dwelling containing five or more
units, whether or not such dwelling is publicly assisted (subd. 5,
Sec. 35720).
The act defines "housing accommodation" as any improved
or unimproved real property which is used or occupied or intended
to be occupied as a home, residence or sleeping place of any human
being (subd. 2, Sec. 35710).
The term "publicly assisted housing accommodation" is
defined in the act as including the following types of housing
accommodations:
1. A housing accommodation which at the time of any
alleged discrimination is exempted in whole or in part from state
or local taxes. Excepted is any housing accommodation exempted by
reason of the owner's status as a veteran (subd. 3 (a), Sec. 35710).
2. A housing accommodation which is constructed on land
sold below cost by the State or a local agency pursuant to the
Federal Housing Act of 1949 (subd. 3(b), Sec. 35710).
3. A housing accommodation which is constructed in whole
or in part on property acquired by the State or a local agency
through the power of condemnation or otherwise for the purpose
of such construction (subd. 3(c), Sec. 35710)
4. A housing accommodation which, at the time of any
alleged discrimination, is financed in whole or in part by a loan
the repayment of which is guaranteed or insured by the federal
government or the State, or any agency of either (subd. 3(d),
Sec. 35710).
3 All sections referred to are in the Health and Safety Code.
Honorable Richard J. Donovan - p. 5 - #6540
The term "multiple dwelling" is defined by the act as a
dwelling which is occupied, as a rule, for permanent residence
purposes, and which is rented or leased to be occupied as the
residence or home of three or more families living independently
of each other (subd. 6, Sec. 35710).
In addition to the discrimination by owners of housing
accommodations described above, the Rumford Act makes it unlawful
for any person subject to the provisions of Section 51 of the Civil
Code⁴ (the Unruh Civil Rights Act), as that section applies to
housing accommodations and to transactions relating to sales,
rentals, leases, or acquisition of housing accommodations, to
discriminate (subd. 6, Sec. 35720), and for any person, bank,
mortgage company, or other financial institution to whom application
is made for financial assistance for the purchase, organization, or
construction of housing accommodations to discriminate, in the terms,
conditions, or privileges relating to the obtaining or using of any
such financial assistance (subd. 7, Sec. 35720).
Finally, the Rumford Act authorizes the State Fair
Employment Practice Commission to enforce the provisions of the
act and provides for various procedural requirements with respect
to such enforcement (Sec. 35730 et seq.).
It appears to us from the foregoing review of the
Federal Civil Rights Act and the Rumford Act that for the most
part there is no overlap between the Federal Civil Rights Act and
the Rumford Act because the two acts relate to discrimination in
different types of situations. The federal act relates to voting
4
Section 51 of the Civil Code provides as follows:
"This section shall be known, and may be cited,
as the Unruh Civil Rights Act.
"All persons within the jurisdiction of this
State are free and equal, and no matter what their
race, color, religion, ancestry, or national origin
are entitled to the full and equal accommodations,
advantages, facilities, privileges, or services in
all business establishments of every kind whatsoever.
"This section shall not be construed to confer
any right or privilege on a person which is condi-
tioned or limited by law or which is applicable alike
to persons of every color, race, religion, ancestry,
or national origin."
Honorable Richard J. Donovan - p. 6 - #6540
rights and discrimination in certain public accommodations, publicly
owned public facilities, public education, federally assisted
programs (from which federal assistance by contract of insurance
or guaranty is expressly excluded), and employment practices,
while the Rumford Act relates to discrimination with respect to
housing accommodations. One possible area of overlap is with
respect to housing accommodations made available through redevelop-
ment agencies and housing authorities. Discrimination in connection
with such housing accommodations would appear to be covered both by
Title VI of the federal act and by the Rumford Act (Secs. 35710 (3)
(b), 35720).
QUESTION NO. 2
What legal effect, if any, will the Federal Civil Rights
Act have upon the Rumford Act?
OPINION AND ANALYSIS NO. 2
To the extent that the federal act and the Rumford Act
cover different types of situations, the federal act will have no
legal effect upon the Rumford Act. Furthermore, even if there is
an overlap in the coverage of the two acts, in our opinion the
federal act will have no legal effect upon the Rumford Act, in
view of the provision contained in Title XI of the federal act
expressly disclaiming any intention to preempt or invalidate state
laws in the same field unless they are inconsistent with any of the
purposes of the federal act. In our opinion the Rumford Act is
consistent with the purposes of the federal act.
QUESTION NO. 3
Does the Federal Civil Rights Act: supersede state laws
prohibiting discrimination; permit persons aggrieved a choice of
remedy under federal or state law; or provide that state law shall
prevail?
OPINION NO. 3
Generally speaking, under the Federal Civil Rights Act a
person aggrieved by some unlawful discrimination under federal law
may nevertheless seek his remedy under applicable state laws against
such discrimination and in some instances he is encouraged and may
even be required to do so.
ANALYSIS NO. 3
State laws prohibiting discrimination are, chiefly,
the Rumford Act, relating to discrimination in housing; the
Unruh Civil Rights Act, relating to discrimination in "business
Honorable Richard J. Donovan - p.7 - #6540
establishments"; and the California Fair Employment Practice Act
(Pt. 4.5 (commencing with Sec. 1410), Div. 2, Lab. C.°), relating
to discrimination in employment.
As we discussed with respect to Question No. 1, the only
area of overlap of which we are aware between the federal act and
the Rumford Act concerns housing accommodations made available
through redevelopment agencies, since the Rumford Act prohibits
discrimination in "publicly assisted housing,' which is defined
to include land sold below cost by the State or a local agency
pursuant to the Federal Housing Act of 1949 (subd. 3 (b), Sec.
35710), and Title VI of the federal act bars discrimination under
any program or activity receiving federal assistance (with certain
exceptions) by grant, loan or contract. Title XI of the federal
act provides, however, in Section 1104, that:
"Nothing contained in any title of this Act
shall be construed as indicating an intent on the part
of Congress to occupy the field in which any such
title operates to the exclusion of state laws on the
same subject matter, nor shall any provision of this
Act be construed as invalidating any provision of state
law unless such provision is inconsistent with any of the
purposes of this Act or any provision thereof."
It thus appears to us that since the Rumford Act is not
inconsistent with the provisions of the federal act, the remedies
against discrimination provided by the Rumford Act are open to any
person aggrieved. Title VI of the federal act does not provide
for any preference for state actions (as do some other titles of
the federal act, as discussed hereafter), and we think a person
aggrieved may seek any remedy he may have either under state or
federal law.
With respect to the Unruh Civil Rights Act, there is
considerable overlap between this act and the federal act. The
Unruh Civil Rights Act provides that all persons are entitled to
full and equal treatment in all "business establishments, whereas
Title II of the federal act contains similar provisions with
respect to "places of public accommodation" (subsec. (a), Sec. 201,
federal act).
Subsection (b) of Section 207 in Title II provides that:
" (b) The remedies provided in this title
shall be the exclusive means of enforcing the
rights based on this title, but nothing in this
5 Hereafter referred to as the Fair Employment Act.
Honorable Richard J. Donovan - p. 8 - #6540
title shall preclude any individual or any state
or local agency from asserting any right based on
any other Federal or State law not inconsistent
with this title, including any statute or ordinance
requiring nondiscrimination in public establishments
or accommodations, or from pursuing any remedy, civil
or criminal, which may be available for the vindication
or enforcement of such right."
As a result of this provision of Title II and the provi-
sions of Section 1104 in Title XI quoted earlier, we think it is
clear that an aggrieved person retains the remedies for discrimina-
tion provided under the Unruh Civil Rights Act and may seek his
remedy there or under the federal act.
In this regard, however, it should be noted that
subsection (c) of Section 204 in Title II of the federal act
provides:
" (c) In the case of an alleged act or
practice prohibited by this title which occurs
in a State, or political subdivision of a State,
which has a State or local law prohibiting such
act or practice and establishing or authorizing
a state or local authority to grant or seek
relief from such practice or to institute criminal
proceedings with respect thereto upon receiving
notice thereof, no civil action may be brought
under such section (a) before the expiration of
thirty days after written notice of such alleged
act or practice has been given to the appropriate
State or local authority by registered mail or in
person, provided that the court may stay proceedings
in such civil action pending the termination of
state or local enforcement proceedings.
11
It could be contended under subsection (c) of
Section 204 that, since Section 52 of the California Civil
Code provides that a violation of the Unruh Civil Rights Act
is punishable by an action for damages, any person aggrieved
may be required to seek his remedy under the Civil Code prior
to federal action under Title II. We do not think that such is
the case, however, as subsection (c) refers to "state or local
authorities" and provides for "notice" thereto. These provisions
appear to contemplate specific state or local anti-discrimination
agencies, such as the State Fair Employment Practice Commission,
which are authorized to institute enforcement proceedings upon
the filing of a complaint by the person aggrieved, and not to
court action instituteddirectly by the person aggrieved.
Honorable Richard J. Donovan - p. 9 - #6540
Finally, with respect to the California Fair Employment
Practice Act, this act and Title VII of the federal act overlap
in that they both contain similar prohibitions against discrimina-
tion in employment (compare Sec. 703, federal act and Sec. 1420,
Lab. C.). Title VII of the federal act contains the following
provisions, however, relating to state laws respecting such
discrimination in Sections 706, 708, and 709:
"Sec. 706. * * *
" (b) In the case of an alleged unlawful
employment practice occurring in a State, or
political subdivision of a State, which has a
State or local law prohibiting the unlawful
employment practice alleged and establishing
or authorizing a State or local authority to
grant or seek relief from such practice or to
institute criminal proceedings with respect
thereto upon receiving notice thereof, no charge
may be filed under subsection (a) by the person
aggrieved before the expiration of sixty days
after proceedings have been commenced under the
State or local law, unless such proceedings have
been earlier terminated, provided that such sixty-
day period shall be extended to one hundred and
twenty days during the first year after the
effective date of such State or local law. If
any requirement for the commencement of such
proceedings is imposed by a State or local
authority other than a requirement of the filing
of a written and signed statement of the facts
upon which the proceeding is based, the proceed-
ing shall be deemed to have been commenced for
the purposes of this subsection at the time such
statement is sent by registered mail to the appro-
priate State or local authority.
11 (c) In the case of any charge filed by a
member of the Commission [the Equal Employment
Opportunity Commission] alleging an unlawful
employment practice occurring in a State or
political subdivision of a State, which has a
State or local law prohibiting the practice
alleged and establishing or authorizing a State
or local authority to grant or seek relief from
such practice or to institute criminal proceedings
with respect thereto upon receiving notice thereof,
the Commission shall, before taking any action with
respect to such charge, notify the appropriate State
or local officials and, upon request, afford them a
Honorable Richard J. Donovan - p. 10 - #6540
reasonable time, but not less than sixty days
(provided that such sixty-day period shall be
extended to one hundred and twenty days during
the first year after the effective day of such
State or local law), unless a shorter period is
requested, to act under such State or local law
to remedy the practice alleged.
"
"Sec. 708. Nothing in this title shall be
deemed to exempt or relieve any person from any
liability, duty, penalty, or punishment provided
by any present or future law of any State or
political subdivision of a State, other than any
such law which purports to require or permit the
doing of any act which would be an unlawful employ-
ment practice under this title.'
"Sec. 709. ***
88 (b) The Commission may cooperate with State
and local agencies charged with the administration
of State fair employment practices laws and, with
the consent of such agencies, may for the purpose
of carrying out its functions and duties under this
title and within the limitation of funds appropriated
specifically for such purpose, utilize the services
of such agencies and their employees and, notwith-
standing any other provision of law, may reimburse
such agencies and their employees for services
rendered to assist the Commission in carrying out
this title. In furtherance of such cooperative
efforts, the Commission may enter into written
agreements with such State or local agencies and
such agreements may include provisions under which
the Commission shall refrain from processing a
charge in any cases or class of cases specified in
such agreements and under which no person may bring
a civil action under section 706 in any cases or
class of cases so specified, or under which the
Commission shall relieve any person or class of
persons in such State or locality from require-
ments imposed under this section. The Commission
shall rescind any such agreement whenever it
determines that the agreement no longer serves the
interest of effective enforcement of this title.
89
Honorable Richard J. Donovan - p. 11 - #6540
Furthermore, subsection (e) of Section 706 in Title VII
authorizes courts to stay further proceedings on enforcement of
the federal provisions for not more than 60 days pending the
termination of state or local proceedings described in subsection
(b) of Section 706 or the efforts of the federal Equal Employment
Opportunity Commission to obtain voluntary compliance with the
federal act.
It is clear from these provisions of the federal act
that the remedy under state law of any person aggrieved by
discriminatory employment practices is preserved. Indeed, the
state remedy has priority over the federal remedy for a limited
period of time in some cases (subsecs. (b), (c), and (e), Sec.
706), and action under the federal act may be barred in favor of
the state law in certain instances (subsec. (b), Sec. 709).
From the foregoing discussion, it can be seen that
under the Federal Civil Rights Act a person aggrieved by some
unlawful discrimination in housing, public accommodations, or
employment under federal law may nevertheless seek his remedy
under applicable state laws against such discrimination, and in
some instances he is encouraged and may even be required to do SO.
QUESTION NO. 4
What effect will the Federal Civil Rights Act have upon
Proposition 14 of the 1964 General Election relating to the sale
and rental of residential real property?
OPINION AND ANALYSIS NO. 4
Proposition 14 would add a Section 26 to Article I of
the State Constitution, to read as follows:
"Neither the State nor any subdivision or
agency thereof shall deny, limit or abridge,
directly or indirectly, the right of any person,
who is willing or desires to sell, lease or rent
any part or all of his real property, to decline
to sell, lease or rent such property to such
person or persons as he, in his absolute
discretion, chooses.
"'Person' includes individuals, partnerships,
corporations and other legal entities and their
agents or representatives but does not include
the State or any subdivision thereof with respect
to the sale, lease or rental of property owned by
it.
Honorable Richard J. Donovan - p. 12 - #6540
"'Real property' consists of any interest in
real property of any kind or quality, present or
future, irrespective of how obtained or financed,
which is used, designed, constructed, zoned or
otherwise devoted to or limited for residential
purposes whether as a single family dwelling or
as a dwelling for two or more persons or families
living together or independently of each other.
"This Article shall not apply to the obtaining
of property by eminent domain pursuant to Article I,
Sections 14 and 14-1/2 of this Constitution, nor to
the renting or providing of any accommodations for
lodging purposes by a hotel, motel or other similar
public place engaged in furnishing lodging to
transient guests.
"If any part or provision of this Article,
or the application thereof to any person or
circumstance, is held invalid, the remainder
of the Article, including the application of
such part or provision to other persons or
circumstances, shall not be affected thereby
and shall continue in full force and effect.
To this end the provisions of this Article are
severable."
Proposition 14, by its terms, would prohibit the State
and its subdivisions and agencies from directly or indirectly
denying, limiting, or abridging the right of a private individual
or entity to decline to sell, lease or rent his residential real
property to such person or persons as he chooses.
The only area of possible conflict between Proposition 14
and the federal act of which we are aware arises out of Title VI of
the federal act, relating to nondiscrimination in federally assisted
programs (other than when the assistance is by contract of insurance
or guaranty), since the subject matter of Proposition 14 (that of
state or local governmental action respecting residential real
property) is not included in any of the other subjects regulated
by the federal act.
Section 601 in Title VI of the federal act provides:
"Sec. 601. No person in the United States
shall, on the ground of race, color, or national
origin, be excluded from participation in, be
denied the benefits of, or be subjected to
discrimination under any program or activity
receiving Federal financial assistance."
Honorable Richard J. Donovan - p. 13 - #6540
Section 602 in the title provides, in part:
"Sec. 602. Each Federal department and
agency which is empowered to extend Federal
financial assistance to any program or activity,
by way of grant, loan, or contract other than a
contract of insurance or guaranty, is authorized
and directed to effectuate the provisions of
section 601 with respect to such program or
activity by issuing rules, regulations, or
orders of general applicability which shall be
consistent with achievement of the objectives
of the statute authorizing the financial
assistance in connection with which the action
is taken. No such rule, regulation, or order
shall become effective unless and until approved
by the President. Compliance with any require-
ment adopted pursuant to this section may be
effected (1) by the termination of or refusal
to grant or to continue assistance under such
program or activity to any recipient as to whom
there has been an express finding on the record,
after opportunity for hearing, of a failure to
comply with such requirement, but such termina-
tion or refusal shall be limited to the partic-
ular political entity, or part thereof, or other
recipient as to whom such a finding has been made
and, shall be limited in its effect to the particular
program, or part thereof, in which such noncompliance
has been so found, or (2) by any other means authorized
by law:
Section 602 further provides for notice to appropriate persons
prior to any action authorized and for notice to congressional
committees. A determination that voluntary compliance cannot be
secured is also required by the section.
Title VI also provides for judicial review of the actions
of federal agencies under the title (Sec. 603) and provides that
nothing in the title shall: (1) be construed to authorize action
with respect to any employment practice of any employer, employ-
ment agency, or labor organization except where a primary objective
of the federal financial assistance is to provide employment
(Sec. 604) or (2) add or detract from any existing authority
with respect to any program or activity under which federal
financial assistance is extended by way of a contract of
insurance or guaranty (Sec. 605).
The federal law on urban development (42 U.S.C. 1450
et seq.) contains provisions authorizing advances, loans, and
Honorable Richard J. Donovan - p. 14 - #6540
grants to local public agencies engaged in urban renewal projects
in accordance with the provisions of that law. The federal
program is supervised by the Administrator of the Federal Housing
and Home Finance Agency, and is administered by the Director of
the Urban Renewal Administration of that agency (42 U.S.C. 1456).
In the absence of any rules, regulations or orders by
the Urban Renewal Administration implementing Title VI as required
by Section 602 in the title, it is not possible for us to reach
any categorical conclusions with respect to the effect of Title VI,
and thus the federal act, upon Proposition 14.
In this regard we note, however, that the Urban Renewal
Administration has, since 1962, imposed certain requirements upon
local agencies participating in the programs administered by the
administration.
Local Public Agency Letter No. 256, dated November 30,
1962, by the Urban Renewal Administration, relates specifically
to that agency's requirements relating to nondiscrimination. The
letter quotes a portion of Executive Order No. 11063, November 20,
1962, by President Kennedy, relating to equal opportunities in
housing, and specifically implements the order by requiring that
each Contract for Loan and Grant, or Early Acquisition Loan Contract,
executed after November 20, 1962, contain the following:
"Include in every agreement, lease, conveyance,
or other instrument whereby Project Land is disposed
of for uses which may include housing or facilities
related to residential uses (as defined by the
Administrator) an affirmative covenant binding
on the contractor, lessee, grantee, or other party
to such instrument and on the successors in interest
to such contractor, lessee, grantee, or other party
that there shall be no discrimination upon the basis
of race, color, creed, or national origin in the sale,
lease, or rental or in the use or occupancy of such
land or any improvements erected or to be erected thereon;
and the Local Public Agency will take all steps necessary
to enforce such covenant (such enforcement obligation to
survive this Contract) and will not itself SO discriminate."
The California Community Redevelopment Law found in
Sections 33000 to 33714, inclusive, of the Health and Safety Code
provides for the establishment of local redevelopment agencies
and contains provisions enabling such agencies to participate in
federal urban redevelopment programs. This law also contains
provisions prohibiting discrimination because of race, color,
religion, national origin or ancestry in California community
redevelopment or urban renewal projects (Sec. 33050, H.& S.C.)
and requiring nondiscrimination clauses in deeds, leases or
Honorable Richard J. Donovan - p. 15 - #6540
contracts which bind purchasers or lessees, and all successors
in interest and subsequent transferees, not to discriminate
against any person or group of persons, on account or race,
color, creed, national origin or ancestry, in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the
property (Secs. 33435 and 33436, H.& S.C.).
From the terms of Proposition 14 we think it would be
held that it applies to redevelopment agencies subject to federal
provisions such as those set forth above in the Local Public
Agency Letter No. 256, since these agencies are clearly "agencies
of the State" (see Fellom V. Redevelopment Agency (1958), 157 Cal.
App. 2d 243, 247-248; Housing Authority V. City of Los Angeles
(1952), 38 Cal. 2d 853, 861-62).
As agencies of the State these redevelopment agencies
would, we think, at least indirectly, if not directly, limit the
right of a purchaser, lessee or tenant of property acquired
through redevelopment or urban renewal to decline to sell, lease
or rent such property to such persons as they choose by the
insertion of such required nondiscrimination clauses in deeds,
leases and contracts under which residential real property is
sold or leased by a redevelopment agency.
Such a limitation upon the rights of such purchasers,
lessees and tenants of such property is, we think, prohibited by
Proposition 14. It follows that this prohibition by Proposition 14
could have the effect of jeopardizing federal redevelopment funds
for redevelopment agencies operating pursuant to the Community
Redevelopment Law by reason of the inability of a local redevelop-
ment agency to comply with the rules, regulations and orders (such
as the provisions of Local Public Agency Letter No. 256) of a
federal agency (such as the Urban Renewal Administration) with
respect to the sale or lease of residential realty by the agency.
Very truly yours,
A. C. Morrison
Legislative Counsel
MacKenzie, C.Mackennief.
Deputy Legislative Counsel
SCM: fo
"Proposition 14 would establish
Constitutional immunity for those
who discriminate in the sale or
rental of their property and would
exempt them from present and
future fair housing laws."
A Legal Opinion
and
Description of Proposition 14
from
RICHARD C. MAXWELL
ORRIN EVANS
FRANK C. NEWMAN
Dean. School of Law
Dean, School of Law
Dean, School of Law
University of California
University of Southern California
University of California
Los Angeles
Los Angeles
Berkeley
CHARLES J. MEYERS
RICHARD R. POWELL
Professor of Law
Professor of Law
Stanford University
Hastings College of Law
Palo Alto
San Francisco
CALIFORNIANS AGAINST PROPOSITION 14
5504 Hollywood Blvd., Los Angeles
48 Second Street San Francisco
1
A Legal Opinion On Proposition 14
2
3
And A Description Of
1
Its Effects On The Constitution
5
And The Laws Of The State Of California
6
7
8
Proposition 14 is sometimes referred to as the "referendum
9
to repeal the Rumford Act," or "the anti-Rumford initiative."
In our opinion, these statements do not accurately describe the
10
proposed constitutional amendment. This letter explains briefly
what Proposition 14 would do and what it would not do.
11
The Rumford Act (Health and Safety Code $$ 35700-35744)
12
forbids discrimination on the basis of race, color, religion,
13
national origin or ancestry in the sale and rental of certain
housing. Covered by the Act are owner-occupied single family
14
dwellings with government insured mortgages or other public
assistance, all multiple dwellings (except duplexes) that are
15
government assisted and all multiple dwellings containing five
or more units, whether publicly assisted or not. In addition
16
to property owners, certain other persons who are not owners
17
but who are in the housing business are covered by the Rumford
Act, principally lenders and real estate brokers.
18
Proposition 14 would apply only to a "person, who is
19
willing or desires to sell, lease or rent any part or all of
his real property
"
Person is defined to include an
20
agent of a property owner.
21
Thus, the first important point to be noticed is that,
22
while adoption of Proposition 14 would nullify some of the
Rumford Act it would not nullify all of it. Real estate brokers
23
and mortgage lenders would still be covered by the Act, unless
they were acting as an agent for an owner who had previously
21
instructed them to discriminate. To give but one example, if a
Negro seeks the services of a broker in the purchase of a house,
the broker 1S subject to the Act and cannot refuse his services
26
on the basis of color.
2
I
This is what Proposition 14 would not do to the Rumford
Act. But far more important is what Proposition 14 would do
2
to civil rights legislation other than the Rumford Act.
3
Four years prior to the enactment of the Rumford Act, the
Unruh Civil Rights Act (§§ 51 and 52 of the Civil Code) forbad
4
discrimination by "all business establishments of every kind
5
whatsoever." This statute has been interpreted by the Cali-
fornia Supreme Court to apply to the sale of houses by real
6
estate developers, to the rental of housing by most landlords,
and to the business of real estate brokers. The Unruh Act
7
also applies, of course, to most other businesses.
8
The second important point to be noticed about Proposition
C.
14 is that it would exempt the real estate business from the
anti-discrimination provisions of the Unruh Act. By forbidding
10
state laws from operating against any owner of real estate,
Proposition 14 would free landlords and real estate developers
11
not only from the Rumford Act, but also from the Unruh Act. It
12
would thus carve out an exception for the real estate business
from a civil rights law that continues to apply to other
13
business establishments "of every kind whatsoever."
14
The proponents of Proposition 14 have a legal.right to
seek a constitutional amendment achieving this result -- but,
15
it is vital that the people know about it. To call it a repeal
of the Rumford Act is to obscure the issue and mislead the
16
voter, for the Proposition would not repeal all of the Rumford
17
Act and would go far beyond it.
18
Lastly, Proposition 14 is not a referendum on anything.
The referendum petition circulated shortly after passage of
19
the Rumford Act failed for want of sufficient signatures within
20
the prescribed period. Proposition 14 is a constitutional
amendment that got on the ballot by the initiative procedure.
21
It would do far more than wipe out parts of a statute; it would,
if it accomplishes the purposes of its sponsors, forbid the
22
legislature from ever enacting any legislation that "shall
deny, limit or abridge, directly or indirectly, the right of
23
any person
to decline to sell, lease or rent such property
21
to such person or persons as he, in his absolute discretion,
chooses. (Italics added). Moreover, it would even prohibit
25
the courts from creating legal remedies for those who are hurt
by discriminatory actions of property owners. These are far
26
reaching steps, which the public should know about when it votes.
3
1
In summary, Proposition 14 is not accurately described by
2
such labels as "the anti-Rumford referendum," etc. It is not
a referendum, it is a constitutional amendment. It would not
3
repeal all of the Rumford Act, only part of it. It would not
be limited to the Rumford Act but would go far beyond it.
4
In our opinion, a short, accurate description is:
5
6
Proposition 14 would establish constitutional
immunity for those who discriminate in the sale
7
or rental of their property and would exempt
them from present and future fair housing laws.
8
9
Frank C. Newman
10
Richard C. Maxwell
Frank C. Newman
11
Dean, School of Law
Dean, School of Law
University of California
University of California
12
Los Angeles
13
Charles Janegas
14
Charles J. Meyers
Richard R. Powell
Professor of Law
Professor of Law
15
Stanford University
Hastings College of Law
San Francisco
16
17
18
Orrin Evans
19
Dean, School of Law
20
University of Southern California
Los Angeles
21
22
23
24
25
26
4
111
from this bill
Assembly Bill No. 1240
CHAPTER 1853
An act to repeal Part 5 (commencing with Section 35700) of
Division 24 of, and to add Part 5 (commencing with Section
35700) to Division 24 of, the Health and Safety Code, and to
add Section 1419.5 to, and to amend Section 1414 of, the
Labor Code, relating to discrimination in housing.
[Approved by Governor July 18, 1963. Filed with
Secretary of State July 19, 1963.]
The people of the State of California do enact as follows:
SECTION 1. Part 5 (commencing with Section 35700) of
Division 24 of the Health and Safety Code is repealed.
SEC. 2. Part 5 (commencing with Section 35700) is added
to Division 24 of the Health and Safety Code, to read:
PART 5. DISCRIMINATION IN HOUSING
CHAPTER 1. FINDINGS AND DECLARATION OF POLICY
35700. The practice of discrimination because of race, color,
religion, national origin, or ancestry in housing accommoda-
tions is declared to be against public policy.
This part shall be deemed an exercise of the police power of
the State for the protection of the welfare, health, and peace
of the people of this State.
CHAPTER 2. DEFINITIONS
35710. When used in this part:
1. The term "person" includes one or more individuals,
partnerships, associations, corporations, legal representatives,
trustees, trustees in bankruptcy and receivers or other fiduci-
aries.
2. The term "housing accommodation" includes any im-
proved or unimproved real property, or portion thereof, which
is used or occupied, or is intended, arranged or designed to be
used or occupied, as the home, residence or sleeping place of
one or more human beings, but shall not include any accommo-
dations operated by a religious, fraternal, or charitable asso-
ciation or corporation not organized or operated for private
profit; provided, that such accommodations are being used in
furtherance of the primary purpose or purposes for which the
association or corporation was formed.
- 2 -
- 3 -
3. The term "publicly assisted housing accommodation"
space within the household as an incident of employment
includes any housing accommodation within the State:
therein.
(a) Which at the time of any alleged unlawful discrimina-
CHAPTER 3. DISCRIMINATION PROHIBITED
tion under Section 35720 is granted exemption in whole or in
part from taxes levied by the State or any of its political sub-
35720. It shall be unlawful:
divisions; provided, that nothing herein contained shall apply
1. For the owner of any publicly assisted housing accom-
to any housing accommodations solely because the owner
modation which is in, or to be used for, a multiple dwelling,
thereof enjoys any type of tax exemption by virtue of his
with knowledge of such assistance, to refuse to sell, rent or
veteran status.
lease or otherwise to deny to or withhold from any person or
(b) Which is constructed on land sold below cost by the
group of persons such housing accommodation because of the
State or any of its political subdivisions or any agency thereof,
race, color, religion, national origin, or ancestry of such person
pursuant to the Federal Housing Act of 1949.
or persons.
(c) Which is constructed in whole or in part on property
2. For the owner of any publicly assisted housing accom-
acquired or assembled by the State or any of its political sub-
modation which is in, or to be used for, a multiple dwelling,
divisions or any agency thereof through the power of condem-
with knowledge of such assistance, to discriminate against any
nation or otherwise for the purpose of such construction.
person because of the race, color, religion, national origin or
(d) The acquisition or construction of which is, at the time
ancestry of such person in the terms, conditions or privileges
of any alleged unlawful discrimination under Section 35720,
of any publicly assisted housing accommodations or in the
financed in whole or in part by a loan, whether or not secured
furnishing of facilities or services in connection therewith.
by a mortgage, the repayment of which is guaranteed or in-
3. For any owner of any publicly assisted housing accom-
sured by the federal government or any agency thereof, or the
modation which is in, or to be used for, a multiple dwelling,
State or any of its political subdivisions or any agency thereof.
with knowledge of such assistance, to make or to cause to be
4. The term "owner" includes the lessee, sublessee, assignee,
made any written or oral inquiry concerning the race, color,
managing agent, real estate broker or salesman, or any person
religion, national origin or ancestry of a person seeking to
having any legal or equitable right of ownership or possession
purchase, rent or lease any publicly assisted housing accom-
or the right to rent or lease housing accommodations, and in-
modation for the purpose of violating any of the provisions
cludes the State and any of its political subdivisions and any
of this part.
agency thereof.
4. For the owner of any publicly assisted housing accom-
5. The term "discriminate" includes to segregate or sepa-
modation which is a single family dwelling occupied by the
rate.
owner, with knowledge of such assistance, to commit any of
6. The term "multiple dwelling" means a dwelling which
the acts prohibited by subdivisions 1, 2, and 3.
is occupied, as a rule, for permanent residence purposes and
5. For the owner of any dwelling, other than a dwelling
which is either rented, leased, let or hired out, to be occupied
containing not more than four units, to commit any of the acts
as the residence or home of three or more families living inde-
prohibited by subdivisions 1, 2, and 3.
pendently of each other. A "multiple dwelling" shall not be
6. For any person subject to the provisions of Section 51 of
deemed to include a hospital, convent, monastery, public insti-
the Civil Code, as that section applies to housing accommoda-
tution, or a building used wholly for commercial purposes
tions, as defined in this part, and to transactions relating to
except for not more than one janitor's apartment and not more
sales, rentals, leases, or acquisition of housing accommodations,
than one housing accommodation occupied by not more than
as defined in this part, to discriminate against any person
two families. The term "family" means either a person occu-
because of race, color, religion, national origin, or ancestry
pying a dwelling and maintaining a household, with not more
with reference thereto.
than four boarders, roomers or lodgers, or two or more persons
7. For any person, bank, mortgage company or other fi-
occupying a dwelling, living together and maintaining a com-
nancial institution to whom application is made for financial
mon household, with not more than four boarders, roomers or
assistance for the purchase, organization, or construction of
lodgers. A "boarder," "roomer" or "lodger" residing with
any housing accommodation to discriminate against any per-
a family means a person living within the household who pays
son or group of persons because of the race, color, religion,
a consideration for such residence and does not occupy such
national origin or ancestry of such person or persons, or of
prospective occupants or tenants, in the terms, conditions or
- 4 -
- 5
privileges relating to the obtaining or use of any such financial
(i) To render annually to the Governor and biennially to
assistance.
the Legislature a written report of its activities and of its
8. For any person to aid, abet, incite, compel or coerce the
recommendations.
doing of any of the acts or practices declared unlawful in this
35731. Any person claiming to be aggrieved by an alleged
section, or to attempt to do SO.
violation of Section 35720 may file with the commission a
verified complaint in writing which shall state the name and
CHAPTER 4. ENFORCEMENT
address of the person alleged to have committed the violation
complained of, and which shall set forth the particulars thereof
35730. The State Fair Employment Practice Commission
and contain such other information as may be required by the
created by Section 1414 of the Labor Code is empowered to
commission. However, no such complaint may be made or filed
prevent violations of Section 35720, after a verified complaint
unless the person claiming to be aggrieved waives any and all
has been filed with the commission pursuant to Section 35731.
rights or claims that he may have under Section 52 of the
35730.5. The commission, in connection with its functions
Civil Code and signs a written waiver to that effect.
under this part, shall have the following powers and duties:
No complaint may be filed after the expiration of 60 days
(a) To meet and function at any place within the State.
from the date upon which the alleged violation occurred. This
(b) To appoint an attorney, and such clerks and other em-
period may be extended for not to exceed 60 days following
ployees as it may deem necessary, fix their compensation within
the expiration of the initial 60 days., if a person allegedly ag-
the limitations provided by law, and prescribe their duties.
grieved by such violation first obtained knowledge of the facts
(c) To obtain upon request and utilize the services of all
of such alleged violation after the expiration of the initial 60
governmental departments and agencies.
days from date of its occurrence.
(d) To adopt, promulgate, amend, and rescind suitable rules
The State Fair Employment Practice Commission may there-
and regulations to carry out the provisions of this part.
upon proceed upon such complaint in the same manner and
(e) To receive, investigate and pass upon verified complaints
with the same powers as provided in Part 4.5 (commencing
alleging discrimination in housing accommodations, as defined
with Section 1410) of Division 2 of the Labor Code in the
in this part, because of race, religious creed, color, national
case of an unlawful employment practice, and the provisions
origin or ancestry.
of that part which are not inconsistent with this part as to the
(f) To hold hearings, subpoena witnesses, compel their at-
powers, duties and rights of the State Fair Employment Prac-
tendance, administer oaths, examine any person under oath
tice Commission, its chairman, members, attorneys or agents,
and, in connection therewith, to require the production of any
the complainant, the respondent, the Attorney General and the
books or papers at such hearings relating to any matter under
superior court, shall apply to any proceeding under the pro-
investigation or in question before the commission.
visions of this section. However, Section 1430 of the Labor
(g) To create such advisory agencies and conciliation coun-
Code shall not apply to this part, and the Attorney General
cils, local or otherwise, as in its judgment will aid in effectuat-
may not make, sign, or file a complaint under this part.
ing the purposes of this part, and may empower them to study
35732. (a) If such verified complaint alleges facts, directly
the problems of discrimination in all or specific fields of human
or upon information and belief, sufficient to constitute a viola-
relationships or in specific instances of discrimination because
tion of any of the provisions of Section 35720, the chairman of
of race, religious creed, color, national origin, or ancestry, and
the commission shall designate one of the commissioners to
to foster, through community effort or otherwise, good will,
make, with the assistance of the commission's staff, prompt
co-operation, and conciliation among the groups and elements
investigation in. connection therewith. If such commissioner
of the population of the State and to make recommendations
determines after preliminary investigation that probable cause
to the commission for the development of policies and pro-
exists for believing the allegations of the complaint, he shall
cedures in general. Such advisory agencies and conciliation
immediately endeavor to eliminate the alleged unlawful prac-
councils shall be composed of representative citizens, serving
tice by conference, conciliation, and persuasion.
without pay.
(b) If, after the preliminary investigation, probable cause
(h) To issue such publications and such results of investi-
does not exist for believing the allegations of the complaint, the
gations and research as in its judgment will tend to promote
assigned commissioner shall dismiss the complaint. Notice of
good will and minimize or eliminate discrimination because of
dismissal shall be sent to the respondent and the complainant
race, religious creed, color, national origin, or ancestry.
by registered mail-return receipt requested and the com-
- 6 -
- 7 -
plainant then shall have 15 days from the receipt day to file an
disclosure by an employee subject to civil service shall be CREEK
appeal to the dismissal.
for disciplinary action under the State Civil Service Act.
If the assigned commissioner fails to eliminate such alleged
35736. When an owner is contacted by the commission C
unlaw practice and believes probable cause still exists, he
commissioner, or 8 member of the commission's staff, he Birll
may issue and serve in the name of the commission, a written
be informed whether the contact is for the purpose of investr
accusation together with a copy of such complaint, as the same
gation or conference, conciliation, or persuasion; and if it
may have been amended, requiring the owner named in such
is for conference, conciliation, or persuasion, he shall be in-
accusation, hereinafter referred to as "respondent," to answer
formed that all matters relating thereto are privileged.
the charges of such accusation at a hearing.
35737. The commission shall without undue delay cause a
The written accusation, hearings, and all matters pertaining
copy of the verified complaint that has been filed under the
thereto shall be in accordance with the Administrative Proce-
provisions of this part to be served upon or mailed to the
dure Act, Chapter 5 (commencing with Section 11500) of Part
owner alleged to have committed the violation complained of.
1, Division 3, Title 2 of the Government Code, and the commis-
35738. If the commission finds that a respondent has en-
sion shall have all the powers granted therein.
gaged in any unlawful practice as defined in this part, the
35733. After a verified complaint has been filed with the
commission shall state its findings of fact and shall issue and
commission pursuant to Section 35731, and the preliminary
cause to be served on such respondent an order requiring such
investigation thereof has been carried out, or a 20-day period
respondent to cease and desist from such practice and to take
has elapsed from the filing of the verified complaint, if the
one of the following affirmative actions, as, in the judgment of
preliminary investigation has not then been completed, an
the commission, will effectuate the purpose of this part:
appropriate superior court may, upon the motion of the re-
(1) The sale or rental of the housing accommodation to the
spondent, order the commission to give to the respondent,
aggrieved person, if it is still available.
within a specified time, a copy of any book, document, or
(2) The sale or rental of a like accommodation, if one is
paper, or any entries therein, in the possession or under the
available, or the next vacancy in a like accommodation.
control of the commission, containing evidence relating to
(3) The payment of damages to the aggrieved person in an
the merits of the verified complaint, or to a defense thereto.
amount not to exceed five hundred dollars ($500), if the com-
The commission shall comply with such an order.
mission determines that neither of the remedies under (1) or
35734. The commission, at any time after a complaint is
(2) is available.
filed with it and it has been determined that probable cause
The commission may require a report of the manner of
exists for believing that the allegations of the complaint are
compliance.
true and constitute a violation of this part, may bring an
If the commission finds that a respondent has not engaged
action in the superior court to enjoin the owner of the prop-
in any practice which constitutes a violation of this part, the
erty from taking further action with respect to the rental,
commission shall state its findings of fact and shall issue and
lease, or sale of the property until the commission has com-
cause to be served on the complainant an order dismissing the
pleted its investigation and made its determination; but a
said accusation as to such respondent. A copy of its order shall
temporary restraining order obtained under this section shall
be delivered in all cases to the Attorney General and such
not, in any event, be in effect for more than 20 days. In such
other public officers as the commission deems proper.
action an order or judgment may be entered awarding such
Any order issued by the commission shall have printed on
temporary restraining order or such preliminary or final
its face references to the provisions of the Administrative Pro-
injunction in accordance with Section 527 of the Code of Civil
cedure Act which prescribe the rights of appeal of any party
Procedure.
to the proceeding to whose position the order is adverse.
35735. All matters connected with any conference, concili-
ation, or persuasion efforts under this part are privileged and
CHAPTER 5. MISCELLANEOUS
may not be received in evidence. The members of the commis-
sion and its staf shall not disclose to any person what has
35740. Nothing contained in this part shall be deemed to
transpired in the course of such endeavors to conciliate. Every
repeal any of the provisions of any other law of this State
member of the commission or its staff who discloses information
relating to discrimination because of race, color, religion,
in violation of this section is guilty of a misdemeanor. Such
national origin or ancestry.
8
35741. Nothing in this part shall be construed to affect the
title or other interest of a person who purchases, leases, or
takes an encumbrance on 1 housing accommodation in good
faith and without knowledge that the owner or lessor of the
property has violated any provision of this part.
35742. Nothing contained in this part shall be construed to
prohibit selection based upon factors other than race, color,
religion, national origin, or ancestry.
35743. As it is the intention of the Legislature to occupy
the whole field of regulation encompassed by the provisions of
this part, the regulation by law of discrimination in housing
contained in this part shall be exclusive of all other laws ban-
ning discrimination in housing by any city, city and county,
county, or other political subdivision of the State. Nothing
contained in this part shall be construed to, in any manner
or way, limit or restrict the application of Section 51 of the
Civil Code.
35744. The provisions of this part shall be liberally con-
strued for the purpose of effectuating the public policy con-
tained herein.
SEC. 3. Section 1414 of the Labor Code is amended to read
1414. There is in the Division of Fair Employment Prac-
tices the State Fair Employment Practice Commission. Such
commission shall consist of seven members, to be known as
commissioners, who shall be appointed by the Governor, by
and with the advice and consent of the Senate, and one of
whom shall be designated as chairman by the Governor The
term of office of each member of the commission shall be for
four years; provided, however, that of the commissioners first
appointed two shall be appointed for a term of one year, one
for a term of two years, one for a term of three years, and
one for a term of four years. The term of office of each member
of. the commission appointed pursuant to the 1963 amend-
ments to this section shall also be for four years; provided,
however, that of the two commissioners first appointed pur-
suant to the said amendments, one shall be appointed for a
term which shall expire September 18, 1966, and one for a
term which shall expire September 18, 1967.
SEC. 4. Section 1419.5 is added to the Labor Code, to read
1419.5 The commission is empowered to prevent discrimi-
nation in housing as provided in Part 5 (commencing with
Section 35700) of Division 24 of the Health and Safety Code
SEC. 5. If any provision of this act or the application
thereof to any person or circumstances is held invalid, such
invalidity shall not affect other provisions or applications of
the act which can be given effect without the invalid provision
or application, and to this end the provisions of this act are
severable.
Housing
STATE OF CALIFORNIA
RONALD REAGAN, Governor
OFFICE OF THE COMMISSIONER
BURTON E. SMITH
DIVISION OF REAL ESTATE
111 Capitol Mall
PB
Commissioner
Sacramento, California
12 April 1968
fin
The Honorable Ronald Reagan
Governor
State of California
Sacramento, California
Dear Governor:
The Rumford Act - Recommended Position
Issue:
What position should the Governor take, in the light of recent
developments, with respect to modification or repeal of the
Rumford Act?
Facts:
Federal open housing legislation has just been enacted. In
the backwash of the King assassination tensions are high. Al-
though it is not the major factor in racial tension, discrimi-
nation in housing does exist.
New federal legislation contemplates an aggrieved person avail-
ing himself of local and state relief, unless the coverage and
remedy is substantially weaker.
It is consistent with the Governor's position and with that of
many of his supporters that government should remain as close
to the people as is consistent with what needs to be accomplished
and which people cannot accomplish by themselves.
The Rumford Act stands as a symbol to minority groups in Cali-
fornia of the success of their leaders in the legislative arena
with respect to open housing.
Recommendations:
1. That the Governor should maintain his position that it would
not be appropriate to repeal the Rumford Act at this time.
The Honorable Ronald Reagan
-2-
April 12, 1968
2. That the Governor should conclude, as my analysis con-
cludes, that the Walsh Bill (S.B. 293), as presently
constituted, would alter California's open housing
statutes in such manner that under the new Federal law
an aggrieved party could bypass local controls and
petition the federal government, directly. Therefore,
in the light of current events, the Walsh Bill would
need substantial revision and should be set aside for
the time being.
3. That in recognition of the facts set forth above the
Governor should recommend that possible changes to the
Rumford Act be delayed until the 1969 session; that the
Governor should express his willingness, under such
circumstances, to appoint a special committee of leaders
of the housing and real estate industry, representatives
of minority and civic groups and his own staff. The
committee should be charged with the responsibility to
determine how California statutes should be revised to
cope most effectively with minority housing needs with-
out the necessity for the aggrieved to seek redress from
federal authorities and to minimize the difficulties for
those who are unable to find relief without seeking as-
sistance under the new federal statute. The charge to
the committee should call for a report to the Governor
by December 1, 1968, and should include a commitment by
the Governor to give full consideration to the report of
the committee, pointed toward the introduction of agreed
legislation at the 1969 session of the California Legis-
lature.
As you know, Governor, I am devoted to protection of historic
American property rights. In the light of our times I feel the
recommendations above would be the least divisive and most
likely to conclude the conflicts over minority housing next year
in an atmosphere of accommodation.
Respectfully submitted,
Burton E. Smith
Commissioner
FORM FOR USE BY THE SELLER OF REAL PROPERTY EXCLUDED FROM
OPEN OCCUPANCY LEGISLATION UNTIL THE EFFECTIVE DATE OF SUCH
LEGISLATION
The actual content of the form is to be established by regula-
tion of either the Real Estate Commissioner or the FEPC.
The form is to be completed by the seller, a copy attached to
each copy of the listing agreement, and a copy retained by the
real estate broker for three years.
The statute providing for this form would contemplate that the
form would include the following:
1) The name of the seller and the address of the property being
offered for sale.
2) Sufficient identifying information to tie the document to
the listing to which the form must be attached.
3) A declaration by the seller that he is aware of the exemption
provided him under federal legislation and that he desires
to restrict the sale of his property.
4) An affirmative declaration by the seller that this decision
is his own and that he is aware of those sections of Cali-
fornia law which refer to the public policy of this State
as it relates to discrimination in housing.
5) The form would also include some excerpts from applicable
California statutes.
6) The form would include a provision for a termination date
consistent with the expiration of the listing agreement
with the broker, and in no event could the restriction
continue beyond the effective date of the abolition of the
exemption claimed under federal open occupancy legislation.
7) The form would also provide for the signature of the broker,
who would sign under penalty of perjury that the restric-
tions imposed by the seller were not as a result of any
inducement by him either overt or covert.
4/22/68
CONFIDENTIAL
PROPOSED TOPICS FOR DISCUSSION
WITH GOVERNOR REAGAN AND HIS ADMINISTRATIVE STAFF,
COMMISSIONER BURTON E. SMITH, ROBERT W. KARPE, PRESIDENT,
CALIFORNIA REAL ESTATE ASSOCIATION, AND H. JACKSON PONTIUS,
EXECUTIVE VICE PRESIDENT, CALIFORNIA REAL ESTATE ASSOCIATION
Monday, April 22, 3:30 p.m.
State Capitol
I.
EQUAL RIGHTS CREA has sponsored for several years an Equal
Rights Program as an educational means to encourage the
availability of housing to all people regardless of race,
color or creed. Emphasis this year has been for voluntary,
peaceable, equal opportunity and fair housing.
II.
LEADERSHIP MEETINGS CREA is anxious to meet with as many
leaders of minority groups, and others, in order to create
greater communication in the field of housing. Our leaders
are hopeful that the problem will disappear when there are
negros in all neighborhoods.
III.
A FILM IN COLOR is proposed for development by CREA for
communication purposes to encourage an understanding of the
law, property owner, and the rights of individuals. The
rights of (all) individuals (on both sides). The problem
we wrestle with is public acceptance of the minority individual.
This film would courage voluntary acceptance of negros in all
housing. QUESTION: In what way can the Governor suggest
support for such a CREA activity?
IV.
CALIFORNIA HOUSING LAW (Rumford and Unruh) must now be
reviewed in light of the recently passed Federal Act an
educational program will be developed by CREA to clarify the
responsibilities of Real Estate Licensees under these laws
and to continue to provide leadership to its implementation.
Assuming the Rumford Act is a symbol that should not now be
tampered with, how can we free, in the future, the property
owner from government control? The Association wishes to
support the administration and our position in this regard
should be reviewed.
HOUSING BILLS
file
SB 293 - Walsh, Burns, Collier, Cusanovich & Whetmore, Cologne
Marler, Schrade, Richardson & McCarthy -
Creates 5 "man Fair Housing Commission to encourage open housing, investigate alleged dis-
crimination, and take affirmative action to educate and foster understanding. Commission
also empowered to mediate housing discrimination complaints. They can exert persuasive
power only. Commission has no coercive or injunctive powers. Does have subpoena powers.
Any owner (except State or redevelopment) would have complete freedom in sale or rental of
his property (regardless of number of units) but it would be illegal for him to interfere
in sale or rental of someone else's property, (including single family).
Where owner discriminates in sale or rental of his own property, aggrieved person can file
verified complaint and seek mediation with Fair Housing Commission.
Where state agency discriminates or private person interferes in sale or rental of someone
else's housing property, the courts would have jurisdiction to enjoin or award damages.
Preempts housing discrimination field and prevents overlapping regulation by local gov't.
and Unruh Act.
Realtor could not encourage discrimination but he could legally accept restrictive or
discriminatory listing from owner.
Eliminates enforcement by FEPC in housing area and transfers housing portion of their budget
allocation to new commission.
SB 319 - Schmitz, Schrade, Bradley, Richardson, Coombs, Cusanovich
and Whetmore -
1. Repeals Rumford.
2. Cuts FEPC from 7 to 5 members.
3. Prevents Unruh Act overlap into housing.
AB 217 - Wakefield, Badham, Briggs, Burke, Campbell, Collier,
Conrad and Moorhead -
1. Repeals Rumford Act.
2. Reduce FEPC from 7 to 5 members,
3. Doesn't cover Uhruh Act overlap into housing.
SENATORS
ASSEMBLYMEN
NICHOLAS C. PETRIB
FRANK HOLOMAN
ELEVENTH DISTRICT
VICE CHAIRMAN
MILTON MARKS
California Tegislature
SIXTY-FIFTH DISTRICT
NINTH DISTRICT
WILLIAM T. BAOLEY
BEVENTH DISTRICT
PETER R. CHACON
MICHAEL J. DEVIER
SEVENTY-NINTH DISTRICT
ROBERT N. KLEIN, JR.
Joint Committer m Community
CONSULTANTS ON
HOUSING NEEDS
Deuelopment and Housing Needs
ROOM 1061, STATE BUILDING
350 MCALLISTER STREET
SAN FRANCISCO, CALIFORNIA 94102
TE. EPHONE: (415) 557-0818
GEORGE N. ZENOVICH
BIXTEENTH DISTRICT
CHAIRMAN
MEMORANDUM
April 17, 1974
To:
Don Livingston
From:
George B. Beattie, Principal Consultant, Assembly
Committee on Urban Development and Housing
Michael J. BeVier, Consultant on Housing Needs
Robert N. Klein, Jr., Consultant on Housing Needs
Joint Committee on Community Development and
Housing Needs
Subject:
The California Housing Finance Corporation
INTRODUCTION
/
The California Housing Finance Corporation is an entity which
would provide low-cost. financing to assist the "forgotten
Californians" who, by virtue of hard work, earn a moderate income
which, after taxes, is too high for them to qualify for federal
subsidies, but too low to enable them to rent or own a decent home
for their families.
EXISTING STATE ASSISTANCE PROGRAMS
The goal to provide decent housing for all Californians is one
very deeply rooted in our national and state programs. The major
assistance program to provide decent quality housing is the interest
and property tax deduction on personal income tax returns at the
state or federal level. Generally this benefit flows to middle and
upper income families and individuals. In 1972, the State of
California provided an estimated indirect assistance of $239 million
through such deductions. The average tax savings for the individual
earning $30,000 or more was $450, while the average tax savings for
the individual or family earning $16,000 was $94. In recognition
of our basic values, we must admit that the indirect assistance through
the state income tax plays a helpful role in insuring quality housing
for California citizens, but it points out that moderate and low
income individuals and families have been relatively ignored. Even
the Veterans Home Loan Program principally serves middle-income (or
upper-moderate) citizens because of high down payment requirements.
-2-
A concern for equity requires some basic balance in the state's approach
for those who need assistance most are presently receiving the least
assistance. The creation of a California Housing Finance Corporation
could bring a greater measure of equity to our state programs and
honor the basic American philosophy of providing decent housing for
all.
A PUBLIC CORPORATION
The concept of a public corporation for housing finance is unique
from any proposal which thus far has been placed before the Legislature.
It does not create a large bureaucratic agency in Sacramento to provide
housing services and it bears no resemblance to FHA or the federal
Department of Housing and Urban Development. It empowers a public
corporation to raise capital through issuance of tax-exempt securities
for the purpose of financing new construction, rehabilitation and
resale of rental and homeowner units: The proceeds from the sale of
such securities will not be loaned directly to mortgagors, but made
available to savings and loan associations, banks, mortgage bankers
and local public entities whose expertise in mortgage lending is
utilized for both the origination and servicing of the loans. By
emphasizing the use of private enterprise in this manner, the Corpora-
tion will require only a small staff of highly professional personnel.
FINANCIAL SELF-SUFFICIENCY
The Corporation will be financially self-sufficient. Its basic
financing will be provided by a proposed issue of $500 million in
general obligation bonds to be placed on the November 1974 ballot
for voter approval. These bonds would be self-servicing with loan
repayments fully covering bond payments; the general fund would only
be drawn upon in an emergency. Start-up expenditures would be covered
by an initial loan from the general fund of $750,000 and the arbitrage
on bond proceeds which are invested in taxable securities between the
time they are received and the time they are committed to a loan is
more than sufficient to cover administrative expenses and repay the
loan to the state. The experience with this type of program in other
states has resulted in outstanding records. With over 120,000 units
produced with state assistance in this country, there has never been
an instance in which the mortgage payments were not sufficient to
service the bonds issued to finance those mortgages.
One of the most appealing aspects of this corporate concept is
its financial independence and stability. It is created to be inde-
pendent of state appropriations and therefore has enforced upon it
the same financial and managerial discipline imposed by a private
corporation which depends on wise reinvestment of its capital funds.
The corporation is managed by a Board of Directors appointed in nearly
equal shares by the Governor, the President pro Tempore of the State
Senate and the Speaker of the Assembly. The Board will hire executives
to perform day-to-day management of the corporation and a proposed
constitutional amendment which is part of the legislative package
would exempt all of the corporation's employees from the civil service.
-3-
IMPETUS FOR CREATION
The impetus behind the creation of the California Housing
Finance Corporation comes from two sources. First are the statistics
gathered by the Census Bureau which imply the existence of substantial
amounts of indecent housing in the state. Second is the substantial
amount of assistance which this corporation can provide in helping a
moderate income family to obtain better housing.
1. Statistics on Housing Need
There are three normally acceptable criteria of housing need:
a) structural quality; b) overcrowding; c) financial availability.
Each of these criterion are defined below and followed by a summary
of statistics reflecting housing need in California.
Structural Quality: The accepted method of judging housing
quality used by the Census Bureau, the Department of Housing and
Urban Development (HUD), as well as the California Department of
Housing and Community Development (HCD), is to classify it as either
standard or substandard. The California HCD includes under sub-
standard housing those units which (1) lack plumbing facilities such
as running water or a flush toilet, (2) are so structurally dilapidated
that it is more economical to demolish and reconstruct rather than
repair, or (3) can be repaired, but require substantial structural
rehabilitation.
In 1960, the Census Bureau counted 735,000 substandard units in
California. Based on local surveys of housing starts and the Census
Bureau's "Components of Inventory Change" study conducted in 1970, the
amount of substandard housing in the state has increased since 1960.
The California Statewide Housing Element estimates that a minimum of
300,000 units in the state are in such a severly dilapidated condition
that they need to be replaced and another 700,000 require major rehab-
ilitation.
Overcrowding: The Census Bureau uses the generally accepted
definition of an overcrowded housing unit as one which is occupied at
a density of more than one person per room.
According to the 1970 Census, there are slightly over 500,000
households living in overcrowded units in California. The average
size of such households is 6.29 persons resulting in 3,177,000 persons
in the state, or 16% of the 1970 population, living in overcrowded
housing. This burden is not spread evenly through the population,
but affects disproportionately minority ethnic groups such as blacks
and Spanish-Americans. Possibly the most significant is that a large
percentage of those living in overcrowded housing are children. A
statistical example is that 51.5% of all Spanish-American children in
the state live in overcrowded housing.
Financial Availability: Measurement of the ability of households
in the state to afford decent housing presents complex problems. The
most that can be done here is to provide several statistics which
merely sketch the problem of financial availability.
One million households, or 19% of all California households, have
total annual incomes under $3,000 according to the 1970 Census.
The appropriate percentage of income to be spent on housing by low
and moderate income families, according to HUD and the Bureau of Labor
Statistics, is approximately 25% of adjusted gross or 20% of gross
income. One million low income households must therefore find decent
housing which costs no more than $63 per month. General familiarity
with rents in California suggests the difficulty.
A comparison between the number of households eligible for feder-
ally subsidized housing and the number of subsidized housing units
available in the state indicates the shortage of low income housing.
Approximately 37% of all renter households in the state have incomes
below the maximum eligibility requirements for public housing. The
number of public housing units in the state in 1973 was sufficient to
house only 6% of this 37%.
A state study (SHE) also showed 800,000 California households--
12% of all California households to be eligible by income for federally
assisted moderate income housing. Less than 10% of those eligible are
presently living in assisted housing.
2. Who Can a California Housing Finance Corporation Aid?
Whether the housing problem is one of quality, overcrowding or
financial availability, a California Housing Finance Corporation could
generally serve only the moderate income group. This income group is
defined basically by federal standards for Section 236 housing. on
a
state average, the incomes would go from one person with a maximum
income of $5,800 per year to eight persons with a maximum income of
$11,800 per year. High cost areas like San Francisco would have some-
what higher maximums going to perhaps $15-16,000 per year.
The federal government has chosen to concentrate its efforts on
the low income range. By: abandoning the moderate income housing programs
and concentrating on the Section 23 leasing program for low income
families and individuals, the federal government has left to the states
the task of providing for that moderate income group which can be
efficiently reached through a public corporation of the kind proposed.
The federal decision may in part have been based upon the realization
that their moderate income programs in the United States were running
10-15% foreclosure rates while state housing finance agencies in exis-
tence for more than ten years have built 120,000 units of housing for
moderate income persons with no foreclosures. State programs with
state supervision have proved to be incomparably more effective in
serving the needs of moderate income individuals in this country than
have federally administered programs.
To demonstrate quickly the need of the moderate income family or
individual, examples of housing costs in the Fresno, Livermore, and
San Francisco/Marin County areas will be used. These examples represent
three different cost ranges within the state.
Fresno: The lowest price single family, new construction develop-
ment in Fresno sold for approximately $22,000 in the first months of
1974 (2 bedrooms). Assuming a 95% loan at 8½ for 30 years, figures
below show the minimum income required to purchase such a unit.
-5-
Example:
Sale price (2-bedroom)
$22,000
Down payment (5% minimum)
1,100
Loan (95%)
$20,900
30 years at 8½; $160.71 monthly
Taxes of $687.50; $57.30 monthly
Insurance
at
$7.00 monthly
Utilities
at
$27.00 monthly (includes water & garbage)
$252.00 monthly payment
Lender requires 4:1 ratio of income to monthly payment.
$252 X 4 = $1,008 montly income or $12,096 per year minimum
income to purchase the lowest price, 2-bedroom unit available.
Assuming the minimum priced 2-bedroom existing unit of standard
quality would be $14,600, the minimum income to qualify would be
$8,424.*
The U.S. Bureau of Labor Statistics set up an ascribed minimum
budget for a family of four living in California during the autumn
of 1972. That total budget was $7,691.' Adjusted by 12% to bring it
current for the fall of 1974, the amount needed for a family of four
would be $8,613. This is very close to the minimum needed to pur-
chase an existing house in Fresno with conventional financing.
The monthly housing cost for purchasing an existing $14,600
dwelling in Fresno would be $166.32 with utilities, or $1,995 per
year for housing costs. However, the minimum budget requirement for
a family of four only allows $1,880 per year (21% of the family
budget) for housing expenses (after an adjustment for inflation). The
family using a minimum budget and earning $8,613 per year, therefore,
cannot actually afford to pay the monthly housing costs necessary to
purchase an existing dwelling. The Bureau of Labor Statistics budget
goes on to say that given that the family pays no more for its housing
than $1,880 per year, the food budget is already so low that it is
estimated that only about 1/4 of those who spend amounts equivalent to
the cost of this food purchase plan actually have nutritionally adequat
diets. In the transportation category, the budget assumes that only
1/2 of the families will own cars, that those cars will be' about 8 year
old, and no allowance was made for repairs. Clearly the family has no
room for economies and has a family budget which is already under
intense strain. Housing costs for this moderate income family must be
reduced if adequate budgets are to be left for other essentials such as
food, transportation and medical care.
The hypothetical family for whom the Bureau of Labor Statistics
budget was designed included a 38-year old employed man, a woman not
employed outside the home, a 13-year old boy and an 8-year old girl.
This typical taxpaying family which is neither rich nor poor could
not afford decent housing today in a relatively low cost area such as
*
Current utility estimates with an 18-month horizon are $27/month
for a 2-bedroom home (assuming a family of four).
-6-
Fresno, and their plight is even more severe in areas such as
Livermore and San Francisco.
HOUSING ACCESS WITH A HOUSING FINANCE CORPORATION
Given that a California Housing Finance Corporation existed,
the maximum net interest cost to the purchaser, under general obli-
gation bond financing, would be 6% including all origination and
servicing fees to private lenders providing those services. On the
construction loan, also handled through a "qualified mortgagee", the
savings would be about $400 in interest cost because of 4% yields
being paid on short term bond anticipation notes. The net construction
interest would run nearly 4.5% when fees were added; the $400 savings
reflects the net savings after fees.
The impact of these savings on the same $22,000 home can best be
illustrated by the following example:
Example:
Sale price (2-bedroom)
$21,600
($400 construction
Down payment (5% minimum)
1,080
interest savings)
Loan (95%)
$20,520
40 years at 6%; $112.90 monthly
Taxes at $675; $56.25 monthly
Insurance at $7.00 monthly
Utilities at $27.00 monthly (includes water & garbage)
$203.15 monthly payment
Lender requires 4:1 ratio of income to monthly payment.
$203.15 X 4 = $812 monthly income or $9,768 yearly income.
The qualifying income is reduced from $12,094 to $9,768
because of $400 in construction interest savings and
approximately $48 per month savings in principal and
interest.
Assuming again that the minimum priced 2-bedroom existing unit
of standard quality would be $14,600, the minimum income to qualify
would be $7,265.76.*
As the following examples will show, the moderate income group
from $8,500 to $14,500 is the sole beneficiary on new or existing
single family, except in a few rural or central valley low cost areas.
Although apartment housing costs will not be reviewed herein, new
construction apartments in Fresno under FHA are running $19,000 for a
2-bedroom unit and rehabilitated units cost about $14,000. This leaves
the income range served at between $7-14,000 (Central Valley area).
The only low income Californians who could be reached in signif-
icant numbers are the elderly. With a 100% tax exemption for elderly
*
Monthly income $605.48 = 4 X $151.37 monthly housing payment
($80.75 principal and interest; $38.02 taxes; $6.00 insurance;
$27.00 all utilities).
-7-
housing projects owned by non-profit corporations, aged singles or
couples in the $4,000 to $5,000 annual income range could be reached.
(This assumes studio or 1-bedroom apartments; the elderly/non-profit
tax exemption is available under existing law.)
Low income families could not be housed under this program
without federal subsidies. The needs of the low income family must
continue to be met by units leased under the federal Section 23
programs.
Livermore: In Livermore, the lowest price single family, 2-
bedroom home is selling for about $27,000 to $28,000. Taking the
correct minimum to be $27,000, a total monthly payment of $297 would
be necessary at 8½/30 years for a 95% loan of $25,650. At 6% for
40 years, adding in savings from the lower construction interest,
the purchaser's payments would be $58 a month less, requiring a
yearly income of $11,510 to qualify; at market rate financing with
the $297 monthly payment, a yearly income of $14.294 would be needed
to qualify.
San Francisco/Marin: San Francisco shows a minimum 2-bedroom
apartment cost of $35,000 even with a redevelopment agency land
writedown, and Marin County has a minimum price for a 2-bedroom town-
house of $29,000. Single family homes are selling for $35,000 and up.
Using the $29,000 figure, with a 95%/30-year loan at 8½, one
has a $318.20 monthly payment which requires a minimum annual income
of $15,273.50. The minimum income to qualify is reduced with 6%
financing -- a $64 a month savings* - to $12,228. These same figures
apply to existing 2-bedroom homes in San Francisco, in the lowest
income areas. Except for an extremely depressed high crime neighbor-
hood, even the low income areas do not have older existing single
family residences available for less than $27-29,000.
ECONOMIC IMPACT
A significant impact which creation of the Corporation would
have on California is the additional capital investment which it may
attract. To the extent that the Corporation's securities are sold
out-of-state to investors who would not otherwise have invested
within California and to the extent that in-state investors purchase
these bonds with money that would have been invested out-of-state,
the Corporation results in additional capital investment in California.
While the extent of impact is difficult to anticipate, the experience
of Michigan may be indicative. The Michigan State Housing Development
Authority finances approximately $200 million annually. A study by
Applied Decision Systems, Inc. concluded that the $200 million in
mortgage financing would, in addition to creating 12,100 new housing
units, generate the following:
$7 million in state tax revenues;
$4 million in local property tax revenues;
$183 million in receipts to general building contractors;
$165 million in receipts to special trade contractors;
$85 million in sales for wholesalers and distributors of
* Including construction interest saving.
-8-
building materials; and
15,900 jobs in all industry sectors.
These figures represent only the primary and direct positive
impacts on the state economy and do not include an estimate of the
multiplier effect of additional investment. Such estimate requires
an input-output analysis from which the velocity of money within the
economy can be determined. Application of national multiplier factors
is inexact, and it will suffice here to indicate that the estimate of
primary impact is conservative and multiplier effects may result in a
total impact that is several times greater.
BONDING CAPACITY
Moody's Investor Service bond credit report on California for
1972 noted that total bonds issued were $5,294,529. To derive the net
*
direct debt load on the state, Moody's then subtracted out $2,774,264
in harbor, veterans, and water bonds arriving at a net direct debt
load of $2,520,265. Their analysis explains that these bond issuances
are self-supporting from revenues (loan repayment, harbor fees, etc.)
and therefore must be deducted out before figuring any direct debt
load figures. It is critical that it be understood that such self-
supporting programs do not significantly influence the credit rating
of the state.
It is also important that one realize that the State has com-
pleted or neared completion on several major bond financed projects
which will, therefore, not create future recurring demands. The
State Water Project is far advanced and although $200 million remains
in unissued but authorized authority, many of the major projects have
neared completion and projected issuances for the next few years seem
to be in the $20 million a year range. Of the $150 million author-
ization for clean water bonds providing money for sewage treatment
plants, etc., $100 million will have been used by July 1, 1975. Of
the $200 million in revenue authority authorized for pollution control
issuance, all of this authority shall be exhausted in the fiscal year
1974-75. By the end of fiscal 1974-75, two-thirds or $200 million of
the $325 million authorized for school earthquake rehabilitation
assistance will have been utilized. Finally, falling enrollment pro-
jections in the state public higher education system would appear to
indicate a lower use of bond authorities by the state for higher
education.
With these major programs having expended the bulk of the funds
authorized, the state is in an excellent position to enter a major
new program area, such as housing finance assistance, without under-
mining its credit. Were the general obligation bond authority for
housing to come on line in 1975-76, one would expect a $100 million
maximum issuance in that year of general obligation bonds, with a
$200 million plateau (maximum) being reached and sustained for the
following years. At the $200 million per year maximum plateau, the
housing programs would just match the water bond issuance levels in
1970-71 and 1971-72 at $200 million and $190 million respectively.
Between 1964 and 1971 fiscal years, the State of California sold
$1,550,000,000 in general obligation bonds for the California Water
Should be billions; add three zeroes.
-9-
Project with no evident impairment of California's credit. For
several consecutive years, the issuances were above $200 million
per year reaching $300 million at one point. The success of the
California Water Project bond sales appears to be strong evidence
that California can undertake a major housing finance program
without undermining its bond credit rating.
The State Treasurer's Office projects $742,000,000 in bonds
to be issued in 1974-75 and $880,000,000 in 1975-76, without any
bonds for a Housing Finance Corporation. These figures assume new
authorizations of issuances for a number of specific projected or
existing programs which will have exhausted any existing authority
by that time. Even adopting the assumption that all these new
authorizations will be approved by the voters or Legislature
(revenue bonds), the total issuance in 1974-75 would only be raised
to $842,000,000 and to $1,080,000,000 in 1975-76 by projected sales
of a California Housing Finance Corporation. These levels relate
proportionately to the $721,175,000 issued as far back as 1970-71.
In the last decade, personal income (one of the principal rating
factors in evalutating state credit*) in California has grown at an
average rate of 10% a year. Based on a proportional rate in bonding
capacity, a proven capacity of $721,000,000 in 1970-71 should sub-
stantiate issuances of $1,161,177,000 in 1975-76 (compare to pro-
jection with California Housing Finance Corporation bonds of
$1,080,000,000). It must be noted also that in 1972 the state's
credit rating was raised from AA to AAA. This tends to indicate that
the state issues in 1970-71 of 721,000 or of $1,045,000,000** in 1971-
72 did not subject the state's credit capacity to a heavy strain.
BASE OF SUPPORT
Because the proposed California Housing Finance Corporation
legislation (SB 1633/AB 2966) abandons a direct lending model of pre-
vious legislation and structures the program for lending through
"qualified mortgagees", the private financial structure of California
now enthusiastically supports this legislation in principle. The
California Savings and Loan League recently made the historic switch
from opposing and state involvement in residential financing to offi-
cially supporting a State Housing Finance Corporation. The Mortgage
Banker's Association also strongly endorses this legislation; but
the Banker's Association is neutral. Merrill Ring, Vice President
of the Bank of America Securities Division, reportedly favors the
state role, but wants direct lending by the state. His position of
extreme liberalism has strongly influenced the Banker's Association's
reluctance to take a position on the more conservative approach of
the California Housing Finance Corporation bills which provide the
very central role for private enterprise in the lending and servicing
activity.
*
Other credit rating factors have shown a similar growth path.
$630,000,000 in long term issues and an average of approximately
$170,000,000 continually outstanding in short term revenue
anticipation notes.
-10-
Besides backing from the private lenders, listing all the
particular organizations in support would be too time consuming
since more than 50 groups in the Los Angeles basin alone have
endorsed the concept; however, the largest most active backing
has come from the following:
1) League of Women Voters
2) California Builders Council
3) The League of California Cities
4) The Urban Coalition, chapters lead by the Los Angeles unit
5) The California Labor Federation
6) California Bar Association, lead by the Los Angeles and
American Bar Association Joint Committee on Low and Moderate
Income Housing
7)
California Chapters of the National Association of Housing
and Redevelopment Officials
8) The California Real Estate Association appears to be
breaking into several factions -- some in support, but
generally neutral.
9) Private mortgage insurance companies
10) Association of Bay Area Governments
11) In principle, the Southern California Associated Govern-
ments -- no formal vote has been taken at this time.
12) Numerous public interest and consumer groups.
Michael J. BeVier
Consultant on Housing Needs
Robert N. Klein, Jr.
Consultant on Housing Needs
George B. Beattie, Consultant
on Urban Development & Housing
MJB : RNK : GBB : mw
The following low income budget for an urban family of four
in California is based upon the Bureau of Labor Statistics data
for autumn, 1972. Four SMSA's in California Bakersfield, Los
Angeles/Long Beach, San Diego, and San Francisco/Oakland -- were
used to determine an average low income budget for California.
The family of four includes a 38-year old employed man, a
woman not employed outside of the home, a 13-year old boy and
an 8-year old girl. The budget assumes that the family is well-
established and has average inventories of clothing, house-
furnishings, major durables, and other equipment.
TOTAL BUDGET:
$7,691
Expenditures for
Food
$2,045
(26% of total budget)
Costs for food are based on USDA low cost food plan which
has larger quantities of foods like potatoes, dry beans and
peas, flour and cereal, and smaller amounts of meat, poultry
and fish, and fruits and vegetables other than potatoes than
do the budgets for intermediate and higher income levels.
It has been estimated that only about 1/4 of those who spend
amounts equivalent to the cost of the USDA plan actually have
nutritionally adequate diets.
Housing
$1,679
(21% of total budget)
This allows for rental housing only and approximately $139
a month for an "unfurnished, 5-room unit (home or apartment)
in sound condition; a complete private bath; fully equipped
kitchen; hot and cold running water; electricity; central or
other heating; access to public transportation; schools, gro-
cery stores, play space for children; and location in a
residential neighborhood.' Included in this amount are costs
for furnishings and operations, such as heating fuel, gas,
electricity, water, insurance on household contents.
Clothing $ 716
(9% of total budget)
This provides approximately $167 a year for each family member,
or about $14 a month per family member for essential replace-
ment clothing (coats, shoes, sweaters, etc.). It is assumed
that the family members have a basic inventory of clothing.
The quality of items in the lower income budget is likely to
to lower than that in the intermediate or higher income budgets
developed by the Bureau. The amount includes cleaning and shoe
repair services.
Transportation
$ 769
(10% of total budget)
Assumes that over ½ of the families will own cars that are
about 8 years old. The mileage allowance was less than for
intermediate and higher income level budgets, as was the
allowance for repairs. No comprehensive insurance allowed
for, and no out of town travel on planes, trains or other
public vehicles was specified.
Medical Care
$ 726
( 9% of total budget)
Includes family membership in a group hospital and surgical
insurance plan, visits to doctor, dental and eye care and
drugs. Expenditures lower at this income level because
families will either defer needed treatment or get it in
free clinics.
Personal Care
$ 202
( 2% of total budget)
For haircuts, beauty shop, supplies such as toilet soap,
toothpaste, shaving cream, kleenex, shampoo, etc. Approx-
imately $4 per month per person.
Other Family Consumption $370 ( 5% of total budget)
Includes costs for reading, recreation, tobacco (not cigarettes),
alcohol, education and miscellaneous expenses.
Other Items
$ 374
Includes allowances for gifts, contributions, life insurance,
and occupational expenses.
18% of
total
Social Security &
budget
Disability Payments
$475
Personal Income Taxes $548
5/7/74
HOUSING
BOON OR BOONDOGGLE
For several years the California Legislature has had under consideration
a number of bills proposing that State government enter the field of providing
various forms of assistance to "low and moderate-income people" in the area of
housing. Those proposals have been predicated on the following assumptions:
1. That there is an inadequate supply of acceptable housing in
California within price ranges that can be afforded by those
mentioned above;
2. That private industry is incapable of solving this problem; and
3. That the use of state resources is the only remaining alternative
available.
Reports released by this administration and prepared by the Department of
Housing and Community Development outlined the arguments just advanced. On all
previous occasions this administration has reacted negatively to the bills passed
or proposed. As we see it, there are three alternatives:
1. To deny that the problem, as detailed above, exists;
2. Accepting that a problem exists, but that there is no State role; or
3. Accepting that a problem exists, and agreeing there is a legitimate
role for the State to play.
At this point we would be hard pressed to deny the problem. It would be
virtually impossible to publicly argue that people are not having trouble buying
a home. With the present federal thrust, we need to do some homework to select
option #2, and the pressure continues to mount for option #3. We would like the
opportunity to draw upon the Department of Finance and our own staff to come back
to cabinet with either the 2nd or 3rd option for a decision. The arguments which
we find most persuasive are:
- 2 -
1. "The inflationary spiral has made it almost impossible for many
of our citizens to qualify for the purchase of a home, new or
used. The soaring costs of land, labor, materials and money have
priced many moderate-income families out of the home buying market
In each of the above needs, the private sector has not been able to
solve the problem." (C. Larry Hoag, President, California Real
Estate Association.)
2. Over the past several years, both the executive and legislative
branches of the federal government have indicated their desire to
alter the character of federal housing grants-in-aid programs by
delegating the responsibility and funding authority to state and
local units of government. The Nixon administration favors less
restrictive funding mechanisms, those which granted states and
local units of government the flexibility to design and implement
programs of their own choosing. In the area of housing, the emphasis
has been placed heavily upon state involvement, particularly in the
area of housing finance, for moderate-income families and individuals.
In the absence of state assumption of responsibility, it has been
made clear that problems simply cannot be solved by the private sector
acting alone.
3. Federal monetary policy, in an effort to halt inflation, traditionally
affects most adversely the housing and construction industry and the
purchasers thereof. On this issue, Business Week magazine reported
that actions by the Federal Reserve Board "would be more
tolerable if monetary policy hit every sector of the economy
with equal force. But it does not. In reducing the available
supply of money, or increasing the cost of money, or some
- 3 -
combination of both, the Fed tries to damp economic activity
by squeezing people out of the financial markets. It is the
nature of these markets that the process hits hardest those
with the weakest claims on the money that is available. The
housing market is invariably hit first, followed by state and
local governments (which are often limited in what they can pay
to borrow), small business, and the stock market. The Fed's
ultimate target may be consumer or capital spending, but consumer
loans reward banks handsomely, and big corporate borrowers usually
have long, close ties to their banks. Both groups are the last to
feel the rigors of tight money, and policy has to be made very tight
before either group feels the pinch at all." (Oct. 6, 1973, p. 103)
In conclusion, the problem as discussed above can best be summed up in these
words of George McKeon: "My first inclination and thoughts run much in tandem
with the Governor's, that being, is there a need for more government, and why can't
the private sector respond to these challenges? Times and conditions cause me to
look at this posture in a slightly different manner than I would have even as
short as three to five years ago and I assure you that when we see on the
horizon that money is beginning to tighten and its availability pinched, we begin
to build for those of our state who are most able to buy, who can arrange the
credit, and who can qualify. This means that our normal thrust of supplying
housing at the $17,000 to $23,000 per unit level is obviated."
BASE OF SUPPORT
California Savings and Loan Association
California Mortgage Bankers Association
League of Women Voters
California Builders Council
League of California Cities
Urban Coalition
California Labor Federation
California Bar Association
California Chapters-National Association of Housing and Redevelopment Officials
California Real Estate Association
Private Mortgage Insurance Company
Association of Bay Area Governments
Southern California Associated Governments
Numerous Public Interest and Consumer Groups
1
CALIFORNIA ANNUAL
HOMEOWNER'S ASSISTANCE
$239,265,000
Cost to State Treasurer
Deduct for interest on Home Mortgage
Payments and Home Property Tax Deduction
2
CALIFORNIA MAIN
HOUSING ASSISTANCE PROGRAM
(State income tax deductions)
Hundred of
dollars savings
500
450
400
350
300
250
200
150
100
$4,000-
$13,000-
$31,000-
7,000
16,000
over
3
FINANCIAL SELF-SUFFICIENCY
Record of State
Housing Finance Agencies
120,000 units financed with debt service
requirements of all bonds being met on time.
4
SELF SERVICING BONDS
Proposed $500M. G.O. Bond Issue:
Voter approval on November 1974 ballot
Mortgage revenues cover cost of retiring bonds plus
a reserve fund so State General Fund shall not be
drawn upon.
5
STATISTICS ON HOUSING NEED
a. Structural Quality
b. Overcrowding
C. Financial availability
6
SUBSTANDARD HOUSING IN CALIFORNIA
HAS INCREASED SINCE 1960
1960 - 735,000 substandard units in California
1970 - 1,000,000 substandard units in California
1970 - 300,000 of the 1,000,000 SO severely dilapidated
they must be demolished.
7
CHARACTERISTIC OF SUBSTANDARD UNIT
Lack plumbing facilities - running water or flush toilet
So structurally dilapidated it's more economical to
demolish and reconstruct than repair
Can be repaired, but require substantial structural
rehabilitation
8
OVERCROWDED UNITS
500,000 households living in overcrowded conditions
Average household size: 6.29 persons, with 3,177,000
Californians living in overcrowded housing
Children are disproportionately affected
51.5% of all Spanish-American children in California live
in overcrowded housing
9
FINANCIAL AVAILABILITY
Approximately 25% of California households have income below
maximum eligibility for public housing
1973 - 3% of 25% eligible are housed in public housing
12% of California households have income below maximum for
for eligibility for federal moderate income housing programs
Less than 10% of those eligible are presently living in
assisted housing
Federal Government announced they will end all moderate income
housing programs in favor of state action for those persons.
10
MODERATE INCOME
FAMILY NEEDS
ASSISTANCE
WHO CAN A CALIFORNIA
HOUSING FINANCE CORPORATION AID?
California's 800,000 moderate income families in need
will be the main beneficiary
Income range benefitted will be $6 - 14,000 per year
Low income elderly can also be reached, because of
non-profit property tax exemption for elderly developments
12
HOW MUCH CAN MODERATE INCOME FAMILY
PAY FOR HOUSING - 20% OF INCOME?
Bureau of Labor statistics - hypothetical family of 4 -
illustrate minimum budget requirements
Family - 38 year old employed man, woman not employed,
13 year old boy, 8 year old girl
Assuming moderate income budget minimum - $8,600 and spending
maximum of 20% of gross income for housing
Amounts left for food and transportation inadequate
Only 1/4 of those who spend amounts equivalent to cost of
food purchase plan act have nutritionally adequate diets
1/2 of families own cars, cars will be approximately 8 years -
no allowance for repairs
13
MINIMUM INCOME NECESSARY
TO QUALIFY TO PURCHASE A HOME
Fresno
Sale price - 2 bedroom
$22,000
Down payment - 5% minimum
1,100
$20,900
Loan - 95%
30 years - 8-1/2%
$160.71 mo.
Taxes - $687.50
57.30 mo.
Insurance
7.00 mo.
Utilities
27.00 mo. (includes water and garbage)
$252.00 Monthly Payment
Lender requires 4:1 ratio income to monthly payment.
$252 X 4 = $1,008 monthly income
or $12,096 per year minimum income.
Purchase lowest price, 2 bedroom unit available.
14
MINIMUM INCOME NECESSARY
TO QUALIFY TO PURCHASE A HOME
Assuming minimum priced 2 bedroom existing unit of standard
quality - $14,600 - minimum income to qualify $8,424.
15
MINIMUM INCOME TO PURCHASE A HOME
WITH MORTGAGE FUNDS RAISED BY HOUSING FINANCE CORPORATION
Sale price - 2 bedroom
$21,600
Down payment - 5% minimum
1,080
$20,520
Loan - 95%
40 years - 6%
$112.90 mo.
Taxes - $675
56.25 mo.
Insurance
7.00 mo.
Utilities
27.00 mo. (includes water and garbage)
$203.15 monthly payment
Lender requires 4:1 ratio of income to monthly payment.
$203.15 X 4 = $812 monthly income or $9,768 yearly income.
16
QUALIFYING INCOME REDUCED FROM $12,094 TO $9,768
BECAUSE $400 CONSTRUCTION INTEREST SAVINGS AND
APPROXIMATELY $48 PER MONTH SAVINGS IN PRINCIPAL AND
INTEREST
17
MINIMUM INCOME TO PURCHASE HOME
WITH MORTGAGE FUNDS RAISED BY HOUSING FINANCE CORPORATION
Assuming again minimum priced 2 bedroom existing unit
standard quality $14,600 - minimum income to qualify
$7,265.76
18
DIRECT ECONOMIC BENEFITS TO CALIFORNIA
(For each $200M. housing financed)
Millions of Dollars
$7M
$ 4M
$85M
# 183M
$ 165M
$7 million in state tax revenues
$4 million in local property tax revenues
$183 million in receipts to general building contractors
$165 million in receipts to special trade contractors
$85 million in sales for wholesalers and other distributors of
building materials
15,900 JOBS IN ALL INDUSTRY SECTORS
19
BONDING CAPACITY
Status of major state bond financed projects
State water project - estimated $20M/year
Clean water bonds - by July 1975, $100M issued of
$150M authorized
Pollution control - authorized $200M issued end
of FY 74-75
School earthquake rehabilitation -- end of FY 74-75,
$200M issued of $325M authorized
20
WITH MAJOR PROGRAMS EXPENDED BULK OF
FUNDS AUTHORIZED, STATE IN EXCELLENT
POSITION TO ENTER MAJOR NEW PROGRAM AREA,
SUCH AS HOUSING FINANCE ASSISTANCE,
WITHOUT UNDERMINING ITS CREDIT
21
CALIFORNIA WATER PROJECT
1964-1971: Total issue of $1,550,000,000 G.O.
state bonds
Yearly issues: up to $300,000,000
No impairment of California's credit
22
PROJECTED FINANCING
$ millions
$1,161
12-
-
$1,080
10 -
10% growth rate
CA personal
$880
-
income
$842
8- -
$742
$721
-
6- -
-
4 -
-
2 -
-
70-71
74-75
75-76
Assuming the Housing Finance Agency
will issue $200M per year
at its peak
23
BOARD OF DIRECTORS
State function
CHFC
limited to
providing
funds service
Executive
Staff
Private and
local function
S
Mortgage
Comm.
Local
&
Public
L'S
Bankers
Bankers
Entities
Moderate
LD Dev.
Income
Family
NP Dev.
Purchasers
Moderate
Income
Tenants
24
BONDHOLDERS
CORP.
CHFC
FIN. INTERM.
Mort. Bankers . S & L's
Bankers . Local pub. ent.
Moderate
LD Dev.
income family
NP dev.
purchasers
Moderate
income
tenants
25
Housing
State of California
Memorandum
To
James Crumpacker
Date
:
February 26, 1970
Cabinet Secretary
Subject:
Attached Statement
of the Department
of Public Works
From
:
Business and Transportation Agency
Office of the Secretary
1120 N Street, Sacramento, (916) 445-1331
Attached is a copy of the statement presented by the Department
of Public Works in Washington on February 24, 1970.
This statement relates to California's position on a proposed
expansion of a Federal relocation assistance program for people
involved in eminent domain actions. It states California's
leadership in this area and requests certain changes in the
Federal bill SO that our activities are not impaired.
Of particular interest are Pages 8 and 9 relating to extreme
hardship now facing homeowners who are forced to give up homes
with a 5% to 6% loan rate and repurchase homes having substantially
higher loan rates in the area of 10%.
As the statement points out, we intend to introduce legislation
to correct this situation in California and request that the
Federal Government consider a similar change. This bill will be
carried by Assemblyman Lanterman and was approved by the
Legislative Unit as B-53.
The Department of Public Works' testimony was discussed and
coordinated with Jim Jenkins in Washington.
Marc
MARC SANDSTROM
Assistant Secretary
CC: Paul Beck
George Steffes
STATEMENT
OF THE
STATE OF CALIFORNIA, DEPARTMENT OF PUBLIC WORKS
ON
S. 1 AND H.R. 14898 AND RELATED BILLS
BEFORE THE
PUBLIC WORKS COMMITTEE, HOUSE OF REPRESENTATIVES
UNITED STATES CONGRESS
February 24, 1970
STATEMENT
OF THE
STATE OF CALIFORNIA, DEPARTMENT OF PUBLIC WORKS
ON
S. 1 AND H.R. 14898 AND RELATED BILLS
BEFORE THE
PUBLIC WORKS COMMITTEE, HOUSE OF REPRESENTATIVES
UNITED STATES CONGRESS
The Department of Public Works of the State of California
appreciates the opportunity to present to the House Public
Works Committee its view and comments on the numerous bills
now pending before the Committee dealing with relocation assistance.
The relocation assistance problem has been of deep concern
to the Legislature and the administration in California for
many years. We are concerned not only in providing the finest
of highway facilities possible, but also in fair treatment
to our citizens and property owners whose property is needed
for these vital public works projects. Consideration must
be given to these persons not only in the route adoption and
design stages of the highway projects, but also during the
right of way acquisition process. We are dealing with people
who not only have to pay for the highway project but who also
have to bear the burden of giving up their properties and relocating
themselves, their families, their businesses and farms. One
of California's goals in this regard is that no individual
should be displaced by a state highway project unless replace-
ment housing is reasonably available. This philosophy governs
California's right of way acquisition program.
-1-
California was the first state to actually fully imple-
ment the relocation assistance provisions of the Federal Aid
Highway Act of 1968. On September 23, 1968, at the request
of Governor Reagan, our Legislature enacted "The California's
Highway Relocation Assistance Act" as an urgency measure to
comply with the aims and objectives of the federal law. Also
in 1968, the State of California enacted what has been sometimes
referred to as the "Ralph Bill", a replacement housing development
law. Governor Reagan in recommending this law intended to accomplish
the objective of developing replacement housing which is decent,
safe and sanitary and functionally equivalent to housing elimi-
nated by highway construction. This California law is limited
only to low income families whose properties are located in
economically depressed areas. This legislation was enacted
because studies of the impact of highway programs on low income
areas such as Watts in Los Angeles County and San Ysidro in
San Diego County indicated that decent, safe and sanitary
housing for low income individuals and families was not available
in sufficient quantity for the numbers of individuals and
families to be displaced by the highway projects. Normal
market activity provides adequate housing for families in
the middle income bracket but a totally inadequate housing supply
is being produced today for low income families to meet the
exigencies of new freeway construction in urban areas. In
fact the removal of large volumes of housing occupied by low
-2-
income families and individuals tends to place a premium on the
remaining available housing thus driving up prices of available
housing, and putting the remaining housing beyond the reach of
low income displaced persons or families.
The California Governor and Legislature intended by its
replacement housing law to interrupt this inflationary cycle by
the production of additional housing units for low income families
and individuals. The production of this housing is done through
utilization and cooperation of individuals in the private sector,
(1) by use of their building talents and capabilities, (2) by
providing interim financing for construction and (3) by utilizing
the benefits of the federal aid highway act as a direct development
contribution rather than as a payment to the displaced individual.
The most important aspect of providing replacement housing
is the establishment of a sufficient lead time for persons
displaced by freeway construction to have replacement housing
immediately available to them in order not to impose a hard-
ship upon these people and at the same time not interfere with
the orderly process in planning, designing and construction
of vitally needed freeways. More will be said on this subject
when we dwell on the bills in detail.
S. 1 and H. R. 14898 approach the problem of drafting
uniform relocation legislation from opposite points of view.
First, we would like to point out that the Department of Public
Works of the State of California has no objection to the extension
of the relocation assistance provisions of the Federal Aid Highway
Act of 1968 to all federal agencies and to other federal aid
-3-
programs. However, we feel that the approach that should
be taken by the Congress is to pattern any uniform law in
this area after the most recent legislation in this field,
the Federal Aid Highway Act of 1968. This is particularly
important in the federal aid area where the states will be
required to enact implementing legislation. We believe the
approach should be taken that would build on the existing
statutory law rather than developing entirely new approaches
which may not meet the problems and which will cause the states
to drastically amend already implemented laws and procedures.
California prefers the approach taken by H. R. 14898.
California has two major concerns with regard to
the bills now pending before this Committee. This concern
is limited to (1) those areas in which S. 1 drastically departs
from and limits the relocation assistance provisions of the
Federal Aid Highway Act of 1968 and (2) to those provisions
which the state highway departments will be unable to effectively
carry out because of unnecessary involvement of federal agencies.
We have read the preliminary statements of the Chairman
of the Legal Affairs Committee and the Chairman of the Right-
of-Way Committee of the American Association of State Highway
Officials and generally endorse the points made in their
presentations.
The most crucial aspect of S. 1 and the one which
may have the most profound effect on the highway program is
its failure to contain a provision which would protect highway
-4-
projects from endless litigation and delays. The present
Federal Aid Highway Act contains provisions which, in effect,
require that, within a reasonable time prior to displacement,
there will be available decent, safe and sanitary dwellings
to the extent that can reasonably be accomplished. S. 1 contains
a similar requirement without the phrase which we have underlined.
We strongly believe that such a clause is necessary to prevent
continuous legal proceedings and the stopping of right-of-
way acquisitions for highway construction.
The matter of enforcing a state's assurance that replace-
ment housing is available should be handled on an administrative
basis by the federal agency responsible for administering the
program. The administering agency should take constructive
steps to require compliance with these assurances and to see
that the state highway program is so managed that sufficient
lead time is provided between the commencement of right of way
process and the actual construction so that every person or
family that is displaced will have the opportunity to move to
comparable decent, safe and sanitary replacement housing.
Proper administration of this program can eliminate
such problems and provide 100 percent compliance with the assurances.
On the other hand, there could be situations where
the present wording of this section in S. 1 could be used as
a device to harass, delay and thwart the construction of a needed
freeway even though decent, safe and sanitary dwellings are
available. Displaced persons could easily make unsupportable
-5-
contentions that available dwellings do not meet their personal
preference with regard to public utilities, public and commercial
facilities, or rents or prices are not within their means. Such
unfounded contentions could cause some states to be unable to
meet the target date of 1975 for the completion of the Interstate
System. It is essential that the above underlined words be
included in any uniform legislation in order to permit the highway
program to move forward without undue delay.
Another important area of concern to California is
Section 211(e)(2) of S. 1. This section gives the Secretary
of Housing and Urban Development the authority and responsibility
to determine the prices for dwellings prevailing in the locality
in order to arrive at the administrative bonus payment to residential
property owners and tenants.
State departments involved in the actual acquisition
process are in a better position to determine the average price
for decent, safe and sanitary dwelling as a part of its right
of way appraisal process. The average price determination has
to be made with reference to the specific locality of the dwelling
at the time it is being acquired. A determination by the Secretary
of the average price for decent, safe and sanitary dwelling
for every locality at the time of each acquisition will unnecessarily
duplicate and undoubtedly delay the determination of the relocation
assistance payment and thereby work an added hardship on the
displacee. Further, no replacement payment could be made by
a state until the Secretary has made a final determination.
We believe the state agency responsible for determining the
-6-
acquisition payment for the property should also make the determination
of the average price of a relocation dwelling in order to arrive
at the relocation assistance payment. Another federal agency
should not be injected into the already lengthy process of highway
right of way acquisition. The current procedures of the Bureau
of Public Roads are adequate and workable. These procedures
assure fair and equitable treatment and should be continued
in any uniform statute.
There are several provisions in S. 1 which, if enacted
into law, would require those states which have enacted legislation
implementing the Federal Aid Highway Act of 1968 to cut back
and to limit payments presently authorized by statute. We doubt
that the California Legislature would cut back on relocation
payments presently allowed. Such cutbacks would require the
states to the extent of the cutback to fund them entirely without
federal reimbursement. This is particularly oppressive to state
legislatures when it was at the statutory directive of the Federal
Aid Highway Act of 1968 that the states enacted their laws with
such limitations.
For example, the payments to business and farm operators
in Section 211(c) and (d) is limited to those businesses and
farm operators whose average net earnings are less than $10,000.00
per year. Present federal aid highway law and state law contains
no such limitation. Section 231(c) of S. 1 limits the amount
of federal participation in relocation assistance payment that
is now provided in the Federal Aid Highway Act of 1968. Section
504 presently provides that the federal share of the first $25,000.00
-7-
of such payments shall be 100 percent, and where payments
exceed $25,000.00 the federal share shall be according to
the apportionment formula for the system on which the property
was acquired. S. 1 limits the maximum federal contribution
and participation to the first $25,000.00 for persons displaced
prior to July 1, 1972. No provision is made for federal participation
in the payments in excess of $25,000.00 or the federal contribution
for such payments after July 1, 1972.
California legislation was enacted without a maximum
monetary limitation on relocation assistance payments. It would
be very difficult indeed for us to now ask our Legislature to
enact legislation which would provide a maximum payment to displaced
persons. California legislation was enacted upon the representation
and with the implied assurance that there would be participation
by the federal government for payments in excess of $25,000.00.
There are other provisions of S. 1 where we have comments
and suggested changes. These are included in the more detailed
statement which we have presented to the Committee counsel.
We should like to conclude our statement with a very
important and crucial problem and a proposal to remedy it. It
is a situation which has been brought about by the present-day
nationwide economic situation and is predominately a problem in
the highway program. As you know, the construction of a highway
requires the acquisition of many parcels of properties from one
distant point to another. All of the parcels must be acquired
before the project can be commenced. California has experienced
resistance from some home owners and other property owners in
the acquisition of these parcels because of the loss of favorable
financing. Property owners who are being displaced are being
faced with the economic situation that requires them to obtain
financing for a replacement dwelling at interest rates much
higher than that being paid on the acquired dwelling. California
believes that this is unfair and that the property owner should
not have to bear the burden of this loss because of the economic
circumstances prevailing when his property is acquired.
We believe that in the highway acquisition field an
additional payment should be made to such property owners computed
on the basis of a schedule which relates to (1) the increase in
the interest rate, (2) the remaining term of the original mortgage,
and (3) the amount of the unpaid balance on the old mortgage. Such
payment should also take into account the average length of time
that property owners own their property and should be paid only
when the owner has acquired his new residence. Such a payment
should be administered at the discretion of the acquiring agency
when financing conditions are such that the prevailing interest
rate is substantially higher than the mortgage interest rates on
the existing loans.
Governor Reagan intends to request the California
Legislature to pioneer legislation to resolve this pressing hard-
ship and inequity, and legislation will probably be introduced
at the State level next week on this subject. We strongly urge
that this Committee and the Congress make this problem a part of
its consideration of the relocation assistance law and provide
for federal participation in reimbursement for this badly needed
type of payment.
-9-
Housing
JOHN K. LAWLER
Commercial
Investment Properties
TEMPLEBAR 2.0373
ACARDS
FINANCIAL CENTER BUILDING
OAKLAND, CALIFORNIA 94612
April 15, 1968
The Honorable Ronald Reagan
Governor of the State of California
The Governor's Office, State Capitol Building
Sacramento, California
RE: Flanner House
"Self Help" housing
Dear Governor Reagan:
In respect to my letter to you of March 1, 1968, and your favorable wire
of March 7th, with follow up by Secretary Kenneth F. Hall, at your re-
quest I would like to give you some idea of the reaction to the Flanner
House "Self Help Housing" idea, resulting from our six panel discussion
held March 8th before the Oakland Citizen Committee for Urban Renewal.
So I am enclosing a copy of the Tribune article giving this meeting some
attention, and also enclosed is the OCCUR's secretary's report of the
meeting at which Mr. Carl Mak, Chairman, (and Oakland General Manager of
P.G. & E.) requested that I act as coordinator.
Also enclosed is a copy of Mr. E. S. Arnst's proposal for Urban Renewal,
as mentioned in the above Tribune article.
After talking with Mr. Frank Crosby, Executive Secretary of the Oakland
Real Estate Board, and Vice Chairman of OCCUR as well, he has recommended
to the Board's Committee on Housing that this "self help" housing idea be sub
ject to detailed discussion, at which time your wire and Secretary Kenneth
Hall's letter will be read and discussed.
The OCCUR membership expressed appreciation of your response to my letter,
and the recognition that you have given this self help participation idea
for our disadvantaged citizens. We will try to extend this interest further
to and through our local Real Estate Board members, where I believe its
opportunity for further development will fall on fertile ground.
Sincerely yours,
John Jan Lawler Kawlie
JKL/jkd
CC: Mr. Paul Beck
Mr. Kenneth F. Hall
Mr. Frank L. Crosby
Mr. Carl C. Mak
'Sweat Equity' Plan Examined Here
Wartim
Now S&i
An Oakland citizens com-
have afforded, was formed in
Although incomes of resi-
Frank H. I
eran forei,
mittee is examining a "sweat
1945 as a private self help
dent families ranged in the
and board ct
equity" approach to low in-
organization.
1950's from only $3,500 to $4,-
Press Intern
come home ownership which
Through excellent leader-
200, the minority group bread-
member of
was dramatically successful
ship and with the aid of tech-
winners toiled 20 hours a week
Francisco
in Indianapolis prior to tight
nical help provided by Purdue
at night while also holding
and Loan As:
money.
University, dozens of blocks of
their regular day jobs.
Bartholom
The Flanner House Homes
rotting wooden tenements and
program, in which the man of
rubbish strewn lots were
Working in groups of 20, the
Francisco, 1
"help do it yourself" moon-
awards for
the house contributed 900
transformed into neat neigh-
lighters completed their
during WW
hours labor as a down - pay-
borhoods of attractive frame
war in 1949
ment he otherwise could not
and brick houses.
Continued Page 7-C, Col. 4
1951.
Continued from Page 1-C
"I doubt seriously whether
Income levels in West Oak-
homes in nine months to a
land are sufficient enough but
"Compare the tonic to the
year.
if we could get business and
ego that would accrue to the
Most components were pre
banking support as was done
down - trodden person or fam-
in Indianapolis there would be
ily who had successfully com-
fabricated in the assembly
encouragement to try it per-
line factory. Quality discounts
pleted a venture of this kind,
haps in the Model Cities pro-
on materials were obtained
with the deadening paralysis
through a $200,000 revolving
gram."
that one usually encounters in
fund contributed mostly by in-
San Rafael contractor Ed
a public housing tract. We an-
terested local businessmen.
Arntz said he would be willing
ticipate awesome difficulties
to form a private non-profit
but success here would be
Plumbing, heating and elec-
tric work was done by con-
corporation to which he would
sweet indeed."
volunteer a part of his time
tractors hired to do the job.
Another person who feels
without remuneration.
Unfortunately the Flanner
the same is Gov. Reagan who
The corporation, operating
House program skidded to a
said in a telegram to John K.
on an "open book" basis,
stop in late 1965 when comp-
Lawler, program moderator
etition for the lender's mort-
would seek funds or subsidy
for OCCUR:
gage money climbed past
from public sources to attract
"The idea of sweat equity
FHA 6 per cent ceilings and
"a cadre of full time em-
certainly is worthy of serious
required payment of points.
consideration for it already
Although no government help
ployes, experienced in the
has been used successfully
previously had been required
business and responsive to
and has the advantage of en-
the Indiana people now are
such goals." They would do
couraging private initiative. I
asking subsidies to circum-
the more complex work such
would appreciate being kept
vent financing headaches to
as plumbing.
advised of the plans and
start their work again.
Arntz would give "utmost
progress of your group."
A week ago the Oakland Cit-
consideration" to obtaining
izens Committee for Urban
good design which also com-
Development (OCCUR) heard
bined construction simplicity,
a panel discussion of the Indi-
anapolis program.
low operation and mainte-
nance costs.
Reaction was favorable but
participants wondered wheth-
"The total labor budget
er changing times required
would be split into a step pay-
Oakland Tribune
new financial tools - existing
ment arrangement S0 the
Sun., March 17, 1968 7-C
government programs were
more work the buyer would
mentioned- and "bugs"
complete, the larger cash pay-
were seen in the length of
ment he would receive for his
time the do-it-yourself building
efforts," Arntz said.
consumed while loans were in
Stressing that he foresaw
a state of flux.
plenty of problems, he none-
John B. Williams, executive
theless added:
director of the Oakland Rede-
velopment Agency, said:
"I don't believe It can be
done on a scattered lot ap-
proach. Maybe there is some
suitable redevelopment acre-
age, possibly in Oak Center,
where it could be tried in vol-
ume. Another thing, the stand-
ards of nearby houses would
have to be good enough to jus-
tify the sweat equity man's
dollars and work.
OAKLAND CITIZENS' COMMITTEE FOR URBAN RENEWAL
March 8, 1968
8:00 - 9:30 a.m.
SUBJECT: Flanner House Homes, Inc.
The regular meeting of the Oakland Citizens' Committee for
Urban Renewal was convened by Chairman Carl Mak.
ANNOUNCEMENTS
The Model Cities discussion scheduled for today's meeting
was postponed in order to contact speakers for that program.
SUMMARY OF MEETING
A panel of six speakers was introduced to present their
viewpoints of the Flanner House Homes project, a self-help
organization founded in 1945 by Mr. Cleo W. Blackburn for group-
building houses. The headquarters for this organization is in
Indianapolis, where several hundred Negro families with incomes
from $3500 to $4200 built their own prefabricated homes during
evenings and weekends. Plumbing, heating and electrical work
was done by hired professionals. This assembly-line home build-
ing production was done without subsidy by the federal govern-
ment (although one is being sought now). Businessmen contributed
much of a $200,000 revolving fund for purchase of construction
materials and banks advanced most of the mortgage loans. There
was no downpayment required -- only "sweat equity." The finished
home was worth about $14,000 with a FHA insured mortgage loan of
about $9,500 which returns construction costs to the revolving
fund. While the men worked on the houses, women attended classes
in upholstery and other fields of housekeeping. The residents of
the Flanner project in Indianapolis formed neighborhood groups
and persuaded the city government to build a new elementary school
and a swimming pool.
The first speaker on the panel was Mr. John B. Williams,
Executive Director of the Oakland Redevelopment Agency. He
described his "sweat equity" efforts years ago in building a
home. The results of his endeavors convinced him that "sweat
equity" is not designed for low-income families, but for people
in the middle-income bracket who have an amateur's knowledge of
good housing and building construction. Mr. Williams noted that
if the Flanner housing concept were to be considered for Oakland,
scattered site construction would be preferable and the business
community of unions, teachers, Council of Churches, Economic
Development Council and Redevelopment Agency would have to lend
their support in terms of contributions of dollars in staff time.
Mr. Williams pointed out that there are not large areas of unused
land on the fringes of Oakland as there are in Indianapolis. He
suggested that Oakland study the tools available through the
OCCUR meeting of March 8, 1968
Page 2
Model Cities Program to clear lands for development of "sweat
equity" tracts and to study new 1968 housing legislation under
Section 221 (h).
Section 221 (h) of the Model Cities Act of 1966 authorizes
the FHA to provide insurance for the purchase of a single-family
unit at 3% interest. Non-profit corporations may purchase five
or more single-family units, rehabilitate them, and resell them
to low-income families. Mortgages of $12,300 to $20,000 are
available up to 30 years for eligible families whose incomes
range from $3,000 to $7,000 depending upon size of family.
The second panelist was Mr. Jack Taylor, Administrator of
the Building and Housing Department, who had put "sweat equity"
into his own home some years ago and concurred with Mr. Williams
that the Flanner House concept was geared to a middle-income
group, but suggested that federal grants may be possible to
assist low-income families. Also, if Oakland implemented the
plan it would be more difficult to construct houses in scattered
sites than within a limited area. He stated that at first glance
it would appear there could be problems in permits and licensing,
but he was sure these could be worked out. He offered the co-
operation of the Building and Housing Department if the Flanner
House concept is initiated in Oakland.
Mr. Norman Lind, Director of the City Planning Department,
agreed with Mr. Williams and Mr. Taylor that the Flanner House
program is directed at the middle-income group, also basing his
opinion to a great extent upon his own experience in "sweat
equity. Vacant land is scarce in Oakland, but construction
need not be on a tract basis -- a number of variations could be
applied. He felt the program should be directed to the 72,930
low-income people in Oakland by an amendment to the plan to
utilize scattered sites and to include rehabilitation as a less
expensive method of housing. Other forms of subsidies could be
explored to fit into an appropriate program, loans of 3% for 50
years, demonstration grants from HUD, and Sections under 221 (h),
115, and 112. Another feature of the Flanner House proposal
could be modified to provide employment on a full-time basis.
Mr. Lind concluded that the self-help Flanner House program
might be modified to include a total approach to solve Oakland's
employment and housing problem.
In the absence of Mr. J. Lamar Childers, Mr. Al Thoman
represented the Alameda County Building Trades Council as the
fourth panelist. Mr. Thoman described his attempts at rehabili-
tating his own home, resulting in the same conclusion as the other
panelists -- it requires a certain amount of "know-how" and is
time-consuming. He reported that the United States Department of
Agriculture made available loans of 3% for a self-help housing
project for agricultural workers in seven California counties
from Fresno to Visalia. Groups of five or six families (averag-
ing about five children to a family) grouped together and helped
each other construct homes of 1100 square feet of floor space.
OCCUR meeting of March 8, 1968
Page 3
A minimal amount of skilled labor was hired by these groups to
supervise construction. About 250 houses out of a contemplated
800 have been completed. Monthly payments are approximately $45.
There is a legislative bill in the State Assembly at the present
time which would further this plan on a state-wide scale. The
Alameda County Building Trades Council takes a firm stand that
industry has not been able to provide low-cost housing, and
families should be able to secure with their own efforts, and
at a cost within their incomes, decent, safe and sanitary hous-
ing, believing that this will tend to eliminate a certain amount
of ruthlessness which is evident in the agricultural sector and
should stabilize the families into becoming community-oriented
taxpayers, at the same time gaining such amenities as schools
and hospitals. As for the Flanner House proposal, the Alameda
County Building Trades Council is withholding its recommendation,
as the unions in the eastern part of the United States vary
greatly from unions in California.
Mr. John M. Bailey, Vice President of the Citizens Federal
Savings and Loan, was the fifth panelist. He described his
efforts at "sweat equity" with his own home and praised the
inspectors of the Building and Housing Department for their co-
operation and advice. He stressed that supervision is necessary
as well as training and availability of time. From the financial
viewpoint, financing would be no problem once the property was
completed in accordance to code standards.
Mr. James Watson, Vice President of the Wells Fargo Bank,
pointed out that there could be blunders in executing the Flanner
House project in California by using the method of the eastern
part of the country. However, the bank takes the stand that
capable individuals building their own homes are a good financial
risk, but the amount of time necessary to complete the home --
working evenings and weekends only -- results in money being held
in commitment for about 2½ years. He introduced Mr. E. S. Arntz,
a San Rafael building contractor, as an interested party.
Mr. Arntz cautioned against such a broad program of 72,930
inexperienced people in Oakland undertaking home building and
rehabilitation themselves. He felt that his twenty-five years
in building construction convinced him that "it would be a disas-
trous area of endeavor."
In a general committee discussion it was pointed out that
there was one concept which was being overlooked: that any self-
help type of home rehabilitation or new construction gives an
individual a sense of responsibility and pride of accomplishment
that cannot be felt as deeply if the actual work was done by
someone else, and that such initiative and sense of belonging
would create a more stabilized community.
The Chairman announced that OCCUR had received a telegram
OCCUR meeting of March 8, 1968
Page 4
from Governor Ronald Reagan stating that the "sweat equity"
program is a good sign and may become an important factor in
low-income housing in California; that it was an idea worth
considering and he would appreciate being advised of the plans
and progress of OCCUR in such an endeavor.
The meeting adjourned at 9:45 a.m.
*
*
*
A TENTATIVE PROPOSAL FOR URBAN RENEWAL
A PILOT PROJECT
By: E. S. Arntz
Introduction
The proposal outlined in the following draft is responsive to the
plight of under-priviledged people in our urban areas and the consequent deteriora-
tion to our nation. I recognize that the dimensions of the problem are enormous
and that many facets of need compete for our attention and resources. Within the
context of this recognition, however, I find myself increasingly interested in the
interrelationship of three principle factors: 1) the need for housing in blighted
areas, 2) the mass unemployment that exists in these areas, and 3) the absolute
necessity of educating these people in work wkille commensurata with their aptitudes.
This proposal though by necessity directed at a select target group within the
general area of need, seeks accomplishment in these three problem areas:
I propose,
I. To form a private non-profit corporation, licensed as a construction
company and organized specifically for work in the construction or reconstruction
of residential units in needy areas. I would volunteer a portion of my own time
to this enterprise without remuneration but would endeavor to attract a cadre of
full-time employees, experienced in the business and responsive to the goals of the
company as a management team.
II. This corporation would seek funds or subsidy from public sources,
subject of course to the necessary scrutiny and controls consistent with good
practice, prior to disbursement. The fact of its non-profit status and an open book
policy with regard to expenses should hopefully obviate the necessity to smother
its effectiveness or efficiency of operation by controls and red tape. Funding
should relate to the accomplishment of stated goals with competitive efficiency
rather than bureaucratic entanglement
MILLS The first task of our enterprise would be to obtain land and under-
take the designiof good housing units suitable to our purpose, This design should
be accompanied by a complete Bill of Materials so that all material, including all
items that are normally purchased by subcontract on an installed basis, could
2
actually be purchased and warehoused,
if
ned
lete structure down
to the last nail. Utmost design considerati hould be given to low operation
and maintenance costs in the completed structure and to simplicity of construction
and erection detail. This need not result in unattractive design since our objec
tive is an accomp lishment that will instill creative pride in those who participate
The best possible designers should be retained to accomplish this, and alternates
should be incorporated into the design, if possible, which could be added at the
option of the owner with his own labor to enhance the attractiveness of the home.
Since each unit will be built as an individual building project, housing location
could be obtained in various locations in a given area to replace condemned or
razed ildings. The stigma of the vast mass produced impersonal ghetto- like
project might be liminated by this approach.
IV. The second phase of our scheme would require the careful screening
and selection, through existing social agencies, of the ultimate owner and resident
of the housing unit. He should qualify as to need and he must also exhibit a
sincere desire to own the home and participate in the actual job of it construction.
A little old lady would not do, but a little old lady with two strong, healthy sons
in their late teens might very well comply, to demonstrate the point.
V. Basic to the plan would be our intention to furnish supervisory
personnel only for all parts of the work that could be performed by the buyer on
a do-it yourself basis. Our construction employees would do only those skilled
items that could not be perf
Thy the buyer himself The total labor budget
for the project would be distributed to the buyer on payment arrangement upon
the completion and inspection of the various phases of project constructi on after
our own payroll costs had first been deducted. Thus the more work the buyer would
complete the larger cash payment he would receive for his efforts. An attempt
would be made to exempt these payments so that they do not act as an incursion into
welfare receipts of the individual or otherwise kill the very incentive of enterprise
we are trying to instill. Obvious controls and time limitations should be imposed
to maintain the good standing of the buyer with an ultimate severance of the purchase
agreement in those instances where! the buyer would not perform. Payments to the
buyer for his labor should by weighted in favor of the later construction phases
so that a successor in ownership could be attracted to purchase A particity const-
ructed building. This could be recomplished by 6 percentage withold until final
completion and occupancy had occurred.
I am not unaware of the problems that are inherent in a procedure of
this type but the possible benefits are commensurate with the efforts expended
It would require patient dedication to our goals on the part of our own carefully
selected field personnel to accomplish even partial success, but I feel confident
that gains would be made in a heretofore untouched area of our basic unemployment
problem. Our approach would have to be compatible with existing Union Contracts
but since all labor would be Union with the exception of the work performed by
the owner, there could hardly be cause for objection to our procedure from that
source.
VI. Ultimate government sponsored financing should be arranged do that
the final ownership package leaves the successful purchaser with on attractive home
on terms that he can afford.
VII. At the completion of the project
should be made to
place those buyers who have exhibited antitude during the course of construction
in Union Apprenticeship classes. In some cases, they could even be hired by our
firm for a continuation of the program.
VIII. My qualifications as a successful contractor and developer are
available for the review of interested parties and should establish my competence
for an undertaking of this type and magnitude.
Compare the tonic to the ego that would accrue to the down-trodden person or
family who had successfully completed a venture of this kind with the deadening
paralysis that one usually encounters in a public housing tract! We anticipate
awesome difficulties but success here would be sweet indeed.
Interested parties can contact me by mail in care of:
Arntz Bros.
4 Joseph Court
San Rafael, California 94903