STATEMENT OF HENRY DuLAURANCE, NATIONAL APARTMENT

OWNERS' ASSOCIATION

Mr. DULAURANCE. Mr. Chairman, and members of the Committee on Banking and Currency.

Before I begin, I would like to have Form D-106 inserted in the record.

Mr. BROWN (presiding). That may be inserted. (The document above referred to is as follows:)

You may

For each building for which rent increases are requested, file two (2) copies of this petition with the Ares Rent Office. be required to support the figures in this petition by submitting your books, records, receipts, or Federal Income Tax Return.

A. "TEST YEAR":

In order to determine the amount of certain expense and income items to be shown on this petition, you must select a "test year. The "test year" you select must be the most recent full calendar or fiscal year, or any twelve consecutive months ending not more than 90 days before the date of filing this petition.

"

1. HEATING fuel used IN TEST YEAR.-Enter only if heat is supplied to the tenants by the landlord, without sharing the bills.

2. UTILITIES USED IN TEST YEAR.-Enter only if utilities are supplied to the tenants by the landlord, without sharing the bills.

$

3. PAY ROLL DURING THE TEST YEAR.-Do not include any salary for the owner or for corporate officers, nor any labor cost for repairs and replacements.

$

4. JANITORIAL MATERIALS USED IN TEST YEAR.-Do not include materials for repairs and replace

5. REAL ESTATE TAXES.-This is the amount of all real estate taxes (exclusive of penalties and overdue taxes for other years) shown on your latest tax bill. If taxes have increased smce you received your latest bill you may attach a signed statement from your tax official showing the assessment and tax rate now in effect for the building, and enter your taxes on this new basis.

$

6. INSURANCE.-Divide the cost of each policy that is in effect on the date the petition is filed by the number of years that it covers, to obtain the annual expense.

$

$

7. INTERIOR PAINTING AND DECORATING.-Add the expenses for interior painting and decorating in
the test year and the two preceding years, and divide the total by three (3) to obtain the annual expense.
& DEPRECIATION.-Enter the depreciation figure shown on your last Federal Income Tax Return.
NOTE. The amount of depreciation which will be allowed is the lesser of the following: (a) the
amount shown on your tax return, or (b) 21% of the present annual income for buildings containing
one to four units, or 16% of the present annual income for buildings containing five or more units.
9. MISCELLANEOUS EXPENSES IN TEST YEAR. This may include management fees actually paid.
Show specifically the nature and amount of each miscellaneous expense.

(a)

$

$

(b)

NOTE: If you want to show an increase in pay roll or utilities which was not in effect during the entire test year, file Form D-100 in addition to this form.

EXPENSES FOR REPAIRS AND REPLACEMENTS may be shown on pages 2 and 3 of this petition. If you have no records of such expenses, or if the tenant is required to make all repairs, you may tear off pages 2 and 3 and file only pages 1 and 4 with the Area Rent Office. In any case, however, you must all out page 4 of this petition.

97026-52-pt. 2- -31

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C. REPAIRS AND REPLACEMENTS:

Expenses for repairs and replacements should generally not be charged entirely to the year in which they were paid. Instead, they should be "allocated" (that is, spread) over the period of years they normally last. For example, if a roof which normally lasts 15 years was replaced in the test year at a cost of $300, only one-fifteenth or $20 is chargeable to the test year and $280 is chargeable to the other 14 years.

year.

Similarly, if a roof was replaced any time within the last 15 years, one-fifteenth of the cost may be properly charged to the test Thus, it is proper for you to show not only a portion of the expenses incurred in the test year, but also the portion of the expenses incurred in previous years which is allocable to the test year. However, no portion of a prior year expense may be shown if the period between the date it was incurred and the end of the test year exceeds the proper "allocation period." The proper "allocation period" is the number of years shown in the Allocation Schedule below, unless it is established conclusively that an expense has been incurred more or less frequently.

In the table below, list on a separate line any repair or replacement item that is properly chargeable to the test year. In column 1 show the nature of the item. In column 2 show the year the item was purchased or completed. In column 3 show the cost. In column 4 enter the proper "allocation period," as shown in the Allocation Schedule, unless your records show conclusively that you have incurred the particular type of expense more or less frequently. Divide the cost of each item, as shown in column 3, by the number of years, as shown in column 4, and enter the result in column 5.

IMPORTANT NOTE.-The cost of capital improvements may not be included under repairs and replacements, since they are taken into account in the allowance for depreciation in table B on page 1.

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D. RENTAL INCOME:

Give the information required in the table below for every residential and commercial unit in the building.

Fill in column 4 for each unit according to the following instructions:

Units With Maximum Rents. Enter present maximum rent-even if vacant or occupied by the landlord, his employees, relatives, or other persons paying no rent or only a nominal rent.

Units With Voluntary Leases in Effect.-Enter the present rent payable under the terms of the lease.

Uncontrolled Residential and Commercial Units.Enter the rent charged on the date the petition is filed. If no rent or only a nominal rent is charged, enter the full rental value. (Commercial units include garages rented to persons other than tenants of the dwelling units in the property. A single monthly or weekly total rent should be entered for all such garages, and the number of these garages specified in column 2.)

Units With Seasonal, Alternate, or Other Varying Rents.—Enter the average monthly rent during the year ending on the date the petition is filed.

E. TOTAL INCOME OTHER THAN RENTS FOR THE ENTIRE TEST YEAR: (Includes receipts for phone service, laundry equipment, utilities, alternations, etc.).

CERTIFICATION

IT IS NOT NECESSARY THAT THIS PETITION BE SWORN TO, BUT ANY FALSE STATEMENT WILL RESULT IN THE DENIAL OF YOUR ENTIRE PETITION AND MAY SUBJECT YOU TO THE PENALTIES PROVIDED BY LAW.

I HEREBY CERTIFY THAT: (1) the information supplied by me in this petition is true and correct, and (2) I am maintaining all services required by the Rent Regulations, and will continue to maintain such services so long as any adjustment granted under this petition continues in effect.

Mr. DULAURANCE. My name is Henry DuLaurence and I am from Cleveland, Ohio. I am privileged as chairman of the legislative committee of the NAOA to submit the views and recommendations of that association concerning the proposed extension of the Housing and Rent Act of 1947, as amended.

Our association is Nation-wide and represents the owners of rental property throughout the country. This industry is composed of millions of small property owners. We have frequently been maligned as the avaricious rich. Nothing could be further from the truth. Eighty percent of all rental property is owned by people who have five units or less and have a gross annual income of under $5,000. We are representing the little business man of the real-estate world-the retired couple-the widow-and they urgently need your help.

The United States is now completing its tenth year of Federal rent control. As in the past the Rent Stabilizer is again requesting that it be renewed-expanded-strengthened.

Our association is unalterably opposed to rent control. We think it is wrong morally, unsound economically, and does not cure the housing shortage but actually perpetuates it. We have had rent control for 10 years. Since 1940 we have built or converted over 10,000,000 dwelling units; we have increased our dwellings by 25 percent but our population has increased only 15 percent and yet because of rent control we still have an artificial housing shortage.

A brilliant example of what happens under rent control can be seen in the case of the 25 large American cities which lost population between 1940 and 1950. Each one of those cities had a vacancy ratio in 1940 each one of those cities' had a net increase in dwelling units each one of those cities lost population between 1940 and 1950 and yet 23 of those 25 cities are still under rent control. Certainly these figures show beyond a shadow of doubt what a synthetic housing shortage rent control can and does cause.

The inherent dangers of controls are becoming more and more obvious daily. The inherent dangers to a democracy-and to our way of life is manifest-and its future implications clear.

Our industry has been under continuous "temporary" controls for 10 years. For 10 long years we have sought to live within a rent structure frozen at 1941 levels. For 10 long years, we have received the most meager of rent adjustments by the Federal agencies which administer such controls.

Actually controls are no longer necessary for our industry. If the argument for controls is sound, then the bigger the increase in population the more danger there would be of excessive rent increases. Let us see what has happened to date. Of 231 of our largest cities, 90 are now decontrolled. Those 90 decontrolled cities had an increase in population between 1940 and 1950 of 31 percent. The 128 cities still under rent control increased in population an average of only 91⁄2 percent.

From all the impartial statistics we have been able to gather, these decontrolled cities have had fair and reasonable increases. The decontrolled cities carried in the BLS Index shows an increase of 16.8 percent. From this mass of evidence we can only come to one logical conclusion: the cities still under control, having a population increase of only 91⁄2 percent, would have even smaller rent increases.