A Comsat for Construction

As the demand for decent housing continues to outstrip construction, "No Vacancy" is becoming the ubiquitous sign of the times. Last year, U.S. builders put up just under eight houses and apartments for every 1,000 people, which was half of 1950's record pace. The U.S., once preeminent, now lags behind Western Europe, Japan and Russia in housing output on a per capita basis. This week the Nixon Administration will announce formation of the National Corporation for Housing Partnerships, a Comsat-style combination of Government and private industry. The corporation expects that its activities will add at least 10,000 new houses and apartments a year in the 1970s for families earning $8,000 or less.

The housing corporation will be headed by Chairman Carter Burgess, former head of American Machine & Foundry, and President Ray Watt, a large West Coast builder. It aims to raise $50 million from large corporations and banks and a public sale of stock. Then it will invest most of the money in a number of partnerships of local builders and small investors. For every dollar that the corporation puts up, each local partnership will put up about three dollars. In addition, these partnerships will get FHA-insured loans under the National Housing Act for up to 90% of the costs of construction. Altogether, the initial $50 million could stimulate $2 billion in construction.

Most of the new housing will be apartments in which tenants can qualify for rent subsidies, provided that Congress approves them. In an urban area, two-bedroom apartments will rent for $75 a month and three-bedrooms for about $90. Helped by federal tax shelters, investors in the partnerships can expect an attractive 16% return on their capital.

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