The CHAIRMAN. There has been some criticism of local boards. How do you appoint those local boards?

Mr. Woods. Upon the recommendation of the Governor.

The CHAIRMAN. The Governor of the State?

Mr. WOODS. Yes, sir.

The CHAIRMAN. In other words, you have been appointing people who were not recommended by the local people?

Mr. WOODS. Only if the governor refused to send in his recommendations did we go to the local people.

The CHAIRMAN. Has that happened often?

Mr. Woods. It is the minority of cases, and then not consistently. Sometimes a governor will wait 60 days, maybe 3 months; then we do go ahead and in that case appoint with the next group of local officials, who are usually the mayor and the city council, who make recommendations.

The CHAIRMAN. What I want to get at is, you don't appoint anybody unless you get a recommendation from an official of the community or from the governor?

Mr. WOODS. That's right.

The CHAIRMAN. So it is local.

Mr. Woods. It is local, very definitely.

Senator CAPEHART. In Indiana does the Governor appoint all the boards?

Mr. Woods. In Indiana, yes; all of the boards that I can remember for the State have been.

(The following was submitted for the record by Mr. Woods:)

SUPPLEMENTARY STATEMENT ON APPOINTMENT OF RENT ADVISORY BOARD MEMBERS IN THE STATE OF INDIANA

When I appeared before the Senate Committee on Banking and Currency on March 25, Senator Capehart asked whether the Governor of the State of Indiana had nominated all of the persons who had been appointed to membership on rent advisory boards in the State. I answered that the Governor had nominated all of the board members, so far as I could remember.

Upon checking our records, I found that all of the members of 12 boards had been nominated by the Governor. However, in the case of seven boards, one or more of the members were not nominated by the Governor, because the Governor was unable to supply nominations. The facts on these seven boards are as follows:

If we

Mr. WOODS. Now, there may be an individual case, occasionally, where there is a resignation, and the law provides that we give the Governor 30 days to make his recommendation. We wait 60. haven't heard from the Governor, then we go to the next local jurisdiction and ask for a recommendation.

In all cases I can say it is done locally.

The CHAIRMAN. I am glad to hear that.

Mr. Woods. In connection with this case the Senator brings out, I am going to describe the trouble we had in northern New Jersey immediately upon the passage of the act. In that case we began to put the 20 percent provision into effect, and immediately our office in Newark was swamped with some 25,000 tenants' complaints against this increase. Well, we just didn't know where to turn. We went to our local advisory board. They said we can't possibly, with just some 15 members, cope with this situation.

So then we went to the Governor. We went to Governor Driscoll, and he, realizing the importance of this thing, expanded the board program and appointed nine new boards to serve that area, and those boards were the ones that disposed of these 25,000 complaints.

Senator FREAR. What jurisdiction does the board have over the director of that area?

Mr. Woods. Very firm jurisdiction, Senator. I have given our area rent directors specific instructions that in any case where they differ with the board, it is the board's decision that finally rules, unless the case is completely outside the law, and then the rent director doesn't make the decision, he must send it on up, and if we say the board is right that is who makes the final decision.

Senator FREAR. Does the board have to act in all instances? Cannot the director act in certain situations?

Mr. WOODS. Yes. These boards serve voluntarily, and naturally we can't ask them to take every case that comes into their office. Senator FREAR. They serve without compensation, don't they? Mr. Woods. That is true. The boards usually lay down certain ground rules for each rent director to follow. They will say we will take appeals of a certain nature, but straight adjustment cases up or down, go ahead and process them. If the people want to appeal to us on those cases, all right.

Other boards say, we want to look at every eviction case that goes through.

We let them make their own ground rules.

It is interesting, on this practice, that where boards are so valuable to us is in this very case that involves decorating. The whole northeastern New Jersey communities were in an uproar about this matter of decorating. Was it a practice or wasn't it a practice?

That is one of the criticisms that has been leveled against the agency; the decision as to how to handle these cases was finally made by the local board.

The CHAIRMAN. The local board makes those decisions?

Mr. WOODS. Yes, sir.

The CHAIRMAN. You did not overrule them?

Mr. WOODS. We did not overrule them.

The CHAIRMAN. There has been more complaint about that, as far as I am concerned, than about anything else.

Mr. Woods. To give you the specifics on it, here was a case where on the registration-many, of these registrations were filed back in 1942 the question of decorating was in doubt. Landlords would come in and say. "Look, I didn't mark decorating Yes on the regis tration form; therefore I didn't have to do it."

The board took the attitude in that area-all the boards did-that they couldn't conceive, in the ordinary multiple unit apartment build

ing, that a landlord would never do decorating, even though he might not have marked a piece of paper on a certain date and said he didn't. So the board took the attitude that if, since 1942, no decorating had been done and the apartment was in bad condition, particularly after inspection by the office, it could be presumed that there was a decrease in service there, and if the landlord wanted to get his 20-percent increase, to follow the provision of the law he should decorate.

Now, we didn't hold up the 20-percent increase. We gave him that but told him, "Now you've got to do this decorating or there will be a decrease in service and we have to reduce the rent by the amount of the value of that service."

But in no event did we deny this 20-percent increase. We adjusted it later if he refused to decorate, but he got the benefit of it.

Senator SCHOEPPEL. I would like to say to you, Mr. Woods, that some of the complaints that I have received outside of my own State area, probably by reason of my being on this committee that has jurisdiction over this, have stemmed from complaints in that New Jersey area. They had to do, as late as 1951, I think, with a letter that went out from your office, dated October 19. In answering letters that had come in on painting and decorating and repairs with relationship to the landlord's filed statement, your area office indicated that these services were not provided. "Kindly be advised that the registration statement is merely a self-serving one filed by the landlord and is not binding upon the Office of Rent Stabilization."

Yet, on the basis of that statement that was signed, you set up section D, that had to do with equipment and services, and then you set up a separate section for services alone.

In those statements these landlords stated the condition of their rental properties, and presumably in a world of instances agreeable to the tenant.

Then you later come back, and I don't know how it was handled but you just have testified that it was on the recommendation of the local rent boards, or the committee in each of these communities; you made a change and made some deductions as against their potential 20 percent increase.

I was just wondering how much weight you applied to these different factors that you set out. You established or approved a certain rent for that property; then later on you come back and say as a result of the committee's recommendation and their determination in these various areas, especially New Jersey, if they didn't redecorate the rent would be reduced. Even though it was announced that that was the initial way you approached the thing, with the concurrence of the tenant at that time, you made a reduction.

That has been the source of many complaints that have come to us, and are still coming, scatteringly by now.

I was wondering how much weight you gave to these things that initially were set out by the landlords and concurred in by the tenants when you first established what that rental property figure should be. Mr. WooDs. Senator, we gave a lot of weight to it, but we found that mistakes occurred on both sides. That registration statement as it was designed in 1942 was fairly clear as to the dollar rent to put down on it, but it has always been a source of trouble to us on the services. Let me give you an example. A landlord might not have established some service on the very day that he rented the apartment. The

service, though, might have traditionally gone with that unit. He could have said "No" on there and may have been perfectly honest in it and well-meaning, but a service would have been established on the unit, particularly in a community where decorating service was not uniform.

Take the cities of New York and Chicago and Pittsburgh and some others. There was a well-known, well-established, annual custom of decorating, and it never was very confusing. But some communities had a practice of decorating only at the time a tenant changed. Other communities had the practice of not decorating at all unless actual deterioration set in.

But the timing of this registration made it imperative that we should look behind an actual X mark on the registration to see what the facts were. Sometimes it was a benefit to the landlord that we did that, because he was otherwise cheating himself; sometimes it was a benefit to the tenant.

But I would like to add that in New Jersey the same boards, in making their general rule, also said that the board further recommended that an exception should be made from a general rule in any instance where the landlord demonstrated that he had not painted and decorated prior to the maximum rent date, regardless of change in tenancy or the length of time his tenant had remained in occupancy, and the area rent director has followed both of these recommendations of these boards.

It was not an easy one to solve, but the board, being local people, living under local conditions, felt that there must be some justification for this great mass of complaints, and had they begun to get into the individual cases and get back to the decorating customs, they would have found that maybe one man only decorated every 3 years, another one only did it every 5 years, maybe one did it every 2 years.

But in most instances, unless he had clear proof that he had never decorated, they assumed that at some time decorating was necessary and if it wasn't done it was a decrease in service.

Senator SCHOEPPEL. Did the board establish the rule that it had to be redecorated every third year, or once within a 3-year period? Mr. Woods. No, sir, we did not, and I don't think any boad did, not in that community. We have had that happen where the board in another community might have felt that that was the custom, but not here. No; they did not go that far.

Senator SCHOEPPEL. I was trying to get the picture as to how you set this thing up uniformly all over the country. I well understand that conditions change. We have certain areas in the country, for instance, where they are users of gas, and I think those people will tell you that it is cleaner. But a city where there is a lot of coal smoke obviously requires more decorating, and earlier decorating. I realize that.

Mr. Woods. That is why we don't feel that we are in any position to make a general rule to apply to the country. These boards, the board in Chicago or Pittsburgh, with their smoke situation, the standards or the ground rules that they tell the office to observe are going to be much closer than in an area such as a resort area, where there is very little industry and where a place does not get dirty as often.

I notice that that is one of the criticisms that I was going to answer, and I might as well answer it now. It is one criticism that I will admit to. We do not have a standard practice all over the country for these things. We leave it to those local boards, and we think that that is what the Congress wanted.

A board in a northern city might treat their customs, and tell the director to handle certain things, entirely differently than a California board, but as long as they both stay within the framework of the law and the regulation, we think they are both doing right in accordance with what you people wanted us to do and wanted us to administer. Senator CAPEHART. Is it a fact that back in 1942 every rental property in existence at that time did file with you a form?

Mr. WOODS. Yes, Senator. One of the requirements of rent control on the effective date in every community was a registration form. Senator CAPEHART. Do you have one of those registration forms? Mr. Woods. I'm sorry, I don't have one.

Senator SCHOEPPEL. I think I've got one here.

Senator CAPEHART. Is this the form?

Mr. Woods. Yes, sir.

Senator CAPEHART. Now, this form I hold in my hand was filed in the form of a registration by every person that owned a rental property in 1942, is that correct?

Mr. Woods. Yes, sir.

Senator CAPEHART. And on that, of course, they filled out the equipment, the services, and so forth, is that correct?

Mr. WOODS. That is correct, sir.

Senator CAPEHART. And at that time the rent was established for that property based upon the information contained in this form? Mr. WOODS. Senator, I wouldn't say it was established. On the base date we took the actual cash rent that they gave us, and the actual services, furniture, furnishings and equipment on the base date. We didn't look at the services and then establish the rent. We took their word on both of these.

Senator CAPEHART. In other words, you took their word on the equipment and the services?

Mr. Woods. Yes, sir.

Senator CAPEHART. And then a rent was established?

Mr. Woods. No. That was the rent: those services and equipment, plus the cash.

Senator CAPEHART. In other words, this became your permanent record of every rental property in the United States?

Mr. Woods. That is true.

Senator CAPEHART. Now the Congress, in its wisdom, whether right or wrong-let's not argue that point because we are here today, I think, primarily on the administration of the law rather thar the merits or defects or whether we should or should not have rent control, or whether it is fair or unfair. We are here purely on administration, as to whether or not you have been administering the law according to the intent of Congress and according to the law. As you know, we have had witnesses here who claimed that you have not, they accused you of not doing it. That was the reason we suggested that you come here today and state your side of the case.

It was the intention of Congress, was it not, that all rental properties be given a 20-percent increase over their 1942 rental?