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cult to tell a man what to do in that case. Do you tell him to stop paying
and forget everything! Tour
I said: “I really don't know what to tell you. Chances are if you have only 2 years to pay, maybe you ought to pay it. Who knows, you may find uranium or gold up there. I don't know."
But anyhow, OILŠR has not done the job. I don't think that they
have enough employees. And I am not in favor of building the bubor
reaucracy, but I am for requiring government to protect consumers.
If you want to know how well consumers are protected, ask Patricia u Hrnes
, the assistant U.S. attorney from New York, because I think she will tell you a story that will be more convincing than anything that I can tell you, about some developer who got about $170 million for land that he paid about $20 million for, and that is a pretty good profit
And I am inclined to remember something Bob Strauss said. When asked about our oil problem he said, “I am from Texas and I don't know any poor oilmen." I am getting to the point where, I am from New Jersey and I haven't heard of a poor land developer in the United States. Chairman ASHLEY. In your hearings, apparently you established to the satisfaction of just about everybody that there are only a handful of States that have adequate laws protecting their consumers. Mr. MINISH. That is right, Mr. Chairman. Chairman ASHLEY. And that for that reason this has escalated into a national problem, requiring a national solution.
Of course, that was decided 10 years ago when we legislated in the first instance
. Is it your impression that States are looking to the Federal Government to provide this protection! Is that the reason that only a handful of States are in this business of trying to protect their own people from the kinds of fraud and deception that is found both in intrastate and interstate land sales?
Mr. MINISH. Mr. Chairman, that is an accurate statement. Some of the States are looking for Federal assistance. I think that the attorney general from Colorado, Mr. MacFarlane, and also the one from New Mexico, will testify to that, that they are looking to the Federal Government for help with this problem.
Chairman Ashley. One of the things that has interested me is that OILSR doesn't seem to be interested in establishing any kind of cooperative arrangements with those States that do pursue aggressively the kind of legislation that affords protection to citizens purchasing property either within that State or outside that State. Generally within the State, that would be the province of State governments.
And I am curious as to what your notions are about the situation where a State, whether it be New York or Florida or any other State, directs itself aggressively to this problem. In that situation wouldn't it be appropriate for there to be some kind of cooperative arrangement between OİLSR and that State which would obviate the necessity for the honest developer--and we are concerned with him, as well as the dishonest developer--to fill out the reams of disclosure material, and go through the registration and so forth, twice rather than once. What is your thought on that?
Mr. Mixish. Well, I think that is a good suggestion, Mr. Chairman. I think that OILSR should work with the States to eliminate a lot of
duplication. It is my information that the only State whose property report is accepted by OILSR is California.
Chairman ASHLEY. Well, it certainly suggests itself to me that this might be an area that together we might look at closely. It would seem to me to be one way of encouraging the States to direct their attention to this matter in the first instance; and it would help to eliminate costly duplication, which obviously is paid for in large measure by the taxpayers, be they Federal or State.
Mr. MINISH. Well, Mr. Chairman, I agree with you that there should be cooperation. But I get a little concerned, whether many States have the interest or ability to do the job. I am reminded, and I am sure you are well aware of, the meat inspection issue, where some of the people who were against Federal legislation said that the States could do it. Then the people who were managing the bill showed pictures in the Speakers lobby of what the States were doing. And I think that if anyone here saw some of those pictures, he would probably be a vegetarian from that day on. (Laughter.]
So I question whether the States have the will or the means to regulate land sales by themselves.
Chairman ASHLEY. Well, it strikes me that we might consider establishing some kind of Federal standards to be met by the States, at least where there is the duplication and the States don't do everything that OILSR does, because the problem from the Federal standpoint is broader than that of the States, I suspect. I seems to me that through the establishment of standards, where appropriate and where those standards are met, duplication could be eliminated. It would be a good idea.
Mr. Grassley, any questions?
Before I ask our colleague a question, I would like to say that I worked very closely with Mr. Minish on this legislation and I think he needs to be complimented for his hard work. I am the ranking Republican member
and, even though we don't agree on everything, I find that he has a fine reputation around here, and it has been supported by my work with him. He probably doesn't need any flowers thrown in his path, but in all the investigations I have shared the podium with him, I found him to be very thorough and very extensive, and a person that can ask fair and penetrating questions to get to the bottom of things.
So I feel your calling him as a witness is a good place to start the meeting, Mr. Chairman.
Mr. Minish, I was interested in your discussion concerning Sherwood Forest. Starting on page 3 of your statement about the Nelson bill, where you state that it will exempt some of the worst interstate developers, your testimony deals almost exclusively with that 100-mile exemption. I was wondering if there was any other problems with that bill, and specifically, do you have any specific examples related to the Nelson exemption of where there are other problems.
Mr. MInish. Well, Mr. Grassley, first of all, thank you for your kind remarks. The think that upsets me most about the hill is that 100mile exemption. Mr. Green, who is from New York City, has a lot of constituents who could be burned and who would not be protected under the Nelson bill. And while there are many other problems-I
don't have the bill before me and I don't know all of the specifics of it, I would say that that alone is enough information to make you be against it. There is the self-executing problem, also.
Mr. Grassley. What you could do is, if you think of any of the others, you could submit them to us in writing. I would appreciate that.
Mr. Mixish. I will have my staff provide a summary of all the problems in the Nelson bill.
[The following summary of problems in the Nelson bill was provided for the record by Congressman Minish:]
PRESENT STATUS OF THE NELSON PROPOSAL
As you know, S. 3084, the Housing and Community Development Amend-
1. Policy Objections. The investigation which our Subcommittee has pursued has shown that large numbers of consumers continue to be de frauded or disappointed by land developers every year. It is widely agreed that the federal law is inadequate to protect lot buyers. Two bills (our proposal, H.R. 12574 and the Carter Administration's proposal) would make the Interstate Land Sales Full Disclosure Act significantly tougher, but neither of those reform proposals is included in either of the Housing bills.
Therefore, under the rules of the conference, the only question for the conferees is whether to provide more exemptions to an already inadequate law. There is no possibility of getting any consumer-oriented amendments into the final Housing bill. In light of the results of our investigation and the testimony which has been given at the various hearings held on land sales, it would be irresponsible for the Congress to make exemptions for developers the only concern of its legislation. Any land sales amendments should be primarily concerned with protecting the public, not with taking care of developers.
It should be pointed out that since lot purchasers have little or no organized voice in Washington, the only way to get any increased pro tection for them may be to tie it to changes in the law that the land sales industry wants. If the Congress accepts the Nelson amendments by themselves, even the possibility of a tradeoff will be non-existent.
2. Procedural objections. If the conference committee accepts the Nelson proposals, it will be short circuiting the legislative process.
As you know, although tho House suboanmittees (ours and the Housing Subcomittee) have held hearings on land sales, there have been no markups of any of the various proposals for change. NO member of the House has voted on arry land sales amendments.
The Senate's procedure in adopting the Nelson proposal was disjointed, to say the least. The impetus for the Nelson bill came out of hearings, ciaired by Senator Nelson, which the Senate Small Business Carmittee held in January of this year. Besides the Office of Interstate Land Sales Registration of H.U.D., which administers the federal law, the only other witnesses were developers or other representatives of the land sales industry.
NO representatives of the lot-buying public testified. Shortly thereafter, Serator Nelson introduced a bill, s. 2716, which provided a number of new exemptions from the Interstate Land Sales Act. The bill made no attempt to deal with consumer problems.
The Nelson bill was introduced as an amendment to the Housing bill which was marked up by the Senate Banking Committee in May, 1978. The Senate Carmittee deleted the consumer-oriented reforms which were in the original Carter Achministration proposal and substituted the Nelson bill. The committse had held no hearings on the Nelson bill prior to accepting it. In the face of strenuous objections by Senator Williams, the Cammittee scheduled hearings on land sales to be held before consideration of the Housing bill by the full Senate. At those hearings, a number of witnesses, including yourself, H.U.D., public interest groups and plaintiffs' attorneys testified about the large loopholes which would be created by the Nelson proposals. Despite extensive criticisn, only minor changes were made to the Nelson amendments before their passage by the full Senate. Hopefully, the conference committee will decide to reject these ill-considered and one-sided amendments.
3. Substantive Objections. Although there may be some need for clarification of the jurisdiction of OILSR, the Nelson bill goes far beyond its stated purpose and adds new exemptions which would apply to some of the biggest and worst developments in the country. The following is our analysis of several of the Nelson proposals.
(a) The 54-5-lot Exemption. The Nelson bill would amend section 1403 of the Interstate Land Sales Act to exempt from its disclosure requirements any developer who sells no more than five lots or five percent of his total lots sold during a calendar year (whichever is greater) to out-of