BUT, OF COURSE, you can never have a home of your own in the Navy!” This statement has been repeated, sighingly, so frequently and has fallen so often upon resignedly agreeing ears, that the very truth and certainty of it is accepted in the same category with death and taxes.
If the situation which gives rise to this exclamation is not pitiful enough, there is yet another implication, and an even more serious one, since in the above statement there is at least an underlying, even if unexpressed, attitude of hope.
But what of the average naval officer when he comes to retirement? He has spent thousands of dollars upon houses— other people’s houses—and what has he to show for it?
Disagreeable memories, for the most part, of a furnace which burned coal in abundance but would not heat the house; of a leaky roof; of antiquated plumbing; of myriad repairs—promised, but never made; memories, in short, of an endless procession of landlords. A few of them were likable, to be sure, but all possessing an interest diametrically opposed to that of the tenant.
The problem of the naval officer on active duty is to obtain maximum housing facilities for his family with a minimum rental outlay. This basic mission is so often complicated by the requirements of proximity to the activity to which the officer is attached, to schools, shopping districts, etc., that, in the final analysis, the vicinity in which an officer may choose a house is rather narrowly limited. The owners of such houses are never unmindful either of the compulsion under which the officer is forced to choose or the maximum rental rate which the naval officer traffic can be made to bear. It has long been axiomatic among real estate men in coastal cities that “the Navy holds the rents up”—as most assuredly it does.
It is fair to say that, with the exception of a few large cities in which naval activities are located, were it not for the naval personnel, rents would be nowhere near their present high level. In other words, the Navy itself creates the value for which, in the end, it is forced to pay an additional premium. It is because of this peculiar fact that rental allowances, based upon a national average, are almost always inadequate. Thus it is not that the naval officer is financially able to pay more rent than the civilian, but in the case of the former, the compulsion is greater. The civilian, with his comparative permanence of tenure, will buy or build before he will submit to exorbitant rentals. To the naval officer, however, with his brief tour of duty, this very logical recourse has been closed; he must accept what is offered and pay what is asked.
And pay he does; make no mistake about it. During the course of the average naval officer’s career a sum sufficient to build an extremely comfortable, not to say magnificent, home, is expended in rent. A handsome yield is thus realized on the composite real investment; a yield, however, on someone else’s investment!
The purpose of this article, however, is not to add another voice to the loud but ineffective chorus at the wailing wall of helplessness. I propose a Declaration of Independence of Landlords; I submit that you can own your own home in the Navy!
The plan by which I propose to accomplish this is fundamentally one which has been proved hundreds of thousands of times, by our own people and within our own borders. It is not a visionary ideal nor is it a utopian dream impossible of fulfillment. It is American—both in its concept and in its proposed execution.
Consider, first, the simple purchase of a home by a naval officer on the installment plan. This has been done in not a few instances but it is, for the average person who has but his salary, a very hazardous undertaking. Let us take the case of Lieutenant Bill Jones, who has just purchased a house in Honolulu, say. It happens that Jones has been able to scrape enough money together to make the required down payment and has arranged the installments to correspond as closely as possible to his rental allowance. Now, if Jones spends three years in the Islands, he will find that he has purchased a sizable equity in his home. But in order to secure this equity, he must continue his monthly payments. Ah, there’s the rub!
Jones receives his orders to San Diego, and begins at once to look for someone to whom he might rent his house. If he is fortunate, he may find a tenant at once; if not, he must put his house—and his trust—in an agent, and hope for the best. Say that Jones found to his sorrow that, to him, his house was the answer to a life-long prayer; but to others it was merely a house, perhaps an inconveniently located one. A house, moreover, which called for a rental above that which the average person was willing to pay. What happens?
Jones, upon his arrival in San Diego, must at once begin to pay rent there—in addition to meeting his payments every month on the house in Honolulu. This last he must do upon pain of losing his equity; but how long can he stand to carry it vacant? By the practice of strict economy and narrow budgeting, he may struggle along for a short while—but what of other expenses? He finds, perhaps, that the old car just can’t hold out any longer; he must trade it in on a new one and begin the inevitable payments.
This is more than Jones bargained for. He requests a bank loan, but finds that he is unable to carry the monthly interest and principal repayment charges necessary to float it. A request for leniency is denied by return mail from the realtors in Honolulu.
Of course, you have long since foretold Jones’s loss of his cherished dream—and equity.
He was unusually unfortunate, you say. Perhaps you think that he tried to operate on too scanty a margin. The real cause of Jones’s downfall, however, is much deeper; he attempted a deep descent into the sea of home finance with naught but the shallow-water helmet of his own limited resources. Jones cannot hope to plant his feet safely on the bottom without the aid of a strong arm of responsibility at the financial air pump.
Let us now look at Jones’s case amid circumstances more fortunate. Let us say that just prior to receiving his orders to San Diego, Jones heard that a classmate, Smith, was being ordered to Honolulu. Also, that Smith, like himself, was purchasing a home in the vicinity of his present station. Both officers being in the same plight, it was a very simple matter to arrange to exchange houses, Jones moving to Smith’s house in San Diego while Smith occupied Jones’s house in Honolulu. The houses, let us say, were of comparative size and value, hence the rentals (monthly payments) were in harmony with local levels. Since each officer had the basic interests of the home owner at heart, there was surprisingly little call for maintenance expense. A water leak here, a terracing job there, and countless other repairs and improvements—all were attended to by the tenants and the material expense amicably adjusted. The work of betterment went on continuously, each for the other, and a real joy was found in the dividend-paying employment of spare time. There were none of the usual tenant- landlord difficulties, for the very cogent reason that the interests of the one were the concern of the other.
When Jones’s tour of duty at San Diego was completed, he had the great good fortune to be ordered to the navy yard at Bremerton, where Lieutenant Noble, who was purchasing a home, had just received his orders to Honolulu. Again an exchange was effected; the houses in Honolulu and Bremerton being idle but the short while necessary for painting and renovating. To complete this cycle of almost incredible good luck, let us assume that Smith, upon leaving Honolulu for Annapolis, was equally fortunate in being able to make an exchange with an officer leaving the Naval Academy for destroyers in San Diego.
At the end of a few years Jones finds that the house in Honolulu is his—deed and title! It has been vacant far less than the commercial realtor’s most optimistic prediction. Jones, in effect, has been transferring his house with him wherever he has been ordered and he has continued his payments by virtually the same money which he has paid out in rent!
But, you object, this rosy, utopian situation which I have sketched in such glowing hues is impossible of fulfillment: its success is predicated upon a chain of fortunate circumstances which could never be realized in actual, sober practice. It is highly improbable, you contend, that an officer would always be lucky enough to find an “exchange” wherever he was ordered.
Alas! Your objections are but too well- founded.
Only in a few isolated instances would we find such an “exchange” possible; the missing link would occur too frequently to insure the success of such a plan. Even if postponed for a number of years, the breakdown, when it did occur, as it almost inevitably must, would culminate in an even greater loss of equity.
But if the odds against an officer’s purchase of a home on a “rent as rent can” basis are too long to constitute a conservative investment, and if the alternate plan of the simple exchange is impossible of achievement, how, then, are we to conclude that it is possible for a naval officer to own his own home?
Before presenting my answer to this question, I wish to point out that a study of the naval housing situation has firmly convinced me that the government is not without responsibility in the matter. It is clear, certainly, that the responsibility of the government to provide adequate, comfortable, and economical housing for an officer and his family is no less than the responsibilities incurred under the general provision of maintenance of welfare and morale. It must be likewise admitted that, with the exception of adequate pay, there is no other single factor which goes to make for high morale in the case of an officer with a family as does suitable and proper housing facilities.
I maintain that the responsibility of the government is not ended with the payment to an officer of his rental allowance. It must go further; it must make sure that there is available in the vicinity of the activity to which he is ordered, a house ready for occupancy upon his arrival which is at once in keeping with the standard of living which his government expects him to maintain and its cost within the amount which it allots him for its hire.
The plan now proposed not only allows the government, without cost, to carry out its responsibility according to the principle just enunciated, but it goes much further; it assures the return of almost every dollar paid out in rent over the entire period of an officer’s career, in cash or real property, upon his retirement from the service!
Simple, almost singularly devoid of obfuscating complexities, the plan is at once eminently practicable, soundly workable. It contemplates at the outset the creation within the Navy Department of a quasi-public corporation to be known as the Naval Quarters Authority. This organization is to be staffed from officer personnel of the Navy—line, construction, civil engineer, and supply—talent from all of these corps to be drawn upon as necessary. The initial capital outlay of the Authority is to be constituted in an authorized government loan of $50,000,000 at an interest rate not exceeding that of its cost to the government (i.e., the Authority to pay no higher rate of interest than that paid by the government on the bonds required to raise it). This authorized loan to be drawn upon as necessary and secured to the government by deposit of title to real property purchased by the Authority. The point of withdrawing the loan only as required is made since the Authority is to pay interest only on those funds actually withdrawn from the Treasury.
Contingent expenses of the Authority, clerk and stenographer hire, office expenses, appraiser’s fees, etc., are to be borne on a pro-rata basis by those participating in the benefits of the Authority.
The field organization of the Authority is to consist of a board of three officers (one to be a civil engineer and one a graduate in law) at each navy yard, naval station, and fleet base. An experienced civilian real appraiser, thoroughly acquainted with local values and trends, will work on a contingent fee basis with each board.
These field boards are to receive applications for equity purchase (requests to occupy houses of the Authority and to participate in the purchase plan); investigate and recommend purchase of (1) houses already built and (2) sites for future building; and handle all matters of upkeep, maintenance, and repair of properties under the administration of the Authority. In general the boards will exercise control and supervision over all local matters, under the direction of the Naval Quarters Authority.
The plan contemplates, also, the transfer of all housing facilities within navy yards, naval stations, etc., from the Navy to the Naval Quarters Authority by means of leases, in perpetuity, for no consideration. The Authority to assume responsibility for control (other than military), upkeep, and maintenance of all quarters so transferred. This procedure is made necessary in order that an officer ordered to duty where there are government quarters available may not lose the benefits of the Authority.
With this brief sketch of the organization of the Authority in mind, let us take an example to see how the plan works out in practice. We will assume that the plan has just been instituted and that there is no property under the control of the Authority at the particular station selected.
Let us assume, then, that Ensign Gish, having just joined the ranks of those who bother about houses, has decided to make his rent pay for his home. Gish makes out an application for equity purchase and files it with the local field board for consideration.
Gish has found a house which he believes would suit him perfectly, and he has described the premises in his application. The field board, upon receipt of Gish’s papers, begins a careful investigation of the property. It is first ascertained, of course, whether or not the property is for sale, and if so whether or not it can be purchased for the amount dictated by a fair and equitable appraisal. If these questions are answered in the affirmative, then the important matter of location is studied. Would the average naval officer like to live in this neighborhood? Would he like to live in this particular house? Is the neighborhood adequately protected by zoning restrictions? If not, what, in all probability, will be the character of this section of town, say ten, twenty, or thirty years hence?
Is the trend of growth of the city such that this property will appreciate in value? Is the house soundly constructed? Will it be tenable over a long period without requiring large outlays in maintenance costs?
If these and similar practical questions are satisfactorily answered the field board will forward the application, along with all pertinent facts, to the Naval Quarters Authority, Washington, with a recommendation to purchase. Here the data are checked to insure conformity with basic plans of the Authority, and if favorable a withdrawal voucher is made out against the loan, previously authorized by Congress, and presented to the Treasury. The money is credited to the account of the Authority by the Treasury, and interest is computed only on the sum withdrawn from the date of its credit to the Authority. A check is then drawn in favor of the field board and forwarded to that body to complete the mechanics of purchase.
The title will be registered in the name of the Authority and the deed forwarded for file in Washington. The property has now been bought and paid for by the Authority. Ensign Gish makes out an allotment for the amount of his rental allowance, to be paid direct to the Quarters Authority in Washington, and moves in. The plan contemplates the acquisition of both furnished and unfurnished houses to the end that those with furniture need not be forced to store their articles, and those who do not want to be encumbered with household effects need not.
Payments in liquidation of the original loan and interest charges are made to the government out of Gish’s monthly allotment. Likewise, out of his allotment comes his share of taxes, upkeep, and maintenance expense. All will be most vitally concerned, of course, in keeping the maintenance costs at a bed-rock minimum to the end that a greater proportion of the monthly payments may go to the government in prompt liquidation of the loan, and thereby reducing interest charges.
At the end of Gish’s tour of duty he will have accumulated an equity in the real property of the Authority equal, approximately, to the amount he has paid in less interest and his pro-rata share of taxes, upkeep, and overhead charges. Upon detachment, the field board will furnish Gish with a transfer of equity statement in which will be set forth the status of his account with the Authority.
Just as the Authority has acquired Gish’s house, so has it purchased other houses wherever the Navy is stationed. In some cases they are bought ready-built and in other cases, where economy and necessity dictate, sites are purchased and houses are built according to the plans of the Authority. Let us assume, further, that the plan has been in operation for a considerable period and follow young Gish to his next station.
Since a copy of his orders has been furnished the Authority, in Washington, upon issue by the Bureau of Navigation, Gish has no worries about “house hunting” when he arrives at his new place of duty. The field board at his new station has been informed by the Authority of the exact housing requirements of Gish. They have, in fact, furnished him with a complete descriptive list of houses which will be vacant at the time of the annual turnover; he has been told to indicate his choices in order of preference and return his request to the field board as early as practicable. Houses within the same rental allowance group will be assigned on a first come, first served, basis.
Thus Gish will arrive at his new station and will proceed at once to the house which the field board has made ready for him. There will be no temporary “camping” at hotels or apartments, nor will he and his family be forced to impose upon friends while “looking for a place to live.” Expenses for food and shelter, never a small item, will thus be saved.
The transfer of equity is taken up by the local field board and Gish is secure against the worries of having signed an entangling lease, of being compelled to pay a rental beyond his means, and the myriad other perturbing complexities to which a “rented” house gives rise.
The plan appreciates, of course, the increased housing facilities which Gish will require as he gains promotion and perhaps a larger family. His rental allowance, however, increases as well and we thus have the happy situation of an officer enjoying larger and more desirable quarters as he grows older, while at the same time his equity purchase is being proportionately increased.
It is needless to follow Gish through the various ranks as he moves from “home” to “home” rather than from “house” to “house” up through that “long line that leads from rear rank to rear admiral.” Suffice to realize that Gish, upon retirement, will not look back upon thousands of dollars spent to create a return upon someone else’s investment, but will himself collect the greater part of those thousands to build a home whenever or wherever he pleases. He may elect to withdraw his equity in the form of a home already in possession of the Authority or he may want his accumulated funds paid him in cash; the plan contemplates Gish’s accommodation in either case.
This, in brief, constitutes the plan whereby every officer in the Navy may save for his own home while enjoying housing facilities which, if they do not prove superior, will at least be equal to those for which he now spends irretrievable thousands.
True, to inaugurate the plan will require congressional action as well as trail-blazing in a forest heavily treed with precedent; but it is sound, workable, and above all equitable. It asks nothing of the government save a helping hand; the taxpayers are not asked to foot our bills. The plan aims merely to secure for the naval officer the opportunity to own his own home, an opportunity long open to those comparably situated civilians whose occupations give them permanence of tenure.
It is to be regretted that the senior officers may not participate in the full benefits of a long career: their money cannot be recalled. But, unfortunate though this is, in a larger sense it may well prove of incalculable benefit to the inauguration of the plan. For it will be the senior officers who must, for the benefit of those who follow them, present, defend, and institute the Naval Quarters Authority. The very fact that they can hope to profit but little, if at all, should give added weight to their recommendations.
The question is, does the Navy want this plan? If so, where there is a will there is a way—you can own your own home in the Navy!
Strategy is the art of making use of time and space. I am more parsimonious of the former than of the latter. Lost space I can always recover: but lost time, never.—GNEISENAU.