Chap. 55.—An ACT to promote public health, safety, morals and general welfare
by providing for the construction and supervision of safe and sanitary dwell-
ings and apartments, and for the renting thereof at reasonable rentals; the
elimination of unsanitary and dangerous housing conditions; authorizing the
incorporation of limited dividend housing companies, and prescribing the
powers, rights and duties thereof; creating a State board of housing for
the purpose of encouraging, approving, assisting, supervising and regulating
such activities, prescribing and defining the powers and duties of board, in-
cluding supervisory and regulatory powers, over limited dividend housing
companies engaged in such activities, authorizing the board to fix within cer-
tain limits rentals of housing accommodations furnished by limited dividend
housing companies. [H. B. 46]

Approved September 13, 1933

Be it enacted by the General Assembly of Virginia as follows:

1. This act shall be known as the “State Housing Law.”

2. It is hereby declared that it is necessary in the public interest to
make provisions for housing families of low income and to provide for
the elimination of congested and unsanitary housing conditions which
exist in certain areas of the State and which are a menace to the health,
safety, morals, welfare, and reasonable comfort of the citizens of the
State. The providing of such housing for families of low incomes and
the correction of these conditions in such areas being now otherwise
impossible, it is essential that provision be made for the investment of
private funds at low interest rates, the acquisition at fair prices of
adequate parcels of land, the construction of new housing facilities
under public supervision in accord with proper standards of sanitation
and safety and at a cost which will permit monthly rentals which wage
earners can afford to pay, and for the gradual demolition of existing
unsanitary and unsafe housing. Therefore, there are created and au-
thorized the agencies and instrumentalities hereinafter prescribed which
are declared to be the agencies and instrumentalities of the State for the
purpose of attaining the ends herein recited, and their necessity in the
public interest is hereby declared as a matter of legislative determination.

3. There is hereby created and established a State Board of Housing,
to consist of three members as follows: the State Health Commissioner,
the Commissioner of Public Welfare and the Commissioner of Labor.
No additional compensation shall be paid to the three director mem-
bers of the Board for services performed as members of the Board.

4. The members of the Board shall choose from among their number
a chairman and vice-chairman, and the board may appoint such other
officers and employees, including a secretary, as it may require for the
performance of its duties, and shall fix and determine their qualifica-
tions, duties and salaries.
5. No housing project proposed by a limited dividend housing cor-
poration incorporated under this act shall be undertaken, and no build-
ing or other construction proposed by any such limited dividend housing
corporation shall be placed under contract or started without the ap-
proval of the Board. No housing project shall be approved by the
Board unless:

(a) It shall appear practicable to rent the housing accommodations
to be created at rentals not exceeding those prescribed by the Board.
No such project shall be approved in contravention of any zoning or
building ordinance in effect in the locality in which designated areas are
located.

(b) There shall be submitted to the Board a financial plan in such
form and with such assurances as the Board may prescribe to raise the
actual cost of the lands and projected improvements by subscriptions to
or the sale of the stock, income debentures and mortgage bonds of such
corporation. The plan may provide for the raising of working capital
in an amount to be approved by the board not to exceed three per
centum of the actual cost through the investment in stock and income
debentures of the corporation. Whenever reference is made in this
act to cost of projects or of buildings and improvements in projects, such
cost shall include charges for financing and supervision approved by the
Board and carrying charges during construction required in the project
including interest on borrowed and, where approved by the Board, on
invested capital.

(c) There shall be such plans of site development and buildings as
show conformity to reasonable standards of health, sanitation, safety
and provisions for light and air, accompanied by proper specifications
and estimates of cost. Such plans and specifications shall not in any case
fall below the requirements of the health, sanitation, safety and housing
laws of the State and shall meet superior requirements if prescribed by
local laws and ordinances.

(d) The plans and specifications mentioned in the preceding para-
graph shall have been submitted to the city plan commission, if such
there be, of the city in which the housing project is located. Such com-
mission shall return the plans and specifications to the Board within
fifteen days of their receipt by the Commission, together with such state-
ments and recommendations as the commission may desire to make.
It shall be within the discretion of the Board to adopt or to reject any
or all of such recommendations.

_(e) If required by the Board, the corporation shall deposit all
moneys received by it as proceeds of its mortgage bonds, notes, income
debentures, or stock, with a trustee which shall be a bank or trust
company authorized to do business in this State and such trustee shall
receive stich moneys and make payment therefrom for the acquisition of
land, the construction of improvements and other items entering into
cost of land improvements upon presentation of draft, check or order
signed by a proper officer of the corporation and, if required by the
Board, countersigned by the said Board or a person designated by it for
said purpose. Any funds remaining in the custody of said trustee after
the completion of the said project and payment or arrangement in a
manner satisfactory to the Board for payment in full thereof shall be
paid to the corporation. :

6. The Board shall have power to investigate into the affairs of
limited dividend housing companies, incorporated under this act, and
into the dealings, transactions, or relationships of such companies with
other persons. Any of the investigations provided for in this act may
be conducted by the Board or by a committee to be appointed by the
Board consisting of one or more members of the Board. Each member
of the Board or a committee thereof shall have power to administer
oaths, take affidavits and to make personal inspections of all places to
which their duties relate. The Board or a committee thereof shall have
power to subpoena and require the attendance of witnesses and the pro-
duction of books and papers pertaining to the investigations and in-
quiries authorized in this act and to examine them in relation to any
matter it has power to investigate, and to issue commissions for the ex-
amination of witnesses who are out of the State or unable to attend
before the Board or excused from attendance.

7. The Board is hereby empowered to (a) study housing conditions
and needs throughout the State to determine in what areas congested
and unsanitary housing conditions constitute a menace to the health,
safety, morals, welfare and reasonable comfort of the citizens of the
State, (b) prepare programs for correcting such conditions, (c) col-
lect and distribute information relating to housing, (d) investigate all
matters affecting the cost of construction or production of dwellings,
(e) study means of lowering rents of dwellings by securing economy in
the construction and arrangement of buildings, ({) recommend and ap-
prove the areas within which or adjacent to which the construction of
housing projects by limited dividend housing companies: may be under-
taken, and (g) co-operate with local housing officials and planning com-
missions or similar bodies in cities and other localities in developments
of projects they at any time may have under consideration.

8. The board may permit the consolidation of two or more approved
projects or the extension or amendment of any approval project or the
consolidation of any approved project with a proposed project. In any
of these events, the consolidation project shall be treated as an original
project and an application shall be submitted as in the case of an original
project and rents may be averaged throughout the consolidated or ex-
tended project. The Board may likewise permit or decline to permit
any limited dividend corporation to organize and operate more than one
project or to take over any project heretofore approved by the Board
and to operate it independently of other projects of the corporation.

9. In pursuance of its power and authority to supervise and regulate
the operations of limited dividend housing companies incorporated
under this act the Board may: |

(a) Order any such corporation to make, at its expense, such repairs
and improvements as will preserve or promote the health and safety of.
the occupants of buildings and structures owned or operated by such
corporations.

(b) Order all such corporations to do such acts as may be necessary
to comply with the provisions of the law, the rules and regulations
adopted by the Board or by the terms of any project approved by the
Board, or to refrain from doing any acts in violation thereof.

(c) Examine all such corporations and keep informed as to their
general condition, their capitalization and the manner in which their
property is constructed, leased, operated or managed.

(d) Either through its members or agents duly authorized by it,
enter in or upon and inspect the property, equipment, buildings, plants,
offices, apparatus and devices of any such corporation, examine all
books, contracts, records, documents and papers of any such corporation
and by subpoena duces tecum compel the production thereof.

(e) In its discretion prescribe uniform methods and forms of keep-
ing accounts, records and books to be observed by such companies and to
prescribe by order accounts in which particular outlays and receipt shall
be entered, charged or credited. :

(f£) Require every such corporation to file with the Board an annual
report setting forth such information as the Board may require verified
by the oath of the president and general manager or receiver if any
thereof, or by the person required to file the same. Such report shall
be in the form, cover the period and be filed at the time prescribed by the
Board. The Board may further require specific answers to questions
upon which the Board may desire information and may also require
such corporation to file periodic reports in the form covering the period
and at the time prescribed by the Board.

(g) From time to time make, amend and repeal rules and regula-
tions for carrying into effect the provisions of this act.

10. The Board shall fix the maximum rental or charges per room to
be charged the tenants of the housing accommodations furnished by such
corporation. Such maximum rental or charges shall be determined
upon the basis of the actual final cost of the project containing such
rooms so as to secure, together with all other income of the corporation,
a sufficient income to meet all necessary payments to be made by said
corporations, as hereinafter prescribed, and such room rental rates or
charges shall be subject to revision by the Board from time to time. The
payments to be made by such corporation shall be (a) all fixed charges,
and all operating and maintenance charges and expenses which shall in-
clude taxes, assessments, insurance, amortization charges in amounts ap-
proved by the Board to amortize the mortgage indebtedness in whole or
in part, depreciation charges, if, when and to the extent deemed neces-
sary by the Board; reserves, sinking funds and corporate expenses essen-
tial to operation and management of the project in amounts approved by
the Board. (b) A dividend not exceeding the maximum fixed by this act
upon the stock of the corporation allotted to the project by the Board.

(c) Where feasible in the discretion of the Board, a sinking fund in
an amount to be fixed by the Board for the gradual retirement of! the
stock, and income debentures of the corporation to the extent permitted
by this act. ,

Letting, subletting or assignment of leases of apartments in such
buildings or structures at greater rentals than prescribed by the order
of the Board are prohibited and all such leases will be void for all pur-
poses.

11. (1) Reorganization of limited dividend housing companies shall
be subject to the supervision and control of the Board and no such re-
organization shall be had without the authorization of such Board.

(2) Upon all such reorganizations the amount of capitalization, in-
cluding therein all stocks, income debentures and bonds and other evi-
dence of indebtedness shall be such as is authorized by the Board which,
in making its determination, shall not exceed the fair value of the prop-
erty involved.

12. Whenever the Board shall be of the opinion that any such
limited dividend housing company is failing or omitting, or about to
fail or omit to do anything required of it by law or by order of the
Board and is doing or about to do anything, or permitting anything or
about to permit anything to be done, contrary to and in violation of law
or of any order of the Board, or which is improvident or prejudicial to
the interests of the public, the lienholders or the stockholders, it shall
commence an action or proceeding in the circuit court of the county, or
in any court of record of the city in which the said company 1s located,
in the name of the Board for the purpose of having such violations or
threatened violations stopped and prevented either by mandamus or in-
junction. The Board shall begin such action or proceeding by a peti-
tion to the said court, alleging the violation complained of and praying
for appropriate relief by way of mandamus or injunction. It shall
thereupon be the duty of the court to specify the time, not exceeding
twenty days after service of a copy of the petition, within which the
corporation complained of must answer the petition.

In case of default in answer or after the court shall immediately in-
quire into the facts and circumstances in such manner as the court shall
direct without other or formal pleadings, and without respect to any
technical requirements. Such other persons or corporations as it shall
seem to the court necessary or proper to join as parties in order to make
its order or judgment effective, may be joined as parties. The final
judgment in any such action or proceeding shall either dismiss the action
or proceeding or direct that a mandamus order or an injunction, or both,
be issued as prayed for in the petition or in such modified or other form
as the court may determine will afford appropriate relief.

13. When the Board shall have approved a project for the construc-
tion of housing accommodations presented to it by a limited dividend
housing company, such company may undertake the acquisition of the
property needed for said project. Such property may be acquired by
gift, bequest or purchase, or, in the case of limited dividend housing
companies, by the exercise of the power of eminent domain, under and
pursuant to the law providing for the appropriation or condemnation
of private property by corporations. The power of eminent domain
shall not be exercised by a limited dividend housing company except
with specific authorization of such action by the Board and for such
purpose the Board shall specify that the acquisition of the property and
the construction of the particular housing accommodations in connec-
tion with which said power is required has been determined by the
Board, after public hearing, to be in the public interest and necessary
for the public use. The hearing shall be held at a time and place ap-
pointed by the Board, and notice of such hearing shall be given by the
corporation by one publication in a newspaper, designated by the Board,
published or circulated in the city or county wherein the property is
located, at least twenty days prior to such hearing. The owner or owners
as shown upon the county auditor’s current tax duplicate of such prop-
erty as is proposed to be acquired shall also be notified at least twenty
days prior to such hearing by registered mail addressed to the last
known address of such owner or owners.

The Board may expressly except from its certificate hereunder any
part of the property proposed to be acquired as unnecessary to the plan.
The approval by the Board of the project shall be deemed in any pro-
ceeding to acquire land by appropriation as sufficient evidence of the
necessity of the appropriation and a duly certified copy of the certificate
of the Board shall be conclusive evidence as to the matters lawfully
certified therein in any appropriation proceeding.

14. Whenever the council of any municipality in which a project
approved by the Board is located shall determine by ordinance that any
part of the land included in any such project should be maintained as
a public park or grounds, such land may be purchased by the munici-
pality for such purpose, and thereafter be maintained as a public park
or grounds. The council of a municipality by ordinance may also de-
termine that real property of the municipality, specified and described in
such ordinance, is not required for use by the municipality and may
sell or lease such real property to a limited dividend housing company
incorporated under this act, after giving notice by advertisement once
each week for three consecutive weeks in a newspaper of general cir-
culation in the city, of the property proposed to be sold or leased and of
the terms of such proposed sale or lease.

15. Any number of natural persons, not less than three, a majority
of whom are citizens of this State, may become a corporation by sub-
scribing, acknowledging and filing in the office of the State Corporation
Commission, articles of incorporation, hereinafter called “Articles,”
setting forth the information required by the general corporation act of
the State, except as herein modified or changed.

(a) The purposes for which a limited dividend housing company
is to be formed shall be as follows: To acquire, construct, maintain and
operate housing projects when authorized by and subject to the super-
vision of the Board of Housing.

(b) The shares of which the capital shall consist shall have a par
value.

(c) Articles of incorporation shall contain a declaration that the
corporation has been organized to serve a public purpose and that it
shall remain at all times subject to the supervision and control of the
Board or of other appropriate State authority; that all real estate
acquired by it and all structures erected by it, shall be deemed to be
acquired for the purpose of promoting the public health and safety and
subject to the provisions of the State housing law and that the stock-
holders of this corporation shall be deemed, when they subscribe to and
receive the stock thereof, to have agreed that they shall at no time re-
ceive or accept from the company, in repayment of their investment in
its stock, any sums in excess of the par value of the stock, together with
cumulative dividends at the rate of six per centum per annum, and that
any surplus in excess of such amount if said company shall be dissolved,
shall revert to the State.

(d) The provisions of the general corporation laws of the State, as
hereafter from time to time amended, shall apply to limited dividend
housing companies, except where such provisions are in conflict here-
with.

16. No stockholder in any company formed hereunder shall receive
any dividend in any one year in excess of six per centum per annum
except that when in any preceding year dividends in the amount pre-
scribed in the articles of incorporation shall not have been paid on
the said stock, the stockholders may be paid such deficiency without
interest out of any surplus earned in any succeeding years.

17. No limited dividend housing company incorporated under this
act shall issue stock, bonds or income debentures, except for money or
property actually received for the use and lawful purpose of the cor-
poration. No stock, bonds or income debentures shall be issued for
property except upon a valuation approved by the Board of Housing
and such valuation shall be used in computing actual or estimated cost.

The Board of Housing may permit stock or income debentures to
be issued to any amount not exceeding three per centum of the esti-
mated total cost, or three per centum of the actual cost if actual cost
should exceed estimated cost, of a project for working capital to be used
in connection with such project.

18. No limited dividend housing company incorporated under this
act shall:

(1) Acquire any real property or interest therein unless it shall
first have obtained from the Board a certificate that such acquisition is
necessary or convenient for the public purpose defined in this act.

(2) Sell, transfer, assign or lease any real property except to an-
other limited dividend housing company formed under this article,
and without first having obtained the consent of the Board, provided,
however, that leases conforming to the regulations and rules of the
Board and for actual occupancy by the lessees may be made without the
consent of the Board. Any conveyance, incumbrance, lease or sub-
lease made in violation of the provisions of this section and any transfer
or assignment thereof shall be void.

(3) Pay interest returns on its mortgage indebtedness and its income
debenture certificates at a higher rate than six per centum per annum.

(4) Issue its stock, debentures and bonds covering any project
undertaken by it in an amount greater in the aggregate than the total
actual final cost of such project, including the lands, improvements,
charges for financing and supervision approved by the Board and in-
terest and other carrying charges during construction, and an allowance
for working capital to be approved by the Board but not exceeding
three per centum of the estimated cost, or of the total actual final cost
of the project shall be greater than the estimated cost.

(5) Mortgage any real property without first having obtained the
consent of the Board.

(6) Issue any securities or evidences of indebtedness without first
having obtained the approval of the Board.

(7) Use any building erected or acquired by it for other than hous-
ing purposes, except that when permitted by law the story of the build-
ing above the cellar or basement and the space below such story may be
used for stores, commercial, co-operative or community purposes, and
when permitted by law the roof may be used for co-operative or com-
munity purposes.

(8) Charge or accept any rental fee or other charge for housing
accommodations in any building constructed, acquired, operated or
managed by it in excess of the price prescribed by the Board.

(9) Enter into contracts for the construction of housing projects,
or for the payments of salaries to officers or employees except subject
to the inspection and revision of the Board and under such regulations
as the Board may from time to time prescribe.

(10) Voluntarily dissolve without first having obtained the consent
of the Board. |

(11) Make any guaranty without the approval of the Board.

19. Any company formed under this act may, subject to the ap-
proval of the Board, borrow funds and secure the repayment thereof
by bond and mortgage or by an issue of bonds under trust indenture.
Each mortgage and issue of bonds by a company formed hereunder
shall relate only to a single specified project and no other, and said
bonds shall be secured by mortgage upon all of the real property of
which said project consists. The bonds so issued and secured and the
mortgage or trust indentures relating thereto, may create a first or
senior lien and a second or junior lien upon the real property embraced
in any project. Such bonds and mortgages may contain such other
clauses and provisions as shall be approved by the Board, including the
right to assignment of rents and entry into possession in case of default ;
but the operation of the housing projects in the event of such entry by
mortgages or receiver shall be subject to the regulations of the Board
under this act. Provisions for the amortization of the bonded 1in-
debtedness of companies formed under this act shall be subject to the
approval of the Board.

20. The amount of net earnings transferable to surplus in any year
after making or providing for the payments specified in subdivisions
(a), (b) and (c) of section ten of this act shall be subject to the ap-
proval of the Board. The amount of such surplus shall not exceed
fifteen per centum of the outstanding capital stock and income deben-
1933] | ACTS OF ASSEMBLY 105

tures of the corporation, but the surplus so limited shall not be deemed
to include any increase in assets due to reduction of mortgage or
amortization or similar payments. On dissolution of any limited divi-
dend housing company, the stockholders and income debenture cer-
tificate holders shall in no event receive more than the par value of their
stock and debentures plus accumulated, accrued and unpaid dividend
or interest, and any remaining surplus shall be paid into the general
fund of this State. |

21. If in any calendar or fiscal year the gross receipts of any com-
pany formed hereunder should exceed the payments or charges speci-
hed in section ten, the sums necessary to pay dividends, interest accrued
or unpaid on any stock or income debentures, and the authorized
transfer to surplus, the balance shall, unless the board of directors with
the approval of the Board of Housing shall deem such balance too small
for the purpose, be applied to the reduction of rentals.

22. Any person directly affected and aggrieved by any order or de-
cision of the Board may appeal within twenty days after the rendering
of such order or decision to the circuit court of the county, or to any
court of record of the city, as the case may be in which the premises to
which the order or decision relates are situated, for the purpose of
having the reasonableness and lawfulness of the order or decision in-
quired into and determined. The party taking such appeal shall set
forth in the appeal filed by him his objections to the order or decision
and the manner in which he is aggrieved thereby. Within three days
after the filing of the appeal he shall file with the Board written notice
thereof and the Board shall, within five days after receiving such written
notice, file with the clerk of the court to which such appeal is taken, a
certified copy of the order or decision appealed from and within ten
days thereafter all documents and exhibits considered by the Board in
the matter, accompanied by a statement of the facts and reasons on
which the order or decision is based and, if available, a transcript of the
testimony taken at the hearing.

The party taking the appeal shall file within five days after service
of notice upon the Board a copy of said notice with proof of service
with the clerk of the court and thereupon the court shall have jurisdic-
tion in said appeal and the same shall be entered upon the records of
the court and shall be tried therein without formal pleadings.

_ The court shall hear and determine such appeal with all convenient
speed on the record before the Board and on such new and additional
evidence as may be offered by either party. An order or decision of the
Board shall be held prima facie to be reasonable and the burden of
proof in all issues raised by the appeal shall be on the party appealing.

Any party directly affected by any order or decision of the Board
who shall fail to file an appeal as herein provided to such order or de-
cision, shall be deemed to have assented thereto.

Any notice or other instrument in writing may be served upon the
Board by delivering the same to the chairman, vice-chairman or secre-
tary of the board, or, if none of such officers can be found, by a copy left
at the office or usual place of business of the Board with the person
having charge thereof. ,

23. Before any limited dividend housing corporation incorporated
under this act shall purchase the property of any other limited divi-
dend housing corporation, it shall file an application with the Board in
the manner hereinbefore provided as for a new project and shall obtain
the consent of the Board to the purchase and agree to be bound by the
provisions of this act, and the Board shall not give its consent unless it
is shown to the satisfaction of the Board that the project is one that can
be successfully operated according to the provisions of this act.

24. In the event of a judgment against a limited dividend housing
corporation in any action not pertaining to the collection of a mortgage
indebtedness, there shall be no sale of any of the real property of such
corporation except upon sixty days’ written notice to the Board. Upon
receipt of such notice the Board shall take such steps as in its judgment
may be necessary to protect the rights of all parties.

25. The Board may charge and collect for a limited dividend housing
corporation, incorporated under this act, reasonable fees in accordance
with rates to be established by the rules of the Board for the examina-
tion of plans and specifications and the supervision of construction in
an amount not to exceed one-half of one per centum of the cost of the
project; for the holding of a public hearing upon application of a
housing corporation the amount sufficient to meet the reasonable cost of
advertising the notice thereof and of the transcript of testimony taken
thereat; for any examination or investigation made upon application
of a housing corporation and for any act done by the Board, or any of
its employees, in performance of their duties under this act an amount
reasonably calculated to meet the expenses of the Board incurred in
connection therewith. The Board may authorize a housing corporation
to include such fees as part of the cost of a project, or as part of the
charges specified in section ten of this act pursuant to rules to be estab-
lished by the Board. :

- 25-a. Limited dividend housing corporations incorporated under the
provisions of this act are hereby prohibited from acquiring any real
estate, and from building, constructing, owning, maintaining and/or
operating any buildings or project in any county, city and town of the
Commonwealth, except in cities having a population in excess of one
hundred and seventy thousand inhabitants according to the census of
nineteen hundred and thirty.

26. The provisions of this act shall be severable and if any of its
provisions shall be held to be unconstitutional the decision so holding
shall not be construed to affect the validity of any of the remaining pro-
visions of this act. It is hereby declared as the legislative intent that
this act would have been adopted had such unconstitutional provision
not been included therein.

27. An emergency existing, this act shall be in force from its passage.
1933] ACTS OF ASSEMBLY 107