was the case for the 44 counties studied. Eighty-two percent of their bonds were issued under the provisions of the "1915 bond act” and only 18 percent under the provisions of the "1911 act."

On the basis of the problems involved in securing data for the pilot study, it would appear to be an almost impossible task to secure a complete and detailed inventory of all "special improvement districts" in the State for study unless the reporting of such information to a State agency was mandatory. In lieu of this, the most promising future study would be one that concentrated on a sample composed of the counties with the greatest number of districts. Each county selected as a part of the sample should be studied by some person, group, or agency that was completely familiar with the local area.

Another question would be: Why did the pilot study not report on the extent to which "special improvement districts" are used to finance off-site improvements in new subdivisions? The basic problem was that the records, as presently maintained, are not concerned with such information and the officials responsible for keeping current records are not the officials that created the districts. They have either no interest or very little interest in the factors which led to the establishment of a particular district.

Therefore, the original records pertaining to the creation of each district must be searched and these records are usually not in the same location as the current records. Even then, there is no black-and-white statement that a district pertained to only one subdivision. This must be deduced from either the number of names on the original petition, if any, or from the special assessment list that is the basis for the bond issue. In the latter case, the only clue is that the great majority of the properties have the owner listed as unknown if it is a new subdivision. Perhaps, if a given researcher were familiar enough with a local area, he could determine from the name given to a district whether or not it represented one new subdivision.

It would seem that a first step in exercising greater control over "special improvement districts" would be to require a more detailed record in the office of the official responsible for maintaining the current records and some form of comprehensive annual statement on the financial status of each district. In view of this, the question could be asked: What is the reason behind having "1911" bonds handled by the county treasurer and "1915" bonds handled by the county controller; does it serve a practical purpose today?

For that matter, what is the necessity of having several different statutes under which "special improvement districts" may be created and bonds issued? The purpose of such districts is to facilitate the installation of needed improvements in a given physical area and to provide a means by which property owners may spread the cost of the improvement over a period of time if they so desire. Would not one act to cover the creation of the districts and the issuance of bonds be sufficient? The present situation in California appears to maximize the possibility of confusion which, in turn, provides a more convenient cover for possible misuses of the districts and/or their bond issuing powers.

All in all, the pilot study ends with more questions to be answered then it started out to answer. It would seem that the picture of "special improvement districts" presented here could be compared to an iceberg-the observer sees only a small portion of it; the major part of its bulk remains hidden from view. (Text continued from p. 23.)

Senator WILLIAMS. Thank you.
Mr. Jensen.

STATEMENT OF ROBERT J. JENSEN, OREGON REAL ESTATE COMMISSIONER, SALEM, OREG.

Mr. JENSEN. Mr. Chairman, Senator Neuberger, members of the committee. The State of Oregon is honored and appreciates being asked to appear before your committee in relation to subdivision land sales. In 1961, in June, the real estate department became aware of the sale of large parcels of land to out-of-State buyers. A hurried investigation gave us information the majority of these purchases were for

the purpose of subdivision promotion and mainly to buyers outside the State of Oregon. Since the Oregon Legislature had recently adjourned, we felt additional investigation should be made in order to prepare legislation involving subdivision controls for the 1963 legislature. Whereas, Mr. Chairman, your committee is particularly concerned with the abuse of the elderly in relation to subdivision promotions, we also determined these sales were also pointed toward the oversea serviceman receptive to the purchase of land on which to retire and who was afraid land prices would substantially rise before he could come home. And it was also pointed toward the laborer or whitecollar worker of modest means afraid of inflation and dreaming of a bonanza through investment. We determined the success of the majority of these land speculators was due to three points: (1) The distance between the purchaser and the land offered for sale, the selling of land sight unseen; (2) the sales, the sales contract triggered to everyone's pocketbook with downpayments and monthly payments as low as $5 per lot or parcel; and (3) the advertising inducing purchasing by misleading and untrue statements and verbal promises that were not kept. In 1962, with the approval of our Governor, we began preparation of a subdivision control law. Because of the hard-hitting publicity and editorials of the news media of our State, particularly the newspapers, and of the support of the Better Business Bureau, Federal, State, and county officials and many members of the real estate industry, and an understanding legislature, Oregon today has a subdivision control law in the protection of the public and the legitimate land developer. In all respect and in all sincerity, Mr. Chairman, I believe that I can tell you that the people of our State, particularly the legitimate land developers and the real estate industry, would be opposed to total Federal legislation. We feel we have an effective and adequate subdivision law in the protection of the public, except in probably two areas.

In my opinion, no law yet conceived can give absolute protection to the public. Federal legislation would be well received in the area of Federal control over national advertising where it concerned magazines, television, radios, and national newspapers. We are hopeful that some means can be determined where the violation of the laws of one State by a developer in another State would allow the violating developer in the State in which he has his development to be prosecuted by that State. Whether that can be done or not, I do not know, Mr. Chairman. But I do believe that it behooves each State to, as quickly as possible, initiate a subdivision control law on the order of the State of California or the State of Oregon. Now I am a great respecter of Commissioner Gordon and of the State of California. However, I cannot, at this moment, agree on the fair, just, and equitable part of his law. I feel that any person purchasing a piece of property, say as an example, for $100 an acre, who can find a buyer for $500 an acre, where he tells that person the truth about that property and that piece of property is worth $500 to the prospective purchaser, I believe that purchaser should be allowed to purchase the property. I may come to a different opinion altogether on this idea, but at the moment I do believe there is a certain element of caveat emptor—let the buyer beware. And if I have the opportunity to purchase a piece

of land at a low price and through my honest ingenuity I have chance to sell that property at a good price, I believe that is my right. Senator WILLIAMS. As an example, you have in Oregon desert areas; don't you?

Mr. JENSEN. Yes, sir.

Senator WILLIAMS. And if a developer disclosed the fact that this is desert country, suggests that as a speculative proposition it might later have greater value than it has now, this would be, in your judgment, the kind of fair disclosure that would be permitted?

Mr. JENSEN. Yes, sir. We have the same as California, Senator. We have the full disclosure act, along with the added teeth of escrow. We have the public report that must be issued to each prospective purchaser and that purchaser is given information as to the vicinity of the project, the possibility of water, the rainfall, the temperature, the height above sea level, the schools-where the schools are located, whether they are 10 miles away or 100 miles away. And we do have some that are 9 miles away, I can assure you, from the project-the roads and so forth. We are able to give all this information to the prospective purchaser and we feel that he should read this and he must sign that he has received it. Then, if he wants to be gullible, we feel that is his own problem.

Senator WILLIAMS. You do not have anything comparable to the fair, just, and equitable provisions of the California law that reach the out-of-State operator?

Mr. JENSEN. No, sir. But when a developer outside of our State wishes to sell property within our State, they must pay the expenses of one of my representatives of my State department to oversee that project, check with all of the local authorities, whether it be State, Federal, county, or city officials to determine what is available to the prospective purchaser and a public report is issued.

Senator WILLIAMS. And your investigator makes an on-site inspection?

Mr. JENSEN. Yes, sir.

Senator WILLIAMS. Has there been general compliance with this by out-of-State operators?

Mr. JENSEN. We have had very little trouble, Senator. I am rather amazed at this. Of course, we have not had our law as long as California has, but the majority of these people have complied strictly with our request. When they have advertised in our State or sent brochures into the State, we have notified them that there is a law and they must comply with it and they have complied. I have been pleasantly surprised. I might say that the newspapers of our State, on the average, will not handle any advertising unless it is approved by the real estate department. They have given us tremendous support.

Senator WILLIAMS. That is one of the keys, I think, to enforcement, the full cooperation of the media and particularly the newspapers. Senator NEUBERGER. Mr. Jensen, on this application, a special note, you say, "Many regulated finance companies will not loan money." And then the next one I don't understand: "The contract to be used prohibits purchasers recording of the contract of sale."

Mr. JENSEN. This is correct, Senator. In many of the contracts, the sellers of the real estate developments put a clause in their contract that the purchaser may not record his contract until the final payment has been made or that he has had consent of the selling developer. This is for the purpose if the purchaser does not fulfill his obligation in full, in paying out the contract, the developer has a little better opportunity and easier opportunity and less expensive opportunity of getting that land back again. But we notice, in our public report, the prospective purchaser-that that clause is in there so that he knows what he is getting into.

Senator NEUBERGER. What is happening in Christmas Valley? Is anybody living there?

Mr. JENSEN. Yes. It is not developing, I believe, as the developer would like, but there are people living there. In my opinion, Senator, and it is solely my opinion, I believe that most of these types of lands have been bought for speculation, not to live in, that they are hopeful that within 5 years the lands will have increased 5 to 10 times. If you have a moment, I will read you a letter I have received. It is addressed to me,

Dear Commissioner: My aging parents sent me this enclosed advertisement and asked me to look into it. They would sell their property in Southern California and buy some of these acres with the idea of making 5 to 10 times their purchase price in a few years on which they would be able to retire comfortably. Is there any chance at all that this is possible, or would they lose their money?

Of course, I wrote this lady and I told her it would be very foolish for her parents to purchase this land without first seeing it and determining whether it was what they wanted.

Senator NEUBERGER. You didn't try to advise her beyond that she should see it?

Mr. JENSEN. This letter was written, Senator, before the subdivision law went into effect. Had it been in effect, I would have sent her a public report.

Senator NEUBERGER. And that would have shown the distance from schools, water, and all that sort of thing?

Mr. JENSEN. Right, doctors, hospitals, shopping.

Senator NEUBERGER. I was so amused in that brochure that evidently the land developer sent out made Oregon appear to be the beautiful State that it was. "Water skiing. Take your choice. Oregon has thousands of lakes on which thousands of people ski every year." Which is quite true, but they are quite remote from this area.

Mr. JENSEN. Since the law, if the developer is going to use a lake, he must put in the brochure the distance from that project to the lake. If the purchaser feels that they want to drive that far, again, that is their business, but they should know how far that lake is from the project.

Senator NEUBERGER. This is kind of an unfair picture. "When deer season opens, all work stops and everyone goes hunting." But the point that bothered me most is, you said that you didn't believe we should have laws that go as far as California's at the Federal level, except the Federal laws should provide for advertising control.

Mr. JENSEN. I am saying outside the State of Oregon, now, Senator. I am saying that where magazines cross our borders, there should be some control over them. Because there is no law-even California's law and I think Commissioner Gordon will agree with me-we can't stop it nor can we stop nati al television or national radio. And I think where misinformation or fraudulent or misleading advertising is put over these media, that some Federal control should be there to help us. The newspapers will assist us in Oregon. I have no problem in Oregon. The magazines that are printed in Oregon, I have no problem with, because they cooperate with me. And I have a very strong advertising section in that law that ties them tooth and nail that they can't do anything as long as they are in the State of Oregon. Senator NEUBERGER. But if this is good for Oregon, why isn't it good for the whole Nation?

Mr. JENSEN. I think it is excellent. I think our law is a fine law. Commissioner Gordon has the fair, just and equitable. I cannot, at this moment, feel that it should be a part of the Oregon law. I feel there should be a certain element of caveat emptor to apply. And I again say, if I have the ability to purchase a piece of land at a reasonable price and turn around through my ingenuity, being honest about it, and induce you that it is worth twice or three times as much, that should be between you and me.

Senator NEUBERGER. Let's say it doesn't go as far as the California law, it is just in between. Wouldn't it be just as good for Washington and Idaho and Nevada?

Mr. JENSEN. Absolutely. I feel we have an excellent law.

Senator NEUBERGER. Because we seem to believe in this principle, that is, the purpose of the SEC, to protect the public. They can't possibly have all the information. We don't hesitate to try to give the public a great deal of advice in other areas. The FTC, of course, is set up to regulate some of this advertising. Suppose this developer offered genuinely a free parcel of land, no strings attached?

Mr. JENSEN. No charges?

Senator NEUBERGER. I suppose you would have to have a filing charge of some kind.

Mr. JENSEN. Senator, I was cognizant of this free offering of a lot; you won it at a county fair, or a State fair, and everybody won. So, in order to protect the people in our State, I put in : "Sale or lease includes every disposition, transfer, offer, or attempt to dispose of or transfer land in a subdivision or in interest, or estate therein, by a subdivider or his agent, including the offering of such property as a prize or gift on a monetary charge, or consideration for whatever purpose is required by the subdivider or his agent."

Now, if he wants to give it away free and clear, I don't care about that. But, if he is going to use the gimmick of 2 weeks after the fair is over he sends them a registered letter and says, "You just won a lot and it is free to you, but it will cost $49.37 or $50 to go through the paper work and issue you a deed," then I say that is a gimmick. Because most of the land costs $20 an acre, and they are giving a quarter of an acre. So, the cost is $5 a lot to begin with, but they are making a nice profit.