authorities to make greater use of the existing housing supply through acquisition with and without rehabilitation of existing dwellings that are available on the local market and suitable for low-rent housing purposes.

The present annual contributions formula establishes a maximum contribution in terms of a specified percentage of the development cost. Under this formula, use can only be made of housing with an economic life extending over a sufficient period to allow the amortization of the capital cost at the statutory rate. This rate was designed to permit amortization over a long period, generally 40 years. Under the alternative formula, the annual contribution payable with respect to properties to be used for a shorter term can be fixed, as a maximum, at the same dollar amount as the annual contributions under the conventional formula for newly constructed dwellings designed for the comparable numbers, types, and sizes of families. Because it is not stated in terms of a specific percentage of capital cost, the formula will permit acquisition, or acquisition and rehabilitation, of structures over whatever period may be appropriate, considering the condition and nature of the property.

To create the volume of acquisition and rehabilitation contemplated by the Congress and with the flexibility inherent in making the "flexible formula" applicable to this program will require the development of a complete new body of policies, procedures, and techniques in the following areas:

How, when, and to what extent the program should be used in a given community or neighborhood.

Acceptability of available structures.

Appraisal, acquisition, and rehabilitation costs.
Rehabilitation methods and guide specifications.

Techniques to make possible and encourage the involvement of the private homebuilding and rehabilitation industry.

Other techniques to achieve economies through development of a new "mass production" rehabilitation industry, if possible.

Forms and terms of acquisition contracts and rehabilitation contracts.
Inspection methods and records.

Payment of annual contributions.

Training and guidance of local housing authority staff in carrying out PHA policy and procedures.

The staff requested for the new acquisition and rehabilitation program will develop the dwelling unit and neighborhood standards, including cost standards. needed for determining the suitability of existing housing for low-rent use. It will explore and develop methods for acquiring existing housing. It will develop design standards for improving the properties with respect to heating and sanitary facilities, room sizes, structural soundness, and other physical features of the housing and related facilities. It will explore and develop methods covering various possibilities for the actual carrying out of the rehabilitation work, including (a) securing performance of the work by others before the local housing authority takes title; (b) contracting by the local authority through competitive bidding, negotiation, and such; and (c) force account.

The central office staff will be responsible for all aspects of planning in connection with the acquisition and rehabilitation program, together with establishing and achieving production goals. It will coordinate such planning with Urban Renewal, Office of Economic Opportunity, the open space program, beautification program, and all other public and private resources involved in the restoration of neighborhoods, and will develop the policies needed for these purposes.

The regional offices will be responsible for all PHA operational aspects of acquiring and rehabilitating existing housing for low-rent purposes, and interpreting the program to local housing authorities undertaking such housing. This will include coordination of housing rehabilitation with neighborhood and community planning for renewal, and with the variety of regional and State organizations concerned with open space planning, beautification, urban renewal, and the like.

Eighty-two new positions are requested to carry out the new acquisition and rehabilitation program.

Support functions for leasing, acquisition and rehabilitation programs.—The increased program and the need to develop new policies, procedures and techniques for the new approaches under the act will generate a heavy administrative workload in the support areas.

Cost analysis.-It will be necessary to develop appropriate criteria and perform related work connected with determinations under sections 103 and 502 of

the act as to what it would cost to build conventional low-rent housing in localities where housing in private accommodations under lease with the private owner or shorter term acquisition and rehabilitation of existing structures is being considered.

Fifteen new positions are requested to staff the cost analysis function.

Legal staff. The variety and complexity of legal relationships involved in the leasing program and the new techniques, contract forms, procedures, etc., required for a mass rehabilitation program will add very significantly to the workload of both the central and regional legal organizations. This is particularly true during the early stages of implementation when contract conditions and forms must be developed and a volume of new questions and interpretations will be encountered.

Thirty-eight new positions are requested to handle the legal matters related to the new programs.

Program planning.-The new concepts and the changes in existing concepts will require more intensive analysis of the housing market and the rate of housing supply utilization to make certain that maximum rents for public housing (except in the case of elderly, relocatees, and disaster victims) are in fact 20 percent below the rent level of standard unsubsidized private dwellings that are available in substantial supply. In these other cases, although a 20-percent gap is not required, rents cannot exceed those of private housing. Additionally, the continued easing of the housing market over the past several years, as evidenced by a national vacancy rate in rental housing of almost 8 percent, requires careful and detailed analysis. Determinations cannot be made in broad terms but must be related to particular dwelling sizes, the particular types of dwellings and their locations; particularly in relationship to availability to various ethnic and racial groups.

Further, it is necessary to meet the requirements of a major increase in statistical reporting workload involving complete revision of reporting forms and instructions as well as reprograming many new reporting systems.

Twenty-six new positions are requested to handle the program planning and statistical reporting functions related to the new programs.

Intergroup relations.-All annual contributions contracts executed under the new programs will be subject to Executive Order 11114 on Equal Opportunity in Employment. PHA is required to process all complaints and reviews relating to such contracts and provide reports, information, and assistance to the President's Committee.

The provisions of title VI of the Civil Rights Act of 1964 prohibiting discrimination in federally assisted programs, and HHFA regulations thereunder, apply to all dwellings provided under the new programs. Title VI requires inspections, audits, investigations, efforts to obtain voluntary compliance, formal and informal hearings, and determinations, and possible litigation, irrespective of whether any complaint is filed.

Seven new positions are requested to handle these functions related to the new programs.

Labor relations.-Statutory requirements and regulations governing labor standards and wage rates will apply to the dwellings that are acquired and rehabilitated under the new program.

Six new positions are requested to handle the labor functions related to the new programs.

Fiscal activities.-The increased workload in loans and annual contributions payments will have a substantial impact on fiscal activities.

Seven new positions are requested to handle the fiscal workload stemming from the new programs.

New positions requested.—A total of 225 new positions are requested, 54 in the central office and 171 in the regional offices. The total annual salaries for these positions is $1.774,737, but they are requested for only 0.5 of the year for a net salary of $887,369.

This additional staff is necessary to provide the manpower and skills needed to gear for and carry out the new programs authorized by the act. The workload is increased by 25,000 dwellings a year, or more than 71 percent. The additional positions requested represent an increase of 15 percent in staff. The details on the distribution of the new positions requested appear on the following pages:

Administrative expenses.-The administrative expense requirement for 1966 is $1,100,000. The major portion of this request-$962,000 is chargeable to personnel compensation and benefits. An increase of $138,000 is requested for travel and other objects.

The following table summarizes obligations for all objects of expense, after which appears an analysis of each object classification:

The cost of regular salaries for personal services is shown in detail by organizational unit on pages N-8 and N-9.

The Federal Employee Health Benefits Act of 1959 (73 Stat. 708) provides that the Government will share with employees the cost of health benefit plans. Retirement contributions are for payments to the retirement fund pursuant to amendments to the Civil Service Retirement Act (70 Stat. 744). Payment by the Public Housing Administration is at the rate of 6.5 percent of the basic salaries of employees covered by the act.

Federal group life insurance is provided pursuant to Public Law 598, 83d Congress (68 Stat. 736), as amended. The estimate represents payments to the fund of $3.25 per $1,000 of insurance.

FICA taxes are paid with respect to employees not subject to the Civil Service Retirement Act, as provided under the Federal Insurance Contributions Act (68A Stat. 429), as amended.

21 Travel and transportation of persons, total_.

1966 estimate

$19,000

The functions involved in the new program are of such a nature that necessarily will require extensive travel. The amount requested will provide for 750 days of travel for the additional employees.

The estimate covers transportation of household goods and personal effects of appointees under the new program.

The amount estimated for freight and express includes funds for the transfer of equipment and supplies.

23 Rent, communications, and utilities:

Long-distance toll charges__
Telephone services___

Subtotal..

Space rental and maintenance___

1966 estimate

$6,000

9,000

Long-distance telephone calls are made when necessary to expedite transactions and to reduce travel costs. The PHA uses the Federal telecommunications system whenever possible. The above estimate is based on the present GSA billing rates.

Telephone services other than long-distance toll charges include switchboard and local service charges and telephone installation costs. In Washington, D.C., and at all regional offices except Puerto Rico, PHA is served by General Services Administration switchboards. At these locations, the billing for local service and switchboard charges is established by the General Services Administration and is prorated to the several agencies served by the switchboard.

Since PHA is a corporation, it is required to pay rental for space it occupies except for the San Francisco regional office which is located in a Federal building. The General Services Administration secures this space, adds the cost of utilities, operations, guard service, repair and maintenance, etc., and bills PHA for such rental.

The following tabulation shows the estimated cost of additional space that will be required by the requested employees.

The above estimate provides for the forms, procedures, and other material that will be required in connection with the new program.

The above estimate provides for the rearrangement of offices, involving partition changes, incidental repairs, and moving of files that will be necessary with the new program and the increases in personnel authorization.