number of areas that will be declared critical areas will be much larger than the number declared by the Kaul committee in a period where we did not have the-

Mr. THOMAS. The authorization was $40,000,000, of which you got $15,000,000 and the Public Health Service got $25,000,000.

Mr. SEWARD. The authorization was $60,000,000, Mr. Thomas. Mr. THOMAS. That is right, and your request was $40,000,000. "The activities of the Public Health Service dealing directly with health" is the language of the authorization. I am rather confused as to what specifically is health, but anyway the Bureau of the Budget tried to come up with some guess on it, and perhaps they did about as good as anybody else could do. Is that right?

Mr. FITZPATRICK. Mr. Chairman, speaking with reference to your special interest in having facilities and housing treated as one—you will recall that the legislation when originally introduced did adopt that approach.

Mr. THOMAS. That is right, it was taken out in conference.

Mr. FITZPATRICK. The Congress decided that the four functions specifically mentioned in section 316 should be handled by the Public Health Service.

UNIT COSTS FOR PUBLICLY CONSTRUCTED DEFENSE HOUSING

Mr. THOMAS. I notice your cost here on these public defense housing units, $10,000 a unit, and your trailers cost $2,900 and temporaries cost $5,980 a unit. You have 16 permanent public housing. Is this 16 trailer camps?

Mr. FITZPATRICK. That is 16 projects, 16 areas where trailers will be located.

Mr. THOMAS. How many units are you going to have in these 16 projects? The unit cost is $10,000, and the sum total is $15,000,000. How many units will that be?

Mr. FITZPATRICK. 1,500 trailers and 4,875 temporaries.

Mr. THOMAS. These will be rather large projects, will they not? Your temporaries cost $5,980, and you have 1,553 projects. How many units will be in each one of those projects?

Mr. KELLY. 4,875 units, which is a little over 90 units per project. Mr. THOMAS. In other words, they will be placed then, as far as permanents are concerned, in 16 different towns and cities?

Mr. KELLY. That is right.

Mr. THOMAS. As far as your trailers are concerned, they will be in 16 different towns and cities and as far as your temporary public housing is concerned, they will be in 53 different towns and cities? Mr. EGAN. That is right.

Mr. THOMAS. How many units will that average for your permanent public housing?

Mr. KELLY. A little over 90 per project.

Mr. FITZPATRICK. A little over 90 in permanent, a little over 90 in trailers, and approximately 90 in temporaries.

NEW POSITIONS REQUESTED

Mr. Reporter, will you insert in the record at this point a table entitled "New Employees Requested Under Supplemental Estimate.” (The table referred to is as follows:)

New employees requested under supplemental estimate

Under Office of the Administrator:

Defense housing (including administrative expenses of Public Hous

Mr. THOMAS. The table which I have referred to indicates that the Office of the Administrator for Defense Housing is requesting 186 new positions and for community facilities 42 new positions. For the programing of defense housing 264 new positions are requested. For the Federal National Mortgage Association 159 new positions are being requested. For prefabricated housing 32 new positions are being requested. For the Federal Housing Administration 14.5 new positions are being requested under the category of administrative expenses. And 564 new positions are being requested under the category of nonadministrative expenses.

That is a total of 1,261.5 positions in the supplemental bill.

Of that number, 186 are for defense housing, while 42 are for community facilities. For the programing of defense housing 264 positions are requested, while the Federal National Mortgage Association 159 are requested. For prefabricated housing 32 are requested. That is a total of 683 for the Office of the Administrator. Is that correct? Mr. FRANTZ. That is right, Mr. Chairman, if you include PHA and Fanny Mae.

Mr. THOMAS. Mr. Egan, there are one or two questions I would like to ask you about your part of the program. Now, these permanents, 16 projects, there are about 90 units in each program; is that correct? Mr. EGAN. That is correct, sir.

Mr. THOMAS. That applies to the permanents, the temporaries, and the trailers; is that right?

Mr. EGAN. That is right, sir.

Mr. THOMAS. Now, these houses are public housing, but are they to be used as subsidized low-cost housing, or merely for defense workers?

Mr. EGAN. They are purely for defense workers, Mr. Thomas. Mr. THOMAS. And no part of the rent, utilities, and so forth, will be subsidized; is that correct?

Mr. EGAN. That is correct.

RENTAL RATES FOR DEFENSE HOUSING

Mr. HOUSING. Now, what rental will you charge for the permanents, the temporaries, and the trailers?

Mr. EGAN. We anticipate that we will have a rent of about $65 for the permanents and about $50 for the temporaries. I think the rent for the trailers will be about the same as that for the temporaries, Mr. Thomas. That includes all utilities, of course.

Mr. THOMAS. Well, now, do you intend to furnish either the permanents, the temporaries, or the trailers?

Mr. EGAN. To furnish them?

Mr. THOMAS. Yes, sir.

Mr. EGAN. No. The trailers will have some furniture as part of the unit when it is purchased. The bunks will be in there.

Mr. THOMAS. But as far as the permanent or temporary housing is concerned, there will be no furnishings other than utilities?

Mr. EGAN. That is right, sir.

Mr. THOMAS. Now, the rents you charge will be the same as the rents for similar projects in each area?

Mr. EGAN. I anticipate that we may be somewhat under the comparable rent in private housing for the same accommodations. Mr. THOMAS. Why?

Mr. EGAN. Well, in the first place, we are borrowing money a little cheaper. We are charging-what is it, 2% percent?

Mr. FITZPATRICK. Two and one-half percent.

I might add that there are two other substantial items in there in that, of course, that we don't have to figure that the property must return a profit in the sense that the private operator does on the operation itself, or on the equity that the private operator has to invest. Moreover, another place where substantial savings result is, I think, in the type of services that we will have to furnish, which are somewhat of a lesser standard than the ordinary private operator must furnish in order to attract and hold his market.

Mr. THOMAS. Well, are you figuring on collecting enough rent from each of these categories, the permanents, the temporaries, and the trailers to amortize them? And if so, over what period of time?

Mr. EGAN. On the permanents, we will; on the temporaries we will never collect the full amount.

Mr. THOMAS. What about the trailers?

Mr. FITZPATRICK. Jack, can we pay out on the trailers against their useful life?

Mr. KELLY. If we are able to purchase the kind of trailers we purchased in the case of the Kansas City flood, which is a standard trailer, we will be able to. If we have to purchase a lesser type, such as we had to purchase in World War II, then we can't do it.

Mr. THOMAS. Then to a certain extent these are subsidized housing quarters, then, aren't they? In other words, if a man had to go in, using FHA assistance and they have to charge a higher rent than you plan on charging either for the permanents or the temporaries or the trailers, what you are planning would be subsidized housing, is not that correct?

Mr. FITZPATRICK. I think in a sense that is true, Mr. Thomas. That is inherent in the operation.

Mr. THOMAS. What do you mean by "inherent in the operation"? Is there anything in the act that makes it mandatory that you charge a lesser rent than these same facilities would bring in a private market in a general market?

Mr. FITZPATRICK. Yes, there is a requirement of the act that we set the rents on the basis of full economic rents.

Mr. THOMAS. Will you read into the record at this point that section of the act? Do you have it convenient and handy? Can you find it quickly?

Mr. FITZPATRICK. While Mr. Frantz is looking that up, let me say that in the case of temporary housing I think perhaps its useful life might be a period of 10 or 15 years, properly maintained. If you were to use it over the full period, I think we would recapture.

Mr. THOMAS. What distinction, what yardstick do you use in determining the difference between a permanent house and a temporary house? Are they all going to be made of wood or brick construction or what?

Mr. EGAN. We anticipate, Mr. Thomas, that depending on the local code requirements in the locality-we will build to the minimum code requirements. They do not necessarily have to be of masonry construction.

Mr. THOMAS. Perhaps prefabricated houses for your temporary housing? Will they be prefab?

Mr. EAGAN. Well, they will be mobile housing. I mean that they will have to be so designed that they can be moved, according to the requirements of the statute, Mr. Chairman.

Mr. FITZPATRICK. We are not speaking there of prefabs in the form of demountable houses. The demountables will be permanent

structures.

Mr. THOMAS. Can you put your finger on that section of the act, please?

Mr. FITZPATRICK. It is section 312.

Mr. THOMAS. Would you read it into the record?

Mr. FITZPATRICK. (reading):

The Administrator shall fix fair rentals based on the value thereof as determined by him which shall be charged for housing accommodations operated under this title and may prescribe the class or classes of persons who may occupy such accommodations, and preferences or priorities in the rentals thereof

That last relates to preferences for defense workers.

Mr. THOMAS. There is nothing in the act which makes it mandatory that you subsidize these houses, the occupants, rather, of the houses. It says "charge a fair rent." What interpretation do you put on "fair rent."

Mr. FITZPATRICK. In terms of permanent housing, we must fix a rental on the basis of recovering the capital cost and the cost of the money invested in constructing the house.

Mr. THOMAS. Well, is there any distinction made in the act between a permanent house and a temporary house with reference to fair value of rent thereof?

Mr. FITZPATRICK. Not in that sense, but when you get to the case of a temporary house other than a trailer, for example-I don't know where you could find a standard in the community of what is comparable to that if you try to define comparability.

Mr. THOMAS. The probabilities are that these temporary houses that you are going to build are going to be a whole lot better than some of the houses that some of the local folks have heretofore called permanent, are they not?

Mr. FITZPATRICK. Mr. Thomas, I think we have benefitted from our experience last time and we would not propose to build that type of temporary housing in this emergency.

Mr. THOMAS. Is there a section of the legislative act making it mandatory that the funds for public housing be appropriated to the Housing and Home Finance Agency rather than to the Public Housing Administration?

Mr. FITZPATRICK. Yes, sir. The act places the functions in the Administrator and authorizes appropriations to carry out the act. Mr. THOMAS. And authorizes the Administrator to delegate someone to carry out his functions?

Mr. FITZPATRICK. Yes, the Administrator has that under his general power.

FEDERAL NATIONAL MORTGAGE ASSOCIATION

Mr. THOMAS. What about the Federal National Mortgage Association, for which a request of $450,000 of administrative expenses is made?

Mr. FITZPATRICK. Mr. Thomas, Mr. Baughman, the president of the Corporation, is here.

Mr. THOMAS. We are delighted to see you, Mr. Baughman.

Mr. FITZPATRICK. He would like to have the opportunity to explain the request.

Mr. THOMAS. All right, Mr. Baughman, will you proceed?

Mr. BAUGHMAN. Mr. Chairman, I have a prepared statement which I believe will give you the high lights and basic reasons why it is necessary that the FNMA seek additional administrative funds with which to operate during the current fiscal year.

USE OF ADVANCE COMMITMENTS AND SET-ASIDES

Among other things, the Defense Housing and Community Facilities and Services Act of 1951 authorized FNMA to make advance commitments, not to exceed $200,000 outstanding at any one time, to purchase mortgages covering programed critical defense area housing, military (Wherry Act) housing, and housing for victims of a catastrophe in a major-disaster area. This authority expires on December 30, 1951. By this action the Congress formally recognized the extreme shortage of mortgage funds that has prevailed for some months that has seriously hindered construction of this vitally needed housing.

Earlier, in order to give as much assurance as possible, within the limitations of its authority, that ample funds would be available, FNMA set aside $400,000,000 of its funds for the purchase of such mortgages on the over-the-counter basis. This fund has since been increased to $600,000,000 to meet currently foreseeable needs. It is hoped that the action of the Congress and the administrative action taken by FNMA will do much to stimulate mortgage credits for the purpose of financing the construction of the required housing.