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ground that their incomes are derived in whole or in part from public assistance. In the initial selection of tenants for a project, preference shall be given (subject to the overriding preferences in sec. 202 relating to veterans' preference) to families having the most urgent housing needs; thereafter in selecting tenants due consideration shall be given to the urgency of housing needs. After admission, periodic examinations must be made of the incomes of all families who are tenants in the project so that, if their incomes are found to have increased to the point where they exceed the applicable income limits for continued occupancy, they will be required to move from the project.


Section 202 extends preferences to families displaced by low-rent housing projects or public slum-clearance or redevelopment projects. Such preferences are necessary to enable the rehousing of such displaced families and permit such projects to go forward. Both within this group and all other groups, low-income families of veterans and servicemen of World War II will be given preference in admission for a 5-year period. Definitions of the terms "veteran" and "servicemen" are provided in this section.

Specifically, under this section preference is given in all projects to families which are to be displaced by any low-rent housing project or by any public slum-clearance or redevelopment project initiated after the date of the approval of the Housing Act of 1949, or families which were displaced by such a project within 3 years prior to applying for admission. As among such families, there is a first preference to the families of disabled veterans, a second preference to families of deceased veterans and servicemen whose death was service connected, and a third preference to the families of other veterans and servicemen. A similar veterans' preference is extended as among families who have not been displaced by a slum-clearance project

. All of these preferences, of course, apply only if the family seeking admission is otherwise eligible, and if a dwelling of suitable size and rent is available.


This section is designed to end certain inequities and uncertainties resulting from present cost limits on low-rent housing assisted by the Federal Government, and to compensate for the drastic increase in building costs since the enactment of the United States Housing Act in 1937.

Experience has indicated that existing provisions, which place & ceiling on dwelling-unit costs as well as on room costs, and which provide for higher cost ceilings for cities of more than 500,000 population, are inadequate or faulty, in that (1) a limitation on cost of the entire dwelling unit hampers the provision of housing for larger-sized families of low income and so discriminates against such families; and (2) a differential in cost limits based solely on the size of the community is no longer realistic due to the increasing uniformity in construction costs, including both labor and material, irrespective of city size. The section, therefore, eliminates the limitation on dwelling-unit cost (but not the limitation on room cost, so that the essential limitation on construction costs is still retained by the requirement that contracts shall provide in all cases for meeting the specified per room limitation on construction costs) and establishes a uniform ceiling, not dependent upon city size, for the cost of dwelling construction and equipment. In addition, the section simplifies determination of compliance with the cost limitations by specifically basing these limitations upon the cost of dwelling construction and equipment. This will ordinarily permit firm determination of compliance with the cost limitations embodied in the contract pursuant to this requirement of the act at the time the main construction contract is awarded.

In order that the drastic increase in building costs may not prevent the provision of housing needed for families of low income, the section provides for a higher cost limitation of $1,750 per room, as compared with existing limitations of $1,000 and $1,250 in small and large cities, respectively. It also authorizes an increase in this cost limitation by Dot more than $750 per room in areas where it would not be feasible without such an increase to construct the project without sacrifice of sound standards of construction, design, and livability, and where there is an acute need for such housing. The percentage of increase in the cost limitation as provided in this section is subtantially less than the percentage of increase in construction costs which has actually occurred since 1937.

Because of special cost problems in Alaska, the section also has special provisions permitting higher costs in that Territory if found necessary.

This section also will require that the Public Housing Administration, taking into account the level of construction costs in the respective localities, shall approve the amount of all main construction contracts before they are awarded by the local public housing agencies. This is in lieu of a present requirement as to comparison with the average costs of private construction in the locality.

The authorization increasing cost limits is applicable to any lowrent project completed after January 1, 1948. This will make the increased cost limitations available in the case of low-rent projects which were deferred during the war, on some of which a small amount of construction work was done before they were deferred. It will also make the increased cost limitations applicable to, and permit the revision of contracts for, any projects which have proceeded (prior to enactment of this bill) under the provisions of Public Law 301, Eightieth Congress.


The basic purpose of this section is to amend the financing provisions of the United States Housing Act of 1937 so as to make possible the permanent financing of substantially all of the capital cost of lowrent housing projects by the sale of bonds to private investors, and thus in effect limit Federal lending assistance for low-rent housing primarily to the temporary interim financing necessary prior to the issuance of definitive bonds.

The sale of bonds for the permanent financing of low-rent projects at low interest rates has been made possible through a pledge of the Federal annual contributions as security for the bonds. Subsection (a) relates to this pledge, and makes it possible, in the event there is more than one issue or class of bonds, to pledge appropriate amounts of annual contributions separately to each issue or class of bonds. This subsection also makes it clear that local public-housing authorities may obtain loans covering development or acquisition costs without any annual contributions being provided in connection with such loans either in whole or in part.

Pursuant to subsection (b), every annual contributions contract (including amending or superseding contracts) may provide that, in the event of a substantial default by a local public-housing agency in its covenants to the Public Housing Administration, such local agency shall at the option of PHA be obligated to convey title to or deliver possession of the project to PHA (subject to the right of the local publichousing agency to reconveyance or redelivery upon a satisfactory curing of the default). Conveyance of title rather than delivery of possession would be required only when PHA determines that this is necessary to achieve the purposes of the act. After taking title or possession, PHA would continue to make annual contributions for the project, but not in excess of the amounts contracted for pursuant to statute. This would assure both (1) that the project will continue to operate as a low-rent housing project, and (2) that investors who have furnished the capital funds for its construction in reliance upon the continuance of its low-rent character and the making of annual contributions therefor during the entire life of the loan, will have their investment adequately protected. With this assurance there is every reason to anticipate that private capital will be willing to furnish practically all of the capital cost through long-term loans and to do so at low interest rates.

Subsection (c) revises the provisions in the act relative to the going Federal rate (which determines the minimum loan interest rate and the maximum annual contribution rate) so as to provide that the governing rate is the one as of the date of Presidential approval of the contract for loan or annual contributions, respectively, rather than the date the contract happens to be signed by PHA and the local public-housing agency. Further, it provides that in the event there are two or more rates of interest on such date, the rate used shall be the highest thereof, and that in no event shall such rate be deemed to be less than 272 percent.

Subsection (d) reduces the maximum loan period from 60 to 40 years in the case of projects which are initiated after March 1, 1949, and which are assisted by Federal annual contributions. It also reduces the minimum interest rate on Federal loans made for projects where the maximum loan and annual contribution period is 40 rather than 60 years, from the applicable going Federal rate plus one-half of 1 percent to simply the going Federal rate. Contracts for projects initiated prior to March 1, 1949, may thus be amended to reduce the loan and annual contribution period to not more than 40 years and thereby make the project eligible for an interest rate at simply the applicable going Federal rate.

The present power of PHA to make 60-year loans at an interest rate equal to the going Federal rate plus one-half of 1 percent is retained for projects initiated after March 1, 1949, provided they are not assisted by Federal annual contributions. This lending power could, of course, be made use of only if the projects and tenants were otherwise eligible under and meet all of the requirements of the United States Housing Act of 1937, as amended, and if financial assistance were available from other sources, such as State or local governments, in amounts which would enable the local public housing agencies to meet their operating costs and debt service on the Federal loan, and at the same time achieve rents low enough to be within the means of families of low income.

Subsection (e) limits the period over which annual contributions may be paid on projects initiated after March 1, 1949, to 40 years as contrasted with the present authorization of 60 years. In order to make this possible, and thus substantially reduce the total amount of the annual contributions, and also to assure a highly marketable local housing agency bond even under adverse market conditions, this paragraph would, in respect to projects where the contribution period is limited to 40 years, amend the present requirement that the contribution shall not exceed a sum equal to the going Federal rate plus 1 percent upon the development or acquisition cost of the project so that the limitation would be a sum equal to the going Federal rate plus 2 percent upon such cost. Contracts for projects initiated prior to March 1, 1949, may thus be amended to reduce the annual contribution period to not more than 40 years and thereby make the project eligible for annual contributions at the applicable going Federal rate plus 2 percent. The additional annual contributions authorization made by this bill would be available, if needed, in connection with such refinancing of existing projects or the sale to local public-housing agencies of the Public Law 412 and Public Law 671 projects now owned by the Federal Government. The shortened period over which annual contributions may be paid will more than compensate for the permitted increases in the amount of annual contributions.

In addition to substantially reducing the need for Federal loan assistance, subsections (f) and (g) also revise certain conditions with respect to Federal subsidy assistance. This is done by providing (1) that, instead of an adjustment in the maximum amount of annual contributions at 5-year intervals, in any year when the receipts derived in connection with the project exceed expenditures and charges, the excess must be used for purposes which will reduce subsequent annual contributions; and (2) that contracts for loan and annual contributions based on a certain "going Federal rate” may, in the case of a change in such rate, be amended so as to base the interest rate on Federal loans, or the maximum contribution payable, on the new rate whenever_this would promote economy or be in the financial interest of the Federal Government, provided this does not impair the rights of the holders of any outstanding obligation of the public housing agency involved for which annual contributions have been pledged.

Subsection (h) requires that borrowings by PHA be from the Treasury. At the same time, the statutory language with respect to PHA's borrowing authorization is adapted to the changes in PHA's lending program that would result from the provisions of this title, by relating the gross amount authorized to the amount of obligations that may be outstanding rather than to the aggregate amount that the PHÁ may issue exclusive of refunding obligations. The gross amount authorized is increased from $800,000,000 to $1,500,000,000 in recognition of the size of the extended program and the increased construction costs anticipated. It is expected that with this amendment PHA's


borrowing power will make it possible to provide all of the capital funds required from the Federal Government in connection with the extension of the low-rent program.

Subsection (i) provides a definition of development cost (which is not defined in the present act) which will include in capital cost all items which would be capitalized under standard business practice, including the cost of capital improvements made at any time during the life of the project. This definition, in accordance with business practice, includes appropriate carrying charges, such as interest, insurance, payments in lieu of taxes, local housing authority overhead, and any initial operating deficit. Carrying charges subsequent to the date of physical completion, however, may not be capitalized.

Subsection (j) makes it clear that, in line with the usual practice in the past, where a local public

housing agency is undertaking two or more low-rent public housing projects, they may, in a contract, be treated collectively as one project.


Subsection 205 (a) increases the Public Housing Administration's annual contributions authorization in order to provide for an extension of the program of low-rent public housing in urban and rural nonfarm areas. It increases the total amount of annual contributions authorization available to PHA on or after July 1, 1949, by $85,000,000 a year (in addition to the existing authorization), which authorization would be increased by further amounts of $80,000,000 in each of the following 3 years, and by $75,000,000 on July 1, 1953. The new authorization thus totals $400,000,000 per annum. In respect to projects initiated after March 1, 1949, PHA may authorize the construction of not more than 150,000 additional new dwelling units after July 1, 1949, which limit would be increased by further amounts of 150,000 units on July 1 in each of the years 1950 through and including 1955, respectively, thus making a total of 1,050,000 new dwelling units in 7 years. In respect to projects initiated after March 1, 1949, not more than 1,050,000 additional new dwelling units may be put under construction without further authorization from the Congress.

The President is authorized to accelerate or retard the program, if he finds such action to be in the public interest, after receiving advice from the Council of Economic Advisers as to the general effect of such increase of decrease upon conditions in the building industry and upon the national economy. Subject to the total additional annual contributions authorization of not more than $400,000,000 per annum, the amount made available at the beginning of any fiscal year may be increased at any time or times by additional amounts aggregating not more than $80,000,000 per annum. Subject to the total authorization of 1,050,000 new units, authority to commence construction which is made available at the beginning of any fiscal year may be increased at any time or times by additional amounts aggregating not more than 100,000 units, and each of such authorizations may be decreased at any time or times by amounts aggregating not more than 100,000 units. The construction authorization to become available at the beginning of each fiscal year could thus be increased to not more than 250,000 units, or be reduced to not less

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