Senator PASTORE. And principally this is needed for what? To supervise the granting of these loans?

Mr. BROWNSTIEN. This is needed principally in our field offices, to make the appraisals, to examine credit, to do the necessary clerical work, to dispose of our acquired properties, and also to keep up with work in the Comptroller's Division.

Senator PASTORE. And if these people are not there, it may delay the whole process? Is that the point?

Mr. BROWNSTEIN. Yes, sir.

Senator PASTORE. And you say that up to $4,060,000, almost a million and a half of that is for the pay increase?

Mr. BROWNSTEIN. Yes, sir.

Senator PASTORE. Any further questions?

FHA HOME PROPERTY INVENTORY AND SALES

Senator ALLOTT. Well, I note in your statement, Mr. Brownstein, the bottom of page 3, 51,274 home properties on hand.

Now, my recollection is that is not too bad. What was it last year and the year before at this time-do you recall?

Mr. BROWNSTEIN. We have those figures, Senator Allott. In March a year ago we had 41,555. I will have to supply for the record what it was 2 years ago.

(The information is as follows:)

In March 1962, home properties on hand were 30,252.

Senator ALLOTT. All right.

Then you have got the 8,120 reported as sold. So that really reduces the 51,000 to somewhere around 43,000 homes, which is not too disproportionate to the figures of last year-unless you also reported the 41,000 the same way.

Mr. BROWNSTEIN. Well, they were reported the same way. But our number would have been much smaller last year on those sold but not closed, because we are currently using private financing to close our sales, and this is taking a little longer than when we were taking back purchase money mortgages, as we were a year ago. But it keeps us out of the mortgage servicing business, and we think it is much more satisfactory.

Incidentally, Senator, our sales have accelerated very rapidly, and I hope that for the balance of this year we are going to reduce our inventories.

FNMA SALES PRICES

Senator ALLOTT. With respect to the sales of FNMA obligations, what has been the situation? Are they selling at par? What is the situation with respect to your sales during the year-selling over par, under par? What is the picture on that?

Mr. BAUGHMAN. Our sales of mortgages this year are substantially less than a year ago. In 1963 we actually sold mortgages in the amount of a billion one hundred million. This year we expect our sales to run something in the neighborhood of $550 million.

Senator ALLOTT. Are you having to put those on the market at a discount?

Mr. BAUGHMAN. Five and a quarter percent mortgages are being

sold at par.

Senator ALLOTT. At par. Are they all 514?

Mr. BAUGHMAN. No, we have various rates, but sales prices are all based on a yield of 514 percent.

Senator ALLOTT. So that you are selling them in proportion, or at the same rate, ratio, as 54 percent to par?

Mr. BAUGHMAN. Same yield; yes, sir.

UNIT COST OF PUBLIC HOUSING

Sentor ALLOTT. There are various people who have written me about the per unit cost of public housing. One of the objections of course, which is not the main objection, is the inclusion of art and decorative features as a part of public housing. I would like to have your comments on that.

Mr. WEAVER. An important criticism, I think, is that there is not enough of it. I think we ought to make these projects more attractive. The art, of course, is minimal.

Mrs. MCGUIRE. We don't include any artwork. These are art pieces contributed by the community groups interested in the housing. We have no provision for it.

Senator ALLOTT. What have you to say, then, with respect to the criticism which has been leveled that-at least I have had letters about it-that the cost of public housing is too high-I mean the construction. Mr. WEAVER. I think there are two answers to that.

The first is that it is hard to compare the cost of public housing with the cost of private construction, for two reasons. The first is this housing has to last at least 40 years; it has to be of such a construction so that its maintenance costs will be fairly low.

Thirdly, it is usually constructed on land which has structures already on it, so that the unit cost of land runs $2,000, $3,000, $4,000, $5,000 per unit-because you have to pay for the existing houses, the demolition, and all the other costs.

And, fourth, in the cities it is all constructed at union wage rates, whereas most of the individual homes constructed are constructed in areas outside of these jurisdictions, and at a much lower wage scale. And, finally, in meeting the needs that we are now faced with, we are having increasingly to build large units, because this is where the great need is. Public housing has become largely relocation housing. And where we are building three-, four-, five-bedroom units, in a private project, it is seldom over two or three. So that there are, I think, some built-in factors that require a higher cost.

We are very cost conscious. I have to approve each project, and we have each project broken down by constituent elements of the cost. And we are watching this.

But I think it is false economy to attempt to cut corners on this.

PROBLEMS OF THE ELDERLY ON LOW PENSIONS

Senator ALLOTT. One of the things and I don't want to inject anything controversial here, but we all know that generally speaking the old-age pensions in the South are much lower than they are in other areas. How do you cope with this, with respect to old age, your elderly housing fund? I don't have any recent figures.

My recollection is at one time that they were around $45 in the South when they were over 100 in several other places.

How do you cope with this in taking care of the elderly, in, let's not say the South, but in the low old-age pension States?

Mr. WEAVER. Well, there are two things. In the first place, the Housing Act of 1961 provided for $10 a month additional subsidy for elderly occupants in pubile housing under specified conditions. In addition to that, usually where the pensions are lowest, the cost of construction and maintenance are lowest, so that our housing rental rates under PHA are lower. And there are some instances in some States, particularly in high-cost areas in States with the low pension, where we cannot cope with them. And we just cannot reach some of those people.

Senator ALLOTT. You just cannot do anything?

Mr. WEAVER. Unless there is some local supplementation of their income through welfare or through some other source. Senator ALLOTT. Thank you, sir.

FHA BUDGET REQUESTS AND WORKLOAD

Senator PASTORE. I have a letter here from Senator Morse on the subject of the budget requests for the FHA. I ask that it be inserted in the record, without objection.

(The letter referred to follows:)

U.S. SENATE,

COMMITTEE ON FOREIGN RELATIONS,

April 9, 1964.

Hon. WARREN G. MAGNUSON,
Chairman, Independent Offices Subcommittee, Appropriations Committee,
U.S. Senate, Washington, D.C.

DEAR MAGGIE: During recent weeks I have received a substantial volume of correspondence from real estate people in Oregon, expressing deep concern over the present backlog situation in the Federal Housing Administration's Portland insuring office. In fact, some of the letters indicate that a delay of over a month occurs in the processing of these appraisals.

Upon discussing this matter with the Federal Housing Administration in Washington, I have been advised that the volume of applications for mortgage insurance has been running very high. In the month of March, the annual rate, seasonally adjusted, was more than a million unit applications as compared with the 990,000 estimate in the fiscal 1965 budget. Although office production has been very high in FHA field offices, serious backlogs have developed in some areas, particularly with respect to Portland. The volume of FHA properties sold and home mortgage insurance claims is very high and is increasing. There is every indication from the current trend of FHA workload that its full budget request of $10,375,000 for administrative expenses and $79,750,000 for nonadministrative expenses will be urgently needed in the fiscal year 1965.

Under the circumstances, I urge that the subcommittee give serious consideration to including additional funds, over and above the budget request for fiscal 1965, to enable the employment of additional personnel to handle these cases. Above all, I urge that the fiscal 1965 budget request applicable to the Federal Housing Administration not be reduced.

Your serious consideration of this matter will be deeply appreciated.
Cordially,

WAYNE MORSE.

PUBLIC HOUSING ADMINISTRATION

Senator PASTORE. Without objection, the prepared statement of Commissioner McGuire of the Public Housing Administration will be inserted in the record at this point.

(The statement referred to follows:)

STATEMENT OF MARIE C. MCGUIRE, COMMISSIONER, PUBLIC HOUSING

ADMINISTRATION

Mr. Chairman and members of the committee, the PHA has been the spokesman before this committee of the low-income families in the United States concerning their housing needs. These needs derive from the inability of families of limited incomes to afford decent, safe, and sanitary housing in a suitable environment that is the national goal expressed in the Housing Act of 1949.

As the HHFA Administrator reported, this country expects to reach this year a new home building rate of at least 1,600,000 in the private nonfarm sector. The new housing built for low-income families since 1953 has stayed about 35,000 per year, or 2 percent of the total new starts.

Yet today we still have some 9.3 million families with incomes under $3,000 per year, of whom 5.3 million (10 percent of total household) are living in slum or substandard conditions. We have a public housing program in operation of 558,000 dwelling units for families of low income, which is about 1 percent of the total housing supply. Approximately 174,000 units are in various stages of planning, or a grand total on completion of 732,000. The program now, after 26 years of operation, provides shelter for 2,100,000 persons, of whom 1,240,000 are children and 135,000 are elderly families, and when the units in planning are completed, an additional 3.9 will be housed.

Today the cities and towns throughout the country are responding more vigorously to the housing needs of their low-income citizens than at any time in the past decade. More than 2,100 communities are involved in the program or are requesting assistance. Some 638 communities have entered the program in the past 3 years. Almost two-thirds of these are small communities with less than 5,000 population.

The attached two maps show the location of the communities with public housing programs and the location of new housing authorities that have been formed since September 1961. These maps demonstrate the wide distribution of the program, as well as the broad distribution of the new and growing interest. Some of this interest has recently been in States which heretofore have not participated in the program.

Some of this program growth is due to the increase of urban renewal programs, highway expansion, and other public and private activities that create a need for relocation of low-income families; some of it is due to new areas of concern of the Public Housing Administration, such as housing on 61 Indian reservations in 19 States; some of it is due to the interest across the country

in providing a safe standard of shelter for the increasing number of elderly couples and individuals of low income; but most of it is due to an increasing awareness of the housing needs of poor families generally and the massive effort to modernize our cities and towns and provide a healthier basis for economic growth.

The 100,000 units authorized in the Housing Act of 1961 are committed and requests are on hand for more than 38,000 units from over 300 communities are now held in abeyance. Of the 100,000 units, nearly one-half were requested as specially designed units for the elderly. Of the requested units held in abeyance awaiting further authorization, over 17,00 are for the elderly.

The average rent today of all occupants of public housing is $44 per month; for the elderly it is $32. Thus it is apparent that the public housing program now and for years past has been working in our Nation's poverty area and has witnessed both the reasons for poverty and oftentimes its unhappy social expressions. We sincerely believe that local housing authorities can and will be used as one focal point in local communities in the war against poverty and will continue to make their contribution both in employment opportunities and in improved housing.

In addition to the numbers of homes we are helping to provide, we have worked earnestly these past 3 years to achieve more acceptable design, to develop techniques to help overcome dependency, and at the same time to try to streamline our procedures and constantly seek ways to economize. Despite the continuing increase in the development and management workload, we have now the same level of employment as in 1960.

Of the 53 positions requested in the administrative budget, 14 are for the program audit operation in the field, and 26 are for the regional management staff directly concerned with local housing authority expenditures. The 53 positions requested are imperative to keep abreast of the demands, particularly those caused by the hundreds of new, small programs and the specialized nature of the Indian and elderly programs.

At the time annual contributions contracts are executed a firm obligation of the Federal Government is established to make these payments when they are due. We are requesting $214 million for the payment of annual contributions authorized by the Housing Act of 1937, as amended. This amount includes $6 million for the payment of additional contributions for the elderly.

An authorization of $1,420,000 is requested for nonadministrative expenses. This would permit the use of funds amounting to $758,000 derived from rental income for the operation of three federally owned directly operated projects built in 1938 under the PWA program. Of this, $200,000 is for necessary repair work. These are the most commonplace, down-to-earth sort of basic maintenance expenses-repairing hazardous conditions in walks and steps, repairing leaking roofs, replacing refrigerators and things of that sort. The Congress appropriated $180,000 for such repairs in 1964 and the additional amount requested will enable us to continue the work necessary to bring these projects up to acceptable standards.

The remaining $847,000 requested would permit the use of fees collected from local housing authorities for technical services to employ a small staff of construction representatives. This would provide for an increase of seven positions. These skilled men are needed to safeguard the Government's interests while construction is in progress.