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PUBLIC HOUSING ADMINISTRATION-Continued

Public enterprise funds-Continued

Low RENT PUBLIC HOUSING-Continued

The United States Housing Act of 1937, as amended (42 U.S.C. 1401 et seq.), provides for a low-rent public housing program comprising decent, safe, and sanitary dwellings within the financial reach of families of low income. Such housing is locally owned and operated by local housing authorities created under State law. The Public Housing Administration is responsible for administering this program. The Administration makes loans and annual contributions to local housing authorities to assist in financing the construction of low-rent housing projects and in maintaining their low-rent character after completion and occupancy.

The most recent amendments of the Housing Act of 1937 were made in the Housing Act of 1964 (Public Law 88-560), approved September 2, 1964, which among other things (1) increased by $30,250 thousand (for a total of $366,250 thousand) the authorization for annual contributions in order to provide for approximately 37,500 additional units and to cover the cost of newly authorized relocation benefits; (2) authorized an additional subsidy (similar to the special subsidy for the elderly), within the $366,250 thousand limitation, with respect to units occupied by families and individuals displaced from urban renewal or public housing sites; (3) authorized relocation payments to families, individuals, businesses, and nonprofit organizations displaced from low-rent housing sites and to include their cost with the development costs in computing the amount of annual contributions for the project involved; (4) authorized local housing authorities to make payments in lieu of taxes up to 10% of shelter rents regardless of the local contribution through tax exemption; and (5) made low income individuals who are handicapped or displaced by governmental action eligible

for admission to low-rent housing.

Budget program-Development. The Housing Act of 1961 authorized the placing of approximately 100,000 additional housing units under annual contributions contracts. Under this authorization annual contributions contracts were executed for 100,118 units before July 1,

1964.

The Housing Act of 1964 provides for approximately 37,500 additional housing units through October 1965. It is planned that 35,000 of these units will be placed under annual contributions contracts during fiscal year 1965.

The 1966 budget assumes that new legislation will be enacted in 1965 increasing the authorization for annual contributions to continue the current low-rent program at the annual level of 35,000 dwellings.

A 3-year comparison of the workload accomplishments and of the status of the program by stage are presented in the following tabulations:

WORKLOAD ACCOMPLISHMENTS
[Dwelling units]

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Increased annual contributions requirements in 1965 and 1966 including a supplemental appropriation of $14 million anticipated in 1965 (reflected above), are eligible for annual contributions resulting from the comto an increased number of units pletion and permanent financing of new projects, (2) to the increased contributions authorized in the Housing Act of 1961 with respect to dwelling units occupied by elderly families and persons and (3) to the additional sub(including single persons) displaced by urban renewal or sidy authorized in the Housing Act of 1964 for families istration may make payments up to $366.2 million per low-rent housing projects. The Public Housing Adminannum. As of June 30, 1964, the maximum amount of annual contributions which the Administration is committed to pay is $333.8 million. The uncommitted authority of $32.4 million will be used to make annual contributions contracts in 1965 and early 1966. Uncommitted authority and savings from unused committed which are estimated at $5 million in 1965 and $5.4 million can be used to make for the elderly in 1966 and which will continue to increase with the increase in the number of units occupied by elderly families and persons.

Administrative expenses.-The administrative expenses for the low-rent public housing program are financed by appropriations. These expenses amounted to $15,460 thousand in 1964. For 1965 the amount of $16,352 thousand is estimated, including a supplemental of $568 thousand to pay increased salary costs pursuant to Public Law 88-426. The estimate for 1966 is $17,210 thousand.

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Administrative expenses are related primarily to the provision of technical advice and assistance to local housing authorities in the development and management of low-rent housing projects and to the auditing of local housing authority operations to ensure compliance with the social purposes of relevant Federal legislation and to protect the Federal investment.

The principal reasons for the rise in administrative expenses are (1) the increasing number of dwelling units entering all stages of the program during 1965 and 1966, and (2) increased costs attributed to the Federal Employees Salary Act of 1964. Increased employment is required for 1966 to permit satisfactory performance of this increased workload.

Nonadministrative expenses.-The Public Housing Administration utilizes program receipts to meet certain expenses of the low-rent public housing program. The use of these funds correspondingly reduces the requirements for appropriated funds. The Congress has established a nonadministrative expense limitation which applies (1) to expenses for the operation and maintenance of federally owned, directly operated projects; and (2) to expenses for technical services provided by the Administration during construction.

As of June 30, 1964, 3 federally owned, directly operated projects, containing 1,182 units, remained in the program. These projects have not been sold or leased to local housing authorities for various reasons, such as absence of State enabling legislation, local conditions, and the lack of legislative authorization to dispose of the projects for other than low-rent use. Estimated program receipts and expenses for 1965 and 1966 are based upon the continued operation of these projects by the Administration throughout both years.

Technical services are provided during the development stage by having representatives of the Administration visit the sites of projects under construction to ensure that projects will be built in accordance with specified and acceptable standards. The local housing authorities pay a fixed fee to the Administration for this service and the receipts are used to pay the cost of the service. The estimated cost for 1966 is based upon the number of projects in the construction stage.

Financing. The Public Housing Administration makes loans to local housing authorities to finance the early costs of project development. These loans are made with funds borrowed by the Administration from the Treasury for this purpose and with certain available working funds. The Housing Act of 1949 authorized the Administration to have outstanding at any one time borrowings from the Treasury of $1.5 billion. There was no outstanding amount of Treasury borrowings at the end of 1964, and none is estimated for June 30, 1965 and June 30, 1966.

When the Federal development loans to a local housing authority accumulate to an amount which is attractive to private investors, the local authority sells short-term temporary notes to the public and utilizes the proceeds to repay the Federal loans and to meet current needs for additional working capital. These notes are secured by the Federal Government's pledge to make development loans, if necessary, covering up to 90% of the development cost of the project. This arrangement has established an excellent security rating for the notes, which sold at an average interest rate of 1.983% in 1964.

In 1964 direct loans by the Administration were refunded through secured loans by private investors in the amount of $156 million. This refunding is estimated at

$140 million in 1965 and $145 million in 1966. The temporary notes sold to private investors are issued for short periods, an average of 5 months, and may be reissued several times, and in increasing amounts, before the project is permanently financed. As a result, a considerable turnover of short-term notes takes place and the volume of loan activity managed by the Administration during any fiscal year greatly exceeds the amount of loans outstanding at the end of that fiscal year. The following table shows the actual financing and refinancing of development loans during 1964 and estimated transactions during 1965 and 1966 (in millions of dollars):

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Units..
Permanent financing-
Average per unit.

1964

actual

Cumulative net costs.
Appropriations expended:
Annual contributions.
Administrative expenses..

Deficit..

92

456

501

47

942

2,110

2,093

959

Development program:
Revenue...
Expense..

1965 estimate 47

384

387

44

959

1,718

1,733 944

Normally, project development costs are permanently financed toward the end of the construction period through the sale of long-term bonds to the public. These are usually 40-year serial bonds and are secured by the Federal Government's pledge to pay annual contributions. In 1964 they sold at an average interest rate of 3.318%. As of June 30, 1964, there were approximately 667,845 units potentially eligible for permanent financing. Of these, 525,678 units had been permanently financed, leaving a potential permanent financing workload of 142,167 units. The estimates for permanent financing based on program status as of June 30, 1964, are shown below:

Net operating loss, development program.

1,413,935 157,364

-173,261

The amount of permanent financing for 1964 includes development cost of $460 thousand for projects refinanced and $60 thousand for additional development funds required for projects previously permanently financed, for which the number of units are not shown above.

1966 estimate

1964 actual 1965 estimate 1966 estimate 38,008 30,879 35,307 $526,279,134 $463,820,000 $538,226,000 $13,833 $15,021 $15,244

Operating results.-Operating income is not intended to be sufficient to cover all program expense. Net costs, in the budget year, are approximately equal to the appropriations for administrative expenses and annual contributions payments. The magnitude of such costs and appropriations used on a cumulative basis are as follows (in thousands of dollars):

44

394

392

46

944

1,859

1,825 978

1,613,935 173,716

-171,362

1964 actual 1965 estimate 1966 estimate -1,744,560 -1,959,013 -2,204,926

4,475 3,277

7,037

7,872

-2,562

-4,595

Revenue, Expense, and Retained Earnings (in thousands of dollars)

1964 actual

1965 1966 estimate estimate

1,844,935 190,926

-169,065

3,648 8,330

-4,682

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2131): Provided, That necessary expenses of providing representatives of the Administration at the sites of non-Federal projects in connection with the construction of such non-Federal projects by public housing agencies with the aid of the Administration, shall be compensated by such agencies by the payment of fixed fees which in the aggregate in relation to the development costs of such projects will cover the costs of rendering such services, and expenditures by the Administration for such purpose shall be considered nonadministrative expenses, and funds received from such payments may be used only for the payment of necessary expenses of providing representatives of the Administration at the sites of non-Federal projects: Provided further, That all expenses of the Public Housing Administration not specifically limited in this Act, in carrying out its duties imposed by law, shall not exceed [$1,420,000] $1,582,000. (Independent Offices Appropriation Act, 1965.)

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Nonadministrative Expenses

Program and Financing (in thousands of dollars)

Limitation....

Proposed increase in limitation due to
civilian pay increases.......

Stores and deferred charges...
Unpaid undelivered orders.....

Total selected resources.............

Identification code
25-25-4098-0-3-552

Personnel compensation:
Permanent positions..

Positions other than permanent..
Other personnel compensation....

Total personnel compensation.....

12.0 Personnel benefits....

21.0 Travel and transportation of persons..

22.0 Transportation of things.............

23.0 Rent, communications, and utilities....
25.1 Other services..

26.0 Supplies and materials.

31.0 Equipment........

41.0 Grants, subsidies, and contributions..

1964 actual

93.0 Non administrative expenses included in
schedule for fund as a whole..

Total obligations...............

1,394

1,389

9.1

$8,823

Object Classification (in thousands of dollars)

Total number of permanent positions..
Average number of all employees...
Average GS grade...
Average GS salary..

1964 actual

Personnel Summary

1,257

137

1,394
26

603

654

1,420

1 Includes capital outlay as follows: 1964, $22 thousand; 1965, $38 thousand; 1966. $37 thousand.

2 Selected resources as of June 30 are as follows:

1963 1964

26

24

12

151

38

175

1964 actual

709

23

11

743

52

157

175

178

35

17

36

-1,394

92

89

10.6 $10,110

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24

24

-1,440

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92 92

10.6 $10,620

1965 1966

1965 estimate

48

785

8

793

57

181

2

178

119

37

38

35

1,511

1,443

9.0 $9,230

664

918

1,582

1,582

1,582

221805

1966 estimate

888

8

896

65

246 3

178

109

38

12

35

-1,582

106 100

10.7 $10,366

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