PUBLIC HOUSING ADMINISTRATION-Continued
Public enterprise funds-Continued

Low RENT PUBLIC HOUSING PROGRAM-Continued
LOW RENT PUBLIC HOUSING PROGRAM FUND-continued

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.

Recent modifications of the United States Housing Act of 1937 were made in the Housing Act of 1961 (Public Law 87-70), which among other things (1) made available the remaining balance of the $336 million annual contribution authorization contained in the Housing Act of 1949; (2) authorized increased contributions, within the $336 million limitation, with respect to certain dwelling units occupied by elderly tenants of particularly low income; and (3) gave localities greater flexibility in shaping admission policies in such a way as to best meet their own particular local problems.

Budget program-Development.-While not explicitly related to any specific number of dwelling units, the Housing Act of 1961 provides for approximately 100,000 additional units. Under this authorization annual contributions contracts were executed for 23,133 units in 1962. The budget plans contemplate that the remaining units under this authorization will be placed under annual contributions contracts during 1963 and 1964.

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

Management.-The following table summarizes the an

Increased annual contributions requirements in 1963 and 1964 are attributed largely (1) to an increased number of units eligible for annual contributions resulting from the completion and permanent financing of new projects, and (2) to the increased contributions authorized in the Housing Act of 1961 with respect to dwelling units. occupied by elderly families and persons. The Public Housing Administration may make payments up to $336 million per annum. The maximum amount of annual contributions which the Administration will be committed to pay with respect to contracts executed as of June 30, 1962, is estimated at $272.6 million, leaving $63.4 million of uncommitted authority to pay annual contributions, including the increased payments for the elderly, which are estimated at $3.7 million in 1963 and $5.6 million in 1964.

Administrative expenses.-Administrative expenses for the low-rent public housing program are financed by appropriation. The obligations incurred for these expenses amounted to $13.9 million in 1962. For 1963 the amount of $15.0 million has been appropriated. The estimate for 1964 is $16.2 million.

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 increasing number of dwelling units entering all stages of the program during 1963 and 1964 is the principal reason for the rise in administrative expenses. Increased employment is required for 1964 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 estab lished 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, 1962, 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

ter of locally owned projects assisted by this program:

of congressional authority to dispose of the projects for other than low-rent use. Estimated program receipts and expenses for 1963 and 1964 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 for this service based upon a percentage of the total development cost, and the receipts are used to pay the cost of the service. The estimated cost for 1964 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 outstanding amount of Treasury borrowings, which may not exceed $1.5 billion at any one time, was $32 million at the end of 1962. The outstanding borrowings on June 30, 1963, are estimated at $25 million and on June 30, 1964, at $20 million.

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 1.569% in 1962.

In 1962 direct loans by the Administration were refunded through secured loans by private investors in the amount of $105 million. This refunding is estimated at $162 million in 1963 and $170 million in 1964. 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 one fiscal year greatly exceeds the amount of loans outstanding at the end of the fiscal year. The following table shows the actual financing and refinancing of development loans during 1962 and estimated transactions during 1963 and 1964 (in millions of dollars):

96

96

90

Management program:

174

269

289

Revenue:

174

275

293

Financing..

96

90

86

Operation of federally owned proj

ects:

Revenue..

603

Receipts from projects operated by

local housing authorities under

Expense:

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 1962 they sold at an average interest rate of 3.243%. As of June 30, 1962, there were approximately 621,817 units potentially eligible for permanent financing. Of these, 465,405 units had been permanently financed, leaving a potential permanent financing workload of 156,412 units. The estimates for permanent financing based on program status as of June 30, 1962, are shown below:

administration contract..

Other receipts...

Total revenue..

Annual contributions to locally owned projects (grants). Financing...

Operation of federally owned proj

686

750

-167,426

37

-193.242 -219,458

-172,387