money was relatively expensive and when public housing bonds lacked the market acceptance they warranted. During 1953, four sales of bonds were held, with the following results: All were serial bonds with the last maturities in 30 years. The interest cost of the bonds sold in the May and September sales was disappointingly high but reflected the high interest yield of all taxexempt securities in the open market. Without the improved acceptance of housing bonds resulting from the Attorney General's opinion, the interest cost would have been still higher. The interest cost of the December sale showed a great improvement. Moreover, bonds purchased by banks and investment dealers at this sale moved so rapidly into the hands of investors that the purchasers were able to close their accounts within less than 1 week. The secondary market for housing bonds in late December and in the first part of 1954 has also shown a great improvement. Because of improved interest rates and easier marketability of housing bonds, PHA has determined to discontinue, at least for the present, the practice of selling bonds running only to 30 years and covering only about 68 percent of development cost. In the sale scheduled for March 2, 1954, bonds will be sold covering full project costs and running up to 40 years. E. Refunding of Bonds Held by PHA under Act of 1937 Most public housing projects built under the original United States Housing Act of 1937 were permanently financed through the sale of a relatively small number of series A bonds to private investors and the purchase of a relatively large amount of series B bonds, by PHA predecessor agencies. The B bonds were bought by these agencies with funds borrowed from the Federal Treasury. Congress, in appropriating funds for PHA for fiscal 1954, recommended that the Commissioner make every effort to refund local housing authority bonds held by PHA under the original Housing Act of 1937. The objective of the Congress was to have the amounts invested in these local authority bonds repaid to the Treasury. After careful study of alternatives and after consultation with the United States Treasury, the Public Housing Commissioner on November 18, 1953, recommended a plan to local housing authorities, for refinancing most of the projects permanently financed prior to 1949. Arrangements will be made for retiring these outstanding series A and B bonds, and it is expected this will be done before June 30, 1954. To provide funds for the payment of the series A and B bonds, local authorities will sell to private investors temporary notes with maturities running up to 1 year. It is planned these projects will again be permanently financed by the sale of New Housing Authority Bonds similar to those now being sold for new projects, but these sales will be postponed until they can be fitted into the regular schedule of permanent financing. As soon as the outstanding series A and B bonds are retired on these projects and temporary notes sold, PHA will be able to repay the Treasury about $210 million. This is over 77 percent of the amount which PHA now has borrowed from the Treasury for investment in series B bonds. The remaining funds which PHA has invested in series B bonds. are on projects where the series A bonds sold to private investors represent a relatively large proportion of capital cost. These outstanding series A bonds bear such advantageous interest rates that it would be unwise to retire the outstanding bonds in favor of new financing. F. Temporary Financing The short-term temporary notes sold by local authorities to private investors are secured by an unconditional obligation of PHA to loan, if necessary, funds to pay both principal and interest of the temporary notes at their maturity. Temporary notes are used primarily for projects under construction, and the maturities of the notes for this purpose generally run less than a year. Temporary notes, as explained above, also were sold in connection with permanent financing in 1953 to supplement the amounts borrowed through the sale of bonds. A number of projects built under Public Law 671, are still financed by temporary notes. As of December 31, 1953, local authorities had outstanding temporary notes in the following amounts: Construction loans on new projects-‒‒‒‒ Supplemental loans on permanently financed projects. Total___ $532, 027, 872 194, 524, 128 87,074, 000 813, 626, 000 Because of the short maturities of the temporary notes used during the construction stage, the volume of sales of temporary notes during any year far exceeds the amount outstanding at any one time. During calendar year 1953 there were 14 separate sales of temporary notes, comprising 620 separate issues for a total of $1,679,677,000. At the first sale on January 27, the average interest rate was 1.423 percent. The general worsening of market conditions resulted in a steady rise of interest rates which culminated, in the sale of June 9, 1953, at a high level of 2.132 percent. During the second half of 1953, there was a steady decline in the interest cost of short-term taxexempt money, and interest rates moved steadily downward until in the sale of December 8, an average of 1.236 percent was achieved. For all temporary sales during 1953, the average interest rate was 1.579 percent. Chapter III WAR AND EMERGENCY HOUSING A. Description of Programs PHA also administers various kinds of emergency housing, provided by the Federal Government to meet specific housing needs. The laws authorizing this housing in general, provide for its disposition when the original purpose has been met. The emergency housing falls into 5 general categories. 1. The public war housing program consists of federally owned permanent and temporary housing built under the provisions of the Lanham Act (Public Law 849, 76th Cong., approved October 14, 1940), and related statutes. This housing served essential war workers and their families during World War II. After the war it continued in use to meet emergency housing needs. Of the more than 627,000 units in the Lanham program, almost 30 percent was permanent and the remainder temporary, not built to permanent standards, and not intended to serve for an extended period. Some Lanham housing was operated by PHA, but most of it was operated by local housing authorities under lease. Responsibility for management and disposal of Lanham housing is vested in the HHFA Administrator, with PHA operating in this field under delegation of authority from him, and under his supervision. 2. The homes conversion program used Lanham funds to remodel privately owned buildings into rental housing for war workers. In this way, the Government provided 49,565 accommodations in 8,842 leased properties. 3. The veterans reuse program was authorized by Title V of the Lanham Act in 1945 and 1946 to provide emergency housing for veterans and servicemen and their families. Reuse housing consisted of Government-owned, surplus temporary structures which were turned over by PHA to local governments, local public bodies, nonprofit organizations, and educational institutions for conversion into temporary accommodations. About 267,000 reuse units were provided. Some were dormitory accommodations for single veterans and the remainder family units for married veterans. 4. The subsistence homesteads and greentowns were work relief projects built in the 1930's by the Subsistence Homestead Division of the Department of the Interior and the Resettlement Administration, respectively. Thirty-one homestead projects with some 3,100 dwellings and 3 entire greentowns were transferred in 1942 to PHA's predecessor agency, FPHA. The 3 greentowns were planned suburban communities: Greenhills, a 742-unit village near Cincinnati, Ohio; Greendale, a 637-unit project outside Milwaukee, Wis., and Greenbelt, Md., on the outskirts of Washington, D. C. Greenbelt included 893 homes in the original community and an additional 1,000 permanent homes built with Lanham funds early in World War II. 5. Public defense housing built with Federal funds in critical defense housing areas. This housing was authorized by Title III of the Defense Housing and Community Facilities and Services Act of 1951 (Public Law 139, 82d Cong., approved Sept. 1, 1951). In defense locations with temporary housing needs, mobile or portable dwellings were provided, suitable for reuse elsewhere. No permanent defense housing has been provided under this program. Most of the new program of defense housing is located on or near military installations. The size and location of the projects are determined by HHFA, the Department of Defense and other Federal agencies concerned with defense activities. The HHFA Administrator is charged with the statutory responsibility for public defense housing. He, in turn, has delegated to PHA authority for procurement and installation of temporary defense housing. Statutory authority for starting construction of projects under this program expires June 30, 1954. As of December 31, 1953, PHA had received assignments from HHFA for 14,400 defense accommodations, of which 11,561 units and 63 projects were completed and under management. Another 1,600 dwellings were under construction; 712 were in planning; 570 had been terminated and awaited final disposition. The 5 emergency housing programs originally totaled 963,000 dwelling units as follows: 1 Excludes 28,000 units previously disposed of under Defense Homes Corporation and Surplus Property Act Programs. B. Management Eligibility for admission to Lanham Act housing under PHA control is now restricted to distressed families of veterans and servicemen, |