MONDAY, JANUARY 18, 1943.

FEDERAL PUBLIC HOUSING AUTHORITY

STATEMENTS OF HERBERT EMMERICH, COMMISSIONER; LEE F. JOHNSON, ASSISTANT COMMISSIONER FOR MANAGEMENT; WILLIAM P. SEAVER, ASSISTANT COMMISSIONER FOR DEVELOPMENT; DAVID L. KROOTH, GENERAL COUNSEL; WARREN JAY VINTON, CHIEF ECONOMIST; AND R. A. SPENCER, DIRECTOR BUDGET DIVISION

SALARIES AND EXPENSES

Mr. WOODRUM. We take up now the item for the Federal Public Housing Authority:

Salaries and expenses: In addition to the amounts available (which shall be transferred to this authorization) for the payment of the administrative expenses of the Federal Public Housing Authority in carrying out the provisions of section 201 of the Act of September 9, 1940 (54 Stat. 872), the Act of October 14, 1940, as amended (42 U. S. C. 1521), and the Acts of March 1, 1941 (55 Stat. 14), May 24, 1941 (55 Stat. 197), and December 17, 1941 (55 Stat. 810), relating to war housing, including temporary shelter, and in carrying out the provisions of sections 3 of the Acts of June 29, 1936 (40 U. S. C. 423 and 433), relating, respectively, to the operation and maintenance of the projects transferred pursuant to Executive Order No. 7732 of October 27, 1937, and of the projects transferred pursuant to paragraphs (1 (g) and 6 of Executive Order No. 9070 of February 24, 1942, not to exceed $3,500,000 of the funds of said Authority derived from its operations under the Act of September 1, 1937, as amended (42 U. S. C. 1401), shall be available for all necessary administrative expenses of said Authority, including personal services and rent in the District of Columbia; maintenance, repair, and operation of motor-propelled passenger-carrying vehicles; employment of persons or organizations, by contract or otherwise, for legal or other special services, without regard to section 3709 of the Revised Statutes and the Classification Act of 1923, as amended; payment, when specifically authorized by the Commissioner, of (1) the actual transportation and other necessary expenses and not to exceed $10 per diem in lieu of subsistence to persons serving, while away from their homes and without other compensation from the United States, in an advisory capacity to the Authority and (2) expenses of attendance at meetings or conventions concerned with the work of the Authority; printing and binding; purchase of law books, books of reference and periodicals; and photographing equipment.

JUSTIFICATION OF ESTIMATES

You may insert the justifications.

Mr. EMMERICH. Yes, sir.

(The justifications are as follows:)

SUMMARY STATEMENT

Creation of Federal Public Housing Authority. The Federal Public Housing Authority is a war agency. It was created on February 24, 1942, by Executive Order No. 9070 of the President in the exercise of his powers under the First War Powers Act, 1941. It is one of the three main constituent units of the National Housing Agency and operates under the supervision of the National Housing Administrator. It is responsible for the administration of the publicly financed housing program which is now primarily concerned with the housing of war workers migrating into expanding war production localities.

Under the reorganization, the functions of a number of agencies formerly engaged in war housing were consolidated into the Federal Public Housing Authority:

1. The Division of Defense Housing of the Federal Works Agency.

2. The defense housing projects of the Public Buildings Administration. 3. The United States Housing Authority.

4. The Defense Homes Corporation.

5. The defense housing formerly under the War Department (except for projects on military reservations).

6. The defense housing formerly under the Navy Department (except for projects on military reservations).

7. The urban housing of the Farm Security Administration.

8. The Mutual Ownership Defense Housing Division of the Federal Works Agency.

The public housing programs of these eight agencies were brought together into the Federal Public Housing Authority for the purpose of eliminating duplication and overlapping, and for the purpose of increasing efficiency in a program which was recognized as being vital to the successful prosecution of the war.

Functions of Federal Public Housing Authority. The reorganization made it the responsibility of the Federal Public Housing Authority to administer the extensive Federal public war housing program; also to continue the minimum of essential operations on the program authorized by the United States Housing Act of 1937, including the completion and conversion to war housing purposes of projects undertaken by local authorities under that act which were located in expanding war production areas with acute housing shortages.

Since the reorganization, the Federal Public Housing Authority has concentrated its efforts upon the essential war housing program. The size of this pro

gram has been increased under the recent additional $600,000,000 Lanham Act authorization for war housing. The place of the public war housing program in the total war picture can best be indicated by a statement on the subject from the President and a congressional committee. In his message to Congress recommending this increase in the authorization for war housing, the President said in part:

"Industry cannot effectively mobilize and plants cannot expand with sufficient rapidity unless there are enough houses to bring the worker to the job, keep him on the job, and maintain his efficiency and morale. More than ever before in our

history we need houses to help win the war." [Italics added.] In a favorable report on this recent increase in the authorization for public war housing, the Senate Committee on Education and Labor stated:

"This need has been further underscrored in principle and supported in detail by statements from the Under Secretary of War (Robert P. Patterson) and the Under Secretary of the Navy (James V. Forrestal), from the Chairman of the War Production Board (Donald M. Nelson), and from the Director of Operations of the War Manpower Commission (Gen. Frank J. McSherry). Examination of the extensive house hearings * * * discloses a virtual unanimity as to the need on the part of representatives of war production industries, labor groups, members of the building industry, and others * * * The committee * * * is convinced of the direct relationship between adequate war housing and full war production. It is aware that in many critical areas war production has been impeded by housing shortages, and that those shortages will be aggravated gravely unless action is taken now.' [Italics added.]

The war public housing program under Federal Public Housing Authority, including the federally owned and federally aided programs assigned under various acts of Congress involves projects with a total estimated cost of over $1,516,000,000. This public war housing program comprises projects located in expanding areas of war production in all parts of the country. It includes dormitory accommodations, accommodations for couples, dwellings for larger families, and trailers. These war housing projects containing 432,000 units will house almost 1,400,000 persons.

In the undertaking of this tremendous and essential war housing program, the Federal Public Housing Authority has taken the necessary measures to meet the grim standards of total war. It has stripped its projects to meet the increased

shortages of material and labor and the need for speed. It has now limited the new construction of war housing almost exclusively to temporary construction. It has prepared and used standard plans for each of the different types of housing accommodations. It has reduced the amount of critical materials going into projects to about one-fourth of the amount used in normal times.

In addition to an all-out war approach to the Federal public war housing, the Federal Public Housing Authority took effective steps to bring about the fullest possible conversion to war use of the federally aided low-rent housing program under the United States Housing Act. Thus, all further construction of public housing which could not be devoted to war purposes was stopped. Where projects were being constructed under the United States Housing Act and were located in expanding war production areas, local authorities were required to complete the projects for use by essential war workers moving into such areas. Permanent low-rent public housing projects costing $257,500,000 and involving 52,800 homes have been converted to these war purposes.

In other words, all nonessential building of public housing was stopped. The only building of public housing which was carried to completion was that which was necessary for essential war workers. There was, however, $488,700,000 of projects owned by local housing authorities involving 105,500 homes which were already built for low-income families, in accordance with the slum-clearance and low-rent purposes of the United States Housing Act. In order to protect the Government's investment in these projects and to carry out the law under which they were undertaken, the Federal Public Housing Authority is continuing the supervision of the local housing authorities in their operation and maintenance of these locally owned projects which were constructed before the war.

As has been pointed out, the total war housing program of Federal Public Housing Authority is $1,516,000,000 and will provide housing for almost 1,400,000 persons. In addition to this war public housing, Federal Public Housing Authority is responsible for other public housing which, at the time of reorganization, had already been built under the United States Housing Act and other Federal laws. The combined federally owned and federally aided public housing program of Federal Public Housing Authority consists of projects containing accommodations for almost 1,900,000 persons involving $2,154,700,000 of housing. Recognizing that it was created as a war agency to do a war job, the Federal Public Housing Authority has thus endeavored in every way to put the public housing program on an all-out basis.

Progress of reorganization. The reorganization order provided for the transfer of the public housing programs of eight different Federal agencies to the Federal Public Housing Authority. The actual transfers of these programs were staggered so as to avoid any delay in the construction or management of housing vitally needed to make war production possible. As each program was taken over, some of the trained and experienced personnel of the agency involved was transferred along with the program. In consummating the reorganization, the Federal Public Housing Administration has always kept before it the basic objective of keeping the housing program in motion. At the same time that construction and management operations were continued without interruption, an organization was amalgamated in Federal Public Housing Administration which would be adequate to cope with the wide variety of new problems presented by the war exigencies.

The effect of the unification of publicly financed war housing in one agency has been to eliminate the duplication and overlapping which existed among the agencies previously undertaking public housing. It has eliminated the confusion which previously existed in localities where several different agencies, operating under different regulations, were carrying on public housing programs. The reorganization has increased efficiency in the public war housing program and made it possible to adjust that program quickly to the changing needs of wartimes. Through a single direction of the public war housing program, it has been possible to achieve a uniform and effective policy in these adaptations to war exigencies, in matters such as the change from permanent to temporary construction, the cut in the amount of critical materials going into housing, the standardization of plans to conserve manpower and materials, the restriction of occupancy of war housing to essential war workers, etc.

The reorganization, by placing all Federal housing functions in one agency, has also resulted in the integration of private and public housing programs and has facilitated a close-working relationship. Public housing projects are being undertaken only where private enterprise cannot meet the need for housing in expanding war production areas.

In addition, the reorganization has resulted in economies in administration and savings in administrative expenses. While there are no exact figures available from the predecessor agencies for purposes of comparison, it is a known fact that there were substantial reductions in the personnel engaged in carrying the work load which was taken over under the reorganization. Since the reorganization,

there has been a large expansion of the publicly financed war housing program and a consequent large increase in the work load, but the increases in staff have been relatively small in comparison with this increased work load.

The magnitude of this increase in the war housing work load of Federal Public Housing Authority as contrasted with that of Federal Public Housing Authority's predecessor agencies prior to the reorganization is evident from a few comparisons. Thus, as to projects under construction, on January 1, 1942, all of Federal Public Housing Authority's predecessor agencies had 66,000 units in that stage, as contrasted with 150,000 units now under construction by Federal Public Housing Authority alone on November 30, 1942. As to projects in the preconstruction stages, on January 1, 1942, all of Federal Public Housing Authority's predecessor agencies had 53,000 units in that stage, as contrasted with 128,000 units in this stage by Federal Public Housing Authority alone on November 30, 1942. Finally as to projects under management, on January 1, 1942, all of Federal Public Housing Authority's predecessor agencies had 64,000 units in that stage, as contrasted with 154,000 dwelling units now under management by Federal Public Housing Authority alone on November 30, 1942. In summary, all war housing in all stages handled by Federal Public Housing Authority's predecessor agencies prior to the reorganization was 183,000 dwelling units. On November 30, 1942, the total volume of war housing in all stages handled by Federal Public Housing Authority alone is 432,000 dwelling units, a program nearly 21⁄2 times greater than that prior to the reorganization.

To meet the wartime need for speed and to avert an additional burden on the communication and travel facilities of the country, the Federal Public Housing Authority has vigorously followed the policy of decentralization. Necessary powers have been delegated to the 10 regional offices in the field to enable them to carry out the Federal Public Housing Authority's operations of constructing and managing projects, with a minimum of reference to Washington for decisions on specific projects. Moreover, this decentralization has been carried right to the locality to the fullest extent possible by utilizing local housing authorities, established under State laws, consisting of uncompensated local citizens selected by the head of the local government. The use of these local housing authorities to assist in the undertaking of Federal public war housing projects has made it possible to locate and manage projects in a manner which best accords with local needs and conditions. This is in line with the congressional mandate in the Lanham Act (sec. 305) directing consultation with local housing authorities in the undertaking of Federal war housing projects. The closeness of the regional offices and local housing authorities to actual operations and needs has resulted in a much more effective program since the reorganization than was possible under the centralized control of some of Federal Public Housing Authority's predecessor agencies.

Organization structure.-The Federal Public Housing Authority functions through a central office in Washington and 10 regional offices in the field as explained above. Under a policy of decentralization, the regional offices have the responsibility for the actual operations of building and managing projects. The central office establishes the policies and standards for regional operations, maintains certain controls over regional office activities, and extends assistance to the regions on especially difficult problems.

The Federal Public Housing Authority organization, including both central and regional offices, is divided vertically into four main branches according to the major type of activities; namely, development, project management, administration, and legal.

Development is the planning, design, and construction of projects, and the acquisition of land. Project management is the renting, operation, and maintenance of projects. Administration is concerned with all necessary service functions such as personnel, budget, auditing and accounts, statistical records, and general office services. Legal is concerned with necessary legal functions.

Summary of this budget submission. The Federal Public Housing Authority has a vast widespread program of war public housing which is federally owned and is constructed with appropriated funds. This program will serve about 1,200,000 people. (In addition to this federally owned war housing, there is the locally owned war housing built with Federal financial assistance. This program will serve almost 190,000 people.) In the various acts of Congress appropriating funds for this war housing which will be federally owned, the Congress included authorizations for administrative expenses in carrying out that program. Since funds have already been made available by Congress for administrative expenses

of this federally owned war public-housing program, this budget submission does not include a request for any further appropriation of funds for such administrative expenses.

The only request which is being made for administrative expenses relates to the federally aided program under the United States Housing Act including the portion of the program initiated under that act, which was completed and converted to war-housing use under title II of Public, No. 671. The total active volume of this program involves $746,200,000 of projects to provide homes for about 569,000 people. The request is for authorization to use part of the corporate funds available to Federal Public Housing Authority under the United States Housing Act for administrative expenses in carrying on this program.

While the authorization requested for administrative expenses is only for this program under the United States Housing Act and title II of Public, No. 671, the Federal Public Housing Authority wishes to present to the Congress the complete picture of its organization and of its administrative expenses on its federally owned as well as its federally aided housing programs. It is believed to be in line with the purpose of the reorganization to make it possible for the Congress to get a unified statement on administrative organizations and expenses relating to the public-housing progiam from the one agency which has now been charged with responsibility for that program.

Briefly, a summary of estimated administrative expenses of Federal Public Housing Authority for the fiscal year 1944 is as follows:

1. Three million five hundred thousand dollars for administrative expenses required for Federal Public Housing Authority-aided program as against an authorization of $4,277,132. for the fiscal year 1943, of which it is estimated that $3,800,000 will be used in the fiscal year 1943. This means a reduction in 1944 of required for Federal Public Housing Authority-aided program as against an 18.2 percent in administrative expenses on the Federal Public Housing Authorityaided program below the amount authorized for such expenses in the fiscal year 1943 and a reduction of about 8 percent below the amount which it is estimated will actually be used of this authorization in the fiscal year 1943.

2. Twelve million five hundred thousand dollars for the combined expenses of Federal Public Housing Authority covering all of its programs for the fiscal year 1944 as against $14,550,000 for the fiscal year 1943, representing a reduction of $2,050,000, or 14,1 percent. These figures for administrative expenses include overhead costs not normally charged to the specific projects.

This $12,500,000 includes the $3,500,000 administrative expenses for the Federal Public Housing Authority-aided program.

In the following discussion of these administrative expenses, the Federal Public Housing Authority will first present the explanation of the administrative expenses for the Federal Public Housing Authority-aided program referred to in paragraph 1 above. It will then give the total picture of the_administrative expenses (referred to in par. 2) relating to the whole Federal Public Housing Authority organization and all of its programs, including those for which the administrative expense funds have already been authorized. Following these justifications of the administrative expense budget, the Federal Public Housing Authority will present briefly an estimate of the amount of the appropriation needed to meet the contractual obligation of the Government to local housing authorities for annual contributions under the United States Housing Act.

ESTIMATE OF FEDERAL PUBLIC HOUSING AUTHORITY-AIDED PROGRAM BASIS OF THIS REQUEST

Federal Public Housing Authority-aided program, before and during the war.— In this aided program, the Federal Public Housing Authority is carrying out functions under the United States Housing Act and under the war housing amendment to that act contained in title II of Public, No. 671. This program is primarily a program of financial assistance to local housing authorities which own, construct, and operate the projects.

Under the program, as it was undertaken under the United States Housing Act before the war, local housing authorities secured loans from the United States Housing Authority up to 90 percent of the total development cost of the project, and obtained at least 10 percent of the cost of the projects from other sources. The purpose of the program was to clear slums and provide decent homes for low-income families who were formerly compelled to live in slums. The necessary

See footnote on p. 126 for an explanation of what is included in this figure for administrative expenses.