low rents which were required by law to be charged in these projects were made possible by Federal annual contributions along with annual contributions from the localities. For each new unit of low-rent housing constructed under this program, the locality was required to eliminate one substandard slum dwelling.

Prior to the outbreak of war, a total of $488,700,000 of projects involving 105,500 homes for 380,000 people had been substantially completed by local housing authorities with the financial assistance of the United States Housing Authority. Since the outbreak of the war, in order to protect the Government's investment in these projects and carry out the law under which they were built, the Federal Public Housing Authority has continued the supervision of the local housing authorities in their operation and maintenance of these projects. The Government is directly concerned with the economical operation of these projects. Such economical operation is necessary to keep down the Federal annual contributions and to assure repayment of the Government's loans.

To put the program on an all-out war basis, Federal Public Housing Authority took effective steps to bring about the fullest possible conversion to war use of the Federal Public Housing Authority-aided projects initiated under the United States Housing Act which were located in expanding war-production areas. Of those which were not completed and occupied before the war, projects having a total development cost of $257,500,000 have been converted for use by essential war workers. On all uncompleted projects which were not located in expanding war-production areas, all further construction was stopped as part of the policy of stopping nonessential building. No new projects for slum-clearance purposes have been initiated since the war.

The local housing authorities, undertaking this $257,500,000 of projects, have enlisted fully in the war effort by the conversion of this housing to war purposes. These projects were undertaken by local housing authorities with the financial assistance of the Federal Government. They are serving war workers who pay full economic rentals, so that no annual contributions will be needed in the operation of these projects during the period of the emergency.

From the foregoing, it can be seen that to the fullest extent possible this Federal Public Housing Authority-aided program has been put on a war basis and is serving a war need. The $3,500,000 authorization for administrative expenses relates to the work load of Federal Public Housing Authority in connection with this program.

Federal Public Housing Authority's essential activities and work load on aided program. On this program involving $746,200,000 of active projects, the Federal Public Housing Authority must perform certain minimum essential functions.

It has issued obligations which are guaranteed by the Treasury in order to raise funds for loans to local housing authorities. About $400,000,000 of such obligations are now outstanding, the balance of the cost of the program having been raised by local authorities through long- or short-term loans from private investors. In order to assure its ability to meet its outstanding obligations as they mature, and as a matter of good business administration, the Federal Public Housing Authority performs certain functions to protect its investment represented by the bonds of local housing authorities evidencing their loans from Federal Public Housing Authority.

The Government has another direct and immediate interest in the proper and economical operation of these projects since the Federal Government has contracted to pay annual contributions to local authorities. These Federal annual contributions, along with local annual contributions, are necessary to achieve the low-rent character of the $488,700,000 of projects devoted to the original lowrent and slum-clearance purposes of the United States Housing Act. Sound and economical management of local authority projects will reduce to a minimum the annual payment of Federal contributions which are obtained through annual appropriations by Congress to meet contractual obligations of the Government. The fact that annual contributions payments and appropriations have been kept far below the maximum contract obligations is largely the result of Federal Public Housing Authority assistance and supervision in the operation of the projects.

The Federal Public Housing Authority is charged by law with the duty of assuring that local authorities comply with the requirements of the Federal laws under which financial assistance was extended to them, and with the provisions of the contracts made pursuant to such laws.

On the $257,500,000 of war housing included in the Federal Public Housing Authority aided program, the Federal Public Housing Authority has the continuing responsibility of assuring that these projects will best promote the war program by serving the most essential war workers in the locality.

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In order to accomplish these essential objectives, the Federal Public Housing Authority extends assistance to local housing authorities and makes available to them the benefit of successful experience of other local authorities in meeting like problems. Under its contracts with the local housing authorities, the Federal Public Housing Authority reviews certain major matters involving local authority operations such as operating budgets and maintenance programs and rental and tenant selection practices. It also makes periodic audits and inspections to assure compliance with the requirements of Federal laws and contracts.

A few examples will illustrate some of the Federal Public Housing Authority work necessary to accomplish the essential outlined above:

There is the work which must be done on technical problems such as major difficulties of heating, plumbing, and maintenance of buildings and grounds.

There are the steps which should be taken to reduce the continuing maintenance and repair budgets, such as programs of tenant maintenance requiring tenants to assist with janitor service, painting, and maintenance of grounds.

There is the assistance work to be done in such technical phases of operations as the installation of accounting systems, payments in lieu of taxes, and difficult questions involving fuel and utility consumption, or negotiation of utility rates. There is the assistance needed by local authorities in meeting their wartime problems of maintenance such as the need for reducing necessary repairs and replacements. assistance in finding suitable substitutes for critical materials needed for essential maintenance, and getting priorities for this essential work. There is also the technical assistance given in the financial field which has produced such substantial savings. As a result, private capital has been enlisted in temporary financing at extremely low interest rates during the construction period of projects, which has reduced project development costs and brought about corresponding reductions in Federal annual contributions. This temporary financing during the management period on the projects converted to war housing under title II of Public, 671 results in continuing savings which help to eliminate the need for Federal and local contributions and make possible quicker amortization of capital cost. In addition, there has been assistance given to local authorities in the marketing of their long-term bonds so as to reduce interest costs with corresponding reductions in Federal contributions.

There is the assistance needed in meeting wartime problems in this program which will be almost entirely in the management stage in the fiscal year 1944. For example, in view of the shortages of critical materials and of manpower, there are the different adjustments necessary to carry on the business functions of maintaining and operating housing projects. Moreover, on the projects converted to war purposes there are the many new problems of assuring that the projects are made available only for those who are most urgently needed in the expanding war industries of the community. In the low-rent slum-clearance program, some of the local authorities have been confronted with difficult problems, such as adiustments in tenancy and rentals as a result of increases in tenant incomes.

Estimate of administrative expenses on aided program.-The work load on the Federal Public Housing Authority-aided program for the fiscal year 1944 will be smaller than it was in the fiscal year 1943. Accordingly, Federal Public Housing Authority is requesting a reduced authorization for administrative expenses for the fiscal year 1944.

On the basis of the work load for the year 1944 which represents the minimum of essential operations in the Federal Public Housing Authority-aided program, it is believed that the $3,500,000 authorization requested for administrative expenses represents a conservative estimate. It is 18.2 percent less than the amount authorized for the fiscal year 1943 and will be about 8 percent less than the reduced amount which it is estimated will actually be used for the fiscal year 1943.

The authorization requested is for the use for administrative expenses of corporate funds of the Federal Public Housing Authority available under the United States Housing Act.

It should be noted that the interest profit which the Federal Public Housing Authority will make on its outstanding loans during fiscal year 1944 (representing the difference between the interest rate at which it borrows and the interest rate at which it lends) will be substantially greater than the amount requested as an authorization for the administrative expense of the Federal Public Housing Authority-aided program.

COMBINED ESTIMATES FOR FEDERAL PUBLIC HOUSING AUTHORITY ON ALL OF ITS PROGRAMS

Includes expenses covered by existing authorizations.-There has been set forth above a statement of justification relating to the requested authorization for administrative expenses for the Federal Public Housing Authority-aided program. In this section there will be submitted the total picture of the administrative expenses for the whole Federal Public Housing Authority organization including all of the Federal public housing programs and the Federal Public Housing Authority-aided program. In the various acts of Congress appropriating funds for the Federal public war housing programs, the Congress included authorizations for the administattive expenses needed to carry out those programs.

Amount of combined administrative expenses on entire Federal Public Housing Authority program. The total estimate of administrative expenses for Federal Public Housing Authority for all of its programs is as follows for the fiscal years 1944 and 1943:

The foregoing estimates are based only upon what is required to complete the program now assigned to Federal Public Housing Authority under existing congressional authorizations. It should be recognized that any major addition to this work load through an additional congressional authorization of housing would involve additional administrative expenses. According to the practice followed in the past, authorizations for administrative expenses have been included with the authorizations of funds for the construction of additional war housing.

Ratio of administrative expenses to total war housing program. There is a relatively small administrative overhead in relation to the size of its work load as measured by its program expenditures. Taking the two largest Federal war housing programs of the Federal Public Housing Authority (those under the Lanham Act and PA-9), Federal Public Housing Authority has made a study of the ratio between administrative costs and program expenditures under these two programs during the last 9 months. The results of this study are summarized in the following table which shows the very low ratio of administrative expenses to total expenses of these two programs:

Federal Public Housing Authority administrative expense compared with total expense cumulative: Feb. 28, to Nov. 30, 1942, obligations incurred

LANHAM ACT AND PA-9 PROGRAMS

Administrative expense....

Total development program expense

Ratio: Administrative expense, total development program expense (percent) __.

$6, 089, 201 $516, 610, 344

1. 2

This table illustrates the economy achieved by Federal Public Housing Authority in keeping down its administrative expenses.

Volume of total Federal Public Housing Authority program.-The present total program of Federal Public Housing Authority involves approximately $2,154,700,000 of housing involving 564,300 units to accommodate almost 1,900,000 persons.

1 These figures and those set forth in the table on the next page for administrative expenses include the usual administrative and overhead costs. They do not include costs, such as the cost of plans and specifications and field supervision on projects, which are properly chargeable to these specific projects as construction costs according to standard accounting practices. Nor do they include the cost of management customarily incurred at the site of projects for rent collections, tenant selection, or maintaining projects which are properly chargeable to rental income of such projects.

Of this total program, the part which is exclusively for war purposes is $1,516,000,000 involving 432,000 units to house almost 1,400,000 persons. These figures indicate the magnitude of Federal Public Housing Authority's job. They also show the essential war character of its program.

Status of publicly, financed war housing program. The status of the total public housing program of Federal Public Housing Authority on November 30, 1942, is as follows:

1. War public housing under development: On the federally owned war housing program being developed by Federal Public Housing Authority with appropriated funds under various acts of Congress, there is a total of 251,200 dwelling units in the development stage. Of this, one-half is now under construction involving 125,000 dwelling units. The remaining half is yet to be placed under construction.

On the local war public housing program being constructed with loan funds under the aided program, there is a total of 26,800 dwelling units in the development stage. Of this, 25,064 or 85 percent is under construction, and only 1,736 or 15 percent remains to be placed under construction.

Thus, the total volume of both federally owned and federally aided war public housing in the development stage is $994,000,000 involving 278,000 dwelling units for 896,800 persons.

2. War public housing under management: On the federally owned war housing program constructed with appropriated funds under various acts of Congress, there is a total of 128,000 dwelling units in the management stage.

On the local war public housing program constructed with loan funds under the aided program, there is a total of 26,000 dwelling units in the management stage. Thus, the total volume of both federally owned and federally aided war public housing in the management stage is 154,000 dwelling units involving $522,000,000 of housing for 490,000 persons.

3. All other public housing under Federal Public Housing Authority: All other public housing under Federal Public Housing Authority is now in the management stage. The volume of this balance of the total Federal Public Housing Administration program may be summarized as follows:

The Federal Public Housing Authority aided program under the United States Housing Act consists of a total of $488,700,000 of housing involving 105,500 homes. This housing was all substantially completed at the time of the reorganization. The federally owned public housing program which was completed at the time of the reorganization and was transferred to Federal Public Housing Authority for management consists of a total of about $150,000,000 of housing and 26,800 dwelling units. This housing was largely constructed by the Public Works Administration.

Thus, the total of these other public housing programs of the Federal Public Housing Authority is $638,700,000 of housing and 132,300 dwelling units for 470,000 people.

4. Total of all public housing programs in Federal Public Housing Authority: The total of all of these public housing programs in Federal Public Housing Authority is approximately $2,154,700,000 of housing consisting of 564,300 dwelling units which will house almost 1,900,000 people.

Construction work load. This construction program involves a very great work load. Building in wartimes is exceedingly difficult, with all the problems of shortages of material and manpower. This is particularly true because this program is being pushed to completion at such an accelerated pace.

A few illustrations given below of problems being met by Federal Public Housing Authority in construction will help indicate the nature of this work load.' 1. Obtaining priorities and allocations of materials: Federal Public Housing Authority must prepare all necessary data and make any changes in its practices which are necessary from time to time to meet the requirements imposed by the War Production Board because of shortages of materials. It is necessary to work closely and continuously with the War Production Board in getting priorities and allocations of materials for the public war housing programs.

2. Reducing use of critical materials because of shortages: Federal Public Housing Authority must constantly develop war housing standards which provide for a minimum use of critical materials through the substitution of ceramic materials, plastics, and available types of lumber for metals and scarce varieties of lumber. This must be done, even though the convenience and comfort of tenants is adversely affected. Federal Public Housing Authority's specifications must meet the standards prescribed from time to time by the War Production Board for minimum use of critical materials.

3. Standardization of plans: Federal Public Housing Authority must have standard plans for war housing projects which are adjusted to the material shortages as they develop. Such standard plans are necessary to reduce the delay between the programming of housing and the start of actual construction. Such standardization also facilitates the procurement of materials. In the case of temporary dwelling units, such plans and specifications are designed to permit maximum salvage of materials in the post-war period.

4. Mass purchasing of equipment: The purchase of equipment, such as ranges and stoves, must be centrally controlled in order to obtain such items today, since production of many things has been stopped and can only be resumed as war needs require. It is necessary to process these procurement requests through the various regulatory agencies, such as the War Production Board. This practice of centralized procurement must be followed to assure the availability of essential equipment so that projects will be ready for tenancy as soon as the building construction is finished. There is, however, no centralized purchasing of construction materials, such material being purcased locally wherever available, in order to minimize burdens on transportation facilities.

Management work load.-There will be a very great increase in the Federal Public Housing Authority management work load because of the steadily growing volume of housing which is being completed and opened for occupancy. On June 30, 1943, Federal Public Housing Authority will be managing or supervising the management of from two to three times as many dwellings as on June 30, 1942. There will be even further increases during the fiscal year 1944 until Federal Public Housing Authority, under its total present program, will finally reach a volume of housing managed or supervised which will total approximately $2,154,700,000, involve over 564,300 units, and house almost 1,900,000 people. This large management work load consists chiefly of the Federal public warhousing program. It also covers the Federal Public Housing Authority-aided program, including the projects under that program converted to war housing. The management work load on this Federal Public Housing Authority-aided program is discussed elsewhere above and should be considered along with the material in this section in order to get a clear picture of the total management work load.

In the management or supervision of management of the public housing program, Federal Public Housing Administration has geared itself to wartime conditions. This management work load on war housing is partially illustrated by the following objectives and problems:

1. Housing essential to in-migrant war workers: Its first duty is to assure that the war housing serves its basic purpose of housing essential war workers moving into areas of expanding war production.

2. Community facilities in projects near war plants in isolated areas: Since the purpose of the housing is to bring workers to war industries where they are needed, Federal Public Housing Administration has the job of assuring that the housing provided continues to be satisfactory so that the workers will stay on their war jobs where they are needed. Where the war plant is located in an isolated area and the housing or dormitories are located near the plant far removed from any established community, it is imperative to assure that the necessary normal community facilities (such as stores, schools, and restaurants) are provided for the war workers and their families.

3. Wartime problems in project maintenance and operation: The management or supervision of this war housing involves all of the difficult problems of operating and maintaining properties in wartimes. There are the shortages in materials needed for repairs and maintenance and the necessity for avoiding the use of critical materials as much as possible. This means trying to keep up the property to avoid repairs, which involves enlisting the cooperation of tenants in conserving existing facilities. Where repairs are necessary, it means finding substitutes for critical materials and getting priorities for such material as is essential. The widespread operation and maintenance of these properties also involves the difficulties resulting from shortages in the manpower needed for this work, particularly since the projects are generally located in the areas of expanding war production where there are labor shortages.

4. Utilizing local housing authorities: To assist in this management job, Federal Public Housing Authority utilizes local housing authorities where they exist. This is in line with the policy of decentralization (as explained above) and best assures that the projects will be operated to meet local needs and conditions. Contracts are made with such local housing authorities for the management of projects on a basis of reimbursing the local authority for its costs, witho it profit.