or just under $2 per month per person rehoused. This was 60.8 percent of the maximum that we were permitted to pay, which was $11.83. (See chart 24 which follows Mr. Klutznick's statement.) Mr. KLUTZNICK. Now are there any questions about that chart? (No response.) Mr. KLUIZNICK. Chart 25 shows the make-up and distribution of "economic rent," that is, the amount which would have to be charged tenants if no contributions were received either from Federal or local governments. The left-hand pie is the economic rent cost per dwelling unit. The economic rent of each dwelling unit is illustrated in the central circle as being $36.61. The green pie illustrates how that cost is made up: 45 percent of it is operating expense; $6.99 or 19 percent of it is full local taxes; 1 percent is utilities not included in the rent, 35 percent is debt service. (See chart 25 which follows Mr. Klutznick's statement.) Mr. KLUTZNICK. The right-hand circle shows how the economic rent is met: Sixty-four percent of the income needed to meet the economic rent is tenants' payments. Fifteen percent is the local contribution. Local contributions are required by statute and must equal at least 20 percent of the Federal contributions. In practice, these local contributions are met through the exemption of low-rent housing from local taxes. The amount of the contribution is the full local tax less the payments in lieu of taxes. Twenty percent is the FPHA contribution, which is the Federal cost-the whole Federal cost-in this program. Chart 26 illustrates what the war period has done to Federal annual contributions due to rising family incomes and rent incomes. In 1941 the Federal Government paid 88.2 percent of the maximum annual contributions that it was permitted to pay. In 1942 it had to pay only 79.6 percent, in 1943 only 69.1 percent, and in 1944 only 60.8 percent of the maximum. I am not particularly proud of that. It merely reflects the fact that the local authorities have higher-income families in their housing today whose rents are higher as a result, and who can't move out because of war stringency. But this does prove that we do not spend Federal money to take care of the family that can take care of itself. This is the beauty of the annual-contribution system. In proportion as we are successful in reaching lower-income families, the annual contributions will again increase in order to achieve the rents they can afford. (See chart 26 which follow's Mr. Klutznick's statement.) The CHAIRMAN. Their rents-their income is higher? Mr. KLUTZNICK. As their income gets higher, their rent increases to the point where they pay the OPA maximum. The CHAIRMAN. Yes. Mr. KLUTZNICK. Chart 27 merely shows that we are fresh out of money. (See chart 27 which follows Mr. Klutznick's statement.) Mr. KLUTZNICK. Under the Wagner-Steagall Act we had authority to enter into maximum annual contribution contracts of $28,000,000 a year. We have committed ourselves for locally owned projects just short of $25,000,000. There must be kept available for presently federally owned projects that are to revert to local ownership-such as the Ohio projects and 671 projects-$2,618,000. Actually, if we sold all presently federally owned projects, we would be over a million dollars short of annual authorizations. And that is why I say that section 707, which would authorize an additional program of $22,000,000 in the first year, increasing at the rate of $22,000,000 a year for the next 3 years to a total of $88,000,000 at the end of the fourth year, is the meat of this whole discussion. It is calculated to provide 125,000 units a year. The CHAIRMAN. Yes. Mr. KLUTZNICK. And it is limited to providing not to exceed 500,000 units in the 4 years (excluding units provided through rehabilitation) without additional authorization from the Congress. The 125,000 units a year can be accelerated by action of the President if there is a need. Under this additional authorization, the period over which the contribution may be paid would be limited to 45 years, as contrasted with the period of 60 years under the present authorization. As explained above, we believe this 25 percent reduction in the period of annual contributions will be made possible only through the financing amendments which are designed to enlist local private capital at lower interest rates and with larger participation than has been possible under the present law. Now I should like to indicate what would be provided under that program. Chart 28 discloses that under this additional authorization, 125,000 dwelling units a year would rehouse approximately 482,000 people. Those units would have an estimated development cost of $625,000,000. Their construction would provide 300,000 man-years of employment. The total 4-year program gives you those same figures multiplied by four. At the end of the 4 years the program would rehouse just short of 2,000,000 people; it would involve an estimated capital expenditure of two and a half billion dollars; and it would provide 1,200,000 man-years of employment. (See chart 28 which follows Mr. Klutznick's statement.) It may be of interest to the committee to have before it a statement of the applications for postwar low-rent housing which the localities have filed with FPHA. By an Executive order of the President, all agencies authorized by law to aid projects of localities were asked to prepare and keep up to date advance programs of works which, in addition to supplying needed facilities, would afford employment and provide useful outlets for materials and capital. In keeping with this order and our responsibilities under the United States Housing Act, the FPHA made available to local public agencies forms on which any of them who so desired could set forth their plans for low-rent programs. I would like to have a copy of this form made a part of this record, to follow my testimony. The CHAIRMAN. It will be. (The form, "Application for Allotment of Funds for Postwar LowRent Public Housing," appears in the appendix.) Mr. KLUTZNICK. We asked the communities to indicate on that form what if anything they proposed to do with respect to low-rent housing in the first 3 years after the war. You will remember this bill proposes a 4-year program; the President's order covered merely 3 years. We also indicated in that form that they would have to determine their own public housing need, and for their guidance suggested: First, that no new public housing should be provided where it is possible to fill a need with decent existing housing. 80525-4615A Second, that no public housing should be provided that will compete with private capital in its appropriate sphere. Third, that determinations of public housing need in the locality should leave a reasonable gap between the top of the low-income market and the lowest possible floor of private capital, in order to leave the way free for private capital to move into the lowest possible markets. It should be noted how closely the instructions in this application reflect the principles which are included in S. 1592. Up to the present time there have been submitted to the Federal Public Housing Authority applications for assistance of urban lowrent housing projects from 336 localities out of the 448 being presently served by local housing authorities. The applications are summarized in a list which we should like to submit for the record at this point. (The matter referred to is as follows:) 3-year programs for urban low-rent housing submitted by local housing authorities (pursuant to Executive Order No. 9384 on shelf of postwar projects) |