end result is an increased number of applications, larger projects, and financial assistance for a greater variety of types of facilities other than water and sewer systems.

The following tabulation shows the marked increase in workload which will result from the enactment of new legislation:

The basic legislation authorizes the Administrator to make loans to municipalities and other political subdivisions and instrumentalities of States. Under the Housing Act of 1961, States are no longer eligible borrowers. Financial assistance may be extended only if credit is not otherwise available on reasonable terms. Loans must be of such sound value or so secured as reasonably to assure repayment. The maximum maturity may not exceed 40 years.

Processing priority is specified for localities of less than 10,000 population. Although loans may be made to finance any essential public works, processing priority is specified for basic public works (including works for the storage, treatment, purification, or distribution of water; sewage, sewage treatment, and sewer facilities; and gas distribution systems).

FINANCIAL SOUNDNESS

The legislation authorizing the program requires that loans be of such sound value or so secured as to assure retirement or repayment within a maximum of 40 years. Agency policy accordingly requires full and complete analysis of the data submitted by the applicant to establish need and feasibility, the design of the project to assure the most economical methods of operation and maintenance over its lifetime, the ability of the community to carry the financial burden imposed by borrowings to provide the project, and the legal rights, duties, and obligations of the community with respect to the planning, building, financing, and operation of the proposed project.

ADMINISTRATIVE EXPENSES

Administrative expenses in fiscal year 1962 are estimated to be $1,100,000-an increase of $400,000. The supplemental estimate proposes an increase of 100 in yearend employment. Most of these positions will be located in the regional offices, mainly in the technical staffs responsible for the financial and engineering review of applications.

Technical assistance to applicants and detailed application review are in line with the Agency policy of encouraging maximum participation by private lenders in the program. The bond issue must meet market standards for legal, financial, and technical excellence. Projects and loans which are soundly conceived may attract private investment funds either (1) for the whole bond issue when floated by the locality; (2) for some portion of the issue when participation by private lenders can be secured; or (3) by sale of an issue originally purchased by the Federal Government after a reasonable period of seasoning.

Application review requires analysis of the proposed project and of the borrower's financial and legal capacity. Typically, Agency staff meet with representatives of the applicant community both in the regional office and at the project site during the course of application review. The planning, financing, and construction of a public facility is beyond the technical and administrative capacities of many small communities with which the program is involved. Agency assistance is often required on a detailed basis to assure the development of sound and well conceived projects.

The applicant's legal authority to build the facility and the effect of statutory, charter, and bylaw provisions upon details of the loan are reviewed by the Agency

legal staff. Engineering review ascertains that the project embodies a sound basic design and that it can probably be built within the estimated cost upon which loan approval is predicated. Financial review includes analysis of the applicant's financial position, the type of bonds proposed for issuance, the security offered and required, and similar details.

Mr. CONWAY. That is correct. What has happened is this: with the sharp increase in the authorization-the Housing Act of 1961 added $450 million-so that the total authorization of $600 million is four times as great as it had been up to this time. At the same time, the act provided for a new and more attractive interest rate, and the volume of activity in this program has stepped up greatly. We feel the expanded workload justifies the full $400,000 in administrative expenses rather than the $300,000 allowed by the House.

LOANS TO SMALLER COMMUNITIES

Senator MAGNUSON. I think we have in the record, in regular appropriations, as I recall it, the statement that these loans were mainly to smaller communities.

Mr. CONWAY. That is correct. We have a population ceiling of 50,000.

Senator MAGNUSON. But the loans themselves were even to smaller communities. The average was to very small communities. Mr. CONWAY. Much smaller; yes.

Senator MAGNUSON. I wonder if you could get that out of the regular appropriation and put it in this one.

Mr. CONWAY. Yes, sir.

Mr. WOOLNER. Eighty-seven percent involved communities under 3,000 population.

Senator MAGNUSON. A very high percentage on that one. You don't need any program funds in that one at all?

Mr. CONWAY. They are all there, yes, sir.

(The information referred to follows:)

PUBLIC FACILITY LOANS BY TYPE AND SIZE OF COMMUNITY

About 90 percent of public facility loan applications received by the Housing and Home Finance Agency have come from communities with populations of less than 5,000. Over 90 percent of these applicants were seeking assistance in the construction of water and sewer facilities. The typical applicant has been a town of about 1,000 population which needed about $200,000 to finance a project and which had never before issued bonds or planned, constructed, and operated a public facility.

FEDERAL HOUSING ADMINISTRATION

ADMINISTRATIVE EXPENSES

Senator MAGNUSON. Now the FHA. On the administrative expenses there, the House cut you $150,000.

Mr. CONWAY. In the case of both the FHA and the Federal National Mortgage Association, after careful review, we have concluded that the reductions made by the House in the administrative items are not so great as to cause unduly difficult management problems and accordingly we are prepared to live with what the House has authorized.

Senator MAGNUSON. All right. We will pass that quickly before somebody changes his mind. That concludes all the items, does it

not?

PUBLIC HOUSING ADMINISTRATION

ADMINISTRATIVE EXPENSES

Mr. CONWAY. No, sir; we have one more, a very important one, and that is "Public housing.

Senator MAGNUSON. Public Housing Administration, that is right, where the House gave you nothing.

Mr. CONWAY. That is right.

Senator MAGNUSON. That is a request for $350,000?

Mr. CONWAY. Yes, sir. In the case of the Public Housing Administration, the Housing Act of 1961 authorized new annual contribution contracts for approximately 100,000 units of low-cost public housing. Of these, it is estimated that some 30,000 will be placed under contract during the fiscal 1962. No such activity was contemplated in the regular budget and we feel very strongly that these additional units and this additional activity will require an increase in personnel in the developmental area. This is the point that I would like to emphasizethat the original budget contemplated an actual decline in developmental staff, rather than the increase which is now urgently needed as a result of the authorization of these 100,000 units and the placing of some 30,000 of these under contract during the current year. Commissioner McGuire can address herself to this program.

Senator MAGNUSON. The $350,000 for additional positions?

Mrs. MCGUIRE. That is correct; 50 positions, including 44 in the regional offices. These are all in the area of technicians, engineers, and so on. Of the 100,00 units we already have applications for 46,795, as of the end of August.

Mr. CONWAY. And there is a very strong emphasis in these new units for housing for the elderly which we feel requires extra attention on our part.

APPLICATION PIPELINE

Senator MAGNUSON. You have applications for 46,000. Would you give a general estimate as to how many you would grant for the next fiscal year?

Mrs. MCGUIRE. Our goal was 30,000. Of course, this would depend somewhat on the staff we have to work with. We already have some in the pipeline. We are still working with 33,000 that are under annual contributions contracts and just going into design, so, in effect, we handle that workload in addition to hopefully 30,000 to 35,000 of this 46,000 this year.

PHA EMPLOYMENT

Senator MAGNUSON. How many people do you have there regularly? Mrs. McGUIPE. We have a total staff of 1,405 in the 7 regional offices and in Washington.

Senator MAGNUSON. I meant in this field.

Mrs. MCGUIRE. In the development field?

Senator MAGNUSON. No, in the Public Housing Administration. Mrs. MCGUIRE. 1,405 is the total staff; 493 are in development activities.

Senator MAGNUSON. What I mean is you have that total, but how many people do you have in the Public Housing Administration? Mrs. MCGUIRE. 1,405.

Senator MAGNUSON. And you want 50. That would be 1,455? Mrs. MCGUIRE. Yes, Mr. Chairman.

Senator MAGNUSON. For 33,000 units?

Mrs. MCGUIRE. Of course, a large portion of the 1,405 are not in the development section. There are only 493 in the development

area.

Senator MAGNUSON. What are the 50 going to be in?

Mrs. MCGUIRE. Development.

Senator MAGNUSON. How many do you have now in development? Mrs. MCGUIRE. 493.

Senator MAGNUSON. So that would be approximately 550?

Mrs. MCGUIRE. Yes.

Senator MAGNUSON. For 33,000 units?

Mrs. MCGUIRE. The 33,000 that we are planning to put under annual contributions this year, plus the 33,000 already in the shop and in different areas of completion.

RELATIONSHIP OF EMPLOYMENT TO UNITS IN DEVELOPMENT

Senator MAGNUSON. So you have 1 for about each 150 units?
Mrs. MCGUIRE. I never figured it that way.

Senator MAGNUSON. Doesn't it figure out that way? You say you have 30,000 now and you expect to put 33,000 in. That is 63,000. Then you have 550 people who are going to administer the 63,000. Mrs. MCGUIRE. Yes.

Senator MAGNUSON. That is about, unless my figures are incorrect, one person for every hundred units.

Mrs. MCGUIRE. As of August 31, we have 18,414 applications, 15,000 reservations, 12,000 preliminary home contracts, 83,000 in the preconstruction stage, and 42,000 under construction. These are figures in addition to using just the application number that I gave you. All of these are covered by personnel engaged in development activities.

Senator MAGNUSON. What I am trying to get at is how many Federal employees are required for X number of units.

Mr. DESIPIO. Some of the figures that the Commissioner just read include a number of development people.

Senator MAGNUSON. In this particular development?

Mr. DESIPIO. These represent all units in development, sir, that have not yet moved to the management phase. The figures are 46,000 plus 42,000-and that is 88,000-plus 83,000-what is that? 170,000 I think, units that are in the development phase somewhere or other.

Some of these are under construction. Some of them are in the preliminary planning stage, but they all require development personnel to work with.

Senator MAGNUSON. I understand that. What I am trying to get at is how many Federal employees do you have in the program for X number of units?

Mr. FRANTZ. It works out roughly to 1 to 400.

Senator MAGNUSON. One to four hundred. These are applications that haven't been granted. Suppose they all get granted. You would still have 1 to every 400? Supposing what she suggests is going to all be done. They will be built. There they are. You have 1 Federal employee for each 400 units.

I am not saying this is good or bad, but I just want to know how many people there are on the Federal payroll for the units.

Mr. FRANTZ. If they were all built and there weren't any more to be built, those people would all go away.

Senator MAGNUSON. They would all go away?

Mr. FRANTZ. Yes, sir.

Senator MAGNUSON. They would move over to something else.

Mrs. MCGUIRE. They would be in management, to be sure.

Senator MAGNUSON. They won't go away. Don't worry about that. Do you consider that high or low?

Mrs. MCGUIRE. I consider it very low, indeed.

Senator MAGNUSON. Would that correspond with private employment on units of a similar type?

Mrs. MCGUIRE. I would think so, if they observe the same kind of controls, and technical advice, and interest that we give. We have some 1,200 local housing authorities now and each of these bringing in applications have to be processed, sites have to be approved, designs approved, and so on. I consider this is a minimum that we could possibly hope to get with this number of units underway without extraordinary delay, and this is, I think, very important because many of these units tie in with urban renewal. They are needed for relocation as well as for the elderly.