contributions available in case the FPHA takes over projects in the event of default, so as to keep the bonds firm.

Also, it limits loans to 45 years, and will reduce the ultimate contributions required by 25 percent. That is the point that Senator Ellender made this morning,, by this firming up Federal finance assistance can be reduced from 60 years to 45 years, and reduce the total cost of the whole period by 25 percent.

Section 905 provides for the rehabilitation of existing structures for low-rent use in order to prevent or arrest the spread of blight and slums.

Senator Buck. The agency has not attempted anything of that kind so far?

Mr. MYER. No. There has been no general action under this provision, up to this time. This makes special provision for that type of activity. There has been some of it done, but not a part of a general program in the agency.

Section 907 would extend the low-rent program by providing for an increase in the authorization for annual Federal contributions, which, together with the contributions of the local public agencies, are used to maintain the low rent character of the housing for families of low income. The present statute authorizes a maximum of $28,000,000 in annual Federal contributions. This authorization is now exhausted.

This section provides for an additional authorization of $26,400,000 for the first year, with an increase of the same amount for each of the three succeeding years, with the proviso that not more than 500,000 units may be provided under this new progarm.

Differences between this title, title IX, and the parallel titles in S. 1592, are listed in a statement provided for the record. The two most important changes, however, I would like to mention here, and those are items that I have already mentioned:

1. That this title provides for an increase in permanent per-roomcost limits of $250 per room, which was not provided for in S. 1592, and it retains the emergency authority for an additional increase of $250 per room in addition, until December 31, 1949, if there is an acute need on the part of veterans and if building costs require it.

2. S. 1592 would have authorized additional annual contributions of $22,000,000 at the beginning of each of the 4 years after enactment. This title increases that amount to $26,400,000 under the same conditions. The only reason for that change is because of the change in the statutory cost limits and the additional cost if the buildings were constructed at these higher cost limits.

The other changes in title IX are changes in language designed to clarify the provisions of the United States Housing Act of 1937, and are provided for the record.

Now, I want to talk briefly about title XI relating to rural nonfarm housing.

Title VIII of S. 1592 would have authorized both the Secretary of Agriculture and the FPHA to provide for certain types of assistance in the field of farm housing, and would have authorized FPHA in addition to provide assistance in rural nonfarm housing.

The provisions of title VIII of S. 1592 have been modified and appear in this bill in two titles: Title X providing for farm housing assistance by the Department of Agriculture, and title XI providing for rural nonfarm housing assistance by FPHA. These titles have

been redrafted so that responsibility for farm housing would clearly rests with the Department of Agriculture, and the FPHA's responsibility would be limited to the rural nonfarm housing program.

Title XI is primarily directed to the provision of housing for lowincome families in rural areas who do not live on farms. It is similar to the urban program in its essential features.

Veterans and servicemen of low income have preference for a 4-year period, as was indicated in the urban program. The title provides for a payment of contributions to local housing authorities in rural areas to assist in maintaining low rents for low-income families, limited to a period of 45 years as far as the financing is concerned. Assistance is restricted to families whose net income is not sufficient to provide decent, safe, and sanitary housing.

There is provision for a special annual contribution authorization for rural nonfarm housing. Contributions contracts up to $5,000,000 are authorized for the first year. This amount is increased by $5,000,000 at the beginning of each of the four succeeding years, totaling $25,000,000 by the fifth year. It is estimated that this amount of funds would provide for approximately 30,000 houses yearly, or a total of 150,000 in the 5-year period.

Title XII of this bill would provide a procedure under which the permanent federally owned war housing could be transferred to the local public agencies for low-rent use with certain provisos and safeguards, some of which are:

1. The locality must request such housing by action of the governing body itself.

2. The FPHA must determine that such housing is suitable for low-rent use.

3. The net revenues from the operation would be returned to the Treasury of the United States.

4. The veterans' preference will be provided as in section 902.

5. No annual contributions would be provided in the case of housing transferred in return for project net return, other than the capitalization in the beginning.

The only major difference in this title with that of the similar title in S. 1592 relates to the matter of removal of accrued war-caused deficiencies. This bill would authorize FPHA to make administrative loans where deficiencies were such that they could be cured within a reasonable time from income from the projects.

Secondly, it would authorize the use of disposition reserves, to make corrections where they are of such magnitude that the cost should not be borne out of the project incomes.

Section 302 of title III: This section of title III would establish the Federal Public Housing Authority as an agency and instrumentality of the Government and would make provision for the continued operation, orderly completion and liquidation of those housing activities transferred to the Federal Public Housing Authority urder Executive Order 9070. I will not go into those items, Mr. Chairman, unless you are interested.

I have supplied for the record a more complete statement relating to the items I have just summarized for you.

The full statement follows:

As background for consideration of the provisions of S. 866 that affect the programs administered by the Federal Public Housing

Authority, I should like first to summarize very briefly and generally the responsibilities and operations of the Authority for the low-rent housing program under the United States Housing Act of 1937.

Under that act, the FPHA extends aid to localities for the provision of decent housing for families whose incomes are so low that they cannot be adequately housed by private enterprise. Administration of this program is based on local initiative and responsibility. Localities undertake public housing pursuant to State enabling legislation. Local governing bodies give prior approval to each project and make annual contributions to help achieve low rents. Local authorities own the projects and have full responsibility for their financing, for their construction, and for their management. The Federal Government, through the FPHA, makes annual contributions to help achieve low rents, may lend a portion of the capital funds required, and reviews local actions as to conformity with statutory requirements and corresponding regulations.

Housing is provided in this program only for families in the lowest income group. To assure this, the FPHA requires that local housing authorities establish schedules of rents and income limits for admission and for continued occupancy suitable for the housing of such families.

A local authority may borrow from the FPHA up to 90 percent of the development cost of a low-rent housing project, and such loans must be repaid in full with interest. In practice, local authorities have found it possible to borrow a very substantial proportion of their citalap requirements from private sources.

Annual contributions from both the Federal and local governments are necessary to make up the difference between the actual cost of providing decent, safe, and sanitary dwellings and the rents that lowincome families coming from substandard housing can afford. The Federal contribution may not exceed specific limitations set forth in the act.

Under the act, for every unit of low-rent housing built, the locality must, by demolition, closing, or repair, eliminate one unit of substandard housing.

Public housing laws are now in effect in 40 States with an aggregate population of 120,000,000 as well as in the District of Columbia, Hawaii, Puerto Rico, and the Virgin Islands. There are active local housing authorities in 448 cities and rural authorities have been established in 368 counties.

The program developed under the United States Housing Act comprises approximately 194,000 low-rent dwellings. Of these, 168,000 are completed and under active management and approximately 7,000 are under development. About 19,000 dwelling units are in deferred status: They have been authorized, but construction was deferred at the onset of the war in order to conserve building materials and is still delayed because of abnormally high construction

In addition, the FPHA is administering some 22,000 lowrent units developed by the Public Works Administration.

The full program possible with the financial resources made available by the United States Housing Act of 1937 has now been obligated. Local housing authorities, however, have submitted to the FPHA their programs for future low-rent housing. Those submitted by urban authorities come from 336 localities in 38 States and cover 360,000 new dwelling units, planned for development over a 3-year

period. Since no funds are available to FPHA for assistance to additional programs, we have taken no action on these local submis sions, neither approving nor disapproving the amounts involved.

The need for low-rent housing continues to be acute. There are still a tremendous number of American families who, because they cannot affort to pay even the lowest rentals charged for decent private housing, are forced to live in quarters that are a disgrace to any civilized nation. The problem is made particularly acute today by the fact that new families have been forming at an uncommonly rapid rate the great majority of them veterans' families-and many of these, too, have no prospect of being able to afford decent private housing.

According to a Federal Reserve Board survey made in 1945, about 31 percent of all the urban families in the Nation had money incomes of less than $40 a week, while about 18 percent had incomes under $30. More recent spot surveys made by the Bureau of the Census among veterans' families reveal an even higher percentage in the lower-income brackets; among this group in nonfarm areas, approximately 34 percent of the families surveyed had incomes under $40 a week. Quite clearly, these veteran and nonveteran families with incomes under $30 or $40 a week cannot afford to pay more than that amount for monthly rent without being deprived of other vital necessities. Just as clearly, not many of them are going to find privately operated housing of adequate quality these days that will rent for less than $30 or $40 a month, or anywhere near that figure.

The formula provided in the United States Housing Act affords us a practical solution to the housing problems of the families that are in the lowest income group. The low-rent housing program, in my judgment, has successfully stood the test of nearly a decade of operations. The legislation before this committee provides some modifications in the program that experience has shown to be desirable, and it authorizes an extension of the program which, though falling short of meeting the whole need, will nevertheless do much to relieve the distress of families, particularly those of veterans, who are suffering most acutely from the critical shortage of homes.

I should like now to address myself specifically to those provisions of the bill before the committee that involve operations by the FPHA, and then to indicate how those provisions differ from the corresponding provisions of S. 1592. I shall discuss, first, title IX, which provides for aid to urban localities for low-rent housing.

Section 901: Local determination of need; tenancy only by lowincome families.-It is a fundamental principle that low-rent public housing should serve only families of low income who cannot be adequately housed by private enterprise. To this end, the original provisions of the United States Housing Act are strengthened by section 901 of the bill so as to assure that public housing will not compete with private enterprise, and will be limited to serving only families of low-income. The principal safeguards will be as follows:

The local agency must demonstrate there is a need for low-rent housing that cannot be met by private enterprise.

The local governing body must approve all low-rent housing. The local agency must set income limits and admit no family above such limits.

The income limit for admission must not exceed five times the gross rent-or six times, for large families.

A gap of at least 20 percent must be left between upper rent limits for admission and the lowest rents at which private enterprise is providing a substantial supply of adequate housing.

Admission must be restricted to families coming from unsafe, insanitary, or overcrowded dwellings, except low-income veterans during the next 4 years.

Families whose incomes increase so that they can afford adequate private housing must be required to move when such dwellings are available.

Section 902 requires that eligible veterans and servicemen of low income be given preference over all other applicants for admission to low-rent housing projects developed under this bill. This preference extends for a period of 4 years after enactment.

As we shall see in a moment, section 907 (a) of the bill limits the additional urban program to a total of 500,000 dwelling units. The number of veterans of low income who are in serious need of housing and would be eligible to occupy any additional low-rent housing provided is several times greater than the number of dwelling units authorized in this bill.

Section 903 increases the cost limits contained in the present United States Housing Act. The limits in the present act are dollar cost limits, and relate only to the costs of dwelling facilities, excluding the costs of sites and their improvements which are so highly variable. The present act fixes those cost limits at $4,000 per dwelling unit and $1,000 per room for cities under 500,000 population, and at $5,000 per dwelling unit and $1,250 per room for larger cities.

Several difficulties have arisen in connection with the practical application of those limitations, some of which I should like to mention. In the first place, our experience has shown that the costs of construction in the suburbs of large cities are as great as in these cities themselves. For example, building costs in Yonkers are fully as high as in New York City. Under the present act, however, the higher cost limits are applicable only to cities of one-half million or over, and not to their metropolitan environs. Section 903, accordingly, makes the higher limitations applicable not only to any city which itself has a population of 500,000 but also to localities with a lesser population when they are located in metropolitan districts with a population exceeding 500,000.

Secondly, the present act provides dollar limitations both on the cost of the entire dwelling unit and on the cost per room. The effect of the limitation on the cost of the dwelling unit has been to force localities to limit the number of units for larger families. Thus, there was a substantial deficiency in three-bedroom units, and only onethird of the needed number of four-bedroom units was actually built. Section 903 meets this problem by eliminating the cost limitation per dwelling, while retaining the limitation per room. This would enable the local authorities to meet the needs of larger families coming from substandard housing.

Still further, and most important, building costs have reached such very high levels that the dollar cost limits stated in the present act are no longer realistic, and will not even make possible the reactiva