The Federal Public Housing Authority, formerly the United States Housing Authority, was also placed under a single head when established by Congress. In recent years it has directed the construction of and managed over $2,000,000,000 of war housing and 800 low-cost housing projects and advanced $800,000,000 for the development of these projects. The widespread operations of the Farm Credit Administration are under the direction of a single Governor, in place of the Board which was eliminated sometime ago who supervises the operations of the Federal land banks and many other agricultural credit and financial institutions. It had total advances outstanding at the beginning of this year of nearly $2,000,000,000. I doubt very much if any of these administrations could be eliminated to advantage and boards substituted to direct their operations. S. 804 S. 804 would adjust the rate of dividends paid by the Federal Savings and Loan Insurance Corporation on its capital stock and decrease the premium charge for its insurance. I would like to discuss each section of this bill separately. The first section would adjust the dividend rate paid by the Federal Savings and Loan Insurance Corporation to the Home Owners' Loan Corporation, which corporation holds all the capital stock of the Insurance Corporation. Section 506 (a) of S. 866 contains provisions which are identical in effect, except that under S. 866 the adjustment would be as of July 1, 1946, whereas in S. 804 the adjustment would be as of July 1, 1947. I would recommend the enactment of these provisions, and I see no objection either to a July 1, 1946, effective date or to a July 1, 1947, effective date for the adjustment. The dividend rate on the capital stock of the Insurance Corporation was originally fixed at 3 percent per annum because the bonds with which the Home Owners' Loan Corporation made payment for the stock bore interest at that rate. The 3 percent rate is now out of line with realities, since all interestbearing bonds of the Home Owners' Loan Corporation have at present an interest rate of 1 percent per annum. This section would make the dividend rate equal to the average interest rate on the bonds of the Home Owners' Loan Corporation outstanding during a particular dividend period. It would bring about the situation which undoubtedly was contemplated by Congress in passing the original act, and it is to be noted that the bill (H. R. 4428), which was passed in the last Congress by both Houses, contained a similar provision. The second section of S. 804 would reduce the premium rate of the Federal Savings and Loan Insurance Corporation from one-eighth of 1 percent to onetwelfth of 1 percent of the accounts of insured members plus creditor obligations of insured institutions. It would retain the existing power of the Insurance Corporation to assess additional premiums but would similarly reduce the maximum rate hereof. In connection with an earlier bill on this subject, the Federal Home Loan Bank Administration indicated its assent subject to certain reservations. Because of significant and important inflationary developments in the real estate market during the past year or so we believe that a reduction in the premium rate is not now justified. Keeping pace with the rise in real-estate prices average mortgage loans have increased in amount with consequent increases in risk. Indeed, the whole mortgage picture has changed during the past year both in the quantity and quality of the risk. For the year ending December 31, 1946, the mortgage holdings of insured institutions increased by approximately $1,500,000,000 as compared with $500,000,000 in the previous year. During the same period the reserves held by the associations themselves diminished in relation to the mortgage loan holdings. In the light of these developments I cannot recommend the enatment of section 2 of S. 804 at this time CONCLUSION I wish to thank the committee for the opportunity to express my opinion on the legislation affecting the Federal Home Loan Bank Administration which is pending before the committee. It is my firm belief that during this critical period there would be definite advantages in the establishment of a national housing policy as proposed by S. 866 and the coordinated execution of such policy. I urge the prompt enactment of S. 866 and the amendments to the basic statutes, affecting operations of the Federal Home Loan Bank Administration, which I have recommended. If in the testimony of other witnesses with reference to some of these provisions affecting the Federal Home Loan Bank Administration statements are made which it does not mean seem to me are in accord with the facts, I would ask this committee for the provilege, before the hearings are closed, of making a further statement on the matter. Senator Buck. Thank you, very much. on you. Mr. Dillon S. Myer, Commissioner, Authority. Mr. Myer, will you proceed please? We will feel free to call Federal Public Housing STATEMENT OF DILLON S. MYER, COMMISSIONER, FEDERAL PUBLIC HOUSING AUTHORITY, WASHINGTON, D. C. Mr. MYER. My statement for the record relates to titles III, IX, XI, and XII of S. 866, with certain other comments. I wish first to present a brief summary which would include comments on the following items: First, the basic provisions of the United States Housing Act. Second, the progress and present status of the low-rent housing program developed under the act of 1937. Third, the present need for housing and for low-income families. Fourth, the outline of the supplementary amendments of the United States Housing Act, included in title IX of S. 866. Fifth, the difference between title IX and the provisions of S. 1592. Sixth, rural farm housing, which is included in title XI; then title XII relating to procedures for the transfer of federally owned war housing to local public agencies for low-rent use; and Finally a summary of section 302 under title 3, would establish the Federal Public Housing Authority as an agency and instrumentality of the Government. I would like to start with the provisions of the United States Housing Act and the summary of title IX of S. 866. The United States Housing Act establishes within its policy the intention to promote the general welfare, and to remedy unsafe, unsanitary housing conditions and the acute shortage of decent safe and sanitary dwellings of families of low income. It provides for cooperation with local authorities organized under State acts, and further provides that only the lowest income groups shall be served. Loans may be made to local public agencies for construction of lowrent housing, and annual contributions are provided to assist in achieving and maintaining the low rent character of the projects. At least 20 percent of the contributions must be made by local agencies. The act also requires equivalent elimination of slum dwellings. There are 448 local urban housing authorities in 40 States, and rural authorities have been organized which include 368 counties. One hundred and ninety-four thousand units of low-rent housing have been authorized under this act, and funds have been obligated. Senator TAYLOR. Low rent? How high does that go? Mr. MYER. That is within the limitations established by the United States Housing Act. Usually those rents do not exceed $30 a month, including utilities. One hundred and ninety-four thousand units of low-rent housing have been authorized pursuant to this act, of which 168,000 units have been completed. There are certain others in process, and a few that have been deferred because of the war situation and have not yet been constructed, but the funds are obligated. Senator BUCK. Mr. Myer, do not some of these units take in even the much lower salaried group families? Mr. MYER. I was talking about rents in this case. The question of rents. I said that the rents, generally speaking, are under $30 a month, including utilities in this housing. Senator BUCK. They do go down as far as perhaps $15, do they not? Mr. MYER. Yes, sir, in some communities they go down as low as $15. It will vary by communities, depending on what the general rental scale is and the general income within those areas, and depending on the market. And of course it is maintained at a base where such housing will not compete with adequate supplies of housing provided by private enterprise. Senator TAYLOR. What else are we doing in the housing field now? We are building these low-rent units from $30 down; are we doing anything from $30 up, any place? Mr. MYER. As far as federally financed and constructed housing, the only housing that is being constructed at the present time, Senator, within our bailiwick, is the completion of the temporary housing which was provided for under title V of the Lanham Act, which started out with the general idea that 200,000 units of temporary housing would be constructed for veterans at colleges and universities and in municipalities, where such agencies were willing to cooperate. There have been around 140,000 units of those completed and there are some that are still in process, and there are some that are in suspension because we do not have funds enough to complete the job. Senator TAYLOR. What do they rent for, generally? Mr. MYER. They are renting, generally, I should say, between $25 and $45 a month, depending on the area. Again the rentals are determined within the area, and they include utilities. Senator TAYLOR. But very few of them, comparatively? Senator TAYLOR. That is all, then, that is going on? Mr. MYER. Other than the general construction by private industry of housing that has been constructed during the last year and is now in process. Some of that is receiving aid through insured mortgages and through the financing features that have been in existence for some time. Senator TAYLOR. Are there any strings on the rents that can be charged through these insured mortgages? Mr. MYER. There are no strings as far as I know, other than those that are set up under OPA ceilings, and under the general restrictions. of the veterans' emergency housing program. There is a provision under the Patman Act as regards the rents that may be charged. I do not have those details at my tongue's end. But there are certain provisions that are established in regard to rental housing that is constructed under the loaning provisions. Senator TAYLOR. You would not have any offhand idea as to what the average range of rentals is in the new housing being built? Mr. FAHEY. Is there not a ceiling of $80 on the FHA insured? Mr. MYER. I understand it is an average of $80, rather than a ceiling. Senator TAYLOR. Probably $60 would be the lowest, then. We can Mr. MYER. That might be so. However that is a little bit out of my bailiwick. I do not remember the exact conditions. supply that for the record. (The information to be supplied is as follows:) Rental construction permits for new dwellings and conversions, January and February Under $40. $40 to $49. $50 to $59. $60 and over. Total.. 1947 3,760 1,750 5,597 Source: VEHP progress reports, Office of the Housing Expediter. Senator TAYLOR. At the present time, and even under the Taft bill, there would be nothing done for the people between $30 and $60, for example. Mr. MYER. At least, not so far as public housing is concerned. There is no provision, directly, for public housing in that area in this bill. Senator TAYLOR. That is the field where the veterans would be most affected because they are young, strong men, most of them, and could get a job where they could afford to pay more than $30, but the vast majority of them certainly could not afford to pay $60, and they would just be left out. Mr. MYER. I might say, Senator, that a fair portion of veterans are in the low-income group that would be covered by this act. How many, I do not know. But I suppose about the same proportion that you would find the population generally. It is very probable that there is a need for this type of housing for at least a fourth of the population. Senator TAYLOR. In the middle range? Mr. MYER. No. I am talking about the low-income range. So that there are a large number of veterans in the low-rent range, as well as within the moderate range. Senator TAYLOR. The folks in the middle are the forgotten people in this instance, are they not? Mr. MYER. There is no provision for direct federally financed housing for this group. The need for the extension of this program-referring again to the low-rent program under the United States Housing Act-is very great, as indicated by the figures supplied by a sample study made by the Bureau of the Census in 1945, which showed that 34 percent of the urban families were receiving less than $40 per week. Certainly this large segment of the population cannot pay more than $30 to $40 per month for rent and utilities, and most of them must pay less. I would like now to summarize briefly the provisions of title IX of this bill which amends and supplements the United States Housing Act of 1937. Section 901 provides additional safeguards to assure that low-rent public housing will not compete with the private enterprise, and to assure that it serves only families of low income. Some of the provisions are: 1. That the local public agency must demonstrate that there is a need for low-rent public housing which will not compete with private industry. 2. The local governing bodies must approve their request. 3. The local agency must establish income limits. 4. A gap of 20 percent must be left between the upper-rent limits for admission and the lowest rents for which private enterprise is providing a substantial supply of adequate housing. Senator BUCK. Just what does that mean? between 20 and 30? Mr. MYER. Let me put it this way: Let us assume that private enterprise, for example, were providing, after the market study was made, housing down to $40 a month, in adequate supply. It means that no housing could be provided in this field that would rent above $32 a month; it would have to be 20 percent below that figure. Continuing, No. 5: Admission must be restricted to families coming from unsafe, unsanitary, overcrowded dwellings, except for low-income veterans, during the next 4 years. 6. Families whose incomes increase so that they can afford adequate private housing must be required to move when such dwellings are available. Section 902 provides for veterans' preference over other applicants for a period of 4 years. Section 903 would increase the limits for the construction cost contained in the present act, for dwelling facilities. It provides that room costs in metropolitan areas under 500,000 population would be raised from $1,000 to $1,250 per room. In the metropolitan districts over 500,000 population, from $1,250 to $1,500 per room cost. And it further provides that an additional $250 per room may be added to these limits until December 31, 1949, where it is found that it is not feasible to construct within the permanent limits, and where there is an acute need for housing for veterans of low income. Senator TAYLOR. That makes a 5-room house cost from $8,000 to $10,000, to add on all those "whereases" and extras. Mr. MYER. What would be provided here is that, using all the emergency clauses, no houses to be constructed under this would be constructed at a cost exceeding $1,750 per room in large metropolitan areas and $1,500 in the other areas. With the emergency features off, the per room cost would not exceed $1,250 and $1,500. The present law plans a limit both on unit cost and on room cost. The unit cost limitation has been removed. It was removed in S. 1592, and it is removed in this bill. Senator BUCK. I think it is common knowledge in this section of the country that you cannot buy a 5-room house today in this section of the country for $8,000. Mr. MYER. We have checked these figures pretty carefully. We find that it would take about these limits if any housing of this type is to be constructed under present price conditions. Section 904 provides for increasing the participation of private capital in the financing of low rent public housing at low interest rates. It does this by provision that we may continue to make annual |