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In fiscal year 1960 management decided to improve the heating equipment in the 18 houses located on V Street in Northwest Washington by covering the individual coal-fired furnaces to individual gas-fired furnaces. The cost of installing new gas-fired furnaces, with forced-air fans and duct work was approximately $3,000. To make this expenditure it was necessary to defer certain other maintenance work, such as exterior painting, until fiscal year 1961 or 1962. The increase in the salaries of classified Federal employees on July 1, 1960, plus the wage board raise in February 1960, has increased the salaries for personal services on title I by approximately $1,000. An effort is being made in the 1961 and 1962 budgets to absorb this increased expense by deferring most operating improvements at the present time. It is hoped that completion of a title II housing property, DC 1-34, in Northwest Washington by the end of fiscal year 1962 will decrease slightly the prorated costs in that area chargeable to title I.

At the Kelly Miller area a working foreman was reclassified from "Administration expense" to "Maintenance expense," resulting in a $1,000 adjustment on title I, with no change in total costs.

Title II. PHA-aided program

As of July 1, 1960, the Authority has the following housing program:

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Mr. THOMAS. In days gone by you had two or three warehouses under title I. What became of them?

Mr. SERVAITES. They have all been disposed of, Mr. Chairman, and the money from them has been deposited in the Treasury.

Mr. THOMAS. Who was the lucky fellow to get them, the Highway Department?

Mr. SERVAITES. I am not familiar with that.

Mr. HASKELL. They were disposed of by the General Services Administration. Some went to private enterprise on public bidding and others were taken by the Administrative Office of the U.S. Courts. Mr. THOMAS. Why did you dispose of them.

Mr. HASKELL. We had no use for them.

Mг. THOMAS. In other words, you are in the housing business and not in the warehousing business; is that correct?

Mr. HASKELL. That is correct.

Mг. THOMAS. What did they bring, do you recall?

Mr. HASKELL. Not specifically. I can put that in the record for you if you like.

Mr. THOMAS. When were they sold?

Mr. HASKELL. Within the past 3 years.

I might say that of the total amount, $761,000, that had been originally appropriated under title I, properties that were valued at $607,000 were transferred and there were actual receipts from sales of property of $159,000.

Mr. THOMAS. The original acquisition cost was about $670,000 or $607,000?

Mr. HASKELL. $607,000.

Mr. THOMAS. That was the acquisition cost?

Mr. HASKELL. No, that was their appraised value at the time of sale, appraised by GSA.

Mr. THOMAS. Do you know what the acquisition cost was?

Mr. HASKELL. It was roughly, $200,000.

Mr. THOMAS. You made a profit, then, did you not?

Mr. HASKELL. We did. One piece of property was used as a parking lot before the last World War, and during the war it was used for temporary war housing. After the war housing was removed, the land was transferred to the American Red Cross under directive of Congress. The appraised value at that time, as I remember, was $560,000 and it only cost $119,000.

Mг. THOMAS. You are doing all right.

TITLE I HOUSING

Under title I you have 96 units. These units were constructed under the District of Columbia Alley Dwelling Act. When were they constructed, 1937 or 1938?

You say, "Our budget estimate for fiscal year 1962 is $40,000. The expense estimates are uniformly less than the rental receipts which are covered monthly into the Treasury."

You have an income of $44,000 this year. Last year it was $44,000, and in 1960 it was $43,446. You estimate that your total bills for 1961 and 1962 will be $40,000, leaving you a surplus of $4,000 on the property. Is that correct?

Mr. SERVAITES. Yes.

IMPROVEMENT OF HEATING EQUIPMENT

Mr. THOMAS. I notice you spent $3,000 to improve the heating equipment in 18 houses by converting furnaces from coal-fired furnaces to gas-fired furnaces.

Mr. SERVAITES. Yes. They were converted from coal to gas. That has been done.

Mr. THOMAS. That is how much per furnace?

Mr. JONES. Divide $3,000 by 18.

Mr. THOMAS. I think you say in your justifications that in order to do this it was necessary that you defer other maintenance work? Mr. SERVAITES. Which was exterior painting; yes, sir.

Mr. THOMAS. How much exterior maintenance did you defer to make this conversion from coal to gas?

Mr. SERVAITES. Only the exterior painting has been deferred.
Mr. THOMAS. Nothing else?

Mr. SERVAITES. Nothing else. The rest is routine.

OCCUPANCY RATE

Mr. THOMAS. Are all the 96 units full?

Mr. SERVAITES. Yes.

Mr. THOMAS. Are there any vacancies?

Mr. SERVAITES. If there is a vacancy it is not for long. The turnover has been very slight.

Mr. THOMAS. The turnover has been slight?

Mr. SERVAITES. Yes.

Mr. THOMAS. Originating mainly from deaths?

Mr. SERVAITES. And higher incomes or moving from the city.

EMPLOYEES CHARGED TO TITLE I

Mr. THOMAS. How many employees do you have charged against these title I properties?

Mr. SERVAITES. Less than two administrative people; one and a percentage of another.

(NOTE.-There are a total of five employees on title I. Approximately two are administrative and three are maintenance employees.)

TOTAL EMPLOYEES

Mr. THOMAS. What is the total number of employees?

Mr. SERVAITES. Approximately 370 permanent and temporary.
Mr. THOMAS. 370?

Mr. SERVAITES. Yes.

BOARD MEMBERS

Mr. THOMAS. Mr. Tobriner, you have a nonpaying job that takes a lot of time, does it not?

Mr. TOBRINER. Yes.

Mr. THOMAS. That is by statute, is it not?

Mr. TOBRINER. By Executive order.

Mr. THOMAS. I think the local housing authorities throughout the United States perform their services as a patriotic duty. Is that true? Are the Board members paid? I think that is by virtue of the 1937 statute, is it not?

Mr. FINLEY. This Authority is unique in that all the Board members have other positions and they serve as ex officio members of the Board.

Mr. TOBRINER. This is entirely an ex officio Board.

Mr. THOMAS. Who actually runs the Housing Authority?

Mr. FINLEY. Our executive director, Mr. Servaites, is the one we hold responsible.

Mr. THOMAS. You mean he runs the show and takes all the abuse and everything else; is that correct?

Mr. FINLEY. We meet monthly on matters of policy.

Mr. THOMAS. How often does the Board meet?

Mr. FINLEY. Once a month.

Mr. SERVAITES. And more frequently as necessary.
Mr. THOMAS. Where are you from, Mr. Servaites?
Mr. SERVAITES. I am from Ohio originally.
Mr. THOMAS. How long have you been here?

Mr. SERVAITES. I have been in Washington about 3 years. Before coming here I was in Puerto Rico for 10 years.

Mr. THOMAS. You have been in the public housing field how long?
Mr. SERVAITES. Approximately 20 years, Mr. Chairman.
Mr. THOMAS. What were you doing in Ohio?

Mr. SERVAITES. I was reared and grew up in Ohio. My housing experience has been principally in the States of Ohio and Michigan prior to going to Puerto Rico.

Mr. THOMAS. If you have been here 3 years we ought to make a native of you.

Mr. FINLEY. He has been with us only 3 months. Before that he was with the National Housing Conference. Mr. Ring retired and we made a nationwide search to replace him and were pleased to obtain the services of Mr. Servaites.

Mr. THOMAS. We are delighted to have you and wish you well in your undertakings.

Mr. SERVAITES. Thank you.

Mr. THOMAS. Now what is the general picture under title II? How many units do we have in the District of Columbia, what is the rate of occupancy, and so on?

Mr. JONAS. Mr. Chairman, could I ask a couple questions on title I before you go into that?

Mr. THOMAS. Certainly.

NUMBER OF EMPLOYEES UNDER TITLE

Mr. JONAS. You say you have only one employee charged to title I?
Mr. SERVAITES. One plus a percentage of another, about 1.75.
Mr. JONAS. What does he do?

Mr. SERVAITES. He would take care of administrative duties.

I might explain that these projects under title I are operated, maintained, and managed in connection with our title II program as well, so that we prorate in accordance with the number of units, and by that means we determine how much of a man-year is assigned to the pro

gram.

Mr. JONAS. What standard do you use by which you just allocate one-half a man to title I out of your total employees?

Mr. SERVAITES. We use a proration of number of units.

Mr. JONAS. A strict proration?

Mr. SERVAITES. A strict proration in the management area.

We

may in one management area operate four or five properties of which one could be a title I property.

DEFERMENT OF OPERATING IMPROVEMENTS

Mr. JONAS. I notice you say: "An effort is being made in the 1961 and 1962 budgets to absorb this increased expense (pay act increase) by deferring most operating improvements at the present time." That is a strange way to absorb a pay increase, to defer necessary improvements, is it not?

Mr. SERVAITES. The standards of some of the units are not up to our standards on other properties. A great deal of improvement could be made in these units to bring them more in line with our title II program or improvements could be deferred.

Mr. JONAS. What was the amount of the pay increase, $1,000?
Mr.SERVAITES. Approximately that.

Mr. JONAS. Could you not absorb this amount by cutting off another one-third of a man or another one-fourth of a man, instead of deferring the necessary improvements?

Mr. EDWARDS. If I may explain, most of our title I properties—we have 11 areas-area 6 has most of those title I properties. It also has a small number of title II properties, so when it is prorated it is higher than in some of our other areas. We have 174 units of title II under construction now that will come in that area in 1961, and that will bring down the area costs.

Mr. JONAS. Are the properties being damaged by deferring these improvements?

Mr. EDWARDS. We do not think so. Unit costs, we think, will come down in 1962 so that we will be able to do the routine maintenance work which we deferred for a year.

Mr. JONAS. That is all, Mr. Chairman.

TITLE II PROGRAM

Mr. THOMAS. Tell us about title II. First let use insert pages 16 and 17 of the justification.

(The pages referred to follow :)

TITLE II

GENERAL STATEMENT

All activities under title II of the Alley Dwelling Act are conducted under supervision of Public Housing Administration.

As of July 1, 1960, all title II dwelling units under management were placed under one annual contribution contract. Operating costs, debt service, and provisions for operating reserves are met from rental income and Federal contributions.

Development activities are initially financed by loan notes which are subsequently retired with proceeds from bonds sold to private investors. At the end of the development period, debt service on bonds and costs of operation are met from rental receipts and Federal contributions. The contributions permit the Authority to reduce rents for low-income families below cost levels.

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