Subsection (c) revises the provisions in the act relative to the going Federal rate (which determines the minimum loan interest rate and the maximum annual contribution rate) so as to provide that the governing rate is the one as of the date of Presidential approval of the contract for loan or annual contributions, respectively, rather than the date the contract happens to be signed by PHA and the local public-housing agency. Further, it provides that in the event there are two or more rates of interest on such date, the rate used shall be the highest thereof, and that in no event shall such rate be deemed to be less than 21⁄2 percent.

Subsection (d) reduces the maximum loan period from 60 to 40 years in the case of projects which are initiated after March 1, 1949, and which are assisted by Federal annual contributions. It also reduces the minimum interest rate on Federal loans made for projects where the maximum loan and annual contribution period is 40 rather than 60 years, from the applicable going Federal rate plus one-half of 1 percent to simply the going Federal rate. Contracts for projects initiated prior to March 1, 1949, may thus be amended to reduce the loan and annual contribution period to not more than 40 years and thereby make the project eligible for an interest rate at simply the applicable going Federal rate.

The present power of PHA to make 60-year loans at an interest rate equal to the going Federal rate plus one-half of 1 percent is retained for projects initiated after March 1, 1949, provided they are not assisted by Federal annual contributions. This lending power could, of course, be made use of only if financial assistance were available from other sources, and if the projects and tenants were otherwise eligible under the United States Housing Act of 1937, as amended, such as State or local governments, in amounts which would enable the local public-housing agencies to meet their operating costs and debt service on the Federal loan, and at the same time achieve rents low enough to be within the means of families of low income.

Subsection (e) limits the period over which annual contributions may be paid on projects initiated after March 1, 1949, to 40 years as contrasted with the present authorization of 60 years. In order to make this possible, and thus substantially reduce the total amount of the annual contributions, and also to assure a highly marketable local housing agency bond even under adverse market conditions, this paragraph would, in respect to projects where the contribution period is limited to 40 years, amend the present requirement that the contribution shall not exceed a sum equal to the going Federal rate plus 1 percent upon the development or acquisition cost of the project so that the limitation would be a sum equal to the going Federal rate plus 2 percent upon such cost. Contracts for projects initiated prior to March 1, 1949, may thus be amended to reduce the annual contribution period to not more than 40 years and thereby make the project eligible for annual contributions at the applicable going Federal rate plus 2 percent. The additional annual contributions authorization made by this bill would be available, if needed, in connection with such refinancing of existing projects or the sale to local public-housing agencies of the Public Law 412 and Public Law 671 projects now owned by the Federal Government. The shortened period over which annual contributions may be paid will more than

compensate for the permitted increases in the amount of annual contributions.

In addition to substantially reducing the need for Federal loan assistance, subsections (f) and (g) also revise certain conditions with respect to Federal subsidy assistance. This is done by providing (1) that, instead of an adjustment in the maximum amount of annual contributions at 5-year intervals, in any year when the receipts derived in connection with the project exceed expenditures and charges, the excess must be used for purposes which will reduce subsequent annual contributions; and (2) that contracts for loan and annual contributions based on a certain "going Federal rate" may, in the case of a change in such rate, be amended so as to base the interest rate on Federal loans, or the maximum contribution payable, on the new rate whenever this would promote economy or be in the financial interest of the Federal Government.

Subsection (h) requires that borrowings by PHA be from the Treasury. At the same time, the statutory language with respect to PHA's borrowing authorization is adapted to the changes in PHA's lending program that would result from the provisions of this title, by relating the gross amount authorized to the amount of obligations that may be outstanding rather than to the aggregate amount that the PHA may issue exclusive of refunding obligations. The gross amount authorized is increased from $800,000,000 to $1,500,000,000 in recognition of the size of the extended program and the increased construction costs anticipated. It is expected that with this amendment PHA borrowing power will make it possible to provide all of the capital funds required from the Federal Government in connection with the extension of the low-rent program.

Subsection (i) provides a definition of development cost (which is not defined in the present act) which will include in capital cost all items which would be capitalized under standard business practice, including the cost of capital improvements made at any time during the life of the project. This definition, in accordance with business practice, includes appropriate carrying charges, such as interest, insurance, payments in lieu of taxes, local housing authority overhead, and any initial operating deficit. Carrying charges subsequent to the date of physical completion, however, may not be capitalized.

Subsection (j) makes it clear that, in line with the usual practice in the past, where a local public-housing agency is undertaking two or more low-rent public housing projects, they may, in a contract, be treated collectively as one project.

SECTION 205. ANNUAL CONTRIBUTIONS

Subsection 205 (a) increases the Public Housing Administration's annual contributions authorization in order to provide for an extension of the program of low-rent public housing in urban and rural nonfarm areas. It increases the total amount of annual contributions authorization available to PHA on or after July 1, 1949, by $85,000,000 a year (in addition to the existing authorization), which authorization would be increased by further amounts of $55,000,000 in each of the following 3 years, and by $58,000,000 a year on July 1, 1953. The new authorization thus totals $308,000,000 per annum. In respect to projects initiated after March 1, 1949, PHA may au

thorize the construction of not more than 135,000 additional new dwelling units after July 1, 1949, which limit would be increased by further amounts of 135,000 on July 1 in each of the years 1950 through and including 1954, respectively, thus making a total of 810,000 new dwelling units in 6 years. In respect to projects initiated after March 1, 1949, not more than 810,000 additional new dwelling units may be put under construction without further authorization from the Congress.

The President is authorized to accelerate or retard the program, if he finds such action to be in the public interest, after receiving advice from the Council of Economic Advisers as to the general effect of such increase or decrease upon conditions in the building industry and upon the national economy. Subject to the total additional annual contributions authorization of not more than $308,000,000 per annum, the amount made available at the beginning of any fiscal year may be increased at any time or times by not to exceed in any fiscal year an additional amount of $55,000,000 per annum. Subject to the total authorization of 810,000 new units, authority to commence construction which is made available at the beginning of any fiscal year may be increased at any time or times by not to exceed in any fiscal year an additional 115,000 units, and each of such authorizations may be decreased at any time or times by not to exceed in any fiscal year 85,000 units. The construction authorization to become available at the beginning of each fiscal year could thus be increased to not more than 250,000 units, or be reduced to not less than 50,000 units, but the amount of any decrease would remain available for subsequent authorization by the President at any time or times so that construction of the full 810,000 new units initiated after March 1, 1949, could eventually be authorized by him.

In order to reserve funds for low-rent housing in urban nonfarm areas, it is provided that 10 percent of the annual contributions authorizations which become available shall be reserved for projects in rural nonfarm areas for a period of 3 years after the authorization becomes available.

Under subsection 205 (b), contracts for annual contributions on projects initiated after March 1, 1949, shall require exemption of the projects from all real- and personal-property taxes, but the contracts may authorize payments in lieu of taxes not in excess of 10 percent of shelter rents. This requirement of tax exemption is in lieu of existing provisions in the act as to local contributions. In the event that tax exemption is not legally available, local contributions may alternatively be made in cash in an amount not less than 20 percent of the annual contributions paid by PHA.

Contracts on projects initiated prior to March 1, 1949, may also include similar provisions in respect to project fiscal years for which the annual contributions date is subsequent to July 1, 1949; but if existing contracts on such projects are not so amended, payments in lieu of taxes will be limited solely to the amounts provided under contracts outstanding on July 1, 1947. As to project fiscal years for which the contributions date falls between July 1, 1947, and July 1, 1949, payments in lieu of taxes (unless already made in larger amounts) will be authorized in the amount of 5 percent of shelter rent or in the amounts specified in the few existing contracts which call for amounts over such 5 percent.

SECTION 206. SPECIAL PROVISIONS FOR LARGE FAMILIES OF LOW INCOME

Experience has proven that the existing provisions of the United States Housing Act make it difficult to meet the needs of large families of low income. In addition to the provisions in section 203 revising the cost limitations so as to permit the construction of larger dwelling units, this section revises the requirements as to eligibility for families with a relatively large number of children. In lieu of the present provision which requires that annual income at the time of admission may not exceed five times the gross annual rent, or six times the gross rent for families with three or more minor dependents, this section provides that the 5 to 1 ratio shall be used for all families, but that, in determining family income for admission an exemption of $100 shall be given for each member of the family (other than the head of the family or his spouse) who is less than 21 years of age. Under this new provision, there will be a somewhat larger spread between the incomes for eligibility of families with few children and those with a relatively large number of children, in recognition of the very substantial differences in their respective living expenses.

A further difficulty has arisen in the case of families who are eligible to remain in a project on the basis of the income of the regular, principal worker or workers, but who become ineligible if a child goes to work upon the completion of his schooling. Even though this be a temporary condition which will end as soon as a child marries and establishes his own home, the family would nonetheless be required to move from the project. The present provisions thus tend to force children to leave the home in order to continue the family eligibility. This section, therefore, authorizes a local public-housing agency (in lieu of a $100 exemption) to deduct all or part of the earnings of such a secondary worker from family income in determining eligibility for continued occupancy. This exclusion will be only a temporary matter, since it is limited to secondary wage earners who are under 21 years of age. Moreover, the income of such children will not be excluded in determining eligibility for admission or in fixing the actual rent to be paid by the family.

SECTION 207. TECHNICAL AMENDMENTS

Subsection 207 (a) amends the declaration of policy contained in section 1 of the act so as to limit the future low-rent public-housing program of the Public Housing Administration to urban and rural nonfarm areas. It is contemplated that no assistance to farm housing will be provided under the United States Housing Act, and that the experimental farm-housing program undertaken before the war be liquidated as quickly as possible.

Subsection 207 (b) makes it clear that contracts for financial assistance shall be entered into with a State or a State agency only if such State or State agency is itself to develop and administer the project. Subsection 207 (c) defines the term "initiated" when used in reference to the date on which a project was initiated as referring to the date of the first contract for financial assistance in respect to such project entered into by the Authority and the public-housing agency. Pursuant to this definition, the various requirements of the bill applicable to projects initiated after March 1, 1949, will apply, not only

to newly constructed projects on which contracts for financial assistance are first entered into after such date, but also to any federally owned Public Law 412 and Public Law 671 projects on which there are not existing contracts for financial assistance but which may be sold to local public-housing agencies under a contract for financial assistance, entered into after March 1, 1949.

Subsection 207 (d) removes the present requirement for the elimination of substandard dwellings in connection with low-rent projects. This is appropriate since the bill clearly separates the function of extending Federal assistance for the clearance of slums from that of extending assistance for low-rent housing. The responsibility for slum clearance is now to be undertaken pursuant to the provisions of title I of the bill.

The other subsections of this section provide technical amendments to the United States Housing Act of 1937, as amended, which are required either as a result of the substantive amendments to the act provided in this bill or have been shown to be necessary as a result of experience under the bill.

TITLE III-HOUSING RESEARCH

The purpose of this title is to assist in progressively reducing housing costs and increasing the production of better housing, and in making available necessary data on housing needs, demand, and supply.

SECTION 301

This section authorizes the Housing and Home Finance Administrator to undertake and conduct a program with respect to technical research and studies concerned with the development, demonstration, and promotion of the acceptance and application of new and improved techniques, materials, and methods which will permit progressive reductions in housing costs and stimulate the increased and sustained production of housing, and concerned with housing economics and other housing market data. It also retains the present provisions of the Housing Act of 1948 with reference to the improvement and standardization of building codes and regulations and methods for the more uniform administration thereof, and standardized dimensions and methods for the assembly of home-building materials and equipment.

This section also permits the Administrator to enter into research contracts for work to continue for 4 years and provides that funds so obligated may remain upon the books of the Treasury for an additional fiscal year. (Under present authority, contracts must be performed and payments made within 2 years after the fiscal year in which undertaken.) This includes contracts for developmental research. The Housing and Home Finance Agency has no laboratory of its own and must utilize other Government agencies and contract with eligible agencies of State and local governments, educational institutions, and other nonprofit organizations for laboratory research; however, such laboratories are frequently reluctant to tie up their facilities in short-term projects offering no assurance of completion. Many research problems are complex and require for their solution a series of time-consuming successive steps. This provision is therefore