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$18,000,000 savings as against the $16,000,000 saving which I estimated 2 years ago.

Mr. DIRKSEN. What is the total amount of annual contribution actually paid as against the amount authorized?

Mr. KEYSERLING. The amounts actually paid come to about threequarters of those authorized on a yearly basis.

Mr. DIRKSEN. That would be $21,000,000?

Mr. KEYSERLING. They have not reached the peak yet, because the projects have not all been completed.

So we are saying $18,000,000 as against the $16,000,000 I predicted to the committee 2 years ago. That is enough to cover about 4 years of administrative expenses, and we have done that by having the financial staff and legal staff adequate to work out the thing that is cheapest.

The next saving has been on subsidy itself. In other words, we are trying in every possible way to cut operating costs. That is the main function of the operations and Maintenance Division. In Other words, it is like any other proposition of managing a billion dollars worth of housing, cutting all the corners you can, reviewing the charges, and so forth. Now, as to the 85,000 units of our program in occupancy which have been reviewed and in which each operation has been studied, we have cut the subsidies $2,700,000 below the original project figures and below the maximum allowed by law. On the basis of the whole program, that will represent a saving of more than $5,000,000 a year. That is an annual saving, so that when you project it over the life of the program, which is 60 years, it is a $300,000,000 saving, or equivalent to a saving of more than one-third of the whole construction program. That is the subsidy saving.

On the Tenant Relations item, this work has nothing to do with coddling localities, telling mothers how to take care of their children, how to educate them; it is the work of getting the tenants working, as far as possible, upon the upkeep of the project-painting, the upkeep of the utilities, and things of that kind-and out of that, savings in maintenance costs have been effected of about $1.50 per unit per month, or $18 per year on developments with a full tenant maintenance program. If this savings in tenant maintenance were achieved for all dwelling units the savings in operating cost, which will later be reflected in subsidy savings, would amount to about $3,200,000 a year.

As to construction, we have a technical staff working constantly upon the matter of reducing costs. Putting the thing in summary, our average construction costs for the program as a whole are $500 per unit less than when we started

Mr. FITZPATRICK. That is for the nondefense projects?

Mr. KEYSERLING. That is on everything. That takes in everything we have done, including the projects converted for defense and the other projects. The average now, including the ones we had at the beginning, is $500 lower. It is those kind of figures that really test administration; because if you have that saving on 190,000 units, you get $95,000,000.

I will say, also, that our present cost figures on our present so-called regular program are running considerably below the statutory limitations not only in our act, but also considerably below the statutory limitations in the Lanham Act which, according to the present Senate version are being revised upwards. In other words, we are far below the average limits and, on the regular program, our costs have gone down constantly, except as I said they have gone up a little bit in this very high-cost period in the last 8 months, but we have checked that and, during the past 4 months, the cost is now running lower than during the previous 4 months. So those are items of saving.


Just in summary, and then I am completely through: First, we are operating under the control of the defense mechanism and for defense purposes; second, we are cutting our administrative budget relative to our work load; third, the work load is increasing more severely than we can measure, because of specific factors increasing costs; fourth, we are operating at great savings in our program itself, which measure many, many times our administrative budget; fifth, we are paying our administrative costs entirely out of loan profits; lastly, we are asking, quite apart from this, for an appropriation to pay annual contributions on completed projects of $17,000,000.

Mr. WOODRUM. Give us a word about that.

Mr. KEYSERLING. That is the service for reducing rents on the regular program, as lower rents are necessary to rehouse the slum dwellers.

Mr. WOODRUM. That is a subsidy?

Mr. KEYSERLING. That is a subsidy. There was a balance from the fiscal year 1941 of $5,000,000 which, added to the $8,000,000 provided by Congress for 1942, came to $13,000,000. We expect to use $11,000,000 of this in 1942, so that there will be $2,000,000 over. This year we expect to need $19,000,000 in all, so we are asking for $17,000,000 to be added to the $2,000,000 balance.

Now, our overestimates have been due in the main part to the fact as we have gone along our budgets have come to less than we thought they would, and have gradually been reduced. We have made economies. We need more subsidies this year than last year because, of course, the subsidy is paid only after the project is completed and reaches the maximum when the whole program is completed.

There is an offset against the subsidy, from what we are earning through the profit on our loans. It happens we are applying that toward administrative expenses. But the fact is that next year we figure on about $8,500,000 in interest profit, which is really an offset against the $17,000,000 we are asking to pay subsidies.

Mr. WIGGLESWORTH. Your conversion to defense work will affect you in this respect?

Mr. KEYSERLING. Yes: it will.
Mr. WIGGLES WORTH. It will reduce it, won't it?

Mr. KEYSERLING. It is very hard to figure now. I think it will be best to do it at the end of the year, when we know just where we stand. Lets make real savings and then use them, rather than counting chickens before they're hatched. This is what we have done in past years when we have come back to this committee and reported the annual contributions appropriated and not used so that those funds could be carried forward for use in the next year with a corresponding reduction in the new annual contribution appropriated need for

that year.

: Mr. WIGGLESWORTH. I wish you would put in the record what that is.

(The information requested is as follows:)

Statement on annual contributions
Appropriated for 1942.
Carried over from 1941.

$8,000, 000 5, 236, 102

Total available for 1942_

13, 236, 102

Estimated requirements for 1943.

19, 000, 000 Estimated carry-over from 1942.

2, 000, 000 Appropriation requested for 1943..

17,000,000 Mr. KEYSERLING. The fact is we expect to come back next year, as we have in the past, showing certain balances to be applied next year.

Mr. SPENCER. Our original estimates indicated payments would run as high as $21,000,000. However, we discounted this amount by $2,000,000 because projects converted to defense purposes would not require full subsidy. It is therefore fair to say that the factor of conversion of projects to defense has been taken into consideration, although we believe it likely that we may be able to effect further savings as we have in past years.

Mr. KEYSERLING. I think we have. Nonetheless, I am prepared to say I expect in succeeding years we will always come back and show economies, at least for a while, because we have in the past. I think we ought gradually to reduce the subsidies, too.


Mr. DIRKSEN. The 49 P. W. A. projects referred to in your summation are limited to defense?

Mr. KEYSERLING. These are old P. W. A. projects of the old Housing Division.

Mr. DIRKSEN. You still service those?
Mr. KEYSERLING. We had no responsibility for their construction.
These projects were transferred to us when the U. S. H. A. was
created and we manage them.

Mr. DIRKSEN. Are you empowered, under the statute, to sell them?
Mr. KEYSERLING. Yes, we are.
Mr. DIRKSEN. Is it the policy to sell them?
Mr. KEYSERLING. It is the policy, but we have not sold any yet.

Mr. DIRKSEN. Out of those, how many are in defense areas, or nondefense areas?

Mr. KEYSERLING. A great many are in defense areas, but it is difficult to use, them expressly for defense workers, because they are all occupied. But certainly it is true that a large part of the workers in those projects are, in fact, now engaged in defense activities.


Mr. WIGGLESWORTH. Your slum-clearance loans have been made on a 2-percent interest basis?

Mr. KEYSERLING. Our loans run half a percent above the Government borrowing rate on medium-term issues. They are generally made at 3 to 3 percent.

Mr. WIGGLESWORTH. Are they on a 60-year basis still?
Mr. KEYSERLING. That is right.
Mr. WIGGLESWORTH. And the subsidy average is what?

Mr. KEYSERLING. The subsidy average now is about 2.9, as against the present statutory maximum of 3.5.

Mr. WIGGLESWORTH. Would you put in the record the present rent average and the income limitations?

Mr. KEYSERLING. I will be glad to do that. (The information requested is as follows:)

Average rents and incomes in U. S. Housing Authority-aided low rent housing

projects as of Nov. 30, 1941 Number of projects for which rents have been approved..

262 Average monthly shelter rent per dwelling unit

$12. 63 Average annual family income anticipated in projects.

$823. 00 A further break-down of the family income groups is shown in the following table:

Percentage distribution by annual family income groups of tenants living in U. S. Housing Authority-aided developments


of Range of incomes:

families Under $400.

2. 8 $400 to $499.

4. 9 $500 to $599

9. 6 $600 to $699

16. 1 $700 to $799

15. 5 $800 to $899

12. 8 $900 to $999.

12. 2 $1,000 to $1,099.

11. 4 $1,100 to $1,199

7. 2 $1,200 to $1,299.

5. 1 $1,300 to $1,399.

2. 2 $1,400 and over.


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Mr. WIGGLESWORTH. And the percentage of tenants that are now citizens?

Mr. KEYSERLING. Since the statutory prohibition, I believe of last year, nobody except citizens have been admitted.

Mr. WIGGLESWORTH. They are all citizens now?

Mr. KEYSERLING. Exactly, as to admissions since the statutory prohibition.

Mr. WIGGLESWORTH. How about those admitted prior to that?

Mr. KEYSERLING. Most of them, the overwhelming majority, are citizens, of course, but there are some instances where there are parents of citizens who are not citizens. In other words, we did not throw out people who were admitted prior to the statutory prohibition. Of course, as to all projects under contracts made since the statutory prohibition, nobody has been admitted anywhere who is not a citizen.

Mr. WIGGLESWORTH. Would you give us some over-all estimate in percentage?

Mr. KEYSERLING. Yes. The noncitizens, even including those admitted before the statutory prohibition, are far less than 1 percent.


Mr. WIGGLESWORTH. I would like to have for the record some tables such as you gave last year. For instance, I should appreciate it if you would bring the table appearing in last year's hearings at page 380, "Summary of U.S.H.A.-Aided Projects, and so forth, up to date, if you will:

Mr. KEYSERLING. I will be glad to put that in the record. (The information requested is as follows:)

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