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Eligibility for admission

There are two major factors used in determining eligibility for admission to the commisson's low-rent public housing projects. These factors are: (1) The total family income must be equal to or less than the established limit for admission.' (2) The family must have a verified housing need. The two temporary housing projects do not have an established limit on income.

The annual income limits for admission vary from $2,100 for 2 adults to $3,500 for a family of 11, including 9 minors, which type family would be placed in a 6-room unit. Their income can be increased as much as $420 in the lower bracket or $650 in the upper bracket to be eligible for continued occupancy. Of course, if they were admitted on a lesser income the spread would be greater. The Housing Commission reports that it evicted about 1,000 tenants during the 3-year period from 1947 to 1950 and that it continues to evict all families after they become ineligible, by reason of excessive income. The Commission reports that of the 1,000 families evicted 51 percent of those evicted bought homes of their own. This applies to both Negroes and whites.

After income is verified and found to be within the eligibility limits, applicants are given preference for vacancies in the following order of priority:

(1) Applicants with court-ordered eviction notices. (2) Applicants with forceable detainer notices with date for court action. (3) Applicants whose families cannot live together because of lack of housing.

(4) Applicants who reside in substandard, overcrowded (more than 112 persons per room) and nonresidential structures (storerooms, attics, garages, etc.).

Applicants who are being evicted for not paying their rent or any other reason of their own making are not given consideration as evictees.

In 1950 more than 20 percent of all tenants had no earned income. They were dependent on public assistance and other gratuities, and Federal old-age insurance or other forms of pension. Rents charged

Most rents are based on the total income of the tenant family. They vary from $13 a month for a 1-bedroom unit at Sheppard Square to $56 a month for a

3 The annual income limits for admission to and remaining in the projects are as follows:

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$100 additional income per year is allowed for each nonworking minor (single person under 21) above the number shown in the schedule for 5 or more persons.

A working minor's income is not deductible for admission but is permitted after occupancy for establishing eligibility.

The working minor is not allowed the $100 exemption for admission or for continued occupancy even though he may become unemployed from time to time.

All rents must be based on entire net family income, the $100 yearly minor exemption is only t. be used for establishing eligibility.

4-bedroom apartment. A family of 4 with an income of $1.200 a year would be expected to pay $21 a month. With an income of $3,000 a year it would pay $53 a month."

The lease that all tenants sign when taking up residence in a public-housing project specifies that rent must be paid on the first day of the month. For each 5-day period of delinquency a service charge of 25 cents may be required: however, the total charge may not exceed $1. Other terms of lease

The lease used by the commission is similar to the standard lease used in private real-estate dealings. Some of the unique features of the LMHC lease are as follows:

Tenants agree to refrain from giving accommodation to boarders and lodgers. A $5 deposit is required to insure payment for any damage to property other than ordinary wear and tear. The tenants also agree to submit to the commission, upon request, a signed statement setting forth the number, ages, and income of all persons residing within the premises. Further, to vacate the apartment upon notice if such income exceeds the prescribed limits. The lease stipulates that the tenant may obtain his limit for continued occupancy at any time upon request to the project manager. Each tenant agrees to notify the commission each time that his income is increased or decreased, and the rent for the next month is adjusted upward or downward accordingly. In the event that the tenant fails to notify the commission of the increase in family income, the tenant agrees to be liable for retroactive rent based on the unresorteri increased income.

WHAT DOES PUBLIC HOUSING COST:

Introduction

The cost question has three facets: What it costs to build a project, what it costs to operate it, and what it costs the city to provide the municipal services required by project residents. Ilow the Federal Government participates

Before discussing what it costs to build a public-housing project, it is necessary to explain the role of the Federal Government.

The Federal agency responsible for public housing is the Public Housing Administration, a division of the Housing and Home Finance Agency. The functions of the Public Housing Administration in general are to make capital loans, pay annual contribution to offset deficits in operating the projects, and to review local action for conformity with the law. Under Section 20 of the National Housing Act, the Public Housing Administration may have outstanding at any one time capital loans totaling as much as $1.5 billion. These loans fall into three categories:

* Maximum rents in the various projects are shown here:

Nurnber of bedrooms

The 8 permanent

projects

Fincastle
Heights

None
1.
2.
3.
4.

$39. 30
43. 20
45. 60
52.00
56. 00

None $41. 40 45 60 49. SO None

• This table shows the monthly rent a family consisting of a husband, wife, and 2 children would pay, according to various incomes.

Annual income

Monthly
income

Monthly

rent

$1,200).
$1,800
$2,40
$3,000.

$100
150
200
250

$21
32
42
53

1. Preliminary loans for project-planning purposes. 2. Loans as security for temporary notes sold by local housing commissioners.

3. l'ermanent loans for any part of the permanent financing not covered by sale of bonds to private investors. Preliminary planning of a project

The first step in building a project is for the local housing commission to establish a need for low-rent housing which is not being met by private enterprise. If this need can be substantiated and if the city government approves the building of a new project, the Public Housing Administration makes a small preliminary loan for the cost of blueprinting the development and estimating construction costs.

If the Public Housing Administration approves the plans, the commission selects a site, makes tinal estimates of costs, and lets the contracts for actual construction of the project. It also enters into a cooperation agreement with the city providing for tax exemption for the project; payments in lieu of taxes ; and, where required, the elimination of substandard dwellings in the locality.

The cost of the project is limited by law. It must not be of elaborate design or materials, and economy in construction and administration must be promoted. The cost of building and equipping the dwellings must not exceed $1,750 per room, excluding the cost of land and nondwelling facilities. Up to $750 more per room may be allowed if there is an acute need for housing in the community and the project cannot be built within the normal limits without sacrificing sound standards. H010 ą project is financed

Capital costs of the project are covered by temporary loans until the project is 90 percent complete. Sale of the commission's temporary loan notes is the usual method of obtaining these funds. Becanse the PHA is obligated to lend, if necessary, enough to cover principal and interest when they mature, these notes have been sold at interest rates varying between 1 and 242 percent per year. Temporary loan notes are retired as soon as the project is permanently financed.

When the project is near enough to completion (about 90 percent) to figure cost accurately, permanent financing is undertaken. The city of Louisville and the local commission issue long-term serial bonds (40 years) which are secured by the Federal Government's pledge to pay the difference between rental income and operating expenses, which includes the cost of debt retirement. These bonds are not in any sense an obligation of the city of Louisville and do not in any way affect the debt limit of the city of Louisville. The city merely joins in because the statute requires it. The annual contributions contract with the Federal Government guarantees the debt-service payments, and public housing projects are expected to earn, out of rents, only their operating expenses, exclusive of debt service. However, during the last 13 years the commission's permanently financed projects have taken only 53.3 percent of the Federal subsidy available for their use. Because these bonds are virtually United States Government obligations and are exempt from Federal taxes and many State taxes, they can all usually be sold to private investors at favorable interest rates. Limits on Federal contributions

The amount of the maximum contribution which may be paid annually by the PHA is limited to a percentage of the total development cost of the project. This percentage is fixed at a rate equal to the cost of long-term money to the Federal Government (going Federal rate) plus 2 percent. Under present conditions the inaximum contribution rate would be about 492 percent of the development cost.

Maturities of the bonds are arranged so that debt service will be the same amount each year. This level debt service is set at a figure that will not be greater than the maximum annual contributions available as security for the bonds.

When amortization is completed, the local housing authority can continue to operate the project at low rents without further Federal assistance. What it costs to build Louisville's public housing projects

During the past 15 years, $32.1 million has been spent for the land, buildings, and major equipment that comprise Louisville's 8 permanent public housing proj

44750—54—pt. 1 -69

ects. The 4,505 dwelling units in these 8 projects cost an average of $7.124 each."

The average cost of each project stands at $4,011,936. The lowest cost is for College Court, which was constructed in 1936 at the very beginning of the public housing program. The total development cost of this 125-unit project was $719,093, an average of $5,753 per unit and $1,674 per room.

At the top of the list is one of the newest projects, Cotter Homes, whose 650 units averaged more than $11,000 each. The total bill was $7,180,404; the cost per room, $2,440.' This increase in unit and room cost reflects the increase in the cost of construction as against prewar prices. Million-dollar business20 percent lo88

Public housing in Louisville is a million-dollar business, and it operates at an average loss of about 20 percent of direct expenses. This deficit is met by annual contributions from the Federal Government in the form of a subsidy.

For the past 4 years (1949 through 1952) the 8 projects have had an average operating income of $1,346,167 and expenses of $1,621,447. An additional expense averaging $48,110 for operation in previous years leaves an average adjusted net deficit of $323,390 per year. For the entire period of public housing in Louisville (13 years) the average annual deficit has been $254,460.

This overall deficit is distributed among permanent projects only-Beecher, Clarksdale, Parkway, and Sheppard. The two veterans' projects-Bowman Field and Grand Avenue--showed an average net operating income of $68,818 for the 4-year period, and this amount was turned over to the city. The two projects built by the PWA-LaSalle Place and College Court—had an average net operating income of $12,075, which went to the United States Public Housing Administration. Actual loss: $278,267 to $362,692 in 1952

Figures on the operations and overall deficit of public housing in Louisville may be calculated from three different points of view since the accounts are kept under three separate classifications which are: (1) Those projects built and donated by the Federal Government to the muncipal housing commission; (2) those built and operated by the commission, and (3) those built by the Federal Government as temporary measures, owned by the city of Louisville, and managed by the commission.

Depending on whichever combination is used, the deficit for 1952 amounted to $362,692 for all projects, which may be scaled down to $278,267 if payments to the city and the Public Housing Administration are deducted.

See the collowing table:

Total development cost of the 8 permanent projects

Date begun

Total development cost

Total

Total Number develop- Number developof units ment cost of rooms ment cost per unit

per room

La Salle Pl College Ct. Clarksdale Beecher Parkway Sheppard Iroquois. Cotter

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1936 1936 1938 1939 1942 1941 1951 1951

$1, 230, 140

719, 093 4,524, 826 4, 385, 613 2, 802, 244 2, 162, 058 9,091, 209 7, 180, 404

210 125 786 808 653 423 850 650

$5, 858 5, 753 5,757 5, 428 4, 298 5,111 10, 987 11,046

859

429 3, 377 3, 276 2, 902 1, 788 3,857 2, 943

$1, 431 1,674 1,340 1,339

966 1, 209 2,433 2, 440

Subtotal or average

32,095, 487

4, 505

7, 124

19, 433

1,652

7 See the following table :

BREAKDOWN OF TOTAL COST OF DEVELOPMENT OF COTTER HOMES Structures

$5, 681, 790 Site acquisition and improvement

1, 010, 941 Architectural and engineering fees.

178, 355 Permanent equipment

164, 023 Carrying charges.

113, 364 Administrative costs.

33, 931 Total development costs..

7, 180, 404

The first of these points of view, referred to above, is that in which all income and all expenses of the commission are considered for all units.

Using 1952 as an example, operating income totaled $1,399,449 and total operating expenses amounted to $1,763,597. Expenses thus exceeded income by $364,148. Adjustment of a $1,456 item carried over from previous years leaves an adjusted net deficit of $362,692—which had to be met by Federal subsidy.

Income and expenses (all projects) 1952 Total operating income.

$1, 399, 449

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362,

Adjusted net deficit.

692 Contribution (subsidy) by USPHA.

362, 692 (An explanation of each of these items follows, in order, below.) Operating income

About 98 percent of the operating income ($1,376,845) came from dwelling rent. The average monthly rent per unit was $32.12, ranging from $28.90 at Grand Avenue Homes, the Negro veterans project, to $36.24 average at La Salle Court. This chart gives the average rent picture for all projects.

Average, minimum, and maximum rents paid per month, 1952

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Other operating income items were nondwelling rent, $2,100; sales and services to tenants, $4,905 ; miscellaneous project income, $880, and interest on investments, $14,720. (Total, including rent, $1,399,451.)

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