Low-Rent Housing 'for Nothing'

Editorial lrom the Los Angeles Times, August 12,1951

In the panorama of public housing, as they call it, which was observed here the other day, there is a little cloud (no bigger than a man's hand of course) which ought to be studied by Los Angeles taxpayers. They should study it because they are going to be stuck with taxes although they have been told that it is a Federal beneficence which will cost them nothing except for sew€r, etc.

The public housing of which we speak is the present project to build 10,000 low-rental units on 11 different sites. These units are to be built with money obtained by bond issues by the Los Angeles Housing Authority-bonds guaranteed by the U. S. Treasury-and they will cost, it is said,9110,000,000, and the bonds will be retired through the low rentals which will be charged for the apartments. It all sounds very pretty. The housing will be almost self-liquidating.

But the thing they don't tell you about is the administration cost of these apartrnents. Whenever the government operates such a project as these housing units it must dispatch a swarm of bureaucrats to oversee the property and the tenants. For instance: the Housing Authority's last report shows that the present overhead cost per public housing unit for management, maintenance, operating services, collection, etc., is $28.05 a month. To this unit cost the Housing Authority adds 68 cents for payment in lieu of taxes to the local government and a '$7.77 debt service charge. The accountants then make an acljustment which is too complicated to describe and come up . with a total cost per apartment of $35.60. And the average rental of the units is $32.32. That's a loss of $3.28 a month on the average unit.

Now when Mayor Bowron eagerly signed the co-operation agreement two years ago it was put out that the Housing Authority would give the city a little something in lieu of taxes. That is to say, the low-rental housing would pay, as private ownership does, for all the services the city provides to citizens, renters or homeowners. But the catch is this: the agreement the Mayor signed says that there shall be payments to the city in lieu of taxes "to the extent that funds are available from income." Where are these funds available from income?

The Federal housing bureaucracy also says in its report that it thinks it can cut down expenses. It expects that its 10,000 low-rental units in Los Angeles will drain off only 919.99 a unit to pay the bureaucrats who will be rushing around to see that tenants are worthy-voting right, for instance-of having their low rent.

Byron Jones, director of the Montecito Hills fmprovement Association, has some remarks. He calculates that $95,952,000 eventually will be spent on administration costs for the 10,000 Los Angeles units.

"Now," says he, "suppose that instead of paying this $95,952,000 (to) the planners, we took it and erected 10,000 private homes at the cost of 99,595.20 each and made an outright gift of these houses to the people now living in the so-called slums. The slums would be cleared and we could start collecting taxes for the new homes. Certainly $100 a year a home would be reasonable enough for taxes. This would give us $1,000,000 a year for 10,000 homes, or $40,000,000 over the life of the proposed program (40 years). Thus we would be $40,000,000 further ahead ewn if we gave the homes away under private ownership than we would be under the Socialistic plan. The reason this is true is that the $96,000,000 paid for management and other Socialistic overhead not applicable to privately owned homes is simply unproductive water down the rat hole, while the same $96,000,000 invested in private homes would bring a return in the form of taxes."

It follows from Mr. Jones' reasoning that the costs of the 11 housing projects here will be as follows: l-Principal cost of 10,000 units (911,000 each) $110,000,000

2-Interest at Ztllo amortized over 40 years. . 53,996,000

3-Management-operating overhead 95,952,000

4-Loss in tax receipts 40,000,000

Total Cost $299,949,000

There are some incalculable expenses left out of this table. But it shows that the cost per apartment will be about $30,000 in the 4O-year period. With a rental income of. $32.32 a month per unit you have over the 40 years an income of $155,000,000 and the net loss, to be paid from taxes, therefore, is about $145,000,000.

Mr. Jones calculates that Federal taxes will pay for $44,000,000 of this deficit. The rest will be borne by Los Angeles$40,000,000 of it in tax losses and the rest to be collected $61,000,000, that is.

This is the low-rental housing we arC'getting for nothing from the Federal government.

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Projects That Can Be Postponed \(/on't Get Metal Allotments

Washington, D.C.-The National Production Authority says flatly that "no non-essential construction rvhich can be postponed will receive allotments (permission to buy the needed metals) for the fourth quarter of 1951."

This refers to business chances of getting steel, copper, and aluminum after September 30, for starting nerv structrtres or completing those already begun. Projects wili be judged on their individual merits rather than by the classification to which they may fall, as, for example, "defense" or "public works."

The classifications, however, will serve only to determine what applications NPA u,ill look at first. It does not mean that an approved top priority project will be entitled to steel before an approved lorver-priority project. Among approved projects, metals r,i'ill be obtained on a first-comc first-served basis.

Here are those classifications:

CLASS I PRIORITY: Construction projects u'hich "further" the defense effort-like a tank-making plant, a steel n-ri1l, an aluminum mill or an aircraft plant.

CLASS II PRIORITY: Construction deemed essential to public health, safety or u'elfare, and any industrial plant that has been awarded a "certificate of necessity" for special tax benefits and had been started before Aug. 3.

CLASS III PRIOIi.ITY: Construction needed to replace facilities ruined in disasters like fires and floods. Also, any inclustrial facility that got a certificate of necessity before Aug. 3, or where construction had begun by Aug. 3 and the certificate didn't come until later.

CLASS IV PRIORITY: All other industrial construction. NPA said that it wouldn't grant any metal allotments for rlew recreational facilities in the last three months this year except where "undue hardship" will result, for example, to an owner who has purchased much material that will have to lie idle.

With Lumber MiU 6 Supply Co.

Ervin Jensen, formerly with Western Cnstom Mill, Inc., I-os Angeles, is nou'a salesman for Lumber Mill & Supply Ct-,.. Los Angeles.

Spend 3 Months in Europe

Henry Hess of the Henry Hess Company, San Francisco, and Mrs. Hess returned recently from spending three nronths in Europe.

Retail Conlerence September 26-28.

The annual conference of retail lumbermen of Southern California will be held in the Hotel del Coronado, on September 26,27, and 28, 1951. Attendance will be limited to retail lumber owners and principals. Or-rie Hamilton requests that those who have not made reservations do so at once. The telephone number is 't'Ucker 6108.

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Tacoma lumher $ales, Inc.

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Telephone PRospect 1108

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CABGO and EAIL fIR and REDWOOD

NEPRESENTING

St. Paul d Tacoma Lumber Co, Tqcomcr, Wash.

Delicnce Mill Co. Tccomcr, Wash.

Dickmcn Lumber Compcny Tqcomc, Wcsh.

Kcrlen-Dcnris Compcrny Tqcomc, Wcrsh.

Tcrcoma Harbor Lumber d Timber Co, Tdcomq, Wcrsh.

G. L. Speier Co.

Arcqtq, Calil. Also Northern Ccrlilornicr crnd Southern Oregon FIR cnd REDWOOD MIttS