Evening star., 1939-10-31
Private Capital for Housing

Coming at time when the banks
of the country are overstocked with
idle money, the information that the
United States Housing Authority has
worked out simple and promising
plan for active participation of pri-
vate capital in financing public low
rent housing construction is of
prime Importance to investors
To what extent the Alley Dwelling
Authority of this city is prepared
to Join in the issuance of these local,
short-term housing securities is not
known at this writing. That the
A. D. A. is studying the plan is re-
assuring. 1t is conceivable that such
notes, if issued here, would find a
ready market. The prospect is of
special significance when one con-
siders that the savings deposits in
Washington's banks and trust COM
panies had advanced to an all-time
peak of S106, SIT 900 on the last date
of call.
The U. S. H. A. plan is equally i'm
portant to all local housing authori-
ties in that it would enable them to
save at least two per cent in the in
terest they otherwise would be re-
quired to pay for u S. H. A. loans.
In terms of the $77O,0O000O housing
program the potential savings in con-
struction would approach $4,000, ,OOO
Local authorities would sell their
siX-month notes to bidders offering
the lowest rates of interest. In Syra-
cuse, N. Y, test issue was sold at
less than one-half of one per cent.
Administrator Nathan Straus expects
the plan will be adopted generally
because it gets around an apparently
unintended lapse in the present law,
which requires the U. S. H. A. to
charge the going Federal rate of in
terest plus one-half of one per cent.
In the two years of the housing pro-
gram the Federal rate has ranged
from three to three and one-quarter
per cent. Local authorities thereby
will be able to save the difference.
The A. D. A. is expecting to obtain
S15,000,000 or more in loans from the
Federal agency. Should it issue
temporary loan notes bearing inter-
est at less than one per cent, the
saving would be considerable. The
U. S. H. A. advances its loans as they
are needed. Under the proposed plan
the money to redeem the local notes
would be deposited three days in ad-
vance of their expiration. The ad-
vantage to the local agency is readily
seen.
That this temporary small-scale
financing will proceed inevitably to
permanent large-scale financing of
public housing projects with private
funds and thus tap huge reservoirs
of idle capital is the belief and hope
of its sponsors. Then, indeed, the
alliance of business and Government
in economic revival through housing
will be cemented.
Inc Y. 5. n. A. WILL be two years old
on Wednesday. For such STRIPPING
it has accomplished much in this
short period. Now there are 298 prof.
ects under loan contracts with 1875
local authorities. Mistakes in policy
have been made as is only natural in
a Federal experiment of this kind.
But the agency has succeeded admir-
ably in constantly lowering construc-
ton costs and lowering rents. De-
spite stubborn objections on many
sides it has stood firm in restricting
its tenants to families of the lowest
income groups.
This open invitation to private
capital to participate in public hous-
ing in time may be its outstanding
achievement. Certainly, the plan
merits the fullest cooperation by 10
cal authorities on the one hand and
private investors on the other. For
this reason the first issuance of $780,
100000 will command Nationwide
interest.