Evening star., 1939-11-05
A. D. A. 10 Offer
Big Note Issue
Wednesday
Savings Expected
To Be Reflected by
Lower Costs and Rents
BY NELSON M. SHEPARD.

Lower costs and kents
BY NELSON M. SHEPARD.
Washington banks will be given
their first opportunity Wednesday
to help finance public housing con-
struction in the District when the
Alley Dwelling Authority offers a
S1,500,000 issue of six-month loan
notes for public sale on that date,
1t was announced yesterday.
The A. D. A. was one of II mu-
nicipal housing bodies to take the
lead in arranging the first $50.000,-
900 issue of secured housing notes
which Administrator Nathan Straus
OF the United States Housing Au-
thority said would be offered this
week.
"This is the initial step in the
U. S. H. AS long-range plan of
throwing open the portals of pub
lie housing to the vast stores of idle
private capital" he said.
The II participating local au-
thorities, he estimated, would save
around 100000 in construction
costs because of the low interest
charges involved in the new tenn
porary loan notes. In the expecta-
ton Of securing private loans bear
ing less than l per cent interest,
they should save the difference in
the and 81 per cent interest
charges on loans previously OBJ
tanned from the Federal agency.
Lowest Interest Bid to Win.
Under the financing plan, the
notes will be sold to the investor
offering the lowest rate of inter-
est. Executive Officer John Ihlder
of the A. D. A. said he planned to
advertise the notes on Wednesday
and expressed the hope that Wash
ington banks or other Washington
investors would be successful bid
ders.
The A. D. A. notes will be non-
callable and exempt from Federal
as well as local taxes. Bidders will
have the option of designating the
denomination of the notes and the
incorporated bank or trust COM
pany in which they will be paid.
In view of the record savings ac-
counts on deposit in Washington
banks, Mr.. Ihlder said he enter
tanned bright hopes of the first issue
being bought up readily.
Proceeds from the sale of this
short term paper will be met by
local housing authorities for two
purposes, the U. S. H. A. announced:
To refund cash afreadyradvanced
to the local authority under loan
contracts and to pay accrued in
terest thereon.
Balance to Meet Building Costs.
The balance of the proceeds over
and above that issued for such re-
funds and interest will be used for
defraying the costs connected with
construction of the low-rent hous-
ing projects.
The U. S. H. A. has made ad-
vances of $26.320, 900 to the II local
authorities involved in the first
issue. The interest accruing amounts
to SAIL ,295.59. The total to be re-
paid to the U. S. H. A. through
the sale of the notes is $26. 1871 .295.
leaving a balance Of $22,943, ,704. Al
available for construction costs.
To date, the U. S. H. A. has
advanced $l,039,0O0 to the Alley
Dwelling Authority under its loan
agreements. The $1,500,000 issue
Of A. D. A. notes, however, will be
used in repaying advances of $685.
900 on four developments, together
with $14,322 80 in accrued interest.
The total amount to be repaid the
Federal agency, therefore, is $649,-
322.39, leaving balance of $780,
677.61 available to apply on con-
struction costs.
The A. D. A. is now paying the
Government per cent interest on
the foregoing advances that have
been made and 81 per cent on
the remainder. The Syracuse IN.
~ Authority, which first tested
the private market for floating
housing loans, obtained a rate Of
less than u of per cent shortly
before the European war broke out.
Even with a slight advance in in
terest, 1t was believed the A. D. A.
would have no difficulty In secur-
ing a rate below / per cent.
Higher Rate Avoided.
This means that during the con-
struction period. ranging upwards
to about 18 months, the local au-
thority will be paying this low rate
on its money instead of the higher
rate which the Government is re-
quired by law to charge.
The notes may be renewable at the
end of the six months In the event
they are to be redeemed at the ex-
piration period, the U. S. H.. A. will
deposit to the credit of the Alley
Dwelling Authority, for instance, the
necessary sum needed. Deposits will
be made in the Federal Reserve
Bank of the district in which the
local authority Is located three days
before the notes expire.
The other local authorities par
ticipating in the first issue and the
amounts for each are as follows
Atlanta. Ga, $4,000, 900; Charleston,
s. c., 81, ,410,O 900; Charleston, w. Va.
t1,7o0, 900; Chicago, 50, ,465. 900; Louis
vile. KY, 100000; Macon, Ga.
1000 900: New Orleans, $500 900;
Peoria. ILL.,. $3,000. 600; Philadelphia
$500, 900, and Pittsburgh, $7,800, 600
Regular Schedule Envisioned.
As local authorities come into the
plan, 1t was said that similar short
term notes in groups of $50, ,000, ,00a
viii be offered on . regular schedule
Of four to six weeks.