1955-1957 — Page 11

available by Government. The Authority is at liberty, if it so wishes, and subject to Government approval, to borrow money from other sources, if this becomes necessary to discharge its functions. The necessity has not yet arisen.

Loans to finance housing schemes are granted by Government when the schemes have been approved in principle, and so far the following have been granted:

(i) $33m for the North Point Estate;

(ii) $7.5m for the Cadogan Street Estate; (iii) $50m for the So Uk Estate.

In addition a loan of $1m was made by Government when the Authority was first constituted, in order to meet administrative expenses during the period when an organization and staff were being built up, and building operations initiated-in other words to 'prime the pump.' It is not intended that recurrent expenditure will continue to be met from this loan once rental income accrues, and expenditure from it will be capitalized within the various schemes as they mature.

Overhead expenses (principally salaries) will be charged against the various projects as they proceed, roughly in proportion to the number of tenancies involved. For instance, this will be 15% for the North Point Estate, and 5% for the Cadogan Street Estate. The North Point, Cadogan Street and Administration Loans were all made with interest payable at the rate of 34% per annum (calculated on maximum in- debtedness during each month, and compounded half yearly in March and September). In October, 1955, however, Government notified the Authority that for all future schemes, i.e. from So Uk onwards, the interest on loans would be at the rate of 5% per annum.

The Authority therefore decided that in order to avoid any rent differential, the rents on the North Point and Cadogan Street Estates should be calculated as if amortization was at 5% rather than at 34% per annum. This equates those rents with those which will obtain on future estates, and at the same time provides a useful contingency reserve. Rents will be fixed by calculating the direct annual expenditure on each estate, and then assessing a standard rental, which will give a basic rent per flat adjusted in detail according to relative quality, position, etc. Income arising from shops (of which there will be some on most estates) will also be credited to a contingency reserve.

The policy of the Authority is directed to securing that in any period of three successive years after 1st April, 1956, its revenue shall be

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