Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-01-24
PRICE ON PARKWAY
CALLED TOO HIGH
Evidence on Financing of
Cooperative Apartments
Given at Hearing.

Spring. resulting in the wiping out of
the equity held by tenant stock pur-
ChaSers, was heard last night before
the Gibson subcommittee of the House
which is investigating the matter
After a mass of complicated and to
some extent contradictory testimony
had been adduced by witnesses who had
some official connection with the
project, j. Miller Kenyon. who at one
time acted as attorney for group of
tenants, charged that in his opinion
the sale price placed on the apartments
was 'ridiculously'' high.
The declaration was made following
the testimony of Frank Russell White,
architect and builder of the apartment,
who told the committee that sale value
of 1868 800 had been placed on the
completed property and that it was
subject to first trust of $4,000 with
interest at 61c per cent. and second
trust Of 100000, at 6l2 per cent.
Questioned by Gilbert.
Questioned by Representative Gilbert
of Kentucky, who conducted the hear
ing, Mr.. White said that he had been
advanced S277,700 net from the first
trust, issued by the Real Estate Mort
gage g. Guarantee Corporation, and
that the commission on the loan and
interest for six months had been de-
Quoted from the trust money.
After Mr.. White had testified to the
placing Of the two trusts on the
property Mr.. Gilbert demanded:
After the erection of the apartment
building was completed. what real value
was back of these trusts totaling $440.-
O00?"
Mr.. White replied that the building
was selling for $630,000. as completed
project.
But what was the real value Of the
property?" queried Mr. Gilbert.
Mr. White said that in his opinion
the property had a value of S55O,O00
and explained that the value of such
residential property was computed on
the basis OF income on rentals.
Cause of Failure Sought.
In opening the hearing. the third
during the investigation. Mr.. Gilbert
said the plan of the inquiry was to
determine if dishonesty or the basic
plan for cooperative apartment prof.
ects had been the cause of the failure
of the Parkway.
Aside from Mr.. White and Mr..
Kenyon, witnesses last night were:
Roy L. Neuhauser, Joint holder with
Sol Lansburgh Of the second trust, who
declared he had had no part in actual
management OF the project, and no
interest in 1t other than the trust; and
A. F. Prescott, jr., lawyer who for
short time acted as secretary treasurer
of the Parkway Apartments Inc. title
holders Of the property. Prescott said
he actually handled no funds from
sales and that he had resigned because
of methods of Arthur NJ Suit, president
OF the corporation and exclusive agent
for sales, for whom warrants since have
been issued. Mr.. Neuhauser amplified
his statement today by declaring that
he suffered a personal loss along with
the tenants.
A high light in the testimony by Mr..
Prescott was that in the sale of one
apartment, Suit had written in a,
clause purporting to exempt the buyer,
a d., Manning, from the operation of
the -usts against the building.
Representative jenkins, member Of
the subcommittee, suggested that such
procedure constituted obtaining
money under false pretenses, since trust
holders had priority over other equity
holders.
Tells Why He Resigned.
Prescott said he had resigned as Sec
retary-treaSurer in May last year after
acting for less than two months. when
Suit refused to carry out an agreement
reached with Neuhauser to place funds
received from tenants in escrow, in
stead OF allowing Suit and White to
take out commissions in advance This
arrangement was contemplated, he said,
TO assure payment of bills due.
Mr.. White said that he purchased
hn ~,
Neuhauser and Mr.. Lansburgh and that
Neuhauser suggested that an apartment
be erected thereon. Under questioning
he said he paid SCI 900 toward pur-
chase OF the site, having sale price of
$4,000, and that the second trust held
by NeuhauSer and Lansburgh covered
the cost of the land.
In May, 1927, after the building was
started, he said, Mr.. Suit approached
him with the idea of selling the build
ing on the cooperative plan. He agreed
after the second trust holders made
no objection, he said, and it was then
That the Parkway Apartments, Inc. was
incorporated In Delaware. Suit, 1t was
testlneo, claimed he had contracts at
the Tune Tor sale of % apartments.
Later, however, White said, he dis
covered he had made IAN error" on
finding that Suit did not have % con-
tracts and when he was unable to meet
bills for the building.
Wanted to Abandon Plan.
White then wanted to abandon the
cooperative sale plan, he said, but that
Suit objected, claiming that he then
had total of 43 sales contracts. He
claimed that Neuhauser and L. E.
Breuninger, president of the corpora
ton holding the first trust, said the
plan should be continued. that Neu-
hauser agreed to see that bills were
paid"
At that time, he said the property
was transferred to the Parkway Apart
ments Inc. and that following that
date ne had nothing to do with the
project, except that he was to receive
payments on his equity over and above
costs, If any funds were available
Mr.. Neuhauser emphatically denied
statements by White that he had prom
ised to see that bills were paid fol-
lowing transfer of title to the Delaware
corporation and he questioned also
Whites statement that after that time
he had nothing to do with the project.
Neuhauser denied also that he had
suggested the building Of the apartment
or that he had agreed in advance to
finance the project. pointing out that,
though he was vice president of the
Real Estate Mortgage g. Guarantee Cor
poration he alone had no power to
arrange financing, which was handled
through corporation committees.
Says He Made Protest.
White and Suit were receiving shares
OF payments by apartment purchasers
while bills were pending for operation
nd frNr rnfi &C H.
declared, and said he protested that lit
didn't seem right"
Mr.. Gilbert then interposed: what
did you do to protect the tenants?"
Mr.. Neuhauser replied that when it
looked as though the apartment could
not be- carried by 26 tenants he made
several efforts to straighten out the