Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-25

| extreme, the Smakler GOWnS WHERE IL rs
economical and satisfactory to rent the
space required for post Office purposes
on month-to-month basis. Between
these two extremes there is a third
group of cases--caSeS where the Gov
eminent does not own the necessary
buildings and where 1t is not economi-
cal or practicable to rent suitable quar-
! tiers on a month-to-month or year-to-
year basis. The department now oc-
cupies about $500 buildings under lease
for terms running from to 20 years.
In about 5000 towns the main post
Office is located in a leased building.
In the larger cities we are leasing more
than 1900 buildings for branch Offices
and stations, about 100 for garage pur-
poses and SO for railway mail stations.
Our rent on these $500 leased build
ings ranges from few hundred dollars
year to $500, 900, which is the annual
rental for the Van Buren, street postal
station in Chicago. Our total annual
rent bill for the $500 leased buildings
is approximately $1,000 900. or an av-
erage of about So 500 for each building.
THE establishment of the parcel post
in 1913 resulted in an enormous in
crease in the volume of the mails, and
made necessary a substantial expansion
of the physical plant of the postal
service. In normal times the need for
been met by the enlargement of the
post Office buildings already occupied by
the Government and the construction
of additional buildings in the larger
cities. But while the new condition
caused by the development of the par
eel post was crystaliZing the United
States entered the World War, and the
Government suspended all building OPP
erationS as a matter of public policy,
not to resume them until 1925. This
forced the Post Office Department to
secure the buildings which it neeued
to accommodate the growing postal
business, and particularly the parcel
post, by leasing them from private own
ers. In the larger cities, like New York,
Chicago and San Francisco, the quar-
ter5 in Federal buildings were no longer
adequate even for the normal postal
needs, exclusive of the parcel post, and
the only means of relief was to procure
additional stations and anneXes. Where
satisfactory privately owned buildings
were available in convenient locations
these were leased as they Stood with
such alterations as were necessary to
adapt them to the business OF handling
the mails. But in many instances suit
able buildings could not be found, IN
which cases the department was forced
to contract with private persons to
construct and equip the necessary
buildings to be leased to the Govern
ment upon completion.
while the peculiar conditions OBJ
tanning Immediately following the war
seemed to compel this course of action,
beyond question the Government was
frequently placed at a disadvantage by
this policy. A company erecting and
equipping a post Office building for the
Government on contract for lease for
10, Is or 20 years is obliged to figure on
recovering virtually the whole cost of
the building in rental during the term
of the lease, because of the likelihood
that at the end OF the term it will have
on its hands vacant building Ill adapt
ed for anything but the special uses Of
the Postal Service. The result Is that
during the term of lease the Govern
ment is required to pay in rental not
merely reasonable return on the build
er'S investment, but virtually the full
cost of the building as well. Yet at the
termination of the lease the building is
still the property of the lessor and the
Government has absolutely nothing to
show for its expenditure. Nor does this
tell the whole story. The Government
can borrow money for per cent or less,
but when it contracts for the construc-
ton of building to be leased for post
office quarters 1t Is the owner who must
borrow the money to finance the prof.
ect, and his interest rate, including all
expenses of financing, will range from
to 10 per cent per annum. Moreover,
he must, of course, pay taxes on the
property, notwithstanding the fact that
it is occupied by the Government, and
interest, financing costs and taxes
are passed on to the Government in
rental charge. Under these conditions
there is no doubt but that in e.period
from about 1918 up to the present time
the Post Once Department has In many
cases been compelled to pay excessive
rentals for the buildings which 1t has
leased for post office uses.
Policy Forced on Department.
ut Is proper however, to keep certain
things In mind: In the first place, the
leasing policy was forced on the Post
Office Department by the Governments
suspension Of ordinary building opera
tons during the war and for a consid-
cradle period thereafter. In the second
place. the department had to provide
the facilities necessary to keep the mails
moving, whatever the cost might be.
1t was frequently difficult to do this at
any cost. There were repeated in
stances in which the postal authorities
we're unable either to find a suitable
building to rent or to induce any indi-
vidual or company to construct and
equip building for lease uaier terms
advantageous to the Government. In
such cases the department did the best
it could. 1t gave publicity to its needs
1t invited competitive proposals. 1t sent
its representatives to interview public
spirited citizens, bankers and contrac-
tors. 1t exhausted its resources to find
builder who would undertake to
finance, erect and equip the necessary
structure and lease 1t to the Govern
ment on reasonable terms. You will re-
call that this was during or soon after
the war. Land values were high. There
was shortage of building materials as
well as labor. All these things added
TO the departments difficulties and they
contributed meaSurably toward the high
rentals which in many instances the
Government was obliged to pay.
'The urgent need for post Office
quarters soon attracted a class of in
dividuals who came to be known as
professional bidders, who specialized in
erecting. equipping and leasing build
ings for post Offices and postal sta
tons. These men made 1t their bust
ness to study the departments require
mentS for space and postal equipment,
in some instances going so far as to Sc
cure options on available sites in an
ticipation of advertisements for build
ingS TO be furnished under lease. 1t
not infrequently happened that offers
more advantageous TO the Government
would come from these so-called pro-
fessionals than from any casual local
bidder with his more limited resources
and experience.
There has, however, been no little
criticism of the departments dealings
with professional bidders, resulting
largely, 1 think. from their methods
and practices of financing. The pro-
fessional bidders depend upon bor-
rowed capital Generally speaking,
| their nractlce has been. after occurring