Evening star., 1934-06-18
HOBBS DEFENDS
S12,6OO,oDDF|GURE
FOR MAYFL0WER
Figure Was S7,000,000
Above Actual Cost of
Hotel.
FORMER WARDMAN AIDE
SAYS MIGHT BE HIGH NOW
Tells Investigating Committee
Appraisal Based on Repro
duction Cost.

The Senate District subcommittee
investigating the proposed reorganiza-
ton of the Mayt1ower Hotel sought to-
day to learn from James B. Hobbs,
formerly of the Wardman Construc-
ton Co., the basis for his $500 900
appraisal on the property back in 1928.
1T was developed during the hear
ing that this appraisal, which was
used in connection with the sale of
the hotel bonds. was about $1,000, 600
in excess of the actual cost of the
property.
Hobbs insisted his valuation was not
high at the time it was made, and that
it was based on the cost of reproduce
ton on the property new. He ad-
mitted. however, that in the light Of
present-day conditions the $4,000, 900
appraisal would be high.
81 Per Cubic Foot.
In making the appraisal Hobos said
he arrived at a reproduction cost of ST
per cubic foot. The valuation on the
land he placed at $40 SO a square foot,
and explained that in reaching this
figure he considered the sale price of
property in the vicinity of the hotel.
Hobbs revealed it took him two days
to make the appraisal and that the
Mayfiower Hotel Corporation paid the
Wardman Construction Co. 50 500 for
his work. He said his investigation
POnciCtpH nf O of i,
hotel and study of land sale prices
in the neighborhood
Senator Reynolds, Democrat, of
North Carolina, drew from Hobbs an
admission that he did not take into
consideration actual construction
costs. the cost of furnishings, or the
assessment placed on the property by
the tax assessors office. He said he
did not believe it was necessary to
consider these factors because of his
familiarity with construction costs
In the Dark.
Hobbs denied he knew why the
hotel wanted the appraisal in 1928.
three years after its completion, but
admitted it was customary for an
pralsalS to be made in connection
with the floating of bond issue.
II you had known at the time
that they were going to use your
appraisal as means of selling ST.
OOO,O00 more in bonds would your
firm have permitted the appraisal
to be used for that purpose?" asked
Senator Reynolds.
We wouldn't want to be a party
to fraud" he answered. I'VE
didn't ask them how they were going
to use the appraisal"
Reynolds Leads Questioning.
You know that a number of in
vestors lost money" declared Senator
Reynolds. If we can show you that
the land and the building cost S.
100000 and that you missed by ST.
100000, would you admit your fig
ures were high?" inquired Senator
Reynolds.
Hobbs reiterated, however. he did
not know at the time that his valua-
ton was S7,0O0,ooO in excess of the
actual cost, and insisted his figures
were fair"
Joseph Low, attorney acting on be-
half of several hundred first-trust
bondholders who are opposed to the
plan of the three large Bondholders'
Committees, testified in detail con-
corning the objection he had to the
proposed reorganization plan. He
read from a statement of these OBJ
jectionS previously filed in the court
proceedings connected with the May
flower case.
Calls Plan Improper"
Low told the subcommittee that
fundamentally we felt it improper
that some of the substantially same
interests that floated the finances in
1928 should control and direct the
reorganization.
Later, he said some question had
been raised as to whether it is fair
to refer to two of the committees
as being connected with the Halsey
Stuart Co., or the American Bond &
Mortgage Co. Low then read from
a prospectus which, he said, gives
the history of who f1oated the issue
and the members of the respective
committees. Low testified this docu-
ment indicated the Henderson Com
nlittee of New York is substantially
under control of Halsey Stuart Co.