Evening star., 1944-03-25
Builder Asserts NCHA
Properties Here Are
Not Se|f-Liquidating
60-Yeur Amortization
Base Is Not Correct,
Senote Group Told


by Lewis T. Breuninger, appraiser
and private builder, in testimon,
before the Senate District Subcom
mittee studying housing here.
The self-liquidation claim is basee
on an estimate that the building.
will have useful life of go years
whereas all prudent private build
ers afnortize their investments ovel
a maximum period of 40 years, Mr
Breuninger said. The NCHA claim
does not take into consideration
the District real estate taxes which
its properties fail to pay, he added
nor does it allow for interest on the
money originally appropriated by
the Government.
When these items are considered
the Title I properties-112 housins
units which cost 1854 actually
operate at an annual loss of $4,527
he charged. If amortized on the
proper basis for 40 years, the prop.
critics, instead of being self -liquidat-
ing, would lose s9,149 annually, hit
said.
I'm its present form, the sliding
scale plan has so many obsolete fea.
lures do not believe it has any net
advantages over standard forms OF
regulation, but rather, net disad-
vantages," DR.. Bonbright testified.
IF modified, it will be superior tc
standard types of rate control. Its
chief advantage is that If accepted
by the utility company, it reduces
the area of controversy.
But I am bound to add that even
with notifications the truly striking
superiority of the plan is probably a
thing of the past"
Lists Seven Notifications.
The seven notifications proposed
by DR.. Bonbright, who is professor
of finance at Columbia University
and an economist specializing in
public utilities finance, follow:
l. Immediate elimination from the
rate base of Pepco of five or six
million dollars, the amount in ex-
cess over the original cost of the
property.
2. Discontinuance of the use of an
undepreciated rate base if accom-
panied by the crediting to the de-
probation reserve of a rate of in
terest lower than the actual rate of
return"
3. Revision of the automatic rate
reduction formula, so as to credit
consumers with next years pre-
sumptive tax savings"
4. Adoption of a per cent basic
rate of return after allowances for
all taxes.
S. Downward revisions in the
"other stipulated rates of return
used as measures of excessive or de-
fcient earnings"
6. Serious consideration of the
proposal Ito recapture one-half of
any realized excess earnings, this re-
captured excess to be applied to a
special rate reduction reserve, un-
less needed to fortify inadequate de-
probation reserves"
7. A restudy OF the incentive
plONiSAOllS Will SpCCldl IelClcilCc W
the question why the stockholders
of the company should receive a
special reward for the efficiency of
management and the employees.
The purpose of recapturing one
half OF excess earnings in any one
year would be to set up a special
fund to guard against an increase in
rates If the company earned less
than the permissible rates of re-
turn in any one year.
Costs Compared.
Today's hearings also were
marked by comparison of public
and private housing costs by Harry
Poretsky, private builder, who
said he has constructed 800 apart
ment units and more than 300
houses here in the last 20 years.
Mr.. Poretsky compared the
NCHA's Williston Apartments, 200
block of w street NV, with three
properties he has constructed-43
apartment units at 6323 Luzon ave-
nue. NV, 81 apartment units at
1911 Irving street NE. and a 289-
unit development near Second and
Orange streets Sc.
The 30-unit Williston Apartments
cost $l,319 a room, excluding land
he said. He gave his costs as $500
q room excluding land on Luzon
avenue, s1,013 including land on
the property in Southeast and ST.
058 room including land and 10
per cent sale profit on the Irving
street apartments.
Attacks NCHA Planning.
Mr.. Poretsky said all the proper
ties are of masonry construction
ana have about the same useful
life. The NCHA's apartment: he
salo, was built on much cheaper
construction market than any of his
buildings.
: Mr. Poretsky charged that plans
ana specifications for the Williston
apartments were "extravagant and
impractlcable" and said he could
have placed 81 units on the same
land on which the NCHA built only
81 units. A private builder spend
ing his money as the NCHA did on
thls project would soon be bank
rupt," Mr.. Poretsky said.
! Chairman Burton of the subcom-
mlttee pointed out that, while Mr.
Poretsky said his costs were lower
1or the Luzon avenue apartments
the rents he charges are nearly twice
as high as those for the Williston
Apartments. VIA
James c, Wilkes, attorney for the
washington Home Builders Associ-
alton, said there were several ex-
plantations for the higher rents and
that he would offer an analysis of
private and public rents later in the
hearings.
OPEN FOR INSPECTION