Evening star. [volume] (Washington, D.C.) 1854-1972, 1951-03-05
Bates Questions
i. 5. Agencies
Use
Distress at Reading
Of Proposed Leases
Expressed in House
By Crosby S. Moves

expressed IN House
By Crosby S. Moves
The proposed use of new apart
ment buildings here as Office space
for defense agencies came under
sharp questioning today by
House Armed Services Subcom-
mittee.
The committee, headed by Rep
resentative Clemente OF New York,
is looking into proposed leases by
the Defense Department Of the
State and Boston Houses, new
apartment buildings on Massa-
chusetts avenue, and Gelmarc
Towers. 1880 Columbia road NV,
earmarked for the Civil Defense
Administration.
Opening the proceedings in Mr..
Clemente's absence. Representa-
tive Bates, Republican, of Massa-
|chusetts announced the commit
tee had been very much dis
tressed" to read of the proposed
leases in the newspapers, and
very embarrassed" by the COM
mittee's ignorance of the trans
actions. He observed that any
withdrawal of apartments from
the market will hurt the housing
situation.
Financing Investigated.
Mr.. Bates declared the purpose
OF the investigation is to deter
mine whether the Government
can save money by buying or
building additional Office space in
stead Of signing leases for what
will probably be long term re-
quirements.
Getting down to cases, the COM
mittee went closely into the
financial arrangements involved in
the projected lease of the State
House, on which GSA is ready to
sign a lease calling for a $400, 000-
a-year rental.
l.. Anthony Ziernicki and Albert
H. Greene, spokesman for GSA,
told the committee the replace
ment value of the property had
been set by the Federal Housing
Administration at $2.993,37s, in
Guiding land.
1t was estimated that should
the Government purchase the
property, it could sell it again
after two and a half years for rs
per cent. Rental for the same
period would cost about SIG mil
lion. including the cost of opera
ton, making the leasing transac-
ton about 5000. 900 more expensive.
Owners Stand To Make Less.
The witnesses observed. how
ever, that GSA has no present au-
thority to purchase property in
the District and that apartment
type buildings are not generally
suitable for long-term Federal oc-
cupancy.
The owners of State House, &C
cording to Mr.. Ziernicki, will make
less profit off of the arrangement
with FSA than they would in nor
NAL rental of the building for
residential use. He said FILA esti-
mates annual rentals under pres
ent rent ceilings for the building
at $405, 180 against a total opera
ton and financing cost of $751;
1854, leaving a profit of SAT 1926.
Under Government occupancy,
despite the fact that the cost Of
upkeep of the building would be
borne by the Government, the
owners expenses would be $780,
522, leaving a profit of $19,472.
The reasons for the increased
expense to the owners under Gov
eminent operation as opposed to
private operation caused some
confusion among committee mem
bers.
Mr.. Bates commented that the
owners are apparently lust
public spirited citizens who like
to lose money"
Saving Emphasized.
1t was brought out that it may
cost the Government $4,000
more to operate the building as
Office space than it would cost
the owner to run it as a residen-
tial apartment project.
| Committee Chairman Clemente
commented that. in many cases.
the Federal Government has
leased buildings for long periods
at cost in excess of the purchase
price of similar property. We've
got to look with an eye of saving
money for the Government in
these transactions" he said.
The GSA witnesses were asked
to submit comparative estimate
covering a 10-year period show
ing the difference in cost between
buying and renting the State
House building.
The hearing recessed until 2
p I'm. tomorrow.
Officials Summoned.
Called as the first witnesses
were Raymond j. Hayden, as
sistant director for administra-
ton in charge of space require
ments. Office of the Secretary Of
Defense, and his assistant Henry
Dement,.
They explained the Defense De-
partment, already overcrowding
it's quarters in the Pentagon, and
requiring space for an additional
l7,345 employees, had applied to
the General Services Administra-
ton for additional Office space.
GSA conducts the actual TRANSACT
lions.
Mr.. Dement, said, however, that
1000 employees of the Air Force.
now in the Pentagon. are slated
for new Offices at the State House.