Evening star., 1954-12-20
Area Tenants
Called Victims
Of WindfaIIs'
Senote Report
Cites Extra Rent to
Boil Out Property

!
Washington-are paying large
sums in extra rent to "bail out"
properties on which the mort.
cages are substantially more
than actual costs.
This was stressed in a report
by the Senate Banking Com
mittee on its investigation OF
the Federal Housing Admins
| tration. The committee investi-
CATION was headed by its chair
man, Senator Capehart, Repub-
lican. of Indiana.
In one Washington area prof.
ect. the Shirley-Duke Apart
ments in Alexandria. the FHA-
approved rental schedule per-
mitted tenants to be charged
/ $3.50, 900 to 1925, 900 a year more
than they would have had to
pay had actual instead of esti-
mated costs been used, accord
ing to the report. The report
said this figures out to S115 per
year per apartment.
Rents Further Inflated.
But there was another step.
The report stated that after the
project was completed. FHA ap-
proved a rent increase of $780,
994 year based on increased
operating costs.
1t was pointed out that IL
operating expenses of project
increased beyond the figures used
in the original FILA estimate,
the sponsor could apply for a
rent increase which generally
was allowed. Thus, the report
stated. rents were further in
flated.
A table is given listing wind
fall" profits realized by some
builders who were later allowed
to increase rents. Thirty-two
projects are listed. Ten are in
the Washington area. According
to the table there were more
than SIS million in windfall
profits on these 10 projects. In
addition the rent boosts
amounted to $388.96l a year.
WOOdner COmpanies Listed.
Other sections of the report
I stated that:
| l. The companies headed by
Ian Woodner issued checks to
him totaling STA million since
World War II, although his SAL
ary in that period totaled only
100000 and he had testified at
the end Of the war he was worth
between $4,000 and $4,000. In
five years, the report stated. he
built $50 million worth of real
estate projects financed entirely
by FILA. One of his buildings is
the huge Woodner Apartments
at 1886 Sixteenth street NV.
2. Morris Cafritz. Washington
builder, made his three sons a
gift of land costing him $4,000.
The sons will ultimately own
properties having a cost of s7.2
million "in the absence of ad-
verse economic conditions"
No gift taxes will be payable
beyond those applicable TO the
gift of the land, and no income
taxes will be paid except to the
extent the rental income from
the property exceeds all costs
of operation !" Involved here
is Parklands Manor in Southeast
Washington.
3. The conduct of some attor.
neys appearing before the COM
mittee was mot conducive to
that standard of truth and JUS
tice which the lawyers have and
must advocate" Specific refer
ence was made to seven lawyers.
four from Washington.
Hotel Purpose Charged.
In the investigation of the
Woodner projects the committee
said it did not get from Mr..
Woodner all the facts. It's re-
port states that the testimony
shows many irregularities oc-
Cured"
The committee also said the
Sixteenth street Woodner prof.
ect was perhaps the most glar-
ing example" of the use of the
FILA program for a hotel prop
erty. 1t pointed out that the
FILA financing was not sup
posed to aid in hotel construc-
tion but added. THE record sup
ports the conclusion that its
sponsors intended to operate the
property as a hotel from its in
ception."
Clyde L. Powell, ousted as as
sistant commissioner of FILA,
gave Mr.. Woodner permission to
convert 23s units in the building
into a hotel. This is listed as
only one of several favors Mr..
Powell was said to have granted
Mr.. Woodner.
! The report was critical Of the
lawyers mentioned on various
grounds.
Chaite is Criticized.
Arthur NJ. Chaite. former FILA
attorney who later represented
Mr.. Woodner. was unable to ex-
plain Woodner checks for $50. 900,
the report stated. 1t added. 1T
seems reasonable to assume that
Chaite must have known more
about that $4,000 than he was
willing to tell this committee"
Daniel B. Maher was discussed
in the report as the lawyer for
Mr.. Powell. The report stated
that Mr.. Maher filed a petition
with the Secretary of the Senate
attacking the committee because
it had included in the record an
FBI report on Mr.. Powellis ar
rests although Powell has not
contradicted or disputed its
statements.
Samuel e. Neel. general eoun-
sci for the Mortgage Bankers As
sociation was criticized on tie