Evening star., 1955-05-03

lie hearings on a bill seeking
such negotiation powers, after
hearing GSA officials argue in
favor of contracts let on a COM
petitive bid basis.
Subcommittee Chairman SYM.
ington said he was sorry to see
a split on the question. He said
he favors giving GSA the right
to negotiate.
Then Mr.. Searles got a num-
Der Of sharp questions about
whether the RIA had made any
commitments to Mr.. Zeckehdorf
that would ban other developers.
The RIA chief said his agency
agreed not to sell the land Mr..
Zeckendorf was interested in
during an 18-month study period
but denied this would block con-
sideration of any other legiti.
mate offers.
Mr.. Searles also said the RIA
is working toward full recovery
from developers of the cost Of
acquiring land and clearing slum
properties so that no public sub
sidy would be required.
New Rules Blamed
Asked about Area B, Mr..
Searles told the Senators Mr..
Bush had decided to drop out
because a completely changed
set of ground rules" adopted by
the Federal Housing Admins
tration, had eliminated the at-
tractiveness" of financing possi-
bilities to Mr.. Bush.
Mr.. Searles did not spell out
details Of the FILA problem. But
he indicated one major concern
was a practice under which he
said FILA uses the issuance Of
new mortgage insurance con-
tracts as a way to force repay
ment of so-called "wind-fall
profits" taken out of previous
FHA-insured projects.
Mr.. Searles said Mr.. Bush felt
some builders who had done
such previous building "have
adopted the position of not doing
any more business with the FILA
on rental housing"
Reached by telephone in Nor
folk, Mr.. Bush declined to dis
cuss details of previous projects
under the controversial Section
608" Housing Act provisions or
what part they might have
played in his decision.
In his preliminary discussions
with FILA on Area B, Mr.. Bush
said, I'VE hadn't got to that
question-what the profile
would have been I don't know"
Required More Capital
His main difference with FHA
in the discussions, Mr.. Bush said,
involved the size of the builders
fee that would be used in figuring
financing. He said new policies
would have required far more
capital than he had anticipated
when he submitted a proposal to
RIA for the Area B project in
1858.
Expressing regret that the pro-
ject could not be worked out,
Mr.. Bush said he feels neither
| he nor RIA owes the other any
obligation. No contract had been
| signed. .:..E .
FHA officials said they an
nounced last February 20 they
would check new mortgagc-in-
surance applicants as to their
previous participation with FHA
so that sound underwriting
judgment may be made con.
corning the insurance risk"
Applications Reviewed
This step was decided, a spokes.
man said. after a number Of
builders failed last summer to
answer questionnaires about pre-.
vious Section 608 mortgage con-
tracts. FILA policy, he said, is
that "windfall profits" diff
ference between cost and the
amount of the insured
loan-should have been ap-
piled to reduce the mort
gage and thereby reduce rents.
The spokesman said each Of
the new applications is being
reviewed ION its own merits as
an individual matter" to deter.
mine whether to do more busi-
ness with the builders.
AS to the amount of builder
profit that can be allowed in
new contracts, an official said,
FILA must decide on a basis Of
current building experience.
He said this amounts to about
S per cent, half the allowance
Mr.. Bush asked.