Now, because that was true, and because the structures were temporary, the PHA has followed a rather rigid policy of limiting maintenance to the absolute minimum, in order to assure that the Federal Government would recover the maximum amount possible of what it had invested in these temporary projects. That is by way of general background, sir.

I will be very glad when I get back to report your concern about this specific project to the Commissioner of Public Housing and see that you get a full report on it promptly.

Senator MCCARRAN. Well, you can see here that this is, as I have stated, merely a tempest in a teapot; over $2,000 invested for the preservation of Government property.

Senator CORDON. How much does the university pay in rent? Senator MCCARRAN. It pays enough to maintain them. And this money came out of that. They pay $98 a month for each unit.

Mr. FRANTZ. I would take it, Senator, without, as I say, knowing the detailed facts, that the difficulty arises from the fact that the expenditure was made without prior authorization, and perhaps therefore in violation of the lease agreement, though I would not assert that as a fact.

Senator MCCARRAN. But they canceled the lease now. These units being occupied by veteran students, GI students, as they are, they canceled the lease; and there does not seem to be any horse sense in allowing those buildings to stand there and deteriorate.

Mr. FRANTZ. I don't have the facts on that, Senator, but I will be glad, as I say, to have that looked into and submit a report to you. Senator HAYDEN. Are there any further questions by members of the committee?

REVISED BUDGET ESTIMATE FOR AGENCY

Mr. FRANTZ. For your convenience, Mr. Chairman, I have a table which shows by projects the figures as they are in the estimate and the reduced amounts.

Would you care to have that for the record?

Senator HAYDEN. Yes; we would like to have that.

(The table referred to follows:)

Summary of revisions in estimates of cost of Defense Production projects

Senator CORDON. Mr. Chairman, I would like to again express my appreciation for the sincere way in which this group has endeavored to carry out its obligations and carry them out as closely as possible within the funds that have been provided.

Mr. FRANTZ. Thank you, sir.

Senator CORDON. I think too often we find here an opportunity for condemnation, and I am pleased when I can find one for commendation.

LETTER SUPPORTING CREDIT-CONTROLS STATISTICS

(The following letter was submitted for the record:)

Hon. KENNETH MCKELLAR,

HOUSING AND HOME FINANCE AGENCY,
OFFICE OF THE ADMINISTRATOR,
Washington 25, D. C., April 16, 1951.

United States Senate Washington, D. C.

DEAR SENATOR MCKELLAR: On Friday, April 13, representatives of this Agency appeared before your committee in support of a portion of the estimate, "Expenses of Defense Production," H. R. 3587, the Third Supplemental Appropriation Act, 1951. The funds involved are intended for allocation to this Agency to support certain urgently needed statistical and fact-gathering activities necessary to the proper administration of credit controls in the field of housing. I have today received a letter from Edward L. Norton, member of the Board of Governors of the Federal Reserve System, expressing the Board's interest in the uninterrupted execution of this program and support of the appropriation request involved. As was pointed out in testimony before your committee, the responsibility for credit controls in very important parts of the housing field is shared jointly by the Federal Reserve Board and the Administrator, and the information produced by the statistical operations to which this estimate relates is intended to serve the requirements of the Board as well as of this Agency and other interested agencies.

I believe it will be of interest to the committee to know that this item has the wholehearted support of the Federal Reserve Board. Accordingly, I am transmitting Mr. Norton's letter herewith in the hope that you will find it convenient to call it to the attention of the members of the committee handling this item and to arrange its insertion at an appropriate place in the record.

Sincerely yours,

RAYMOND M. FOLEY, Administrator.

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,
Washington, April 16, 1951.

Hon. RAYMOND M. FOLEY,
Administrator, Housing and Home Finance Agency,

Washington 25, D. C.

DEAR MR. FOLEY: The Board understands that you are to appear before the Appropriations Committee of the Senate in support of your Agency's request for funds to carry out a statistical program designed to help ascertain and evaluate the effects of real-estate-credit regulation imposed pursuant to the Defense Production Act of 1950.

As you are well aware, the selective control of real-estate credit is being utilized for the first time in this emergency to contain inflationary pressures and to facilitate the availability of labor and materials needed for the defense effort. We are, therefore, in discharging our joint responsibility for the regulation of such credit, moving in uncharted seas, and it is of the utmost importance that we have the best and most current information which it is possible to obtain on the effects of the equity and amortization provisions imposed by Regulation X and its counterparts.

Early in the development of the real-estate-credit regulation, our respective staffs considered exhaustively the needs for supplementing available information useful in guiding regulation policy. The program jointly worked out called for sharing the burden of filling in gaps in accordance with the special background and staffing of our two organizations. The splendid cooperation that has existed

in carrying out the work has been very gratifying to both of us. As you are also aware, we have been urged by home builders, mortgage lenders, and public interest groups to obtain such information, and we have received splendid cooperation from all interested parties in formulating our information program.

It would be most unfortunate at this stage, not only for the Government agencies charged with the duty of regulating real-estate credit but for the hundreds of thousands of individual citizens affected by such regulation, if you would find that your Agency would be unable to carry through the program substantially as you propose to present it to the Senate committee.

Sincerely yours,

EDWARD L. NORTON.

GENERAL SERVICES ADMINISTRATION

STATEMENTS OF JESS LARSON, ADMINISTRATOR OF GENERAL SERVICES; W. E. REYNOLDS, COMMISSIONER, PUBLIC BUILDINGS SERVICE; AND C. D. WILLIAMS, DIRECTOR, NATIONAL INDUSTRIAL RESERVE DIVISION

SALARIES AND EXPENSES

Senator HAYDEN. Mr. Larson, do you have a prepared statement? Mr. LARSON. No, I don't, Senator Hayden. I have a justification here, which has been distributed to your committee, and I might speak very briefly from that by way of an introductory statement and as an indication to the committee as to what we now feel we can get along with.

ORIGINAL AMOUNT REQUESTED

You will note on the first green sheet, page 9, that $4,400,000 has been provided up to March 31 and that we have requested an additional appropriation of $5,100,000, to complete the year for the activities enumerated; $4,988,000 of that is for the rental, operation, and management of space-both in and outside of the District of Columbia.

REVISED ESTIMATE

Since this estimate was formulated, Mr. Reynolds, the Commissioner of the Public Buildings Service in GSA, and his boys, have done, I think a splendid job in space utilization; and we find now, as we get into this fourth quarter, our total requirements for the entire year will run approximately $2,000,000 less than the amount originally estimated. This information has been developed by analysis of preliminary reports from 10 regional offices as of March 31, 1951.

The House committee, in its report, deducted $500,000, in addition to an anticipated unobligated balance of $569,000. We are now proposing to this committee at this time that an additional $900,000 may be deducted, which is based on more realistic information as to our March 31 unobligated balances.

Senator THYE. Mr. Chairman, that is somewhat unusual.

Senator CORDON. I suggest that we congratulate these gentlemen and let them go now.

Mr. LARSON. Well, I give Mr. Reynolds' boys credit for pushing people closer together and just running a good bang-up operation. That would make additional funds for the fourth quarter of $3,100,000 that we are requesting, which, together with an estimated unobligated

balance of $1,500,000 carried over from the third quarter, will make $4,600,000 available.

Briefly, Mr. Chairman, that is all we have to say.

Senator HAYDEN. Then it may be made of record that you are asking for less than the House allowed?

Mr. LARSON. That is correct, by $900,000.

Senator HAYDEN. Are there any further questions, gentlemen? Senator CORDON. Mr. Chairman, ordinarily I like to look into the mechanics of this sort of thing. We have been over it a number of times heretofore. I have never had occasion for question at the end. of any such examination. There are so many dollars that are going to have to be spent if you are to maintain a building. The necessity of the additional funds where you have to prepare a building for maintenance is obvious.

I do not have any questions. I appreciate the fact that they have been over their work and have been able to find economies by careful study and examination and do this kind of a job.

Mr. LARSON. In all fairness, I might add, Senator Cordon, that there has been some lag in the program also.

Senator CORDON. That is necessarily so.

DISCUSSION OF LEASES AS AGAINST OWNERSHIP OF BUILDINGS

Senator HAYDEN. Speaking of leases, somebody told me that we had paid in lease money two or three times the cost of buildings here in the District over a series of years. Does anybody have any figures on that?

Mr. REYNOLDS. We would not have the exact figures. We do know this, that we have rented some buildings, or the Government has, as many as 40 years or more; and we find, on a very careful analysis of a program which we intend to propose to the Congress, that we can pay for a building in 20 years at an equal or less rental than we normally have to pay. So if you have it for 40 years, that would indicate that you probably bought it twice.

Senator CORDON. You have been helping the District maintain its government, because as landlord you have been paying taxes on it, among other things.

Mr. REYNOLDS. That is correct.

Senator CORDON. And, if you do not pay the taxes, we will probably have to make a little bit bigger contribution as our share of the cost of the District of Columbia.

Mr. REYNOLDS. That is correct.

Senator HAYDEN. What is this 15-percent rule?

Mr. REYNOLDS. The 15-percent rule is that you cannot pay any more than 15 percent of the fair market value for each year's rent. Senator HAYDEN. For that building?

Mr. REYNOLDS. The value of the property; yes.

Senator CORDON. I thought the general rule was 12. It is in my territory.

Senator HAYDEN.. The maximum is 15?

Mr. REYNOLDS. The maximum is 15. And also there is another provision in that same law that limits you in the preparation of a building for occupancy to 25 percent of the first year's rent.

Mr. LARSON. That is the one that causes us the most trouble.

Senator THYE. Mr. Chairman, who does the appraising of the property?

Mr. REYNOLDS. Normally, we take it from the assessment rolls, unless there is a question. Then we have it appraised either by our own appraisers or by outside appraisers. The law speaks of the fair value. Normally, the General Accounting Office looks at fair value as being the assessed value as represented on the tax books, taking into consideration the percentage of difference that normally applies in a local area, which may be different, maybe 30, 40, 50, or 60 percent, between the assessed and fair market values.

Senator THYE. What agencies check on the assessor that establishes the assessed value?

Mr. REYNOLDS. The General Accounting Office.

Senator THYE. The General Accounting Office will determine whether the property has been excessively assessed; so that there cannot be an inflated price for the purpose of determining how much the actual rental maximum could be.

Mr. REYNOLDS. No, there cannot be an inflated figure.

Senator CORDON. You mean to say that an assessed value is deemed to be a fair value?

Mr. REYNOLDS. No, they use the assessed value as a base and then determine what the local practice is as to what relationship that bears to the total value.

Senator CORDON. In addition to that, you will send out professional appraisers who know reproduction costs and can determine present condition and that sort of thing; do you not?

Mr. REYNOLDS. That is right.

Senator CORDON. And property trends, so far as sales are concerned? Mr. REYNOLDS. That is right.

TOTAL RENTAL COST TO DISTRICT OF COLUMBIA

Senator HAYDEN. How much of the total rent are we paying in the District now?

Mr. REYNOLDS. About $3 million.

Senator HAYDEN. I am asking that question in line with what Senator Cordon said. If, of course, we acquired that property, then the District would lose in taxes. Now, what would that amount to, just roughly? If you can guess at it, all right. If you cannot, we can put it in the record.

Mr. REYNOLDS. I would prefer to put it in the record. I know what the tax rate is, but I don't know the value of these buildings.

Senator CORDON. That would be an interesting factor in our future consideration of building programs.

(The information referred to follows:)

The total assessed value of space leased in the District of Columbia, including whole buildings or parts of buildings is $20,505,820. Based on the local tax rate of $2.15 per hundred dollars, the total amount of taxes accruing to the District of Columbia from these properties is estimated at $440,875.

Senator HAYDEN. Are there any further questions from any other member of the committee?

Mr. LARSON. We have two more items in the bill.