I do not think that is possible. On the waterfront-to come back to that-I do not think that in the absence of a clearer directive than we have, that we could have set these prices at, let us say, $1 a foot. Five years from now when you have thriving good businesses down there, another committee of Congress would call us up and ask us what we were doing, enriching the priority holders at the expense of the public or just what had been our policy. I think what we need here, if you want these prices set on this theory, is another act of Congress. Mr. GARBER. Then the language in here on giving them a priority to relocate in substantially similar circumstances where they can conduct the kind of business that they had been conducting and with the same kind of clientele, if you quadruple the costs, they cannot serve their meals at the same price, they cannot serve the same customers; the people that have been going on the waterfront will have to go someplace else to find their lunches and their middle-income evening meals.

Mr. DOYLE. You know who will be going there? They are within a 5-minute minibus ride or even a 15-minute walk of Independence Avenue, where there are going to be about 60,000 Government workers. I think they will be serving them at lunch, some of them at dinner, and I do not think that any restaurant is going to continue to charge the price it charged before or fail to exploit that land any more than some other member of the public who came in, and I think the public deserves consideration on this.

Mr. GARBER. That is just the point here. The public is being served and has been served on the waterfront. Now, then, if the prices which must be met under this present plan make it impossible for the business people to serve that public, the public is going to have to go someplace else. It is all well and good to presume that, because of some other development there will be some additional people available as customers, but this is not what the committee report recites nor what the act recites as to some future contingencies in pricing this land.

Mr. DOYLE. I still say that we would not be able to price it on the basis of the several references in the law to this matter or any theory that a particular user cannot pay anything for it or can pay 50 cents for it or any other amount. I think we have got to have on the basis of current law a price which runs to the use.

Mr. GARBER. Does it appear reasonable that if you had discussions and meetings with experts of the National Restaurant Association or people who are competent especially in that field, and you find from the national experience that there is a certain level at which such businesses may reasonably thrive for the clientele they serve, that your land disposition prices be prepared in such a way as to meet that? Wouldn't that be a fair market price for the use?

Mr. DOYLE. I suppose we could have gotten someone with the association of which you speak to serve as our appraiser on the thing. As a matter of fact, our appraisers did have to give us comparable figures and I think that if you asked our appraisers to come and talk with you, they would defend and defend quite ably the prices they recommended to us. I told you that the prices we have set are substantially below the higher of those two appraisals.

Mr. GARBER. I do not think we can debate the merit of the appraisals. After I looked at them, it has been very, very limited study, I am of the opinion that there are some things that have not been adequately considered here in reaching those figures.

Mr. DOYLE. I think, Mr. Garber, that if the committee asked you to draft a law in which you would state these prices, that before you were through drafting it, you would land up about the same place I have landed up.

Mr. GARBER. I claim nothing ingenious. It might be true. That still does not answer the problem, for which there must be an answer. Mr. DOYLE. Well, the answer is either to get an act of Congress, which will authorize us to subsidize these businesses, or to set a price that you want to charge for it. At the moment, the law under which we operate and get our funds requires us to charge fair market values for the uses specified in the redevelopment plan. Let me say this: I think any economist would say, in response to Mr. Jackson's very unrealistic suggestion this morning, that they enter into a lease agreement with us, at the prices we now propose, with the proviso that we reduce them if something happens-I do not know what. I think the fact that they are willing to enter into the lease would be taken by most economists as an indication that they think that price in and of itself is fair, but they would be glad to pay less if they could get it for less.

Mr. GARBER. There is another interpretation you can place on that, and that is, in order to give these people any protection, the Congress felt it necessary to enact this special priority provision. Each of these priority holders, on receiving this notice at the beginning of the 180-day period, was compelled to make some kind of an expression. If one made no expression, then technically he was relinquishing any priority right.

Mr. DOYLE. No. We have assured them that so long as land is available they will have their priority, whether they let us know within 180 days or not.

Mr. GARBER. You may be gone tomorrow or the next week.

Mr. DOYLE. The letter is on file.

Mr. GARBER. I understand there is a letter, et cetera, but if there were any legal question-I do not think this was in any way-that this would in any way prevent the possibility of the dissipation of the priority right.

Mr. DOYLE. I am sure that no one has any intention of trying to keep the priority holder from exercising their priority, and I am as sympathetic as anyone else to the plight of people who say they cannot afford it, and, as I said, and I said it in all seriousness, I have actually thought about writing a letter, pointing out this problem to the House District Committee and asking them to sponsor legislation to get some public agency to build a building or in some way to make it possible for these people to get in, because I think that you would have a limit below which you would not go in enabling them to reestablish their businesses on the waterfront. That limit would have to be not to charge them for the land at all. There is no money to give them, to take the land. You might argue that you could give it to them if

you

have to, to leave them where they were before, but you could not go further than that, unless you appropriated some money for it.

Mr. GABRER. The other factor here, when you talk about the Government building these facilities, these people are ready, willing, and able, some of them, to spend as much as $700,000, $800,000, to put up a building, which at the end of the lease term, reverts to the agency. This is what they are willing to do.

Mr. DOYLE. But at what price? We have had no suggestion as to what the price would be and no rationalization for the price, except Mr. Jackson's, which I can find no legal basis for.

Mr. GARBER. Mr. Jackson clearly indicated that the prices which have been proposed here are out of line with the entire experience of his client.

Mr. DOYLE. I think that if we took into account the depreciation of the building in which Hogate's now does business, the fact that we are charging a rent which is low, because it is on a 30-day lease, that we would find the price we originally proposed is not far out of line with what Mr. Rulon is now paying.

Mr. GARBER. You mean the original proposal?

Mr. DOYLE. Yes.

I think we could give you an economic analysis which would show the price we propose is not too far out of line with what Mr. Rulon is now paying, but you have to take into account that when he gets his new building, he obviously has a greater investment than he has in this one-taking all those things into account that the price he is now paying us bears a fair relationship to the prices that have been set. Mr. GARBER. I do not

Mr. DOYLE. That would not be true, I think, for some smaller operator. I am not suggesting that it is, but there are some cheaper sites. Mr. GARBER. You do insist, then, in your view, that there is really no difference between the use or the pricing for the operator of the very exclusive restaurant and the operator of a carryout restaurant shop; they all should pay the same price?

Mr. DOYLE. I see no way under current law to do it on the basis of the user, which is what you are asking. If the law permited it, I then see no way, except by the most arbitrary findings, to establish the differences, and if we were engaged in that kind of arbitrary conduct, I am sure that not only this committee but many other people would rightfully be very critical of us.

Mr. GARBER. And

Mr. DOYLE. Because it would have to be arbitrary.

I see no other way to do it. You would have to look at the books and say, "Your volume was not very large. You were serving these customers. I do not think you can pay anything for the land.” We say to someone else, "You have a fine thriving business and you can pay us $25." Someone would have to make these arbitrary decisions and have never heard of public administration of that kind. I would rather not be associated with it.

Mr. DownY. Couldn't you use the word "negotiaton" instead of "arbitrary"? In other words, you used "negotiation." When we were in the other hearings you said "negotiation."

Mr. DOYLE. I do not think it was negotiation. As a matter of fact, when we come to that, I want to describe to you what was done, because in those cases the prices had to be determined by an appraisal

method, by a finding by the Board, and finally, since Federal aid was involved, by obtaining the concurrence of the Housing and Home Finance Agency. I think that the problem there is we say a piece of residential land is worth $3.40 a foot and you are going to have densities on it, and certain other limitations, which affect the value of the land. You give it to your appraiser. He comes up with a price and then you sell it to someone. You select him by an architectural competition or by one means or another. The public thinks that was negotiation because there wasn't public bidding on it. As I say, I would prefer it would always be offered to the public so in the marketplace you can find out what you can get for a piece of land. Anything is only worth what you can get for it. That is the traditional way of establishing value, but in those cases, where contracts were entered into without offering it to the public, the same appraisal procedure was followed. It was not just arbitrary nor it wasn't because the developer said it was not worth that much and "We want it for less." I think the opinions of the Federal Housing Administration as to what such land is worth obviously entered into our appraisers' judgment on it, because in finding their comparable sales, they were dealing with land on which FHA had insured a mortgage and FHA will only allow certain values.

Mr. DOWDY. I think some of this happened before you came, and some of it happened afterward, but we have had testimony about prices being negotiated downward even after you agreed with somebody that they could have it at a given price, then later reduce the price and even maybe reduce it later. That is what I was thinking about—about negotiated prices.

Mr. DOYLE. I think in my judgment a price which is negotiated, and I will have somewhat the same feeling about even the word "negotiation" in terms of acquiring property, suggests that your judgment as to the value of something has been influenced by someone who has an interest in either getting it, in the case of acquisition, higher, or, in the case of buying, lower, and that seems to me to undercut the whole notion of establishing a fair market value. Your trust runs in two directions in both cases; one is to the seller, if you are buying, and one to the public. We are always walking a tightrope.

Mr. HUDDLESTON. Why were the rents to be charged the holder reduced by 10 percent?

Mr. DOYLE. They were not reduced 10 percent. It was after we had our meeting on October 16, and we had had the session with the appraisers. The Board concluded that fair market value was not necessarily the high estimate we had been given, nor necessarily the low estimate, but somewhere within that range.

Incidentally, we have not yet convinced the Urban Renewal Administration that we did the right thing, and have not gotten their concurrence on that, but at any rate the Board decided they could still be within the range of fair market value, and reduced the prices either by 10 percent or to the highest-or to the low appraisal, so not all the prices were reduced 10 percent. Some were just reduced to the low appraisal.

Mr. HUDDLESTON. That still places the rent in between the appraisals of the two appraisers.

Mr. DOYLE. Yes.

Mr. HUDDLESTON. How did you happen to pick 10 percent? Was that an arbitrary figure you picked or did you have some criteria for reducing them 10 percent?

Mr. DOYLE. No. We ranked the prices per site by the two appraisals and if you took, as I recall it, if you compared the high and the low on the most expensive sites and split the difference, you would have had to reduce the high by 13 percent, but others you would only have to reduce by 7 or 8 percent, so we set 10 percent rate straight down the line. That would work.

Mr. HUDDLESTON. It is an average of averages.

Mr. DOYLE. Yes. If we had reduced the most expensive sites by 13 percent, because that would have been the split between the high and the low, and the others only 8 percent, obviously the persons who got reduced to 8 percent would have said "We should have been reduced 13 percent like the others," so we adopted the formula of reducing them 10 percent or to the low appraisal.

Mr. HUDDLESTON. The fact you reduced them on the average of 10 percent, doesn't that indicate to you that even the RLA does not think there is anything sacrosanct about appraisers' estimates, and would it indicate maybe the wisdom of getting Mr. Jackson in and hearing what his appraisers have to say about it?

Mr. DOYLE. We have had a standing offer to Mr. Jackson's client for many months to give to our appraisers his analysis, whether he prepared it or whether he hired someone to prepare it. He has refused to give it to us, or hasn't given it to us. Instead he wants to have a public debate about it. I do not see that anything as technical and complicated and difficult as setting land values can be furthered by a red-hot debate between appraisers at a public meeting.

Mr. GARBER. Has the RLA offered to furnish its appraisals to Mr. Jackson's appraisers so that he can evaluate them and make his observations?

Mr. DOYLE. No. We have not offered to have our appraisers, or our appraisals subjected to that kind of examination. Ultimately I suppose it is pretty much a matter of public record. Another thing you should bear in mind, we are skating on thin ice. This morning you talked about 18 months and nothing having happened. I feel that if we get other appraisers in-let's say we say these appraisers obviously did not fill the bill because they did not satisfy everyone—I think we have to start the 6 months running again. Believe me, we have tried hard and wrestled with this problem. We have done everything we could to get this to the point where we can go to public hearing, and I was afraid-I make no bones about it-that whatever the prices were, the charge would be made we had set them too high and we should have set them lower. I never dealt with a redeveloper who didn't say the price was too high.

Mr. GARBER. This probably has been the history elsewhere in the Southwest. At least the record will show that. It also shows that there have been very substantial changes as a result of negotiation. How you reconcile that with the position here, I do not know.

Mr. DOYLE. Mr. Garber, do you think that was wrong, if that happened? I am not saying it did happen.

Mr. GARBER. We may get into that later in the afternoon.