their businesses. The joint venture with its greater financial strength and knowhow can do for these displacees something they would have great difficulty doing individually, i.e., reestablish a business on the waterfront.

We, therefore, urge that the first sentence of section 4(b) be amended as follows: after the words in the first sentence a "redevelopment company," strike out the words "solely owned by the owner or owners of one or more of such business concerns," and insert in lieu thereof the words "owned by the owner or owners of one or more such business concerns or in which the owner or owners of one or more such business concerns have an ownership interest," so much of such real property, etc.

This amendment would permit such a redevelopment company to exercise the priority only for purposes of relocation of the displaced business of the owner or owners who have an ownership interest in the redevelopment company.

We would be most pleased, if you desire, to discuss these proposed amendments with you or with members of your staff.

Very truly yours,

JAMES R. SHARP, President.

Mr. Dowdy. I believe that concludes our hearing.

(Whereupon, at 12:15 p.m., the subcommittee adjourned subject

to the call of the Chair.)

47-520 0-65—pt. 1- -6

APPENDIX

(Excerpts from "Report on the Investigation and Study of Urban Renewal Redevelopment Programs and Parking and One-way Street Planning in the District of Columbia," House Committee on the District of Columbia, H. Rept. 1947, 88th Cong., 2d sess., dated Jan. 2, 1965.)

REPORT ON URBAN RENEWAL REDEVELOPMENT PROGRAMS IN THE DISTRICT OF COLUMBIA

12. Relocation of displaced businesses

The Redevelopment Act of 1945, as originally enacted, was directed toward the removal of existing substandard housing conditions in residential areas. Businesses located in such areas were apparently considered incidental, and the Congress appears to have assumed that some reasonable provisions would be made in connection with displaced businesses. Urban renewal operations, in the meantime, have displaced hundreds of businesses, Thousands of such displacements are in prospect if the application of the act is broadened to cover nonresidential areas.

Larger businesses and chainstores seem to have had reasonable success in relocation in urban renewal areas or entering urban renewal areas from which other businesses had been displaced. The information submitted to the committee appeared to indicate that approximately 40 percent of the small businesses displaced from urban renewal areas disappeared. They either discontinued business or moved outside the District of Columbia.

Redevelopment Land Agency officials, in testimony before your committee, were inclined to regard many of the latter group as being marginal businesses. This characterization appears to have been a convenient explanation for the disappearance of some of such businesses rather than a justifiable description of many of them. Most small businesses are marginal at some point or other. Small business may provide a very comfortable living for a proprietor, partnership, or small corporate entity and yet be unable to withstand the shock of removal and the delays in relocation. In some instances, relocated businesses are faced with a second bulldozing operation which will further deplete their resources. Some of the land disposition procedures followed by the District of Columbia Redevelopment Land Agency essentially precluded the possibility of relocation of businesses in a project area except on such terms as were determined by the redeveloper. The Southwest area Ĉ project contract with Webb & Knapp is an example. In the negotiated agreement, the Agency agreed that the redeveloper would have a noncompetitive privilege to take all the 450-acre area except those parts to be used for public purposes. Thus, any displaced business which desired to relocate in the project area was forced to accept such terms as might be available from the redeveloper. Businesses which had owned their lands and buildings and whose operators who were ready, willing, and able to repurchase land and construct buildings in harmony with the redevelopment plan were almost without exception denied the chance to acquire any sites. Such businesses as the redeveloper permitted to relocate in the area were faced with rental charges from two to five times the monthly sums allocated to rental prior to their displacement.

In 1958, the Congress enacted an amendment to the Redevelopment Act requiring that the Agency establish a policy which would provide to displaced businesses a priority of opportunity to relocate in the same project area (act of Aug. 28, 1958, 72 Stat. 1103). The Agency's interpretation of this amendment and the regulations written pursuant to the amendment, were such as to provide no greater right to displaced businesses than was available to them without that provision in law. The regulations placed the discretion in the redeveloper whether to relocate a displaced business. Thus, the redeveloper, who secured an exclusive,

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noncompetitive agreement made the displaced businesses compete in the market with other similar businesses which had suffered no losses by being displaced. Other efforts of Congress to establish priority for the relocation of businesses occurred in connection with the Washington Channel waterfront. Located on the waterfront area were approximately 20 small businesses located on land which RLA officials informed the Congress was needed for the Southwest Freeway within the Southwest area C project boundaries. In 1958, the request for legislative authority to use such land was accompanied by a promise from the Redevelopment Land Agency to relocate the businesses displaced from that area. Some of those businesses had been in operation for more than 40 years. Congress approved such legislation (act of Aug. 28, 1958, 72 Stat. 983). To date, none of these businesses have been relocated in the waterfront area despite the commitments made to your committee during the testimony on this legislation.

Thereafter, in 1960, Redevelopment Land Agency officials again requested legislation in connection with the waterfront area. It was necessary to transfer title from the Federal Government to the Redevelopment Land Agency to enable it to carry out the project plan (act of Sept. 8, 1960, 74 Stat. 781). Along with provisions authorizing the transfer of legal title, the Congress established special priorities for the relocation of waterfront businesses on the waterfront. Displaced businesses were to be given a 180-day period during which they might negotiate for a relocation site at the fair market value of the land to establish facilities "at least substantially equal to the facilities from which such business concern was so displaced." More than 4 years have passed since that enactment by Congress and, to date, no contract or agreement has been executed by the Agency with any displacee, despite the fact that the 180-day period provided in the law has been announced and has expired. During the 180-day period, some of the displacees indicated their desire to proceed with negotiation of an agreement, but not one was able to secure even a commitment as to a potential site.

The waterfront parcel experience indicates to your committee either a lack of administrative capability or purpose or the necessity for further legislative action on the problem of relocation of small businesses displaced in urban renewal areas. It appears to your committee that neither the local Agency nor the Office of the Commissioner of Urban Renewal has given sufficient time and attention to the problem of relocation of business to develop any semblance of a reasonable, workable policy to be applied in urban renewal project areas. With more than 2,000 additional District of Columbia businesses facing displacement, if amendments being urged upon your committee are enacted, the small business structure of Washington presents a major problem both administratively and legislatively in connection with urban renewal.

The Washington Channel waterfront is a crescent-shaped area of about 18 acres bordering the channel westerly of Maine Avenue. The waterfront area was reduced by closure of Maine Avenue south of M Street which provided a waterfront public park between the Federal City Council Harbour Square project and the channel. The plans for the waterfront, the adjacent Southwest project area C-1, and the architectural services for the Harbour Square structure was performed by the same person.

The waterfront area was titled in the United States but was being used by the District of Columbia. The land in the area was part of the total Southwest area C project exclusively committed to Webb & Knapp. An act of Congress was required before any change in title could be effected.

Structures built by the District of Columbia, which were leased to waterfront restaurants and fish dealers, were located on land needed for bridge and highway developments. By 1958, there was need for authority from Congress for demolition of such structures. Congress approved such action with the firm understanding that the Redevelopment Land Agency would act promptly in providing temporary or permanent relocation for displaced waterfront businesses. Because of this obligation imposed by Congress, the Agency negotiated an exchange on land with Webb & Knapp Co. to free the waterfront area from commitment to the redeveloper. ("Urban Renewal Hearings," 1963, vol. 1, pp. 192, 193.)

About the same date, the Executive Director of the Agency launched a proposal for a private corporate structure to be carefully brought forward as redeveloper for the area. The businesses to be displaced were not to be participants in the corporation but would be subject to such plans and requirements as the corpora

tion established for relocation of displacees. This purpose was pursued consistently until the departure of the former Executive Director at which time all arrangements had been completed for such corporation which came into being in December 1961 and was financed under a contract to serve as a consultant to the Agency. (“Urban Renewal Hearings,” 1963, vol. 1, pp. 153–189.)

In the interim, Congress enacted amendments, one of which provided priorities for the relocation of displaced businesses in urban renewal project areas. Regulations issued pursuant to this amendment evaded the intent by leaving the power with the redeveloper to decide whether to provide for displaced businesses. "Urban Renewal Hearings," 1963, vol. 1, p. 32.)

When the Agency found it necessary to secure legislative approval authorizing transfer of title to the waterfront area from the United States to the Agency, Congress linked with this authority special provisions to assure displaced businesses a prior right to a lease, based on the fair market value of the land use. None of the displacees were accommodated but the Agency continued its activities leading to the formation of the above-mentioned corporation. This corporation, the Washington Channel Waterfront, Inc., prepared a plan which has been followed by the Agency.

After notice by the Agency, displacees were to have 180 days within which to negotiate for a site at the fair market value lease rental. During that period, which expired several months ago, no displacee was able to secure designation of any site on which to relocate even if economically feasible.

The

Compared to previous contract requirements, those proposed for displaced waterfront businesses were the most rigid ever imposed by the Agency. lease provides use for a limited period of years. The displacee is required to build to the requirements of the plan. Public parking is to be provided underneath each structure at the expense of the lessee. Building height is limited to two levels. The value of the land, on which the lease rental was to be based, exceeded the highest land prices previously used by the Agency for any residential use or for the commercial uses in the Town Center East or the multistory office and commercial complex of Webb & Knapp for the 10th Street Mall. A price of $16 per square foot was negotiated for the latter while the top land value for the waterfront was set at $17.

Examination of appraisals by your committee seems to indicate that appraisers may have been given special instructions for the preparation of the land-use values. Appraisals by other highly competent appraisers indicate that the prices being used by the Agency are beyond any reasonable probability of economic survival by the displaced businesses.

Confronted with these facts, the best suggestion that the Agency offered was that the Congress provide subsidies for displaced businesses. Any such subsidy would in effect be merely an indirect subsidy to the Agency, which will lease the area in perpetuity since title cannot be conveyed, and not a subsidy to displaced businesses which are ready, willing, and able to invest as much as $800,000 in a building plus the cost of equipment at a lease rental in harmony with the economics of the restaurant industry.

Your committee anticipates that the next Congress may be required to devote more direct attention to the policy body of the Agency as to its actions relating to relocation of businesses.

(Excerpts entitled "Washington Channel Waterfront," pp. 24272471 from the hearings before Subcommittee No. 4 of the House Committee on the District of Columbia, Urban Renewal Program for the District of Columbia (pt. 6), 88th Cong., 2d sess., dated Nov. 17 and 18, 1964, follow :)