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It constitutes no problem, in my opinion. Mr. GREEN. They are not prepared to pay the amount of money asked and spend ū. amount of money necessary to put them in condition. Mr. KELLEHER. Of course, this is a collateral issue. Mr. BECKER. I know you are involved in this and your colleagues from Pennsylvania and Philadelphia. There is a figure of $500,000 in here. You say that the city of Philadelphia is not in a position to pay that money over 10 years, at $50,000 a year. Mr. GREEN. The Army is asking $4.5 million. Mr. BECKER. You are not talking about the bill, now? Mr. GREEN. We haven't gotten to that yet. Let's just review the contradictory attitude the Army has taken on this matter. First, the Army entered into a long-term lease with the city of Boston. When Philadelphia followed that precedent, the Army reversed itself and they said, “What is good for Boston is not good for Philadelphia.” Then Philadelphia decided to follow the precedent established by the Army when it handled piers in Newark, which recognized accumulated deterioration of the facility and placed upon the purchaser the responsibility for rehabilitating it and for preserving it in effective use for a marine terminal in the event of an emergency. Again the Army reverses itself and says, “What is good for Newark isn’t good for Philadelphia.” Why is it that Boston and Newark piers are necessary for national defense and the Philadelphia piers are not? First in answer to Mr. Becker's question, the city of Philadelphia is not interested in buying these piers. We are perfectly satisfied to take a lease from the Army for $1 a year and operate the piers and kee them in a condition where in case of a national emergency they wi always be available for the Army. We are only forced into this position because every time we turn around the Army changes its mind about the situation. Mr. PEARL. In the report on H. R. 8153, which proposed the dollar lease to the city of Philadelphia, the Department indicated that if the committee proceeded to consider this leasing proposition, it should also consider the means by which property was made available at other ports, not only at Boston, and refer to the authority to sell the Newark piers in 1936. The piers at Newark were disposed of by sale to the city of Newark under the act of June 20, 1936—which was at Forty-ninth United States Statutes at Large, page 1557–and the purchase price under that was $2 million. It was for that reason we referred to the Newark situation. Newark represented a sale at fair value subject to a recapture in the event of need therefor during a war or emergency declared by Congress and provided that the city of Newark would be paid by the United States during any period of recapture 3 percent of U. purchase price that had been paid by the city of Newark, 3 percent per annum aid by the city of Newark so when we recaptured the facilities during (orld War II, the city of Newark had paid toward the purchase price of $2 million an amount of money that resulted in their receiving $18,000 a year for the use of the piers by the United States during the entire period of World War II.

This action of a year ago amended the 1936 act to permit the Port of New York Authority in the development of the piers to put in additional funds and be assured of a return to it, on the additional capital improvements that it made over and above the purchase price, because the act of 1936 merely provided for the United States to pay an amount of money based on the amount paid for the purchase of the property. So the formula adopted in the act of February 18, 1956, amending the 1936 act permitted the Port of New York Authority, the present operator of the Newark piers, to be paid a return on capital improvements that it puts into the piers. There is no question about it, we have always said and we believe that anyone owning a property that we need in the event of a future emergency should be encouraged to spend money on it and that they should be entitled to be paid while we are using the piers based on the amount of money that they have spent without Federal aid. This is a regular formula in airport disposals as I am sure you know, that whenever money is spent by a municipality without Federal aid, the United States pays rent, even though they recapture the facilities. They pay rent on that property which was added without Federal aid. o Newark situation as I say, was merely referred to as an additional one that should be followed. But we also said at that time that the committee should consider the proposal to the port of Stockton which I referred to a minute ago. In answer to your question, I can say Public Law 902 of the S4th Congress, the act of August 1, 1956, provided for the sale of property to the Stockton port district at fair market value with no restrictions attached to it. eeds have been executed and the property has been sold to the port of Stockton and there is no right of recapture or reversion or reentry by the United States. The deed as executed and the deal as finally worked out under the provisions authorizing the imposition of terms and conditions deemed necessary by the Secretary—in this case it was both Air Force and Army that were involved—involved permission for the port of Stockton district to make these payments over a period of time and that is the only condition that is in the deed. Otherwise they have free and clear title without any restriction. Now, if I can get back to refer for a moment to the Boston Army Base situation because much has been made yesterday and again today as to why Philadelphia is different from Boston, I think you are familiar with Boston in the sense that it has been before this committee many times, that we have a large and active facility at Boston. The Boston Army Supply Base is a big building that is being used right now. Adjacent to it is a pier. Not the entire pier was required for current needs. But even now we are using part of the pier in connection with regular Army activities at Boston. In 1954—well in 1953 is when it started, I guess—we found that to keep the Boston pier from falling into the river we would have to spend $11 million on it. Now the Boston }. had also been under lease but we had been losing money on the Boston pier. We hadn't made money on the Boston pier but we had a current requirement for it, we had a definite mobilization requirement for the Boston pier in support of this big investment that we have in a large supply base and a large building that is being used there.

It constitutes no problem, in my opinion.

Mr. GREEN. They are not prepared to pay the amount of money asked and spend the amount of money necessary to put them in condition.

Mr. KELLEHER. Of course, this is a collateral issue.

Mr. BECKER. I know you are involved in this and your colleagues from Pennsylvania and Philadelphia.

There is a figure of $500,000 in bere. You say that the city of Philadelphia is not in a position to pay that money over 10 years, at $50,000 a year.

Mr. GREEN. The Army is asking $4.5 million.
Mr. BECKER. You are not talking about the bill, now?
Mr. GREEN. We haven't gotten to that yet.

Let's just review the contradictory attitude the Army has taken on this matter. First, the Army entered into a long-term lease with the city of Boston. When Philadelphia followed that precedent, the Army reversed itself and they said, "What is good for Boston is not good for Philadelphia."

Then Philadelphia decided to follow the precedent established by the Army when it handled piers in Newark, which recognized accumulated deterioration of the facility and placed upon the purchaser the responsibility for rehabilitating it and for preserving it in effective use for a marine terminal in the event of an emergency.

Again the Army reverses itself and says, "What is good for Newark isn't good for Philadelphia."

Why is it that Boston and Newark piers are necessary for national defense and the Philadelphia piers are not?

First in answer to Mr. Becker's question, the city of Philadelphia is not interested in buying these piers. We are perfectly satisfied to take a lease from the Army for $1 a year and operate the piers and keep them in a condition where in case of a national emergency they will always be available for the Army. We are only forced into this position because every time we turn around the Army changes its mind about the situation.

Mr. PEARL. In the report on H. R. 8153, which proposed the dollar lease to the city of Philadelphia, the Department indicated that if the committee proceeded to consider this leasing proposition, it should also consider the means by which property was made available at other ports, not only at Boston, and refer to the authority to sell the Newark piers in 1936.

The piers at Newark were disposed of by sale to the city of Newark under the act of June 20, 1936—which was at Forty-ninth United States Statutes at Large, page 1557—and the purchase price under that was $2 million. It was for that reason we referred to the Newark situation.

Newark represented a sale at fair value subject to a recapture in the event of need therefor during a war or emergency declared by Congress and provided that the city of Newark would be paid by the United States during any period of recapture 3 percent of the purchase price that had been paid by the city of Newark, 3 percent per annum paid by the city of Newark so when we recaptured the facilities during World War II, the city of Newark had paid toward the purchase price of $2 million an amount of money that resulted in their receiving $18,000 a year for the use of the piers by the United States during the entire period of World War II.

Former president, National Institute of Real Estate Brokers.
Former president, Philadelphia chapter, American Institute of Real Estate

Apolo

ormer president, Philadelphia chapter, Society of Residential Appraisers.
Past president, Philadelphia Real Estate Board.
Former chairman of the real-estate board's appraisal committee.
Now a member of the executive appraisal committee of the Philadelphia Real

Estate Board.
Director of the National Association of Real Estate Boards.
Past director of the Pennsylvania Real Estate Association.
Director of the Girard Fire & Marine Insurance Co., member of the royalty

roup. g Roognized as an expert witness in Federal and State courts. Mr. PRICE. If he has handled all those jobs in those particular organizations, he hasn't had much time to do any appraising. Mr. BECKER. That might be over a period of 25 or 30 or 40 years. Mr. Do YLE. Did you ever read a Congressional Directory? Mr. BECKER. You fellows have been on here all morning. I have just a couple of questions. Mr. PRICE. I have something in connection with this. Mr. Pearl, could you give me some idea of the provision of the Department of the Army, relative to their feeling in the disposal of this property, what their feeling would be that if these piers were disposed of under the nonrestrictive-sales provision, if they were used exclusively for warehousing purposes rather than for marine operations and the piers were allowed to deteriorate, could you give me some idea what the feeling of the Army would be in that connection? Mr. PEARL. Yes; we would say our judgment was wrong. Mr. LANKFoRD. Mr. Chairman, Mr. Pearl started to tell us how they arrived at this $4.5 million figure. Mr. BECKER. I wanted to ask one question here earlier, and it's simply this, and it has to do with Mr. Doyle's question and the questions of Messrs. Green and Price. It has to do with the question of the change of position of 6 months ago to today. If my memory serves me correctly, you testified this has been before the Senate Armed Services Committee for almost 4 years, or 3 years and over, and they made no determination for you up to this time; is that correct? Mr. PEARL. That is correct. Mr. BECKER. It was during that time you have been holding this thing up, and you can’t proceed with it, can you? Mr. PEARL. That is correct. Mr. BECKER. So, during this time, you have been in a position where the policy would have to be reviewed from time to time and new judgments made; is that correct? Mr. PEARL. That is correct. Mr. BECKER. So, if the period changed from 6 months ago to today, as you testified, that would be in line with the fact that you have not been able to do anything with the property whether you wanted to or not; is that correct? Mr. PEARL. That is correct. Mr. BECKER. So, all this question on what we are doing as to changing position or making a new determination, if you were not making a new determination from time to time, I think you would be subject to severe criticism. Mr. PEARL. I agree with you, sir.

Mr. GREEN. At the same time, you had a mobilization requirement for the piers in Philadelphia.

Mr. PEARL. But we don't any more.
Mr. GREEN. It is just a recent change of mind?

Mr. PEARL. At Boston, we have a large building there that we own and have an investment in, and we have a current use.

Mr. GREEN. You could just as well sit here and say you have no mobilization requirements for Boston, and you can sit here and say you have none for Philadelphia.

Mr. PEARL. Mr. Green, we are using part of the Boston pier even now. If it were determined by the Secretary of the Army that it was possible to divorce the pier from the large storehouse, or warehouse building that is at Boston, I guess it could be done.

Mr. GREEN. You still have not told me what factors caused the Army to change their mind about the Philadelphia piers, in 6 months.

The only thing that I can see that caused you to change your mind was the Director of the Bureau of the Budget. I think that is a very weak argument; that you are going to get more money from the piers.

It doesn't say you are going to get more money from the city of Philadelphia. The city of Philadelphia is in the position to pay the $4%, million that you say you have an appraisal for, and we never did get around to that.

On what basis do you determine that the piers are worth $4% million?

Mr. PEARL. Do you mean the appraisal approach, Mr. Green?
Mr. GREEN. That is what I am trying to find out.
Mr. LANKFORD. How did you come up with the $4.5 million figure?

Mr. PEARL. We hired, by contract, an appraiser in the city of Philadelphia, a real-estate appraiser, who is a member of the American Institute of Real Estate Appraisers, and he, in the same way he would approach the valuation of any other property, analyzed this property and submitted a report to the district engineer, and the way he arrived at that was through the conventional

Mr. GREEN. Who made the appraisal?

Mr. PEARL. The Samuel T. Hall Co., 1218 Chestnut Street, Philadelphia, Pa.

Mr. PRICE. Would a copy of that report be available for our records? Mr. PEARL. I would have to find out from the Department.

Mr. PRICE. Let me ask this question: Were these appraisers experienced in marine facilities, or were they, more or less, real-estate appraisers who might be more qualified to appraise the value of warehouses and factory sites?

Mr. PEARL. And Mr. Hall had associated with him another appraiser, Jerome H. Mallon. Now, I don't know either one of these men, personally, but the district engineer in Philadelphia has a responsibility of selecting qualified people who are familiar

Mr. PRICE. Could you find out for us?

Mr. PEARL. I could read to you the qualifications of Mr. Hall, as attached to this report. [Reading:)

Over 40 years of real-estate brokerage and appraisal business.
Member of the American Institute of Real Estate Appraisers.
Member, Institute of Real Estate Management.
Member of the Society of Residential Appraisers.
Member of the Society of Industrial Realtors.
Former president, Society of Industrial Realtors, Philadelphia chapter 9.

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