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Mr. LUND. That is right.

Mr. BROOKS. The notice of intent to negotiate specified renewal options for five 1-year periods? Mr. Lund. That is right.

Mr. BROOKS. Yet, the final lease agreement provides for two 3-year renewal options?

Mr. LUND. That is right.
Mr. BROOKS. Would you comment on this change?

Mr. LUND. Yes. We got a better price for these second 3-year and the third 3-year term. They went down. The rental dropped.

Mr. BROOKS. Did you want a 3-year term? Is that what you were advertising for? Was it desirable for the Government to have 3-year terms?

Mr. LUND. That is rather debatable. A lot of people, like the Post Office Department, think it is desirable to have 20- and 30-year deals.

Mr. BROOKS. We have had some lease-purchase problems, too. We are familiar with that routine.

Mr. LUND. We don't like to get them too long because, first of all, we don't have the authority of the Post Office Department.

Mr. BROOKS. That is good.

Mr. LUND. Thank you. But we do have our normal length is 5 years plus renewals. We do have special authority to go to 10 years but we have never signed a 10-year lease. The advantage of the longer lease is purely the price differential, that is all.

Mr. BROOKS. What is the GSA policy on renewal options in areas where new Federal office buildings are under construction or contemplation?

Mr. LUND. That becomes a neat little problem. You deal with some pretty fine folks, GSA, but I am sure that you will agree with me that we can't always tell exactly what they will do. I am thinking of the Appropriations Committees of Congress. We don't exactly know what they are going to do. So we have to make a guess, and we try to guess the best way we can.

We face here the possibility that we may have a new Federal building here in town. At that time it could have been very well that it looked like to us that it would be up in about 6 years. It seems now that the Congress has been kind to GSA and maybe we are going to be able

to buy a site and get along a little faster. Mr. BROOKS. Do you have a site picked? Mr. Lund. No, sir. Mr. Floete is coming out here to pick that site. Mr. BROOKS. Do you have a recommendation! Mr. LUND. Oh, yes. Mr. BROOKS. How many?

Mr. LUND. One. Backed up by the City Council of Kansas City and all the civic organizations on a beautiful scroll. I have never worked in a case anywhere where the city has been so unanimous in the area that they want a site to be located.

Mr. BROOKS. Are they going to have to condemn it or buy it?
Mr. LUND. We hope that we are going to be able to buy it.

Mr. BROOKS. The offer which you accepted August 14 provided for Government possession on November 14, 1959?

Mr. LUND. That is right.

Mr. BROOKS. Why was the date changed to January 1, 1960, in the lease?

Mr. LUND. Because there was a steel strike, and they had to have a lot of steel. That is one thing. But the main reason was the agencies which we worked with, in putting them in here—it was the Army, Navy, and the Air Force -no slight to the Marines—they were the ones that were in there.

If you really want to have some fun, sir, try to get three of these agencies in the same building and each of the CO's wants the same office on the first floor, in the corner, or they all want identical offices in the building, and you don't have enough corners to go around. And it was a neat little job to get those fellows lined up. Mr. Knight did one of the best negotiating jobs I have ever seen to get those fellows in that space so that everyone had the same amount of prestige. To do that there were some changes.

Mr. BROOKS. Was there any penalty for their failure to give possession on the original projected November 15?

Mr. LUND. No. They tell me there is not.

Mr. BROOKS. After bids were received and rejected, the subsequent offers had to be submitted by August 14; is that right?

Mr. LUND. That is right. Mr. BROOKS. Can you tell us how the date was decided upon and when the decision was made?

Mr. LUND. They tell me that we picked August 14 because that was one of the days one of the bids expired with the people we were negotiating with.

Mr. BROOKS. Was this date made known to all the parties you were negotiating with ?

Mr. LUND. The date of August 14 was; yes.

Mr. BROOKS. The August 14 date was not mentioned in any prior notice, was it!

Mr. LUND. I don't know. But the date was known to everybody.

Mr. BROOKS. Was there any official notice given of this date or was it communicated to the officials orally?

Mr. LUND. Mr. Knight tells me he communicated to all of them orally.

Mr. BROOKS. He called them on the telephone and told them?
Mr. LUND. Yes.
Mr. BROOKS. Did you have any protest over that cutoff date?
Mr. LUND. Yes; we had a protest.
Mr. BROOKS. On what grounds?

Mr. Lund. On the ground that the man whose price turned out to be second low wasn't ready.

Mr. BROOKS. Why didn't you wait! ?
Mr. LUND. I don't know why he waited.
Mr. BROOKS. You don't know why he waited ?
Mr. LUND. I don't know why he waited.
Mr. BROOKS. How much time did he need ?

Mr. LUND. He is a very capable man—the man who was working on it was very capable. I don't know why he didn't get it done in time. It turned out he was high but at the time we were negotiating we knew he was going to be high because he gave us figures telling us he was going to be high.

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Mr. BROOKS. When the Third Recon on April 30 offered to provide space by August 16, was there any possibility that they could comply? The original offer?

Mr. LUND. It all depends on what luck we had with getting the CO's lined up in the building space.

Mr. BROOKS. Understand now, I am saying when Third Recon made their offer on April 30 to provide the space by August 16 in accordance with that original offer, was there any possibility they could comply in their reconditioning of that warehouse that they were proposing to use?

Mr. Lund. Do you mean physically?
Mr. BROOKS. Yes. Actually comply. It means to do, get with it.
Mr. LUND. The question never occurred to me. I don't know.
Mr. BROOKS. Doubtful?
Mr.LUND. I don't know.

Mr. BROOKS. When they made the offer on August 6 to supply the space by November 15, did you sincerely think they could comply?

Mr. LUND. I am pretty sure we wouldn't have put it in there if we didn't think so.

Mr. BROOKS. That they could make those changes in 6 weeks?
Mr. Lund. Do you mean on August 16 ?
Mr. BROOKS. Two months. August 6 to November 15.

Mr. LUND. If we had stood pat on our requirements, to furnish them—we had to give them a partition layout, we had to tell them where the sinks were going to go and all that sort of stuff.

Mr. BROOKS. Didn't they wait until after your letter of acceptance of August 14 to begin remodeling?

Mr. LUND. I assume so.
Mr. BROOKS. When did they start?
Mr. LUND. The remodeling?
Mr. BROOKS. Yes.
Mr. LUND. I don't know.

Mr. BROOKS. When you signed the lease on November 23, did you really think you could get possession by January 1?

Mr. LUND. Yes, sir. Mr. BROOKS. You thought in 5 weeks they could do it? Mr. LUND. Yes, sir. Mr. BROOKS. Complete? Mr. LUND. As a matter of fact, they did. We moved in. Mr. BROOKS. When did the Henges Co, finish doing the partitions ? Mr. Lund. I don't know. It wasn't our contract. It was the Third Recon contract with them. I don't know when they finished them.

Mr. BROOKS. We have a letter here that says, "Henges hopes to substantially complete their work by December 28," which would have been prior to the time.

Mr. Lund. Thank you. I remember that letter. That came from Lewis Geiss. He was the architect.

Mr. BROOKS. When did the armed services finally move in?

Mr. LUND. They were in on January 1. I am just looking for a calendar. I didn't want my motives misconstrued here. Mr. BROOKS. Go ahead. Mr. Lund. They moved over that weekend. Mr. BROOKS. The weekend of what?

owner.

Mr. LUND. Of January 1.

Mr. BROOKS. To refresh your memory, in the Kansas City Star of January 17, there is a story on the "Amazing New Face at 2420 Broadway," commenting on the renovation job that these folks had done. It says:

The military units headed by “a colonel, commander, and major," presently are in space at 25th and Walnut Streets, in the old Hall Building. They plan moves to the new quarters shortly.

So I am led to believe by that that they must not have moved on the 1st if they were planning to move "shortly,” on January 17. If this story is correct, maybe they didn't move for another couple of weeks.

Mr. LUND. Mr. Knight tells me that on the evening of December 31 we turned the keys of the previous building we occupied over to the

So we must have been out by December 31. Mr. BROOKS. It is possible that they had the keys but just didn't use them.

Mr. Lund. The owner may not. But the armed services, I am pretty sure, wouldn't have walked off and not have any keys to get in the building with a bunch of inductees around.

Mr. BROOKS. Maybe the Kansas City Star was wrong

Mr. LUND. I am afraid it was that time. Maybe it was political license or reportorial mistakes.

Mr. WALLHAUSER. Could it have been that it was substantially completed and they were substantially in ?

Mr. LUND. They were in the space, and it had to be substantially completed. There may have been some defects—I mean, omissions. There always are. I know, for example, the drapes weren't in the windows. They weren't in on the day we had the dedication of the building, which was several months later.

Mr. BROOKS. We want to thank you for coming down.

We would like to invite Mr. Thomas Jay, if he is here, the regional commissioner, to testify.

Mr. LUND. Thank you, sir.

Mr. BROOKS. Mr. Jay, would you raise your right hand and be sworn ?

Do you swear that the testimony you are about to give this subcommittee shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. JAY. I do.

TESTIMONY OF THOMAS G. JAY, REGIONAL COMMISSIONER,

GENERAL SERVICES ADMINISTRATION, REGION 6, KANSAS CITY, MO.

Mr. BROOKS. Give me your name and your full position.

Mr. Jay. My name is Thomas Jay. I am the regional commissioner for the General Services Administration, region 6.

Mr. BROOKS. We are delighted to have you with us today. We would have apparently satisfied you better had we started with you yesterday morning. We would have scheduled it that way but I had trusted that you would understand the reason for giving you an opportunity to testify after we had heard the charges from the people that worked for you and otherwise. I hope that you do understand it. We are interested in developing all of the facts. We would appreciate your telling us how long you have been the regional commissioner and a little bit of your background, something about the responsibilities of your position here as the GSA regional commissioner.

Mr. Jay. I entered GSA duty on June 3, 1957, here in Kansas City. Previous to that time, for approximately 4 years, I had served as the regional real estate manager for the Post Office Department, the Wichita region.

Previous to that time, and back to when I came out of the service, I was engaged in commercial real estate in Kansas City.

Mr. BROOKS. The GSA region, over which you are the commissioner, covers what? Seven States?

Mr. Jay. Seven States.
Mr. BROOKS. With a budget of roughly what? $50 million ?
Mr. Jay. Approximately.
Mr. BROOKS. Approximately 1,600 or 1,700 people ?
Mr. Jay. Yes, sir.

Mr. BROOKS. I just thought that first we might try to clear up a few minor items before getting down to these contracts.

I wonder if you would tell us how you came to be involved in the promotion of the Mecca Motor Hotel Corp., and if you are, give us the names of your partners.

Mr. Jay. Yes, sir. May I use my words, sir?
Mr. BROOKS. Of course.

Mr. Jay. The Mecca Motor Hotel, Inc., is a group comprised of four persons at the present time: Ralph F. Myers, Lyle Dutoit, Paul Dutoit, and myself.

For sometime this group has—incidentally they are all personal social friends of mine. I met them personally socially. None of them are doing business with my office, or have done any business with my office.

For some years we have talked of ways to make money, frankly; possible business investments we could make. We try-we planned at one time a bowling alley; which didn't work out. And in or about July 1 of last year the corporation secured a long-term lease on a piece of vacant property in Kansas City, not as a real estate speculation but as a business venture upon which we proposed—the corporation proposes—to have erected a downtown motel.

That is purely and simply—to this date the corporation has not consummated a deal for the construction and the operation of this motel.

Mr. BROOKS. Mr. Jay, the date of the corporation to do business was June 23, 1959, last year?

Mr. Jay. Sir, I don't know.
Mr. BROOKS. Approximately that?
Mr. Jay. Approximately then.
Mr. BROOKS. My understanding is that the president is Mr. Dutoit.
Mr. Jay. Yes, sir.

Mr. BROOKS. The vice president is Mr. Paul Dutoit; the treasurer is Mr. Myers; the secretary is yourself, is that correct?

Mr. Jay. I don't know.
Mr. BROOKS. You don't know who the officers are?

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