Omnibus Rivers and Harbors and Flood Control Bills, 1965

STATEMENT OF LT. COL. E. R. PRESTON-Resumed

Colonel PRESTON. Good morning, Mr. Chairman and members of the committee.

Calispel Creek lies in Pend Oreille County, Wash., in the northeastern part of that State, about 50 miles north of Spokane. The Calispel Valley is a very fertile natural meadow about 7 miles long, varying in width from 2 to 4 miles, lying along the shores of Calispel Lake and south and west of the towns of Cusick and Usk. In its natural state, the Calispel Valley was subject to annual overflow of the Pend Oreille River, the spring flood runoff usually occurring from April through June.

The Pend Oreille County Public Utility District No. 1 is planning a rehabilitation of an 8-mile diversion canal constructed in the 1930's to carry the Calispel Creek flows to the Pend Oreille River, for purposes of flood control, irrigation, and power. Certain minor modifications of an existing pumping plant would also be accomplished.

H.R. 4775 would authorize a monetary contribution toward the construction cost of this project, to be determined by the Secretary of the Army, and subject to a finding by the Secretary of the Army, which is approved by the President, of the economic justification for allocation of the amount determined for flood control. It appears that the resulting benefits of this locally sponsored project warrant further study.

Preliminary estimates show a total cost of $457,000 for the project, based on a 1964 evaluation, with an amount of $190,000 as the magnitude of Federal assistance which is possible for a project of this type. These estimates are subject to further study, which would be needed if H.R. 4775 is enacted.

In the Secretary of the Army's letter to the chairman of the House committee on Public Works, dated August 6, 1965, the Department of the Army indicated no objection to the enactment of H.R. 4775 and the Bureau of the Budget has no objection to the presentation of this report for the consideration of the committee.

Mr. JONES. Mr. Baldwin?

Mr. BALDWIN. No questions.

Mr. JONES. Thank you, Colonel Preston.

Colonel PRESTON. Thank you, sir.

Mr. JONES. H.R. 5701, by Mr. Shriver, our colleague from Kansas. Mr. SHRIVER. Thank you, Mr. Chairman.

(H.R. 5701 follows:)

[H.R. 5701, 89th Cong., 1st sess.]

A BILL To authorize the Secretary of the Army to pay the market value of certain leasehold interests, buildings, and improvements and to pay severance damages to certain persons having interests in lands acquired for the Marion Dam and Reservoir project in the State of Kansas

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the Secretary of the Army shall pay to each person having a leasehold interest in any Scully real property acquired by the United States in connection with the Marion Dam and Reservoir project on the Cottonwood River in Kansas the following:

(1) the actual market value, if any, of such person's leasehold interest; (2) the fair market value of all buildings and improvements which are owned by such person and which are located on such real property; and (3) severance damages for the loss or impairment of such leasehold interest and such buildings and improvements.

The reservoir would cover very little farmlands and no commercial or indus trial sites at all. The U.S. Corps of Engineers has estimated that the recrea tional facilities resulting from construction of this dam would attract more than 800,000 persons annually.

We respectfully urge the construction of this dam.

Yours very truly,

Hon. ROBERT E. JONES,

Chairman, House Public Works Committee,
Washington, D.C.

CLIFTON WHEATON, Secretary,

UNION BANK,

Jamestown, Tenn., August 24, 1965.

DEAR MR. JONES: I am informed that the bill authorizing construction of Devils Jumps Dam on Big South Fork River in McCreary County, Ky., is due to be considered by your committee at an early date.

I respectfully recommend and urge that this bill receive favorable action by the House Public Works Committee and that construction of said dam be authorized. The Union Bank, its officers, and patrons, and the citizens of Fertress County and surrounding areas are also in favor of construction of this dam and reservoir. We hope you will see fit to support this bill and recommend favorable action thereon.

In addition to McCreary County, Ky., Scott, Morgan, and Fentress Counties Tenn., would be affected by this project and portions thereof covered by water. Jamestown is the county seat of Fentress County, Tenn. Very little farmlands would be covered by this reservoir and to my knowledge no commercial or industrial lands would be affected. The location of the reservoir would be in the heart of the Appalachian area of Tennessee and Kentucky, the economy of which is in need of aid and this project would affect an area with a population of about 150,000 persons.

My information is that this project has been approved as economically feas ble and would repay a sum equal to the original investment with interest within the 50-year limit. I am also informed that construction of this project would be in line with President Johnson's recently created Committee on Preservation of Water Resources; and that there is a ready market for the power to be manufactured by this project.

I am told that this project has been approved by the Corps of Engineers, the Budget Bureau, the Federal Power Commission, the U.S. Departments of Interior and Agriculture, and the State and local governments of Kentucky and Tennessee.

Again, I respectfully request that this legislation be passed.

Sincerely yours,

Mr. EVERETT. Mr. Chairman.

Mr. JONES. Mr. Everett.

O. E. HULL, Cashier.

Mr. EVERETT. We are always happy to have our distinguished colleague, Congressman Evins, from the Fourth District of Tennessee, with us.

Mr. Evins, are all those statements from Fentress County?

Mr. EVINS. This is Tennessee's officials and prominent citizens writ

ing in support of the project.

Mr. EVERETT. From Fentress County?

Mr. EVINS. Yes.

Mr. EVERETT. Thank you. We are very pleased to have you here this morning.

Mr. EVINS. We in the Appropriations Committee are always aware that those who say the least generally get the most money.

So I thank you. Thank you, Mr. Chairman.

Mr. JONES. Colonel Preston.

STATEMENT OF LT. COL. E. R. PRESTON-Resumed

Colonel PRESTON. Good morning, Mr. Chairman and members of the committee.

Mr. JONES. Mr. Baldwin?

Mr. BALDWIN. No questions.

Mr. JONES. Thank you, Colonel Preston.

Colonel PRESTON. Thank you, sir.

Mr. JONES. H.R. 5701, by Mr. Shriver, our colleague from Kansas. Mr. SHRIVER. Thank you, Mr. Chairman.

(H.R. 5701 follows:)

[H.R. 5701, 89th Cong., 1st sess.]

tion, there was opposition to this leases developed, and the Kansas Legislature saw fit to pass an act which provided that, although Mr. Scully might issue 1-year leases, that provided the tenants had to remove their buildings, that those provisions in his leases were void and that he either had to buy the buildings or find a buyer for the leases.

And the reason I call this to the committee's attention, this is not a tenant at will transaction; it is not like the railroad cases that I am sure the committee is familiar with.

Our Supreme Court of Kansas has approved this interpretation of the Scully leases. And as a practical matter the operative interpretation placed on the Scully leases for more than 90 years in our area has been that a Scully tenant continued with his lease year in and year out until the tenant either sold his lease or died and the lease passed to either the tenant's heirs or his devisees.

Scully leases in our area have a recognized value. Real estate men sell Scully leases as if such leases were real estate. When a Scully tenant dies, his lease is appraised and State and Federal inheritance taxes are paid on the value of the lease as well as upon the value of the improvements thereto. They are inventoried in the estates and have frequently in our area been set off to the widows as homesteads.

Now, Scully leases have this market value because, first, a tenant knows that his lease will be renewed indefinitely without any interference from third persons trying to rent the land and cut underneath him. Scully would not stand for that.

A farmer for all practical purposes can have the benefit of ownership at a minimum cost.

And I might say to the committee that Mr. Klein up here, he farms and has leases on 800 acres of Scully land. That land at a conservative figure is worth $275 an acre. That amounts to $220,000. That would be at 5 percent. It would cost him $11,000 per year in the interest to own that land. He has to pay the taxes on it, which is $1,000, which would be a total of $12,000 a year it would cost him to own the land.

He leases that very land from Scully for $2,300 and pays the taxes for $1,000, which makes his annual cost on that land of $3,300. And that is one of the other reasons why Scully leases have a market value.

The Scully policy on rents has not generally followed the upward cycle of rentals, but over the years has been reasonable. And in fact below what other landlords charged. People living in the area where Scully controls large amounts of land have purchased the leases, in many instances in order to have a home and a family close together in their farm operations.

Now, the Marion Reservoir is going to take about 3,500 acres of Scully land actually from our clients. There are 60-some hundred acres involved, but there is actually 3,500 acres going to be taken.

We represent 30 of these people. And they are asking that they be paid for the value of their leasehold.

And I might point out to the committee's attention-and if the committee has some time, these men would like to read their statements. For instance, this man up here, Mr. Klein, has got-he will suffer, if we do not get relief, he will suffer right at $48,000 worth of damage and loss here that they say that he cannot be compensated for. These other men are suffering similar amounts.

We are asking that we be paid for leases, that we be paid for improvements that are being taken, and then we are asking that we be allowed severance damage where there is a partial taking.

As Congressman Shriver has said, we are required to put all the improvements on the land, we build all the fences, ponds, and wells, and we have grubbed out trees, we have changed the contours, we practically act like owners of the land, except we pay this very nominal

rent.

As a practical matter, in our area no difficulty is encountered when a tenant sells his lease, as Scully will accept any reliable person desiring to buy one of these leases. Away going tenants have in the past and are still receiving amounts for Scully leases far in excess of the fair market value of the improvements that have been placed on the land. And this increased amount represents a market value of the leasehold interest itself.

Whenever a Kansas municipality or the State of Kansas condemns any Scully land, payment has been made to tenants, not only for the value of his leasehold interest that is being taken but also for the improvements. Scully leases have been used for collateral.

And I might call to the committee's attention that this man, Klein, has got a $20,000 mortgage on his leasehold estate that is going to beI do not know where the man is going to get his mortgage paid if this man does not get relief.

Prior to the Marion Dam and Reservoir project, these Scully leases had a market value and were passed from generation to generation of farmers. These tenants should have the right to just compensation from the Government for this property being taken.

I would like to call this case to the committee's attention. We have a lady by the name of Marie Hein that is a widow, and they are taking all of her land except approximately 20 acres. She has a large tract of land, and leaving her with $20,000 worth of buildings sitting on 20 acres.

And we contend that she ought to be compensated for that, because they have wiped the lease out from under her and leaving her with just those buildings.

And in conclusion, I would like to call to the committee's attention that this House bill 5701 is a private bill, as it applies only to the Scully area in the Marion Dam, and we certainly urge the committee to approve the passage of the bill.

And if it would please the committee

Mr. JONES. Mr. Wheeler, if these gentlemen have statements, we would be glad to receive them and have them printed in the record, or make any observations that they would like to bring to the attention of the committee.

Mr. WHEELER. Would you like to say something?

Mr. HETT. Mr. Chairman, in this committee, this is a new experience for me, and I certainly appreciate being heard in here.

Mr. JONES. What is your name, sir?

Mr. HETT. My name is Wilbur Hett. I am in Marion County. My address happens to be Hillsboro, Kans., however.

And this one point I would like to bring out as bearing on Mr. Wheeler as representing us here. I happen to be the chairman of the group of Scully tenants that are represented in this area. And in my own case my father bought the lease in 1928. We moved on it in

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Omnibus Rivers and Harbors and Flood Control Bills, 1965: Hearings ..., Part 3