All we need is this authorization. We do not even need to spend the money, but when we go to the Latin American countries we have to tell them that the United States is going to participate. All we need is this authorization.

Mr. FRELINGHUYSEN. I am not arguing against Federal participation by asking these questions, but I am not sure as to how essential it is to assure U.S. participation. As I understand, you will have free space for all exhibitors and free space, I assume, for the U.S. Government?

Mr. PEPPER. That is correct.

Mr. FRELINGHUYSEN. Or otherwise we would be discriminated against.

Mr. PEPPER. I said nominal rental but we mean free.

Mr. FRELINGHUYSEN. Once something is authorized the next step will be to go to the individual countries and say, "We will build the building if you exhibit there"?

Mr. PEPPER. That is right.

Mr. FRELINGHUYSEN. Are we supposed to be financing the exhibits they put up?

Mr. PEPPER. We do not finance any part of the Latin American exhibits.

May I say Dr. Muskat went out and spent some time with the gentleman who was in charge of the Seattle Fair and he advised Dr. Muskat:

I spent $200,000 or $300,000 and several months of my time to get the Latin American countries to come to Seattle and I did not get one. Later I found out the reason why. I asked them to come in and build buildings and they will not put up brick and mortar that far from home, but if you will build the building they will come.

That is why we borrowed money from CFA and since we were doing it for the Latin American countries we thought we should do it for the U.S. Government.

Mr. FRELINGHUYSEN. I understand this is intended to provide a facility where a country may exhibit wares it hopes to sell in this country. Is that correct?

Mr. PEPPER. Yes.

May I read a letter from Ambassador Sevilla Sacasa of Nicaragua? Mr. FASCELL. That may be inserted in the record at this point. (The letter referred to follows:)

THE NICARAGUAN AMBASSADOR,
Washington, D.C., August 26, 1965.

DEAR MR. PEPPER: I have just received your kind letter of August 25, in regard to the Inter-American Cultural and Trade Center in Miami, Fla.

I consider the Interama a magnificent project which would undoubtedly enhance the friendly understanding that exists between the free Latin American countries and the United States, and I think that Miami, Fla., would afford a most desirable seat for its activities.

As Ambassador of Nicaragua and personally, I believe that any action that the Government of the United States may take to support this project would be looked upon with favor by all the Latin American countries that are interested in promoting this mutual understanding. I have expressed this opinion whenever the opportunity has arisen to refer to the Interama.

With the renewed assurances of my highest esteem and distinguished consideration, I remain,

Sincerely yours,

GUILLERMO SEVILLA SACASA.

Mr. PEPPER. He is indicating that if the Government of the United States puts in an exhibit he thinks the Latin American countries will respond favorably.

Mr. FRELINGHUYSEN. We have no indication on the record as to economic feasibility. I would assume the World Trade Center in Manhattan will attempt much the same thing as Interama. I see Dr. Muskat is shaking his head. I think somewhere we ought to get some indication that this thing is economically feasible.

Mr. PEPPER. Let Mr. Holley give you a summary of the feasibility report.

Mr. FASCELL. Without objection, we will put the report in the record at this point.

1

(The report of the Economics Research Associates referred to follows:)

Dr. IRVING E. MUSKAT,

ECONOMICS RESEARCH ASSOCIATES,
Los Angeles, Calif., August 25, 1965.

Chairman, Inter-American Center Authority,
Miami, Fla.

DEAR DR. MUSKAT: AS authorized by your letter of April 21, 1965, Economics Research Associates studied the feasibility of issuing additional bonds for development of the Inter-American Center. We do so in our capacity as your selected management consultant, confirmed by authority resolution adopted March 17, 1965, and in pursuance of the responsibilities of the management consultant as stated in sections 309 (b) and 807 of the trust indenture.

We find the issuance of the remaining senior lien bonds in the amount of approximately $13 million, and Community Facilities Administration bonds in the amount of approximately $22 million, to be economically feasible. It is our opinion that the facilities to be constructed with the bond issue proceeds, when combined with the other facilities and improvements which are in being, in progress, committed to, or reasonably to be expected, will yield a total activity and facility complex at Interama which has ample earning capacity to service debt.

The development and implementation of an exposition generally follows a standard sequence of events. In Interama's case, financial support from the local, State, and Federal governments, as well as from local private enterprise, must come before exhibitors and concessionaires can be expected to participate. We find conclusive evidence of ample support from all these sources. We have completed a review of all aspects of Interama, including its concept, site planning and utilization, master planning, organization, financial resources, operating and development plan, and all actions taken in relation to these matters. On the basis of this general review of Interama's progress to date, we conclude that by continuing to take action along these established lines Interama can be brought into being as a viable permanent exposition.

Our review shows that Interama has complied with the requirements of the trust indenture and we have executed a certificate to that effect. The special conditions attendant to the CFA loan offer have also been met. We project annual attendance, estimated conservatively, at an average of about 12.5 million visitors for the 1968-75 period. While this is about 5 million less than our 1963 estimate, the decrease results from our taking a more conservative view of an exposition's impact on its available market, and from the use of new data on tourism trends in the Miami area.

We project that Interama's net revenues will average just over $12 million annually from 1968 to 1975. This level of income provides an average of 2.19 times coverage of all debt service requirements of the trust indenture and CFA loan bonds, as calculated by Goodbody & Co. Further, it is projected that annual attendance can decline more than 50 percent below our 12.5 million estimate with

1 See appendix III, p. 56, for ERA's Preliminary Study, Economic Feasibility of Interama, August 1965.

out impairing Interama's ability to meet all its debt service requirements. These conclusions support our opinion of the feasibility of issuing additional bonds.

Respectfully submitted.

G. HERBERT HOLLEY,

Vice President.

Mr. HOLLEY. We are projecting an attendance of 12.5 million. This is 25 percent higher than at Seattle.

Mr. FRELINGHUYSEN. Is this 12.5 million a year?

Mr. HOLLEY. Yes. It is 25 percent higher than Seattle in a tourist market that is two or three times higher.

Mr. FRELINGHUYSEN. To the extent that it is a trade center, I would think you would not get as many visitors as did the New York World's Fair or the fair in Seattle. Has that been taken into consideration?

Mr. HOLLEY. Yes. The total complex has the drawing power. We think the plan here overcomes the limitations of what was experienced in New York. We are projecting a per capita spending of $4.87 at Interama compared to $6.59 at Seattle and $5.70 at New York. We project $1.83 net to Interama, which is quite conservative. We tried to play this conservatively all the way along because we have been retained by the bondholders to indicate the level of the total income to Interama, and it amounts to an average of about $12 million a year.

The total revenue amounts to $20 to $25 million. The total expense, $10 to $12 million. The net being about $12 million a year. This relates to debt service requirements on the order of two times the protection of the total debt service requirements of both the senior issue by Goodbody Underwriters and the CFA loan. The debt requirement on those two loans is required a little more than two times.

The attendance could decline a little over 50 percent before Interama's ability to service that debt would be impaired. The attendance could go down to about 60 percent of what was experienced at Seattle

Mr. FRELINGHUYSEN. How much was expected at New York and how much was actually achieved?

Mr. HOLLEY. The original projections publicized in New York were $40 million the first year and $30 million this year. The actual paid at New York was about $27 million the first year and of course this year we do not know. It will be something in the order of $20 million, perhaps less.

This is for a 6-month exposition, a different type of a thing. We have taken that into account. In other words, in 1963, when we made our first feasibility study report, the experience we had was of Seattle which penetrated its market very well. We have taken a more conservative view this time. One of the reasons we have done so is because New York has not done as well as Seattle did.

We have tried to build all this experience into our projections to make them conservative and realistic."

Mr. FRELINGHUYSEN. You are proceeding on the assumption there will be very substantial participation both by the foreign nations and by private industries; is that correct?

Mr. HOLLEY. Foreign nations, private industries, and the various governments involved, local, State, and Federal.

Mr. FRELINGHUYSEN. We are going to have participation by our State governments?

Mr. HOLLEY. By Florida in the sense they have made a financial contribution is what I mean.

Mr. FRELINGHUYSEN. There are not going to be domestic governmental exhibits?

Mr. HOLLEY. No, I meant the local governments have contributed facilities and financial support is what I mean.

Mr. FRELINGHUYSEN. I realize my time has elapsed, Mr. Chairman. Mr. FASCELL. Mr. Roybal.

Mr. ROYBAL. I would like to compliment my colleague, Claude Pepper and the people of Miami, Fla., for having selected the Economics Research Associates as the agency that is doing the feasibility study. They are from my city. They are one of the most outstanding firms not only in this country but in the world. I am concerned, however, with the $11 million and also the amount that is to be made available by the Federal Government for maintenance.

We are told that the building will be made available to the Government for approximately $1 a year. It will be made also available to Latin American governments on a free basis, and my question is: Will the Latin American governments also have to pay for maintenance?

Mr. PEPPER. They will pay all their own maintenance. We do nothing but make the space available to them.

Mr. ROYBAL. Will the U.S. Government then pay for maintenance only for a period of 4 years and free afterward?

Mr PEPPER. That is right. After the authority proposes to offer it from then on. We think we will have revenue with which to do the feasibility study We do not think they will have to do it for 4 years but we want to be on the conservative side.

Mr. ROYBAL. Can you tell me what amount of the total invested in this project has to be paid back?

Mr. PEPPER. Of the total amount that the Government of the United States provides by way of assistance to this project, $22 million is a loan and all of it has to be paid back. Whatever is built, whatever is spent for the U.S. participation and for early maintenance is not paid back. That is an expenditure by the Government of the United States.

Mr. ROYBAL. The total amount to be paid back out of the entire investment is $22 million?

Mr. PEPPER. Yes, sir.

Mr. FASCELL. There are other funds to be paid back.

Mr. PEPPER. I mean for the Government. I thought you meant for the Government.

Mr. ROYBAL. I am trying to find out what your liability will be.

Mr. PEPPER. There are two particular liabilities; $22 million to the Government of the United States for the loan and $21 million to Goodbody for the loan made from them; $3 million of that $21 million has already been used for filling in the sites there to make them suitable for buildings. The other money would be available and used for different things to develop the project.

Mr. ROYBAL. In other words, the figure of approximately $43 million paid back?

Mr. PEPPER. That is right.

Mr. ROYBAL. How long a time will it take?

Mr. PEPPER. I would like Mr. Holley to answer that and also as to the availability of the project to pay it back.

Mr. Holley. The trust indenture bonds, the Goodbody bonds, will be paid back in about 4 years. Both loans in about 8 years.

Mr. PEPPER. The legal time in which they may be paid back is very much longer.

Mr. HOLLEY. Yes, sir. It is 20 years on both.

Mr. PEPPER. They are both 20-year loans but the feasibility report shows that they can be paid back in about 4 years after the project gets into operation.

Mr. ROYBAL. This is based on the fact that there will be a net profit of approximately $12 million a year?

Mr. HOLLEY. That is right. Out of which the mandatory debt service requirements average $4 to $5 million and the rest of it will be used to repay the principal on an accelerated basis.

Mr. ROYBAL. Who will pay the salary of the resident commissioner? Mr. HOLLEY. The Federal Government.

Mr. PEPPER. That is a continuing expense. I was in error when I said the total contribution of the Government, the figure I previously gave. He would be the equivalent of an assistance secretary of the agency, so chosen by the President, and his salary would be paid by the Government of the United States.

Mr. ROYBAL. This will be an expense Interama will not take over after a certain amount of time?

Mr. PEPPER. I would think not. Not that particular one. After all he represents the Government. The Government from time to time may be changing the quality and the character of its exhibit. Did you notice Mr. Stone mentioned we might want to tell the story of America, democracy in America. We might want to use art at one time and at other times scientific things and space, like we used at Seattle. The idea is to let the proper officials of the Government of the United States tell the American story in the way they think is best. This man would have for his job the supervision of what the Government does there.

Mr. ROYBAL. That is all, Mr. Chairman.

Mr. FASCELL. Mr. Fraser?

Mr. FRASER. Thank you, Mr. Chairman.

Mr. PEPPER. I thank the gentleman for what he said about ERA. We share your high regard for it.

Mr. FRASER. I want to commend our colleague from Miami, Congressman Pepper, for his presentation this morning. This has been extremely helpful and I know that there has been a lot crowded into a relatively short time.

Mr. PEPPER. Thank you.

Mr. FRASER. That seems to be the way these hearings work out. I would assume that because Miami draws so many tourists today that there is a natural market in terms of people available to attend this kind of a center which might be substantially larger than one might find in other parts of the country. I assume that is a part of the objective involved here.

Mr. HOLLEY. Yes, we show the level of Florida inflow at the present time in projections.

Mr. FRASER. I think the idea of adding this other dimension to the interest and opportunities that would be available to tourists in the

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