NAVY DEPARTMENT LAND PROJECTS TUESDAY, JUNE 25, 1946 UNITED STATES SENATE, COMMITTEE ON NAVAL AFFAIRS, Washington, D. C. The committee met, pursuant to call, at 10:30 a. m., in room 212, Senate Office Building, Senator David I. Walsh (chairman) presiding. Present: Senators Walsh (chairman), Morse, and Willis. By proxy: Senators Magnuson and Tobey. The CHAIRMAN. The hearing will come to order. The committee will first consider various projects of the Real Estate Division, Bureau of Yards and Docks, Navy Department, covering acquisition or disposal of land or property, by lease or otherwise, submitted for the approval of the Senate Naval Affairs Committee by the Navy Department. Mr. Dudley, will you come forward, please, and inform the committee with respect to these various projects? STATEMENT OF WILLIS R. DUDLEY, ASSISTANT HEAD, REAL ESTATE DIVISION, BUREAU OF YARDS AND DOCKS (ACCOMPANIED BY CAPT. JOHN R. VAN NAGELL, OF THE BUREAU OF ORDNANCE, AND W. P. TIENCKEN, OF THE BUREAU OF YARDS AND DOCKS), NAVY DEPARTMENT Mr. DUDLEY. Mr. Chairman, the first project is in Minneapolis. Minn. The CHAIRMAN. That is project No. 112-D. (Report of the Navy Department on project No. 112-D is as follows:) SUBMITTED BY: NAVY DEPARTMENT, BUREAU OF YARDS AND DOCKS, REAL ESTATE DIVISION Project No. 112-D 1. In order to expedite production of necessary ordnance material, the Chief of the Bureau of Ordnance entered into facility Contract NOrd (F)-1100 with the Northern Ordnance, Incorporated, wherein it was agreed that the Corporation would acquire the fee simple estate in the land required for the expansion of the plant, known at that time as The Northern Pump Company, and the Navy Department would contract for the construction thereon of the necessary buildings and equip same with the mechanical facilities required to produce the ordnance materal. The contract includes a clause whereby the Corporation is given a priority option to purchase the buildings and the facilities at an amount equal to their cost to the Navy Department, and if the Corporation does not elect to do this it is agreed that the Corporation will transfer to the Navy Department the fee interest in the land upon which the Navy-owned buildings have been constructed for an amount equal to the appraised value of the land as determined by approved local real estate valuators. 2. The Navy Department has erected buildings and appurtenances and installed tools and equipment representing an investment in excess of $21,000,000 on land that is owned by the Northern Pump Co. and/or The Northern Ordnance, Incorporated. 3. Upon the surrender of Japan, the Bureau of Ordnance terminated their contract with the Northern Ordnance, Inc., and it has been determined by the Bureau of Ordnance to retain this plant as a permanent peacetime stand-by Naval Ordnance Plant. The Corporation is not interested in acquiring the entire Navy-owned buildings and industrial facilities since the plant is designed and equipped for the production of highly specialized Navy material and there is no indication that the future needs of the Navy will be great enough to warrant the Corporation making the investment required to take over the Navy-owned facilities. Therefore, it has become incumbent upon the Navy Department to exercise their option and acquire the fee interest in the land in order that the Government's investment of $21,000,000 in buildings and equipment might be protected. 4. The contractor has indicated their desire to exercise their option and to purchase the Government-owned Hydraulic Testing Building, known as Building No. 17. This building was an extension of a structure that was a part of the original Northern Pump Company's plant and is on land that is owned by the Northern Pump Company, and is an integral part of the original facility and readily lends itself to separation from the proposed Navy plant. 5. It is necessary that an additional 41.89 acres, more or less, of unimproved land be acquired in the immediate vicinity of subject plant in order that Marine Barracks and Naval Officer Quarters might be constructed thereon. 6. Formal real estate appraisals have been obtained from local valuators which indicate the 82.81 acres, more or less of land, owned by the Northern Ordnance, Incorporated, and upon which the Navy has erected the Government-owned buildings, has a present fair market value of $41,305; The Hydraulic Testing Buildings, known as Building No. 17, has a present fair market value of $57,421 and the 41.89 acres, more or less, of unimproved land to be used as a site for the location of the proposed Marine Barracks and Naval Officers Quarters has a present fair market value of $31,417. 7. It is proposed that negotiations be entered into with the Northern Ordnance, Incorporated, whereby the Corporation owned land required by the Navy Department will be transferred to the U. S. Government and Building No. 17 will be turned over to the Corporation, it being understood that any difference in present fair market value in favor of the Navy will be credited to the Navy in the final settlement in terminating Facility Contract NOrd (F)-1100. The Bureau of Ordnance will provide required funds for the proposed acquisition of the necessary additional land from existing appropriations. 8. The approval of the Committee is respectfully requested. Mr. DUDLEY. This project, Mr. Chairman, is in connection with the Northern Ordnance, Inc., works out in Minneapolis, Minn. The Bureau of Ordnance entered into a contract with a contractor there, the Northern Pump Co., as it was known at that time; now it is known as the Northern Ordnance, Inc.; for the expansion of a plant. The contract had what we call cross-options in it. That is, the contractor had the right to purchase any of the improvements that were constructed with Navy funds. The Navy had the right to purchase the land underlying these improvements in the event the contractor did not care to purchase the improvements. Now, then, the contractor has determined that there are only certain of the improvements that he can use after the war. Likewise, the Bureau of Ordnance has determined that certain improvements are very essential as a standby plant. Therefore, to protect that investment, they propose to enter into an exchange whereby the Navy will retain title of the portions that they wish to retain; and certain other buildings will be transferred to the contractor as an offset against this price. It is considered that there will be very little money which will actually change hands. It will be an adjustment based upon actual appraised values. The CHAIRMAN. There will not be a great deal of cost to that? Then, in addition, for expansion purposes, they propose to acquire 41.89 acres of unimproved land that adjoins there, in order that they can construct naval officer quarters and a Marine barracks in connection with that plant. The CHAIRMAN. You mean, the standby plant? Mr. DUDLEY. That is right. The purchase price for that is estimated at $31,417. The CHAIRMAN. That is really the only new appropriation or new money that will be invested, except that exchange you speak about between the present owners of the fee and the Navy Department? Mr. DUDLEY. That is correct, sir. The CHAIRMAN. And the Navy Department has put $21,000,000 into this, I understand. Captain VAN NAGELL. That is right, sir. The CHAIRMAN. Where is it located? Captain VAN NAGELL. 20 miles out of Minneapolis, Minn., Mr. Chairman. The CHAIRMAN. Very well. That may be agreed to. The next project is No. 131-D. (Report of the Navy Department on project No. 131-D is as follows:) SUBMITTED BY NAVY DEPARTMENT, BUREAU OF YARDS AND DOCKS, REAL ESTATE DIVISION Confidential Project No. 131-D The approval of the committee is respectfully requested on the following project: 1. Cognizant Bureau: Chief of Naval Operations. 2. Interest to be acquired: Fee. 3. Location: Culebra Island, Puerto Rico. 4. Description: Northeast Bay and the portion of Culebra Island lying northwest of a line joining Scorpion Point and Resaca Point containing in all 1,805 acres, more or less. 5. Owner: Various. 6. Navy use: For the purpose of enlarging the impact area now used for bombardment training in order to have suitable slopes for reverse slope firing. 7. Approximate cost: It is estimated that the cost will be $58 per acre or a total of $105,000 for the land. It will, however, be made the subject of an appraisal and if acquisition can not accomplish within the limit of the amount determined as the fair value, it will be acquired by condemnation. The CHAIRMAN. Mr. Dudley, describe that project. Mr. DUDLEY. This project, Mr. Chairman, concerns 1,805 acres, more or less, in the northwesterly corner or side, you might say, of Culebra Island, which is just off the coast of Puerto Rico. We have some land in there at the present time. This is a project for the fleet and for training there. This land would be used as an area for bombardment training purposes and also for amphibious landing training and general training. The CHAIRMAN. Are we using any of the land we have there now? Mr. DUDLEY. Yes, sir; we have some now, and we are using it. The CHAIRMAN. Is this in the nature of an expansion? Mr. DUDLEY. This is, Mr. Chairman, in the nature of an expansion. The CHAIRMAN. To what you have already there? Mr. DUDLEY. It is in the nature of an expansion to what we have there already. The CHAIRMAN. How many acres? Mr. DUDLEY. 1,805 acres. The CHAIRMAN. And what is the price? Mr. DUDLEY. The estimated cost is $58 per acre or a total of $105,000. We will, of course, make detailed appraisals. The CHAIRMAN. You will? Mr. DUDLEY. We will make those; yes, sir. The CHAIRMAN. Who is the owner of that land? Mr. DUDLEY. There are numerous owners involved. The CHAIRMAN. All right. Without objection, that may be done. The next one is project No. 61–D-1. (Report of Navy Department on project No. 61-D-1 is as follows:) SUBMITTED BY NAVY DEPARTMENT, BUREAU OF YARDS AND DOCKS, REAL ESTATE DIVISION Project No. 61-D-1 The approval of the committee is respectfully requested on the following project : 1. Cognizant bureau: Marine Corps. 2. Interest to be acquired: Leasehold to 30 June 1946, and renewal thereof to 30 June 1947. 3. Location: San Francisco, Calif. 4. Description: 2 parcels of land, 11.62 acres, 93,570 sq. ft., Buildings No. 1 to 8, known as the Hammond Plant No. 1. 5. Services: None. 6. Owner: Matson Navigation Company. 7. Present occupancy: Marine Corps. 8. Marine Corps use: Storage of motor vehicles and spare parts. 9. Approximate cost: $2,500 per month. 10. Cancellation: Either party may terminate lease upon 60 days written notice. 11. Probable termination date: Unknown. NOTE.-Replaces lease with Hammond Aircraft which expired 31 March 1946 for same space and rental. The CHAIRMAN. Proceed, Mr. Dudley. Mr. DUDLEY. Project 61-D-1 is a Marine Corps storage property lease. The CHAIRMAN. At San Francisco, Calif.? Mr. DUDLEY. Yes, sir. This project was intended to be included in the major list of Marine Corps renewals; it was project No. 61-D. However, it was inadvertently omitted because there was a change of ownership there. Now, the lease expired as of March 31, and a new cwner came in. The Marine Corps advises me that this is used for storage of motor vehicles and spare parts. They advise me that they are taking those out as rapidly as they can and as soon as they get that material out, they propose to give up this lease. The CHAIRMAN. The purpose of this is to continue it temporarily until they are able to get that material out of there? Mr. DUDLEY. Yes, sir. The CHAIRMAN. All right. Without objection, it may be done. The next project is No. 154-D. (Report of Navy Department on project No. 154-D is as follows:) SUBMITTED BY NAVY DEPARTMENT, BUREAU OF YARDS AND DOCKS, REAL ESTATE DIVISION Project No. 154-D CONTRACTOR'S LEASE The approval of the committee is respectfully requested on the following project: 1. Cognizant bureau: Ships. 2. Interest to be acquired: Leasehold, by Gibbs & Cox, Inc., Navy contractor. 3. Location: New York, New York. 4. Description: 4th and 5th floors at 19 Rector Street, comprising 31,600 sq. ft. 5. Services: Elevator, heat, water and cleaning services. 6. Lessor: 19 Rector Street Corporation. 7. Navy use: By Contractor, for finished plan and training division, extension of model shop facilities and filing of plans, correspondence and records. 8. Approximate cost: $45,425 per annum; $1.4375 per sq. ft. The committee approved under project No. 646-B the lease of the same space for the same contractor for the period 1 September 1944 to 31 August 1945, at $1.25 per sq. ft. or a total cost of $39,500 per annum. This is a request for the renewal of the same lease for the period 1 September 1945 to 31 August 1946 at an increased rate. The consideration of $45,425 per annum for the renewal of the lease at $1.4375 per sq. ft. is in line with charges now being paid by private tenants in this, building and has been approved by this Bureau based upon an appraisal of rental values in the building. Mr. DUDLEY. Project No. 154-D is a contractor's lease; that is, it is not directly to the Navy, but in accordance with the understanding we must obtain approval of contractor's leases also. This is for the purpose of closing out a Bureau of Ships contract. The contractor is remaining in there only sufficiently long enough to actually close out the contract and perform the necessary auditing. The CHAIRMAN. And this is a further continuation until it is closed out; is that right? Mr. DUDLEY. Yes, sir. The CHAIRMAN. Without objection, it may be done. The next project is No. 156-D. (Report of Navy Department on project No. 156-D is as follows:) SUBMITTED BY NAVY DEPARTMENT, BUREAU OF YARDS AND DOCKS, REAL ESTATE DIVISION Project No. 156-D CONTRACTOR'S LEASE. 1. Cognizant bureau: Bureau of Ships. 2. Interest to be acquired: Leasehold by Merritt-Chapman & Scott Corporation, Navy contractor. 3. Location: New York, New York. 4. Description: Rooms 1027–1031 and 1807–1811 of the Whitehall Bldg, 17 Battery Place, Borough of Manhattan, City and State of New York, 4257 sq. ft. 5. Services: Elevator service and steam heat. 6. Lessor: Whitehall Improvement Corp. |