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Mr CANNON: Was there any merit in their claim that there was other property available at a lower price and better suited for the purpose?
Mr. MARTIN. Engineers made surveys of it for both the Procurement Division and the Post Office Department, and their reports indicated that this was the most suitable property, without question, in that area.
Mr. CANNON. How does the contract price compare with the assessed valuation? - Mr. MARTIN. The assessed valuation is $7,500,000, and the contract price is $9,000,000. The Department secured appraisals from three sources, and the average of those appraisals is $9,291,700.
Mr. Boylan. Who made those appraisals?
Mr. Martin. Brown, Wheelock, Harris & Co. appraised the property at $12,000,000; the Interstate Commerce Commission's lowest appraisal, or final appraisal, was $7,000,000, and the Treasury's engineer, who used all the information he could obtain from all sources at New York as to the value of the property, estimated the value as $8,875,311. My understanding is that Brown, Wheelock, Harris, & Co.'s appraiser in this case was Mr. Stevens, the vice president of that company, who is considered to be one of the best qualified men for the purpose in New York. Our own representatives have made a survey of the property.
Mr. Ludlow. Is there any prospect that this may be tied up in the courts yet?
Mr. MARTIN. We have no reason to think so.
Mr. CANNON. Did you acquire this as an easement, or do you have a fee simple title?
Mr. Martin. We have a fee simple title, with a reservation to the railroad company to use the under surface for railroad purposes. In appraising this property, the Brown, Wheelock, Harris & Co. deducted 15 percent from the total fee value as being that part of the value represented by the reservation of the subsurface rights. Mr. BOYLAN. They deducted 15 percent for that?
Mr. Martin. Yes, sir. Their appraisal was $12,000,000 net. Subject to this subsurface reservation, we have a fee-simple title to the entire property.
Mr. WIGGLESWORTH. The supplemental deed has been actually executed and recorded.
Mr. Martin. Yes, sir. The title was passed on by two Attorneys General.
Mr. Ludlow. You do not jeopardize the Government's interest by going ahead and completing the transaction by appropriating the money?
Mr. Martin. I do not see any jeopardy for the Government's interest. We have a contract, and have purchased the property on the basis of the average of the appraisals. It is a piece of property the Post Office Department has always held to be ideal for its purposes. They have occupied a portion of this building since it was originally built, which, I think, was in 1920.
Mr. PURDUM. For about 27 years.
Mr. Martin. We presented the item to the Budget about 3 years ago, or 2 years ago. At that time we told the Budget that an investigation had been asked for by the Post Office Department to
determine whether there was any ground for the charge that this contract was invalid. For that reason the Budget did not send down an estimate for the first payment required for interest under the contract.
Mr. CANNON. How long would it take to amortize this building?
Mr. Martin. We do not have that figured out for this reason: The building was primarily built for office purposes, especially the four upper stories. The Post Office Department has occupied the ground and second floors, I think, for a number of years. It is the intention of the Post Office Department to utilize all but the two top floors for postal activities in this particular Grand Central district. There is contemplated considerable remodeling to make the building more adaptable for postal purposes.
Mr. CANNON. The remainder of it would be leased.
Mr. MARTIN. It would be used for Government purposes. About 50,000 feet will be available for other offices.
Mr. CANNON. For Governmental offices?
Mr. MARTIN. No, sir; but there will be a saving on account of rental, I should say, at the rate of $1.50 to $2 per foot, because that is what you are required to pay in that district for square footage; an annual saving on account of rent, when the remodeling is completed, of from $75,000 to $100,000. In addition to that, the Post Office Department will surrender two leases for activities that will be located in this building. There will be something like 312,000 square feet made available in this building after the remodeling: There have been estimates made of the value of this space, and we have information that the space in the adjoining building on the first floor rents from $5 to $7.50 per
foot. Mr. WOODRUM. Do you have the opinions of the Attorney General with reference to this matter?
Mr. MARTIN. Mr. Witman has them.
OFFICE OF THE ATTORNEY GENERAL,
Washington, D. C., January 16, 1933. Hon. OGDEN L. MILLS,
Secretary of the Treasury, Washington, D. C. DEAR MR. SECRETARY: I have the honor to report the examination of title to certain land in the city of New York, N. Y., acquired from the New York Central Railroad Co., for the consideration of $9,000,000, to be paid in accordance with the provisions of the act of Congress approved July 12, 1932 (47 Stat. 656), and described as the Grand Central Station post office and office building, located at 452 Lexington Avenue in said city.
For a detailed description of the land conveyed, reference is made to the enclosed deed which is dated December 28, 1932, and recorded in the office of the register of the county of New York on December 29, 1932, in liber 3850, page 488 of the conveyances and indexed under block no. 1280 on the land map of the county of New York. The survey attached to the deed is recorded in book of maps no. 900, volume 21, page 70.
The certificate of title covering the premises conveyed was prepared by the New York Title & Mortgage Co. and bears date of December 30, 1932. In addition to the certificate of title, the vendor furnished gratis a policy of title insurance in the amount of $9,000,000 executed by the New York Title & Mortgage Co., dated December 30, 1932.
From an examination of the certificate of title and recorded deed, I find title to the land under consideration is now vested in the United States of America, subject to the exception and reservation to the New York Central Railroad Co., its successors and assigns, of the perpetual right of exclusive use for railroad station terminal, and other purposes of the railroad company, its successors and assigns, of the subsurface of the land conveyed, together with the tracks, structures, facilities, equipment, and other property of the railroad company located therein, which rights are specifically defined in the instrument of conveyance; also subject to reservation and exception for purposes of light, air, and support in favor of said subsurface and the southerly and westerly adjoining premises and also reservation for necessary ventilating shafts, with the right to maintain and operate on the roof of the present structure or upon any building at any time constructed in renewal or replacement thereof, penthouses, motors and fans for ventilating purposes; subject also to the right of the railroad company to the use of the spaces in the building located on the land, known as rooms nos. 4509, 4511, and 5509, together with the telephone equipment, for a period not to exceed 1 year, which appears to be satisfactory to your Department from the papers submitted by you. Under the act above referred to, you were authorized to acquire this land with the above reservations and exceptions.
Enclosed herewith you will please find the following instruments and papers relating to the transfer of the title to this property:
1. Closing report of the New York Title & Mortgage Co., dated December 29, 1932.
2. Certificate of title of the New York Title & Mortgage Co., dated December 30, 1932.
3. Policy of title insurance of the New York Title & Mortgage Co., dated December 30, 1932.
4. Recorded deed from the New York Central Railroad Co. to the United States of America.
5. Assignment executed by the New York Central Railroad Co. of all leases covering the offices in the building conveyed.
6. Certified copies of resolution adopted by the board of directors of the New York Central Railroad Co., on December 14, 1932. Respectfully,
William D. MITCHELL,
OFFICE OF THE ATTORNEY GENERAL,
Washington, D. C., September 7, 1935. The honorable the SECRETARY OF THE TREASURY.
MY DEAR MR. SECRETARY: Some time age there was received by the Department of Justice a memorandum dated December 29, 1934, and addressed to the Joint Interdepartmental Committee on Public Buildings, by Mr. E. R. Witman, Assistant Chief, Legal Section, Procurement Division, and Mr. C. H. Carle, Assistant Superintendent, Division of Post Office Quarters. The memorandum relates to the purchase by the Government of the property known as 452 Lexing. ton Avenue, New York City, and recommends that the matter be referred to the Attorney General for review and for the purpose of determining whether he finds any reason why the Government should not proceed with carrying out of the terms of the contract.
The memorandum and the accompanying papers have been examined in this Department, and careful consideration has been given to the possible objections to the validity of the deed, suggested by the file. Mr. Alexander Holtzoff, of this Department, recently attended a meeting of the above-mentioned committee at which this matter was discussed.
The conclusion reached is that none of the alleged objections are valid. It was further determined, however, that the provision in the deed to the property, made by the New York Central Railroad Co. to the United States and dated December 28, 1932, reserving to the railroad company the right to attach ducts, pipes, conduits, cables, etc., to the underside of the girders, floor beams and hung ceilings of the building, is broader than authorized by the act of July 12, 1932, which empowered the Secretary of the Treasury to purchase the property, and is more comprehensive than intended by the parties. It is understood that the parties intended to reserve to the railroad company the right to continue to attach ducts, pipes, conduits, etc., to the ceiling and beams of the basement floor of the building, such ceiling forming also the roof of the railroad tunnel. Such a reservation would
be unobjectionable. The conclusion reached on this point at the conference was that an appropriate document should be obtained from the railroad company for the purpose of so limiting the aforesaid reservation. Sincerely yours,
STANLEY REED, Acting Attorney General.
OFFICE OF THE ATTORNEY GENERAL,
Washington, D. C., February 24, 1936. The honorable the SECRETARY OF THE TREASURY.
MY DEAR MR. SECRETARY: I have your letter of February 8 relative to the purchase by the Government of the property known as 452 Lexington Avenue, New York City, in which you enclose a supplemental memorandum recently submitted to you by the attorneys for certain property owners who have objected to the acquisition. This memorandum has been reviewed in this Department.
As you point out in your letter, the title acquired by the United States was approved by my predecessor. I have previously reviewed some of the objections now raised, and in my letter to you of September 7, 1935, stated that I have reached the conclusion that none of them are valid, but that the provision in the deed to the property reserving to the railroad company the right to attach ducts, pipes, conduits, cables, etc., to the underside of the girders, floor beams and hung ceilings, should be modified so as to limit the reservation by restricting it to a right to attach ducts, pipes, conduits, cables, etc. to the ceiling and beams of the basement floor of the building. The conclusion reached at the conference had between members of the Joint Interdepartmental Committee on Public Buildings and a representative of this Department was that you would endeavor to obtain an appropriate document from the railroad company for the purpose of so limiting this reservation.
The supplemental memorandum, recently submitted by objecting property owners, advances the contention that the reservation of the 40-foot setback is greater than required by the New York City zoning ordinance or by covenants in prior instruments affecting the property and is hence unauthorized.
The statute authorizing the purchase of the property provides that title may be taken subject to easements of light and air. Presumably, the setback provision was intended to constitute an easement of light and air. Clearly, however, such a reservation should not go beyond the limit of what is reasonably necessary for the purpose of accomplishing the intended objective. Whether a 40-foot setback is greater than reasonably necessary for the purpose is a question of fact, as to which it is not feasible to express any views in the absence of evidence. I suggest that it may be advisable to consider this question in connection with the negotiations, which it is assumed are to be undertaken for the purpose of securing a modification of the reservation discussed above.
I note your further statement th the objecting property owners assert that the price was grossly excessive and that fraud or misrepresentation by the railroad and associated interests, and laxity by Government officials may be implied. No evidence, however, has been submitted to me to support this contention. Sincerely yours,
HOMER CUMMINGS, Attorney General. Mr. WOODRUM. I think it would be helpful to have in the record the act which authorized this transaction. At this point, let the act appear in the record.
(Said act is as follows:)
(PUBLIC—No. 278—720 CONGRESS)
(H. R. 12360] By the act to authorize the Secretary of the Treasury to enter into a contract to purchase the parcel of land and the building known as the Grand Central Station Post Office and Office Building, numbered 452 Lexington Avenue, in the city, county, and State of New York, for Post Office and other Governmental purposes, and to pay the purchase price therefor on or prior to June 30, 1937, approved July 12, 1932.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is hereby authorized to enter into a contract to purchase on behalf of the United States the
parcel of land with the building located thereon in the city, county, and State of New York, bounded by the westerly line of Lexington Avenue, the southerly line of Forty-fifth Street, a line parallel with and distant 275 feet, more or less, westerly of the westerly line of Lexington Avenue and a line parallel with and distant 220 feet 942 inches, more or less, southerly of the southerly line of Fortyfifth Street, for a post-office building and/or for other Governmental purposes, subject to the exception and reservation to the New York Central Railroad Company, its successors and assigns, of the perpetual rights of exclusive use for railroad station, terminal, and other purposes of the railroad company, its successors and assigns, of the subsurface of said parcel to be specifically defined in the instrument of conveyance with the necessary ventilating shafts; and subject also to exceptions and reservations for purposes of light, air, and support in favor of said subsurface and the southerly and westerly adjoining premises, all as may be agreed upon in advance by the respective parties to the conveyance of title to the United States: Provided, however, That the total limit of cost to the United States of such parcel of land and building, including the cost of any necessary remodeling of said building, shall not exceed the sum of $14,500,000 and interest: Provided further, That the contract of purchase, if made, shall provide for the conveyance to the United States of title to said property on or prior to January 1, 1933, and for the payment of the agreed purchase price of said property on June 30, 1937, except that the Treasury Department, at its election, may pay any part of the agreed purchase price prior to said date, and except that commencing on the date of the conveyance of title to said property to the United States and continuing until January 1, 1934, there shall be paid each month to be applied on account of the agreed purchase price a sum not in excess of the aggregate monthly rental now paid by the Post Office Department for the spaces occupied by the Post Office Department in said building and in the adjacent buildings to the north and south, and except that commencing on January 1, 1934, and continuing to the date of the full payment of the agreed purchase price there shall be paid each month, to be applied on account of the agreed purchase price as aforesaid, a sum not less than one-twelfth of the product arrived at by multiplying the aggregate square foot area of the spaces now occupied by the Post Office Department in said building and in the adjacent buildings to the north and south, by a rate per square foot to be agreed upon by the owner and the Secretary of the Treasury, not in excess of $2.50 per square foot and not less than the average rental per square foot now payable by the Post Office Department under the present leases of the spaces occupied by the Post Office Department in the said building and in the adjacent buildings to the north and south: Provided further, That any appropriations made or hereafter made to the Post Office Department for the payment of rent under the leases now in effect and hereinbefore mentioned shall, upon the conveyance of title to the United States, be available to the Secretary of the Treasury for the aforesaid monthly payments, on account of the purchase price: Provided further, That the Treasury Department at the date of its payment of the full purchase price shall pay interest upon the unpaid balances of said purchase price to be computed from the date of the conveyance of title to said property to the date of the payment of the full purchase price at a rate not in excess of 4 per centum per annum to be agreed upon by the owner and the Secretary of the Treasury: And provided further, That all other terms and conditions in connection with the purchase of said property shall be in the discretion of the Secretary of the Treasury.
Approved July 12, 1932.
Mr. WOODRUM. The amount authorized in the act was not to exceed $14,500,000, that being the sum total the property should cost. Will it be purchased within that figure?
Mr. MARTIN. Well within that figure.
COMPARISON OF POSTAL RECEIPTS OF GRAND CENTRAL STATION WITH THAT OF
Mr. Ludlow. A witness testified the other day that there was more business arising at this one substation than in some of the States of the Union.
Mr. PURDUM. Yes, sir; that is true.