WEDNESDAY, JUNE 16, 1937.

PROPOSED PURCHASE OF PROPERTY AT 1212 LAKE SHORE DRIVE, CHICAGO STATEMENTS OF REAR ADMIRAL CHRISTIAN JOY PEOPLES, DIRECTOR; L. C. MARTIN, ASSISTANT TO ASSISTANT DIRECTOR; AND N. MAX DUNNING, PROCUREMENT DIVISION, TREASURY DEPARTMENT

Mr. WOODRUM. Admiral, we would like to have you tell us, briefly, if you please-and you may file for the record such exhibits as you desire about the proposed purchase of a building in Chicago, which proposal you have sent up to us. We would also like to know whether there is any need for that purchase now.

Admiral PEOPLES. I will make my statement as brief as possible, Mr. Chairman.

This is with regard to the proposal of the Central Life Assurance Society of Des Moines, Iowa, to sell to the Government for the sum of $450,000 the property at 1212 Lake Shore Drive, Chicago, recently occupied by the defunct Illinois Life Insurance Co.

LOCATION AND PROPOSED USE OF PROPERTY

It is proposed that the location and the building would be excellent for the use of the United States Court of Appeals and for other uses requiring high-class facilities.

The property is located about 1 mile north of the Loop in a highclass residential district, convenient to a number of high-class hotels, and with excellent transportation by bus and streetcar from the Loop, which is the business center.

The property is approximately 192 feet in its north and south dimension, and approximately 120 feet in its east and west dimension, with an area of 23,022 square feet. It faces the Lake Shore Drive and Lake Michigan on the east; Scott Street on the north; Stone Street on the west, and has a lot-line boundary on the south.

The property is improved with a three-story and partial-basement fireproof building of monumental character, and was constructed in 1923 as the home office of the Illinois Life Insurance Co.

The building received the gold medal of the American Institute of Architects as the best structure erected in Chicago in this particular year.

The ceilings are high-the first floor being 19 feet and 6 inches from floor to floor-and the plan arrangement is excellently adapted to the uses of the circuit court of appeals and other Federal agencies. The interior finish and equipment are of high quality, and the mechanical installations for heating, lighting, plumbing, ventilating, electric clocks, drinking water, elevators, and so forth, are in excellent condition and will have a long life. The building is 14 years old and has been kept in excellent repair.

The advantages of the location for court or other Federal uses are quiet, light and air, cleanliness and comfort in summer due to lake breezes, also convenient accessibility. The judges of the court and representatives of the bar have expressed their approval of the neighborhood.

Taxes for 1928, 1929, and 1930 were assessed on a value for land and building of $1,160,000, broken down as follows: Land, $745,408, or $32.40 per foot; and for building, $415,418.

The reassessment for taxes for 1935, after foreclosure of the property, for land and building was $565,698, broken down as follows: Land, $294,521, or $12.80 per foot; and building, $271,177.

The actual cost of the building taken from authoritative figures was $549,395. The reproduction cost of the building at the present time would be approximately $700,000.

The gross constructed floor area is 66,713 feet for three floors and basement. The net usable floor area, or rentable space, is 46,700 feet.

PURCHASE AND REMODELING COST OF BUILDING

The cost of purchasing the property and remodeling the building for court and other uses is estimated to be as follows:

A survey under date of February 19, 1937, shows that after taking advantage of the added space provided by the remodeling of the United States Courthouse Building now being completed, there will remain 149,693 feet of space leased in commercial buildings at a rental of $169,084 per year, or an average of $1.13 per square foot. The survey shows justification for making provision for 168,900 feet of office space and 6,860 feet of storage space. As to the need for further space to be assigned for the use of the circuit court of appeals, I would prefer to get the details and insert them in the record; except I will say that there will be space assigned to the Securities Exchange Commission, the Federal Power Commission, the Bureau of Foreign and Domestic Commerce, the Interstate Commerce Commission, and the Interstate Commerce Commission-Motor Carriers, with a total rental saving of $15,795.54.

There would be assigned to the third floor of the old courthouse. building, which is now being remodeled, space for the use of the circuit court of appeals, the internal-revenue attorneys who are now paying a rental of $2,880; the Social Security Board, paying a rental of $4,532.30; the Railroad Retirement Board, paying a rental of $682.44, and the War Department for Citizens Military Training Camp, paying a rental of $1,200, totaling $9,294.74. All would be assigned space on the third floor of the old building, which is now being remodeled.

There would be assigned to the seventh floor of the old courthouse, in space now occupied by the circuit court of appeals, the Justice attorneys now paying a rental of $2,520, and the Agricultural Adjustment Administration now paying $5,966, making a total of $8,486; so there will be a grand saving in rental of $33,576.28 per year.

This proposition has been very thoroughly and very carefully investigated. Mr. Dunning, who is present before the committee, made a personal inspection of the entire property. It would be exceedingly advantageous in every respect to purchase the property. Mr. WOODRUM. Is the space badly needed?

Admiral PEOPLES. Yes, sir; the space is badly needed; because, as I pointed out, there will be a net saving in rentals of about $33,000, and even then there will still be a number of agencies paying rent. The point is that there is in the total a rental of 169,000 square feet, and of that total, this building will take care of about 40,000 square feet, still leaving 129,000 square feet of space rented to the city of Chicago.

Mr. LUDLOW. Is the building occupied at the present time?
Admiral PEOPLES. No, sir.

Mr. WOODRUM. As I understand it, if the projected plan, or the 3-year plan, involving $71,000,000, was carried out, all you would need in order to go ahead with this purchase would be some little change of language in the act.

Admiral PEOPLES. Yes, sir.

Mr. WOODRUM. To permit the purchase.
Admiral PEOPLES. That is it; yes, sir.

Mr. WOODRUM. There would not be required any change so far as the financial end of it is concerned.

Admiral PEOPLES. No, sir.

Mr. WOODRUM. In other words, you have enough money to take care of it?

Admiral PEOPLES. Yes, sir. We have a short amendment before the committee now.

Mr. WOODRUM. Are there any further questions?

Mr. MCMILLAN. What estimate have you arrived at for the custodial expenses of this building?

Admiral PEOPLES. The cost of the operation of the building would be about $22,800.

Mr. MCMILLAN. Does that include the cost of fuel?

Mr. DUNNING. Yes, sir; it includes the cost of fuel, operation, and maintenance.

RENTAL SAVINGS THROUGH PURCHASE OF PROPERTY

Mr. WOODRUM. As I understand it, on a basis of 31⁄2 percent, the property would be amortized in 15 or 20 years.

Mr. DUNNING. On a restudy of the space, when we came to a definite allotment of the different spaces, we found there was about 40,000 square feet instead of 46,700 square feet that could be assigned. This was brought about by excluding from the estimate of assignable space the public lobby. That is really available space, but we have not counted it as rentable space, although if we were renting in other buildings, we would have to provide such facilities for the public. Mr. WOODRUM. What is the difference?

Mr. DUNNING. On the basis of 40,000 square feet, at an average rental value of $1.13 per square foot it would make an item of $45,200. After deducting the cost of operation and maintenance the remainder, $22,400 invested on a 31⁄2-percent basis would return the investment in 20 years.

Mr. SNYDER. What is the total amount of saving that the Government would have in the matter of rentals?

Mr. DUNNING. $33,576.28 in rentals in addition to providing adequate space for the circuit court of appeals.

Admiral PEOPLES. That is for quarters they would be taken out of.

Mr. SNYDER. What rentals are you paying now, in total?

Of

Mr. MARTIN. Permanent and temporary agencies are occupying 200,809 square feet, for which $225,532 a year is now being paid. those activities, some that will go into the courthouse building now being remodeled, and some will go into this insurance building if the purchase is authorized.

Mr. WOODRUM. Will you have to pay anything on account of remodeling the old Federal building?

Admiral PEOPLES. There will be some additional items. We have that data.

Mr. TABER. You have a proposition pending here for additional remodeling of the courthouse, at a cost of $150,000. That is included in these projects, that are on your eligible list. Could not some of that be done away with if you should get both buildings?

Mr. MARTIN. Not this particular item. This item has to do with. the remodeling of the southwest wing of the seventh floor. The space is to be vacated by the collector of customs, who will move to the new Appraisers Stores Building. In other words, it was determined to move the collector of customs from the courthouse into the Appraisers Stores Building, vacating about 19,000 square feet of space in the courthouse for other activities. It is contemplated that space will be remodeled under the $150,000 estimate; and we will also remodel the east and west wings of the eighth floor for the Federal Housing Administration, which is now in rented quarters. Mr. LUDLOW. Is there an option now on this building in favor of the Government?

Mr. MARTIN. Yes, sir.

Mr. LUDLOW. When does it expire?

Mr. MARTIN. On July 1.

To answer your question further, the acquisition of this building and the remodeling of the courthouse building will reduce the requirements in Chicago to the extent that permanent activities would not need all of the space contemplated by the proposed annex building project of $2,200,000. The space requirements of permanent agencies in Chicago under this arrangement may be provided for less than $1,000,000 for four additional stories on the new Appraisers Stores Building in lieu of the annex building which has been listed as an eligible project in the recent report of the Secretary of the Treasury and the Postmaster General.

Mr. WOODRUM. How much will it cost to remodel this building? Mr. DUNNING. $58,000 for remodeling in the old courthouse building. The item of $148,500 for remodeling the insurance building is included in amount of $598,500.

Mr. TABER. You would save $1,200,000 on the office building

annex.

Mr. MARTIN. It would seem so on the basis of the requirements for permanent activities in Chicago.

Mr. MCMILLAN. In looking over this photograph of the building, I notice there is apparently quite a lot of lobby space.

Admiral PEOPLES. Yes, sir.

Mr. MCMILLAN. Is it contemplated, under your estimates, in remodeling the property, to change any of that space? Admiral PEOPLES. No, sir.

Mr. DUNNING. There would be some modification, but it will maintain its monumental character.

Admiral PEOPLES. The lobby will not be materially affected as a result of that.

WEDNESDAY, MAY 26, 1937.

GRAND CENTRAL TERMINAL POST OFFICE BUILDING

Mr. WOODRUM. The committee has under consideration a Budget estimate of approxiately $10,000,000 for the purpose of carrying out the provisions of the act approved July 12, 1932, 47 Statute, page 656, authorizing the purchase of the land and building for a post-office building and/or for other Government purposes, that is commonly known as the Grand Central Station Post Office Building in New York. Congressman Dickstein suggested to the committee that there were some interests in New York that desired to be heard on this matter. Do you wish to be heard, Mr. Dickstein?

Mr. DICKSTEIN. I have no statement to make.

Mr. WOODRUM. We would like to have the record show the names of the gentlemen appearing.

Mr. BROIDO. My name is Louis Broido, and I am appearing for certain property owners on Lexington Avenue.

Mr. WOODRUM. Will you give their names?

Mr. BROIDO. I was retained to represent a group of property owners owning properties in the two blocks on the east side of Lexington Avenue located between Forty-fifth and Forty-sixth Streets and Forty-sixth and Forty-seventh Streets, both of which blocks have been offered to the Government as separate alternative sites for the Grand Central Post Office. At the time this brief was prepared I was retained by a number of the property owners owning property in these two blocks as follows:

Ministers & Missionaries Benefit Board.

Lexington Avenue Syndicate.

Gertrude J. A. Clark.

Ardley Realty Co.

Cashel Development Co.

Douglas Estate.

Forty-sixth Street Lexington Avenue Corporation.

141 East Forty-fifth Street Corporation.

Catalina Paez MacManus

Roosevelt Hospital.

Janeva Rosenthal.

Van Real Estates Co.

Gilford Estate.

Betjeman Estate.

Fanny I. Helmuth.

Dr. Theodore Edlich.

Ruth W. Fisher.

Mary G. Lanigan.
Temple Emanu-El.
Powers Regulator Co.

Frederick Kolb.

Some of these owners, but not all, contributed to the expense of the preparation of the brief and exhibits which will be here referred to. We also have present Mr. August Heckscher, owner of the Grand Central Palace, and his counsel, Senator George F. Thompson.