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Mr. BROIDO. No, sir; not at all.
Mr. Bacon. As I understand it, the Pennsylvania post office is over the tracks?
Mr. BROIDO. This is correct. They made the same mistake there. Mr. Bacon. They got a good deal of convenience in doing that.
Mr. Broido. That is correct. But you have to consider the value of what you are buying in air rights, and you have to consider whether there are any other air rights or other fee properties in competition.
I am not objecting to Rolls Royces. If the Post Office Department wants Rolls Royces I cannot help it. But I do not believe that the Post Office Department ought to be given Rolls Royces just because they want it.
I will admit that it is better to have it over the tracks, and you are going to have this done in a hundred cities of the Nation, but I think something ought to be done about a policy, which permits the acquisition of air rights at an unconscionable price, as in this transaction, at twice what the Interstate Commerce Commission appraised it for. I think that is an unconscionable transaction.
Mr. BOYLAN. That is not an exact statement, because the Interstate Commerce Commission appraised the ground and building at $7,000,000, and $9,000,000 is not twice that amount.
Mr. Broido. I am sorry, but it is approximately twice the $5,000,000. I have tried to be careful in this statement, and I will let the statement stand as it is.
Mr. Boylan. It is not a correct statement, if you say it is twice the amount for which it was assessed.
Mr. BROIDO. I still say that $10,000,000 is twice $5,000,000.
Mr. TABER. Your contention is first, that the Government paid twice what the property is worth.
Mr. BROIDO. Yes.
Mr. TABER. And second, that there is a lien on it held by the New Haven which has never been discharged.
Mr. BROIDO. That is right.
Mr. BROIDO. That property was burdened with reservation for light and air, in favor of the Graybar Building that these people owned, and they were compelled to rewrite the contract last summer.
Mr. TABER. I am getting at the proposition now presented to us, not something that might have been involved in the course of the negotiations, but something that is involved with the situation as it is presented.
Mr. BROIDO. That is what I am getting at, that although the railroad has consented to change the set back restriction from 40 feet to 18 feet, the city of New York has not consented to it.
Mr. Taber. Is the city of New York interested in it?
Mr. BROIDO. Yes; because the city of New York has on file in its building department a sworn affidavit from the owners of the Graybar Building that they have control over the psot-office site, and that when they erect a higher building on the post-office site they will cause a set-back to be made, which will legalize the Graybar Building.
New York City has not been asked for its consent. I think this agreement is nugatory.
Mr. TABER. You mean that the 36-story building was built without proper set-backs in the building?
Mr. BROIDO. Yes; the Graybar Building to the south of the postoffice site. Here is the post-office site (indicating), and here is the Graybar Building (indicating]. When the Graybar Building was built it should have been set back 19 feet more.
Mr. TABER. You mean from the street?
Mr. BROIDO. South from the property line of the post-office site. Here is the Grand Central Terminal (indicating).
Mr. TABER. That is across Lexington Avenue?
Mr. BROIDO. Lexington Avenue is right down here (indicating); you are looking east.
Mr. TABER. Lexington Avenue is between the Terminal and the Graybar Building?
Mr. BROIDO. No; there is a private street there, Depew Place, which belongs to the railroad, and the railroad can build to shut off the light from this building, because there is no reservation in favor of the United States Government. There is only a reservation protecting the Graybar Building.
When the Graybar Building was built it was built 17 feet too far in this direction (indicating north), and it should have been stopped about here [indicating). They gained symmetry in design with that extra space.
Those people said, "We own and control the site where the post office is, and when we build on the postoffice site above the level of the present roof of the building we will set back 42 feet and we will make the building on the post-office site set back enough so it will legalize the illegal construction of the Graybar Building
Mr. BOYLAN. Is that cited in the deed to the United States, as to the set-back that you have just described?
Mr. BROIDO. The agreement with the city of New York?
Mr. BOYLAN. If it is not cited in the deed the Government is not held to it.
Mr. BROIDO. I beg your pardon. In the deed the reservation is 40 feet.
Mr. THOMPSON. That is in the deed.
Mr. Boylan. If you buy this piece of land you have to put the set-back 40 feet; that is cited in the deed?
Mr. BROIDO. That is cited in this deed.
Mr. BROIDO. Yes; and the only reason that is cited is to legalize this Graybar Building. As I have said, this being corner property you would not have to set it back at all. Now, they say you have to set it back 40 feet. I did not know that until I discovered it in the building department, and the Treasury didn't know it either.
Mr. TABER. Do you mean by that that under the statute authorizing the purchase the Government was not entitled to accept that deed with that 40 feet reservation in it? Is that what you mean?
Mr. BROIDO. That is correct.
Mr. BROIDO. That is my position, and that is the position the Procurement Division has taken.
Mr. BOYLAN. Is that in the deed made to the Government?
Mr. TABER. Yes.
Mr. BROIDO. The act says they were entitled to take this land subject to a reservation for the purpose of protecting the light and air of the premises on the south and west, and the premises on the south are the Gray bar Building and on the west the New York Central Terminal.
I pointed out, that when Congress said subject to a reservation to protect light and air, they meant a reservation that was legal and reasonable. No one would say, I suppose, that the Government could take it with a reservation of 100 feet for light and air. It must be reasonable. I pointed out that under the zoning ordinance any building which is built on a corner plot would not require a set-back at all. But the Government assumed the burden of legalizing the Graybar Building.
The Procurement Division agreed it was unreasonable and therefore an illegal set-back provision, but that was 4 years after the purchase was made.
In connection with this street, on the westerly boundary of the plot, as I have stated, the city of New York has a perpetual easement for an overhead roadway, which crosses Forty-fifth Street, runs through the New York Central Office Building and comes down into Park Avenue. It is a serious burden on the post-office property.
But there is nothing in the act authorizing the Government to take the property subject to this easement. When these people, who are the sellers here, made the lease for the Graybar Building they were very careful to include a provision that no property along this roadway, or anything that would be built upon the private street, would exceed the present height. But there is nothing in the Government's deed to prevent the city of New York from building a two-story roadway or higher. There is nothing to prevent the New York Central from building a 40-story office building over the roadway. There is no reservation for light and air for the benefit of the post-office site at all.
When they wrote that provision in it they did it to protect their interest, but no one protected the Government's interest in the light and air. Therefore, all of these surrounding things the Interstate Commerce Commission did not know about, because they are contributed to an understanding of the true valuation of the property.
Mr. TABER. That is no. 4. Are there any other specific contentions? Mr. BROIDO. Yes, sir; they have to do with the value of the property.
Mr. TABER. We have those. Let us get any others that there are, any other specific things.
Mr. BROIDO. Any other specific things in the deed?
Mr. Taber. Any other specific objections you have to this transaction, so we will know what the situation is.
Mr. BROIDO. I have another objection which I have not touched upon in connection with this transaction, and that is with reference to the question of a conveyance of a grant of land where it is intended acquire the use of air rights, as being contrary to the provisions of article I, section 8, clause 17, of the Constitution, that provides that such land is United States Government property.
Mr. TABER. You mean article I of section 8 of the Constitution?
Mr. BROIDO. Article I, section 8, clause 17 of the Constitution of the United States. In other words, wherever you have Government
property, there the United States Government is the sovereign. When they made this exception from the grant you have the situation where I do not believe anybody knows who has jurisdiction over that undersurface of the property, because if the State of New York has jurisdiction of the undersurface property, I do not see how anybody can contend that the Government of the United States acquired it. If they contend that the State of New York has jurisdiction over the property then what the Government acquired was air rights, and the bill did not authorize that acquisition.
If the Federal Government acquired the undersurface in the legal sense then the tracks and the undersurface is under the jurisdiction of the United States, and in that case I do not see how the New York State Public Service Commission would have any jurisdiction over that part of the trackage which is under the post-office site.
If the jurisdiction is split, so that the air rights belong to the Government and the undersurface belongs to the State of New York, if a man shoots another man in a car under ground, he has to be tried in the State of New York. But if a man shoots another man on the floor of the post office he has to be tried in the Federal courts.
There is no constitutional authority in section 8 for the separation of land acquired by the United States from the air rights, or vice versa.
Mr. Bacon. Is that true in connection with the Pennsylvania Station?
Mr. BROIDO. It is just as wrong.
Mr. Bacon. Do you not think the Government gets a tremendous convenience by having air rights?
Mr. BROIDO. Yes, but they should get authorization to buy air rights and pay for air rights. Mr. Bacon. What is the situation as to the Pennsylvania Station?
Mr. BROIDO. That situation is the same as this one. It is practically all the same thing. They deeded it back to themselves. They merely took the property off the tax rolls, and I contend that if the Government goes to a railroad in Chicago, or Cleveland, or any place else and says, “Gentlemen, you are paying $100,000 a year in taxes for this property, and if you will convey it to the United States you will save a hundred thousand dollars a year, and we will give you back the surface and the undersurface”, that ought to be enough consideration for any railroad to make a conveyance of a piece of ground which has no building built on it. There ought to be enough consideration for the railroads in saving the thousands of dollars in annual taxes. But here the Governments says, "I will give you $9,000,000 in cash besides saving you the taxes. Here is a piece of property which paid $182,000 in taxes annually to the city of New York, which now has to go down to Washington and get money for relief and must get along without these taxes, while the railroad has everything it had before except the economic value of the obsolete building
It seems to me that the Government by clever manipulation could acquire those air rights, and if they did buy air rights to pay air-right values.
Mr. TABER. Are there any objections outside of the ones you have already stated?
Mr. BROIDO. The next question is in reference to the type of title to the property. The property cannot be sold by the Government
of the United States. The law is clear that where you give a conveyance of a permanent and perpetual easement, whether for a railroad, or a cemetery, or whatever it is, the man who conveys the property has only the possibility of a reverter. He has no fee title left. Therefore, I say, the Government of the United States, if it conveyed in perpetuity this entire railroad property to the railroad, has something which it can now no longer convey. The decisions of the courts on that are clear. It is a conditional fee.
Mr. Taber. Do you mean that the property was acquired by the railroad company by condemnation?
Mr. Broido. No; the railroad company paid $1,100,000 for it. In his report to the stockholders for 1932, the president of the New York Central Railroad reported a profit of $5,000,000 on the sale of this property to the Government of the United States, even though it still retains for railroad purposes everything that it used it for before. The railroad owned it in fee when the Government acquired it, and I contend that the Government acquired an unmarketable title which it cannot sell.
Mr. TABER. Did the railroad get title in fee when it bought the property?
Mr. BROIDO. It did. When it got the property back in 1910 or 1911 it got title in fee, and when it sold it to the Government of the United States the Government of the United States did not get a title in fee. I say there is no provision for Congress authorizing an executive department to acquire a title that is not a title in fee.
Mr. Bacon. Is not that the situation in Chicago today?
Mr. BROIDO. No; I am informed that the situation there is different. I am told that the Government actually acquired the fee to a certain portion of the property on which its piers stand.
Mr. Bacon. That is not true in the case of the Pennsylvania Station?
Mr. BROIDO. No.
Mr. THOMPSON. I think you will find that the Government acquired the Pennsylvania Station by condemnation.
Mr. BROIDO. I think you are right about that. There are many other important objections to the deed, which are set forth in the summary to the brief, which will be found in the front page of the brief, pages “a” to “o”. The important ones I have given to you here.
I do not see, gentlemen, what harm can be done by withholding this appropriation at this time and having the Congress properly investigate the questions which I have raised. I feel that many misrepresentations were made to the Congress and that the question of policy which I have touched upon is exceedingly important for the Government of the United States.
I thank you very much, Mr. Chairman, and gentlemen of the committee, for giving me this hearing.
I would now like Mr. Heckscher to be heard.
STATEMENT OF AUGUST HECKSCHER, NEW YORK, N. Y.
Mr. HECKSCHER. Mr. Chairman, I think I can save your time if you will give me 3 or 4 minutes in which to read a statement which I had published in all of the important newspapers in New York.