But in order for this to happen, localities need a much more supportive situation in GSA.

Specifically, GSA could help Boston create jobs and give a shot in the arm to the Boston economy by doing the following:

1. Implement a property write-down as allowed in H.R. 2532, which would decrease the City's cost from $4 million to $1 million.

2. Provide realistic, supportive financing which would allow a 20 year mortgage at the cost to the government (probably only about 6 per cent.)

3. Allow a credit to the locality for local expenses for protection and maintenance.

Such an arrangement would guarantee a locality's ability to develop excess property and create a much more positive climate for industrial reuse of excess defense property.

And without this approach, most excess defense properties will still remain in a constant state of disrepair, with no economic return to the locality and an added financial burden to the local taxpayers. A daily reminder to Boston residents of this possibility lies just across the Charles River from us-the Watertown Arsenal.

Mr. RANDALL. Mr. Weeks, you have been very patient. Proceed in any way you want.

STATEMENT OF CHRISTOPHER WEEKS, DEVELOPMENT COORDINATOR, PHILADELPHIA, PA.; ACCOMPANIED BY WALTER D'ALLESIO, EXECUTIVE VICE PRESIDENT, PHILADELPHIA INDUSTRIAL DEVELOPMENT CORP.

Mr. WEEKS. Mr. Chairman, my name is Christopher Weeks and I am development coordinator for the city of Philadelphia.

I do not see a necessity for reading my statement. I would like to excerpt certain salient points, but I would hope that my full statement might be included in the proceedings of these hearings.

Mr. RANDALL. A man who has been as patient and generous with us as you have today is certainly going to receive any extra consideration we can give.

Mr. WEEKS. Thank you very much. I have had to chair many public hearings and I sympathize with your situation here, sir.

I would first like to state that I am very sorry that Mayor Rizzo could not be here personally at this hearing. I know he would have wanted to be here. As you probably know, he had a serious accident at a fire about 10 days ago and is still hospitalized at the present time.

Mr. RANDALL. Is he still hospitalized?

Mr. WEEKS. Yes, sir.

Mr. RANDALL. I heard he was in a cast.

Mr. WEEKS. He is still in the hospital. He is not expected to come out until the end of the week.

I do want to make it clear that I am speaking on a subject that is of very direct and personal interest to the mayor.

I would like to get back to that point a little later.

Second, I would like to say that the city of Philadelphia has had a substantial impact from defense reductions and consolidations. Since 1969, we have had 11,810 jobs eliminated directly because of defense consolidations and reductions. If we take the indirect effects of that, we undoubtedly have lost somewhere in the range of 25,000– 30.000 jobs totally by reason of this factor.

I would also like to note that this is approximately half of the total decrease in employment in Philadelphia since 1969.

The city of Philadelphia has been losing jobs over this time period. I want to stress that I am not saying that the Federal Government's reduction caused this decline in employment. I am saying that it is an important and a major factor, but the intricacies of the labor market are far too complex to suggest that any one factor can ascribe to any part of the total.

Third, I would like to emphasize, from the mayor on down through his administration, the highest priority at the present time is jobs and employment and finding ways to expand the tax base. We are absolutely committed to holding tax levels level or with the minimum increase that could conceivably be possible and obtaining greater revenues and fiscal stability in the city through expanding the tax base, not by expanding tax rates.

On this basis, therefore, and I think corroborating what previous witnesses have said, we feel that economic development should be placed on a par with parks and with social services, health and educational services, and with airports, in terms of priorities at least as we see them here in the city of Philadelphia.

Lastly, I would like to turn specifically to our relations with GSA and raise specific points that I hope will be informative to you and will help you as you deliberate this difficult question.

First, I would like to say that the system, as it operates now and as' we have found it to operate, really does not work to the advantage of either the city or the Federal Government. In the city of Philadelphia, we are dealing primarily with Federal surplus properties which are improved, that is, which have substantial numbers of buildings on them.

We have four that we are dealing with at the present time, the former Army Signal Corps Headquarters, a Marine Corps supply depot, the former Naval Home which has historic and potential economic value and the Frankfort Arsenal.

I would like also to note that the employment impact of the possible shutdown of the Frankfort Arsenal has not been felt in Philadelphia yet, but we are looking at a possible reduction of an additional almost 4,000 jobs if, in fact, the closing of that facility is upheld.

I would like to turn back to the Signal Corps building momentarily to use this as an example to corroborate what we feel is the fact that the appraisals prepared by GSA are substantially higher than can be supported by actual market values.

The GSA has advertised this building so far twice, once in January without a price included in the advertisement and once in this last September with a price included in the advertisement. It was my understanding since January that the approximate value placed upon this building is about $7 million.

I would like to note that, before taking my position in the city of Philadelphia. I was a senior officer in the largest independent real estate consulting organization in the country, and I feel that I am competent in the field of real estate analysis and appraisal, although I am not a professional member of MAI. the appraisal organization. It is my own personal opinion and professional opinion apart from my role in the city of Philadelphia that the price placed on this building by GSA is high by a factor of approximately 2, not by 5 or 10 percent.

I have also consulted with many members of the professional real estate community in the city of Philadelphia and they are also of the same feeling.

I would like to return to the point in which I said that the system does not work well to either of our advantages at the present time. We have this facility. The GSA is now incurring very substantial out of cash pocket costs. That building must be maintained secure. It must be heated. There are very high utility costs in that particular building. I would estimate, although I do not have GSA's records, that no less than a quarter of a million dollars a year and probably closer to half a million dollars is being spent simply in order to maintain that building at the present time.

At the same time, the city of Philadelphia is losing approximately three-quarters of a million dollars in direct tax revenues which we would generate if that building were occupied.

Together then, the two of us, the Federal Government and the city of Philadelphia, are losing well in excess of $1 million a year because that building is vacant at the present time.

I feel a substantial reason that it is vacant is because of the very, very high asking price.

We think it is very substantially out of line with the market.

I feel that if we had the opportunity that is presented here in this bill, that GSA and the city of Philadelphia would be able to sit down and to resolve this situation. You would find that the Federal Government would not have to lay out these substantial costs for continuing to maintain that structure and we in turn would be able to get the tax revenues and the benefits from the employment that would be created therein.

I would also like to mention that not only do we have the priority of employment established from the top down in the city of Philadelphia, we also have an Industrial Development Corporation in the city of Philadelphia which is ready to move into situations like this, that has financed over $500 million in commercial and industrial development programs since its inception in 1958, and that is fully capable of taking charge of this particular kind of situation.

What we need is the flexibility to deal with the price situation where we do not want to pay $7 million for a building that is worth probably not much more than half that.

Lastly, I would like to return to the mavor's feeling about this. I would like to say that the mavor has asked me personally, before his accident, because we were well aware that this bill was being considered. to contact other mayors of cities to inform them of this bill and of its importance, in his opinion, to the city of Philadelphia and possibly to their cities.

We have just barely started that process, but we do feel that many other cities and many other mayors, that may not have had a chance to express themselves personally at these hearings, will want to submit testimony.

If we can get the word out to them quickly, we hope that the record may be maintained open for a few days or longer to permit them to submit statements either for the record or for your consideration as you deliberate the bill.

Mr. RANDALL. Mr. Weeks, I have gone through your full statement and I may have a few questions.

We do have certain limitations to encumber the record. We cannot take everyone. Who would these others be?

Mr. WEEKS. They would be mayors or chief executives of other cities across the country.

Mr. RANDALL. Čertainly. I thought it was others in the Philadelphia

area.

Mr. WEEKS. No, sir. I understand that a representative of San Francisco and a representative of the Real Estate Board of New York City have also asked to submit statements.

Mr. RANDALL. Let me address myself to the situation we find ourselves in now here at this hour of 6:15. We are about to terminate a hearing that we started very nearly on time at 10 o'clock. We have discovered that we have scheduled far too many witnesses and it may very well be that we will have to have another date, another bite at this.

The Chair would be inclined to believe that the members would much prefer that than to having these statements coming in. You will be advised as to whether we will have further hearings.

I have the feeling we tried to cram too much in here in one day. I learned long ago that you do a much better job if you do not try to do too much in a day unless you are against some deadline.

The only questions that I would have is that my dear friend, Jimmy Byrnes, who used to be on the Armed Services Committee with me, and Digger O'Dell is not there anymore, but he was always telling us about the Philadelphia Navy Yard. What happened to that?

Mr. WEEKS. The Philadelphia Navy Yard, while operating at somewhat reduced capacity, is still operating.

Mr. RANDALL. It is still running.

Mr. WEEKS. Yes, sir.

Mr. RANDALL. Yes, the Philadelphia Navy Yard is still going. Good. He used to worry about that an awful lot.

Actually now, your worst loss is the Frankfort Arsenal.

Mr. WEEKS. The Frankfort Arsenal will lose us 3,600 Federal jobs and a like number of outside jobs.

Mr. RANDALL. I just discovered yesterday what is happening to some of these. We have what is called a GOCO, a Government-owned, company operated, Army ammunition plant.

This is in-house. This is owned by the Federal Government. This is the oldest arsenal in the country, isn't it?

Mr. WEEKS. That is correct.

Mr. RANDALL. I just discovered that there is a new arsenal that even some of us on the Armed Services Committee did not even know about down in the State of Mississippi. Maybe that is what is happening here.

Anyhow, the navy yard is not concerned.

You said a moment ago that the GSA is high by a factor of 2 and not by any 10 percent or 15 percent in their appraisal. Did you mean that this is double what is should be?

Mr. WEEKS. That is correct, sir.

Mr. RANDALL. So if we are successful in this bill running the gamut of the legislative process, what you are saying is that, as far as you

are concerned in this particular situation, if it could be worked out at a 50 percent figure, you could live with that.

Mr. WEEKS. I think we could live with that, yes, sir.

I would suggest that, at least from the city of Philadelphia's point of view, that we probably would not necessarily have to see the writedown go as far as 75 percent. A 75 percent write-down is only 25 percent of market value.

I was very impressed with the folks from Mineral Wells, Tex., and I can certainly see in a situation like that where the population and the employment is being reduced massively in their community that there could be a need for write-downs of that scale.

I would suggest that perhaps some flexibility might be given where the executive branch finds unusual economic conditions applying. A write-down below 50 percent could be accomplished perhaps. Mr. RANDALL. Does the staff have a question?

Mr. ROMNEY. No, sir.

Mr. TEMPERO. No, sir.

Mr. RANDALL. Thank you very much, Mr. Weeks.

On this proposal to submit other statements, we will withhold crossing that bridge until we see whether we have to have another day's testimony.

Mr. WEEKS. Thank you, sir. I would personally like to say that I very much appreciated the attention that you have given to this subject. We feel that it is very important and we would be glad to work with you on it.

Mr. RANDALL. You are very kind.

[Mr. Weeks' prepared statement follows:]

PREPARED STATEMENT OF CHRISTOPHER WEEKS, DEVELOPMENT COORDINATOR,

PHILADELPHIA, PA.

Philadelphia, like other major cities in the United States, is faced with the major difficulty of stimulating its local economy as a result of the national economic downturn, and the general suburbanization of industry and business. In addition, the Federal government has recently been consolidating many installations and phasing out others.

In light of these Federal closures, cities such as Philadelphia feel yet another economic loss, while once occupied and productive Federal facilities stand vacant for extended periods during disposition procedures.

Let me give you a brief summary of the extent of Philadelphia's problem with regard to surplus property:

From 1969, personnel movements simply as a result of defense facility reduction, and including the scheduled reductions over the remainder of this year will amount to a direct reduction in employment of 11,810.

Adding in the estimated indirect reduction in employment, brings the total number of Federal defense jobs lost in Philadelphia over the past 6 years to over 17,000.

Based on an average salary of $8,000, (which we can all agree is low), the reduction of 17,000 jobs induces a direct and indirect tax loss of nearly $8 million for each year.

In order to counter these severe losses, the City must make a strong effort to bring in new, or encourage the expansion of existing businesses.

The high price which the City may have to pay for surplus Federal property will surely reduce its ability to offset the loss. A reduction in the fair market price for the economic development of surplus Federal properties is of paramount importance.

Such a reduction in price can in no way be considered a windfall gain for cities, but rather a modest attempt to make some good of a very bad situation.