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architectural, engineering, contracting, planning and financing aspects of this ambitious and imaginative construction project, I can give the purposes of the UN Development Corporation's program my strong and wholehearted endorsement on foreign policy grounds.

It is a matter of importance to the United States that adequate office space be available to the permanent national delegations of UN member states. It is also important that adequate facilities be available to accommodate distinguished foreign visitors having temporary business with the United Nations at its Headquarters and that two million foreign and American visitors to the United Nations each year be received appropriately and efficiently. Additionally, to take even a small step toward easing the housing problems experienced by members of the UN community would be worthwhile. In sum, it is in the national interest of the United States that something consructive be done about the serious difficulties which staff, delegations, and visitors to the United Nations encounter in the highly complex and expensive urban environment of New York.

The United Nations Development Corporation has been chartered as a public benefit corporation by the State of New York to discharge precisely the foregoing functions. Accordingly, I hope very much that my endorsement of the Corporation's program on foreign policy grounds will enable you to seek and obtain the legislation Chairman McCloy requires.

Sincerely,

Mr. JOHN J. MCCLOY,

Bill

WILLIAM P. ROGERS.

THE CITY OF NEW YORK POLICE DEPARTMENT,
New York, N.Y., July 24, 1970.

Chairman, United Nations Development Corp.
New York, N.Y.

DEAR MR. MCCLOY: I have been apprised of the activities of the United Nations Development Corporation to develop the two block area across from the Secretariat with United Nations related facilities, including office space for foreign missions and a hotel for visiting heads of state and other dignitaries. The development would include a direct, safe and secure link over First Avenue to the International Headquarters.

Currently, the 125 foreign missions to the United Nations are scattered widely throughout New York City creating severe security problems of a continuing nature. These problems have grown increasingly acute of late. Security problems are severely accentuated when heads of state and other dignitaries come to New York to participate in the deliberations of the United Nations.

From a security standpoint, the development you propose would be most beneficial by providing the opportunity for consolidating foreign mission offices in a single location and constructing a new hotel adjacent to the United Nations Secretariat. This complex would provide foreign missions and visiting dignitaries a higher degree of protection and safety. For this reason the Police Department commends your efforts and supports the development proposal. Sincerely,

H. R. LEARY, Police Commissioner.

MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.,
New York, NY., July 21, 1970.

UNITED NATIONS DEVELOPMENT CORP.
New York, N.Y.

(Attention: Mr. Thomas Appleby, President)

DEAR SIRS: We are writing this letter at your request to set forth our suggestions and recommendations for financing the construction of the United Na tions Development District in New York City.

On the basis of present cost estimates the financing required for full development of the District will amount to more than $300,000,000. You have also furnished us with your preliminary estimates of revenues to be derived from the facilities to be constructed. We understand that such estimates of costs and revenues have been reviewed by independent consultants.

We considered at length the issuance of bonds of the Corporation secured only the revenues to be derived from the facilities to be constructed, but concluded

that such bonds could not be marketed, especially under present market conditions. This conclusion is predicated on the magnitude of the required financing and the debt service coverage (the ratio of net income to debt service) of 2.0 which in our judgment would be required by purchasers of these revenue bonds. Even if such revenue bonds could be marketed, the high interest rate which would be required, coupled with the aforementioned coverage of debt service, would result in rents and user charges substantially above market rates for similar facilities. This not only defeats the purpose of providing these facilities at moderate and competitive costs to U.N. related users, but also makes highly questionable the marketability of the facilities.

On the other hand, a Federal guaranty of principal and interest on the bonds of the Corporation would assure financing at or near the lowest rate obtainable in the market for fully taxable bonds. This would enable the Corporation to set rentals at rates which would be competitive in the market while supplying sufficient revenues to accomplish the statutory public purpose objectives of the Corporation. Such rentals would be maintained at levels which would produce revenues sufficient to provide adequate coverage of debt service requirements. A Federal guaranty would also permit issuance of the bonds in series and in amounts attuned to market conditions and construction requirements, whereas revenue bonds would of necessity have to be issued in the full amount at one time.

We strongly recommend that the Corporation pursue the course of obtaining a Federal guaranty in order to assure the successful marketing of its bonds. Attached hereto is our analysis of the financing requirements of the Corporation's program, which assumes a federal guarantee of the Corporation's bonds. Very truly yours,

By

MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
EASTMAN DILLON, UNION SECURITIES & CO.

MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
WALTER W. SIEBLING, Vice President.

UNITED NATIONS DEVELOPMENT CORPORATION PROJECT LAND ACQUISITION AND CONSTRUCTION COSTS

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*Includes $8,000,000 for relocation of families, businesses and utilities and demolition costs.

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Note: Coverage of level debt service requirement $27,148,000)-Coverage after local real estate taxes equals 33,000,000 over 27,148,000 equals 1.22 times. Coverage before local real estate taxes equals 33,000,000 plus 8,499,000 over 27,148,000 equals 1.53 times.

Assumptions:

ANALYSIS OF FINANCING REQUIREMENTS—UNITED NATIONS DEVELOPMENT DISTRICT

1. Estimate of total development costs, $264,726,000.

2. Federally guaranteed taxable bonds at 82-percent interest.

3. The projected schedule for the issuance of bonds is shown in the following table:

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4. Interest (net) represents capitalized interest less estimated return (71⁄2-percent) on investment of unexpended construction and interest funds.

5. Level debt service requirements computed on the basis of 40 installments of principal repayment. 6. Bond expense computed at 1 percent of total bonds.

Mr. APPLEBY. As you indicate, the Department of State has taken the position that the proposed legislation is consistent with the foreign policy objectives of the United States and a letter to that effect from Secretary Rogers is appended to Mr. McCloy's testimony together with some other pertinent materials.

Also, the Department of Housing and Urban Development has completed a detailed analysis of the corporation's plan as approved by New York City and it is my understanding that HUD found the proposal to be financially and otherwise sound.

Thank you, Mr. Chairman. I appreciate the opportunity to be here. The CHAIRMAN. Thank you.

The bill, as I say, just was introduced yesterday and has just come in to the committee today. We will send it down to HUD as we do in all cases of legislation and ask for their comments.

We are very glad you gave us this presentation.

Mr. APPLEBY. Thank you, sir.

The CHAIRMAN. Thank you.

This concludes the hearings on this legislation. We have been running right about 3 weeks. The record will be kept open for 1 week. If there are any further statements, changes, corrections to be submitted, we shall be very glad to receive them within that time. The committee stands adjourned.

(Whereupon, at 12:05 p.m., the meeting adjourned, subject to the call of the Chair.)

(The following was received for inclusion in the record:)

CITY OF CLEVELAND, August 10, 1970. DEAR SENATOR: I am enclosing a copy of my remarks in support of H.R. 16647— The Urban Growth and New Community Act of 1970, which I had hoped to deliver to your committee in person.

The Ashley Bill, which H.R. 16647 has come to be known, is one of the best pieces of legislation ever to come before the Congress with respect to the insight and comprehensiveness of its approach to the problems of urbanization and redevelopment. The Bill makes obvious the fact that those of us who must deal with the problems of the urban crisis cannot hope to solve these problems at the level of federal funding now available.

If we are to reverse the cycle of decay in Cleveland and other central cities, it is absolutely essential that we have a vastly broadened federal funding commitment based on consistent statewide land use policies as suggested in the Bill. The Bill would make it possible for Cleveland and other cities to seize development opportunities now impossible to realize in railroad rights-of-way, air rights and other urban land now used for marginal purposes or uneconomically platted. We are particularly hopeful that the passage and proper funding of the Ashley Bill will overcome the lack of success of Title IV of the Housing Act of 1969 in spurring significant new development.

As my enclosed remarks will make clear, I support HR 16647 as essential urban legislation which has been long overdue.

Very truly yours,

CARL B. STOKES, Mayor.

STATEMENT OF CARL B. STOKES, MAYOR OF THE CITY OF CLEVELAND

The Congress is to be commended for its awareness and sensitivity to the ever growing problems of this nation's cities. This has been manifest in the volume of legislation enacted by the Congress for housing and other federal assistance to the urban community. In spite of the good intentions of the Congress, however, the trends in urban areas are uniformly depressing, and the history of housing production has not kept pace with the intentions of this body. It is quite obvious that in particular, the production of low and moderate income housing and the construction of new community facilities which are so necessary if we are to reverse the cycle of decay in our cities cannot be accomplished without massive increases in resources. The huge dimension of the problems that confront us means the problems cannot be solved at the level of funding now in existence. This must be increased substantially. The hortatory preambles in all our social legislation will not alone stem the tide of decay and chaos which faces every major city in this country.

H.R. 16647, the Urban Growth and New Community Act of 1970 is one of the best pieces of legislation to come before the Congress with respect to the insight and comprehensiveness of its approach to the problems of urbanization. Any one knowledgeable about urban problems cannot.do other than to support its aims, and I do so without qualification.

But I must speak to you today from the bias of a mayor of one of our larger cities. Our city's housing problems cannot be met by the private sector or the public sector with the amount of money now available for public housing and rent subsidies. The creation of new communities is an important part of urbanization. However, the creation of new communities alone will not begin to solve the prob lems of our cities today.

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