renewal there. But I do not, by the same token, believe that Federal urban renewal belongs in the central business districts, because I think private enterprise can do it and why should we use all of these tax moneys to do a job that can be done by private enterprise? You asked me a few moments ago, how can I sit here and say it can be done all I can tell you is that I never had such a battle in my life, and I spent 25 years in government, trying to get anything done in the way of renewal. Everywhere I went I heard more from the people who said it couldn't be done than from those who said it could. The people who say it can be done are in the minority. There isn't any question about it. But as I go down the streets of New York City, I see New York City in the high-value districts being rebuilt by private enterprise. I don't see it being rebuilt by Federal urban renewal programs. I see it in residential areas in New York City. Yet in the smaller communities, like Rochester and Syracuse and Buffalo and communities of that size that I am familiar with, I see Federal urban renewal moving more and more into the central business district. There is less and less emphasis by comparison with the past, if I may make that statement, on these very badly deteriorated residential slums. Mr. RAINS. But the idea is to eradicate urban blight. That is what the urban renewal law says it is now. It is for the eradication of urban blight in cities and towns of America. It is for that reason I was trying to determine if you were willing to say to eliminate the section of it that says "urban blight" and just say it is a slum clearance program. Mr. AEX. I think I would answer your question, sir, by saying I believe the percentage of residential requirements should be higher rather than lower. Mr. RAINS. In other words, you are opposed to the theory in the law which states it should be for the removal of urban blight. You think instead it ought to be used for the purpose of residential slum clearance? Mr. AEX. I do. Mr. WIDNALL. Will the gentleman yield? Mr. RAINS. Yes. Mr. WIDNALL. Is there not slum clearance is not slum clearance urban blight? Mr. RAINS. Originally, it was to rebuild houses for people to live in, not businesses, but it was changed in 1954. Mr. WIDNALL. Would you yield further? Mr. RAINS. Yes. Mr. WIDNALL. In 1954 there was a limitation of 10 percent, as I recall, for the amount to be used for commercial redevelopment. This has steadily been upped to the point where in the pending bill it would go to 35 percent and in practice it could be 50 percent. This is a far cry from the original objective, and it certainly means we are getting further and further away from the human needs. Mr. RAINS. Mr. Fino? Mr. FINO. I just want to say that it is very refreshing to hear Mr. Aex inject a different viewpoint here. As the chairman has indicated 1 we have heard witness after witness talking about the inability to go ahead with urban renewal unless the Federal Government moves in and that if you put it on a loan basis rather than the grant basis they just would not go ahead with this kind of activity. I just want to ask you, on this Midtown Plaza, I believe you testified it took about 32 years? Mr. AEX. Yes. Mr. FINO. This was all private enterprise. You have about four or five Federal projects underway? Mr. AEX. I believe there are four. Mr. FINO. When did that start and how far have you gotten? Mr. AEX. Well, we had one project that started 7 or 8 years ago. Mr. FINO. Is it completed yet? Mr. AEX. No. Mr. FINO. Would you say that is because of Government interference or Government participation? Mr. AEX. No; I wouldn't be as critical as that. This project that I am referring to, this is a project that had a high percentage of residential character to it. Mr. FINO. So you had a problem of relocation? Mr. AEX. You had people involved and admittedly, when you have people, you can't move quite as fast. I don't believe the community has been harmed by the timelag in that project as it would be and will be if anything like it is duplicated in the central business district where, in most communities, the high percentage of your tax return comes from. The thing that I keep emphasizing in my own thinking is that we must find some other way; other than to take the properties off the tax roll in the high-value districts and have this timelag that inevitably comes-follows. But it doesn't do as much harm in the type of area that is involved in this project that I am speaking to you about. Mr. FINO. Let me ask you, in connection with these Federal projects, are they not being built, constructed or undertaken by private enterprise you have private sponsors? We call them sponsors in New York City. Mr. AEX. One of the problems with a Federal project is that it is pretty theoretical and has to be a federally aided project. You can make your appraisals, your appraisal studies, and land reuse studies and get the experts in to help you. But the fact of the matter is that first you take the property away from the private owners and for a period of time it is owned by the local government and you clear the land and you install certain facilities and then you hope and you pray that private enterprise will come in. When private enterprise doesn't come in, or it doesn't come in right away, you have the problem that inevitably has been attached to this type of project. What I am pleading for is don't let this happen in the central business districts of cities or we will raise havoc. Mr. FINO. Mr. Chairman, in view of the fact that Mr. Aex made reference to this Midtown Plaza diagram and also the figures in connection with the proposal, may I ask that it be embodied in the record? Mr. RAINS. It is a little difficult to include the drawing, but since it is so good it may be included. (The drawing referred to follows:) Legend: (See next page) New Construction 4, 13, 14, 15, 16, 17, 18 Modernization 1, 2, 6, 7, 8, 10, 11, 12, 19, 20, 22 $32,950,000. Rochester, N.Y., high value central business district new construction, expansion, and modernization (generated by Midtown Plaza since April 1962) NEW CONSTRUCTION Legend 4. Security Trust Office Building, 13-story office building un- Legend 14. RBI (Rochester Business Institute), plans announced for Legend 15. Travelers Insurance Building, 30,000-square-foot office building recently occupied and rented_. Legend 16. Downtowner Motel, 240-room motel recently completed__ Legend 17. Central Trust Bank Building, plans for new branch recently announced____. Legend 18. Lincoln Rochester Trust Office Building expansion, large office building addition_-_-. Total_ $4, 000, 000 20, 000, 000 2, 000, 000 450,000 2, 400, 000 1, 100, 000 3, 000, 000 32,950, 000 EXPANSION OF EXISTING UNITS Legend 5. Manhattan Restaurant, new dining room and new facade recently installed. Legend 9. Sheraton Hotel, new pool and addition under construction. Legend 21. Davids' Building, building by Community Savings Bank for office expansion. Legend 23. McCurdy's Northwest expansion, proposed expansion noted for future development. Legend 24. McCurdy's Southeast expansion, 120,000 square feet added. MODERNIZATION OF EXISTING UNITS Legend 1. Sibley Tower Office Building, new lobby installed, plans for air conditioning announced. Legend 2. Temple Building, office corridors redecorated, new elevators installed, plans for new lobby. Legend 6. Levis Music Shop, relocated to new Main Street premises. Legend 7. Du Pont (stockbroker), new offices opened. Legend 8. Rochester Gas & Electric Corp., remodeling of front in progress. Legend 12. Richford Hotel, front sandblasted, lobby redecorated. Mr. RAINS. Mr. Barrett? Mr. BARRETT. Just one question, Mr. Aex. Back in 1928 and 1929 I was really attracted by urban renewal because of the work I was doing in rehabilitating houses. People were losing their homes in those days and I bought many of them. The real estate people who had buildings to sell asked me if I was interested in buying them. Many of them were rundown. Before I would finish the remodeling work someone would come along and ask me what I wanted for the house. I reached the point where profit was more interesting to me than completing and settling. I would say to them, all right, give me a profit and you can take over and complete the work. As you know, labor was cheap in those days and I did it more to give people employment. As I did this work, people got interested, because they wanted something new. They wanted a freshly painted home and they were interested in buying. I considered that as an incentive. When urban renewal came along I know it would have the same attractive effect on the people, they would buy. I just heard you say that you had 25 years' experience in this category and you think some incentives ought to be given to prevent us from going into the centralized areas of the various cities. What can you suggest as an incentive so it can be worked on and developed in order to get private enterprise to come in instead of the Federal Government? Mr. AEx. You are referring to the central business district? I made two suggestions that would be incentives, one, take away the objectionable capital gains tax on the sale of deteriorated property, providing the owner makes a reinvestment just as you do with the sale of a residential piece of property. I think this would be an incentive for people to sell from one to the other, where the others are going to be the persons that will renew and modernize and rebuild. Mr. BARRETT. Would that indicate that the cost of demolition would be added to the cost of the ground? Would that be an incentive? Mr. AEx. Yes, it could be. I could see that as a possibility. Mr. BARRETT. Do you not think we have to create and inaugurate some attraction in order to give them some incentive? Mr. AEX. I won't try to refer to it here, because I don't think the members of the committee can see it. But I have in my bag a full-page newspaper spread of not more than 3 weeks ago by the owner of a piece of property in downtown Rochester, two blocks from Midtown Plaza, the property is 40 years old. I have examined the commercial buildings that are involved in some urban renewal projects and I have seen buildings torn down that seemed to me had the possibility of restoration. The thing that attracted my attention here was that this fullpage ad in which it said this 40-year-old building had been completely air conditioned, whereas before they were renting for $2.75 to a top figure of $3. This is $3 a square foot and they are now renting for as high as $5 a square foot. It seems to me that here is this business of contagious modernization and repair. Mr. BARRETT. Mr. Aex, I do not want to take too much of your time, but if you have those points, I would like you to send them to the committee. Mr. AEX. I will do that. Mr. RAINS. Mrs. Dwyer? Mrs. DWYER. In reference to the colloquy on Federal taxes, under a previous administration legislative recommendations were that the Federal tax on telephone service be returned to the States for the purpose of financing vocational education as a first step in returning tax money back to the States. The Congress refused to act on this recommendation. Now, I have one question: You said in your statement something about inaugurating a program of residential rehabilitation. How is this accomplished? Mr. AEX. I was trying-I was referring to a program of rehabilitation of residential structures rather than a program of slum clear |