Mr. BRINKMAN. Probably not, Senator. Those were in what might be called good years. The point is that many of these bonds should never have been issued, and probably would not have been issued if there were proper supervision before the securities were put on the market.

Senator KEAN. Of course, as to the hotel bonds, the savings banks and great insurance companies will not buy them. It does not make any difference what they are, from their past experience with hotel bonds it has been such a big risk that the big companies will not

buy them.

Mr. BRINKMAN. Nevertheles, these bonds are permitted to be sold

here.

Senator KEAN. Have they all gone to default here?

Mr. BRINKMAN. Some of them are headed that way, Senator, here in town.

To get down to two issues that demonstrate the need for supervision, we find the issue of the bonds of the Mayflower Hotel; and that might as well be taken up first, because it demonstrates the need for the law.

Senator BLAINE. I would like to take up first the assessment of several properties in the city, and then follow that with each specific case after the investment is put in.

Mr. BRINKMAN. You want to call the assessor?
Senator BLAINE. Yes; I would like to.

STATEMENT OF WILLIAM P. RICHARDS, ASSESSOR FOR THE DISTRICT OF COLUMBIA

Senator BLAINE. Mr. Richards, you are the assessor for the District of Columbia?

Mr. RICHARDS. I am.

Senator BLAINE. We need not administer the oath, because you have already subscribed to an oath, so we will just go ahead. The first property I would like to have you tell us about is the Mayflower Hotel and addition, the assessment made in 1928. That consists of square 162, lot 88?

Mr. RICHARDS. Lot 88 and lot 91.

Senator KEAN. Mr. Chairman, may I ask two or three questions? Senator BLAINE. Yes.

Senator KEAN. You are the assessor of the District?

Mr. RICHARDS. Yes, sir.

Senator BLAINE. You are the sworn assessor and you have taken your oath that your valuations are the true valuations of property in the District?

Mr. RICHARDS. As near as I am able to make them; full market value as near as I am able to arrive at them.

Senator BLAINE. And you assess on the full valuations according to your best judgment?

Mr. RICHARDS. According to my best judgment, we are somewhere between 90 and 100 per cent. In some cases sales have been above our valuations and in other cases below.

I have here some sales comparisons, which I will put in later, on that I would like to offer in substantiation of what we are trying to do.

Senator BLAINE. We will take the assessments of lots 88 and 91. I think you can give those separately, can you not?

Mr. RICHARDS. Yes. The number of square feet in lot 88 is 59,329, at $20 per foot, or, land, $1,186,580; improvements, $3,250,000, or a total of $4,436,580. Lot 91, 5,277 feet, at $20 or $105,540 for the land; $190,000 for improvements, or a total of $295,540; and for the two the total is $4,732,120.

Senator BLAINE. And the tangible property assessment, based on the sworn return of the owner?

Mr. RICHARDS. On the sworn return, $500,000, making the total of the real estate and the tangible property $5,232,120.

Senator BLAINE. What year was that for?

Mr. RICHARDS. Beginning July 1, 1929, the assessment made in 1928, for the fiscal year 1930.

Senator BLAINE. Now, we will turn to the Wardman Park Hotel, lots 25 and 824, annex, and we will ask you to give the same items as you did before.

Mr. RICHARDS. I have for lot 25 in square 2132, 583,173 square feet, at $1.25, or land, $728,966; improvements, $2,853,600, or a total of $3,582,566; the annex, 117,994 square feet, at a rate of $1.65, or land, $194,690; improvements, $1,000,000, or a total of $1,194,690; the total of the two, $4,777,256, or very close to $5,000,000.

Mr. BRINKHAM. I suggest that we can put this statement in the record, and thus expedite the hearing.

Senator BLAINE. Yes; certainly.

Mr. RICHARDS. I will just read the titles of those that are on here and then hand it over for the reporter.

Senator BLAINE. All right.

Mr. RICHARDS. I have the Carlton Hotel, the Boulevard Apartments, the Cathedral Mansions, the Chastleton Hotel, Connecticut Avenue and Davenport, the Highlands, the Stonleigh Courts, 2700 Connecticut Avenue, and the Department of Justice Building. (The statement referred to is as follows:)

Assessment of full value (100 per cent) Wardman real-estate properties as of September 15, 1928

(As of July 1, 1929, fiscal year 1930. Assessment made in 1928)

Assessment of full value (100 per cent) Wardman real-estate properties as of September 15, 1928-Continued

Senator BLAINE. The total assessment of all of the property on your sheet, beginning with the Wardman Park Hotel, I notice is $17,145,525; is that right?

Mr. RICHARDS. Yes, sir. That is next to the last column. The last column, by Ford, Bacon & Davis, we had nothing to do with. Senator BLAINE. You do not know where those figures came from? Mr. RICHARDS. No, sir.

Senator BLAINE. Now, Mr. Richards, you wanted to make some statement regarding your assessment methods. Let me say, first, that we will offer in evidence these two statements, one relating to the Mayflower Hotel and additions, and the one relating to the Wardman Park Hotel and the Department of Justice Building, all inclusive, about which Mr. Richards has testified.

(The Mayflower Hotel statement referred to is as follows:)

Assessment (full-value basis) Mayflower Hotel and addition as of April 11, 1928 1

Buildings, furniture, equipment, etc. (including intangible
values) -

9, 854, 245

Total..

Valuation by Lockwood, Greene & Co. (in circular) of market value of land and building..

12, 600, 000

11, 000, 000

Mr. RICHARDS. Shall I go on in my own way, Senator?
Senator BLAINE. Yes.

Mr. RICHARDS. The only statement that I wish to make is that these assessments have been obtained from the office and to explain, as quickly as possible, our methods of assessment and how we have agreed, in the sales values we have gathered, with the assessments that we have produced.

I do not claim that any two people acting independently are apt to arrive at the same valuation of a piece of property. It would be impossible to have the assessors take up single pieces and go into them in great detail. Our final results are based on the idea that the combined assessments, when compared with the combined sales, are very close, and that those combined sales are the combined ideas of purchasers made at different times and under various conditions.

We are first guided in our assessments by the law that says that we shall assess at full fair market value, and we have the instructions of the court as to market value, a willing buyer and willing seller, and so on. In order to arrive at that in our assessments, we use maps, and each particular piece of property or holding within the District has either a square and lot number or parcel number to designate it from any other piece or parcel of ground. These maps of ours are complete over the entire District of Columbia. We have descriptive data of buildings, and I may say that I think every large building that we are dealing with has been cubed, and has been carefully examined and even has been gone into as to details of construction.

We have sales under the best conditions that we could find them, and in years gone by those sales were tested by stamps on deeds. That is no longer done. We use unit values in working out our lots.

We use unit values in our corner data. We have factors for various classes of buildings, and I have men in the office who have, many of them, been there for a dozen years working on these different plans and ways of arriving at property value and who have conversed with all the various experts in the District on valuation. Therefore our final adjustment is an adjustment from opinion, gathered from sales, from rents, leases, cost of buildings, building factors, and future utility.

I have here, Senator, an outline of those things that guide us, and I would like to submit that as part of my statement.

Senator BLAINE. Have that made a part of the record.

(The statement referred to is as follows:)

PRINCIPLES GUIDING THE ASSESSMENTS OF REAL ESTATE IN THE DISTRICT OF

COLUMBIA

Fair market value is best expressed in the instruction given by the Supreme Court of the District of Columbia for the condemnation of land in square 690, namely:

"The several parcels are to be appraised at their fair market value, with reference to the most advantageous uses to which they can be put by private persons or corporations, and by market value is meant what the property would sell for in cash or on terms equivalent to cash, when offered for sale by one who desires but is not obliged to sell, to one who desires but is not obliged to buy." Fair market value is stated by a New York authority as "the price obtained when voluntarily offered for sale in the open market under equable and normal market conditions, to the competition of buyers." The Missouri Tax Commission, 1918, declares that true value "is the usual and customary selling price at private sale under normal conditions, when a ready, willing, and able seller deals with a ready, willing, and able buyer."

In order to simplify and expedite the making of assessments it has been necessary ot adopt certain rules indicated by lines of experience and to bring into play various scientific helps. The office, therefore, submits seven requirements for a correct assessment of real estate.

1. Maps, giving boundary lines, area, and distinctive numbers of each holding. 2. Descriptive data of buildings, giving character and dimensions, cubic feet, cost, and other information.

3. Sales under normal conditions, offers, and monthly and yearly rentals. 4. Unit values for lots of different depths.

5. Factors for various classes of buildings, that is, the value per cubic foot or the value per square foot of floor space.

6. Assistants with experience and knowledge arising from many years in office and field work.

7. Assessors with experience and judgment.

It is generally conceded that the value of property, improved to its best advantage, is disclosed by the capitalizations of a fair rental. This would be extremely simple if it were not a difficult matter to consider the sufficiency of the rental and what percentage to use in capitalization. Sales are the bedrock upon which assessments are built. Cost of construction, rents, condition, and adaptability of improvements, all enter into the fair market value of real estate. Sales are concrete expressions of the value of these elements. When sales are missing values are determined by an examination and comparison of any of the above elements.

Although the assessor may have data derived from a multitude of sources, still the most acceptable guide comes from sales made under conditions hereinbefore explained. Sales have the nature of competition in the investments of capital. They are a bid for revenue, each investor striving to place his money on the best and safest income paying basis.

Data as to the nature of and the amounts involved in ali sales is gathered by a field force of five men. For several years the considerations have been indicated by stamps attached to deeds, and 80 per cent of these cases may be accepted as reliable. The field force likewise gathers data as to size and condition of building, rents, leases, cost of construction, offers or any data useful in assessment work.