Lease-Purchase Plan

To get the Government out of competition with the building industry, the Budget Bureau and the General Services Administration last year tried a new idea. Why not let private builders pay for new post offices and other federal buildings, sell them to the Government on a lease-purchase deal? Last week Budget Bureau Director Rowland R. Hughes reported that the lease-purchase program's first year has been highly successful. The General Services Administration has approved 26 lease-purchase building projects valued at a total of $91 million; the Post Office Department has approved 27 projects. Total value: $105,562,027.

In a lease-purchase arrangement, the Government gets a private contractor to pay for the building, keep title to it. The Government moves in, pays the contractor a fixed yearly sum, also reimburses him for local taxes, insurance and other costs. At the end of the lease period (maximum: 25 years), when the contractor's cost is amortized and his profit made, title to the building goes to the Government. Advantages of the lease-purchase device are that it keeps a steady flow of new buildings coming into the federal system, smooths out peaks and valleys in federal spending caused by enormous lump-sum building appropriations. Moreover, while the contractor has title to the building used by the government, it is not federal property, hence stays on local tax rolls.

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