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This is the proposed headquarters building for the AMERICAN CHEMICAL SOCIETY

A N e w Building for ACS R A L P H C O N N O R , Chairman of the Board, American Chemical Society

Expanding activities and some 16 years of occupancy have led to overcrowded conditions at Washington headquar­ters. Much study has led to the proposal to erect a new building on the present site

O VER THE PAST FEW YEARS r e p o r t s t o

the Council from the ACS Board have repeatedly mentioned the serious space problems we have in our Washington office where we house the staff of the Executive Secretary and of the Applied Publications.

This study has been going on for four years. When I was elected a Director-at-Large four years ago, my first official act was to attend a meet­

ing of the Finance Committee prior t o my first Board meeting at which t he main subject for consideration was whether our headquarters activities could be expanded in Washington or elsewhere and whether it was desir­able to own our own space. Discus­sions on this subject have continued. This may seem like a long time to take in coming to some final conclusions, b u t I believe with this you will begin to

recognize the complexity of the prob­lem, the care with which each factor h a s been considered, and understand why we have taken so long to come to final conclusions which we can present t o you.

The present ACS building was ac­quired some 16 years ago at a price which is a fraction of the present value of the lot upon which it stands. I t has served the Society well, and is perhaps

SEPT. 16, 1957 C & E N 1 2 1

ACS NEWS

<4 Before the So­ciety moved to its present headquar-t e r s i n iv jay x?7<±x, it had offices in the Mills B u i l d i n g , Washington, D . C. Here is historic Pennsylvania Ave­nue as viewed from the old offices

one of the best investments that the Society has ever made, from a purely-financial standpoint. Initially, it afforded floor space in excess of that required by the ACS. This was rented to eligible tenants which, except for the wartime period when Washington regulations were waived, were required to be other nonprofit organizations. As the Society expanded, the amount of space rented decreased until finally the Society occupied the whole building.

The building was adequate for pur­poses at the time, and in securing it the ACS obtained one of the finest loca­tions for a professional society that exists anywhere in the country. Six­teenth Street is a highly restricted area limited to hotels, apartments, and build­ings for the use of nonprofit organiza­tions. The four corners at Sixteenth and "M" Streets are now occupied by a residential hotel, the National Educa­tion Association, the National Geo­graphic Society, and the AMERICAN CHEMICAL SOCIETY. The National

Education Association is just complet­ing a $7 million rebuilding program on the site which it has occupied for many years. The National Geographic Society has within recent years added new construction and increased its real estate holdings adjacent to Sixteenth Street.

I have stated the good things about this acquisition; I have some criticisms. First, available space is not adequate for present demands. The accommo­dations are not as spacious as would be

Present ACS headquarters at the corner of 16th and "M" Streets. A center hollow core and many corridors make only 18,700 square feet usable for offices

1 2 2 C & E N S F P T. 16, t 9 5 7

ACS NEWS

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In the past 10 years available floor space has not kept u p with increased staff growth

judged by looking at the building's ex­terior. It was not constructed to be an office building, and its layout is in­efficient for this purpose. Of a total of 40,000 square feet in the building, only 18,700 square feet are usable for offices. The hollow core and the arrangement of corridors and services give a small ratio of usable space to total area. And because of its age, maintenance costs are high.

Do W e Need More Space?

Certain questions h a d to b e answered before a new building could be con­sidered.

Employees are becoming more and

more crowded. Those who have been inside the building to see the staff have had eye witness evidence of the crowded conditions. In the past 10 years the Washington staff, which in­cludes both the office of the Executive Secretary and the staff of the Applied Publications, has virtually doubled. The Society feels that the field of chem­istry and chemical engineering in this country will continue to grow and that the ACS as a key part of both will continue to grow in membership. It is also a hope that the Society can expand its areas of usefulness; if this is to be done, needs for space will increase faster than membership increases.

Therefore, there is no doubt of expand­ing requirements for headquarters facilities.

Why Not Move to Some Other City?

The possibility of other locations has been considered. We did not find any place where we could better solve our problems. First, the ACS would lose by moving a substantial number of valuable employees. A majority of employees have ties in Washington which would make it impossible for them to move. The Society would lose these well-trained and highly effective staff members and, even if they could

SEPT. 16, 195 7 C & E N 1 2 3

ACS NEWS

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A typical floor plan of the new proposed ACS headquarters building

be replaced by people of equal com­petence, there would be a difficult ad­justment period for the Society. To justify moving, there would have to be some important advantage to offset this major disadvantage.

Second, there would still have to be an office in Washington. Relations with the Government and with other scientific and technical organizations located in the Washington area require the Society to have at least some key employees in Washington.

Third, in Washington, we are exempt from real estate taxes. To achieve a similar status elsewhere would require independent legislative action and we cannot count upon a favorable out­come. Legal matters can b e long, in­volved, and uncertain.

These are some of the disadvantages of moving. No place was found where it appeared likely that money could be

saved for the Society. Therefore, an early conclusion was that whatever the Society might do to solve its space problem, it could best be done in Washington.

If It Is Important to Stay in the Washington A r e a , W h y Not Con­sider Some Suburban Location?

Other possible sites in the Washing­ton area were investigated. However, once the Society leaves the District of Columbia, it is up against the problem of tax status and the necessity of legis­lative action in either Maryland or Vir­ginia to secure the tax advantage it now has in the District.

This would also introduce a difficult problem in commutation. Transporta­tion now is excellent, but in the outly­ing districts transportation facilities are not so good. We would have a smaller

area from which to draw employees. Furthermore, it is good business to

build space in excess of our present re­quirements and to rent this space to others until we need it. T h e more re­mote the building, the more difficult t o rent this space. Even if w e are suc­cessful in renting it, it would have to b e at a lower price than a central location; this tends to make the undertaking less economical.

In arriving at this conclusion we cal­culated tha t we could sell our present building at a good price and acquire considerably cheaper real estate on which to build. Actually, we cannot count upon getting the full value of our present property without waiting a considerable period of t ime. Zoning restrictions on the use of t h e site mean that the market for t h e location will b e limited. Basically it is a valuable prop­erty; and by waiting long enough w e

1 2 4 C & E N SEPT. 16. 1957

ACS NEWS

could probably dispose of it on favor­able terms. The l imited market simply means that we cannot b e confident of the t ime interval required. However, even if we assume that we could sell it at the proper price and at t h e t ime we want, we still would not compensate for the lower value of rental space in a suburban location. And if i t turns out that w e have to pay real estate taxes in the suburbs, this would make a sub­urban location far more expensive for us. Actual construction costs would be about the same, regardless of location. Therefore, we concluded that we should retain our present site.

Why Should W e Own Our Building?

In order to avoid capi ta l expendi­tures, a long-term lease on a building which might be constructed and owned by someone else was considered. This might be advantageous if w e did not enjoy a tax-exempt status. For the ACS, it turns out not t o be advantage­ous. If w e had to p a y income taxes, for example, the cost of ren t could be a part of the cost of doing business. To some, this plan would have advan­tages; however, we are tax-exempt, and this changes the pic ture . Actually, we might be leasing from an organization which does pay taxes, so tha t our rent would represent a re turn t o them for their tax costs as well as for a return on their investment. Therefore, the operating costs of the Society would be considerably higher if w e leased space and it is to our advantage t o own our own property.

How Large a Building Should W e Build?

Initially, some felt tha t the wise thing would be to design a structure of the maximum size to b e erected on the present site but to bui ld this in incre­ments. For example, we considered building one wing of what would be a final structure and using it together with the present building until more space was needed. W e then proposed tearing down the present bui lding and erecting the rest of the structure. Floor plans were d rawn and estimates made of five or six different possibilities. A final unanimous conclusion was reached which was t o build now a structure of the maximum size per­mitted on this location. Following are some of the points which led to this conclusion:

• The over-all cost to the Society would be considerably greater to do it in installments.

• The maximum size does not have an unreasonable relationship to present requirements.

• Permission of the Zoning Board has been granted to rent the excess space without the limitation that it be re­stricted to nonprofit organizations. The latter is an important point. It means that the Society will have a much larger market for the area when available. It is believed that the excess space can be rented on terms which will provide revenue in excess of the amount needed for building maintenance for many years to come.

Present requirements for the staffs of the Executive Secretary and of the Di­rector of Publications, Applied Journals, are 38,000 square feet. If as much of the ground area as zoning regulations permit is covered, and if an eight-story structure is built ( the maximum per­mitted bu t which has been approved by the Zoning Boa rd ) , 80,000 square feet of floor space will be available, slightly more than double the amount of area which is immediately needed. How long it will take the ACS to need all of the area in this building is not known. Extrapolation of some curves suggests that this entire building will be re­quired for our activities in about 20 years. If chemistry continues to grow in importance, then, unless the ACS fails to discharge its obligations, it will grow also.

Furthermore, it is anticipated that the services rendered should increase. At hand is an interesting example. The increased income to the Petroleum Research Fund will require staff serv­ice of a type which we have not had to give before. Anything we do to­wards increasing the things we do for local sections, for divisions, for indi­vidual members, which represents work not previously done, will require an expansion in staff activities. I do not believe that it will take 20 years for the chemical industry to double in size.

What Type of Building Should W e Build?

The first consideration should be to provide the most efficient utilization of space.

The new building's floor plan, we believe, will give efficient working

space; it also makes available space for machine operations, essential with a continuing growth in the number of members and in the complexity of operations.

In addition to office space, we feel that we should have a library includ­ing copies of all the Society's publica­tions, as well as other important chem­ical publications. This is something the staff needs and which we would expect to make available to others. W e also want to provide an assembly area. Presently we have no large meeting room. We have in mind an assembly area which can accommodate a single group of 250 but which has a folding divider so that two smaller meeting rooms can be provided from it. In addition, we think we should have a room suitable for committee meetings and for meetings of the Board. Finally, we think there should be a small lobby which has the possi­bility of a display area. W e do not have in mind any elaborate technical displays or displays of chemical prod­ucts. W e are thinking more of educa­tional displays which might be of in­terest to visitors to Washington, par­ticularly the thousands of high school students who come every spring. The National Geographic Society has done this quite successfully; we believe that there is something worthwhile that the ACS can do in this connection.

What Will the Building Cost?

It is estimated that this building will cost $3 million. Projected over a 50-year life, with necessary addi­tions for maintenance, it is believed the ACS can build and occupy office space on the present site for $3.31 per square foot per year. This includes depreciation of the cost a t 2 % per annum. Present cost of rental space in Washington is now at least $5.00 per square foot per year.

W e believe that this is an economical and efficient plan. It has been the subject of much time and study by Robert Mellefont and Alden Emery, by the Board's Building Committee of which Wallace R. Brode is chairman and Clifford F. Rassweiler and John C. Warner are members, as well as by our architect, Mr. Faulkner. You will be interested to know that the ACS build­ing will have 5 times the floor area at a cost 3 3 / 4 times as much as the nearby AAAS building.

SEPT. 16. 1957 C & E N 1 2 5

ACS NEWS

How Will W e Pay for This Building?

At last we come to the $3 million question. Obviously, if we had no problem of financing the building, we would not have given so much atten­tion to various way of minimizing our capital layout, and we obviously had to feel that it could be financed before we could decide to build.

Certainly we cannot finance this from our income. For a decade the annual budget approved by the Board of Directors has depended upon op­erating economies to balance expenses against current income. In this way we have operated in the black in 1956 and 1957 but by a small percentage of our total budget . There is certainly no possibility of getting anything like $3 million from our income. Some one may ask about raising dues. We are reluctant to use dues for anything other than operating expenses. We want to make it as easy as possible for younger members of the profession to enter the Society; the Board does not feel that dues represent an appropriate source of capital funds. Anyway, if you want to consider this further, think what the dues would have to be for 80,000 members to contribute $3 mil­lion. Finally, as to the increased in­come we may have as a result of an increase in membership, we i>hall be fortunate if this compensates for reg­ularly increasing costs, for the Society is subject to exactly the same infla­tionary pressures that we feel as indi­viduals.

Neither can this be totally financed from our reserve funds. We have more than $3 million in our reserve funds, but the Board would not recommend using them for this purpose for two reasons. First, a substantial part of these reserves is earmarked for specific purposes; for example, the Petroleum Research Fund cannot be used for Society expenses but must be used solely for fundamental research and advanced scientific education in the petroleum field. We have acquired some reserves for Chemical Abstracts, but in creating these we specified that the funds would be used for CA and these are the only funds which we would have to offset a bad financial year for that publication. Only a frac­tion of our reserves is not earmarked, and we would not recommend using

all nonearmarked reserves in an invest­ment from which lht:y could not readily be recovered at any time. These have been built up slowly over a long pe­riod of time to use in the case of a major emergency; they must be in­vested in such a way that they can be recaptured if any emergency arises.

The case of Chemical Abstracts is an important example of the impor­tance of the Society's reserves. Prior to the establishment of the present pricing of the CA Service, there was a period of heavy deficits with CA. The reserves accumulated for th.'s pur­pose from the dues of Corporation Associates were used to finance these deficits; without such funds we would have been in a serious financial situa­tion and we would have been sorely pressed to find a way of continuing this essential service.

Therefore, the conclusion was reached that a substantial part of the money for this building would have to come from a mortgage. This was not a pleasant prospect, for the annual expense for interest and retirement of a mortgage would be a substantial, priority sum in our annual budget at a time when we are subject to infla­tionary pressures. The addition of such a priority item could, if large, delay expansion in the services we can give our members.

Yet we must have space, and even with provisions for payment of interest and depreciation ( 2 % ) , this still leaves us with lower operating costs than renting space. Thus, we early came to the place where we were considering mortgage arrangements. Almost si­multaneously, identical suggestions be­gan to reach us from many members. Many people said that members would want to contribute to the new home of the Society. Some even accom­panied their suggestions with an offer to pledge a specific sum of money. Some corporations expressed interest.

Actually, during most of the time we were making these plans, we were assuming that we would work out some way of doing this without asking any help. The Society, so far as I know, has never conducted a fund-raising campaign of this type, although many societies have done so. Fortu­nately, in the past our rate of growth and the success, in particular of our Applied Publications, have enabled us to meet our financial needs from our

own resources. Therefore, a fund-rais­ing campaign is a departure from precedent; many of us were frankly skeptical about undertaking it.

Consequently, the Board retained the services of a well-known firm ex­perienced in problems of this kind and authorized an independent field study to be made u y a representative of that organization. He visited a number of sections and called on many members and corporation executives as well.

The result of the specialist's report, based on what he was told by ACS members, showed such a wide interest in participating that the decision was made to offer every member an oppor­tunity to share in our new building. We also hope that some industrial or­ganizations will also contribute. The details of any campaign have not been fully developed but this will be done in a series of meetings.

To summarize our thoughts on financing the building, we shall, of course, have no problem if we receive contributions in excess of $3 million. Whatever amount we do raise will permit us to go ahead with a lower indebtedness and/or a lower commit­ment of capital obtained from alloca­tion of nonearmarked reserves. It is our opinion that as a result of anything reasonable that we can expect in the way of contributions w e shall be able to finance this project successfully without too seriously adding to our annual budget for carrying and retiring indebtedness.

There is one aspect of a funds cam­paign which I 'want to emphasize. While I do not want to indicate a lack of interest in substantial contributions, many of which are needed if the cam­paign is to be a success, the most grati­fying thing would be a complete par­ticipation of our membership, even though in many instances it repre­sented only a modest contribution. There are few instances where the members of the Society have an oppor­tunity to present a united front on any matter. For many of us it may be once in a lifetime that we can join in such an achievement. If, in this en­terprise, we can demonstrate that unity of the Society, it will not only be heart­ening to those of us who are partici­pating in its activities, but will bode well for our future achievements and for improved standards in our services to the members, the profession, and the nation.

1 2 6 C & E N SEPT. 16, 1957