mind that it only includes The Long Island Railroad Company's portion of the expenses of grade crossing elimination. Under the Railroad Law the cost of eliminating grade crossings is divided between the company, the State and the City in the proportion of one-half by the company and one-quarter each by the State and City. The Committee is unable to give definite figures at this time of the cost of grade crossing elimination as the original estimates are being revised in view of the marked increase in cost due to war conditions. It may be, however, that all of the projected grade crossing elimination may not have to be done at the beginning and the cost can be spread over some years. Numerous studies both of the physical and financial aspects have been made in the course of the rather prolonged consideration of this matter and discussions have been held with representatives of the railroad company, as well as of civic associations and property interests affected, which finally resulted in the reaching of a tentative understanding between the railroad company and the Committee at a conference held on February 27th 1917 which was generally as follows: Term of Lease.- Fixed term of ten years to continue thereafter until terminated by either party upon notice. Notice to be given by railroad company to City five years. Notice to be given by City to railroad company three years. Such notice may be given within ten years so as to terminate the term at any time after the tenth year. Basis of Apportionment.- Car mileage basis to be used. Expenses of joint operation and maintenance including taxes are to be pro rated on car mileage basis. The question of power to be subject to subsequent negotiations. Additional Facilities.- For joint use to be provided by the Long Island. 5 per cent per annum on the cost to be pro rated on car mileage basis and added to basic rental. The cost of eliminating grade crossings shall not be considered an additional facility, and no interest. thereon to be added to the rental. News, Vending, etc.- In regard to the news, vending, advertising and other station privileges, the rail road company will consult its licensee and endeavor to have a joint understanding for division of the privileges so that the rapid transit line will not be deprived of its share of the privilege. In regard to transportation of property -package freight the railroad will consult its licensee, the Adams Express Company, and endeavor to make arrangements that will permit of the rapid transit lines retaining its privilege for this service under their existing rapid transit contracts. Rental.- Basic rental $125,000 for first year; subsequent years rental to be increased 6 per cent per annum over preceding years, up to and including the tenth year, which shall be the maximum and which will continue for any additional period over or beyond the ten years. The word maximum applies only to basic rental which is subject to increase for interest on account of additional facilities as set forth above. Only such portion of the basic rental not including of course expenses of operation and maintenance, etc., as may be earned by the City rapid transit shall be paid each year, but such amounts as may not be earned shall subsequently be paid. The effect of this is that any short deficits in rental in the beginning of the operation shall be accumulated without interest. Note. By letter dated March 10, 1917 the company has asked that any accumulation of deficit be limited to the first five years. The results of these negotiations to date indicate a substantial improvement of the propositions. That of September 30th 1915, involving a basic rental of $125,000 with a 6 per cent increase each year, was, of course, much better than the proposition in the letter of April 6, 1915 of a basic rental of $250,000 per year. Comparing the terms of February 27, 1917 with the proposition of September 30th 1915 it will be seen that the financial basis is bettered from the City's standpoint in these respects: The requirement of an allowance of 7 per cent interest on grade crossing elimination expenditures of the railroad company is withdrawn. The interest allowance on the cost of other improvements borne by the railroad company is reduced from 7 per cent to 5 per cent. These concessions represent a saving of $70,000 a year. So The basic rental is to be paid out of the earnings, and deficits therein are to be cumulative without interest. that deficits from operation in the early years of operation will be made up out of the increased earnings of the railroad in future years. It has already been pointed out that the Counsel to the Commission and the Corporation Counsel to the City have advised that while Chapter 534 of the Laws of 1913 empowered the Commission to lease trackage rights, it could not have the effect of compelling the operating companies to operate such as an extension under the Dual System Contracts. It has, therefore, been necessary to consider the attitude of the operating companies with respect to the operation of these trackage rights in case a lease were made with The Long Island Railroad Company. While they had not agreed to enter into supplemental contracts, they have intimated that if a lease is made they would require protection against financial loss in operation over these extensions. The Committee has, therefore, had to consider this additional element, namely, of making such terms with The Long Island Railroad Company as will allow the Commission, in its modifying agreements with the operating companies, to protect itself against the necessity of making up of deficits either to either of the operating companies or to The Long Island Railroad Company, or to all. In connection with this phase of the matter, representatives of the various communities have stated at hearings before the Commission and in conferences with the Committee that they would be willing to have an additional fare charged in most of the territory to be served by the proposed extensions. The Committee desires to impress the fact that if it is successful in coming to definite and final conclusions with the companies involved there must be a definite provision for charging an additional fare for a period amply sufficient not only to make the line itself sustaining with a ten-cent fare but also with a reduced fare. In the opinion of the Committee the results of the negotiations justify it in making this report of progress and in continuing the negotiations which will involve the preparation of a form of agreement with The Long Island Railroad Company, and the negotiation of forms of agree ments with Interborough Rapid Transit Company and New York Municipal Railway Corporation modifying Contracts Nos. 3 and 4 respectively. Incidentally there (Signed) HENRY W. HODGE Committee. On April 18, 1917, the Commission adopted a modification of the route and general plan of construction for the so-called Flushing route (Route 52), such modification being made necessary by a change in the street system of the Borough of Queens. This proposal was later withdrawn from the Board of Estimate and Apportionment by the Commission and on April 27 a new plan showing a change somewhat different in character was made and submitted to the Board of Estimate which approved the change on May 23, 1917. Throughout the summer and early autumn negotiations were continued between representatives of the Commission, of The Long Island Railroad Company and of the Interborough Rapid Transit Company as to the necessary legal steps to be taken to validate the proposed lease of the tracks. Commissioner Charles S. Hervey was designated by Chairman Straus to take the place of Commissioner Hodge on the Committee having the matter in charge, as Commissioner Hodge had joined the U. S. forces and had resigned from the Commission upon leaving for France. The Commission fixed October 31 as the date for a hearing upon the terms and conditions of the agreement between the City and The Long Island Railroad Company and between the City and the Interborough Rapid Transit Company. On the date mentioned a hearing was held and largely attended. The proposed forms of agreement presented for consideration contained certain alternative propositions in respect of which opinions of the Commission's representatives and those of the railroad company differed. These differences largely involved questions. of the rental to be paid by the City and by the Interborough Company. While it was expected that, if the project to lease the tracks were consummated, the New York Municipal Railway Corporation of Brooklyn, through its operating subsidiary, the New York Consolidated Railroad Company, would eventually operate over the tracks jointly with the Interborough Rapid Transit Company, no provision was made for such contingency in the forms of agreement, it being decided that that matter should be left for future settlement. Thus the operating agreement concerned only the Interborough as an operating company. In general, the several speakers at the hearing expressed approval of the plan, fault being found with some details and several suggestions being made for changes in the forms of agreement. These were all taken under consideration and the hearing closed. While work on the forms of agreement was being advanced, the Commission was informed by the Interborough Rapid Transit Company, through counsel, that that company had determined that it could not undertake the proposed equipment and operation of the Long Island tracks "at this time". The letter from the company requested that all negotiations be suspended for the present. Changed business conditions were offered as an explanation of the company's altered attitude. The communication setting forth the Interborough Company's views was received by the Commission at its meeting on November 14, at which time Commissioner Whitney pointed out that both the Counsel to the Commission and the Corporation Counsel of the City had ruled that the Commission did not possess the power to compel the Interborough Company to operate over the leased tracks. Commissioner Whitney then proposed that the Corona line be extended from Alburtis avenue to Main street, Flushing somewhat more than a mile; on his motion, seconded by Commissioner Hervey and unanimously carried, the Chief Engineer and the Chief of Rapid Transit were directed to proceed with the preparation of plans and a form of contract for the construction of a rapid transit extension from Corona to Main street, Flushing. At the end of the year the formal reports of the engineers indicated that the work of preparing the necessary plans for the proposed extension was under way and that such plans would be submitted to the Commission at an early date. |