“Here’s where it gets difficult. The city will arrange to sell the site to the Port Smith Development Corporation for approximately half of what it will pay Suffolk Street Land. The loss represents part of the federal, state, and city stake in new housing. That’s the way the law was written. The Port Smith Development Corporation will build the project, rent the apartments at fixed rates, maintain the buildings, keep the grounds, and retain all rights of ownership. Obviously, the Port Smith Development Corporation has had to demonstrate some kind of financial responsibility. It has—and the Federal Government has agreed to extend to it very low cost, very low interest credit for construction. The president of the Port Smith Development Corporation went to Washington with a letter of recommendation from the office of Herbert Davis, signed by our staff member; and another from a banker downtown who is a member of the Port Smith Planning Board. The Port Smith Development Corporation is going into this with its own capital to the extent of a half-million dollars. Through one set of paper corporations, Rainbow acquired the site for less than two hundred and eighty thousand. The city plans to buy the site for three million. Rainbow will reinvest a sixth of the three million to get the federal credit and the title to a project valued at twenty-seven million. Using techniques developed elsewhere, the people in Rainbow will draw off another six million above and beyond the value of Suffolk Street Houses.

“On Palmer Avenue, where the housing is already completed, they had to move more quickly. The city was in a hurry, so they had to settle for a third of the land. When their construction company took over, they more than made up for what they had sacrificed. Remember that the old buildings were still occupied. Rainbow collected the rents. Demolition was delayed—stalled. Every month was a month to the good. Under normal conditions, slums return their investment every five years, but here was a windfall situation. No repairs, no maintenance. It was two years before the first building came down. For two years the construction company collected rents, and then, as it demolished buildings and tenants were shifted from one building to the next, the company raised the rents as much as the old wartime rental law allows.”

“That takes heart.”

“Not for them. After the first block came down, it was flattened and covered with blacktop. The construction company paid for that and then leased the block to the E and F Services Corporation, which Rainbow created for that purpose, at one hundred dollars a month. The construction company took a loss it applied to taxes and the cost of construction—in other words, the federal loan, while the smaller E and F Services operated the block as a parking lot at enormous profit.