provisions of the Civil Rights Act of 1964 as regards practices employed at the geriatrics center or other government-related activities on the land. Evidently the tract would go to AGC at that point. Then the Texas law pertaining to nonprofit corporations would govern AGC, as would the corporation’s charter, which provides no private gain for the directors and holds that, in the event AGC is dissolved, its assets are, after payment of liabilities, to be disposed of in a manner “calculated to be exclusively to carry out the purposes for which it is formed”; that is, health care and health research. In sum, the deal granted AGC permits its directofs to throw some profitable business in the direction of two of their fellow Johnsonians contractor Odom and architect Brooks as well as, potentially, others in favor with the directors who could be hired to the center’s staff and to do contracted consulting work; further, the land provides a basis for real estate speculation in the area, a low-cost, rather rundown neighborhood of lucrative potential; and, finally, the property could be bought any time the Erwin peopleand only they wish by paying the current market price, less any discount for having used the property for the purposes the government intended. THE STORY broke on Oct. 29 when Knight newspapers, a chain of dailies at Detroit, Akron, Miami, and, lately, Philadelphia, front-paged the news. The next day Senator Williams who, Washington sources say, was fed the information by HEW spoke on the Senate floor. He said the project originated with President Johnson and on Oct. 29, 1968, a meeting was held at the White House. Present were a representative of LBJ, five federal housing and health officials, two representatives of the Brooks architectural firm, and A. H. Dilly, vice-chancellor for health affairs at the University of Texas at Austin. Originally the university was to sponsor the project but, Dilly tells the Observer, UT dropped out in the early going when it became apparent that certain legal technicalities would preclude the university’s participation. UT people were tentatively interested, Dilly says, “because of the center’s potential for gerentology research.” Williams went on in his speech to detail the extraordinary expeditiousness with which the federal bureaucracy handled the Austin group’s requests. The 26.5-acre tract was promptly declared surplus and, contrary to federal law, was not offered for use by other federal agencies. The tract was given the federal government nearly 30 years ago at then-Congressman Lyndon Johnson’s request by the city of Austin and was used as a fish hatchery until late in 1968. With the withdrawal of UT-Austin as the sponsoring agency, Erwin and his group established, on Nov. 19, 1968, the Austin Geriatrics Center, Inc., a nonprofit corporation. Directors were Erwin; Roy A. Butler, president of the Austin school board and a prominent automobile dealer who is personally acquainted with LBJ; and J. C. Kellam, who runs the LBJ radio and television operations, KTBC, in Austin. Erwin, of course, is the head of the UT regents, and was the national Democratic committeeman during the Johnson years. Listed as incorporators were three UT lawyers, Burnell Waldrep, Richard C. Gibson, and William R. Long, Evidently these are the men who handled the necessary paperwork when it was thought UT would be in on the deal. The three UT lawyers say they have no connection with the corporation now. The three directors are the corporation’s only personnel; the charter says there shall be no other participants. The General Services Administration, HEW, and the FHA all worked to get the deal closed by Jan. 20, 1969, when the iohnson reign ,would end. Finally, on Dec. 10, 1968, the deed was conveyed by the federal government to the Austin group after some intriguing goings-on in Washington. ENATOR WILLIAMS said that several lower. echelon federal officials at the agencies involved recommended against the deal. He names William W. Brownholtz, Samuel J. Dick, and J. Keesler, all of the Health Services and Mental Health Administration of HEW. “But,” Williams says, “White House pressure was on, and no attention was paid to any of these adverse reports.” Then, in the closing days of the Johnson administration these developments occurred: on Jan. 17, 1969, HEW signed a contract with the Austin center to pay the Texas corporation $150,000 for a 12-month period of work which, HEW people claimed, would be unique and important to the federal agency. On Jan. 20, Johnson’s last day in the White House, a government-guaranteed loan for $2,283,800 was approved for a 168-bed nursing home at Austin; also that day a second government-guaranteed loan for $6,350,000 was approved for a 363-unit housing project for the elderly only 20% of whose occupants need be able to qualify for rent supplements; 80% of the occupants of the apartments could be able to pay their own rent, which, presumably, would be at levels comparable to the going rate in Austin. In the previous weeks the Erwin group had received, in addition to the $150,000 HEW grant, $298,582 interest reduction payment and $58,779 in rent subsidies, both from the Dept. of Housing and Urban Development. “These advance cash grants and the free land received from HEW were the only security advanced as representing the sponsors’ 10% security for the $8.5 million government loan,” Senator Williams said. “Thus, here we have the government, in cash grants and free land, furnishing collateral for their own loans.” He said the whole deal was a “last-minute scramble to get just one more grab from the federal treasury . .” He said he was requesting that the Justice Dept. investigate the matter. N AUSTIN, Erwin and others in on the deal reacted with indignation, saying there was no intention of personal gain. The idea was simply to prOvide needed low-cost care for the elderly. Erwin said things were “structured in such a manner that nobody can benefit financially.” Butler said that “to my knowledge not a dime has been given” in federal funds for the project. Kellam told Associated Press he is not now a director of the corporation and expressed doubt that he ever had been. A resolution that accompanies the deed to the property at the Austin courthouse reports that on Nov.. 22, 1968, Kellam moved, Butler seconding, that Erwin be authorized to represent the corporation in its negotiations with the government. Kellam, asked by the AP what the name of the corporation was, said, “Hell, I don’t know. I don’t know anything about it. Just pretend you never reached me:” He since has been replaced as a director by John’ Burns, an executive of Austin’s City National Bank. There has been some amused comment about Burns’ position; he is known around Austin to have discouraged his employees at the bank from becoming involved in business matters that might have political implicationg. It appears that Erwin was the organizer of the Austin group in this effort, evidently at Johnson’s request or suggestion. Butler says he was asked to participate by Erwin. Probably Erwin asked Kellam to serve, too. In any case, he is the one who appears to have been most active in the corporation’s affairs and, lately, he has made most announcements to the public about the situation. Two pro-LBJ Congressmen have spoken in defense of the project. Cong. J. J. Pickle, Austin, rose on the House floor the day after Williams’ speech to say that the senator “struck a low blow yesterday against a very worthy and humanitarian project. . . . This is a very poor way to bring us together, and I hope we will not later find that the genesis of Senator Williams’ speech came ,from highly placed political sources in the executive department . . . I say shame on those who cast aspersions by innuendo.” Cong. Henry B. Gonzalez called Williams’ attack “a malicious attempt to embroil the former president . .” From LBJ’s Austin office came word that Johnson would have no comment. November 21, 1969 5
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