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B-169230 1 (1970-06-17)

handle is hein.gao/gaobabkte0001 and id is 1 raw text is: R~tlZNI&7ED- klo to be releasL-d anteide the Oeneral Aco r ba s0e @f 5neelfi approval byIte 0 ec jflfwhc is kept ITby t Ih ~ f Seso, latlofS Braneh, OAS B-169230 RELEASED JUN 171910 Dear Mr. Gross: Further reference is made to your lettex of February 25, 1970, in which you requested that we obtain information from the Economic Development Admin- istration (EDA), Department of Commerce, on any loans made to, or applied for by, the Lifetime Door Company, Inc. Specifically, you inquired about a loan that was made to the company for the construction of a plant in Hearne, Texas, and an application by the company for a loan for the construction of a plant in Los Banos, California. You requested that we advise you as to whether section 702 of the Public Works and Economic Development Act of 1965 (42 U.S.C. 3212) had been violated in authorizing a loan to this company. Section 702 prohibits EDA from making loans to industries experiencing long-run overcapacity. You also requested that we provide you with EDA's justification for the loans and the Small Business Administration's (SBA) credit reports relating to these loans. At a meeting on March 5, 1970, we furnished Mr. Julian Morrison of your staff with a copy of EDA's justification for the loan for the construction of a plant in Hearne, Texas. We informed Mr. Morrison that EDA had decided that reports from the SBA were not necessary since the company had an established credit rating and that the application for the loan for the plant to be con- structed in Los Banos, California, was unapproved at that time. At a meeting with Mr. Morrison on April 2, 1970, we discussed the problems relating to the lack of statistical data on the capacity of the door manufacturing industry on both a national and a regional basis. We also pointed out that the diffi- culties in determining a violation of section 702 of the act were set forth in our report to you dated October 24, 1969, on EDA's loan to Television Electronics, Inc. These difficulties related to the intent of the statute with regard to the term efficient capacity and the time frame within which it was to be compared with demand. It was agreed that our report to you would contain available data on the door production which was not included in EDA's 702 study and that we would not attempt to determine whether the loans to Lifetime Door Company, nc., violated section 702. We reviewed EDA files and information from the Bureau of the Census and the Business and Defense Services Administration of the Department of Commerce. We interviewed officials of EDA, the Business and Defense Services Administra- tion, the Bureau of the Census, and a wood products manufacturers' association. Our work was performed at the agencies' headquarters in Washington, D.C.

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