[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                     SITTING ON OUR ASSETS: CUTTING
                   SPENDING AND PRIVATE REDEVELOPMENT
                      OF UNDERPERFORMING BUILDINGS

=======================================================================

                                (112-40)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 10, 2011

                               __________

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             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman

DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey        Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
TOM REED, New York                   MICHAEL E. CAPUANO, Massachusetts
ANDY HARRIS, Maryland                TIMOTHY H. BISHOP, New York
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHAEL H. MICHAUD, Maine
JAIME HERRERA BEUTLER, Washington    RUSS CARNAHAN, Missouri
FRANK C. GUINTA, New Hampshire       GRACE F. NAPOLITANO, California
RANDY HULTGREN, Illinois             DANIEL LIPINSKI, Illinois
LOU BARLETTA, Pennsylvania           MAZIE K. HIRONO, Hawaii
CHIP CRAVAACK, Minnesota             JASON ALTMIRE, Pennsylvania
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               HEATH SHULER, North Carolina
BILLY LONG, Missouri                 STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      LAURA RICHARDSON, California
PATRICK MEEHAN, Pennsylvania         ALBIO SIRES, New Jersey
RICHARD L. HANNA, New York           DONNA F. EDWARDS, Maryland
STEPHEN LEE FINCHER, Tennessee
JEFFREY M. LANDRY, Louisiana
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma

                                  (ii)

  
?

 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

                   JEFF DENHAM, California, Chairman

TIMOTHY V. JOHNSON, Illinois         ELEANOR HOLMES NORTON, District of 
ERIC A. ``RICK'' CRAWFORD,           Columbia
Arkansas,                            HEATH SHULER, North Carolina
  Vice Chair                         MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois             RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania           TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio                      DONNA F. EDWARDS, Maryland
PATRICK MEEHAN, Pennsylvania         BOB FILNER, California
RICHARD L. HANNA, New York           NICK J. RAHALL II, West Virginia
STEPHEN LEE FINCHER, Tennessee         (Ex Officio)
JOHN L. MICA, Florida (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Peck, Robert A., Commissioner, Public Buildings Service, General 
  Services Administration........................................     6
Principi, Hon. Anthony J., Former Secretary, Department of 
  Veterans Affairs...............................................     6
Wise, David J., Director, Physical Infrastructure Issues, 
  Government Accountability Office...............................     6

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Peck, Robert A...................................................    22
Principi, Hon. Anthony J.........................................    29
Wise, David J....................................................    35

                       SUBMISSION FOR THE RECORD

Wise, David J., Director, Physical Infrastructure Issues, 
  Government Accountability Office, response to question from the 
  Subcommittee on Economic Development, Public Buildings, and 
  Emergency Management...........................................    47

[GRAPHIC] [TIFF OMITTED] T5445.001

[GRAPHIC] [TIFF OMITTED] T5445.002

[GRAPHIC] [TIFF OMITTED] T5445.003

[GRAPHIC] [TIFF OMITTED] T5445.004



                     SITTING ON OUR ASSETS: CUTTING
                   SPENDING AND PRIVATE REDEVELOPMENT
                      OF UNDERPERFORMING BUILDINGS

                              ----------                              


                      THURSDAY, FEBRUARY 10, 2011

                  House of Representatives,
      Subcommittee on Economic Development, Public 
               Buildings, and Emergency Management,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met pursuant to notice at 10:17 a.m. in 
The Old Post Office building annex, Washington, DC, Hon. 
Jeffrey Denham (Chairman of the subcommittee) presiding.
    Chairman Denham. The Subcommittee on Economic Development, 
Public Buildings, and Emergency Management will now come to 
order. This is the subcommittee's first hearing of the 112th 
Congress, and I want to thank our witnesses and committee 
members for braving the cold to be here this morning.
    First, let me start by thanking Chairman Mica for providing 
me the opportunity to chair this important subcommittee. I 
appreciate the trust that you've placed in me and I will work 
hard to find ways to save taxpayer dollars and leverage private 
resources to redevelop Federal properties. I also want to build 
a strong partnership with the Ranking Member, Member Norton.
    We have had several meetings already and we look forward to 
continuing our relationship. I am truly fortunate to have a 
ranking member with such knowledge and experience and I look 
forward to continuing this committee's bipartisan tradition. We 
are here in the annex of the Old Post Office building to turn 
the spotlight on vacant Federal space in Washington, and all 
across the country, so that we may find ways to stop sitting on 
our assets and save taxpayer money.
    The Old Post Office building sits on prime real estate in 
the Nation's capital. Walking distance from both the White 
House and the Capitol Building on what is considered America's 
Main Street, Pennsylvania Avenue. Common sense would tell us 
this building should have tremendous value for the taxpayers; 
however, the reality is much different. GSA loses over $6 
million annually on this building, and the annex has become 
vacant for more than a decade--more than a decade.
    The sad fact is, there are buildings like this one all over 
the country. And as a former State senator from California, 
I've seen first hand the cost of poor management of these 
public buildings has on all of our budgets, and the waste is 
significant. In fact, excess and under used space is a key 
reason the Government Accountability Office placed Federal real 
property on its high-risk management list in 2003, and why it 
remains there today.
    It's on the GAO's high-risk list for good reason: vacant 
and underperforming assets are costly to all taxpayers. 
According to the Federal Real Property Council in fiscal year 
2009, the Federal Government spent $1.7 billion in annual 
operating costs for underutilized buildings, and $134 million 
annually for excess buildings. Last October, Chairman Mica and 
the Republican members of the committee issued a report 
entitled, ``Sitting On Our Assets: The Federal Government's 
Misuse of Taxpayer Owned Assets.''
    One of the report's recommendations is to redevelop 
millions of square feet of idle or vacant Federal buildings, 
such as the Old Post Office building here in Washington, DC, 
through public/private partnerships. Ranking Member Norton is 
also a strong advocate of redeveloping underutilized properties 
and she wrote the Old Post Office Building Redevelopment Act of 
2008. In this case, GSA has the legal authority to redevelop 
the building and generate a positive return. Yet, this annex 
continues to sit vacant and bleeds taxpayer money.
    Business as usual must stop. One of our four witnesses 
today, Secretary Principi, has tremendous experience attracting 
private investment to redevelopment, Veterans Affairs 
facilities, and I hope we can apply these models to GSA 
properties. In addition, one of the first things we must do is 
identify underperforming assets. I understand the GSA maintains 
a database of Federal real property.
    We have talked about that in recent days, yet we continued 
to find that we are absent a complete list. So that's certainly 
an area we will be working on very aggressively here. The 
practice must end, so our committee can conduct oversight of 
all Federal real estate properties.
    I look forward to working with Chairman Mica, Ranking 
Member Norton and other members of our committee on reforms 
that will help stop wasteful spending. I also hope to work with 
all of our witnesses and others in the private sector who have 
firsthand experience turning around these underperforming 
assets.
    I would now like to recognize Ranking Member Norton from 
the District of Columbia for 5 minutes to make any opening 
statements she may have, and we will be operating a little bit 
old school here today with the lack of technology or the lack 
of wiring here in this facility, so bear with us.
    Thank you.
    Ms. Norton. Thank you, Mr. Chairman. Can you hear me? 
Hello!
    [Laughter.]
    Ms. Norton. First, I am pleased to be serving with our new 
subcommittee chair, Representative Jeffrey Denham, and to 
welcome him to Washington. I have had the opportunity to meet 
with Chairman Denham and I believe that his prior State and 
professional experience and his expertise will serve the 
subcommittee and the Congress and the Nation very well.
    I would like to apologize to the witnesses and to others 
who have come to this important hearing, and I just want to say 
for the record that I object to it being held in this annex. 
This is a hearing on the Old Post Office. The Old Post Office 
had a room, which would have the dignity of a congressional 
hearing. This is not a historic building.
    It would have allowed us to see this extraordinary 
structure and to understand the waste. Today we examine why the 
development of the Old Post Office, a nearly empty, unique, 
historic treasure located here at 1100 Pennsylvania Avenue, 
Northwest, has been delayed.
    What this property can tell the subcommittee about how GSA 
manages its real estate portfolio and how the agency can 
improve, by making this first hearing of the subcommittee a 
sight hearing at the Old Post Office, the subcommittee is 
making a point to GSA as the subcommittee tries to understand 
why the development of a company crying out for development has 
been repeatedly delayed in both Democratic and Republican 
administrations.
    For more than 10 years our subcommittee and the full 
committee leadership have expressed mounting concern about the 
neglect and underutilization of this valuable government 
property and have pressed the GSA to develop and use this 
building with its considerable benefit potential--sorry--to 
benefit taxpayers. The implication of today's hearing and the 
questions we are asking could not be clearer.
    We ask today: are there more Old Post Office sites 
languishing in full view around the Nation? The magnificence of 
the historic Post Office building--you'll see it if you go out 
there and look at it as you exit. Its central location and 
priceless value have long made the building ripe for 
development.
    I am mystified why it has been difficult to get GSA through 
Republican and Democratic administrations to develop this 
building to its highest and best use in light of a directly 
applicable precedent, the highly regarded GSA renovation of the 
Hotel Monaco, formerly the Tariff Building.
    The GSA renovation of the Tariff Building into the Monaco 
Hotel demonstrated that GSA could make excellent use of 
otherwise antiquated and virtually useless structures. It would 
seem that all that was needed was to take out that playbook 
that led to the born again Hotel Monaco, now providing 
productive use. Located just a few blocks from the Old Post 
Office building, the Tariff Building is a recent model that 
shows what can be achieved when the Federal Government works 
closely with the private sector to develop property, bringing a 
return to the government while providing a safe and necessary 
facility for the city and preserving a historic structure. 
However, GSA was either unable or did not try hard enough to 
overcome OMB's objections to proceeding on the Old Post Office 
building despite consistent bipartisan insistence by the 
subcommittee.
    Finally, we included in the 1998 Omnibus Consolidated 
Emergency Act language that required GSA to submit a viable 
development plan to Congress. That plan was submitted in 
December 2000 and on May 16, 2001, this subcommittee approved 
the plan by resolution. Notwithstanding these efforts, the 
desired development has not occurred.
    The waste and risk posed by the way GSA managed the Old 
Post Office building became even more apparent with a violent 
altercation and killing of a George Washington University 
student outside the Old Post Office building in May 2005, 
following rental of the Old Post Office for an event held there 
as part of GSA's efforts to rent the facility and gain revenue 
from the building.
    Congressional oversight requiring development of the site 
continued, but GSA did not issue a request for expression of 
interest or RFI until late that year, and only after the 
violent incident. The RFI received many indications of 
interest; however, for no good or sufficient reason, GSA has 
never proceeded to the next step of development, although 
private developers view the Old Post Office as a trophy 
building at a trophy location here between the White House and 
Congress.
    In 2008 in exasperation I introduced H.R. 5001, the Old 
Post Office Building Redevelopment Act of 2008 directing the 
GSA to move forward. How many bills and how many hearings does 
it take to get GSA to develop a single property. Is the Old 
Post Office emblematic of GSA's management of its properties 
nationwide? Whatever GSA's response, this subcommittee has no 
alternative, particularly given today's budget deficit, except 
to require GSA to use the assets it has available or to sell 
them.
    The Old Post Office building is a historic treasure that 
cannot be sold; but, GSA's management of the building is a 
drastic example of an underperforming asset that has long been 
a drain on our Treasury when it could provide a handsome 
financial return to the government as the Monaco Hotel has 
done. GSA spends $12 million to operate and maintain the Old 
Post Office building, while only collecting $5.5 million in 
rent, which results in an annual loss of $6.5 million.
    This subcommittee has taken action to provide new tools to 
develop GSA property. In 2007 Congress enacted and the 
President signed Public Law 108-447, which contained a measure 
that granted GSA two new significant kinds of authorities, 
often referred to as 412 authority. The first allows the 
retention of proceeds from the disposal of real property; and, 
the second is additional real property disposition authority, 
including authority for leaseback arrangements.
    To date, GSA has yet to implement this authority to develop 
any of its underutilized property on site anywhere in the 
United States, even though there are opportunities that could 
bring the government a handsome return. It should not have been 
necessary for the subcommittee to come to this annex today to 
get the requisite attention to the languishing property of the 
Old Post Office site and others like it.
    The burden is on our witnesses today to get us out of this 
building, and particularly out of this annex; and to get the 
government out of leasing real estate properties that could be 
redeveloped or could be sold, and I thank you Mr. Chairman.
    Chairman Denham. Thank you, Ms. Norton.
    At this time I now call on the Chairman of the full 
Transportation and Infrastructure Committee, Mr. Mica.
    Mr. Mica. Thank you. Well, thank you, Chairman Denham and 
Ranking Member Norton, also Ms. Edwards for being with us 
today, Mr. Crawford from a warmer climate in Arkansas, and 
maybe even Maryland's warmer than here today.
    I was hoping, actually, when we were planning this hearing 
and I kept looking at the temperature that we'd have a warmer 
day; but, in fact, it is a cold day for Members of Congress, 
but it's been an even colder decade for the taxpayers who've 
had to foot the bill for an empty building in the heart of our 
Nation's capital as Ms. Norton said just a few blocks from the 
White House and a few blocks from Capitol Hill.
    Now, I know Ms. Norton, and having worked with her she's 
done everything she could to move forward. It is a sad day when 
we have to come here on a cold day to emphasize the lack of 
moving forward with this property. We've talked about this 
property now for more than a decade, and it's been vacant for 
more than a decade. So I'm hoping under your leadership, 
Chairman Denham and other members of the committee, that we can 
turn this situation around. If GSA doesn't have the tools to 
make a difference, then we need to provide them with the tools.
    If they don't have the initiative or the incentive to move 
forward, then we've got to make certain that we provide them 
with that here. Now, if this isn't bad enough, being in this 
empty building, is that next door you have 400,000 square feet 
of which there are only 400 Federal employees, and almost half 
of that space is vacant, underutilized, and is a loss of over 
$6.5 million per year. This goes on and on, a waste of taxpayer 
dollars.
    Now, if this wasn't the only example, this empty building 
and next door underutilized, just read a little bit about the 
report we published on sitting on our assets and the 
underutilized and underperforming public buildings. This is a 
national disgrace, and this isn't the only example of it. So 
somehow, we've got to get a handle on this. The annex that 
we're in is only 53,000 square feet, and the government is 
again losing money by the hour in keeping it vacant.
    In 2008 the Federal Government's real property portfolio 
totaled 3.29 billion square feet of space. A review of the 
three agencies in 2009 by GAO revealed about 10 percent of 
their properties were in excess or underutilized, meaning there 
could be as much as 330 million square feet of extra space 
costing taxpayers billions of dollars each year to maintain 
them.
    GSA in particular holds 282 underutilized buildings that 
are costing the taxpayers nearly $100 million a year, so our 
report details some of this. It's cold and I'm not going to go 
into detail. I don't know what the answer is. I don't know if 
we should give up on GSA and other Federal agencies that look 
to retain some private management agencies to better utilize 
and capitalize and get a better deal for the taxpayers. But I'm 
willing to look at any solution.
    The answer is not what we're seeing in a cold, empty 
building today. We have got to do better and we must do better, 
because millions of taxpayers and Americans are counting on us. 
Yield back the balance of my time, and I thank everybody for 
enduring one of the colder days in Washington.
    Chairman Denham. Thank you, Mr. Chairman.
    I now call on Ms. Edwards for a brief opening statement if 
you look.
    Ms. Edwards. I think I'll pass.
    Chairman Denham. Mr. Crawford.
    Mr. Crawford. Thank you, Chairman.
    I want to thank Chairman Mica for his leadership on this 
effort and the opportunity to serve on the economic development 
of public buildings and emergency management subcommittee.
    I am from Arkansas. This won't make you feel a bit better, 
but believe it or not it is colder there than it is here. I am 
looking forward to working with Chairman Denham as well as 
Ranking Member Norton, and the full committee to preserve this 
historic building. Our goal is to make sure that historic 
Federal properties fulfill their highest and best use of 
preserving them for future generations.
    The Old Post Office is just one example of the many 
properties that we have worth saving. I look forward to working 
with Chairman Mica and I thank him again for this opportunity.
    Chairman Denham. Thank you. I would like to welcome our 
witnesses and thank them for being here today; and, I want to 
thank Commissioner Peck of GSA for making the space available 
for this hearing.
    I ask unanimous consent that our witnesses' full statements 
be included in the record. Without objection, so ordered.
    Since your written testimony has been made a part of the 
record, the subcommittee would request that you limit your oral 
testimony to 5 minutes. This is the first committee hearing of 
this committee, but I do expect to not only run an efficient 
committee, but be very mindful of everybody here's schedules, 
so thank you in advance.
    We have one panel today: Mr. Robert Peck, Commissioner of 
Public Building Service, U.S. General Services Administration; 
Mr. David Wise, Director, Physical Infrastructure Issues; the 
Honorable Anthony Principi, former secretary of the Department 
of Veterans Affairs; and Chairman of the 2005 Defense Base 
Realignment and Closure Commission, the BRAC.
    I would like to thank all of you for joining us today. 
Commissioner Peck, you may proceed.

  TESTIMONY OF ROBERT A. PECK, COMMISSIONER, PUBLIC BUILDINGS 
   SERVICE, GENERAL SERVICES ADMINISTRATION; DAVID J. WISE, 
     DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, GOVERNMENT 
 ACCOUNTABILITY OFFICE; AND THE HONORABLE ANTHONY J. PRINCIPI, 
        FORMER SECRETARY, DEPARTMENT OF VETERANS AFFAIRS

    Mr. Peck. Thank you, Mr. Chairman, and Chairman Mica, 
Chairman Denham, Congresswoman Norton, Congresswoman Edwards 
and Congressman Crawford. Thank you for the opportunity to talk 
to you today. I am, I was going to say, happy, but I am still 
happy to be here to join you at the Old Post Office, a fitting 
if cold example of a redevelopment opportunity that this 
administration is prepared to take.
    By a number of measures, I have to say, GSA, itself, is a 
leader in asset management of our building inventory and 
leases, and I will talk about our performance compared even to 
private sector measures. We are building on our successes and 
managing our assets with aggressive efforts to improve 
utilization of government space across the government to 
deliver new and innovative work place strategies and use the 
authorities we have to further partner with the private sector 
to benefit taxpayers.
    Since 2002 GSA in the space that we control, which is about 
375 million square feet of space has undertaken a major 
portfolio restructuring. We have disposed of 204 vacant or 
underutilized properties in the GSA inventory, totaling the 
more than 9.5 million square feet and receiving $227 million in 
proceeds which we were able to do, by the way, under the 
section 412 authority that Congresswoman Norton mentioned. This 
represented a 5.3 percent reduction in GSA's own portfolio and 
eliminated some $460 million in operating costs, and rather in 
repair liabilities.
    And I want to give credit to one of my predecessors, Joe 
Moravec, a former Commissioner of Public Buildings, who I know 
is sitting here today. This administration recognizes the need 
to do a better job at getting rid of surplus and excess 
property, and in June of 2010 President Obama issued a 
memorandum, ``Disposing of unneeded Federal real estate put GSA 
along with other agencies in charge of culling through the 
Federal inventory of excess assets and making sure that we get 
them out of the inventory.'' And in his State of the Union 
Address, a few weeks ago, President Obama emphasized that this 
is going to be a priority for him.
    First, I want to talk a little bit about how we manage our 
GSA assets. Just to let you know, the national vacancy rate 
right now for real estate, because we have a soft market, is 
somewhere between 15 and 20 percent. The comparable rate in the 
GSA inventory is 2.4 percent. We manage our assets well; and, 
here, I want to get our terms clear. When in the Federal 
Government's real estate inventory report, we recorded an asset 
as surplus or excess, or underutilized. As always, there's a 
term of art here.
    Underutilized property can include property, for example, 
that are under renovation. So some properties that look like 
we're not using them, we're not using them only temporarily, 
because we're upgrading them so they can be used better and 
more intensively. Having said that there are clearly Federal 
surplus properties, and GSA is very good in our inventory of 
tiering our properties. We know we have a three-tier system 
based on performance measures, return on investment measures in 
which we decide whether an asset in our inventory is worth 
keeping, or in the long run is going to be disposed of.
    For other agencies across the government, GSA serves as a 
real estate asset manager also, and we are in charge, except 
for defense properties and some others, a few others in the 
public lands, mostly, as the disposal agent. Under the 1949 
Federal Property Act we disposed of properties in a number of 
ways. One is we can take them to sale. Two, we can give them to 
public entities, States and localities, for certain specified 
purposes in the law.
    And then I have to say, just as a reality check, some of 
our properties are in areas where it's hard even to give them 
away. They just are someplace that nobody wants them, and some 
of those will be retained in the inventory. I say that not to 
say that we don't want to get out everything we can, but just 
to say that some part of the excess inventory is probably not 
amenable to redevelopment.
    One other long-term trend which I want to note that we are 
working on is that we believe that in the Federal inventory we 
can make more intensively use of the space that we do have, and 
we are working very hard with Federal agencies to take 
advantage of the new mobile workplace technologies that allow 
workers to work wherever they can and to use less space for an 
employee so that in the years to come, you should be seeing us 
use less real estate for the ongoing functions of the 
government.
    I do want to point to a couple of examples of places where 
we have used our authorities to get rid of surplus property. 
For example, in 2007 we sold more than 50 acres of land at the 
Denver Federal Center. We got $18 million in cash from the 
county, and $6 million in easement and environmental 
remediation done by the public entity and a good example of how 
we can work with the locality to promote economic development.
    They built a hospital, provided a rapid transit station 
there, and we still occupy an adjacent parcel of land. In 2000 
under the leadership of Ms. Norton, the Congress passed the 
Southeast Federal Center Public-Private Development Act. We 
redeveloped what had been part of the Navy Yard in Washington, 
DC, and over the term of that agreement, if we expect to see 
proceeds of $43 million to the Federal Government, a great 
example of a public-private development.
    As Mrs. Norton noted, and when I was in GSA before, we 
began redevelopment of the historic Tariff Building in 
Washington, DC, as Ms. Norton noted, an example directly 
relevant to the Old Post Office building. And the Tariff 
Building, which is on a long-term ground lease to a hotel 
developer, will over the course of the lease, we believe, earn 
$50 million in revenues for the Federal Government.
    The Old Post Office itself represents a unique opportunity 
and unique history. We renovated this building, the Federal 
Government did, in the late 1970s, early 1980s. The Government 
put in money and so did a private developer put in $28 million 
to develop the retail uses in the building. This annex, 
itself----
    Chairman Denham. We would ask you to be mindful of the 
time.
    Mr. Peck. I will. I'm summing up.
    Chairman Denham. Thank you.
    Mr. Peck. In 1989 this annex was built with $5.5 million in 
private funds, and $1.75 million in public funds. This building 
itself was a commercial failure. The owner went into default, 
and the Federal Government eventually acquired the leasehold.
    With direction provided by Congress in the Old Post Office 
Building Redevelopment Act of 2008 we should now be able to 
leverage the private assets and the public assets in this 
building with private sector investment to create a new 
development. We are--I have to say this carefully. We are 
examining best approaches to doing that and working on the 
right kind of request for proposals that would include, for 
example, all of the safeguards that we would expect and you 
would expect to safeguard the government's interest.
    Finally, I'll just note that we very much support and enjoy 
the opportunities we have to work with the private sector in 
redeveloping vacant or underutilized Federal properties. We do 
believe that this building, itself, is a great example of one 
of those opportunities; and, obviously, I'm happy to answer any 
questions.
    Chairman Denham. Mr. Peck, thank you for your testimony.
    At this time, Mr. Wise, you may proceed.
    Mr. Wise. Good morning. I think I could still turn the 
pages of my statement, but Chairman Mica, Chairman Denham, 
Ranking Member Norton and members of the subcommittee, thank 
you for the opportunity to testify today on our work related to 
Federal real property; and, in particular, the issue of excess 
and underutilized property held by the GSA.
    GSA, often referred to as the Federal Government's 
landlord, controls more square feet of buildings than any other 
civilian Federal agency. GSA provides a range of real estate 
services to its tenant agencies, which it finances through a 
revolving fund called the Federal Buildings Fund.
    In January 2003 we designated the management of Federal 
real property as a high-risk area, in part because of excess 
and underutilized property. Other reasons included overreliance 
on leasing and the challenges associated with protecting 
government assets from terrorism. Later this month we will 
report on the status of these issues as part of our update to 
the high-risk series.
    My testimony today will discuss (1) the scope and cost of 
excess and underutilized real property held by Federal 
agencies, particularly GSA; and, (2) the challenges they face 
in disposing of excess and underutilized real property.
Scope/Costs:
    In fiscal year 2009 Federal agencies, including the 
Department of Defense (the government's largest property 
holder), reported 45,190 underutilized buildings accounting for 
about $1.66 billion in annual operating costs. While not all 
underutilized properties are unneeded, nevertheless, such 
buildings represent the first places to look for possible 
consolidation that could facilitate property disposals.
    GSA itself has a number of such properties. In fiscal year 
2009, GSA reported 282 excess or underutilized buildings 
costing about $93 million a year. For example, GSA's excess 
properties include an office building warehouse complex, 
covering about a million square feet in Fort Worth, Texas. GSA 
spent about $1.4 million in fiscal year 2009 to maintain this 
complex.
    The administration is continuing to focus on disposing of 
unneeded properties throughout the government. A June 2010 
Presidential memorandum to Federal agencies established a new 
target of savings $3 billion governmentwide through disposals 
and other methods by the end of fiscal year 2012.
Challenges:
    The Federal Government's real property portfolio presents 
significant management challenges. We found that many 
government real property assets are no longer effectively 
aligned with agencies' changing missions. As a result, many may 
no longer be needed.
    A number of factors may impede the government's property 
disposal ability. Numerous stakeholders have an interest in how 
the Federal Government carries out its real property practices, 
including local governments and business interests, private 
sector construction and leasing firms, historic preservation 
organizations, various local advocacy groups, and the general 
public. These competing stakeholder interests may result in 
barriers to real property disposals. In 2007 we recommended 
that OMB could assist agencies by developing an action plan to 
address key problems associated with unneeded real property, 
including reducing the effects of stakeholder interests in real 
property decisions. OMB agreed with the recommendation, but has 
yet to fully implement it, because it's unsure of a strategy to 
reduce stakeholder interests.
    Legal issues may impact real property decisionmaking. As we 
reported in 2007 Federal agencies are required by law to assess 
and pay for environmental cleanup that may be needed before 
disposing of any property. In some cases, the cost of this 
cleanup may actually exceed the cost to maintain the excess 
property. Also, certain legislative mandates, such as the 
McKinney-Vento Homeless Assistance Act and the Public Benefit 
Conveyance Program may lengthen the disposal process and/or 
result in zero net proceeds to GSA. As a result, GSA officials 
have stated that they are unlikely to have sufficient time to 
identify additional properties, complete disposal, and achieve 
the cost savings by the 2012 deadline mandated in the 
aforementioned Presidential memorandum and will need to employ 
other strategies to meet the goal.
    In conclusion, the government has many excess and 
underutilized properties that cost billions each year to 
maintain. Despite efforts to reduce this inventory, multiple 
obstacles remain that preclude any quick and easy solutions. 
GSA is in a unique position to take a leadership role, to 
promote innovation in how the government manages its excess 
underutilized properties. Until these obstacles are overcome, 
this issue will remain high risk. Mr. Chairman, this concludes 
my statement, and I'm happy to answer the subcommittee's 
questions.
    Chairman Denham. Mr. Wise, thank you for your testimony at 
this time.
    Mr. Principi, you may proceed.
    Mr. Principi. Thank you. Thank you, Mr. Chairman, and 
members of the committee. It's a pleasure to be with you this 
morning.
    I would like to provide my views as to creating value from 
underutilized and underperforming Federal assets. My testimony 
today is based on my experiences as Secretary of Veterans 
Affairs from 2001-2005. I also served as chairman of the 2005 
Defense-based Realignment and Closure Commission.
    When I assumed my responsibilities at VA, VA was the 
Federal Government's second-largest department, being comprised 
of a nationwide system of healthcare facilities and services, 
benefit program and national cemeteries for our Nation's 25 
million veterans and their dependents.
    The department was and is now a major landholding agency 
with a diverse portfolio of property with over 33,800 square 
acres of land--over 5500 buildings with about 146.9 million 
square feet at approximately 270 locations. This is in addition 
to leasing over 15.5 million square feet nationwide.
    While VA is one of the largest direct providers of 
healthcare in the world, it has an aging infrastructure with an 
average age of buildings of over 50 years, many of which were 
built after WWII when treatment was primarily rendered in in-
patient facilities.
    Also, since that time we've seen a profound change in the 
delivery of healthcare in America, and certainly at the VA. As 
a result, a significant amount of space either was 
underutilized or became vacant. In order to address these 
challenges and in an effort to encourage significant operating 
cost reductions and savings that could be applied to expanding 
medical care for veterans, I undertook two initiatives.
    The first was to bring all the stakeholders together: the 
Veterans organizations, academic medicine, our physicians, to 
craft a blueprint on how we could transform the VA from a 
hospital centric system to a patient focused system. Close down 
unneeded hospitals and open up hundreds of outpatient clinics 
in veterans communities, so that they get access care without 
having to drive hour after hour to a VA medical center to get 
their prescription drugs or primary care--things that can be 
done on an outpatient basis.
    Secondly, I asked two gentleman: Michael Simmons, one of my 
senior legal counsels, and Tony Kushner who I took from the 
Navy, to establish a new management approach that could be used 
as an additional tool in VA's management of its infrastructure. 
That approach was ultimately enacted by Congress, and has 
become known as enhanced use leasing.
    Enhanced use leasing is a cooperative arrangement for the 
development of underutilized or vacant Federal property. 
Basically, an agency leases Federal property on a long-term 
basis to a public or private entity for the development of non-
Federal or Federal uses. In return for the ground lease, the 
agency obtains fair consideration which could be in the form of 
money, facility, space, services or in-kind consideration.
    When applied in the context of an agency's facility 
acquisition strategy, the results can be very favorable. For 
example, a VA administrative officer is not significantly 
different from a commercial office building. During my tenure 
at VA, we built three major office buildings along with parking 
facilities that were privately financed, developed and operated 
on what was once vacant VA land, so that veterans would have 
the benefit of one-stop shopping--a VA medical center, an 
adjacent medical center, a benefits office where they can apply 
for their benefits. Further, because these buildings were 
constructed on Federal land, title to the buildings passed to 
the government on expiration of the ground lease.
    The EU authority also serves as a useful portfolio 
management tool. A good example is the Chicago lake side 
enhanced use lease. Using this authority, we implemented a much 
needed realignment of two underperforming VA medical centers in 
Chicago. One hospital was an aging high-rise facility located 
in the heart of Chicago's Gold Coast, Michigan Avenue. It was 
expensive to operate, and it will serve the veteran patient 
base that had moved from downtown Chicago, and returned for a 
long-term lease of that campus to Northwestern University 
Medical Center and the Rehabilitation Institute of Chicago.
    VA received over $50 million that could be applied to 
building a new vet tower for veterans in the west side where 
most of the veterans who were accessing the VA lived, and it 
turned out to be a very, very successful program. So I believe 
that both enhanced use leasing and having Federal agencies come 
together with their stakeholders to devise a plan for the 
future can indeed lead to the better utilization of vacant or 
underutilized property.
    Thank you Mr. Chairman and members of the committee.
    Chairman Denham. Mr. Principi, thank you for your 
testimony. At this time we'll start around of questioning. The 
first question goes to you, Mr. Peck.
    As you know, Congress passed legislation in 2008 to direct 
GSA to redevelop the building we are in today. In accordance 
with existing authorities, GSA has authority to redevelop 
underperforming buildings even without special legislation; 
but, it is my understanding the special legislation was needed 
last year, even though this building has went vacant for over a 
decade.
    Can you explain why the timing and why this has taken so 
long?
    Mr. Peck. Well I can speak some for the period of time I 
wasn't at GSA. One, I think that there have been, as you know, 
times when it's a good time in the real estate market to go out 
with a proposal like this and times when it's not. So if I 
could focus on 2008 to the present, I would be more useful; 
but, I will note that I'm the guy who signed the report in 2000 
suggesting that we redevelop the building.
    It clearly took during the succeeding years--I'm not quite 
sure what was going on. But I do know that since I've been back 
at GSA, in 2009 we've taken a long, hard look at the building; 
and, in December 2009 we had a panel of the Urban Land 
Institute take a look at the building, give us some advice on 
how we might put it out to market.
    Their suggestion at that time was it was not a good time to 
take the building to market because of the softness in the real 
estate economy. I can tell you that one reason we have 
rekindled our interest and are prepared to go forward is that 
we have been approached by a number of development interests 
who've told us that they are interested in taking the Old Post 
Office building in some kind of an arrangement that probably 
parallels what we did for the Hotel Monaco.
    So I'm hoping sometime soon to be able to report to you 
that we are going out to the market, and we will, when we do 
that, select a developer, negotiate a lease, and as the law 
requires bring it to this committee for its review.
    Chairman Denham. You made a determination in 2000. You 
personally made a determination in 2008, and 2009 you decided 
it was a soft economy and were not prepared to sell at that 
time; and, yet, it took 2010 to actually push legislation to 
get things moving. We're still in a soft market right now. Are 
we not?
    Mr. Peck. The hotel market has been actually quite active 
in the last 6 months or so, 6 to 8 months. The chronology, 
again, in 2008 Congress passed the Redevelopment Act. I came 
back to GSA in 2009. In late 2009 we were advised by a real 
estate panel that that was not a good time to go to market; 
but, I can tell you that by at least halfway through midyear 
2010, we were being approached by developers who said that the 
market--at least for hotel and some high-end office uses--had 
changed. Then it might be a good time to go back out to the 
market. And we have been working actively since at least 2009 
to prepare for bringing this building to market.
    Chairman Denham. So are we prepared to go to market now?
    Mr. Peck. We are. GSA is working diligently to produce a 
request for proposals that we can put out on the street.
    Chairman Denham. And when do you expect that to be 
complete?
    Mr. Peck. I don't want to give you an exact timeframe, but 
I can tell you that we are prepared pretty soon to go out.
    Chairman Denham. In your best estimation, when do you think 
the people of this fine city will actually be able to walk 
through here and see development taking place and be able to 
utilize this building?
    Mr. Peck. Well, let's say we could get an RFP on the street 
in a couple of weeks. It would probably take--our assumption is 
that we could make a selection for a developer by somewhere 
around June-July of this year and probably take another 9 
months or so to negotiate a lease. That's our experience in 
getting to a real development agreement. I've done this in the 
private sector, and that's about the same timeframe that I 
experienced doing that kind of work there too.
    Chairman Denham. So beyond listing the property as surplus, 
excessive or unneeded properties, beyond that, putting the 
proposal out to request and actually finding somebody and 
moving on it so that it's taking it off of our roles, what do 
you expect that average timeframe would be?
    Mr. Peck. Well, I would say if we could negotiate----
    Chairman Denham. That's understanding how long it takes 
just to declare something surplus from the land grabs of all 
the other agencies.
    Mr. Peck. Well, in this case, we don't in the case of this 
building, at least. Are you talking about this building, still, 
Mr. Chairman?
    Chairman Denham. I'm talking specifically about this 
building, but I'm trying to get a good understanding as the 
President has talked about this being a priority. As he talked 
about it in the State of the Union, we are now looking at 
budgetary numbers and making some tough decisions.
    I want to get a good idea that we can take back to the 
taxpayers of this Nation and say it's going to take us 5 years 
to sell properties or it's going to take us 5 months.
    Mr. Peck. Right.
    Chairman Denham. It's an extraordinary time, and I think 
it's going to take extraordinary measures.
    Mr. Peck. This property, again, I described the process 
before. On this property, we don't have to declare it surplus 
or anything else. The Congress has declared for us that this 
property should be redeveloped. So I'm telling you that the 
amount of time it would take to negotiate a lease and then for 
a private sector entity to actually build out the space, 
whatever they're going to do, I think you'd probably expect 
that we're looking at 2\1/2\ to 3 years.
    Three years, I would guess, is a better guess of how much 
time before they cut the ribbon and whatever happens in this 
building happens, and we can say we've got an asset in full 
operation again. For other properties, as you've mentioned, 
someone has to declare the property first excess to the 
government needs.
    It's GSA's job when that happens to go to other Federal 
agencies and see if anyone needs that kind of an asset. That's 
a process that can take as little as 30 days, and then we 
declare a property after that surplus to the government's 
needs. And then we go through this, Mr. Wise described a 
process in which we have to offer it by law to homeless groups 
to see if it's of use to them, and then we offer it to State, 
county and city entities to see if they can use it for certain 
purposes. And after that we're allowed to take it to a sale if 
nobody claims it.
    I also have to say though that there have been times when 
we've had properties ready to go to sale in various public and 
political interests have delayed even that happening, so it can 
take a while. I can also tell you that things can happen pretty 
fast.
    Chairman Denham. So there are a number of regulations that 
are impeding your process?
    Mr. Peck. There are at times, yes, sir. But once we get it 
out to sale, I can tell you that we do on-line auctions. We're 
pretty good at that technology. We can move properties pretty 
fast. We sold a building in Bethesda a couple months ago for 
$12\1/2\ million.
    I think the on-line auction took us about 2 months to work 
through. So things can move fast when we can be very 
businesslike once we actually finally make the decision, we 
have a property, and we can put it out on the street.
    Chairman Denham. Well this committee expects to be very 
aggressive. We plan on making sure that we have plenty of 
lists. My final question to you yesterday, at my request you 
provided me a list of surplus properties. There were only about 
30 properties on that list, even though GSA has thousands under 
its purview.
    Mr. Peck. Right.
    Chairman Denham. And you explained why there were only 30, 
but why this building in particular is not on that list?
    Mr. Peck. Yes, sir. Well, this building has never, as I 
said, this building has never gone through the surplus property 
process at all. It's not declared surplus. It's been declared 
by the Congress as an asset that we should redevelop, and we're 
happy to do that.
    The 30 properties that you got on your list were the 30 
GSA-controlled properties, in other words, properties in the 
GSA inventory per se that are surplus that we are actively--and 
we are actively marketing those properties. Of the thousands of 
other government properties, I will be happy to work with you 
to get you the list as we can.
    There are some internal government regulations about how 
and when we are allowed to release lists from other government 
agency surplus properties, and that's what has not allowed us 
in a short timeframe to respond to your request, but I can 
assure you we will. We want to work with you. We're as 
motivated as you are to get surplus assets out of the 
government inventory. I can assure you that.
    Chairman Denham. How quickly do you think you'll be able to 
provide lists by agency to this committee?
    Mr. Peck. Mr. Chairman, I've been in and out of the 
government and I would love to give you an estimate. But I'd 
like an opportunity to go back and figure out how fast I can 
move it. I honestly don't know. There is a cumbersome, probably 
too cumbersome process involved in getting the list out.
    Chairman Denham. I understand the inefficiencies of 
government. I understand that it's taken over 10 years on this 
property in particular. We do not have that time.
    So let me issue a warning to every agency, that we are 
going to be demanding lists. We want to know what properties 
are being utilized, underutilized, accessed or surplused; and, 
you know, we want to provide the President every opportunity to 
sell properties.
    But we are coming after agencies to get those lists, so we 
are hopeful that every agency will be encouraged to work with 
us on a very quickly basis; and, if there are any red tape, if 
there's anything that's prohibiting them from providing those 
lists, we will make sure that this 112th Congress facilitates 
that process in a quick manner.
    Mr. Peck. I appreciate that, Mr. Chairman.
    We are accountable to you. I work for the President. He's 
breathing down our neck also, and we have a mutual interest in 
moving these properties.
    Chairman Denham. Thank you. At this time, I'd like to open 
it up for questioning. I'll recognize each member for 5 
minutes, and I'd like to start this round of questioning by 
recognizing Chairman Mica, first.
    Mr. Mica. I am after Ms. Norton.
    Chairman Denham. This time, Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman.
    My good friend, the full committee chair, does have a flare 
for the dramatic. The next time you want to make a point like 
this, I would suggest that you station Mr. Peck here. And 
telecast the hearing for the rest of us, who had nothing to do 
with the malfeasance that we'd find in here, do not have to 
suffer with Mr. Peck.
    [Laughter.]
    Chairman Denham. At least we're not on Pennsylvania Avenue, 
outdoors, in front of the FTC Building.
    Ms. Norton. Oh, is that a threat, Mr. Chairman? All right. 
We'll see how your fight is.
    Mr. Peck, in a meeting last year I asked you to have an RFI 
out by the end of the year. We're now into every word. I want 
you to tell us exactly where the RFI is. Is it with GSA or is 
it at OMB?
    Mr. Peck. Ms. Norton----
    Ms. Norton. Now, you know, if we can't get straight, Mr. 
Chairman, this committee, unlike some committees hasn't always 
sworned witnesses. We may have to start. I am asking a direct 
question, and it is real clear. I want to know. Is it at GSA or 
have you transmitted it to OMB? Yes or no. Where is it?
    Mr. Peck. Ms. Norton, the RFP is under review both by GSA 
and OMB at the moment.
    Ms. Norton. What does that mean?
    Mr. Peck. Well, we are responding to some questions from 
OMB about what aspect of the RFP.
    Ms. Norton. Why in light of the fact that you had a full 
model before you, you don't have to start from the beginning 
with a historic building. You've got the tariff building. Why 
have you been unable to move forward?
    Mr. Peck. Well, two things; one is that we learn the Hotel 
Monaco/Tariff Building project was a successful project. We did 
learn some lessons from it that would apply to this project. 
This is a slightly different asset, requires something 
different. But I can tell you that we do have a request for 
proposals that is in almost final form.
    Ms. Norton. Mr. Peck, I think you should deliver this 
message, since you say it's two places. That 30 days from today 
the chairman of the subcommittee expects the RFP to be out or 
to have an explanation from the Administration as to why it is 
not out, one or the other within 30 days to the chairman of the 
subcommittee.
    Mr. Peck. I will be happy to deliver that message. I can 
assure you.
    Ms. Norton. Appreciate it. By the way, you had one RFI and 
they came forward in large numbers.
    Mr. Peck. That's correct. That is correct.
    Ms. Norton. So you already know the kinds of uses that the 
private sector thinks a bit, and yet you had to go out with 
another RFI or you're doing an RFP now. This is so redundant 
and repetitive, leading nowhere, and the patience of the 
subcommittee has gone completely out.
    You indicate, and I realize this goes over many 
administrations, but Mr. Peck, do not refer to the state of the 
market. Not here where the market is stronger than it is in any 
other part of the country, and when in fact you had a bull 
market in 2005, and it wasn't out in 2005 either. I don't think 
you can blame it on the market.
    I think that the blame has to be taken where it is in the 
Administration, and that's who we're going to hold 
responsible--not the people who would love to have this trophy 
building out there to build on. What obstacles have kept you 
from using the kind of authority Mr. Principi uses routinely 
and which the Congress gave you by statute, otherwise known as 
412 authority?
    Mr. Peck. Since I have been back at GSA, when I was at GSA 
in the Clinton administration, we didn't have the 412 
authority.
    Ms. Norton. Now, just a moment. I only have so much time. 
What obstacles since you have been an administrator have kept 
you from using 412 authority?
    Mr. Peck. Since I've been the Commissioner, there are no 
legal obstacles to using 412 authority?
    Ms. Norton. What are the obstacles?
    Mr. Peck. There really are few obstacles. One is finding a 
property that's marketable, that the private sector will be 
interested in.
    Ms. Norton. Are you joking, Mr. Peck?
    Mr. Peck. No, ma'am. Can I finish, please?
    Also, all of those properties, all proposals to do those 
sorts of things have to go through internal government review. 
And, in some cases, they are reviews that----
    Ms. Norton. Mr. Peck? Mr. Peck, within 60 days would you 
transmit to the chairman of this subcommittee a list of 
properties that have the potential for the use of 412 
authority, within 60 days to the chairman of this subcommittee?
    Mr. Peck. I would be happy to do that.
    Ms. Norton. Would you provide a list within 30 days of all 
the properties in the national capital region where GSA is 
currently losing money?
    Mr. Peck. Yes, ma'am.
    Ms. Norton. I'd like Mr. Wise and Mr. Principi to indicate 
whether you think the government scoring has been an obstacle, 
why it hasn't been an obstacle for Mr. Principi, apparently, 
why what Mr. Wise believes would be the reasons why an agency 
would use 412 authority.
    We see that Mr. Peck uses the authority when he is selling 
or disposing of property; and, look! We've allowed them to keep 
the money, but GSA, it's pretty easy to sell properties. Some 
of our properties are themselves quite extraordinary 
properties, and I do understand that some, of course, the 
market wouldn't be interested in.
    So, you see, you know, you put it up for sale. You sell it. 
And that doesn't take a lot of expertise. Even I could do that, 
but I couldn't build something. And you haven't used 412 
authority to build, and yet you are the builder. You are the 
developer for the Federal Government.
    So Mr. Wise and Mr. Principi, while you are able to build, 
Mr. Wise, why are they not able to build since they are in fact 
the developers for our government?
    Mr. Wise. Congresswoman Norton, thank you for your 
question.
    I think it's fair to point out that many of the challenges 
that GSA faces are really governmentwide. As I mentioned in my 
statement, we did recommend in 2007 that OMB, along with the 
Federal Real Property Council (of which GSA is a member), 
should develop an action plan to address key problems 
associated with unneeded property, including reducing----
    Ms. Norton. I am asking about disposing a property. I have 
indicated, I think, the easy part. And besides we get to keep 
the cash. I am asking about building properties. I am asking 
about developing properties, and I want to know whether there 
are structural obstacles. I even mentioned scoring. I am not 
sure that's particularly relevant since they do have 412 
authority.
    I also heard Mr. Principi, a major builder of the Veterans 
Administration. So I am trying to understand why a summit, what 
agency builds and the other agency disposes, what sort of I 
can't build.
    Mr. Principi. We, Madam Ranking Member, we complied with 
OMB scoring requirements. Obviously, it was problematic at 
times getting our plans through OMB; however, we persisted. We 
provided them with the scoring, and as a result, we were able 
to develop the buildings, as I indicated, regional office 
buildings on the grounds of VA medical centers, so that we 
could provide veterans with better service and save money by 
not leasing property in the city, if you will. So I think we 
accomplished both objectives.
    Ms. Norton. Finally, Mr. Wise, you see structural obstacles 
at scoring and obstacle of those 412 authorities, essentially 
eliminate that obstacle for GSA?
    Mr. Wise. Congresswoman Norton, we have not specifically 
addressed that issue in our recent work regarding GSA, but it 
is certainly something we would be willing to discuss with 
subcommittee staff to take to develop that issue.
    Ms. Norton. Mr. Peck?
    Mr. Peck. May I? It is to answer your question. Section 412 
gives us the authority to do land exchanges or public-private 
developments, which would allow us to build on a piece of 
government land, for example. But all proposals to do that do 
have to go through the scoring review at OMB.
    Ms. Norton. Do you regard scoring as an obstacle to using 
the 412 authority?
    Mr. Peck. Yes, ma'am. No question about it; I mean, it is 
similar to Capitol East decisions in the private sector. 
However, just going through that review and trying to figure 
out a way in which you can make it work for the government is a 
difficulty.
    Ms. Norton. I thank you, Mr. Chairman.
    I don't know how Mr. Peck would understand that there was a 
scoring problem, since OMB or CBO waits to see what you've got 
before it scores. And since, Mr. Peck, you don't have anything 
to show us or to show CBO, then of course we cannot know 
whether or not you could do 412 authority, as Mr. Principi 
does, without being scored. I urge you to find out.
    Mr. Peck. Well, Mr. Principi may have clarified, and he can 
answer for himself, but the enhanced use lease projects in VA 
do have to go through a scoring review.
    Mr. Principi. Yes, they do.
    Ms. Norton. And somehow they make it.
    Mr. Peck. That's true.
    Chairman Denham. Thank you. I now call on Chairman Mica.
    Mr. Mica. Well, I'll try to be brief since everybody's 
about frozen.
    Mr. Peck, the ranking member has asked for certain 
documentation which we would like to share, not only have come 
to the chairman of the subcommittee, but also to the ranking 
member in the timeframe sheet allotted.
    Also, if you could, in the next 30 days I would like to see 
your recommendations for any changes. If OMB is the problem, if 
something is an impediment, we've passed laws, several laws. 
We've passed specific laws to do this, and we're still sitting 
here in an empty, vacant building.
    I asked the counsel of the committee or staff director if 
we talked to the private sector about what would speed this up. 
And with the private sector and probably many of them are out 
here today are most of them backed away from this about talking 
about what's going on. They're afraid to publicly say anything, 
because they deal with GSA.
    So we can't get out of them a straight answer what the hell 
to do with this, so somehow, if we have to subpoena these 
people in and figure out a way to get these projects done and 
moving. Unfortunately, this mess that we are sitting in is only 
the tip of the iceberg, and this is repeated over and over. And 
Mr. Wise is saying that OMB held up an action.
    Maybe you could reiterate to the committee in writing, too, 
what you see as the obstacles in the next 30 days, and Mr. 
Peck, you. And then somehow, if we have to drag some of these 
folks in, we will put them under oath, Ms. Norton, or whatever 
the people in the real estate business that have to deal with 
these folks. But, this isn't getting done, and it's just 
frustrating.
    We've been talking about this, I think, my entire career 
with you, and again, we've got to do a better job. So those are 
two requests--expect hopefully in the next 30 days to get those 
to the committee.
    Mr. Peck. Yes, sir.
    Mr. Mica. I yield back the balance of my time.
    Chairman Denham. Thank you. At this time, I would like to 
invite Ms. Edwards up.
    Ms. Edwards. Thank you, Mr. Chairman.
    I am shocked I can still move.
    [Laughter.]
    Ms. Edwards. Just a couple of questions, and to Chairman 
Mica and Ranking Member Norton, I haven't been dealing with 
this for many, many years, and don't intend to spend my 
congressional career trying to figure out what GSA is doing 
with the properties, with Federal properties. I am curious, 
though, of the 9600 or so assets that you have indicated.
    Mr. Peck spoke to several different types of properties, 
and I would be interested when you report back to us to have 
some indication of where those properties are geographically, 
and where they fit in those tiers, because not every property 
is just alike. And I mentioned to Chairman Mica when I came in, 
my recollection of the Post Office building used to come here 
actually quite regularly.
    It was much more vibrant earlier on, but that was before 
the redevelopment, the full redevelopment of Pennsylvania 
Avenue. And it feels as though the property didn't keep pace 
with the full redevelopment, and so as a result, no retailer. 
You know, sort of hiring retailers, restaurateurs and 
commercial occupancy really took place in the building. But the 
Post Office building is quite unique in the inventory, and so 
it helped to understand the differences in the inventory so 
that we can construct both our request and oversight to match 
those differences as some properties, it would seem to me, 
should be easier to move to market than others.
    It would also be helpful to know, and perhaps you can tell 
us now, the distinction between the domestic properties and 
those abroad, and the different challenges the properties 
abroad present versus the inventory that's here domestically. 
And what portion of those millions of square feet represent--
properties that pose different challenges--because they're not 
located here in the United States?
    Mr. Peck. No. Let me answer your first question. I don't 
have any internal regulations making it difficult for me to get 
you their tier list of our properties. We'll do that right 
away, and I appreciate you're asking the question.
    Ms. Edwards. Well, what about the full 9600 in assets?
    Mr. Peck. That's what I mean. We tier the 1500 properties 
that we own. The other 8,000 are leases in private sector 
buildings. But in the 1500 we own, which is about 170 million 
square feet, we can give you those tiers really quickly.
    Ms. Edwards. Thank you.
    Mr. Peck. For properties overseas, GSA doesn't actually 
manage the overseas properties. They are managed either by the 
Defense Department, by and large, or the State Department. And 
we can get to the answer to that.
    Ms. Edwards. But are they considered part of this broad 
asset base?
    Mr. Peck. They are, yes, ma'am.
    Ms. Edwards. And if it's not helpful, I think, for the 
subcommittee to be looking at an asset base of what we think 
are 9600 assets, when in fact some percentage of them are 
assets abroad that are not within your purview.
    Mr. Peck. Right. That's exactly right. There are hundreds 
of thousands of government assets. Only 9600 are GSA, and as 
you note there are a good number of assets overseas. We can get 
you answers on that, too.
    Ms. Edwards. Thank you. And then in terms of valuation, I 
think when we look at those assets, would it be helpful to have 
some idea of the valuation? I mean for this committee's 
oversight purposes, looking at the various tiers and where 
they're valued, we might say, well, can you prioritize this set 
of them, because it has much more productive value to the 
taxpayer.
    Mr. Peck. We will be happy to. We will be inviting you to 
an incredibly stultifying debate about whether we should value 
things on their fair market value, replacement value, all those 
kinds of things, but we can get you those numbers, too.
    Ms. Edwards. Thank you. And then I wonder if you can answer 
the question. Of the properties that you have some control 
over, the ones that where they may be located in some area that 
isn't the best market, but could provide some economic 
development opportunity locally, and might we engage in a 
different kind of process for those properties to encourage 
local economic development and growth, and jobs in places that 
are a little bit harder than some of our major metropolitan 
areas.
    Mr. Peck. Well, I was referring, actually, to assets that 
are really pretty far from any kind of a metropolitan center, 
or almost any kind of a population base, but assets that are 
located near a community, we already do have the authority and 
use it pretty successfully, often, to give properties for free 
to local entities for either public purposes, public safety, 
health, education, or economic development uses, which 
communities can also get properties from us to undertake.
    Ms. Edwards. Thank you. I know my time is expired, so I may 
have some other questions, if we are all just so doggone cold.
    Chairman Denham. Well, that's one good thing about having 
an outside hearing in a cold location. They're quick hearings!
    Mr. Principi. Right.
    [Laughter.]
    Chairman Denham. I just have one, final question. Mr. 
Principi obviously had some great successes with the Base 
Realignment and Closure Commission. Could such a commission be 
put in place for all of our properties, nationwide?
    Mr. Principi. It could. I think it would be a very, very 
difficult process. I think BRAC works well for military bases 
in the sense that it's a combination of recommendations from 
the Department of Defense that have to be applied against 
criteria established by Congress. And I think the five 
backgrounds that we've had thus far have been able to reduce 
excess infrastructure and have the communities where those 
bases have been closed to be transferred to either other public 
agencies or to the private sector for redevelopment, and we've 
seen many, many success stories.
    So it is an option that you certainly could consider, but 
it would be a massive undertaking, I believe, Mr. Chairman. 
But, certainly, it could be done.
    Chairman Denham. The BRAC Commission, itself, was a 
tremendous undertaking, and yet you were able to have a plan, 
multiyear plan, with liquidation happening immediately.
    Mr. Principi. Yes.
    Chairman Denham. And we need that immediate liquidation 
today, so.
    Mr. Principi. Well, that's right. By law, when a military 
base is closed, take the 2005 BRAC ground. There are a period 
of years in which that base has to be closed, and so there's no 
delay. By that time it has to be disposed of, sold or 
transferred to another agency of government.
    Chairman Denham. Thank you. Thank you for your testimony. 
At this time, if there are no further questions from Members, I 
would ask for a unanimous consent that the record of today's 
hearing remain open until such time as our witnesses have 
provided answers to any and all questions that have been 
submitted to them in writing, and unanimous consent that during 
such time as the record remains open, additional comments 
offered by individuals of this committee or groups may be 
included in the record of today's hearing.
    Without objection, so ordered.
    I would like to thank our witnesses again for their 
testimony in this cold environment; and, if no other Members 
have anything to add, the subcommittee stands adjourned.
    [Whereupon, at 11:30 a.m., the subcommittee was adjourned.]
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