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

                                ONE YEAR LATER:
                          STILL SITTING ON OUR ASSETS

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

                                    (112-72)

                                    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

                                 SECOND SESSION

                                   __________

                                FEBRUARY 9, 2012

                                   __________

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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
    ANDY HARRIS, Maryland                MICHAEL E. CAPUANO, Massachusetts
    ERIC A. ``RICK'' CRAWFORD, Arkansas  TIMOTHY H. BISHOP, New York
    JAIME HERRERA BEUTLER, Washington    MICHAEL H. MICHAUD, Maine
    FRANK C. GUINTA, New Hampshire       RUSS CARNAHAN, Missouri
    RANDY HULTGREN, Illinois             GRACE F. NAPOLITANO, California
    LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
    CHIP CRAVAACK, Minnesota             MAZIE K. HIRONO, Hawaii
    BLAKE FARENTHOLD, Texas              JASON ALTMIRE, Pennsylvania
    LARRY BUCSHON, Indiana               TIMOTHY J. WALZ, Minnesota
    BILLY LONG, Missouri                 HEATH SHULER, North Carolina
    BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
    PATRICK MEEHAN, Pennsylvania         LAURA RICHARDSON, California
    RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
    JEFFREY M. LANDRY, Louisiana         DONNA F. EDWARDS, Maryland
    STEVE SOUTHERLAND II, Florida
    JEFF DENHAM, California
    JAMES LANKFORD, Oklahoma
    REID J. RIBBLE, Wisconsin
    CHARLES J. ``CHUCK'' FLEISCHMANN,
        Tennessee
                                    ------                                7

     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
    CHARLES J. ``CHUCK'' FLEISCHMANN,      (Ex Officio)
        Tennessee
    JOHN L. MICA, Florida (Ex Officio)

                                    CONTENTS

                                                                       Page

    Summary of Subject Matter........................................    iv

                                   TESTIMONY

    Hon. Robert A. Peck, Commissioner, Public Buildings Service, U.S.
      General Services Administration................................     4

                    PREPARED STATEMENT SUBMITTED BY WITNESS

    Hon. Robert A. Peck..............................................    28

                           SUBMISSION FOR THE RECORD

    Hon. John L. Mica, a Representative in Congress from the State of
      Florida, request to submit the following article: Steven
      Pearlstein, ``Heartbreak Hotel,'' Washington Post Magazine,
      Aug. 25, 2002, at 15...........................................    36

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                ONE YEAR LATER:
                          STILL SITTING ON OUR ASSETS

                                  ----------

                           THURSDAY, FEBRUARY 9, 2012

                      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 2:35 p.m. at
    the Old Post Office Building, 1100 Pennsylvania Avenue, NW.,
    Hon. Jeff Denham (Chairman of the subcommittee) presiding.
        Mr. Denham. The subcommittee will come to order. Let me
    welcome the public buildings commissioner, Bob Peck.
        Thank you for joining us here this afternoon. I want to
    congratulate you, first of all, on the start of a new
    development here. That is one of the things that has changed
    since a year ago today. We certainly want to cover a number of
    other topics. The other thing that has changed is it is a lot
    warmer this year.
        So I also want to thank Chairman Mica for being here today,
    and thank him for his leadership in addressing the Government's
    gross mismanagement of Federal real estate. I am very pleased
    and excited that finally we have some good news when it
    concerns the Old Post Office. It is a major step in turning
    around this property, and a real success for the chairman's
    efforts.
        I look forward to learning more about the selection of the
    Trump Organization today. I am also interested in learning what
    other progress and setbacks GSA has made in the last year to
    reduce the amount of vacant and underutilized property
    nationwide.
        One year ago we met in this building to highlight the waste
    of taxpayer money on vacant and underutilized Federal
    buildings. We chose the Old Post Office because it is a symbol
    of a larger national problem, and how the system for solving it
    is broken. If the taxpayer can lose $6 million a year on prime
    Pennsylvania Avenue real estate halfway between the White House
    and the Capitol, then similar properties must be sitting all
    across the country.
        In this case, Congress held multiple hearings and passed
    two laws requiring the redevelopment. Yet years and years
    passed before we could get to the point of announcing a
    redevelopment team. The bottom line is the system is broken,
    and we need a new process to sell or redevelop these
    properties. It was in our hearing last year that I first
    proposed using an independent commission to identify properties
    for sale and redevelopment, and forcing Congress to give them
    an up or down vote.
        Since that hearing I drafted and introduced the Civilian
    Property Realignment Act. And just this week, the House passed
    H.R. 1734, the Civilian Property Realignment Act, with
    bipartisan support. That legislation will literally shrink the
    Federal footprint by selling or redeveloping high-value
    properties that are underused and burning a hole in the
    taxpayer's pocket.
        In addition, since our hearing last year, the
    administration directed Federal agencies to save $3 billion by
    selling or consolidating Federal property. We want to hear
    about the progress that GSA has made, how many buildings have
    been sold, what were the sale proceeds, and how long will it
    take to work through the backlog of excess properties at that
    rate.
        Over the years, the committee highlighted several large
    underutilized properties. And, as far as we can tell, GSA has
    done little to sell, redevelop, or refill them with Federal
    employees. For example, the Dyer Federal Courthouse continues
    to sit completely empty in Miami. In the New York City area a
    huge Federal building has been 50 percent underutilized for
    almost a decade. In Washington, DC, the Cotton Annex sits empty
    on property CBO valued at $150 million.
        And then there are those examples where GSA is spending
    millions of dollars in taxpayer--will end up with even more
    vacant or underutilized property. One of those examples that I
    have continued to highlight, in Los Angeles GSA intends to
    spend $360 million and completely abandon a 700,000 square-foot
    courthouse and a significant portion of a Federal building.
        In Norfolk, Virginia, we recently learned GSA was sued for
    condemning private land to build a courthouse that we don't
    need and don't have the money to construct. From our
    perspective, it appears GSA is selling or redeveloping a few
    properties, making little progress on most properties, and
    spending millions to add to our excess property inventory.
        On balance, I am not sure if our excess inventory problem
    is growing or shrinking, something we certainly want to hear
    about today. And on top of all this, GSA has failed to respond
    to committee requests for basic financial information about
    GSA's budget. While I am pleased GSA has taken an important
    step to redevelop the Old Post Office, I am very concerned
    about what GSA is doing with the rest of its inventory.
        Again, I thank Mr. Peck for being here today. And at this
    time, Chairman Mica, I would like to recognize the full
    committee chairman, who has been a real leader in addressing
    this problem of wasteful Federal properties.
        Mr. Mica. Well, thank you, Mr. Denham, Chairman Denham, and
    thank you for your leadership on this important subcommittee,
    and following through. So often in Congress, people hold a
    hearing and not much gets done. Sometimes things warm up as a
    result of the rhetoric, and the heat--sometimes things heat up.
    And we are here on a warmer day than we were 1 year and 1 day
    ago.
        And things are looking brighter. And I thank Mr. Peck for
    his cooperation. GSA--there is nothing like a hearing to
    motivate action. I think we called a hearing, and then suddenly
    after a year there was a concurrent announcement that we
    would--they would enter into negotiations with one of those who
    had expressed interest. That took a year. It was a bipartisan
    effort. Ms. Norton isn't here, her staffer is here. But we want
    to say that this isn't just a Republican idea or a Democrat
    idea. This is an idea for the American taxpayers.
        Now, Mr. Denham, maybe if this one hearing has got this--or
    two hearings have gotten this project going, I am told there
    are 14,000 properties on the excess property list, and
    thousands more that are half-empty. So if we do five hearings a
    day for the next year, we might get rid of some of the
    inventory.
        But actually, I have to congratulate--this young committee
    chairman took on this issue, didn't stop. And this past week
    passed through the House of Representatives the Civilian
    Property Reform Act, H.R. 1734 this week that will make a
    difference. And sometimes it is difficult for bureaucracies to
    move. Sometimes Mr. Peck and GSA is caught in the middle. But
    we are going to stop any of the delays that we can and try a
    way to expedite disposal, better utilization, whatever we can
    do to get the taxpayer a better deal.
        This project here--and we want to hear more about it, we
    don't know all the details--we have got to make certain it is a
    successful project. There was an attempt before that wasn't
    successful. I would like to know why it took a year. I have
    been in real estate and real estate development. We need to
    shorten that. It shouldn't take more than 6 months to put out
    an RFP and get people to move forward in these projects, or
    less. In the private sector it can be done. And now we
    understand the negotiating time is about a year. We want this
    expedited, but we want to make certain that the public interest
    is protected in this. This isn't some program to benefit anyone
    in the private sector. This is protecting public assets.
        This project alone can stop the bleeding of between $6
    million and $10 million of taxpayer money, hard-earned taxpayer
    money, going out the door to support an empty building and a
    half-empty adjacent building. This project alone has the
    potential for putting 1,000 people to work. It is two blocks--
    what is it, three blocks--to the White House, sitting here
    vacant and half-vacant for over a decade. And we have got to
    find a way to do better and make certain that we are on the
    receiving end. This project can actually make money for the
    taxpayers, put revenue in our depleted coffers.
        So the other thing, too, is we have got lots of places
    where we can hold these hearings. Mr. Denham, I suggest the
    Cotton Annex, 89,000 square feet, probably no heat there. Maybe
    we could do it in a few weeks, when it warms up a little bit
    more. But here is another building. And then we hear reports--
    here is a building half-empty, 900,000 square feet, Social
    Security Administration office in Jamaica, New York.
        So we have got examples not only here in the capital, but
    throughout the United States, thousands of opportunities to
    stop sitting on our assets and turn those assets into something
    that can benefit the American taxpayer who is on the hook for
    all of this inactivity or lack of attention or lack of
    initiative in moving forward to make these properties and these
    assets valuable again for return. And when you are approaching
    a $17 trillion deficit, every one of these opportunities that
    are missed is sad for the people of the United States and their
    future.
        So, with that, we do have a number of questions, and we
    want to express our, again, gratitude for GSA moving forward
    here. If there are any impediments that we can help them with
    that would make this go faster, and then ensure the success of
    this project.
        One announcement for the ladies waiting in the back. Donald
    is not coming today, so you just got me. Sorry. But hopefully
    he will be successful when he and his development company take
    this project and turn a very rough, rough stone into a diamond.
    Thank you.
        Mr. Denham. Thank you, Chairman Mica. Today we have just
    got one panel: Mr. Robert Peck, Commissioner of Public
    Buildings Service, U.S. General Services Administration. First
    of all, I would like to welcome our witness and thank him for
    being here today and making this space available for the
    hearing. I ask unanimous consent that our witness's full
    statement be included in the record.
        [No response.]
        Mr. Denham. Without objection, so ordered. Since your
    written testimony has been made part of the record, the
    subcommittee would request that you limit your oral testimony
    to 5 minutes.
        Mr. Peck, you may proceed. And before you proceed, let me
    just say for the record you and I have had many different
    conversations, and I appreciate the open dialogue that we
    continue to have to make sure that this property, as well as
    others, continue to move forward.

        TESTIMONY OF HON. ROBERT A. PECK, COMMISSIONER, PUBLIC
        BUILDINGS SERVICE, U.S. GENERAL SERVICES ADMINISTRATION

        Mr. Peck. Thank you, Mr. Chairman, and also Chairman Mica.
    Good afternoon. I am--I was going to say I am not totally happy
    to be back here, because I still prefer to be in warmer space,
    but it is better than last year. I want to thank you for the
    opportunity to join you here today at the Old Post Office to
    discuss the progress we have made this year in pursuing the
    redevelopment of this historic property, and also the progress
    we have made on surplus property around the country.
        I hope I will have an opportunity during the course of my
    testimony and answers to questions this afternoon to correct
    some of the mischaracterizations which I am afraid I have heard
    from the committee today and other times about the nature of
    the surplus property and our efforts. But as you noted, mostly
    we are working together very well.
        I want to congratulate you, Chairman Denham and Chairman
    Mica, on the passage in the House of the CPRA legislation. As
    you know, the Administration expressed some concerns about the
    legislation, but we are eager to continue working together and
    see if we can make that legislation a reality.
        As you know, we announced on Tuesday the selection of the
    Trump Organization as the preferred developer to redevelop this
    facility, the Old Post Office Building in Washington. And we
    are excited to reach this important milestone in the project.
        I would like to take a moment to remember a dear colleague,
    Pat Daniels, who worked many years as a dedicated contractor
    for GSA on this redevelopment project, and also on the
    Southeast Federal Center. Pat took ill suddenly last year and
    passed away 3 weeks ago. And it saddens me that she is unable
    to see this great result of her dedicated efforts.
        This project is only one example of GSA's ability to
    effectively utilize our owned and leased building portfolio.
    GSA is a leader in Government asset management of buildings. We
    are building on our successes with aggressive efforts to
    deliver new and innovative workplace strategies that will
    improve utilization even more.
        One thing I would like to just note now to--also to correct
    some misimpressions I think that the public may have, is that
    while the annex we are sitting in is vacant--and, as you can
    see on the chart I brought, has 53,000 rentable square feet--
    the Old Post Office Building itself, the historic building,
    which you see there, and all of that building which you can
    see--the annex is located way in the back, in a courtyard--the
    building is actually fully occupied by Federal tenants, Federal
    office tenants, and by retail.
        This building, interestingly, in the 1980s was a public-
    private partnership. We select--GSA at the time selected a
    private developer to do the retail. For all kinds of reasons it
    was successful for a while, and then not. And it--but to make a
    very long story short, it is time to take another shot at this
    building, and we think we have a much better way forward.
        Over the last decade GSA has successfully implemented a
    restructuring initiative to right-size our portfolio. Since
    2005, GSA has returned disposal proceeds totaling almost $244
    million. Last year alone we sold 14 public building service
    properties, returning $17 million to our building fund.
    Additionally, GSA continues to make progress on our aggressive
    goal of saving $450 million by fiscal year 2012, the end of
    this fiscal year, in real estate costs, which was put in place
    by the President in his June 2010 memo, ``Ordering Federal
    Agencies to Dispose of Unneeded Federal Real Estate.''
        To date, GSA has saved more than $300 million toward our
    $450 million target. We are on target to make the September
    30th deadline. And we understand other agencies are meeting
    their targets as well, so that we will make or exceed the
    President's $3 billion target.
        GSA has also led Federal efforts to utilize Government-
    owned space more effectively. Modernizing our own headquarters
    is an example of these efforts. Once the first phase of our
    modernization project at 1800 F Street, NW., is completed, GSA
    will move in other offices currently housed in leased space,
    which will significantly increase utilization and save
    taxpayers nearly $7 million annually in leased costs.
        During this renovation, we developed a laboratory to
    experiment with new technologies and solutions for alternative
    workspaces, such as hoteling. An entire PBS division of 87
    people, for example, now occupies a space that previously sat
    only 43. This space comprises various types of workspaces
    designed to increase collaboration, improve productivity, and
    save energy. GSA is also assisting our customers and optimizing
    their space through client portfolio planning. We help them
    identify utilization opportunities to reduce costs and the
    Government's footprint.
        Unfortunately, Mr. Chairman, our efforts have been hampered
    by our inability to get our lease prospectuses authorized. In
    our fiscal year 2011 program alone, there are 20 lease
    prospectuses still under consideration. All of these lease
    prospectuses have been pending for at least a year, and, in
    many cases, much longer. GSA has proactively gone back and
    worked with Federal agencies to reduce lease requirements.
        Since the initial submission of our prospectuses, we have
    reduced these agencies' total leasing needs by over 600,000
    rentable square feet, with possible savings of over $26 million
    annually. GSA worked with the Department of Justice, for
    example, to reduce their space request by almost 83,000
    rentable square feet, saving over $4 million a year. Most of
    these leases represent replacements for existing space that, if
    not acted upon, can fall into holdover, costing taxpayers
    significantly more, and negatively affecting private-sector
    landlords. I am hopeful we can work with this committee to move
    these prospectuses forward as soon as possible to realize these
    savings.
        In addition to improved leasing practices, we have
    successfully used our out-leasing authorities to improve the
    use of our properties, including redeveloping this building.
    The Old Post Office serves as an important landmark here. In
    1982, Federal funding for renovation was combined, as I noted,
    with a private-sector out-lease that provided for a retail
    pavilion. That lease was amended in 1989 to provide for
    construction of this annex, which, as you know--which, as we
    all know, never succeeded.
        We did issue a request for proposals in March of 2011 to
    pursue a redevelopment of the property. The RFP allowed the
    private sector to leverage its expertise in determining what
    the highest and best use would be for the Old Post Office, with
    a goal of providing a positive return for the Government, while
    maintaining the building's historic integrity. The proposals
    were rated both on qualitative and quantitative factors, which
    included the developer's experience, past performance, site
    plan and concept, financial capacity, and financial offer.
        GSA completed this review, and on Tuesday announced that
    the Trump Organization had been selected as the preferred
    developer. This is a significant step in putting this notable
    asset to its highest and best use, preserving its historic
    integrity, and contributing to the vitality of Pennsylvania
    Avenue, the Federal Triangle, and the District of Columbia.
        GSA and the Trump Organization will spend no longer than
    the next year--that is the outside limit--negotiating a
    detailed agreement for the building's redevelopment. If
    negotiations proceed as anticipated, redevelopment will
    commence in 2014, with occupancy in 2016. The redevelopment of
    the Old Post Office is a perfect example of how the Federal
    Government can, in cooperation with the private sector, turn a
    less-than-optimal office building into a facility that will
    more efficiently serve its community and produce a positive
    financial return for the Federal Government.
        Again, I appreciate the cooperation we have had over the
    last year, and the opportunity to come here today, and look
    forward to answering your questions.
        Mr. Denham. Thank you for your testimony. We will have a
    few rounds of questioning today. But first of all, I want to
    initially focus on the Old Post Office. You said in your
    testimony that the Post Office itself is fully utilized. How do
    you define fully utilized?
        Mr. Peck. Well, the historic building itself. We have only
    10,000 square feet of vacant rentable space. So, as a percent
    of occupancy and percent of vacant space, on rentable space,
    the building is fully utilized by our standards and most
    private sector standards. So, the annex building separately--
    which we don't spend much money maintaining because, as you can
    tell, we are not heating it--is vacant.
        But the--so what I would like to explain is that while the
    building is occupied, there are hundreds of Federal employees
    who work in the building. There are retail tenants who work in
    here every day, there are tourists who come in every day. The
    building loses money because it is incredibly inefficient. The
    heating, ventilating, and air conditioning systems are very
    expensive to maintain. And the rents that we collect from the
    tenants and from the retail tenants just don't cover the costs.
        Mr. Denham. You said hundreds of Federal employees
    currently occupy----
        Mr. Peck. Yes, sir.
        Mr. Denham. What is your space utilization rate?
        Mr. Peck. The--I will have to get that for you. But it is--
    I suspect it is around our normal space utilization, which is,
    in most cases, between 200 and 250 square feet a person. But I
    will have to get you that for the record.
        One thing I would note about this building--and the reason
    that, I believe, that most of our proposals were not for office
    space, is that the building was built as an office building in
    a different era. And today it doesn't lay out very efficiently
    as office space. The amount of space that you have for
    circulation and open area is much higher than we would like to
    see in an office building these days.
        Mr. Denham. In an office building like this, you define
    whether or not it is a good business investment or a return to
    the taxpayer based on Federal employees being in that same
    building.
        So what I am trying to get at is we allow a lot of Federal
    employees in a building like this that could be collocated
    somewhere else. So it is not really a savings or a net profit
    for Government.
        Mr. Peck. We absolutely agree. I am not trying to say--in
    fact, what we are all agreeing on is that this doesn't work
    very well for Federal office occupancy. And as I said in my
    testimony, we are working with every Federal agency we can to
    increase the utilization of Federal space.
        One of the things--I will just say again, if you will allow
    me, one of the things that has changed in the world, and it is
    changing in the private world, too, is that with the use of
    technology, and the different ways in which people use their
    space, and the recognition that people can work from home, they
    can work on the road, we have all recognized that we just don't
    need as much office space as people used to use. And we are
    trying to shed what we don't need as fast as we can.
        Mr. Denham. Now that you have got a private investor--
    Trump, in this case--what are the next steps in the process for
    redevelopment?
        Mr. Peck. We will, fairly quickly, sit down with the Trump
    Organization and try to work out the details of an agreement
    between us and figure out who does what, what our rights are to
    certain returns, what their rights are. There are historic
    preservation issues we need to work through, so they can know
    what aspects of the building they need to maintain, and what
    they can't. And while some of that was in the request for
    proposals, these things get much more detailed.
        You know, we have a--one model to go by. We did redevelop
    the historic post office building at--on F Street, between 7th
    and 8th Street in the District, and that is now a hotel, also.
    So we have done these things before. There are a lot of details
    that need to be worked out.
        Mr. Denham. Is that the Monaco?
        Mr. Peck. It is the Hotel Monaco. Yes, sir.
        And the other thing that we have to do is--and we are
    already doing this--is to find another place to put the
    National Endowment for the Arts, the National Endowment for the
    Humanities, and the Advisory Council on Historic Preservation,
    which are the tenants in the building. And we have already been
    out looking at locations with them. So we are trying to get
    ahead of the curve on that.
        Mr. Denham. And what is the timeline for relocating both
    the Federal employees that currently occupy this building, as
    well as the private tenants?
        Mr. Peck. We will--we have tentatively said to the--with
    all of the offerors, that we would be able to vacate the
    building by about this time in 2014.
        Mr. Denham. And again, I want to make sure that the highest
    return for the taxpayers--what can you tell us about the
    selection process, and how Trump was to benefit the taxpayer?
        Mr. Peck. Thank you. I can tell you, now that we--we put
    out a request for proposals. It was open to anyone. We got 10
    proposals--I am now allowed to say that, as well. Most of them
    were for hotel use. There were some that were for office use.
    All of them included some kind of mixed use arrangement.
        We had a--we first had a--we have a selection panel of
    Government employees. We are required to have Government
    employees make the final selection, of course. But they were
    advised by outside economic advisors who took a look both at
    the qualitative and quantitative aspects of the proposal.
        Our RFP said that we were going to look at financial
    return, on the one hand, and on technical qualifications, on
    the other. So we looked at the backgrounds, previous
    performance, of all of the people who responded. We took a look
    at their concepts for the building, and we came up with a
    tentative ranking.
        We then--as we had said we might do in the RFP, we then
    decided that it made sense to have all of the people offering
    come in for face-to-face interviews. Those happened in
    December, and then our committee got together and put their
    heads together with the advisors and made the selection of the
    Trump Organization as the preferred developer. In other words,
    we are going to negotiate with them and see if we can reach a
    detailed agreement.
        Mr. Denham. And on relocating the various tenants, what is
    the cost that GSA is planning on--cost associated with the
    entire relocation? Who is going to pay for that? And where will
    the tenants be relocated to, especially the Federal employees?
    Do they go to leased space or do they go to currently owned
    space?
        Mr. Peck. We--to answer the last question first, we are not
    totally sure where they are going to go. Our preference is
    always to locate Federal agencies in Government-owned space, if
    we have it available. So we have been looking at some of the--
    at some spaces that could accommodate all of the tenants,
    although not necessarily in the same place.
        We are also looking at some leased spaces. We have talked
    to them also about--and probably will allow them to make use of
    less space than they currently have. But we haven't settled on
    that yet. Cost is a factor. We obviously want to get them in
    the cheapest space possible that allows them to meet their
    mission.
        And I am sorry, you had a--your first question was about
    the cost of relocating them?
        Mr. Denham. The cost, and who is going to pay for it.
        Mr. Peck. I will get you that, and who pays for it. The
    cost of relocation, some of it has to--some of the cost has to
    do with where they go. We have a rule of thumb cost for
    relocating people that is just the move costs. It depends on
    how much of their furniture we can re-use, how much more we
    have to use. And we have got some detailed estimates which I
    would rather provide.
        On the question of who pays for it----
        Mr. Denham. As long as we make sure that they are
    provided----
        Mr. Peck. They----
        Mr. Denham. We have had some issues with making sure
    information is provided back to committee staff in a timely
    manner, so----
        Mr. Peck. I know. We have--you know, every time you ask me
    to provide something I have lots of review bodies that help me
    provide my answers for the record. We will try to get them as
    fast as we can.
        Mr. Denham. Thank you.
        Mr. Peck. The--who pays. Typically, when a Federal
    Government agency's lease and a building are--we have a kind of
    an informal lease inside the Government with agencies. When it
    is time for them to move, they have to move, mostly they have
    to pay. There are some instances in which GSA has to pick up
    the cost, and we are still working that out.
        I believe that the arts and humanities endowments, we
    haven't--I am sorry, the budget hasn't come out yet. So I
    believe you will see in the budget some provision for
    relocating the agencies. But I am not quite sure how that has
    gone in the final days of the budget prep, which is coming up
    next week.
        Mr. Denham. And final question. The last developer that GSA
    selected went bankrupt, and obviously this annex has sat empty
    ever since. How are we going to protect the taxpayer from the
    risk of this happening in the future?
        Mr. Peck. Well, there are--that is something that we will
    have to--that we will have in our agreement. But typically--and
    I have worked on these agreements as an advisor in the private
    sector, but with public entities--typically there are either
    rights for the Government to take the space, for the owner of
    the building--in this case the Government--to take the space
    back, if the owner goes bankrupt, subject--always, I have to
    say--to bankruptcy court proceedings, and give it to somebody
    else. Sometimes the person in bankruptcy themselves have some
    rights to get somebody in there as a partner. We will probably
    retain a lot of rights to review what happens if somebody is in
    financial trouble. But, as I said, in the end we are going to
    maintain the ownership of the building, so we will have a right
    to step in at some point.
        Mr. Denham. Thank you. Chairman Mica.
        Mr. Mica. Again, I thank you, Mr. Peck, for your
    cooperation and the progress we have made to date here.
        Let me just talk about, first, the progress and the effort
    in getting here. It has taken some time. Again, I think in the
    private sector we could have put out a request for some
    proposals and had them in in a much shorter time. Is there
    anything in our process that needs to be changed legislatively
    or administratively, so that we could move this kind of
    project, the one we are talking about here, forward, based on
    your experience?
        Mr. Peck. Mr. Chair, I don't think we need--in this
    particular process, because it is under section 111 of the
    National Historic Preservation Act, we actually have a decent
    amount of leeway to move.
        I will say that, you know, this is true--and I found this
    to be true in State and local governments as well--because it
    is a Government process, the Government is more open,
    transparent, and we allow--we take a lot more time evaluating
    proposals than do private sector groups, because you are just a
    lot more open to people suggesting that either political
    influence--it is beyond--or something else intervenes. So we--
    --
        Mr. Mica. Was there any political influence in this one?
        Mr. Peck. There was not.
        Mr. Mica. Swear to tell the truth, nothing but the truth?
        Mr. Peck. No, I do. And I want to say----
        Mr. Mica. I never contacted you. I don't care who you put
    in here, just so it is a viable firm and we don't have to--I
    mean--and I heard from reports that you had substantial--well,
    the participants who expressed interest--and I think that is
    the case, I see--I guess they are GSA people, or just people
    that like to agree with me.
        [Laughter.]
        Mr. Mica. But there was good interest. But it seemed like
    it went on a long time. I mean look at the proposals, you look
    at the return, you sit down, you get some details. My God, it
    is a year later.
        Mr. Peck. Well, OK. But let me answer the political
    influence thing first, because I am glad you asked the
    question, because I really----
        Mr. Mica. And you know, if there is--anybody does mess
    around with this kind of stuff, maybe we should do--add an
    addendum to the insider trading or something. I know politics,
    for some reason, does take place in this. But I don't think any
    of it was from anybody with the committee, interference, and
    there shouldn't be in the process.
        So--and if you don't want to talk about it here, and you
    have any suggestions that we can make certain that we tighten
    that up, so--we rely on you to sort through that maze. But it
    did take a long time.
        Mr. Peck. I want to--first of all, I want to assure the
    public that, one, there were no political appointees who sat--I
    am one--who sat in on the selection. They weren't telling me
    what was going on very much, as it happened, other than telling
    me what the schedule was.
        Two--and I want to compliment the Congress--I know that
    there were offerors who exercised every right, the right they
    have to talk to Members of Congress. And I know that no one in
    the Congress, to my knowledge----
        Mr. Mica. Made any----
        Mr. Peck [continuing]. Contacted us about any of that.
        Mr. Mica. That is good.
        Mr. Peck. Finally, I will just note that there were--happen
    to know now who the offers came from. Some of them are people
    who support Democrats, some are people who support Republicans.
    Obviously, we picked a developer who----
        Mr. Mica. Better not----
        Mr. Peck [continuing]. Has a political affiliation, and it
    isn't mine. And finally, I would say but in the process we got
    a request for proposals out about a month after the hearing
    last year.
        Mr. Mica. Right.
        Mr. Peck. This is a complicated deal. And the people who
    offered needed some time to go through the building, see what
    it looks like, see what condition it is in, and then we needed
    some time. I don't think, even in the private sector--you might
    have shaved a couple of months off, but probably not much.
        Mr. Mica. OK. Well, again, this is a big project, not just
    the annex that we are in, but the post office. We want it
    successful. You had mentioned Hotel Monaco, and I have to cite
    and maybe put in the record an article from August 25, 2002,
    that says, ``Watch your step. When West Coast entrepreneurs
    hooked up with Federal bureaucrats to convert a DC landmark
    into a luxury hotel, they had no idea what they were getting
    into.'' But this describes the nightmare, the bureaucratic
    nightmare, and the problems that were incurred there. Are you
    familiar with this?
        Mr. Peck. I am. I read that article.
        Mr. Mica. Maybe you could tell us how we will avoid some of
    that, and----
        Mr. Peck. I have to say I happen to think that it is a
    great project, and I think that the hotel developer is a
    terrific hotel developer. I think----
        Mr. Mica. The process was--they described it as a
    bureaucratic nightmare--dealing with the Federal Government to
    get that done.
        Mr. Peck. I think they were--I will just say this. I think
    they were a little bit naive about the historic preservation
    process, although they had a lot of experience in historic
    preservation. We are pretty strict on that, and that is one of
    the things they complained about in the article.
        On the other hand, I think that, in the end, they agreed
    that they got a pretty good product out of it, and they are
    making money. So I am--I suspect, if they were interviewed
    today, they would have a different view.
        Mr. Mica. Well, and----
        Mr. Peck. And we will be more streamlined. Can I say that--
    --
        Mr. Mica. There is a description in that of a very
    bureaucratic process. And, you know, no one is interested in
    giving away the store in rapid order. We want the public
    interest protected. But we also want the process expedited, so
    that we can have successes, whether it is this project or other
    projects.
        Do you expect revenue to come in from this deal? And was
    that part of the basis to--it had to be part of the basis of
    the decision to select this particular company. So----
        Mr. Peck. Yes, sir.
        Mr. Mica [continuing]. I know it has cost us money to keep
    this, even though we have Federal occupancy and some other
    occupied area. But it has still been a net expense.
        Mr. Peck. Yes, sir.
        Mr. Mica. We are moving that into the positive column under
    the proposals, I would assume, and that was one of the bases
    and criteria by which the final winner was selected.
        Mr. Peck. Yes, sir. We don't--as I said, we are going to--
    --
        Mr. Mica. We can't talk about the return, but it will not
    become a drag, a financial drag. It should be, actually----
        Mr. Peck. No, sir. And I can tell you----
        Mr. Mica [continuing]. Revenue-positive to the taxpayer.
        Mr. Peck. Yes, sir. And the magnitude of the revenue
    proposed by the preferred selected developer had an influence
    on his selection.
        Mr. Mica. OK. But we didn't want to speed you up or
    anything, but when we announced the hearing, you did make the
    announcement. You think if we did all those hearings it would
    help motivate and then--but we will be doing a few more. And
    that brings up the--I always look forward to seeing the inside
    of the Cotton Annex. And do you know how long that has been
    vacant?
        Mr. Peck. I forget how long that has been vacant. But----
        Mr. Mica. You forget?
        Mr. Peck. But Mr.----
        Mr. Mica. It has been vacant that long?
        Mr. Peck. Mr. Chairman, you know, the Cotton Annex, though,
    is--I have to say there is a shared responsibility for the
    vacancy----
        Mr. Mica. OK.
        Mr. Peck [continuing]. On some Federal properties. And----
        Mr. Mica. Well, that is what we have got to identify. And
    then you shouldn't be sitting there by yourself, taking all the
    heat in the cold. You should----
        [Laughter.]
        Mr. Mica. We need to expand the witness table. Who else
    might be responsible?
        Mr. Peck. Well----
        Mr. Mica. And I want you to give us suggestions for
    witnesses in--for the hearing that will be held soon in the
    Cotton Annex.
        Mr. Peck. Well, there have been proposals that the Cotton
    Annex be used for certain non-profit cultural purposes. And
    some of those have been promoted by Members of Congress. So----
        Mr. Mica. Can you get the FTC in there?
        Mr. Peck. We have looked at that. It is not quite big
    enough, and it is an awkward site, because there is a freeway
    that runs right by it and under it. But there--you know, but
    for example, can I just say the old----
        Mr. Mica. That is called transit-oriented development.
        [Laughter.]
        Mr. Peck. The Old Post Office, this building itself, the
    Old Post Office Building, GSA actually proposed redeveloping
    this building back in about 1999 or 2000. And then we were
    stopped when a rider appeared in appropriation legislation from
    the Senate side, telling us that any redevelopment would have
    to go through authorization and appropriations reviews. And
    informally we were told that we were not to do certain kinds of
    redevelopment.
        Mr. Mica. Does that still prevail? That was in 1999?
        Mr. Peck. No, sir. It is----
        Mr. Mica. So that excuse has lapsed.
        Mr. Peck. That was superseded by Ms. Norton's legislation,
    thank goodness. So we are--which does have a review, but which
    ordered us to redevelop the building.
        Mr. Mica. Is there heat in that building?
        Mr. Peck. No, I am sorry, we are talking about the Old Post
    Office Building.
        Mr. Mica. Oh.
        Mr. Peck. We are talking about the Old Post Office
    Building----
        Mr. Mica. No, I was talking--I am past the Post Office on
    to the Cotton.
        Mr. Peck. The Cotton Annex, we are looking again. There
    have been lots of proposals for that building, and lots of
    ideas about what to do with it. And I am hopeful--we are
    looking at it as part of--we have a number of surplus
    properties on that side of the Mall which we would like to move
    out, and are having active conversations with lots of people
    about how that might happen.
        Mr. Mica. Mr. Denham, if you could, maybe we could schedule
    one a month, at least, clear up a--that only--let's see, we got
    another 10 months left. We could clear up some of the
    inventory. He said a dozen or more.
        In the District?
        Mr. Peck. I didn't say a dozen, I just said a number of
    properties----
        Mr. Mica. OK.
        Mr. Peck [continuing]. On the south side of the Mall that
    are potentially surplus properties.
        Mr. Mica. Well, again, as the chair of the committee, I
    look forward to your scheduling at least a hearing a month. We
    will visit the properties together. Maybe we can put a plan
    together and take them off the, you know, static asset basis
    and put them into productive use. And maybe, God forbid, we
    should have a return, but we just want to stop the bleeding.
        So, that is one little thing that maybe we could accomplish
    here. First, we want to make certain this project moves
    forward. Then secondly, look at other projects, both in the
    District. Then, there is 14,000, I guess, and then thousands
    outside, some that are partially vacant. We are going to be
    busy a long time. But we can pick some sites and maybe advise
    the committee staff to look south during the winter months here
    on our visits to some of those sites. And then we can move into
    the warmer climes as we hold the field hearings across the
    country this year.
        So, we are just doing this one, but this is a followup. And
    then we will have a year-long series of hearings, both in the
    District and in the field, to highlight those. And if you could
    help staff comply with that, and Mr. Denham direct that, as the
    chair of the subcommittee, I would be grateful. He is--this guy
    is good. He is a--he is like a bulldog, I love it.
        Now, we--let's turn to the 21 lease prospectuses that are
    pending. And some of the problem we have is that there are
    requirements, I understand, for more space but no increase in
    personnel. And some of that is being negotiated. Is there any
    way to speed that up, other than just continue the
    negotiations?
        Mr. Peck. Well, I believe that we have--on the leases that
    are pending, on many of them, we have already negotiated
    reduced requirements with the agencies that are involved.
        Mr. Mica. OK.
        Mr. Peck. So that whether we renew the leases or move,
    there will be less square footage than we originally proposed
    in those prospectuses.
        Mr. Mica. Can we get a list of maybe those for the record,
    and include them in the record, so we can see, you know, how we
    can help move that forward?
        And in the budget, the President's budget, will we find
    attention to some of the problems we have had? Again, space
    versus the number of people? Because a lot of plans for
    expansion have, in the last year, suddenly run into some road
    blocks. I don't know why, but there is a different crowd at
    least in charge of one-third of the Government who put the
    brakes on some of this. Is there a reflection in, again, the
    budget you have been recommending to the White House? Can you
    give us a little preview of what we will see?
        Mr. Peck. I can't. I am not allowed to divulge what is in
    the budget. But let me--I am happy to tell you that a----
        Mr. Mica. We can look for----
        Mr. Peck. I am happy to tell you that over the past year we
    have--the Administrator of General Services, Martha Johnson,
    and I have had any number of meetings with Federal agencies who
    have come to us, both because of the administration's focus on
    overhead costs in the Government and Congress' focus on it, who
    come to us asking how they can reduce the amount of real estate
    that they occupy.
        We have conducted national portfolio reviews with three
    major Federal agencies, and we are about to go out for, I
    think, three or five others. That includes really large ones,
    like the Social Security Administration. And I think you will
    see reflected in the budget a reduction overall in Federal
    space occupancy.
        Mr. Mica. Yes, they started in my district with one of the
    offices for Social Security in one of my smaller communities,
    which--what is interesting is we have no problem with that. The
    local community even offered a space for them to occupy. They
    came up with more cockamamie reasons why they couldn't do that.
    So, instead of having 60 to 100 people drive 60 miles to
    Jacksonville, and each day, and 1 or 2 Social Security
    employees to come to a existing State or community facility, we
    got an incredible runaround. Is there anything we can do to
    allow those kinds of activities to, you know, have some
    commonsense approach?
        Mr. Peck. Well, Mr. Chairman, we have talked to Social
    Security and the Internal Revenue Service about where they
    locate their field offices, where they are best located with
    respect to where--the most important issue is where their
    clients are. But also, with----
        Mr. Mica. But again, it just doesn't make any sense to me
    to have--and most of those are elderly, or people that are
    disabled or trying to get to the Social Security office and
    move one or two people, even if they commuted, as opposed to
    300 or 400 trying to get to Jacksonville, some 50, 60 miles
    away. And----
        Mr. Peck. Well----
        Mr. Mica. Is there a prohibition, or something we can work
    on?
        Mr. Peck. Well, I think----
        Mr. Mica. Maybe we can try to do that as we downsize a
    cooperative State, Federal, local initiative. Do we have to
    have--rent space? Do we have to do things that don't make
    sense?
        Mr. Peck. Well, Mr. Chairman, I think you are expressing
    some of the tensions that we have. On the one hand, if you are
    trying to consolidate space and reduce the number of Federal
    locations, you do--sometimes you have to balance that against
    inconveniencing the public, which may have to go farther.
        On the other hand, I will give you an example. We have had
    conversations with the Agriculture Department about some of
    their field offices that were built in an era when you had to
    go visit the Agriculture Department----
        Mr. Mica. Right.
        Mr. Peck [continuing]. To get your agricultural crop
    support, or whatever it was. And these days, farmers sit on top
    of a combine that is controlled by GPS going up to a satellite,
    and they have got a laptop sitting there, and they don't need
    to go to an office at all to communicate with Agriculture.
        Mr. Mica. Right.
        Mr. Peck. So we think we can close some of those things.
    Some of that will start to happen with Social Security, at
    least as my generation starts to get in and is computer
    literate.
        Mr. Mica. If you would, maybe we could take this on as a
    little project with the staff, and see what we could do to look
    for some more cost-effective space utilization by agencies. And
    if there is a prohibition for some of the agencies to occupy on
    a temporary basis, or with some sort of an agreement to house
    that activity, it could save everybody money, energy costs, it
    would be much more efficient.
        Of course we haven't gotten into distance communications
    that would--distance communications. A lot of the folks don't
    have access to laptops, or may not be as capable of
    communicating through modern technology. But again, we have got
    to keep up with current times. So that is another project that
    we can take up.
        Let's go to a couple of projects. I will start with the DHS
    St. Elizabeths. Maybe you can give the committee a quick
    update. I think we have got 4 million square feet out there,
    and 1.2 million is supposed to be occupied by the Coast Guard.
    What is the status of that project? And that leaves a
    substantial remainder. Could you give us a thumbnail sketch?
        Mr. Peck. The Coast Guard building is being completed, will
    be occupied next year by the Coast Guard. We have----
        Mr. Mica. Is that on schedule and within budget, or what?
        Mr. Peck. Yes, sir. It is both.
        Mr. Mica. OK.
        Mr. Peck. And--however, because we have not gotten the
    follow-on--so the building itself is within budget and on
    schedule. We did not get the follow-on funding for the next
    phase of the project. And because of that, we have had to redo
    the way their operations center and utility hookups happen.
    Those will be done on time, also.
        But unfortunately, I have to report that, because of that
    delay, when we do finally move ahead with the next phase of the
    project we will have spent probably an additional $30 million
    to $40 million for temporary fixes, which we would not have had
    to do, had we just continued the project as it was scheduled.
        We are stretching out the schedule. We anticipate that,
    hopefully, when the--when budget circumstances allow us to go
    forward, we will complete the project. But for the moment, we
    have renovated a couple of the historic buildings for some
    support space. We will finish the Coast Guard project. And it
    is hard for me to predict right now when we will move on to the
    rest of the project. It is still our intention and that of the
    Department of Homeland Security to occupy that as its
    headquarters.
        One other thing I will just note is we have talked to them
    also about the possibility of locating even more people on the
    campus than they had originally projected, and they were
    originally projecting about 14,000 people. We think we will be
    able to reduce their space requirements elsewhere in the
    metropolitan Washington area, again, by taking advantage of the
    new kinds of space utilization standards that we are applying.
        Mr. Mica. Well, with the SPP provisions that the President
    will soon be signing into law, we may need maybe half the
    bureaucrats we have in TSA to run their huge screening
    operation. So that might be something else we could save
    substantial money on. Hopefully we can look at that together
    and reconfigure or re-estimate some of the use of that land and
    move forward on a schedule that makes sense.
        What about the FBI? Have you talked to the FBI? I keep
    hearing different things about what their plans are, the
    utilization of that building, and moving forward.
        Mr. Peck. Yes, sir. I think--we, in response to requests
    from this committee--correct? At least the Senate--all right,
    the Senate side asked us to produce a report on the FBI
    building and the potential for relocating it. We send a report
    that suggested that we could reduce the amount of square
    footage that the FBI occupies in this area significantly if we
    could move off of the--out of the FBI headquarters on
    Pennsylvania Avenue, relocate someplace else, and probably sell
    that site to private interests who could, as with this project,
    put it to higher and better use.
        Mr. Mica. How many square feet are there?
        Mr. Peck. The FBI headquarters building is--I want to say 2
    million square--how many square feet in the building? That
    would be 700,000, 800,000 square feet. I can give you these
    numbers.
        Mr. Mica. So----
        Mr. Peck. They occupy about 3.2 million square feet,
    including that building in the Washington area. We believe
    that, with newer space standards, they could--we could end up
    putting them in about 2.2 million square feet, save a million
    square feet, if we can come up with a creative way to move out
    of there and finance a new project.
        Mr. Mica. Well, that brings me to one of my last subjects,
    which is the status of the FTC relocation. And also I know
    under consideration, or at least an offer may have been made or
    considered with some of the space that we are obligated to with
    the SEC on the Constitution Center space. And those
    opportunities do vanish as they try to, you know, fill that
    space. Is there any progress, either at that location or other
    locations?
        One of my goals, whether--you know, I am not here to say
    ``you're fired.'' In fact, we are here today to say you are
    still hired, and--I am not Donald, but one of my goals is to
    relocate the FTC, consolidate that space--you have sent us a
    prospectus for 427,000 square feet. There is over 300,000
    square feet in the existing Apex Building, where the
    headquarters is located that is--dates back to the mid-1930s
    that could use substantial renovation. In addition, on--behind
    Union Station--is it New Jersey--have 212,000, 215,000 square
    feet of leased space. And asked again--and I think there is
    another location on top of that--and asked for a total of
    427,000 square feet in your prospectus to us.
        We, in turn, passed a resolution recommending the
    consolidation and relocation, so we could put as much of the
    FTC together as possible in one location. The--and have the
    National Gallery of Art, which is collocated across the
    street--and I know you have seen the plans they have for
    utilization of that space--and would undertake the full
    renovation cost at no cost to the taxpayers, which could be
    anywhere from $130 million to $200 million in value for
    renovation, plus the consolidation our staff estimates would
    save somewhere between $200 million and $250 million, a
    substantial amount of savings.
        So, I am looking forward to completion of that. I think
    that the FTC has finally come to a realization that that is
    going to happen, and it is going to happen either this year,
    or, I guarantee, next year. So any progress to date you want to
    report as of today?
        Mr. Peck. Mr. Chairman, the FTC lease that--lease
    prospectus that is pending, as you noted, was for 427,000
    square feet.
        Mr. Mica. No, it has been reduced.
        Mr. Peck. And they have been able to reduce their space
    requirements by, I believe, about 80,000 square feet or 100,000
    square feet. It is enough space that we are working--you noted
    the space that the SEC had potentially leased in Constitution--
    the Constitution Center building at 7th and D, SW. There is
    enough space there to accommodate the lease prospectus which we
    had sent out for the FTC, now that they have reduced their
    space.
        With respect to the FTC headquarters building itself--and
    you and I have walked that together--we do not believe that at
    the current time it needs an extensive renovation. It will at
    some point, but not yet. I did also--because I know of your
    interest in this--I did have a conversation with the director
    of the National Gallery of Art to see if the gallery would be
    willing to pay for the value of the building.
        Mr. Mica. Yes.
        Mr. Peck. I know that they are prepared to pay for
    renovation. I don't--we don't believe that we are authorized to
    transfer the building to them without compensation.
        Mr. Mica. Do you think that if we can get--and the value is
    about $70 million, I have been told, because of the condition.
    And that is the deal-breaker in that, if I can come up with $70
    million, that you will give me that building?
        Mr. Peck. I would have to----
        Mr. Mica. Tell me. Come on. This is the whole truth and
    nothing but the truth.
        Mr. Peck. This is a----
        Mr. Mica. $70 million. How about the Minority? Ms. Norton
    said she wanted $70 million, or whatever it is. We are going to
    get the building. It is kind of crazy to have the private--
    well, private money come in and also buy what will be public
    asset. It stays with the Government. It is not--the National
    Gallery doesn't get it, it still stays with the taxpayer.
        Mr. Peck. But, Mr. Chairman, on----
        Mr. Mica. But is that what we need, $70 million more?
        Mr. Peck. Mr. Chairman, on this building, Mr. Trump is
    proposing----
        Mr. Mica. We will go out and get the $70 million. I got $80
    million for the Visitor Center, so this is a discount deal.
        Mr. Peck. Mr. Chairman, on this building the Trump
    Organization is proposing to put $200 million into the
    building, but they are also going to have to pay us for the
    value of the building. So when a--when agencies transfer
    properties within the Government----
        Mr. Mica. Yes, OK.
        Mr. Peck [continuing]. They are required to pay fair market
    value----
        Mr. Mica. But I've got to know what--to do the deal, I've
    got to know what it is going to take----
        Mr. Peck. OK. I will----
        Mr. Mica [continuing]. To finance it. Give me a price----
        Mr. Peck. I will give you a----
        Mr. Mica [continuing]. And we will take that to people.
    Last night I sat in the Ford's Theatre and all those 1
    percenters came and gave money to do the Ford's Theatre
    education center and other buildings. The Mellons and others
    across the country--the Visitor Center, most people don't know
    this, but the evening of September 11th--I'm sorry, September
    10th, the night before September 11th, I hosted the last
    fundraiser to raise private capital for the Visitor Center, and
    we raised millions for the Visitor Center. We did a coin. There
    is $80 million worth of private money in that Visitor Center
    that no one knows or cares about. But if it takes $70 million,
    I want to know how much it is going to take to get this done.
    And then we will work with them.
        The National Gallery is also leasing, I know, at least
    60,000 square feet, and has another 100,000 square feet. I have
    never seen a better plan for utilization of a building than
    what they presented to us. And we walked through there. But we
    are going to do that, one way or the other. There are lots of
    vehicles, too. It is not on the FAA bill that the President is
    going to sign this week. But mark my word, we will get that
    done, and it is going to be one way or the other.
        So, I need to know what the price tag is, or what we have
    to do to make it happen. Because I know it will save money, and
    I know it is in the best interests of the country. So I look
    forward for you submitting that request. And maybe the Minority
    could ask Ms. Norton what her price is. She had told me $70
    million, or had an amendment at one of the committees. We are
    going to get it done.
        But I look forward to working with you, Mr. Peck, and I
    apologize that you have to put up with me. Just sometimes I am
    difficult, unreasonable. But we can get some things done. And I
    thank you personally for--it took a little bit longer--maybe 2
    months longer than--as you said. But we are on our way. If you
    see any impediment, please notify me or the committee.
        And on these others, we can take them one at a time in
    groups. We will do hearings, we will do meetings, whatever it
    takes. And our staff--if there aren't enough people here to
    help you on our--up on the Hill, I will get one or two more. I
    returned $2 million to the taxpayers for operation from my
    committee this past month, and I will spend a couple of bucks
    so that we can save hundreds of millions, maybe billions for
    the taxpayer.
        So with that, Mr. Chairman, have I exceeded my 5 minutes?
        [Laughter.]
        Mr. Mica. And all the GSA staff, please be very careful
    about Googling alerts; I am trying to fox the chairman. I don't
    know if you read the CQ one on the TSA hearing, where they
    Googled the--instructed the TSA administrator on ``let Mica ask
    one question and then take all the time so that he couldn't
    have another opportunity.'' It doesn't work that way on this
    committee. And they tried it on another committee. But I
    outfoxed them. I took 4 minutes and 45 seconds and then just
    asked one pointed question the other day.
        But the problem was they sent--the TSA staff Googled, by
    mistake, their directive to the administrator to CQ. So I
    thought that was kind of funny. But it doesn't work with the
    old man, so----
        Mr. Peck. Well, I haven't filibustered today.
        Mr. Mica. No, no. You have been great. You have answered
    every question. What you haven't answered, we will insist on
    getting a response.
        Mr. Peck. Yes, Mr. Chairman. We will be happy to respond
    with the fair market value of the building.
        And I also wanted to say that we would be--we work well
    with your staff and with Chairman Denham. We are happy to brief
    you on the leases, on our surplus property efforts, as well.
        Mr. Mica. OK. Excuse me, head cold. It is from doing
    hearings in cold buildings.
        [Laughter.]
        Mr. Mica. But the staff just handed me notes like you get
    handed notes.
        Mr. Peck. Right.
        Mr. Mica. A 2007 appraisal of $70 million.
        Mr. Peck. Right.
        Mr. Mica. Before----
        Mr. Peck. So it may be more by now.
        Mr. Mica. So before prices go up, I want to--but let me
    yield back the balance of my time, and excuse myself, Mr.
    Chairman, and thank you again for a good hearing. Thank you,
    Mr. Peck.
        Mr. Peck. Thank you.
        Mr. Denham. Thank you, Mr. Chairman. I do want to real
    quickly address the prospectuses. You know, I believe that
    agencies have to live with less space. I mean that is certainly
    a goal that has been talked about by GSA and by the President.
    And when we start receiving the prospectuses that actually show
    that we are utilizing less space in those prospectuses, we will
    continue to push them out. Now, I have asked you in our
    personal conversations if you have critical ones that are
    mission critical, we will certainly work with you on those.
        But I just want to give one example. The revised FTC lease
    request includes 75,000 square feet of additional space. And
    the committee negotiated that down. But we are going out and
    asking for more space, even though we are not hiring more
    employees. The agency hasn't grown, but yet we are increasing
    space.
        Mr. Peck. Which prospectus was that? Which prospectus was
    that? I am sorry.
        Mr. Denham. The revised FTC.
        Mr. Peck. 75,000 square feet more than we originally asked
    for? I don't believe that is the case. I will look into that.
        Mr. Denham. You can get back to me on that. But just using
    that as an example, our goal in this committee is to reduce and
    live within our means on this. And we certainly want to work
    with you on these prospectuses, but we want to certainly show
    that we are using less space for employees. And when we have
    not hired new employees, we want to make sure that we are
    leasing less space there, as well.
        I just want to go back to a couple of other questions on
    the Old Post Office, and then I want to talk to you about some
    of the new--or actually old--issues that we may be having new
    hearings on.
        I mean this is a perfect example of something that sat over
    a decade, well before I came into Congress, and certainly
    discussing it with the ranking member. Took two pieces of
    congressional legislation to actually push this project
    forward, and a hearing a year ago and now a year later, another
    hearing. We want to make sure that, again, we are working with
    you. And we would like to know what type of impediments, not
    only with this project, but other projects, as we are looking
    to do the same type of redevelopment, what type of impediments
    that you are having to deal with.
        Mr. Peck. Mr. Chairman, no one is more frustrated on this
    than I am since, when I had this job the first time, I proposed
    redeveloping the building and came back 8\1/2\ years later to
    find out that nothing had happened. So I was pretty frustrated,
    myself. And, as I said, there is a shared responsibility for
    that. There are reasons why the executive branch didn't move,
    and there are reasons in the Congress. Ms. Norton accepted why
    this didn't move, because she was sure trying to push it.
        Among the impediments on surplus property--and we have
    discussed this before--are the facts: one, sometimes executive
    branch agencies believe they are going to have a need for a
    property and some of that is a wish, some of it is a--I guess a
    view that maybe some time in the future I might need it. We
    call that kind of land-banking. We have an example in GSA which
    I am happy to say we have gotten over the West Heating Plant in
    Georgetown here, which sat idle for a number of years because
    we thought we might need it as a backup.
        And, as I think I described to you before, we finally asked
    ourselves--or at least some of us asked the question, well, if
    you haven't needed it for a backup through some terrorist
    incidents, physical, you know, weather catastrophes, we
    probably don't need it, and we have moved that out. So we are--
    we have got that on a schedule to get--to put that out in the
    market.
        So sometimes it is Federal agencies that are sitting on the
    properties. Sometimes, as you know, the valuable properties
    that we have--and not all of those 14,000 assets are really
    valuable, nor even good enough that we can give them away. But
    the ones that are, sometimes Members of Congress, either
    responding to community pressure or their own views of what
    should be done with the properties, manage to get a hold on the
    property. And that is why I think that both of us have agreed
    that a Civilian Property Realignment Act could get us over
    that, just like it did on the Defense BRACs. And I think that
    is a problem.
        The final thing I will note--and it is counterintuitive and
    very hard to describe to people that impedes us both in
    reducing the amount of square footage that we occupy for our
    real needs, and sometimes moving properties out of our
    inventory, is the fact that we need some upfront investment
    dollars, either private or public, somehow, to make the
    properties available.
        And here is what I mean by that. In our--the success I
    described in our headquarters building, in being able to move
    between two and three times as many people back into our
    headquarters, is only going to happen because we invested more
    than $100 million in the building to renovate it. It required
    taking out a lot of old walls, investing in different kinds of
    furniture. And we will be able to get a lot more people. In the
    long run, that is a huge savings for the Government.
    Unfortunately, it requires some upfront investment.
        What I described for the FBI headquarters will require some
    combination, I believe, of public and private investment to
    make it happen. And, as you know, we are limited in the kinds
    of financing that we can do. We can either lease a building
    from the private sector, or we can build a building and own it.
    And that is--right now we are not getting the money to build.
    And so we will--in some cases, all we can do is revert to
    leasing, which, in the long run, is not necessarily the best
    deal for the Government, either.
        So, there are some impediments which we have discussed. I
    know you and I--and we should talk about them in the future, as
    well.
        Mr. Denham. And we want to continue to have those
    discussions.
        And my final question, just on your overall goal, I mean
    the administration has come out with their number of $3 billion
    that is their goal of savings, and yet GSA's portion of that is
    $450 million. That seems low, especially when you have things
    like the Cotton Annex that--that one property is $150 million.
    Why is GSA's portion of that $3 billion so low?
        Mr. Peck. Well, because it was a--the--because that was
    what we had to anticipate from the June 2010 memo to September
    of 2012 that we could move through our process and actually
    realize either a savings or a sale on. And we didn't see--for
    example, on the Cotton Annex, we didn't see a clear path to
    getting that out of the inventory in time.
        I will note that we have said--and I think you have said,
    too--on the Property Realignment Act, we think that that number
    could be $15 billion over the next several years, because we
    will streamline the process, and get more properties in the
    pipeline.
        The Cotton Annex, I have to say, is one of those properties
    that would benefit a lot from somebody being able, with some
    finality, to say, ``Here is what we are going to do with the
    building.'' We know we don't need it in the Federal inventory
    right now. We just need to get everybody agreed on what we are
    going to do with it.
        Mr. Denham. And then lastly, before I discuss some specific
    properties, we have had some financial questions for you that
    we have been asking for since December. You know, what have--
    the PBS administrative costs for the past 5 years, and how much
    money is left over from completed renovation and construction
    projects each year.
        Mr. Peck. I think----
        Mr. Denham. Again, I would ask you, on the record, to make
    sure that we get that information promptly.
        Mr. Peck. OK.
        Mr. Denham. No reason why you wouldn't be able to provide
    that information to us, correct?
        Mr. Peck. No, there isn't. And I have reviewed several
    drafts of the response, so I know it is around.
        Mr. Denham. OK, fantastic. Well then, in--last piece of
    this, I will go through a little rapid fire here, a number of
    different pieces of property that I have had a great deal of
    interest in, you and I have talked about, certainly properties
    we are discussing having hearings at. But my specific question
    on each of these different properties is if we had the Civilian
    Property Realignment Act in place today--I know that the
    administration is pushing this, we are pushing it, while we may
    have some--I think you and I both agree we have some small
    differences that we both----
        Mr. Peck. Right.
        Mr. Denham [continuing]. Feel we can work out. I would just
    like to go through each of these properties. And if that were
    in place today, if we had that in place today, what would your
    opinion be on each of these properties?
        The first one, Cotton Annex, which we have already talked
    about, 89,000 square feet that is empty, and by CBO's estimate,
    $150 million. Again, if CPRA were in place today?
        Mr. Peck. I wouldn't want to promise $150 million. I think
    that is high. But it sure would help us move it out of the
    inventory. Absolutely.
        Mr. Denham. But the goal would be to actually sell this
    property.
        Mr. Peck. Yes, sir.
        Mr. Denham. Or would we be looking at redeveloping?
        Mr. Peck. I--that is hard for me to know. I don't know how
    historic it is considered. Anyway, I don't know if it is a sale
    or a public-private partnership or whatever. But somehow it
    surplused to--I believe it is going to be surplused to our
    needs.
        Mr. Denham. But currently not part of the 14,000 properties
    that have already been declared surplus, or----
        Mr. Peck. I think it is under--I think it is considered
    underutilized, isn't it? It is considered underutilized, so I
    think it is considered----
        Mr. Denham. So it is on that list?
        Mr. Peck. I think. Yes, sir.
        Mr. Denham. Second property, the Social Security
    Administration office in Jamaica, New York, 900,000 square
    feet, currently only 1,500 Social Security employees are there.
    It was designed to hold 3,000 employees.
        Mr. Peck. I know that, but--I know it had been----
        Mr. Denham. This building could be sold, it could be
    redeveloped----
        Mr. Peck. The Addabbo----
        Mr. Denham [continuing]. We could combine agencies.
        Mr. Peck. The Addabbo Building? That is one my----
        Mr. Denham. I don't want to bait the witness too much on
    this one.
        [Laughter.]
        Mr. Peck. That is one, if I remember correctly, that is one
    where we either need money so that we can move other people in
    there and make better use of it, or we need to have money to
    move the remaining people out and do something else with the
    building. My guess is, given that location, it would be better
    off if we could move other Federal employees into it. But I
    think it is a money--it is an upfront investment issue, one way
    or the other.
        Mr. Denham. We have approximately 1 million square feet of
    leased space in LA. What is the ballpark estimation on how much
    leased space we have in New York?
        Mr. Peck. Oh, I would have to provide that. It is a lot.
        Mr. Denham. Close?
        Mr. Peck. A lot.
        Mr. Denham. Similar-sized city?
        Mr. Peck. My--yes, I was going to--I would guess much more
    than 1 million square feet in New York.
        Mr. Denham. The Walter Hoffman United States Courthouse in
    Norfolk, Virginia, 210,000 square feet. The two parcels right
    here condemned west of the courthouse for a new annex. What
    would you do with this property?
        Mr. Peck. I am not sure any more. We are having some
    conversations about that. Because there was a--the site was
    acquired to build an annex to the courthouse. And then we
    acquired the site in two parcels. You noted that the second one
    we condemned. We didn't actually get sued, we actually went to
    a condemnation suit, and we had to spend a lot of money on it.
        We need to take a look at what is going to--what the future
    of that project is, and what we do with the parcel. I have to
    say, unfortunately--I mean I defend us, I defend the
    Government's actions, whether it is this administration or the
    previous one. On this one, we ended up buying a parcel. It cost
    more than we expected. I am not sure what to do with the site
    at this point, and I am not sure that the site, in the end, is
    one that we are going to use any time soon.
        The other thing I want to say to you, by the way, is--to
    the committee--is that we did get an authorization to spend a
    certain amount of money on a site. There was a particular site
    in mind. We went to a different site, we spent more money, and
    I think we should have notified the committee. And I apologize
    for not having done that, and it won't happen again.
        Mr. Denham. Thank you. Is this on the excess or
    underutilized property list?
        Mr. Peck. No, because it is presumably on a project that is
    authorized. So I don't believe it counts as underutilized yet.
        Mr. Denham. This is not on the underutilized list, either.
    Even though it is only----
        Mr. Peck. That may----
        Mr. Denham [continuing]. Percent occupied?
        Mr. Peck. That may be at 50 percent. If it is at 50 percent
    occupied, it will show as--just like a building under
    renovation shows at underutilized, that should show as
    underutilized on the list. I don't know if it does.
        Mr. Denham. The staff tells me it is not on the list.
        Mr. Peck. It doesn't? Then there is a mistake in our
    profile----
        Mr. Denham. My point will be, as I go through all of these,
    we have 14,000 properties, many of these high-value properties,
    which you and I have both agreed are not on this list, which is
    part of the reason we need a Civilian Property Realignment Act.
        Mr. Peck. I should note that some of our joint focus in the
    last year has brought us to the understanding that that list,
    which was created for an accounting purpose some years ago
    doesn't work as a real estate management purpose. And we are
    revising the way we--our definitions on the list, and the way
    we put it together. Hopefully it will be a better product by
    this time next year.
        Mr. Denham. My favorite topic when it comes to
    underutilized and excess properties, the courthouses in Miami,
    Florida, the David W. Dyer Federal Building, and United States
    Courthouse currently sits vacant.
        Mr. Peck. It does.
        Mr. Denham. Completely vacant. No phones on. We have tried
    to contact people there. It is empty. I am still looking----
        Mr. Peck. I have----
        Mr. Denham [continuing]. Forward to touring it myself, but
    an empty building.
        Mr. Peck. I did. Well, you put it on the table. I did walk
    the building. It is vacant. It is--and here is--you always find
    something interesting in these deals. This also requires a
    little bit of money. The utilities, which go to one of--there
    are a number of courthouses in this courthouse complex,
    including the new one. But the utilities that go to some of the
    other occupied courthouses are actually located in the Dyer
    building. And so, we need to figure out a way to cut off the
    utilities and replicate them in another building.
        There are different ways we could do that. We could either
    say to somebody, ``Take it as is, where is, but you are going
    to have to pay for us to duplicate the utilities,'' or we have
    to pay for them ourselves. We are trying to figure out what to
    do. Believe me, I do not want that thing to sit there much more
    and----
        Mr. Denham. Currently on the underutilized or excess
    property list?
        Mr. Peck. That is on the--it is underutilized.
        Mr. Denham. But it is not reported on the list?
        Mr. Peck. Not--I don't think it has even been reported as
    excess, it is just underutilized.
        Mr. Denham. And, in fact, not many of the courthouses have
    been, it is my understanding, on the list of underutilized or
    excess----
        Mr. Peck. We got rid of--I mean we moved out in, I don't
    know, 8, 10 years ago, I think we moved out a number of really
    old, underutilized, small courthouses. This one is probably not
    on the excess list yet, because we use the utilities in the
    building. So the----
        Mr. Denham. And you brought up the new courthouse, the
    Wilkie D. Ferguson, Jr. United States Federal Courthouse.
    Obviously a new courthouse, but not fully utilized, either.
        Mr. Peck. It is--I walked through the building. I think it
    is fully occupied by the standard--if you take the standard
    that we get full rent on the building. I think the building was
    scoped out at a point at which we were designing buildings for
    a higher anticipated number of judgeships than we have--than
    have actually come about. And, as you know, we have scaled
    back----
        Mr. Denham. Which is an issue of prosecution----
        Mr. Peck. Which is an issue. And we and the courts have
    both scaled back what we do when we project the number of
    judgeships in the future.
        Mr. Denham. New York City, the Daniel Patrick Moynihan
    United States Courthouse. I just toured that, as well as the
    Thurgood Marshall United States Courthouse. The Thurgood
    Marshall, as you know, is being renovated.
        My concern here is one of the goals of the Civilian
    Property Realignment Act is actually space utilization.
    Courtroom sharing should be part of that. We have got courtroom
    sharing going on here. While it is still not full utilization
    according to the courtroom sharing model, we are looking at--we
    are renovating this. And they tell me the judges that are doing
    courtroom sharing are then moving over here. So, not only are
    we not meeting the goals of courtroom sharing in this building,
    but soon as this is done we are looking at moving a good
    percentage of those judges over.
        Mr. Peck. Well, I think the distinction is that the judges
    who are sharing courtrooms while the Moynihan is being
    renovated are active judges. And under the courtroom-sharing
    guidelines of the judiciary, active district court judges don't
    share courtrooms. Senior judges and magistrate judges do.
        So, we are moving them back. I mean when they move back
    into the Moynihan, as I said, they will meet the judiciary's
    courtroom-sharing guidelines.
        Mr. Denham. And then finally--again, one of my favorite
    topics--the current Los Angeles Federal courthouse. You will
    hear me talking about this one as much as Chairman Mica talks
    about FTC. The Roybal Federal Building and the 312 Spring
    Street courthouse, once the renovation--or the new building is
    complete, we are going to spend $365 million building a brand-
    new courthouse, even though we have got the Roybal Building
    that has two floors that are not being used for courtrooms. And
    then we are going to vacate Spring Street.
        First of all, I don't agree that we should be building the
    new courthouse. But if we are going to build it, should we not
    be selling the empty courthouse that is going to be left
    vacant?
        Mr. Peck. Well, Mr. Chairman, when we build the new
    courthouse, we are either going to backfill the space that is
    vacated in the Spring Street courthouse, and which--and I just
    want to reiterate for the record that we are not going to reuse
    the--we are not going to use the Spring Street courthouse,
    beautiful building that it is, for courts any more because it
    doesn't meet our security standards, handicapped accessibility
    standards. And when we are done, we will either backfill the
    building with leased space, getting out of leased space in Los
    Angeles, or we will get rid of that building. One or the other.
        Mr. Denham. Isn't part of the challenge that you have with
    these historic buildings that, once they are vacated to--if you
    are not going to use them for their original intent of actually
    using it as a courtroom, then to try to put new leased space in
    there--I completely agree. We have got 1 million square feet of
    leased space in Los Angeles. We ought to be utilizing our
    Federal footprint better. But if it is--if you are never going
    to be able to put office space in a courtroom, wouldn't you
    sell it for redevelopment or put it on that excess property
    list?
        Mr. Peck. What we are going to have to do is see what it
    takes to--you know, how much of the building can we use as-is
    or for very little investment to move people out of the leased
    space in Los Angeles and into the building. And if we can't,
    then we will have to--that is when we will have to make the
    decision about doing something else with the building, and
    getting it out of the inventory, redeveloping it, selling it,
    whatever. But I mean we are not going to sit there with that
    building being vacant, or significant vacant. I will tell you
    that.
        Mr. Denham. Thank you. Well, I appreciate once again not
    only your time here as a witness today, but more importantly
    our ongoing dialogue. This truly has been a partnership to move
    this bill forward out of the House and into the Senate. We look
    forward to full cooperation to not only getting it out of the
    Senate, but actually getting this signed into law and being
    able to work with you as it is implemented.
        I mean I think it is going to be a great thing for the
    taxpayers across the United States, to move out of many of
    these different buildings and sell off some of the things that
    we don't need. We don't want to have a fire sale, as you and I
    have often talked about, but we certainly want to get the best
    bang for our buck for the taxpayers.
        Mr. Peck. On that we certainly totally agree.
        Mr. Denham. At this time I would ask unanimous consent that
    today's record of today's hearing remain open until such time
    as our witnesses have provided answers to any questions that
    may be submitted to them in writing, and unanimous consent that
    during such time as the record remains open, additional
    comments offered by individuals or groups may be included in
    the record of today's hearing. Seeing as there are no other
    Members up here with me, I don't think anybody will object.
        [Laughter.]
        Mr. Denham. But without objection, so ordered. Again, I
    would like to thank our witness today for being here and for
    testimony. And at this time this committee is adjourned.
        [Whereupon, at 4:02 p.m., the subcommittee was adjourned.]