[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.]
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