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










                         SITTING ON OUR ASSETS:
                      THE GEORGETOWN HEATING PLANT

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

                                (112-89)

                                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

                               __________

                             JUNE 19, 2012

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure






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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey            Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
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

Flavio Peres, Deputy Assistant Commissioner for Real Property 
  Utilization and Disposal, Public Buildings Service, U.S. 
  General Services Administration................................     5

                PREPARED STATEMENT SUBMITTED BY WITNESS

Flavio Peres.....................................................    28

                       SUBMISSIONS FOR THE RECORD

Flavio Peres, Deputy Assistant Commissioner for Real Property 
  Utilization and Disposal, Public Buildings Service, U.S. 
  General Services Administration:

        Supplementary information to responses to questions asked 
          during the hearing.....................................    35
        List of agencies with the authority to retain proceeds...    39
        List of 124 excess GSA properties........................    40








 
                         SITTING ON OUR ASSETS:
                      THE GEORGETOWN HEATING PLANT

                              ----------                              


                         TUESDAY, JUNE 19, 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 10:00 a.m. at 
the Georgetown Heating Plant, 1051 29th Street, NW., 
Washington, DC, Jeffrey Denham (Chairman of the subcommittee) 
presiding.
    Mr. Denham. The subcommittee will come to order. I want to 
first thank Chairman Mica for joining us this morning, thank 
him for his tireless work on this issue and his leadership; did 
the ``Sitting On Your Assets'' report prior to the 112th 
Congress, and we appreciate him being here.
    First, let me say the Federal Government wastes billions of 
dollars every year on underutilized, unused, vacant buildings 
just like this one. This administration has said this issue is 
a priority, yet neither GSA, Acting Administrator Tangherlini, 
nor the current head of the Public Buildings Service, Ms. 
Chero, are here today.
    While I appreciate Mr. Peres joining us, work on this 
project, I am troubled the new GSA leadership could not make 
time to be here with us today. This is the fourth hearing in a 
vacant building this Congress. We held two in the vacant annex 
of the Old Post Office, and most recently the vacant Cotton 
Annex.
    The Post Office Annex sat vacant for more than a decade, 
and a developer was only selected to redevelop that site 
earlier this year. The Cotton Annex sat empty for more than 5 
years on land valued at $150 million. This is an area that has 
nearly, or maybe possibly more, than 5 million square feet of 
leased space; yet, these buildings are going vacant, 
undeveloped, and underutilized.
    GSA still has not decided what to do with this building. 
Today we're in Georgetown Heating Plant. This building has sat 
vacant for more than a decade, costing the taxpayers over $3.5 
million. But, those costs don't account for the lost 
opportunities. This building sits in one of the more expensive 
real estate areas in the Nation's Capital surrounded by 
development and waterfront. Yet, until last November, none of 
these properties were on the Government's list of excess 
properties.
    The Government has a list of 14,000 properties, and many of 
these properties that we continue to hold hearings at aren't 
even on that list. I'm pleased that GSA is finally taking 
action on this site; however, its past experience is any 
indication. The question is will the taxpayer get the highest 
return possible on the valuable property. Just 2 years ago, GSA 
sold a high-value asset in the middle of Bethesda, Maryland, 
for only pennies on the dollar.
    After years of sitting idle, GSA chose to sell at the 
bottom of the real estate market and seem to take few steps to 
ensure the taxpayer realized the significant value in that 
property. We have to ensure that GSA does all it can to sell 
this property at the highest and best use. And why did it take 
so long to get to this point? This plant was decommissioned in 
2000, but yet it took until November of 2011 to even declare it 
surplus. This is exactly why I introduced and the House passed 
the Civilian Property Realignment Act to get agencies like GSA 
to get rid of or redevelop unneeded properties.
    And what makes matters worse is even after this building is 
sold, GSA continues to compound the problem of vacant space. 
For ever step forward, GSA seems to take two or three steps 
back, while GSA is finally selling this property. Across the 
State in my home State of California, Los Angeles, GSA is 
creating more empty space just as GSA has done in Miami, in New 
York and other big cities around the Nation.
    GSA plans to build an unneeded $4 million courthouse in Los 
Angeles, and then abandon a functioning courthouse six times as 
large as this Georgetown building. It seems for every vacant 
building finally sold by GSA, they continue to create even more 
wasted space. And despite our budget deficit and despite even 
the direction of President Obama's own real property directive 
in 2010, GSA continues to cooperate as if business as usual.
    It is unacceptable and it is costly to the taxpayer. We 
hope today to hear why it has taken so long to sell this 
building, how GSA intends to ensure the taxpayer gets the 
greatest return on its sale, and how many vacant buildings like 
this does the Government actually own.
    Again, I want to thank our witnesses with us today; and, at 
this time, I would like to recognize the full committee 
chairman, Chairman Mica.
    Mr. Mica. Thank you. Thank you. First of all I thank the 
subcommittee chair, Mr. Denham, for his leadership and his 
determination to move forward trying to get some of these 
public assets in the win column for the taxpayers. I thank Ms. 
Norton for coming this morning to this incredibly valuable 
piece of property.
    Now, listen to this. This is over 2 acres in the heart of 
Georgetown. This is probably some of the most costly real 
estate on the east coast, certainly in the District of Columbia 
and in the United States; and, as you heard Mr. Denham say, for 
more than a decade no one made a decision to move forward with 
disposing of this building.
    Now, maybe the inside isn't very pretty and the outside, 
again, may have some value to it, the core structure. I 
understand this building is also above the normal height 
limitation, so it does have some real estate value. But for 
more than a decade, it sat idle. Now, if you are wondering if 
we came here to embarrass GSA and highlight this building, then 
you are right on target.
    Mr. Denham and I set out, like a few weeks after I became 
chairman of the full committee last February, we did our first 
hearing. Some of you were in that cold, frozen building. The 
annex for the Old Post Office that sat vacant two blocks from 
the White House for 15 years. If you are wondering what we are 
going to do after this, then you haven't read our report.
    The report is ``Sitting on Our Assets: The Federal 
Government's Misuse of Taxpayer-Owned Assets.'' We wrote this 
as Mr. Denham also pointed out in October of 2010. That was the 
same month that Mr. Neely was sitting in his hot tub in Las 
Vegas, no one minding the store when the other folks had 
control. We set out a plan and we intend to take this plan and 
ensure that the Federal Government and GSA stop sitting on 
valuable assets.
    So far, Mr. Denham and I have done two hearings at the 
annex to the Old Post Office, the last hearing we did in an 
empty building. Some of you were there. It was the Cotton 
Annex. Today is our third hearing. Now, this is our score card, 
folks. We only have Mr. Denham. There are 14,000 either vacant 
or partially vacant, or underutilized properties under the 
purview of the Federal Government. So we have 13,997 to go, and 
I hope you will be with us for all of those events.
    We will go from one end of the country to the other end of 
the country. We just started here in our Nation's Capital; but, 
as you heard, the scene you see today with the building sitting 
here, again, for over a decade, is repeated across the country. 
I happen to be a former businessman and in real estate. Any 
company that allowed this to happen would be bankrupt, would be 
defunct, except for the Federal Government. Because a few 
blocks from here, there is a very full building that's 
operating 24/7.
    That's where they are printing the funny money to keep this 
game and fiasco going. Now, let me tell you something. We came 
down the Whitehurst Freeway just a few minutes ago. Did you see 
the sign up on this building? I was told the sign was put up 
yesterday morning. Did you see the sign when you entered? So, 
actually, before holding and announcing this meeting, there was 
no sign on the building, and the property was not put on the 
market for sale as you would do. It was probably one of the 
least expensive ways of putting it on the market.
    So we made some progress, Mr. Denham. We have got ways to 
go. There are other properties around here we could highlight. 
I have a proposal to consolidate the Federal Trade Commission 
Operations, which are now at least three locations. And they 
asked for 427,000 square feet. Heaven forbid they should 
consolidate some space allowing other agencies to take private 
sector money and develop an old building!
    We wouldn't want to do that, because that would save the 
taxpayers between $400 and $500 million, and that is a half a 
billion dollars on one transaction. So here we sit in an empty 
building in the heart of our Nation's Capital. The most 
expensive real estate that you can find anywhere in the United 
States and on the east coast and in the Nation's Capital. 
Nothing was done for 10 years; so, yes, we are here to 
highlight it. Yes, we are here to try to bring this to a halt, 
and we will do it one way or the other.
    Now, again, I am disappointed in not having had the 
cooperation of the acting administrator. I can tell you how 
hard it is to get anything done when you have an administrator, 
let alone an acting administrator in an agency that is in 
turmoil and which many of the leaders, and actually show who 
testified at our very first frozen a la carte to hearing down 
the street.
    Some of those people had to step down, but we are going to 
do it either with or without GSA. We will do it now or we will 
do it in the next Congress, but we are going to keep the 
Federal Government from sitting on valuable assets. I will say 
that today. I will say that tomorrow, and we will say it until 
we get it done. With that, those are my comments; and, again, I 
look forward to working with everyone: the chairman, ranking 
member, Mr. Hanna, everyone in a positive fashion to move this 
forward. And, again, if you want the blueprint for what we are 
going to do, just go online and read it. Thank you and I yield 
back.
    Mr. Denham. Thank you.
    At this time I would like to recognize the ranking member, 
Ms. Norton, for any opening statement she may have.
    Ms. Norton. Thank you, Mr. Chairman.
    The Georgetown West Heating Plant where this hearing is 
being held this morning, an underutilized General Services 
Administration building on prime land in the Georgetown 
neighborhood of the District of Columbia has been put on the 
market for sale. However, the plant, built in the late 1940s, 
had remained underutilized with no clear plan for full 
utilization over the past decade until the Obama administration 
began the disposal process in 2011.
    Part of the administration's efforts to dispose of and 
redevelop underutilized Federal properties, that effort led to 
the administration's submission of the Civilian Property 
Realignment Commission proposal to Congress still pending here 
for identifying Federal properties for sale, disposal or 
consolidation. Since GSA began to market this property for 
sale, the private sector has shown strong interest, and not 
surprisingly. With the potential of returning a significant 
financial gain of return to U.S. taxpayers, not unlike the 
award of the contract for redevelopment of the Old Post Office 
Building earlier this year, several questions about the site 
are immediately apparent.
    Beginning in 2000, instead of undertaking a cost benefit 
analysis to determine the highest and best use of this 
Georgetown property, GSA cited a number of reasons for the 
delay of its disposal or use, including the possibility of 
using the site for backup generation of power, the cost of 
cleanup, and questions about whether the Department of Interior 
controls parts of the site. Has the value that GSA obtained 
from the property plus its investment of over $3.5 million 
towards maintaining it been greater than the value the 
Government would have received from selling or developing the 
property over the past 10 years?
    Has the contribution to maintaining the plant been a wise 
use of the diminished Federal buildings fund? In furtherance of 
the ongoing sale of the property, GSA is currently undertaking 
the required National Environmental Policy Act and National 
Historic Preservation Act processes for property disposal with 
the anticipation that these activities will be completed later 
this summer. My expectations are that GSA should work closely 
and quickly with the District of Columbia Deputy Mayor for 
Economic Development to coordinate local zoning to the extent 
it is possible to ensure a maximum financial return to Federal 
taxpayers.
    Several months ago, I requested information on vacant or 
underutilized properties in the District of Columbia. At that 
time, the Georgetown West Heating Plant that is the subject of 
today's hearing was listed. I will want to know today where the 
other properties on that list are in the disposal process and 
what steps have been taken to dispose of them, particularly the 
Cotton Annex where the subcommittee held a hearing in March.
    I am skeptical about the other two properties in the 
District of Columbia that remain underutilized. Can GSA justify 
the U.S. Secret Service claim that it needs a valuable 
abandoned property at 9th and H Street, Northwest? Why is a 
warehouse in downtown DC that was planned for the Veteran's 
Court of Appeals still vacant? As far as I'm concerned, there 
is a presumption against holding any property for an agency for 
an extended period of time unless GSA has reasons serious and 
realistic enough to overcome this presumption.
    I look forward to hearing from GSA today about its plan to 
auction off the Georgetown West Heating Plant and steps it has 
taken and will need to take to address the underutilized and 
excess properties across the country. And I thank you both, 
Chairman Denham and Chairman Mica.
    Mr. Denham. Thank you, Ms. Norton.
    Mr. Hanna, statements?
    Mr. Hanna. At this time I would like to invite Mr. Peres 
with an opening statement. He is our panel today: Mr. Flavio 
Peres, deputy assistant commissioner for real property 
utilization and disposal, U.S. General Services Administration. 
I would like to welcome him today, thank him for being here, 
and ask unanimous consent that our witness's full statement be 
included in the record. 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. Peres, you may proceed.

 TESTIMONY OF FLAVIO PERES, DEPUTY ASSISTANT COMMISSIONER FOR 
   REAL PROPERTY UTILIZATION AND DISPOSAL, PUBLIC BUILDINGS 
         SERVICE, U.S. GENERAL SERVICES ADMINISTRATION

    Mr. Peres. Thanks, Mr. Chairman. Good morning Chairman 
Mica, Chairman Denham, and Ranking Member Norton and 
Congressman Hanna.
    My name is Flavio Peres and I am the deputy assistant 
commissioner for real property utilization and disposal at 
GSA's Public Buildings Service. Thank you for the invitation to 
join you here today at the West Heating Plant, an exciting 
development opportunity in the heart of the district that GSA 
will auction off later this year. This property is an example 
of GSA's revitalized push to aggressively right-size its 
portfolio in our ongoing efforts in line with the 
administration's goals to better utilize Federal real property. 
While GSA has a large real estate portfolio to manage, the 
broader Federal Government portfolio is far more extensive.
    In fiscal year 2010, 24 landholding agencies report 
approximately 890,000 buildings and structures governmentwide. 
Of which 14,000, Mr. Mica pointed out this morning, were 
described as excess, indicating that agencies had no further 
mission need for the asset. The administration has moved 
aggressively to ensure that Federal agencies better utilize 
their real estate. In June 2010, the President issued a 
memorandum entitled, ``Disposing of Unneeded Federal Real 
Estate,'' which charged civilian agencies to more effectively 
utilize space, reduce operating costs, and dispose of unneeded 
real property to save $3 billion by the end of fiscal year 
2012.
    More recently, OMB issued a May 2012 memorandum entitled, 
``Promoting Efficient Spending to Support Agency Operations'' 
that stated, among other things, that agencies should not 
increase the size of their civilian real estate inventory. Any 
increase in an agency's total square footage of civilian 
inventory must be offset through consolidation, co-location or 
disposal of space. From my vantage point, these initiatives, 
along with the continued discussion on real property reform, 
are improving the Federal Government's management of real 
estate, ensuring that agencies' decisions are made in a cost-
effective way, and saving taxpayers money.
    Of the approximately 890,000 buildings and structures, GSA 
controls 9,000 assets. In square footage, this comprises about 
12 percent of the total Government inventory. GSA leads the 
market with its vacancy rates and utilization. Only 3 percent--
again, 3 percent--of GSA's portfolio has been classified as 
under or not utilized. Although we work diligently to identify 
unneeded assets for disposal, it is important to note that not 
all properties labeled as underutilized are available for sale. 
Most of GSA's underutilized assets are either leases that are 
now occupied or have expired, or property that is undergoing 
major building modernizations that will be backfilled with 
other tenants.
    Of the 14,000 assets categorized as excess, GSA identified 
124 as excess to our own agency needs and began the disposal 
process for these assets. The other 13,876 are from agencies 
other than GSA, constituting the vast majority of excess 
Federal assets. Again, let me stress, 13,876 of the 14,000 
assets cited are managed by landholding agencies other than 
GSA. Our low numbers of underutilized assets are a testament to 
a major portfolio restructuring, and it was implemented over 
the past decade, aimed at rightsizing our real estate 
portfolio.
    In the last 10 years we have disposed of over 280 GSA 
assets valued at $260 million. In addition to managing our own 
inventory, GSA has authority to dispose of most properties 
governmentwide. GSA develops tailored disposal strategies 
specific to an asset's characteristics, environmental issues, 
community concerns, political concerns and market conditions 
affecting the repositioning of the unneeded asset.
    Similarly, when preparing a property for public sale, GSA 
develops marketing plans that optimize the public offering. We 
use tools and techniques common to the private sector, designed 
to reach very broad audiences and to target specific interests. 
While GSA has the expertise to successfully navigate properties 
through this process, each individual landholding agency is 
responsible for making their own asset management decisions and 
whether that asset is excess to their needs. In the last 10 
years, GSA has disposed of over 2,600 governmentwide assets, 
generating over $2.4 billion in proceeds.
    Today, the committee has chosen to host the hearing at the 
West Heating Plant, a property that will soon be available for 
sale at realestatesales.gov. The plant sits on a little more 
than 2 acres of land in prime location in the District. The 
plant was built in 1948 to provide steam services to the 
Government buildings on the West Side of the city. The plant 
ceased steam service in 2000 and since then the site has served 
as a backup steam location, as well as providing backup fuel 
storage capacity and spare parts for GSA's Central Heating 
Plant.
    As part of our efforts to better utilize real estate, GSA 
formally declared the parcel excess to its needs in October of 
2011. As the first step in the disposal process, we screened 
the property for other Federal needs, and with no expression of 
interest declared the property surplus. After running through 
homeless screening in accordance with McKinney, GSA has 
commenced marketing and appraisal efforts in support of a 
public sale. The property will be sold ``as-is, where-is.''
    GSA is currently proceeding with required reviews under 
NEPA and the National Historic Preservation Act, and these 
activities are slated for completion in the late summer. The 
online auction at realestatesales.gov will commence in the 
fall. Already, interest from private sector developers has been 
incredibly high. GSA is one of many landholding agencies in the 
Federal Government. We continue to aggressively manage our 
inventory to dispose of unneeded properties, and we continue to 
work in concert with the administration and other landholding 
agencies in the Government to more effectively use real estate.
    The West Heating Plant is an example of GSA's effective 
management of real property. The plant will be auctioned off 
later this year generating millions of dollars in proceeds, 
saving money in ongoing operations and maintenance and putting 
the property back to productive reuse.
    I welcome the opportunity to be here and am happy to answer 
any questions you may have.
    Mr. Denham. Thank you, Mr. Peres, for your testimony.
    Mr. Mica. Mr. Chairman, I request that you swear in the 
witness.
    Mr. Denham. At this time we will swear in the witness.
    Do you promise to tell the whole truth and nothing but the 
truth?
    Mr. Peres. Yes, I do.
    Mr. Mica. Thank you.
    Mr. Denham. Thank you.
    In 2000 this plant ceased steam generation. Is it currently 
on the excess property list, the 14,000, list of 14,000 
properties?
    Mr. Peres. Yes, it is.
    Mr. Denham. And when did it become part of that list?
    Mr. Peres. The building was declared excess in October of 
2011.
    Mr. Denham. Why did it take 11 years to get onto that list? 
Has it been used for anything during that 11 years?
    Mr. Peres. Chairman Denham, I had the exact same question 
when I came into my position in February of this year. I was 
part of a panel that looked at what to do with this asset. The 
interesting thing about the West Heating Plant, you have to 
look at it in conjunction with the Central Hearing Plant. The 
plant was used as a backup facility. It was used as backup for 
potential failure of the Central Heating Plant. And, as part of 
the backup facility, we stored fuel here. It was also used as 
an office for maintenance and for spare parts for the folks 
working in the Central Heating Plant.
    I work in looking at highest and best use. I mean my role 
is really to determine that. That's obviously not the highest 
and best use of this asset. I was part of the team working with 
folks to really look at what should we do. To get to a solution 
on excessing this property, we needed to have a way forward 
with the Central Heating Plant. The Central Heating Plant 
provides steam to over 93 buildings in the District of 
Columbia. This had been used as a backup, but we felt if we 
were to be more aggressive trying to leverage financing from 
the private sector, we had a way forward in this plan.
    As part of the team, we successfully looked at ways that we 
can approach an ESPC alternative. We put a notice of 
opportunity out, working with the Department of Energy, for 
ESCOs to provide us a solution on how they would manage the 
Central Heating Plant and really do the investments that are 
necessary to ensure the operations of heat, chilled water and 
steam to the 93 buildings in the loop.
    When we had a way forward, we believed we have a strategy 
to go forward, the agency felt comfortable we could excess this 
property. So that's why the determination was made in 2011 to 
excess this property and move in a different path with the 
Central Heating Plant.
    Mr. Denham. So this facility in particular was a backup for 
the last 11 years until it was determined that it was 
determined that it was no longer needed as a safety net.
    Mr. Peres. Correct.
    Mr. Denham. And then was immediately listed as excess?
    Mr. Peres. Yeah. I believe it was March of 2012 was when 
notice of opportunity went on the Central Heating Plant, but we 
made the strategic decision last year to move forward and 
excess this property with the vision of going forward with an 
ANESCO approach to the Central Heating Plant.
    Mr. Denham. The last hearing that this committee held was 
in the Cotton Annex. Was that property on the excess property 
list?
    Mr. Peres. That list is updated on a yearly basis. As we 
told you in the last hearing, we had recently put out this 
notice of opportunity to the ESCOs. We read the feedback that 
we got, because part of that analysis was looking at if the 
Cotton Annex site was necessary in terms of the solution for 
the Central Heating Plant. We have since determined that it is 
not necessary, so we will move forward with disposing of the 
Cotton Annex as well.
    Mr. Denham. So it's on the excess list today?
    Mr. Peres. Today we're studying the best way to do that, so 
it is unlisted towards disposal. I'm saying it's not on the 
official list, because the snapshot is taken on a yearly basis, 
but it's moving in that direction.
    Mr. Denham. And, just for an example, would a 600,000-
square-foot building in the middle of a major city with just 
400 employees, is that something that would be on the excess 
list?
    Mr. Peres. It depends what the utilization of the building 
is. Obviously, from your description there, we have to look at 
it; but, no. It seems as though it should be on the list.
    Mr. Denham. The Prettyman Courthouse in DC?
    Mr. Peres. I'm not aware of the utilization of that 
building.
    Mr. Denham. 400 employees, 600,000 square feet. These are 
the types of properties we want to understand exactly why 
they're not on the list and what your proposal is for the 
future. Another one would be the L.A. courthouse. You had said 
that for any agency before they go out and create new space 
that they're supposed to shrink space under the President's own 
directive.
    Mr. Peres. Correct.
    Mr. Denham. Bob Peck had said that while that project has 
significantly changed, it is GSA's intent to move forward on 
the L.A. courthouse. That's 400,000 square feet of new space, 
which would then leave another vacant property at Spring Street 
of 690,000 square feet. That does not seem to fit within the 
President's directive.
    Mr. Peres. In my role in the Office of Utilization and 
Disposal, I look at highest and best use of property. I don't 
necessarily look at the individual use and utilization inside 
the building. I'm interested in how we market that property and 
if it's used to its highest and best use. So I'm not aware of 
the specifics regarding those assets you mentioned.
    Mr. Denham. Well, I would assume then, if the L.A. 
Courthouse is proposed by your agency to be moved forward and 
to build from the ground floor that you must be looking at the 
Spring Street Building to say this is coming onto the excess 
list. Our agency is determined that it is coming onto the 
excess list; and, you must be looking at marketing that now, 
rather than waiting a decade and letting it sit vacant like the 
Miami Courthouse and what's happening in New York. Would that 
not be a correct assumption that you would be looking at that 
now?
    Mr. Peres. We are looking at strategies with what to do 
with Spring Street now. Correct.
    Mr. Denham. Back onto the Georgetown Heating Plant, this 
building is sitting in the middle of some of the most valuable 
real estate in the city. What is GSA doing to ensure that we 
get the highest best use for the taxpayer? I know that you had 
mentioned the online options. We have concern with some of the 
sales on the online options.
    Mr. Peres. Sure. Let me try to address that. We are working 
with how the private sector would do this. We are going to work 
with a broker to market our asset. We are hoping, really, 
because of the location of this asset. The surrounding areas--
you have the Four Seasons right beside us and gorgeous views of 
the rooftop here--this is a prime location of undeveloped land 
in the heart of Georgetown.
    We want to get national and international exposure for this 
asset. We will work with one of the leading brokers out there. 
We put a solicitation out. We are going to receive feedback and 
select someone related to the marketing effort on this 
property. As part of that effort, we are really looking at 
getting out the Rolodex of whoever that broker is to make sure 
we have the right folks bidding on this property.
    The online auction would go through a deliberative process 
that's legislated to get toward sale. We are at the sale mark 
now. We have gone through the Federal screening. We have gone 
through the public benefit process and determined there is no 
public benefit need for this property at the moment, and we are 
finally at sale. We are doing the appropriate environmental 
research and documents that are required. And we are happy to 
be at the sale mark now. And we have already taken several 
developers through the site, so I'm happy to say we have an 
aggressive plan that I think will be successful.
    Mr. Denham. Thank you. My time is expired. I recognize Ms. 
Norton, ranking member, for 5 minutes.
    Ms. Norton. Thank you very much, Mr. Chairman.
    What will be the cost of repairing this property for sale?
    Mr. Peres. I don't have those figures in front of me, Mrs. 
Norton, because we haven't received the submittals yet on the 
marketing proposals I mentioned. So I don't know the figures, 
exactly. I can get back to you with it.
    Ms. Norton. I don't understand. You haven't received what?
    Mr. Peres. We put out a solicitation for groups to respond 
to us.
    Ms. Norton. And that determines how much you'll have to 
spend too.
    Mr. Peres. No. No. Unfortunately, I don't have the budget 
in front of me. I'm saying it depends on what we receive and 
how much--what the proposals are.
    Ms. Norton. I just don't see the relationship between what 
you receive. You mean what you receive may mean that someone 
who goes through the process is willing to help?
    Mr. Peres. Yeah. Well, the most competitive and that we 
believe meets our needs will be chosen in terms of the 
marketing of this property.
    Ms. Norton. I see.
    Mr. Peres. We do have a budget. I just don't have those 
figures in front of me. No.
    Ms. Norton. OK. What is a soft auction process?
    Mr. Peres. A soft close in the auction.
    Ms. Norton. What's the difference between it and any other 
auction?
    Mr. Peres. Yeah. I'd be happy to answer. It's different 
from your particular eBay auction that has a hard date for 
close. The soft auction is a tool that actually--we pioneered 
in the real estate area. What that does for you, once someone 
makes an offer in a property, we will extend the close of the 
bid an additional 24 hours.
    So it prevents folks from coming in at the last second and 
making their best--they're throwing their offer in--and no one 
being able to counter that offer. After the last offer is made, 
we extend it 24 hours. If there's no activity after that 24-
hour period, we will close the auction.
    Ms. Norton. Now, especially out of the figures on where the 
assets are, you have 124 assets that you have identified as 
excess.
    Mr. Peres. Correct.
    Ms. Norton. Are you saying that all those are in the 
process of being disposed of?
    Mr. Peres. No. Two-thirds of those assets aren't 
underutilized anymore. They were assets.
    Ms. Norton. Of the 124?
    Mr. Peres. Of the 124.
    Ms. Norton. But that brings you down to how many? So most 
of these that were on the list you have now determined can be 
used in some other way?
    Mr. Peres. Yes, or there were leases that have expired or 
we've been able to backfill those leases.
    Ms. Norton. So that leaves us where most of the assets are. 
So you have 14,000 categorized--I'm looking at your testimony--
--
    Mr. Peres. Sure.
    Ms. Norton [continuing]. As excess. Turns out that two-
thirds of those are not excess at all. So we look at where the 
excess assets are in the Federal Government. So as compared to 
your 14,000, your testimony says 13,876 are from agencies other 
than the GSA. Well, that's what interests me.
    Mr. Peres. Correct.
    Ms. Norton. Because we have a bill here that has been 
passed. Actually, we have two bills that have been passed; and, 
these bills were necessary, because although any administration 
has control over agencies and can dispose of properties, there 
is always political feedback from Members of the House and 
Senate if you try to sell a property in their district of 
State. So this civilian BRAC bill requiring an up or down vote 
was designed to do for the civilian process what BRAC has done 
for the other process.
    Now, unfortunately, that bill has not passed both houses, 
but you say in your testimony that you are helping some of 
these agencies to target properties for disposal. It seems to 
me that most of your energy ought to go if that's where the 
property is. Could you describe that process of helping the 
agencies which had not only the lion's share but a huge share 
of these properties, the properties that our hearing aimed at 
during the BRAC disposal hearings that we had earlier last 
year.
    Mr. Peres. Thanks Congresswoman. My office is set up to 
help those exact agencies get that decision to declare the 
property excess. So I have two branches: the Utilization branch 
and the Disposal branch that deals with those properties that 
have already been declared excess. So the group that works on 
utilization, we try to get in and analyze the portfolio of that 
agency to help them make the determination on highest and best 
use.
    Ms. Norton. How many agencies are there that have these 
excess properties?
    Mr. Peres. There are 24 landholding agencies.
    Ms. Norton. Well, what agencies have most of these 
properties in excess?
    Mr. Peres. DOD has a lot, VA, the Interior Department, are 
big landholding agencies that have a lot of those.
    Ms. Norton. Now, this sounds like a lot of properties. Are 
those agencies--do they have staff large enough to work with 
you to deal with what turns out to be where most of the 
properties are around the Government, DOD. And what other 
agency did you say?
    Mr. Peres. DOI and Interior, as an example. Well, we're not 
the only disposal agent of the Federal Government. Some of 
these landholding agencies also have their own authority to 
dispose of.
    Ms. Norton. But isn't that the problem? Because if there's 
13,000 plus, have they been using that authority to dispose?
    Mr. Peres. Yes, some of these properties are lighthouses, 
for example, that we're moving aggressively. We have a group 
that's moving on, disposing of those housing facilities, Forest 
Service, Army Reserve Centers.
    Ms. Norton. Do these agencies have--I mean the Federal 
Government has a central agency for leasing and construction. 
That's GSA. Do these other agencies have the expertise to go 
market properties, dispose of them and get a fair return for 
the Government?
    Mr. Peres. I can't speak to their expertise. I can say we 
do have the expertise, and we are happy to take on that 
challenge.
    Ms. Norton. Yes. So somebody may do it without coming to 
you and then he's on his own.
    Mr. Denham. I want to continue down this path, but at this 
time I will recognize Chairman Mica.
    Mr. Mica. Thank you, Mr. Peres. How long have you been with 
GSA?
    Mr. Peres. Since May of 2002.
    Mr. Mica. May of 2002?
    Mr. Peres. Correct, yes.
    Mr. Mica. And you've been in the same position for how 
long? What is your title now?
    Mr. Peres. I am the deputy assistant commissioner for real 
property utilization and disposal. I have been in that position 
since February.
    Mr. Mica. Of this year?
    Mr. Peres. Of this year, correct.
    Mr. Mica. What did you do before then?
    Mr. Peres. I worked in the portfolio arena. Before moving 
towards disposal, I was the deputy assistant commissioner for 
portfolio management.
    Mr. Mica. Did you work on this property at all in that 
position?
    Mr. Peres. I worked in the headquarters office.
    Mr. Mica. Was it under your portfolio?
    Mr. Peres. It was under my portfolio. Correct.
    Mr. Mica. So you were there from 2000 'til we made a 
decision in October of last year. 2002, did you say?
    Mr. Peres. Correct.
    Mr. Mica. OK. And, now, if you are going to put a property 
up for sale, now in real estate the first thing I do is put the 
sign up. When did you all put the sign up that's on the 
building?
    Mr. Peres. The sign was put up yesterday afternoon.
    Mr. Mica. OK. It was put up yesterday. The one at the 
entrance too? The same, or that was there before?
    Mr. Peres. Typically, the sign is part of the marketing 
campaign, but I wanted to make sure we put a sign up as fast as 
we could after we have gotten through the public screening 
process.
    Mr. Mica. So that was last October we started this process, 
but we've got the sign up yesterday. Did you participate in the 
discussion to put the sign up?
    Mr. Peres. Yes, I did.
    Mr. Mica. And who was involved in the discussion to put the 
sign up before the hearing today?
    Mr. Peres. It was myself and the regional disposal office.
    Mr. Mica. Tangherlini didn't participate?
    Mr. Peres. No. He did not.
    Mr. Mica. And, so, it was your decision after?
    Mr. Peres. It was my decision.
    Mr. Mica. How many months to put the sign up, OK. And then 
from 2002, this is under your portfolio. Now, you said the 
highest and best use, that you use this for storage of parts 
and also some fuel, and a backup facility.
    Mr. Peres. Yes, it was a backup facility.
    Mr. Mica. When was the last time it was turned on?
    Mr. Peres. I do not know.
    Mr. Mica. Now, wait a second. You told me you were in 
charge of the portfolio. This is going to be a backup facility 
and you don't know if it was ever turned on. So you wouldn't 
know if it was actually used to its highest and best use. Would 
it?
    Does it have an operating permit? You don't know? It was 
under your portfolio, but you didn't know if it was actually 
ever turned on, or if it was used. And you're telling me you 
don't know if it had an operating permit.
    Mr. Peres. It was under the regional portfolio I managed 
nationally. In terms of an operating permit, we had maintenance 
staff that were responsible.
    Mr. Mica. And what's interesting, Ms. Norton says it costs 
$3\1/2\ million to maintain the empty building. Is that right?
    Mr. Peres. Over a 10-year period, yes.
    Mr. Mica. That would only be $350,000. We'll round it out 
to $300,000 a year. I guess that's just an accounting digit 
with the digit around, but not real money, since somebody else 
is paying for it. We were going to get the highest and best 
use. What's stored here?
    Mr. Peres. As you can see when you walk through the 
building, several spare parts as well as fuel.
    Mr. Mica. Where in this----
    Mr. Peres. You can look at the storage tanks there.
    Mr. Mica. Were they taken out of there?
    Mr. Peres. Yes.
    Mr. Mica. When did you take them out and where did you put 
them?
    Mr. Peres. Yes, we recently took the fuel out a couple 
months ago.
    Mr. Mica. How many other places are there like this for 
backup?
    Mr. Peres. There's no other place like this for backup.
    Mr. Mica. There's no other place. Now, where did you put 
the parts?
    Mr. Peres. We're moving those parts into this plant.
    Mr. Mica. You told me you already moved the parts. Are the 
parts here?
    Mr. Peres. We've moved them to the Central Plant.
    Mr. Mica. So they have been moved to the Central Plant. Was 
there room during the last--was the Central Plant there all the 
time during the last 10 years?
    Mr. Peres. Yes, it was.
    Mr. Mica. And we couldn't have moved them out?
    Mr. Peres. Well, we are able to make a proper----
    Mr. Mica. It took us 10 years to make a decision to move 
the spare parts out. How big were the spare parts? Bigger than 
a breadbox?
    Mr. Peres. Much bigger than a breadbox.
    Mr. Mica. OK. All right. Well, again, it just doesn't seem 
like anybody is minding the store or taking care of the assets. 
This is a pretty valuable piece of property. Are there any 
other properties for sale over 2 acres in Georgetown?
    Mr. Peres. Not that I am aware of.
    Mr. Mica. We don't know if it was turned on. And we don't 
know if there is an operating license. We had other places to 
store what was stored here. I think you moved the fuel 
recently. Where did you move the fuel?
    Mr. Peres. I do not know the specifics of it.
    Mr. Mica. OK. You've got to come prepared to these 
hearings, because I'm going to ask tough questions. Are there 
any other power plants in here to--you said that services 90 
some buildings or facilities?
    Mr. Peres. Ninety-three buildings, correct.
    Mr. Mica. It's just the Central Plant now?
    Mr. Peres. Correct.
    Mr. Mica. How is that fired? Coal?
    Mr. Peres. It is----
    Mr. Mica. Is it oil? Is it gas? Is it combo?
    Mr. Peres. Yes.
    Mr. Mica. OK. Ms. Norton was talking about the numbers. I 
almost fell off the chair when you said you're the most 
efficient at getting rid of properties. Dear God, help us. You 
are the most efficient? Is that your claim?
    Mr. Peres. Yeah. That was my claim, if you look at the 
numbers they provide.
    Mr. Mica. Mr. Denham and Ms. Norton, if this is the example 
of efficiency, we need to broaden our scope of work here. Maybe 
I'll need to talk to Darrell Issa and get a little bit of 
authority beyond this committee. That's one of the most 
frightening things I've heard. I mean that is really 
frightening. If this is an example of efficiency, God help the 
United States taxpayers.
    Now, we have several authorities that were granted. One is 
called Section 412, 585, an Appropriations Act of 2008, which 
allow you to expedite, exchange, lease, do a whole host of 
things with properties. Were the provisions of 412 or 585 used 
or considered for doing something with the assets that's been 
sitting here?
    Mr. Peres. We have looked at that authority.
    Mr. Mica. But did anyone in your portfolio out of your 
portfolio, preparing for the hearing, did anyone ever look at 
using that authority?
    Mr. Peres. Yes, we did, but we felt the most aggressive way 
to----
    Mr. Mica. Is there something wrong? Is something lacking? 
Do you have enough authority under the provisions of that law? 
Is there something that can make these things happen quicker or 
move these projects forward faster? Is this inadequate?
    Mr. Peres. We have the authority under Section 412.
    Mr. Mica. But you decided not to use it?
    Mr. Peres. It didn't make sense in this property. It made 
sense to go to sale, and when I became responsible for that I 
moved into property for sale.
    Mr. Mica. OK. And yesterday we put the for sale sign up. 
You don't want to do it too soon. You know. You might get a 
rush. You know. We might have people backed up here with 
offers, so that wouldn't look good.
    Final question, if I may, Mr. Chairman. OK. On my turf, 3 
years ago members of our committee visited the Miami--well, we 
visited Miami and the old Miami Courthouse. It was vacant then. 
Is it still vacant today?
    Mr. Peres. Yes, I believe so.
    Mr. Mica. OK. Maybe November or December or January I might 
invite the committee down there. We will take the cooler climes 
for the 13,997. Is there anything that has been done you could 
report finally to the committee on disposing of the Miami 
vacant courthouse building?
    Mr. Peres. I can tell you that my office is now engaged. 
I've sent a group down to look at the asset, as Bob had 
testified in the previous year.
    Mr. Mica. How much did the for sale sign cost here?
    Mr. Peres. The for sale sign here?
    Mr. Mica. Yeah. The one you got, the big one. I don't even 
have to have one that big. Maybe I could get a smaller one and 
put it down on the Miami Courthouse.
    Mr. Peres. I can lend you that one to put up on the 
courthouse.
    Mr. Mica. Thank you. Thank you. I yield back. We are in 
trouble, Mr. Chairman.
    Mr. Denham. Thank you.
    Mr. Hanna?
    Mr. Hanna. Thank you, Mr. Chairman.
    The administration claims approximately a $3 billion 
savings over real estate property. How do they come up with 
that number?
    Mr. Peres. I can't speak to how the administration came up 
with that number.
    Mr. Hanna. You have disposed of 88 properties totaling 
about 4 million square feet out of 370 million square feet. 
That's about 1 percent, a little more than 1 percent. If that 
kind of savings is available and you disposed of roughly 1 
percent, shouldn't there be a rush to move these properties? 
And, if you agree with that, why wouldn't you be moving faster?
    And do you consider the time value of money, say, in a 
building like this? I could store a lot of parts for this 
vacant, empty building, that apparently a good demand for. And, 
one last piece of it. I'm sure you must know something about 
what this building's worth. To speak about the time, value and 
money, what is this building expected to be worth?
    Mr. Peres. I would love to answer that question, Mr. Hanna, 
in terms of the value; but, because we are going forward in a 
process where we want to auction this off, I don't want to 
artificially set a deadline.
    Mr. Hanna. Sure.
    Mr. Peres. I would be happy to talk to you about that.
    Mr. Hanna. But it is substantial?
    Mr. Peres. Substantial, obviously, this land is extremely 
valuable where we're at.
    Mr. Hanna. So there's a big cost to ownership. So the 
longer we take to dispose of any of this property that you have 
such a strong potential demand for is actually a hidden cost in 
and of itself, the time, value and money. So why are we sitting 
on so many properties?
    Mr. Peres. I could tell you GSA has a strategy for each of 
those properties my office is now moving aggressively on. I can 
say in the last year we've disposed of 120 properties 
governmentwide, generating over $40 million in sales. I can 
say, and I say this now, we are going to do everything in our 
power to move these properties sooner.
    And I think discussions, such as the Real Property Reform 
legislation, unfortunately, a lot of times it takes upfront 
investment, as you know, in your background, to be able to move 
these properties. And I can get you a short pay-back, but how 
can that upfront capital that can relocate an agency from the 
building to allow us to move forward, depending what the 
property is, in these budgetary times is difficult for us.
    Mr. Hanna. Sure.
    Mr. Peres. So anything in a reform bill that can help us 
get there, that can incentivize agencies with retention of 
proceeds, for them to make the right capital asset decision. 
That's another thing we run up against. And for my office to be 
as effective as we can be in helping other agencies is to give 
them that incentive to really move their properties.
    Mr. Hanna. Do you think this might be handled better in 
total by the private sector?
    Mr. Peres. No. I do not with the figures that I've quoted. 
And I believe our office is able to do this cost efficiently. 
If you look at how much our services cost to help agencies, 
we're very competitive now and below where the private sectors 
are. And we are engaging them in these disposal activities. As 
I mentioned in my response to Ms. Norton's question, we are 
looking at using services from brokerage firms to really reach 
that Rolodex to increase the value of this property.
    Mr. Hanna. So what do you expect to do in the next year? We 
have got quite a list here. You obviously are aware of the 
problem. You agree there's a problem. You want to pick up speed 
and move toward the resolutions of some of this. What are your 
plans to effect that change?
    Mr. Peres. My plans, really, I've challenged my staff. I 
think one thing we need to look at is market share. Let's do 
more disposals. Let's get out there to try to see if we can 
help more agencies make the decision to move their properties. 
The properties that PBS currently owns that have come up at 
this hearing: Cotton Annex, Miami. We need a solution for these 
properties. We want to move aggressively to come up with that 
solution, and I hope to report back to you all where we are at 
in a couple of months.
    Mr. Hanna. All right. I defer the balance of my time to Mr. 
Denham.
    Mr. Denham. Thank you. Just following up on that I am 
somewhat surprised that you are really carrying the banner of 
GSA and how great things are going, because from this 
committee's perspective, they don't seem to be going very well. 
14,000 properties, and yet this property is not on the list. 
The Cotton Annex is not on the list. Prettyman Courthouse is 
not on the list. New York Courthouse is not on the list. Miami 
Courthouse is not on the list. You are going to build a new 
courthouse in L.A., and you're saying private industry can't do 
it better? There's not a good track record here.
    First of all, it's not a good track record for defining 
excess, underutilized properties when none of those properties, 
which we have had to send our staff out to, which we have 
actually spent time going out and touring to see how empty they 
are, which we have held hearings in to force GSA to take action 
on them, to even declare them as excess surplus, it is amazing 
to me that you are here to justify and defend GSA's record; 
but, secondly, to say that private industry can't do it better, 
I want to see you be able to justify that. So, go ahead. You 
can respond.
    Mr. Peres. Say of the 14,000 we are responsible in GSA's 
portfolio for 124 of those 14,000 properties. I am speaking to 
what I know on those 124 properties.
    Mr. Denham. So out of the 14,000 properties, GSA is only in 
charge of 124 of them?
    Mr. Peres. Of the excess, correct, yes.
    Mr. Denham. And what are you doing to put more properties 
on the excess list?
    Mr. Peres. That is we are really looking at, and I know a 
lot of the questions that have come up here. It's not in my 
area, the disposal arena, but improving the utilization of 
those properties. But, again, to improve the utilization of 
those properties, it takes upfront capital investment.
    We need to be able to modify space, to move tenants, to do 
the IT investment, to get folks to an improved utilization of 
space, to bring folks in from leased space, to better occupy 
the owned assets. However, in strong markets that is a 3-year 
payback. We need the upfront capital investment to be able to 
do that.
    Mr. Denham. The upfront capital investment, when we are 
cutting budgets across the Nation, GSA had $5 billion to work 
with as upfront money to go ahead and go out and sell these 
properties. What's happened to the $5 billion?
    Mr. Peres. What, the----
    Mr. Denham. The stimulus dollars that were supposed to be 
utilized in this arena?
    Mr. Peres. The stimulus dollars to my understanding were 
focused on sustainability. They weren't necessarily directed 
towards improving, to do this type of work that we are talking 
about now. Some of those projects were accomplished in 
improving utilization, but the bulk of those funds were used on 
sustainability.
    Mr. Denham. So you're only in charge of the 124 properties 
out of the 14,000 properties.
    Mr. Peres. Once those properties are declared excess, yes, 
then I'm in charge of those.
    Mr. Denham. OK. And the Civilian Property Realignment Act, 
I assume, since that is redefining the way we do business, is 
governmentwide. I assume that you have taken a look at that 
bill?
    Mr. Peres. Yes, I have.
    Mr. Denham. And I would also assume that taking it all 
under one house and being able to sell properties in tranches 
would help us to move through the 14,000 quicker?
    Mr. Peres. I agree.
    Mr. Denham. Has GSA taken a position on either the bill 
that we sent over to the Senate or the bill that's in the 
Senate, the Senate bill, the companion bill that's coming over 
this way?
    Mr. Peres. I believe there are three things and each bill 
addresses these things a little bit differently that are 
important in moving property, and you have talked about them in 
your bill: addressing the upfront cost of disposal, that I have 
mentioned a couple in my response here. We need to have the 
ability to front money for successful dispositions of 
properties; incentivizing agencies by allowing them to have 
retention of proceeds, or something that can help them make the 
decision to move properties. And, finally, your last point, 
resolving competing stakeholder interests and property I think 
is huge, because every property has several folks that are 
interested, different groups and stakeholders that provide an 
important voice, but that can also delay the process.
    Mr. Denham. Have you issued any type of recommendation to 
either the House or the Senate on what GSA would be helpful in 
the Civilian Property Realignment Act?
    Mr. Peres. We have worked with several staffers in talking 
about those three premises and how we'd be willing to help 
participate in decisionmaking on how to move these properties 
and different ideas we have to make the disposal process more 
effective.
    Mr. Denham. OK. Here's what I don't understand. We have a 
bipartisan agreement. In this House we have sent the bill over 
to the Senate. The Senate has a companion bill. Both the House 
and the Senate have worked with the President. The President 
has issued a directive saying that we are going to sell more 
properties, and your job is to liquidate those properties, yet 
we are not liquidating properties.
    So if the President wants to have this bill, if the 
President wants both parties to work together, if the President 
wants both houses to work together, why isn't the President 
issuing a directive to the Senate or the House to say, give me 
the bill? Give me the bill; let's get this done? Because today 
you can't get your job done.
    You have 124 properties out of 14,000 properties. This is 
one property that I don't care if it is a Republican or a 
Democratic administration, if it is this administration or a 
previous administration, the job is not getting done. So I, 
first of all, don't see how you can defend your record; but, 
secondly, why you are not more passionate, why the President is 
not more passionate about coming up with a solution.
    Mr. Peres. I can't speak to that.
    Mr. Denham. Let me ask one final question. This property is 
going to online auctions.
    Mr. Peres. Correct.
    Mr. Denham. Two years ago, GSA sold a building in Bethesda. 
It is another highly valued real estate property, but we 
received less than what was estimated at its fair market value. 
How is GSA going to ensure that this time we do get the highest 
value on this property that is the biggest piece of acreage in 
downtown Georgetown?
    Mr. Peres. I would say news like this help market the 
property as well. We want to get word out. We have worked with 
developers. We have done various tours already of this 
property. The Bethesda property, timing of the market did not 
help in that sale, obviously. GSA put the property on the 
market when there was a downturn in the market, and we weren't 
able to achieve the fair market value that was established a 
couple years prior to that.
    We feel the market year is strong. If you look at the 
recent developments in Georgetown, there has been a lot of buzz 
on this property already; therefore, working with a leading 
broker in the field, we believe we can maximize value for this 
property.
    Mr. Denham. Well, good. I am very glad to hear that you 
think these hearings are helpful, because you are going to see 
a lot more of them. We are going to go across the Nation. If I 
have to hold a hearing every day during break on every 
different property across the Nation, we are going to do it, 
because we want to make sure that we help you market these 
properties. Because when these properties sit for over a 
decade, it is irresponsible; again, not a Republican or a 
Democrat issue. This is the taxpayers' dollar, that both 
parties should be able to come together and say we just got to 
do things better, and GSA should be responsible for that as 
well.
    So, I am glad to hear you say that this is helpful. We are 
going to make sure we are very helpful to you. I yield to Ms. 
Norton for a final round of questioning.
    Ms. Norton. Thank you, Mr. Chairman.
    Chairman Mica raised 412 authority. This has been the bane 
of our existence as a committee, because we got 412 authority 
in our appropriation through this committee, because we wanted 
to give GSA some flexibility to bring in the private sector 
when it didn't have the funds, for example, to redevelop 
properties.
    You indicated that you wanted to see the redevelopment of 
some of these properties. Has the agency ever used 412 
authority since we granted it some years ago? And, if not, why 
not?
    Mr. Peres. I know my understanding of 412, we have been 
able to receive--part of 412 was receipt of proceeds for the 
property. The outlease leaseback component that I believe 
you're referring to, I don't know if a transaction that we have 
been able to leverage that framework for 412.
    Ms. Norton. I think one of the things the committee needs 
to inquire, OMB in both Republican and Democratic 
administrations, I understand, when we have pressed this issue, 
although the GSA refuses to say so, it is my belief that 
somehow there is an endemic problem in OMB across 
administrations. It keeps the use of 412 authority, granted by 
Congress, from getting the highest and best use of properties 
that should not be disposed of. I am very concerned that 412 
authority lies on the table, while you were saying that, yeah, 
you would like to develop some of these properties. You know 
good and well you can't develop them unless the private sector 
is brought into this equation. When did you begin marketing 
this facility, and when do you expect it to be sold?
    Mr. Peres. We expect the property to go to auction in late 
September. So we have begun the marketing process officially, 
really, it is through word of mouth until we have done that 
contract, while we finish our NEPA and historic 106 process. 
Hopefully, that will be done by the end of June and then we 
will be aggressively marketing this property.
    We already have banners. We want to generate word of mouth 
on the property, but we are beginning the process now. I'm 
sorry. Was there another part of the question?
    Ms. Norton. When do you expect it to be sold?
    Mr. Peres. We expect it to be sold, holding the auction for 
30 days, 30 or 60 days. I have to talk to the team. I am not 
exactly sure, and then we will go from there.
    Ms. Norton. If you sell it, if you sell it before the 
zoning process and the District of Columbia is completed, could 
that affect the price?
    Mr. Peres. We feel we have engaged the city in various 
different discussions on zoning for this property. We are 
currently in the NEPA discussion. Now, the environmental 
assessment as part of the environmental assessment, future use 
of the property is analyzed, and all potential, future use has 
been looked at, the W2 zoning area for this particular locale. 
And the district has agreed with that, and they are part of 
reviewing the NEPA documentation.
    Ms. Norton. The District has agreed with what? I'm sorry.
    Mr. Peres. With the zoning proposed.
    Ms. Norton. Which is what?
    Mr. Peres. In the NEPA, which is W2, which is similar. I 
think it is framed as middle level density. So mixed use for 
the property would leave it as of 4.0.
    Ms. Norton. Like the other properties in Georgetown.
    Mr. Peres. Exactly, like the surrounding properties here, 
so with the hotel next door, the Four Seasons, plus some of the 
residential development here would fall under that zoning 
category.
    Ms. Norton. Now, we recognize the need for Civilian BRAC, 
but we had hearings on it. The administration has pressed it as 
well. The Senate has a different view, but I agree with 
Chairman Denham that this is one issue we ought to be able to 
agree on, since there is widespread agreement that we should 
sell or use these properties.
    Now, my recollection is that the Civilian BRAC bill allows 
the agencies to retain some of the proceeds. If the agency 
turns over the property to GSA today, I take it the proceeds go 
with it. There is no incentive?
    Mr. Peres. No. We are just the broker for that agency, if 
you will. The landholding agency has retention of proceeds 
authority. We can help dispose of the property. They would 
still retain the proceeds for the property.
    Ms. Norton. So there is no need for an additional incentive 
since it is their property, and turning it over to you is not 
really turning over ownership to you.
    Mr. Peres. Correct. But not every agency has retention of 
proceeds, and different discussions----
    Ms. Norton. Well, that is what I am asking. Some agencies 
do and some agencies don't?
    Mr. Peres. Correct.
    Ms. Norton. Does DOD have retention of proceeds?
    Mr. Peres. Yes. I can get you a list of the agencies that 
have retention of proceeds.
    Ms. Norton. Very important, because if they know that they 
can take, particularly in this budget climate, that they can 
get some revenue from this process, it seems to me that we 
ought to be focusing on those. You don't know, or do you know 
what has determined those who can retain and those who cannot?
    Mr. Peres. I think it is different legislative authorities. 
I don't know.
    Ms. Norton. It is probably the way we do legislation here, 
where some got it and some didn't. I want to ask you about the 
properties that I mentioned in my opening testimony.
    First of all, I was just appalled about the Cotton Annex 
for a number of reasons; but, particularly given its location 
on the mall, and that is the most prime of prime properties, 
even more prime than this property. And it seemed to me that 
what was missing was not just you sold this property or that 
property, but there was land around the Cotton Annex, so that 
and indeed there was some discussion at the hearing, that if 
you look at the Cotton Annex and what surrounds it, you have an 
even more valuable piece of property.
    So I have to ask you what are your intentions with respect 
to the Cotton Annex specifically. Do you intend to redevelop 
it? This is a site on the mall, so it can't be redeveloped the 
way, for example, the site in Georgetown is. It is much more 
difficult. What is your analysis of what should be done with 
the Cotton Annex?
    Mr. Peres. We are looking at it now and really analyzing it 
with the full range of our authorities on what can be done with 
the property. We have a relocation authority, for example, that 
allows us to relocate the current screening facility there, and 
maybe relocating it.
    Ms. Norton. I'm sorry. The current what?
    Mr. Peres. The FPS screening facility, the truck screening 
facility that exists there.
    Ms. Norton. On the mall? Close to the mall?
    Mr. Peres. Relocating it elsewhere so that we can 
effectively dispose of that property is what I am getting it. 
So we are trying to analyze what is the best solution for that 
property. My office is now engaging in this and trying to 
explore where the full range is.
    Ms. Norton. Are you looking at the surrounding properties?
    Mr. Peres. Absolutely, because all the parcels and the land 
there make up the value, too, for that property.
    Ms. Norton. So are you are doing it as a consolidated 
matter, or are you looking only at the Cotton Annex?
    Mr. Peres. We are looking at it as a holistic strategy on 
the best way to extract value there for the taxpayers.
    Ms. Norton. I mentioned two properties that are on the 
list, but GSA has been unable to move. Secret Service, I know, 
gets its way a lot of the time; but, when it comes to a 
property that is close to the Secret Service and they say we're 
going to need it--they themselves are located in downtown DC as 
are many of our agencies--I need a justification for why that 
property at 9th and H Street cannot be sold or used by another 
Federal agency, or used in some way that is useful to the 
Government.
    Mr. Peres. I'll be happy to provide that. I don't have the 
details with me today.
    Ms. Norton. I wish you would provide it to the chairman 
within 30 days.
    Mr. Denham. Any reason why you can't do that in 30 days?
    Mr. Peres. No. I think we can do that.
    Mr. Denham. Thank you.
    Ms. Norton. The other property I mentioned, which is the 
only other one that was listed and one that it looks like you 
have some hold on doing anything about, was a warehouse, which, 
as we understand it, was to be used for a Court of Appeal and 
is still vacant. Now, do you have any information on that 
property?
    Mr. Peres. That is my understanding as well. It was 
initially framed as the site for a potential courthouse for the 
Court of Veterans Appeal. And it doesn't look like there was 
funding for that project to move forward, so we are 
reevaluating that. I can also provide a fact sheet on that 
project.
    Mr. Denham. Within 30 days?
    Mr. Peres. Sure.
    Ms. Norton. Thank you, Mr. Chairman. Those are my 
questions.
    Mr. Denham. Mr. Chairman Mica?
    Mr. Mica. Mr. Peres, where did you go to school?
    Mr. Peres. My undergrad at Maryland and my MBA from George 
Washington.
    Mr. Mica. I just went to the University of Florida, so I am 
not as fancy schooled, but I have a little experience in 
business. You told Ms. Norton that you began marketing this 
property. When did you begin marketing it?
    Mr. Peres. The process, we declared the property excess.
    Mr. Mica. We--yeah.
    Mr. Peres. I just want to answer your question, Mr. 
Chairman, in the right way. So I can go through the step in 
chronology.
    Mr. Mica. Well, just marketing, letting the public know 
that it was available. I know you have certain steps, but when 
did you start that?
    Mr. Peres. Really, just recently.
    Mr. Mica. Like yesterday when we put the sign up? Did you 
list it on eBay, Craigslist?
    Mr. Peres. Yes, we have a realestatesales.gov, which is our 
Web site.
    Mr. Mica. When did you put it on?
    Mr. Peres. Three weeks ago----
    Mr. Mica. Oh. Three weeks ago. OK.
    Mr. Peres [continuing]. It was on that list. And feel free 
to go to the Web site.
    Mr. Mica. Was that sort of in concurrence with announcement 
of this hearing?
    Mr. Peres. No. It is part of the process, because we have 
to get through the public benefit screening process.
    Mr. Mica. And the sign just happened to go up yesterday, so 
we have actually been marketing this for 3 weeks.
    When did we give notice on this, staff? About 3 weeks ago?
    Staff Member. At least, about 2 weeks ago.
    Mr. Mica. Yeah. OK. And when I asked Mr. Denham to swear 
you in, you were going to tell us the whole truth and nothing 
but the truth. Right?
    Mr. Peres. Correct.
    Mr. Mica. So you said your job is actually--and 
responsibility at GSA is to really obtain the highest and best 
use of these facilities. Right? You testified to that.
    Mr. Peres. Correct, yes.
    Mr. Mica. Then you told the subcommittee this morning that 
this was going to be a backup facility for power. Is that 
right?
    Mr. Peres. I said that was the reason for keeping the 
property.
    Mr. Mica. Primary backup, and then secondary for storage, 
and you mentioned some storage.
    Mr. Peres. Fuel and a maintenance storage.
    Mr. Mica. Yeah. No. I don't think you checked this out very 
well, because I just did an intensive examination walking back 
to the men's room and I asked the question. The last time this 
place has been fueled up was 2000. Any staffers, workers, 
anybody know any differently? I was told 2000. Then I was told 
that after 2000 what they started doing, they started looking 
at some of this equipment.
    You know. I only have a University of Florida degree, but 
they told me they started cannibalizing this place; that means 
taking parts out. Go look. They are parts here. So that this 
property couldn't have been a backup for those 10 years, 
because they were cannibalizing the place. Did you know that?
    Mr. Peres. A backup, yes. A backup for necessary parts and 
for the fuel.
    Mr. Mica. Oh. It's a backup for necessary power?
    Mr. Peres. If we had to run the plant, that could have been 
made to make sure the plant was able to generate the steam.
    Mr. Mica. Hm-hmm. And then we decided we had no other place 
we could store the parts. So, again, I am very disappointed. 
That is not the highest and best use. It was to pay a third, 
$333,000 a year for 10 years to use this as a storage facility, 
probably get some nice retail space to store some of that up M 
Street or Wisconsin at those prices. Again, some of this just 
defies common sense and logic that we would leave an asset, a 
valuable property, but we have had some great heights in the 
real estate market. We are coming back, and this area has 
always held its value pretty well. And this isn't rocket 
science that we are going to get our money out of this or not.
    I mean you can do an appraisal of it, and we get the 
appraised market value at the time. Is it a wise decision to 
sell at that time? Somebody can make that decision. Maybe we 
should do a lease, lease purchase. If we are going to attract 
private capital, we attract private capital to the property and 
do a deal, but this is a property that sat here with no one 
really making a decision in the best interest of the taxpayers 
for more than a decade. Would you agree?
    Mr. Peres. I would agree, and I think I could help make 
that decision to move the property to the disclosure process.
    Mr. Mica. Well, I am glad you got the promotion to your 
position; but, again, somebody had to overlook the portfolio 
and make a decision during the 10 years in which the property 
sat vacant and we had a bogus reason for even keeping the 
property, because it could never be used as a backup for power, 
because they were cannibalizing the parts from 2000 when they 
turned the thing off the last time, which was in 2000. So, 
again, some of it just doesn't hold water. It's an expensive 
abuse and misuse of taxpayer assets.
    Mr. Denham and I will continue this. We will hold hearings 
in Washington. Unfortunately, folks, this is just the beginning 
of Washington. We are trying to get out of town and do some of 
the other areas across the Nation and look at buildings similar 
to this that are underutilized that are sitting there and not 
getting a fair return for the taxpayers.
    So thank you for holding this hearing. We will continue. 
This is one I hope in a series in which we will make additional 
progress. Let's see if we can't get a good deal on the sign, 
the guy that painted the sign. We will take one down to Miami 
Courthouse, and I will help you hang it. Thank you. Yield back.
    Mr. Denham. Mr. Hanna?
    Mr. Hanna. Yeah. Quick question. You don't mind. Do you, 
John?
    Mr. Mica. No.
    Mr. Hanna. Thank you. If you can agree that a place like 
this lay fallow for 10 years, costing whatever it cost, and 
there was no urgency, apparently, in any department, any person 
who was in charge to deal with this who saw it as somehow a 
trust of theirs to be more efficient, and you have 14,000. Not 
you. You have a few hundred. How widespread is this problem, as 
long as we can agree it is a problem?
    Mr. Peres. It is hard for me to answer that question. I 
could say there are complex issues involved in every disposal. 
This asset, part of it, was the finance solution for the 
Central Heating Plant that needs reinvestment as well. And 
there was the risk, obviously, until there is another way 
forward of keeping this plant before moving down that road. And 
I think Federal agencies are dealing with this issue throughout 
the country, changing in operations, trying to improve 
utilization of properties, ongoing O&M costs.
    Until there are incentives that help them push their real 
estate decisions, I think it might continue. I am hoping that's 
not the case, and we can provide the correct incentives for 
folks to move properties.
    Mr. Hanna. Well, what would that look like? I mean 
incentives to whom?
    Mr. Peres. Incentives that I tried to address, I believe, 
in Chairman Denham's question. I'm looking at providing an 
upfront capital base for that move for folks to get out of 
property for us to achieve kind of a pretty damn good payback 
on these properties and achieve billions of dollars in savings. 
If you just look at the 10-year number that I quoted in terms 
of savings over--I forgot the exact number, but generating $4.2 
billion in proceeds in 10 years.
    The numbers are there. The properties exist out there. I'm 
hoping we can move aggressively on these.
    Mr. Hanna. Thank you. No more questions from me. Thank you, 
Chairman.
    Mr. Denham. Thank you, Mr. Peres, for joining us here 
today. We are going to give you plenty of other opportunities. 
We want to help you to market all of these various properties 
and we are going to be very aggressive on it. I just want to 
summarize this hearing, some of the expectations that this 
committee and these Members have.
    As you heard from Ms. Norton, she asked earlier this 
committee demand this various information, and we will continue 
to bring it up until we get the information. But, first of all, 
she inquired about cost of preparing this property for sale. We 
would like to see what goes into it, so we can understand how 
better to help you with some of these other properties as well 
the Cotton Annex, what went into that.
    We are going to continue to talk about that until it gets 
on the list until we actually get that one up for sale as well. 
Each of these different properties, you should not wait for us 
to help you to market them. We would hope that you would go out 
on your own initiative and talk to every other agency within 
the administration, and ask them to actually follow the 
President's memorandum.
    We would expect the President of the United States to 
actually hold each of the agencies accountable; but, if he is 
not going to show that leadership, this committee will. And, we 
will continue to go out throughout the Nation and help you to 
market these properties. As well, Ms. Norton talked about the 
Social Security Building and property on 9th as well as the 
Court of Appeals for the Veterans.
    As you have heard me bring up several times now, the L.A. 
courthouse, that is a property that even though we have got 
less judges than a decade ago, GSA under Mr. Peck had said they 
were going to go ahead and spend that money anyways. Mr. 
Tangherlini said they were now reviewing the project. We expect 
to see that full review and understand exactly what GSA's 
intention is.
    Miami Courthouse, another one that we are spending money on 
today, it's not on the excess list, but yet it is sitting 
vacant in Miami. I imagine while I am not from the great State 
of Florida, I imagine the property rates there are pretty high 
in Miami, and that is another property that would be a high-
value property as well.
    I would like to see what is in the 124 properties. I cannot 
imagine that the list of 14,000 properties, the majority of 
those properties are lighthouses. I've got to imagine that a 
lot of properties in that 14,000 that should be sold as well as 
thousands, tens of thousands of properties that are sitting 
underutilized that should be part of that list.
    So we want to know exactly what are the steps that are 
being taken to evaluate whether selling the property are better 
done as reuse, redevelopment, and what the current standard is 
for utilization. I also want to know what the timeline is on 
this building. I assume you have a written timeline?
    Mr. Peres. Yes, somewhere here. Give me a second.
    Mr. Denham. If you could just submit it back to the 
committee, we will try to be timely with finishing up this. I 
assume you have also got a written plan on how you define what 
is underutilized.
    Mr. Peres. Yes.
    Mr. Denham. We would like to see that written plan.
    Mr. Peres. OK.
    Mr. Denham. I assume you have got a written plan on 
identifying properties that are not utilized and underutilized 
before they even get to that list. You can submit that plan as 
well?
    Mr. Peres. Yes. And we are hoping to begin the auction in 
September, just to answer that question. I will give you the 
full timeline in response to that.
    Mr. Denham. Thank you. And, lastly, the administration 
claims that there's $3 billion in savings. We would like to see 
what that list is comprised of, whether it is sale of property, 
whether it is redevelopment, whether it is reused, whether it 
is combining the footprint so that we can be active and helpful 
as well working with the President to help him not only reach 
that goal of $3 billion, but this committee is going to be very 
aggressive in seeing how we can far exceed that goal and make 
sure we are getting the best value for the taxpayer.
    In my opinion as the chair of this committee, I believe we 
are moving way too slow; not only on the properties that are 
under your purview, but, more importantly, under the properties 
across the Nation, which is why this committee has worked with 
the administration in defining the bill as the Civilian 
Property Realignment Act, which is why the Senate--I know their 
version. They have worked with the administration as well. But 
sitting on our hands and waiting to see how much more debt we 
rack up is not a solution.
    So we are going to do everything we can to market these 
properties with you, to continue to hold these hearings. We 
will hold as many as we need. And if GSA tries to drag their 
feet and not give us the information that we are asking for, we 
are going to dedicate our staff to go on doing the job for you. 
We will go out across the Nation and define what the properties 
are, what the utilization rate is and how much vacant property 
they have.
    We would hope that we would continue to work together; but, 
right now, we have not seen a great deal of emphasis or 
leadership from the administration in putting the Civilian 
Property Realignment Act, not only getting it through both 
houses, but certainly the President should be demanding that. 
The President wants acting out of the House, but we want the 
President to actually show some leadership in getting the bill 
to them. We want to sell properties, and we want to work 
together, but we are going to need his support in getting that 
done.
    So, my recommendation to GSA is buy some cotton suits, 
because we are going to be doing hearings in Miami, Texas and 
L.A. in the heat of the summer. And I would go out and buy some 
cold weather gear, as well, because we will also be doing some 
hearings this winter, I am assuming, in Alaska, South Dakota, 
and many cold areas as well. But we are going to go across the 
Nation and help you to market these properties.
    I will hold a hearing every day, if we have to; but, we've 
got to get a better response for the taxpayer, and I think this 
is one of the best ways to get rid of wasting Government, to 
bring one-time revenue to help us to rid of us debt, and a good 
way for Republicans and Democrats to come together and just get 
rid of waste. We need the administration and the President's 
support in doing so.
    With that, I'd like to thank you again for your testimony. 
If there are no further questions, I would ask unanimous 
consent that the record of today's hearing remain open until 
such time as our witness has provided answers to any and all of 
the questions. You did say you would get back to us within 30 
days. We may be having a hearing within the next 30 days.
    And I ask 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. 
Without objection, so ordered.
    I would like to thank our witness again for the testimony 
today. If no other Members have anything to add, the 
subcommittee stands adjourned.
    [Whereupon, at 11:20 a.m., the subcommittee was adjourned.]
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