[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



                  FEDERAL TRIANGLE SOUTH: REDEVELOPING
                 UNDERUTILIZED FEDERAL PROPERTY THROUGH
                      PUBLIC-PRIVATE PARTNERSHIPS

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

                                (113-43)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 19, 2013

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
TREY RADEL, Florida
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
                                ------                                7

 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

                  LOU BARLETTA, Pennsylvania, Chairman
THOMAS E. PETRI, Wisconsin           ANDRE CARSON, Indiana
JOHN L. MICA, Florida                ELEANOR HOLMES NORTON, District of 
ERIC A. ``RICK'' CRAWFORD, Arkansas      Columbia
BLAKE FARENTHOLD, Texas, Vice Chair  MICHAEL H. MICHAUD, Maine
MARKWAYNE MULLIN, Oklahoma           TIMOTHY J. WALZ, Minnesota
MARK MEADOWS, North Carolina         DONNA F. EDWARDS, Maryland
SCOTT PERRY, Pennsylvania            RICHARD M. NOLAN, Minnesota
MARK SANFORD, South Carolina         DINA TITUS, Nevada
BILL SHUSTER, Pennsylvania (Ex       NICK J. RAHALL, II, West Virginia
    Officio)                           (Ex Officio)


















                                CONTENTS

                                                                   Page

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

                               TESTIMONY
                                Panel 1

Hon. Jeff Denham, a Representative in Congress from the State of 
  California.....................................................     3

                                Panel 2

Hon. Daniel Tangherlini, Administrator, U.S. General Services 
  Administration.................................................     6
L. Preston Bryant, Jr., Chairman, National Capital Planning 
  Commission.....................................................     6
David L. Winstead, Chair, Public Development and Infrastructure 
  Council, Urban Land Institute..................................     6

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Hon. Jeff Denham.................................................    31
Hon. Daniel Tangherlini..........................................    38
L. Preston Bryant, Jr............................................    56
David L. Winstead................................................    64

                       SUBMISSION FOR THE RECORD

Hon. Daniel Tangherlini, Administrator, U.S. General Services 
  Administration, answers to questions for the record from the 
  following Representatives and Delegate:

    Hon. Lou Barletta, of Pennsylvania...........................    42
    Hon. Eleanor Holmes Norton, of the District of Columbia......    45
    Hon. Andre Carson, of Indiana................................    45


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

 
  FEDERAL TRIANGLE SOUTH: REDEVELOPING UNDERUTILIZED FEDERAL PROPERTY 
                  THROUGH PUBLIC-PRIVATE PARTNERSHIPS

                              ----------                              


                       TUESDAY, NOVEMBER 19, 2013

                  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 10:03 a.m., in 
Room 2253, Rayburn House Office Building, Hon. Lou Barletta 
(Chairman of the subcommittee) presiding.
    Mr. Barletta. Today's hearing is on Federal Triangle South 
in Washington, DC, and how we can use public-private 
partnerships, or P3s, to redevelop underutilized Federal real 
property.
    There are key challenges that we face today with managing 
the Federal real property inventory. One challenge is to get 
Federal agencies to think differently about the space they use. 
While the private sector understands that space is money and so 
has moved towards smaller, more efficient space solutions, the 
Federal Government has been slow to adopt this philosophy.
    This committee worked in recent years on a bipartisan basis 
to reduce the Federal real property footprint and to get 
Federal agencies to use space more efficiently. We succeeded in 
getting agencies to reduce their space requests submitted to 
this committee, and the administration has issued directives on 
freezing the Federal space footprint.
    While there are still agencies that seem to be slow in 
getting the memo, many others have started realizing that the 
more they pay for space, the less funding they have for people 
and their core missions, but even as we move towards freezing 
or even reducing the space footprint, the reality is Federal 
agencies are going to continue to need space to do their jobs.
    The question is: how do we ensure we are optimizing the 
utilization of that space and reducing the costs to the 
taxpayer?
    Much of the Federal space inventory is aging and 
inefficient, and with current budget climate and record 
deficits, we must look for alternatives to traditional Federal 
construction for new space. That is why when I became chairman 
of this subcommittee, I began to explore how P3s could be used 
in Federal real estate.
    Earlier this year, we held a hearing focusing on options 
for a new FBI headquarters, and I hosted a roundtable to begin 
a dialogue with public and private real estate experts on P3s. 
In recent years, there has been significant interest in 
exploring the use of P3s and redeveloping the area known as 
Federal Triangle South here in the Nation's Capital. This site, 
adjacent to the National Mall, has a combination of 
underutilized and vacant properties.
    The current Federal tenants include the Department of 
Energy, FAA, and GSA. The buildings that are used are 
inefficient and costly to maintain and sit on underutilized 
prime real estate in the heart of DC.
    As a first step towards redeveloping this site in 2012, GSA 
issued a Request for Information, an RFI, seeking input from 
the private sector. If done correctly, redevelopment of this 
area leveraging private investment could benefit the Federal 
taxpayer, the tenant agencies, as well as the local community.
    Unfortunately, there are underutilized and vacant Federal 
properties across our entire Nation. There are not only direct 
costs to the taxpayers in maintaining and operating them, but 
they also impact the communities in which they sit, often 
limiting private investment and development of prime real 
estate.
    I hope that proposals like the one for Federal Triangle 
South can be a template for how we can use P3s to address the 
problem of underutilized and inefficient Federal real estate 
across the country.
    I look forward to hearing today where we are in the process 
of redeveloping Federal Triangle South, what benefits would be, 
and how we can use P3s to address the problem of underutilized 
properties.
    I want to thank you all for being here today.
    I will now call on ranking member of the subcommittee, Mr. 
Carson, for a brief opening statement.
    Mr. Carson. Good morning. I would like to thank Chairman 
Barletta for his leadership in calling today's hearing on 
Federal Triangle South, a part of Federal land located just a 
few blocks west of the U.S. Capitol, which contains over a 
million square feet of Federal office space.
    Today's hearing asks an important question: what can we do 
to develop and maintain the Federal real estate portfolio? In 
an ideal world, Congress would vote for a robust annual 
appropriation for GSA's revolving fund to support a proper 
investment in the existing portfolio. These funds would be used 
to renovate existing structures; and instead of engaging in 
costly long-term leases, new buildings could be constructed 
where there is long-term need for real estate by a Federal 
agency.
    Unfortunately, because of Congress' repeated cuts in GSA's 
construction and renovation budget, and because of arcane 
budget scoring rules, GSA has not been able to fund projects 
that maintain the aging inventory of buildings. My first 
choice, which is the most cost-efficient choice, was to simply 
allow GSA to use the funds it collects from other agencies to 
maintain its portfolio.
    The next choice is using public-private partnerships to 
extract value from aging assets located in valuable areas 
around the country. These partnerships should be used to either 
fund the construction of new buildings or renovate existing 
structures in the GSA real estate portfolio. We know that GSA 
is capable of presiding over terrific public-private 
investments. In the District of Columbia, there are two good 
models: the highly regarded GSA renovation of the Hotel Monaco, 
formerly the Tariff Building, and the Old Post Office Building.
    These projects demonstrate that GSA could make excellent 
use of otherwise antiquated and virtually useless Federal 
structures and turn them into income producing properties. We 
should be able to repeat the process that led to these 
successful projects and revitalize the existing public building 
service portfolio.
    The subcommittee crafted new tools to develop GSA property 
using public-private partnerships. In 2007, Congress enacted 
and the President signed Public Law 108-447. This granted GSA 
the authority to engage in leaseback arrangements and exchanges 
for Federal property that could facilitate a public-private 
partnership. To date, GSA has yet to implement this authority 
to redevelop any of its underutilized properties.
    This needs to change because there are opportunities across 
the country that could bring the Government an excellent return 
on its investment. We hope to hear from today's witnesses about 
their concrete plans for extracting value out of Federal 
Triangle South by using public-private partnerships. This could 
ultimately provide more energy and space efficient workspace 
for Federal agencies and save taxpayer dollars.
    So I thank each of our witnesses for their testimony today, 
and I yield back the balance of my time.
    Mr. Barletta. Thank you, Ranking Member Carson.
    On our first panel today is former chairman of this 
subcommittee and current chairman of the Subcommittee on 
Railroads, Pipelines and Hazardous Materials, Representative 
Jeff Denham.
    I 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 a part of the 
record, the subcommittee would request that you limit your oral 
testimony to 5 minutes.
    Chairman Denham, you may proceed.

  TESTIMONY OF HON. JEFF DENHAM, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Denham. Thank you, Mr. Chairman, and thank you, Ranking 
Member Carson. Both of you guys have been leaders on this 
issue.
    Specifically the work I wanted to thank you for is the 
authoring of the Public Building Savings and Reform Act of 
2013. It is a bipartisan matter, and we need to see much more 
of that, especially on reducing our debt.
    We have got over a trillion dollars deficit and 
skyrocketing debt, and we must examine every area of Government 
and look for ways to cut that spending.
    I would also like to thank Chairman Shuster for working 
with me on this issue to ensure that it receives the proper 
oversight and attention. Since taking the helm of this 
committee, Chairman Shuster has worked to create bipartisan 
solutions for our Nation's problems, which is fitting for this 
topic that we are here to discuss today.
    I am here today to talk about a bill that I authored and 
continue to work on with the assistance of Chairman Barletta 
and Chairman Shuster, who have been strong voices in cutting 
Government. H.R. 695, the Civilian Property Realignment Act, or 
CPRA as it is referred to, would create a nonpartisan, 
professional commission to root out ways to inefficiencies in 
the way that we manage our public building.
    The principles of this bill are the driving forces behind 
the effort to redevelop the Federal Triangle and serve as a 
model of how we manage property nationwide.
    I first proposed a civilian commission at the 
subcommittee's first hearing in February 2011, and the 
President proposed a commission in his 2012 budget. In recent 
years, the GAO identified billions of dollars of waste through 
mismanagement over building and an overreliance on costly lease 
space to meet long-term housing needs.
    And on a bipartisan basis, this committee has struggled to 
house Federal employees in the most cost effective manner 
possible, though I am proud to say that due to the actions of 
this subcommittee, GSA leasing prospectuses are becoming much 
more efficient and saving taxpayer dollars. I believe the 
potential to save billions, tens of billions of dollars is 
real.
    I am very pleased that the President made Federal real 
estate a national priority by including it in his State of the 
Union in 2011 and his official budget to Congress. 
Additionally, both houses of Congress have included this idea 
in their budget concerns and their budget documents.
    To be successful the commission will need to do five 
things: consolidate the Federal footprint, real estate 
footprint; house more Federal employees in less space; reduce 
our reliance on costly leased space; sell or redevelop high-
value assets that are underutilized or too valuable for housing 
Federal employee like the Old Post Office that Trump is 
redeveloping here in DC; and then finally, dispose of surplus 
property more quickly.
    In my first term, I had a post office in my district, 
certainly controversial, but believe that we have got to sell 
off those things that just are not being used today. Today we 
are redeveloping that, creating jobs in our local community and 
actually having a new business that will be right there across 
from the courthouse.
    These properties can be redeveloped creating those local 
jobs, but also that ongoing boost to our local economies. So I 
believe a commission that uses these five principles to guide 
its decisions can have an immediate savings of upwards of $15 
billion. We have got to have a solution that incorporates all 
five principles.
    For example, if the commission has a fire sale of worthless 
properties in one of the worst real estate markets in our 
lifetime, then we should not expect to save a lot of money. 
Simply dumping these vacant properties on a market is not a 
long-term solution. What we need is a CPRA, which is designed 
to reshape the way that this country manages the Federal 
footprint, and fortunately, this administration recognizes the 
same problem.
    At the end of the day, the total cost of housing the 
Federal Government is directly proportional to how much real 
estate we hold. To save money, we have to consolidate that 
footprint. To consolidate, we must house more employees in less 
space. Fortunately there are tremendous opportunities to have 
savings in this area.
    GSA is working to reconfigure its headquarters building to 
triple the number of employees working there from 2,000 to 
6,000 in the same building, allowing GSA to vacate two other 
buildings.
    The private sector has been increasing its utilization 
rates for over a decade, and a commission can achieve the same 
results in the Federal Government. Reducing expensive leased 
space is another principle necessary for a successful 
commission. The Federal Government spent well over a billion 
dollars to lease space for the Department of Transportation's 
headquarters, yet the Government could have purchased several 
buildings for this amount and housed thousands of employees for 
much less money.
    Perhaps one of the greatest areas for taxpayer savings will 
be in the redevelopment or sale of high-value, underutilized 
properties. The Postal Service used a private developer to 
transform a rundown, money pit with a great location into $150 
million in revenue and a fully renovated building without any 
taxpayer money.
    While the Government retained ownership of this property, 
in other cases selling may generate the greatest savings for 
the taxpayer. There are high-value properties all across the 
country that are being used inefficiently and oftentimes have 
large amounts of vacant space. Maximizing this value is what 
CPRA seeks to achieve, and I am proud that not only do we have 
bipartisan support in the House and Senate, but the President 
actually wants to engage on this issue. We can save billions of 
dollars by working together.
    Mr. Barletta. Thank you for your testimony, Chairman 
Denham, and for your work on these issues, and I would like to 
note that Senator Warner has introduced a companion bill to 
yours in the Senate. I think that is a big step and shows your 
approach has strong support in the House, Senate and in the 
White House.
    Your comments have been very helpful to today's discussion.
    Mr. Denham. Thank you.
    Mr. Barletta. Thank you for coming.
    On our second panel today we have the Honorable Daniel 
Tangherlini, Administrator of General Services Administration; 
Dr. L. Preston Bryant, Jr., Chairman of the National Capital 
Planning Commission; and Mr. David Winstead, chair of the 
Public Development and Infrastructure Council of the Urban Land 
Institute.
    I ask unanimous consent that our witnesses' full statements 
be included in the record.
    Without objection.
    Since your written testimony has been made a part of the 
record, the subcommittee would request that you limit your oral 
testimony to 5 minutes.
    Administrator Tangherlini, you may proceed.

   TESTIMONY OF HON. DANIEL TANGHERLINI, ADMINISTRATOR, U.S. 
   GENERAL SERVICES ADMINISTRATION; L. PRESTON BRYANT, JR., 
 CHAIRMAN, NATIONAL CAPITAL PLANNING COMMISSION; AND DAVID L. 
WINSTEAD, CHAIR, PUBLIC DEVELOPMENT AND INFRASTRUCTURE COUNCIL, 
                      URBAN LAND INSTITUTE

    Mr. Tangherlini. Thank you very much, and good morning, 
Chairman Barletta, Ranking Member Carson, Congresswoman Norton 
and Congressman Nolan. I also want to thank Chairman Denham for 
his testimony and leadership on this issue.
    I also appreciate you inviting me to appear before you 
today.
    We are here today to explore the increased utilization of 
public-private partnerships both at GSA and across the 
Government. Public-private partnerships are essential to what 
GSA already does. In a very real way our Public Building 
Service is a public-private partnership.
    Approximately 92 percent of the revenue in the Federal 
Buildings Fund is invested in the private sector. These funds 
pay private sector landlords for existing lease obligations, 
service companies to operate and maintain our buildings, and 
design and construction firms to repair and construct our 
facilities.
    At GSA, we are dealing with a building inventory that 
includes some of the oldest buildings in the country, buildings 
that not only need repairs to keep them in working order, but 
often require renovations to ensure that they are up to the 
standards of 21st-century Government.
    Unfortunately in recent years, as Ranking Member Carson 
pointed out, GSA has been unable to use rent that we receive 
from our partner agencies to fund the high-priority mission 
needs of Federal agencies and to make basic repairs to the 
public buildings we hold in trust. In fact, we are now faced 
with cuts that would limit GSA's ability to meet even our 
existing lease obligations.
    In the face of these continued challenges, I am committed 
to exploring all of GSA's authorities to reduce the cost of 
real estate, meet our partner agencies' needs, and repair and 
maintain our public buildings. GSA partners with private 
industry to deliver needed space and service to our agency 
partners. Beyond our traditional ongoing partnership with 
private industry, GSA is interested in further exploring the 
use of flexible authorities that do not require upfront 
funding.
    To that end, with the direction from Congress and this 
committee, in particular, this year GSA used its authority 
under Section 111 of the National Historic Preservation Act to 
out-lease the Old Post Office. The funds that GSA receives from 
the Old Post Office lease will be deposited in the Federal 
Buildings Fund and could be used for repair and upkeep of 
historic Federal buildings across GSA's inventory, saving 
additional taxpayers' dollars.
    We are also actively exploring new approaches to leverage 
the value of our older, outdated buildings to get new, highly 
efficient space for our partner agencies. We have put in motion 
several potential exchange projects, including the J. Edgar 
Hoover Building here in Washington, DC, and of course, the 
project that is the subject of today's hearing, Federal 
Triangle South.
    Federal Triangle South is actually a series of projects 
that could use exchange to leverage the value of several 
buildings in Southwest DC to fund new, highly efficient space 
for the agencies currently housed there. Right now the 
buildings that comprise this area represent a significant 
challenge, as well as an opportunity for both GSA and the 
agencies that occupy them.
    The Cotton Annex is empty. The GSA Regional Office Building 
Seventh and D Streets, SW., is an inefficient and unattractive 
space that was not constructed with the modern realities of a 
mobile workplace in mind. The Department of Energy Building is 
another facility that does not accommodate its tenants' needs 
for space or facility amenities and underutilizes the valuable 
land on which it sits.
    The Federal Aviation Administration buildings are in the 
best shape of any of these facilities, but they, too, are not 
equipped to meet the needs of 21st-century Government.
    On December 2, 2012, GSA issued a request for information 
to identify creative solutions to the challenges presented by 
these buildings, and on February 4, 2013, we received 10 
responses. GSA has evaluated these responses and developed a 
strategy on how best to proceed. GSA intends to release an RFP 
in the very near future to exchange the Cotton Annex property 
and the Regional Office Building for services. This exchange 
would facilitate completing construction and further 
consolidation of the GSA Headquarters, as well as advance 
efforts to support DHS's consolidation at St. Elizabeths.
    We will continue to explore options to address the needs of 
other agencies in the Federal Triangle South area.
    We are excited about the prospect of exchanging some of our 
existing inefficient and outdated properties for facilities 
that better serve today's needs. We believe that this will 
facilitate the District's efforts to transform the properties 
at Federal Triangle South and upgrade a thriving, mixed use 
neighborhood.
    Through this initiative, we can provide for both the 21st-
century space needs of Federal employees, while also creating a 
place in which people will want to work, live, play and learn. 
By exchanging underperforming Federal property for services to 
upgrade and renovate other Federal facilities, we can help 
replace a cold, sterile, utilitarian, single use enclave with a 
vibrant, diverse, and special community of its own
    I thank the committee for the opportunity to testify today, 
and I look forward to answering your questions.
    Mr. Barletta. Thank you for your testimony, Administrator 
Tangherlini.
    Chairman Bryant, you may proceed.
    Mr. Bryant. Good morning, Chairman Barletta and members of 
the subcommittee. My name is Preston Bryant, and I serve as 
Chairman of the National Capital Planning Commission.
    NCPC is the Federal Government's central planning agency 
for all Federal lands and buildings in the greater Washington, 
DC, area, and I am pleased to have this opportunity to speak 
with you about NCPC's role in planning the area south of the 
National Mall, and the purpose of my testimony today is to 
highlight NCPC's what we call the SW Ecodistrict Initiative and 
to provide context for GSA's Federal Triangle South project.
    As the Nation's Capital and seat of the Government, 
Washington, DC, has unique needs, and NCPC, our planning 
agency, works to do three things: to protect our symbolic and 
cultural heritage; to ensure that there is room for future 
generations to locate new memorials and museums and host 
national events; and third, in consultation and partnership 
with GSA and others, to ensure that the Federal facilities meet 
agency needs and provide for a safe, efficient, and attractive 
workplace.
    NCPC believes that the SW Ecodistrict Initiative is a 
roadmap to meet these goals and a great example of the ability 
of partnerships to achieve these greater results. We are 
excited that GSA is an important partner in this process and 
that they are using the SW Ecodistrict Plan to inform their 
approach to Federal Triangle South.
    The SW Ecodistrict Initiative stems from several earlier 
NCPC studies to identify opportunities to fully modernize and 
reconnect several Federal precincts around the National Mall. 
Perhaps the greatest opportunity is the area we are talking 
about today, and that is the area just south of the Mall. It is 
110 acres of Federal and private properties and is bounded by 
Independence Avenue on the north, Maine Avenue on the south, 
Fourth Street to the east and Twelfth Street to the west.
    GSA's Federal Triangle South Initiative comprises 35 acres 
of these broader 110 acres. Today this area is identified by 
super blocks with predominantly single use, aging Federal 
office buildings. The size and design of these buildings, the 
tangled network of infrastructure and, frankly, the 
lifelessness after 6 p.m. public realm contribute to the 
inefficient use of these lands and buildings.
    Now there are several efforts underway to create a once in 
a lifetime opportunity for transformation. This is consistent 
with the administration's ``Freeze the Footprint'' policy. Now 
the Federal Government is reexamining its property to create 
more efficient workspaces for a modern workforce, dispose of 
unneeded property, and reduce its operating costs. In addition, 
there is a multibillion-dollar private project going on in the 
same area.
    In 2010, in close consultation with GSA, the National Park 
Service, the Commission of Fine Arts and the District of 
Columbia, we created a partnership of 17 Federal and local 
agencies to think through the SW Ecodistrict Initiative. We 
also consulted with residents, private sector businesses, 
property owners, and service providers to fully explore how we 
can synchronize projects, leverage resources, and develop 
mutually beneficial partnerships.
    Through this partnership and a lot of detailed technical 
work over the last 3 years we have built a compelling case to 
work with GSA and others to revitalize this important part of 
our city. The SW Ecodistrict Plan recommends how best to 
accommodate future Federal office space needs and use land 
efficiently while creating a new, vibrant mixed use 
neighborhood.
    The opportunities abound. We can reduce operating and 
maintenance expenses, reduce ongoing lease expenses, generate 
new tax revenue for the District of Columbia, retain and 
improve the efficiency of Federal office space and accommodate 
more employees, create additional residential, hotel and 
private office space, and create new sites for museums and 
monuments adjacent to the National Mall.
    The approach we are using for this plan is an areawide one 
as opposed to a building-by-building approach, and by taking an 
areawide approach, we can, for example, manage 110 acres of 
stormwater. We can significantly reduce the potable water use, 
and we can reduce greenhouse gas emissions by more than 50 
percent.
    High-level analyses have shown that the benefits to the 
Federal Government and the taxpayer, to the District of 
Columbia, and to private developers exceeds the costs. The 
challenge, however, is the scale and complexity. This is a huge 
project. Implementation can only be achieved through 
collaborative action by both the public and private sectors, 
and the SW Ecodistrict Plan identifies several opportunities 
which we recognize will be difficult in the current economic 
environment to do these.
    We can, for example, as I mentioned, implement areawide 
stormwater management systems; modernize and expand GSA's 
central utility plant; make public realm improvements by 
working with others in the neighborhood; and to redevelop and 
rehab Federal property to meet GSA's needs for a modern 
workforce. My further statement is in the record, and I will be 
happy to take questions. Thank you.
    Mr. Barletta. Thank you for your testimony, Mr. Bryant.
    Mr. Winstead, you can proceed.
    Mr. Winstead. Chairman Barletta, Congressman Carson, 
Delegate Norton, I am pleased to be here. I am David Winstead.
    The staff asked me to talk about my perspective on this 
project and others from the viewpoint of the Urban Land 
Institute. I am immediate past chair of the Public Development 
and Infrastructure Council, which was formed in 2007. I was 
Commissioner of Public Buildings at GSA in that year, and we 
very much were looking for a forum of both public real estate 
executives and private to talk about the structure of the best 
deals, the authorities in looking at public-private approaches 
to real property.
    This council, I have shared with the committee various 
white papers and case studies that were done looking at exactly 
the structure of the kind of project the Administrator is 
looking at. We actually developed a framework for policy 
development and valuation of public-private real estate 
ventures. We have looked at completed case studies as well as 
hypothetical studies, such as the South Federal Center, as well 
as a headquarter project and a couple of others.
    Members of PDIC have a broad experience in real estate. 
Former Commissioner Bob Peck has recently joined the council. 
We realize the challenge that the Administrator and the 
committee recognize in terms of shrinking resources, the 
Federal Building Fund, the rental issues, and revenues. So 
looking at private delivery and efficiencies in rentable space, 
delivery and finance, and living within the Federal budget is 
really key.
    I struggle with, and I know Dan does, as well, the rent 
relationship to the Federal Building Fund and the imposition it 
has or the limits it has on the ability for Federal 
construction.
    There are two obviously RFIs and others. The Post Office 
has been settled, but Federal Center South as well as the FBI 
Headquarters Project are in the RFI stage, looking for interest 
in the private sector and approaches.
    Several case studies looked at surplus Federal real estate 
or underrenovated Federal real estate and that backlog that GSA 
still has. We have looked at utilizing private entities to 
secure financing and development of needed projects on existing 
federally owned land, achieving Federal land ownership through 
purchase, exchanges as the Administrator mentioned, or 
donation.
    Ground lease models can vary from 30 to 65 years, which 
allow for GSA lease which can be properly scored by OMB, and 
the ownership of the asset remaining with the leaseholder 
during the term and being able to structure it in a way that it 
is not a below market purchase option at the end. So we have 
looked at that in a number of different ways, and as I said 
earlier, these cases are on our Web site, utilize ULI as a 
nonprofit real estate association.
    So I would urge the committee to look at these and take 
advantage of them. I know that GSA is.
    There are other projects that we have looked at, the ground 
lease operating structures, for example, the Veterans Benefit 
Regional Office in Atlanta; the Argonne National Laboratory in 
Illinois; the Military Housing Program which has been very 
successful, and the Ford Island Redevelopment, which is a 
combination of both. Enhanced use leasing in Houston at the 
Brook Army Medical Center, and also Camp Pendleton, and also, 
as Dan mentioned, with the Post Office utilizing historic 
preservation leasing authority such as the Monaco Hotel, Fort 
Hancock and Virginia Medical Center.
    ULI also has a local council. But I chaired the national 
PDIC committee as I mentioned, that looks at this issue: how do 
you take the viewpoint of the public real estate executive in 
facing these kinds of real estate management needs and meeting 
tenant interest of Federal agencies.
    On March 27th of 2011, ULI participated with NCPC and GSA 
and others in looking at the Federal Center South Project. I 
think there was a lot of exchange back and forth about proposed 
zoning and the upscale and mixed use nature of it, and how you 
can leverage the value of select public office buildings and 
land, and revitalize the areas to accommodate 14,000 Federal 
tenants ultimately.
    Although I did not participate in that charrette, Lisa 
Rother who heads up the council staff-wise did, and I think she 
found it was very valuable. I know GSA is looking at proposals. 
So it is still very much in process.
    Based upon some of the discussion I have had with Lisa, I 
think the challenges that some of the ULI participants saw was 
really in the land created from the transfer is going to be 
inadequate for the requirements of all that build-out in the 
Federal Triangle area. Two reasons for that are historic 
preservation requirements, and the encouragement to put in a 
street complex within the Federal Center South that will 
diminish density to a certain extent. So a lot of this is 
planning, and I am sure NCPC and DC Planning will engage.
    The parcels along Independence Avenue are clearly 
institutional Government functions. So they are really not in 
play. The sense of it is that there is an awful lot of 
interest, but one approach that might come out of that is 
importantly matching parcels that create value with development 
that meet Government needs and looking at that on a smaller 
level, like parcel by parcel, to see how you can, in fact, 
build out the vision that NCPC and the District will have.
    I hope these comments are helpful. I would refer the 
committee, and I know the staff is aware of this, to ULI's 
efforts in this area. If the committee would like us to look at 
anything in the future, we would be happy to do so.
    Thank you.
    Mr. Barletta. Thank you for your testimony, Mr. Winstead.
    I just want to say yesterday I had an opportunity to tour 
Southeast Federal Center, and I know Representative Norton 
played a major role in that, and as a former mayor, it almost 
made we want to be mayor again, you know, seeing the excitement 
of taking a very challenging project because of the 
environmental concerns there and turning it into a real tax 
base again, and there is no question that projects such as this 
could take the more difficult pieces of real estate and turn 
them into an economic advantage where the local community is a 
winner with increased tax revenue, and the taxpayer is also a 
winner and the Federal agencies as well.
    So you know, I think there is agreement here that this 
could be a direction and should be a direction that our country 
goes in for the benefit, and overcoming the challenges along 
the way that we will have. And there will be some obviously, 
but I think we are all committed to overcoming those.
    I will begin the first round of questions limited to 5 
minutes for each Member. If there are additional questions 
following the first round, we will have additional rounds of 
questions as needed.
    And I will start, Administrator Tangherlini. Again, thank 
you for coming.
    How many responses did GSA receive from their Request for 
Information on Federal Triangle South?
    And what did GSA learn from those responses and the 
feasibility of redeveloping that area?
    Mr. Tangherlini. We received, as I said in my testimony, 
about 10 responses from the private sector on Federal Triangle 
South, and what we learned was that there is actually an awful 
lot of market enthusiasm for working with GSA, with NCPC, with 
the city, with the public sector more broadly, to look at 
opportunities to really leverage the available land there and 
to help us revisit the way we make investments to serve the 
agencies that we provide facilities to.
    So what we took away from that was that there is a project 
or projects that are actually viable, that are doable, that can 
start a long-term vision, delivering our long-term vision that 
I think the city and NCPC should be commended for sitting down 
and actually trying to develop.
    Mr. Barletta. Administrator Tangherlini, is GSA working 
with DOE and FAA? And how open are they to your redevelopment 
plans?
    Mr. Tangherlini. We are working very closely with DOE, FAA 
and FAA's parent agency, the Department of Transportation, and 
frankly, all of them are very interested.
    We are also working, by the way, with the Department of 
Homeland Security, which is a tenant of ours in the Regional 
Office Building, and working closely with our own region, 
frankly.
    Look. Everyone out there knows that there is the 
possibility that they can get more productive, more sustainable 
21st-century space to deliver on their mission. The irony of 
the Department of Energy Building being as energy inefficient 
as it is is not lost on the Department of Energy. They want 
better facilities so that they can meet their growing, not to 
mention demands for services and things we are asking them to 
do.
    So they see this as an opportunity in partnership with GSA, 
in partnership with the private sector to get what they need in 
terms of facilities to deliver on their mission.
    Mr. Barletta. And we understand that the buildings that 
currently house DOE and FAA are costly to maintain. They have a 
backlog of repairs and are inefficient. How would the use of 
public-private partnerships help address these issues and 
benefit the taxpayer?
    Mr. Tangherlini. Well, we think starting with an empty 
building like the Cotton Annex that, frankly, we can return 
that back to economic value within the community.
    What you saw down in the Southeast Federal Center was land 
that was not being put to its highest and best use being 
converted into land that could attain its economic potential 
and value. That required every bit of 15 years of hard work to 
get that done, but it started with a vision. It started with a 
concept, and then it was a project-by-project effort.
    We think that the private sector can help us make the 
investments necessary to meet the needs of these agencies by 
engaging in a partnership and perhaps exchanging value, taking 
something that is worth value that is not fully being realized, 
such as the floor area ratio of some of the buildings out there 
that are not being fully utilized; put that back into the 
marketplace; and get back services and facilities that meet the 
needs going forward.
    Mr. Barletta. Thank you.
    Chairman Bryant, I understand that the NCPC has also been 
examining how to better utilize underused and underdeveloped 
property. In your view are the current uses of this site 
maximizing the value for the taxpayer?
    Mr. Bryant. This perhaps is as much Mr. Tangherlini's realm 
as mine, but the short answer is no. That is why we began 
looking at this precinct, these 110 acres, more than 3 or 4 
years ago.
    There are many buildings that do not occupy or fully use 
their existing site. DC has a height limit, but there are some 
buildings that could be taller. They are not reaching the 
current height now.
    We have worked very closely with the private sector. Again, 
as I mentioned, there is a major waterfront development being 
planned, a multibillion-dollar development. So we have been 
working in conjunction with private sector developers who are 
active in the area to make sure that our plan and our vision 
complements what they are going to do so that we can better 
utilize and max out these sites.
    So the short answer is, no, they are not fully utilized and 
they can be improved.
    Mr. Barletta. Thank you.
    I would like to now recognize Ranking Member Carson for 5 
minutes of questions.
    Mr. Carson. Thank you, Chairman Barletta.
    Administrator Tangherlini, will an RFP for Federal Triangle 
South represent the approach that the GSA is expected to take 
with the exchange being contemplated for the downtown FBI 
Hoover Building?
    How long will the taxpayer's interest be protected in that 
deal?
    If the Hoover Building does not cover the cost of full 
consolidation of the FBI, how will GSA pay for additional 
costs?
    And lastly, how will GSA vet this plan for financial 
viability?
    Mr. Tangherlini. Those are great questions. Frankly, what 
we are trying to do in each of these instances is recognize the 
limits that have been imposed on GSA in terms of our ability to 
tap into the Federal Buildings Fund and move forward and make 
the kind of necessary investments that we should be making to 
provide 21st-century facilities for agencies to meet their 
needs.
    And so looking at our authorities we are asking ourselves 
how can we work closely with the private sector to meet those 
needs.
    What we have proposed as a possible development scenario 
for FBI and as parts of Federal Triangle South is the idea of 
an exchange using existing GSA authorities, asking what the 
market would give us in exchange for the actual possession of 
that property. Frankly, we will not know what the gap will be 
until we actually get expressions of interest from the private 
sector, and so we have to leave as an opening a question of how 
would we fill that gap if there is one.
    Mr. Carson. Is this plan viable if interest rates rise to 
historical norms?
    Mr. Tangherlini. You know, that is a great question. What 
would be the viability of any private sector participation in a 
PPP if interest rates changed dramatically?
    That is why it is very important for us to move quickly 
while we have the favorable interest rate environment we have 
right now.
    Mr. Carson. Mr. Winstead, in your testimony you discuss 
previous Federal projects that are good examples of public-
private partnerships. Are there any examples that use the kind 
of swap GSA is proposing with Federal Triangle South?
    Can you please describe how those deals were effectively 
structured?
    Mr. Winstead. Congressmen, there are a couple. I think the 
two that are most relevant are the Argonne National Lab, and I 
gave you a copy of the case study where it was really premised 
on a public-private exchange where DOE's Atomic Energy Act was 
provided authority to have an arm's length transaction where 
there was an exchange of land value and secured financing 
through in that project the Illinois Finance Authority, which 
organized an RFI and went out with a ground lease where the 
special purpose entity had a long-term lease of the space and 
the to be constructed facility with required parking.
    The operating lease was reviewed and constructed based on 
the value of the property and the lease. So that is one 
example.
    Another one is looking at the VA office in Atlanta, 
Georgia. It is called the VARO Office Building, which was 
developed by the Authority under public-private partnership. 
Again, you had the value of the land and looking at a ground 
lease exchange where the Authority commitment included 
providing financing through the issuance of taxable revenue 
bonds and secured developer by means of an organized 
competition.
    Once the ground lease was secured, the financing was 
arranged and the Authority entered into a lease of space with 
the VA for its use of to be constructed office building in 
Atlanta. So there are existing cases, and I have provided those 
to the committee and would be happy to provide more.
    I think I covered in my remarks the ones that we have 
looked at and are aware of. I would mention that in terms of 
Federal Center South, one of the biggest struggles, and I had 
an inside view of this for 3 years, is this issue of deferred 
maintenance of Federal buildings. I think the concentration of 
these properties in this incredibly monumental spot of 
Washington, DC, next to the Mall and trying to open that vista, 
really do have values. If you can look at them, I think one of 
the concerns that the ULI charrette yielded was you have to 
almost look at it parcel by parcel in order to really create 
and maximize the values.
    But there are examples and structures I am privy to, and I 
am sure the staff is, of how to approach these projects on that 
basis. The FBI RFI is now out there, and that is going to be an 
exchange of the Hoover Building, discounting construction over 
a long-term ground lease that will bring the value to the 
taxpayer, you know, maybe $50 million a year in rent.
    So there are cases, these specifically, and we can provide 
others.
    Mr. Carson. Thank you.
    Mr. Chairman.
    Mr. Barletta. The Chair recognizes Representative Norton 
for 5 minutes.
    Ms. Norton. Thank you, Mr. Chairman, and I appreciate very 
much that you are holding this hearing at this time.
    Mr. Chairman, this is a city 10 miles square. I do not know 
how many acres you would say the District of Columbia is, but 
when there are large tracts of land in a city that does not 
have a great deal of underdeveloped land, and it turns out to 
be Federal land, that is on us and it is on GSA. So it is a 
very important hearing.
    I want to thank all of you for your testimony because I 
found it all very helpful. I want to particularly thank Mr. 
Tangherlini for taking the GSA in an entirely new direction. 
Some of us who have been on the committee and subcommittee for 
some time have been concerned that GSA has long been a powerful 
agency, but reluctant to use its authorities even when this 
subcommittee gave it new authorities.
    The chairman mentioned the Southeast Federal Center. I grew 
really frustrated that there were 57 prime acres there and the 
Federal Government could not figure out what to do with it, and 
they had really quite mundane notions about, well, you know, 
let us put some Federal workers down there, and the Federal 
workers did not want to go down there so that there it lay.
    We have an Ecodistrict. Now, this is one is really 
shameless because that is near the Mall and really even more 
centrally located, sitting there just waiting for somebody to 
come forward, and this subcommittee has had hearings on it 
before.
    Now, Mr. Tangherlini, you have moved the GSA to really 
thinking about leveraging private sector, and its funds to 
accomplish public sector ends, like reducing the Federal 
footprint, even getting Federal revenue. I wrote you concerning 
what is really the Ecodistrict here, but I wrote you concerning 
a leveraging opportunity that I was concerned might be passing 
us up. And that is that the CSX Corporation, which is building 
a train. I mean, the Panama Canal is going to go from here all 
the way up the east coast and through the District, and it has 
a right-of-way along Maryland Avenue, and it must proceed when 
it gets here.
    Now, I was concerned that the CSX could get here with GSA 
sitting on its assets instead of leveraging this great 
opportunity that CSX very much needs, putting the GSA really in 
the catbird seat. There are one or two minor buildings in their 
way, and meanwhile you want to essentially build areawide.
    You responded that you were engaged in Maryland Avenue 
discussions. Maryland Avenue is a central avenue running 
through this area we are talking about, but you said the 
reconstitution of Maryland Avenue is a complex issue on many 
facets, including but not limited to local land use planning.
    Well, we have heard from Mr. Bryant. We know that the 
District of Columbia greets this. So we know that is not in the 
way now.
    So I have got to ask you: first of all, where is CSX? How 
far up the east coast has CSX come? Do you know that? Is it 
anywhere near Washington, DC, now?
    I ask this question, Mr. Chairman, because CSX is going to 
come and go whether or not GSA acts. It is just going to go 
right through here. So I am concerned simply about the timing, 
and I understand that we cannot do the whole Ecodistrict on the 
CSX leverage, but you said something in your testimony that 
intrigued me. You indicated that you wanted to move first on 
the Cotton Annex and an adjoining building that I think is a 
GSA building.
    Does that indicate that you are trying to move in time to 
take advantage of this opportunity that CSX needing some of 
your property offers you?
    Mr. Tangherlini. The short answer at some level is yes. I 
am not the best person to speak to what the status of the CSX 
double-stack project is.
    Ms. Norton. Well, I would think that that would be of 
some--and I am going to ask you to find out, Mr. Tangherlini.
    Mr. Tangherlini. Right.
    Ms. Norton. If you found out, for example, that CSX was 
already in Virginia, I do not know the path it is going to even 
come, but it is coming from south to north; if you found that 
they were somewhere in Virginia, it seems to me that that would 
factor in, or somewhere in North Carolina, that that would 
factor into your own timing for how you proceed.
    So if you do not know, could you find out and let the 
chairman know within 30 days where the CSX--just leave aside 
here we are--where is CSX coming up the road? How far has it 
gotten? Is it within shouting distance of the District of 
Columbia? And if so, what would you do?
    Mr. Tangherlini. Well, so notwithstanding where they are in 
their project, what I was trying to convey is that we are 
moving very aggressively with identifying a project that we 
think relates to the issues that were raised. We want to 
maximize----
    Ms. Norton. So why did you choose these two buildings 
first?
    Mr. Tangherlini. So those two buildings, frankly, are the 
easiest buildings, one being empty, one being one that we 
occupy, for us to move forward. They are ones that adjoin the 
tracks and do relate directly to the first stage in the 
Maryland Avenue project.
    We have been working very closely with the District of 
Columbia about Maryland Avenue and how they would actually work 
closely with us to allow Maryland Avenue to be extended 
through. We have been working very closely with the NCPC. We 
have been very attentive to what the environmental impacts are 
and what the environmental impact process is, and so that is 
why we are able to consider the various different elements of 
the plan and move forward on some and further research others.
    Ms. Norton. Just a final question. You look at the 
Southeast Federal Center. While the Government cleaned it up, 
the Southeast Federal Center yields revenue for the Federal 
Government.
    Mr. Tangherlini. Right.
    Ms. Norton. It has essentially paid for itself, and I need 
to know whether you believe that the Ecodistrict can be 
developed without Federal funds through the use of 412 
authority, other authorities you may have.
    To the greatest extent possible, do you think that this 
district could be developed in a way similar, say, to the way 
in which the Southeast Federal Center was developed with our 
Federal funds?
    Mr. Tangherlini. We think that there are dramatic 
possibilities for economic development in the Ecodistrict. The 
NCPC and the city have done an awful lot of work to look at 
what the economic potential both locally and nationally are. 
That is why we believe moving forward on some particular----
    Ms. Norton. That was not my question. My question was the 
Southeast Federal Center was developed without Federal funds, 
except the cleanup. And my question is: given your leveraging 
and your other authorities, do you believe that the Ecodistrict 
could be developed without Federal Funds?
    Mr. Tangherlini. That is our hope, and that is why we want 
to go into the market with these buildings and understand what 
the actual value and what the interest of the market is. So 
that is our hope. That is our interest. Frankly, it is clearly 
our desire.
    The question is: what is the market going to demonstrate? 
And we see that this is an opportunity to do something quickly 
that addresses the issues that you raise about the 
infrastructure investments that need to happen and that give us 
an understanding of what the market is interested in in giving 
us back.
    Ms. Norton. Thank you, Mr. Chairman.
    Mr. Barletta. Thank you, Ms. Norton, and we will have a 
second round of questions if you have more.
    And I would like to just second Ms. Norton's point and 
would like to hear a response to her question and whether or 
not an evaluation was done and what those conclusions for CSX 
are.
    Now I would like to recognize Mr. Mica for 5 minutes.
    Mr. Mica. Thank you, Mr. Chairman.
    We are using the cheap system today.
    Well, it is good to see you back, Mr. Tangherlini and 
others, in our continuing saga. As you know, when our side was 
in the minority, we produced the report that was entitled 
``Sitting on Our Assets: The Federal Government's Misuse of 
Taxpayer-Owned Assets,'' and it has provided a guideline.
    And when I chaired the Transportation Committee, we asked 
Mr. Denham to help take the lead in going after this. We have 
done a series of hearings on empty public buildings in 
Washington, DC. We did the Post Office at least twice, and I 
want to commend you for getting that going. That is going to 
turn that asset, I believe. We will get about $250,00 a month 
off the lease from an asset that was depreciating and cost 
taxpayers $8 million to $10 million a year, a half empty, 
400,000 square-foot building and an annex that had been vacant 
for 15 years.
    I see the power plant is up for sale. We did the hearing on 
the empty power plant, $19 million realized putting it online.
    And the Cotton Exchange is not as pretty a picture. We did 
the hearing there I am told in August of 2012, and that is part 
of this Southwest Triangle.
    You did follow up, as I am told, with a Request for 
Information last December. Now, do you have a specific time, 
and you had some interest there, when you are going to do the 
RFP?
    Mr. Tangherlini. As I mentioned in my testimony, sir, we 
hope to actually get it done I said very soon. We have 
committed by the end of January, and so we are hoping to have 
something out by then.
    Mr. Mica. By the end of January?
    Mr. Tangherlini. Yes, sir.
    Mr. Mica. Again, I was not here for the earlier testimony. 
Is that a partial Request for Proposal on the Cotton Exchange 
or is it the whole Southwest Triangle?
    Mr. Tangherlini. No, no. Our proposal at this point, and 
that is what we are still working on, is either the Cotton 
Exchange and the Regional Office Building or the two of the 
buildings.
    Mr. Mica. OK. This is a very slow process. Is there 
anything legislatively that we could do to help you speed it 
up?
    Mr. Tangherlini. Well, I actually think that given the fact 
that we have to make sure that we coordinate very closely with 
the city, with NCPC, understand what the marketplace can bear, 
be careful about understanding the historic nature of the 
properties, those are things that we have to work through, and 
I agree that it would be ideal if we could move faster. I am 
not exactly sure what part of the very complicated process that 
is holding us up.
    Mr. Mica. Well, if there is anything legislatively, I want 
you to report back to the committee.
    Mr. Tangherlini. OK.
    Mr. Mica. Because, again, it is a very, very slow process. 
You are missing some of the market opportunities, but I think 
you are on the cusp. The market is still red hot in the 
District, and it is very valuable property, and it can be 
turned from a nonperforming asset. The Cotton Exchange is at 
least 6 years empty. We did the hearing on the empty Cotton 
Exchange.
    Mr. Tangherlini. Right.
    Mr. Mica. As you know, I am not a happy camper about the 
FTC and the Constitution Building. We are going to have a 
hearing. Is that next week? OK. December it has been moved to. 
We had this little thing. I do not know any reason why we 
cannot get the entire FTC into that property.
    Have you signed the contracts or any lease agreements with 
any of the endowments, for any of the endowments to occupy the 
Constitution space?
    Mr. Tangherlini. I am not sure what the status is.
    Mr. Mica. OK. I want to know that. There is no reason they 
cannot all be in there. You can save $400 million to $500 
million by consolidating the FTC. You are bringing in two 
current vacant properties, and they came in with a request for 
additional space.
    I have had folks over there. We have looked at it, and 
there is no reason why the balance cannot be moved into it. I 
have talked to the appropriators. I am going to do everything I 
can to stop anybody else from the FTC but the FTC going in 
there. I just want to make it clear.
    I know you have been put in somewhat of a political bind, 
but there is no reason that that entire operation cannot be 
consolidated. So when we do the hearing in a couple more weeks, 
I expect answers. I expect to try to move them in there.
    The whole thing is a fiasco to begin with when you rent a 
lease of a million square feet, and end up with an agency not 
using it. I know you are doing the best to fill this space, but 
our job is to do the best possible for the taxpayers, and we 
can save a tremendous amount of money by that consolidation.
    So I have not let up. I am not going to stop, and we will 
find a way to get that in there, and I appreciate your 
cooperation. If we have to move some political mountains, we 
will do that, too, and you are going to cooperate, right, Mr. 
Tangherlini?
    Mr. Tangherlini. I will do my best, sir.
    Mr. Mica. Thank you.
    I yield back the balance of my time.
    Mr. Barletta. Thank you, Mr. Mica.
    The Chair recognizes Mr. Mullin for 5 minutes.
    Mr. Mullin. Thank you, Mr. Chairman.
    Mr. Tangherlini, I appreciate you coming in here. Obviously 
you are rather popular today in this meeting, and you have got 
a tough situation. You have got a tough road ahead of you, and 
our goal, I believe, is to see how we can work together.
    You have two people you have got to answer to, plus your 
job to do. I do not envy you, and I wish you the best of luck, 
truly.
    And so my question kind of has to do with how can we work 
together. So I understand that the GSA already has the 
authority to sell and redevelop underutilized properties; is 
that correct?
    Mr. Tangherlini. That is true.
    Mr. Mullin. All right. And so when you enter a public-
private partnership to offset the costs associated with 
renovating or creating these spaces, you have the authority to 
do that, too, right?
    Mr. Tangherlini. We have certain authorities that can help 
with that, yes.
    Mr. Mullin. OK. Are there any things that prolong or slow 
down the agency's abilities to do that?
    Because obviously, you have a tremendous amount of 
property. I actually own two property companies myself, and 
vacant property is probably the biggest pet peeve I have, and 
there has to be money to be able to do it, which if you are 
able to offset it with, you know, public-private partnerships, 
it seems like you have the ability to do so.
    So what else is holding it up?
    Mr. Tangherlini. Well, I would like to make a couple of 
points that might clear up some misconceptions. The General 
Services Administration manages an awful lot of property.
    Mr. Mullin. Yes.
    Mr. Tangherlini. A third of a billion square feet of 
commercial real estate. So we are one of the biggest commercial 
real estate land managers in the world.
    But we only represent about 10 percent of all the land 
actually controlled by the Federal Government, and our vacancy 
rate is actually very low. It is roughly around 3 percent.
    Mr. Mullin. No offense.
    Mr. Tangherlini. None taken.
    Mr. Mullin. But you are comparing yourself to worse and 
worse.
    Mr. Tangherlini. OK.
    Mr. Mullin. So why would we compare ourselves to something 
that is already bad. Let us think about what you have. You have 
a third of it, right? Is that what you said?
    Mr. Tangherlini. No, no. We have 10 percent.
    Mr. Mullin. Ten percent. OK. So you have 10 percent of it. 
So we have a saying in our company: pay attention to the 
pennies and the dollars will take care of themselves. So let us 
pay attention to your pennies then.
    Mr. Tangherlini. No, I agree. All I am saying is that we 
are working very hard on the vacant property that we have, but 
it is actually very small amount of the GSA portfolio, and so 
that is why we have been working very closely through OMB to 
work with other agencies to find vacant and underutilized 
property that other agencies have so that we can help them 
bring it to market.
    So, for instance, in California we have been working very 
closely with NASA.
    Mr. Mullin. We are getting away from the question. The 
question was what is prolonging or slowing it down. What are 
the hurdles that are in front of you keeping this from actually 
happening?
    Mr. Tangherlini. And my point was that it is actually 
happening. Now, we do have requirements, often legal 
requirements, such as the NEPA Act, which makes sure we are 
careful about how we impact the environment in communities in 
which we operate. We have historic preservation laws which make 
sure that we do not take these assets which people have 
invested in over a long time like the Old Post Office and not 
treat them appropriately and respectfully.
    These are the things that actually lend to some additional 
time in the Federal Government doing redevelopment versus what 
it might take in the private sector.
    Mr. Mullin. So what is your average turnaround on a piece 
of property? What is your average property set bank it?
    Mr. Tangherlini. I do not actually have a number for you 
right now, but I could find it.
    Mr. Mullin. Have you got a guess? I mean, I can guess and I 
am up here all the time. I do not even really get to manage it 
anymore and I can give you an idea.
    Now, granted, I am not controlling as much as what you 
have, but still it is what we have, and I can still give you an 
estimated approximate time.
    I mean, are we talking about months, year, years?
    Mr. Tangherlini. I can tell you for the properties that 
have been brought to my attention in the time I have been at 
GSA for the last year and a half, we have turned around all of 
those properties in the last year and half, either getting an 
RFI or an RFP or negotiating with our local jurisdictions.
    But as you heard in my conversation with Congresswoman 
Norton, even getting to the RFI, that does not get us 
necessarily to the actual development happening. That at least 
lets us gauge market interest, and then from there we have to 
go into the historical preservation evaluation. We have to do 
the environmental work. That can take, you know, in the case of 
FBI we estimate it will be about 2 years to get through that 
process.
    Mr. Mullin. Environmental work because of the material 
used, like asbestos towels, stuff like that?
    Mr. Tangherlini. No, more actually if you are going to move 
a building, relocate a building, sell something of historic 
significance. You have to gauge the impact that that has either 
on the community, gauge the impact that has economically, and 
potentially gauge the impact that that has environmentally on 
traffic, on pollution, et cetera.
    Mr. Mullin. I want to work with you however possible. So if 
you run up against hurdles that my office can be helpful with, 
would you please reach out to us?
    Mr. Tangherlini. Yes, sir, I will.
    Mr. Mullin. I am not here to just throw arrows at you. In 
all seriousness, it is something that we could work together. 
It is something I do know a little about, and I would look 
forward to working with you as much as we can.
    Mr. Tangherlini. Great. Thank you.
    Mr. Mullin. Thank you, Mr. Chairman.
    Mr. Barletta. Thank you, Mr. Mullin.
    We will now begin our second round of questioning, and I 
will recognize myself for 5 minutes.
    Mr. Winstead, so far GSA has made a number of proposals 
primarily focused on its exchange authority as opposed 
leaseback arrangements and similar authorities. How important 
is it in leveraging private dollars to look at all the tools in 
GSA's toolkit?
    Mr. Winstead. Mr. Barletta, I think that comments that Mr. 
Tangherlini has made and Delegate Norton mentioned, the 
administration has really pushed the gauntlet in this area. The 
results of leadership of Ms. Norton we got in 2005 language 
that, in fact, gives us the 412 authority, thus strengthening 
the retention of revenues from the sale or properties and go 
back into investment of existing buildings from sale lease-back 
or exchange.
    One of the concerns from the private sector side noted by 
Congressman Mullin deals with this delay issue and 
inconsistency. In my opinion, the view of these innovative 
financing deals from the perspective of OMB and CBO has varied. 
I think that, you know, it is an artful form, and I know David 
Hahn very well and have met with him since I left GSA to 
discuss consistency.
    But it is a very artful form to make these things 
structured from both a financing standpoint and tax standpoint 
work. I think others in the private sector and some behind me 
understand this art form and resulting delays of decisionmaking 
and reviews of prospectuses that really do prevent a lot of 
projects moving as quickly.
    It is not GSA's fault. It is these other reviews and CBO 
and OMB level from my perspective. So, you know, I do think it 
is important to use these other authorities. In my testimony, 
and I provide to the committee examples of enhanced use leasing 
exchange as well as ground lease structures. I think it is a 
very positive time that we are starting to see these RFIs come 
out in a very fast order to move both potential redevelopment, 
as well as to look at exchange in value.
    I, frankly, think that there is a huge market out there for 
that. GSA does not have the authorization to deal with the 
renovation of these buildings. If you can take one of these 
properties or several of these properties in the South Federal 
Center and convey that information and value of that property 
for construction services, I think it is a very, very good 
move, and there is a lot of interest in the market. I can give 
you a sense of that.
    Mr. Barletta. Thank you.
    You know, a concern that the notion that GSA could exchange 
billions of dollars of inventory for services without further 
action by this committee or appropriations is unprecedented and 
raises significant questions about appropriate oversight of 
taxpayer dollars and the role of Congress and the role that 
Congress has there.
    Administrator Tangherlini, GSA has proposed using its 
exchange authority in a number of cases. However, as you know, 
GSA has a number of exchange authorities, each of which has its 
own requirements and limitations.
    Which exchange authorities do you say are intending to use 
for the FBI Headquarters and potentially for Federal Triangle 
South?
    Mr. Tangherlini. I think I will get back to you with the 
specifics about the actual sites, but Section 412 and Section 
585, we have other exchange authorities that are related to our 
organic statute.
    I would like to point out though that I wish I could take 
credit for inventing this idea. These are authorities that 
have, frankly, been given to us by Congress, and we have used 
roughly a dozen times. The best example is, frankly, in San 
Antonio where we traded properties and facilities for the 
construction of a parking garage just last year.
    And so I think the real issue is how do we work as closely 
as possible with this committee, with the Appropriations 
Committees to make you aware of what we are trying to do so 
that we can continue to reinvest in these assets while we 
continue to face, frankly, the limitation that is being imposed 
on us by the inability for us to access the rent, the market 
based rent, which we are legally required to collect from each 
agency, while we have not been able to access that rent so that 
we can make reinvestments in those facilities.
    That deficit, frankly, that reinvestment deficit is at $4.5 
billion and counting right now. So I want to work very closely 
with this committee, with the Appropriations Committees. We are 
not going to do anything, you know, secretly. We are going to 
do it through RFIs, through RFPs. We are going to work closely 
with staff in these committees. We are going to come these 
hearings. We are going to answer questions, respond to letters, 
and do whatever we can, at the same time maintaining our 
stewardship responsibility to these assets that the American 
people have bought and invested in.
    Mr. Barletta. Sure. You know, realizing that the parking 
garage was a $5 million project, this is obviously much bigger. 
Could you provide for the committee, in writing, if you can, an 
official legal analysis on GSA's exchange authority, on what 
basis GSA believes it can enter into an exchange for services 
on namely to construct a new facility without an approved 
prospectus or approval through the appropriations process?
    Mr. Tangherlini. Yes, we will provide that information.
    Mr. Barletta. OK. Thank you.
    The Chair recognizes Ranking Member Carson.
    Mr. Carson. Thank you, Mr. Chairman.
    Mr. Winstead, in your testimony you highlighted several 
Federal projects that use public-private partnerships to 
develop Federal-owned parcels. What are some of the challenges 
in your mind in protecting taxpayer interest in these kinds of 
deals?
    And what is your recommendation for us so that we can 
ensure that taxpayers receive fair value in exchange for 
Federal properties?
    Mr. Winstead. Congressman, I think that the biggest issue 
in this whole alternative finance strategy is really the issue 
of clarity of equities and the risk assumption of the parties 
between the Government and contractor or developer. And what 
the ULI council has done--and I can provide examples--is a 
structure of how you can make sure with full view of taxpayer 
and all parties involved are dealt with in terms of both the 
responsibilities of the developer or offeror, in terms of 
obtaining financing, what those financing costs are, what, in 
fact, the fixed return is and clarity through that deal. 
Candidly, both ULI and our council, as well as the national 
Public-Private Partnership Association, have very much stressed 
this, and you really cannot get away with it any other way.
    I mean, the process in which you approach and how you 
structure these deals, looking at both legal, tax, financial 
and disclosure issues, can start very early on. You get a 
comfort level.
    The only other comment I would make is, you know, we have a 
kind of perfect storm here at this point. Unfortunately 
Administrator Tangherlini cannot tap that $2.5 billion that he 
needs to renovate the buildings, but we do have an incredible 
amount of private capital interested in the real estate markets 
from everywhere. Although I watched the Washington market drop 
at our last meeting of ULI from the top 10 for the first time 
in 3 or 4 years, it still is one of the best markets in the 
world.
    So the opportunity is there, and I think we would be happy 
to provide both legal documents of how these past ones have 
been structured to the committee. We would be happy to work if 
the committee were to ask us or GSA, but it is really a 
question of looking at disclosure upfront about what, in fact, 
are the risk allocations, returns for both parties, and 
building in that obviously the returns for the off-award 
developer.
    Mr. Carson. Thank you.
    Mr. Bryant, has the District of Columbia endorsed the 
Ecodistrict Redevelopment Plan?
    Mr. Bryant. Yes, sir, I am pleased to say that over the 
last 3 or 4 years the District of Columbia government, 
specifically, the DC Office of Planning, has been a true 
partner, and they have been part of the 17-agency partnership 
where we have done all the planning, all of the envisioning 
together, and the District has, indeed, endorsed the plan going 
forward.
    You know, the SW Ecodistrict at 110 acres, it is largely 
Federal. It is 60 percent public buildings, 40 percent private 
buildings. Thirty-two thousand people work there during the 
day, but after 6 o'clock it is a ghost town. Very few people 
live in the area. It has got significant infrastructure needs.
    So the District has joined us in looking at the economic 
development potential. We could get 4 million square feet more 
in the ecodistrict for public and private use. That translates 
to, you know, taxpayer dollars, public real estate taxes. It 
could generate, depending on the infrastructure investment, 
somewhere between $150 million and $300 million over 30 years 
for the District in just property taxes, not counting sales 
taxes and others.
    So, you know, the District government has been very much 
involved and very supportive of the process.
    Mr. Carson. How essential is zoning to the success of this 
project?
    Mr. Bryant. Zoning discussions are underway right now, and 
there is going to have to be a new zoning designation, but that 
is entirely the District's prerogative, and they are working 
with the National Capital Planning Commission on all zoning 
related questions as well.
    So we are moving together forward on those issues.
    Mr. Carson. Mr. Chairman, I yield back.
    Mr. Barletta. Thank you.
    The Chair recognizes Ms. Norton for 5 minutes.
    Ms. Norton. Thank you, Mr. Chairman.
    Mr. Tangherlini, some of the process that you have been 
able to make may come from the fact that you yourself come from 
OMB and understand OMB. But you also understand real estate. I 
must tell you that OMB has been a roadblock to this committee 
and to development. The Old Post Office, now who took the hit 
Mr. Winstead will tell you was the GSA because the GSA was not 
the problem. The reason I had to put an actual bill in for the 
Old Post Office was that the OMB personnel, the kind of line 
personnel, had outrageous ideas. One of them was there are 
already some Federal agencies in there. There were two or three 
small Federal agencies. It was unfit for Federal agencies or 
any other kind of agencies.
    OMB has tended essentially to look at real estate as just a 
commodity. It does not understand real estate. So I have to ask 
you, as you have raised our hopes whether you have been in 
touch with OMB or whether you expect OMB will be in sync with 
you as you begin to go down roads that OMB would have regarded 
as unholy for GSA to even proceed toward.
    You know, is this a dream in your head or are you talking 
with these people who stood in the way?
    Let me tell you these are the people who, just to give you 
an idea, Mr. Chairman, of just how retrograde OMB has been in 
allowing GSA to use the kind of authority it is trying to use 
know, we built a Department of Transportation Building. It is a 
huge, terrific new headquarters. Whoever heard of building a 
headquarters on a 15-year lease so that they are going to have 
to come back to the Government to get more money to pay the 
developer for their lease?
    Nobody in his right mind would have done that, but the OMB 
rules essentially cost the taxpayers' money. So I have to ask 
you: are we going to have that roadblock or what have you, 
because you come from OMB and perhaps they have greater 
confidence in you and you understand real estate and OMB, have 
you worked through some of these issues with OMB?
    Mr. Tangherlini. So I have worked very closely with OMB in 
every one of our RFIs and every one of our RFPs we have put 
together with the review and comments of OMB. We have tried to 
be very inclusive of OMB so that we recognize that together 
actually our job is to deliver on administration priorities and 
the administration's direction.
    And this administration has been very committed to 
investing in infrastructure and reducing the Federal footprint. 
At the same time though, OMB faces challenges that come out of 
other legislative requirements, and OMB and CBO are actually in 
charge of maintaining the scoring rules that come out of things 
like the Budget Enforcement Act and subsequent amendments.
    The rules we deal with now relate to agreements that have 
been arrived at over time between OMB, CBO, GAO and the 
Congress about how we are going to score congressional action.
    Ms. Norton. And do you think that there are scoring 
roadblocks to what you are proposing?
    Mr. Tangherlini. So we think actually everything we have 
done has been consistent with scoring, and so the question is 
to have a broader discussion about what are the principles that 
underlie scoring. What are we trying to achieve through 
scoring? How do we measure the long-term impacts of certain 
ways we score things versus others?
    And that is the kind of dialogue, frankly, a hearing like 
this allows us to get into at an intellectual level rather than 
at a conflict level. And I think too oftentimes we have engaged 
in conflict. Hopefully what we will get is good information. We 
will get good dialogue.
    Ms. Norton. Oh, there was not any conflict. There was not 
any conflict. There was just an ironclad notion that if it 
scored, no one wanted to go through the process you just said, 
which is what are you trying to achieve, what would cost the 
Government more money, is it consistent with rules. That 
dialogue never occurred. It was not that this committee had 
conflict with scoring.
    Mr. Tangherlini. No.
    Ms. Norton. It is that we are faced with, ``Shut up. It 
scores.''
    Mr. Tangherlini. Right.
    Ms. Norton. And you are saying that is not how these deals 
are going to be handled.
    Mr. Tangherlini. Well, and I think the evidence suggests 
that we are trying very hard to be as creative and as 
thoughtful and as flexible as possible. You know, the offer 
that David proffered working with ULI to further this 
discussion is, I think, also further evidence of the progress 
we are having, where people recognize that perhaps the way we 
are doing things is not going to work with the way we need to 
get them done.
    Ms. Norton. Mr. Tangherlini, we have just opened the Coast 
Guard Building.
    Mr. Tangherlini. Right.
    Ms. Norton. It was a very proud moment, named for the only 
Medal of Honor winner of the Coast Guard, and the Coast Guard 
has fully moved in. They are the first agency to go down there.
    Are you considering ways to complete the Department of 
Homeland Security with this terrific start there with the other 
buildings?
    For example, the Secretary is slated to come next in one of 
the reuse buildings. Could you tell the committee what you are 
doing?
    Mr. Tangherlini. Absolutely. Starting with the President's 
2014 budget request, which would have allowed us to move into 
Phase 2, and through everything else we are trying to make sure 
that we realize the vision of the more than $400 million that 
the taxpayers already invested in the St. Elizabeths campus. We 
are not going to get the benefit as taxpayers of that initial 
investment if we do not make the subsequent investments and 
begin to allow the Department of Homeland Security to actually 
create a cohesive and consolidated headquarters unit.
    As I mentioned, as one of the proposals for the first 
project we are proposing as part of this broader Ecodistrict 
plan is to take some of the revenue or the value generated by 
the transfer of the exchange of one of our buildings and put it 
into the St. Elizabeths campus. We are trying anything we can 
to make sure that we keep fealty with the investments that the 
American people have already made in St. Elizabeths.
    Ms. Norton. That is excellent to hear you say.
    Not to mention that the Department of Homeland Security is 
paying for rent in 60 different locations and is having to do 
short-term and long-term extensions now because it is waiting 
to see when the rest of it will move.
    I would just like to ask you about two vacant properties in 
the District of Columbia that this committee has mentioned in 
prior hearings. We had a whole hearing on 49 L Street.
    Mr. Tangherlini. Right.
    Ms. Norton. I have a special interest in 49 L Street 
because it is part of the Southeast Federal Center or Yards 
District, this new district in Southeast, huge. It must have 
been a warehouse or something, and for some time it was held 
because you thought it would become a veterans court, but for a 
long time it was clear that that was not going to happen.
    But I have not heard anything since we had a hearing 
perhaps was it last year on 49 L Street.
    Mr. Tangherlini. So we have been working very closely----
    Ms. Norton. If I may say so, the community was so concerned 
that since this place was surrounded by development that they 
themselves came up with a plan to develop it, and that is why I 
would like to know where we are on that.
    Mr. Tangherlini. So we have been working very closely with 
local authorities and other planning authorities, and we think 
we are very close to actually having an announcement as to what 
we will do next with 49 L, but we heard the issues and concerns 
raised by you and other members of this committee at the 
hearing that was held there, and we have been working 
diligently to make sure that that building as well----
    Ms. Norton. Do you expect that to come forward this year?
    Mr. Tangherlini. Probably not this calendar year, but I 
expect it to come forward very, very soon.
    Ms. Norton. And there is one other property, Tenth and H 
Street, NW., which is near the Secret Service Building.
    Mr. Tangherlini. Yes, the Webster School.
    Ms. Norton. Yes.
    Mr. Tangherlini. And I can tell you that that is one that 
has been a concern of mine in several of my jobs, and I can 
tell you that I will make a commitment that we are going to do 
something about the Webster School. We are working closely to 
try to put together a panel to give us ideas and suggestions of 
how we both meet the needs of the Secret Service in terms of 
their security, but also meet the needs of the community in 
terms of not having a blighted, vacant but also historic 
building sitting right at the corner of essentially Main and 
Main now after the old Convention Center redevelopment has been 
realized.
    Ms. Norton. Yes. You do need a panel. You need somebody to 
look closely at it, taking into account all of the concerns, 
and if you give your attention to it, I think you can solve 
that problem.
    Mr. Tangherlini. I agree.
    Ms. Norton. Thank you very much.
    Mr. Barletta. Thank you.
    Let me just say the exchange is not a panacea. They are 
complicated, and they have more risk than traditional 
approaches like leasing. I would hope that you will keep the 
lease-back tool on the table.
    Mr. Tangherlini. Well, you know, absolutely. I would like 
to explore ways that we can keep other parts of the authority 
and not just hit one note on the piano. That having been said, 
to the extent that we have authority and opportunity in these 
instances, I think we should also be smart about leveraging 
them as quickly as possible so we do not miss market 
opportunities, and then explore a broader conversation that 
will allow us to maybe explore the opportunities to leverage 
other tools that the Congress has been so kind to provide us.
    Mr. Barletta. I just have a couple more questions, and if 
the panel has any more, they could also ask them.
    Mr. Winstead, can you talk about one of the authorities GSA 
has under Section 412, the ground lease with a lease-back, and 
explain how it is possible to utilize this authority under the 
scoring rules?
    Mr. Winstead. Mr. Chairman, there are structures that have 
been in place and there are components that are well known and 
have been vetted from both the legal standpoint and tax related 
issues and revenue. I think the recent conversation with the 
Administrator is pointing at the issue of concurrence and 
engaging the minds at OMB and CBO in a partnership on this, 
looking at the scoring rules protecting future taxpayers, which 
is why the scoring rules and budget rules are there--to not 
have obligations that blow up in the future on taxpayers.
    But there are ways to do this, and I have provided the 
committee staff the details of that involving an exchange of 
property. Looking at ways in which the parcel where the 
building is constructed, can be titled to the Government, 
leased to a private party for no less than the ground lease 
structure, 65 years, where the building would be leased for 20-
year terms. The occupancy lease does not offer a purchase 
option, a bargain basement structure, which is of concern. One 
of the criteria in the scoring rules is satisfied by the 
building being leased on newly constructed with a life cycle of 
40 years.
    And then Step 4 would be really structuring the net present 
value or the minimum rents on a combined lease that is 
equivalent to about 65 percent of the fair market value. So you 
are below the threshold of the 90-percent rule, and the 
majority of the Government-leased properties is for general 
purpose office space. I think that is the case in both Federal 
Center South, as well as the FBI RFI.
    Now, granted they have huge security requirements, but 
they, in fact, can be termed as general office use buildings.
    GSA, by the way, in recent years, has seen reduction of 
space and is doing much more open space configuration of 
workspace, which is applicable both to Government tenant use as 
well as private sector use.
    A sixth criteria to approach it is a strong private sector 
interest which is out there in Government lease properties, 
which underscores the reality that this can be construed as 
general office space, not special purpose Federal space.
    So you are satisfying these criteria, in my judgment, being 
able to take a land exchange value to create savings to the 
Government, and ULI did a case study 2 years ago which I 
provided the committee that approach. It looked at both Federal 
construction; it looked at leased construction; and it looked 
at leased construction on Federal land. It involved private 
sector people, public sector people, and basically looking at 
about 2 million square feet of space. There was actually a 
savings because of the ability to have a ground lease and 
accrued credit to the lease which eliminates essentially that 
issue of bargain basement pricing or gift at the end.
    So these models are out there. There are lawyers that can 
construct it as well as tax experts. There is interest in the 
private sector to do these, and I would just stress that, as 
the Administrator said, ULI has a strong District Council here 
in Washington. We would be happy to work with the committee or 
get CBO, OMB and GSA obviously involved.
    But there are ways that it can be done. They have been 
proven to be done, and they can satisfy scoring rules and 
create value for the taxpayer.
    In the case of the case study we did for a 2 million-
square-foot building, it showed a consolidation lease savings 
of around $50 million, which was huge. So, you know, I would be 
happy to share that with you if you have not seen that case 
study.
    Mr. Barletta. The bottom line is do you think this can work 
for the FBI and allow for consideration of the FBI from 
consolidation from 3 billion to 2 million square feet? Because 
I think that is where the savings comes from.
    Mr. Winstead. Well, it has been quite a few years since I 
was looking at their lease structure, and I would not be privy 
to it anyway, but I do believe there are savings. Clearly the 
Federal Government in exchange of value of a building like the 
Hoover Building, that there are savings that can be accrued 
because of the new construction cost of a new building, generic 
in many ways in workspace and obviously greener. So it is going 
to have savings in terms of the functions of the building and 
cost of maintaining it every year.
    So there is interest. I do not know what the interest is or 
the level of it, but there is clearly interest that has been 
expressed to GSA. Again, if you can take an administration that 
is very focused on this and ensure that both the real estate 
agency and the OMB people are working in unison, which they 
seem to be, I think it is a real opportunity and the market is 
ripe.
    Interest rates are historically low. I remember in 1995 
when I used to have to go to the legislature in Maryland as 
Secretary of Transportation, talking about the construction of 
transportation facilities out of our transportation fund versus 
the ability to do it under public-private. In those days you 
could not sell it from a public policy standpoint because 
interest rates were 7 percent. So they go, ``Well, why would 
you do that if you can take the money out of the transportation 
authority, put tolls on it, and pay for it through the 
authority?''
    That is not the case now. I mean, it is a very ripe market 
with a lot of interest.
    Mr. Barletta. Thank you.
    One last question. Mr. Tangherlini, you mentioned a little 
earlier an historic review for the Hoover Building. Are you 
suggesting there is an historic review pending or a problem?
    Mr. Tangherlini. I am not. I am just saying that that is 
one of our obligations, is to go through the full NEPA process 
and all of the other processes, many established by statute, 
that ensure that we are very, very careful and thoughtful 
before we dispose of something that the American people paid 
for and made investments in over time.
    And so to some extent that is going to be one of our 
challenges as a public entity, is that we are always going to 
have to be a little more thoughtful, a little more careful, and 
as a result a little more slow than the private sector because 
we have this higher bar of responsibility.
    Mr. Barletta. Great. I just wanted to clear that up.
    Mr. Tangherlini. OK.
    Mr. Barletta. If there are no further questions?
    Mr. Carson. One more question for Administrator 
Tangherlini.
    What is the best way to fund the maintenance of the GSA 
real estate portfolio? And what has been the impact of Congress 
not fully appropriating the rent that GSA receives from other 
Federal agencies that are housed in GSA-owned space?
    Mr. Tangherlini. It is a great question, and I appreciate 
your asking it because oftentimes you hear conversations about 
how we want Government to operate more like a business, and 
there are a few places actually in Government where we operate 
more like a business than, frankly, in the Public Building 
Service and the Federal Buildings Fund of the United States 
General Services Administration.
    By law, the Congress had the wisdom to suggest that we need 
to collect market-based rents, rents that we determine using 
valuation, market-based evaluations of what the rents are in 
the marketplace. We charge that to the agencies. That is 
deposited back into the Federal Buildings Fund so that we can 
then reinvest it in the buildings. We pay our rent. We reinvest 
it in the buildings.
    The problem is for the last 4 years as part of the issues 
we have had generally with appropriations, we have never 
received the full appropriation in the amount of money we have 
collected as rent from those Federal agencies. So we have not 
been able to reinvest it in the buildings.
    We received a sizable amount of money in the Recovery Act, 
but we have actually over time not received as much back in 
rent as we got in the Recovery Act. So at this point we are no 
longer making the kind of major repair and alteration, even in 
some cases minor repair and alteration, never mind longer term 
capital investment in the assets that we have.
    Mr. Carson. Thank you.
    Thank you, Mr. Chairman.
    Mr. Barletta. I would like to thank all of you for your 
testimony today. Your comments have been helpful in today's 
discussion.
    If there are no further questions, I would ask unanimous 
consent that the record of today's hearing remain open until 
such time as witnesses have provided answers to any questions 
that may be submitted to them in writing, and unanimous consent 
that the record remain open for 15 days for any additional 
comments and information submitted by Members or witnesses to 
be included in the record of today's hearing.
    Without objection, so ordered.
    I would like to again thank our witnesses for their 
testimony today. If no other Members have anything to add, the 
subcommittee stands adjourned.
    [Whereupon, at 11:37 a.m., the subcommittee was adjourned.]
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