    St. Elizabeths Hospital: Real Property Issues Related to the West
    Campus (16-APR-01, GAO-01-434).

    The west campus of St. Elizabeths hospital is a unique property
    that according to the Department of Health and Human Services,
    the General Services Administration, and District of Columbia
    officials, is in a badly deteriorated condition.  GAO's evidence
    suggests that a significant amount of money and much work would
    be needed to prepare it for reuse. This work includes stabilizing
    and mothballing the buildings for the period of time when the
    excess and disposal process will take place, developing plans for
    protection and maintenance, addressing environmental and historic
    preservation issues, studying potential uses for the property,
    and identifying user(s). The historic significance of the
    property, as well as the economic implications of its reuse for
    the District, will be key factors to be considered in determining
    the future use of the property.  Attaining a successful outcome
    that is agreeable to all the interested stakeholders and is in
    the best interest of the government will be a challenging and
    complex task.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-01-434
        ACCNO:   A00819
        TITLE:   St. Elizabeths Hospital: Real Property Issues Related to
                 the West Campus
         DATE:   04/16/2001
      SUBJECT:   Historic preservation
    	     Land use agreements
    	     National historic sites
    	     Real property
    	     Hospitals
    	     Obsolete facilities
    	     Repair costs
    	     District of Columbia

    ******************************************************************
    ** This file contains an ASCII representation of the text of a  **
    ** GAO Testimony.                                               **
    **                                                              **
    ** No attempt has been made to display graphic images, although **
    ** figure captions are reproduced.  Tables are included, but    **
    ** may not resemble those in the printed version.               **
    **                                                              **
    ** Please see the PDF (Portable Document Format) file, when     **
    ** available, for a complete electronic file of the printed     **
    ** document's contents.                                         **
    **                                                              **
    ******************************************************************
    GAO-01-434

    Report to Congressional Committees

    United States General Accounting Office

    GAO

    April 2001 ST. ELIZABETHS HOSPITAL

    Real Property Issues Related to the West Campus

    GAO- 01- 434

    Page 1 GAO- 01- 434 St. Elizabeths Hospital

    April 16, 2001 The Honorable Ted Stevens Chairman The Honorable Robert C.
    Byrd Ranking Member Committee on Appropriations United States Senate

    The Honorable C. W. Bill Young Chairman The Honorable David Obey Ranking
    Minority Member Committee on Appropriations House of Representatives

    This report responds to the requirement in H. R. Rep. No. 106- 1033 at 621
    (2000) that we report on various real property issues related to the west
    campus of the St. Elizabeths hospital complex in the District of Columbia.
    As agreed with your offices, our objectives were to (1) determine who owns
    the west campus, (2) determine the historical designations of the west
    campus and the corresponding responsibilities, (3) examine existing cost
    estimates for stabilizing and mothballing the property 1 and conducting
    various studies, and (4) determine what needs to be done to facilitate a
    reuse of the property. To do our work, we interviewed officials from the
    Department of Health and Human Services (HHS), District of Columbia
    government (District), General Services Administration (GSA), Office of
    Management and Budget (OMB), and the Advisory Council on Historic
    Preservation (Advisory Council). We reviewed documents we obtained from
    these officials and researched applicable laws and regulations. We also
    visited the west campus to observe the condition of the buildings and
    grounds. We did our work in January and February of 2001 in accordance with
    generally accepted government auditing standards. On February 1, 2001, we
    briefed your offices on the information contained in this letter.

    1 Stabilization includes structurally stabilizing the buildings, controlling
    pests, and protecting the exterior and interior from moisture. Mothballing
    includes securing the buildings, providing adequate ventilation, and
    disconnecting and sealing off all utilities.

    United States General Accounting Office Washington, DC 20548

    Page 2 GAO- 01- 434 St. Elizabeths Hospital

    We requested comments on a draft of this report from the Secretary of HHS,
    Acting Administrator of GSA, Director of OMB, Mayor of the District of
    Columbia, Executive Director of the Advisory Council, and Acting Executive
    Director of the National Capital Planning Commission (NCPC). Their responses
    are discussed later in this report.

    The federal government owns the west campus of St. Elizabeths, except for
    five buildings that are owned by the District. The west campus has 61
    buildings containing about 1.2 million square feet of space on 182 acres.
    HHS is the holding agency that is responsible for the federal portion of the
    west campus. In 1990, St. Elizabeths was designated a national historic
    landmark (NHL). This designation recognized the exceptional national
    significance of the property and is the same designation given to the White
    House and Capitol. In addition to the buildings on the west campus, the NHL
    designation covers the landscaping and grounds, the vistas of the rivers and
    city, and a Civil War cemetery that is located on the property. Agencies
    that hold NHL properties are required to preserve their historic character
    and minimize harm to them. Despite the NHL designation, officials from HHS,
    the District, and GSA said that lack of funding and the absence of a clear
    direction for the future of the west campus over the years have left it in a
    badly deteriorated condition. In January 2001, HHS officially notified GSA
    of its intention to declare the federal portion of the west campus site
    excess. 2

    Last year, GSA and HHS jointly developed a cost estimate of $8.5 million for
    stabilizing and mothballing the buildings on the federal portion of the west
    campus and performing various studies to start preparing it to be excessed
    and eventually disposed of by GSA. The $8.5 million estimate was what GSA
    and HHS believed was needed to begin the excess and disposal process and did
    not reflect all costs that will be needed to prepare the west campus for
    reuse. HHS would be responsible for the largest portion of the estimated
    cost-$ 5. 3 million to mothball and stabilize the buildings- which would be
    used to preserve the west campus buildings and ensure that no further
    deterioration occurs while the excess and disposal process takes place. GSA
    officials said that this estimate was not as refined as it could have been
    because it was prepared under tight time

    2 By declaring a property “excess,” the holding agency has
    determined that it has no further use for the property to carry out its
    responsibilities. The term “surplus property” means any excess
    property not required for the needs and responsibilities of all federal
    agencies, as determined by the GSA Administrator. Results in Brief

    Page 3 GAO- 01- 434 St. Elizabeths Hospital

    frames; however, they believed it was reasonable given the circumstances
    under which it was prepared.

    On the basis of our discussions with HHS, GSA and District officials, much
    work needs to be done to facilitate a reuse of the west campus. This work
    includes determining environmental remediation requirements and implementing
    them, addressing historic preservation issues, conducting a land use study
    to identify potential uses for the property, and identifying user( s) for
    the property through the federal excess and disposal process. GSA officials
    said that the west campus is a unique property and that the entire excess
    and disposal process will likely take several years to complete. According
    to a District planning official, the District does not oppose HHS' efforts
    to excess the federal portion of the west campus. However, the District
    official expressed concern that under the normal excess and disposal
    process, the District may not have sufficient input into key decisions. The
    District official added that although the District may not be interested in
    gaining possession of the property, it does have the greatest long- term
    interest in what happens to it. GSA officials said that they intend to work
    with the District so that the District's goals for the property are
    considered, zoning and other approvals for the property can be obtained, and
    the issue of what to do with the five buildings that the District owns can
    be addressed.

    In commenting on a draft of this report, the Director of the District's
    Office of Planning generally agreed with the report's findings, but said
    that the District should be the lead entity for the planning of the site,
    working in close collaboration with GSA. Our evaluation of the District's
    comments appears near the end of this letter and in appendix I. HHS had no
    comments and OMB, GSA, the Advisory Council, and NCPC provided oral
    technical comments, which we incorporated, where appropriate.

    St. Elizabeths Hospital is located approximately 2 miles south of the
    Capitol building and is divided by Martin Luther King, Jr., Ave. into what
    are known as the west and east campuses. St. Elizabeths began operations in
    1855 as the “Government Hospital for the Insane.” During the
    Civil War, St. Elizabeths was used to house soldiers recuperating from
    amputations, and the west campus includes a Civil War cemetery. In 1916,
    Congress formally changed its name to St. Elizabeths Hospital, which refers
    to the historic name of the old royal land grant of which the hospital was a
    part. According to an HHS official, during its peak use period in the early
    to mid- 1960s, St. Elizabeths housed approximately 7,000 inpatients and
    employed nearly 4, 000 people. As discussed in more detail below, a 1984
    Background

    Page 4 GAO- 01- 434 St. Elizabeths Hospital

    law authorized the transfer of part of St. Elizabeths to the District.
    Today, the District primarily uses the east campus for its mental health
    services program.

    The west campus- 61 buildings containing about 1.2 million square feet of
    space on 182 acres- is owned by the federal government, with the exception
    of 5 buildings that are owned by the District. HHS is the holding agency
    that is responsible for the federal portion of the west campus. The District
    owns the east campus, which comprises some 42 buildings containing 1.75
    million square feet on 118 acres. Figure 1 is a map of the St. Elizabeths
    hospital complex.

    Figure 1: Map of the St. Elizabeths Hospital Complex

    Source: District of Columbia and GAO.

    Under a use and occupancy agreement between HHS and the District, the
    District was, at the time of our review, using about 15 of the west campus
    buildings at no charge other than accepting responsibility for maintenance.
    The District also provides security for the west campus. West campus
    buildings not being used by the District are vacant. In addition, the
    District plans to completely vacate the west campus in 2001. On January 17,
    2001, HHS officially notified GSA of its intention to declare the federal
    portion of the west campus excess. Under the Federal Property and
    Administrative Services Act of 1949 (Property Act), as amended, GSA The
    Federal

    Government Owns Most of The West Campus

    N

    West

    N

    East Martin Luther King Jr. Avenue

    Buildings on the west side of the map shaded in grey indicate ownership by
    the District of Columbia.

    A A

    Page 5 GAO- 01- 434 St. Elizabeths Hospital

    has responsibility for federal real property utilization and disposal of
    excess and surplus property. 3

    In 1984, the St. Elizabeths Hospital and District of Columbia Mental Health
    Services Act authorized HHS to transfer to the District all property at St.
    Elizabeths Hospital needed by the District to provide mental health and
    other services under the District's comprehensive mental health system plan.
    4 In accordance with that provision, on September 30, 1987, the Secretary
    transferred to the District title to almost all of the portion of St.
    Elizabeths that is known as the east campus and several buildings on the
    west campus. The act contemplated that the remaining portion of St.
    Elizabeths that was not so transferred, which would include most of the west
    campus, would be subsequently transferred to the District after Congress
    approved a master plan prepared by the District for the use of such
    property. The act, as amended, also stated that Congress would approve and
    enact a law transferring the remainder of the property at St. Elizabeths
    within 2 years after the plan was submitted to Congress. 5 Athough the
    master plan was submitted to Congress in 1993, it was never approved.

    The 1993 master plan recommended renovation of the west campus, after which
    approximately 52 percent of the west campus would continue to be used for
    the District's mental health program. The remainder of the west campus would
    be adapted for other institutional- type uses, retail facilities, and
    support buildings. The plan also included estimated costs ranging from about
    $116 million to $128 million for implementation. A District official
    informed us that the District does not intend to use the west campus at St.
    Elizabeths for mental health programs because it currently intends for
    mental health services to be community- based. Because Congress did not
    approve the 1993 master plan and did not enact legislation transferring the
    west campus of St. Elizabeths from HHS to the District, and because the
    District no longer needs or intends to use the west campus to provide mental
    health services, HHS is preparing the property to be excessed to GSA under
    the normal process for excessing federal real property.

    3 40 U. S. C.sect.sect. 470 et seq. The implementing regulations for disposal of
    federal excess and surplus real property are found at 41 C. F. R. Part 101-
    47. 4 Section 8 of Pub. L. No. 98- 621 (1984), 24 U. S. C. sect.225f.

    5 Section 3( b) of Pub. L. No. 102- 150 (1991), 24 U. S. C. sect. 225f.

    Page 6 GAO- 01- 434 St. Elizabeths Hospital

    St. Elizabeths was designated a national historic landmark (NHL) in December
    1990. This is the same designation given to the White House and the U. S.
    Capitol Building; and, according to an Advisory Council official, is granted
    to a very small percentage of historic properties. 6 Agencies that hold NHL
    properties are responsible for preserving their historic character; and the
    National Historic Preservation Act (NHPA) provides that the agency
    responsible for the property shall, to the maximum extent possible,
    undertake such planning and actions as may be necessary to minimize harm to
    such a landmark. 7 The NHL designation for the west campus recognized the
    exceptional national significance of the property and mandated the highest
    level of national preservation priority. The west campus comprises the
    oldest portion of the St. Elizabeths complex and consists of the buildings
    with the most historic importance. In addition to the buildings on the west
    campus, the NHL designation covers the landscaping and grounds, the vistas
    of the rivers and city, and a Civil War cemetery that is located on the
    property. Figure 2 shows the Center Building, which opened in 1855 and
    served as the main hospital building on the west campus; the Civil War
    cemetery, which houses the remains of about 300 Confederate and Union dead;
    and the vistas.

    6 The Advisory Council is an independent federal agency that advises
    Congress and the President on matters related to historic preservation and
    provides a forum for influencing federal activities, programs, and policies
    as they affect historic resources.

    7 16 U. S. C. sect. 470h- 2( f). Also, see 36 C. F. R. Part 65 relating to NHL
    properties. The West Campus Is A

    National Historic Landmark

    Page 7 GAO- 01- 434 St. Elizabeths Hospital

    Figure 2: The Center Building, Civil War Cemetery, and Vistas at St.
    Elizabeths

    Source: GAO and the District of Columbia. "NHL designation

    covers grounds and landscaping, the vistas of the rivers and city, and a
    Civil War cemetery"...

    N

    West

    A D

    C B C C

    D D B B

    A A

    The west campus, with 61 buildings, is owned by the federal government with
    the exception of five buildings (shown in grey) that are owned by the
    District.

    Photos shown and located on the map are: (A) Center Building (B) Civil War
    cemetery (C) View towards Virginia (D) View of Washington

    Page 8 GAO- 01- 434 St. Elizabeths Hospital

    Prior to the NHL designation, St. Elizabeths was listed on the National
    Register of Historic Places. In 1989, HHS, the District, and the Advisory
    Council entered into a Memorandum of Agreement (MOA) on St. Elizabeths. The
    MOA detailed specific measures for preserving the historic character of St.
    Elizabeths in accordance with the Department of the Interior's standards for
    maintaining historic properties. Despite the NHL designation and the MOA,
    officials from HHS, the District, and GSA said that lack of funding and the
    absence of a clear direction for the future of the west campus over the
    years have left it in a badly deteriorated condition. Figure 3 shows
    examples of the deterioration that has occurred on the west campus.

    Page 9 GAO- 01- 434 St. Elizabeths Hospital

    Figure 3: Deteriorating Conditions at St. Elizabeths

    Source: GAO.

    Deteriorating conditions and ceiling damage (A) and (B) exist in the Center
    Building (C) on the west campus at St. Elizabeths

    B B A A

    C C

    A

    Page 10 GAO- 01- 434 St. Elizabeths Hospital

    During fiscal year 2001 congressional budget deliberations, GSA and HHS
    jointly developed a cost estimate of $8.5 million for stabilizing and
    mothballing the federal portion of the west campus and performing various
    studies to start preparing it to be excessed and eventually disposed of by
    GSA. Table 1 shows the cost estimates that were developed and identifies who
    would normally be responsible for funding each item under existing laws and
    implementing regulations.

    Table 1: Cost Estimates for Stabilizing and Mothballing the Federal Portion
    of the West Campus of St. Elizabeths and Performing Various Studies

    Purpose Cost ($ millions) Responsible agency

    Stabilization and mothballing 5. 3 HHS Phase II environmental study a 0. 1
    HHS Phase II archeological study a 0. 1 HHS National Environmental Policy
    Act (NEPA) compliance 2.0 GSA Land use study b 1.0 GSA

    Total 8.5

    a HHS informed us that it will be able to fund the Phase II environmental
    and archeological studies with funds available from its fiscal year 1994
    appropriation. b An HHS official told us that on January 17, 2001, OMB
    directed HHS to provide GSA with funds for the land use study under a
    reimbursable work authorization. According to a GSA official, in general, if
    the local jurisdiction does not fund a land use study, GSA would consider
    funding it, as needed, as part of the planning process to provide input into
    the environmental impact statement and to help create awareness of the
    property.

    Source: GSA and HHS.

    According to GSA officials, the $5.3 million for stabilization and
    mothballing would have been used to prevent further deterioration of the
    buildings and prepare them for approximately 5 years of nonuse while the
    process of preparing the property to be excessed and disposed of takes place
    and a plan for reuse is developed. As the holding agency for the property,
    HHS is responsible for funding this item. The regulations implementing the
    Property Act require the holding agency to be responsible for the protection
    and maintenance of property pending its transfer to another federal agency
    or its disposal. 8 NHPA adds an additional requirement in that the heads of
    all federal agencies are responsible for the preservation of historic
    properties that are owned or controlled by the agency. Prior to the approval
    of any federal undertaking

    8 41 C. F. R. 101- 47. 402- 1 and 101- 47. 402- 2. Cost Estimates For

    Beginning the Excess and Disposal Process

    Page 11 GAO- 01- 434 St. Elizabeths Hospital

    that may affect any NHL, the head of the responsible federal agency shall,
    to the maximum extent possible, undertake planning and action to minimize
    harm to the landmark. 9 Mothballing and stabilization of the property are
    actions HHS intends to take that will prevent further deterioration and
    minimize harm to the historic St. Elizabeths property.

    According to GSA and HHS officials, they developed this estimate by using a
    previous estimate HHS had developed for stabilizing and mothballing the west
    campus. The previous estimate was based on a detailed study of five west
    campus buildings that was prepared by a team of experts HHS contracted with
    in 1998. GSA and HHS applied the cost per square foot to stabilize and
    mothball these five buildings to the entire square footage of the west
    campus to come up with a total cost. A GSA official said they used the total
    square footage for the west campus, including the Districtowned buildings,
    to add some flexibility to the estimate to compensate for inflation and
    additional deterioration that would have occurred since 1998. However, the
    official said that the $5.3 million would have been used to mothball and
    stabilize only the federal portion of the west campus.

    According to GSA officials, there were other attempts to develop a
    stabilization and mothballing estimate. In March 2000, GSA estimated the
    cost at about $11 million. However, this estimate was not based on an
    analysis of actual conditions, and GSA and HHS decided to contract for an
    estimate in the summer of 2000. The contractor estimated a cost of $2.6
    million, but GSA and HHS officials were not satisfied with the estimate
    because of their knowledge of the conditions of the buildings and past
    experience. GSA and HHS then decided to rely on the $5.3 million estimate
    that was derived from the 1998 HHS estimate discussed above because there
    was pressure to provide the estimate for the fiscal year 2001 budget
    deliberations. GSA officials acknowledged that the $5.3 million estimate was
    not as refined as it could have been because of the time constraints but
    said they believed it was reasonable given the circumstances under which it
    was prepared. GSA officials recognized that a better estimate would be based
    on a more thorough assessment of the conditions in all the buildings. They
    also said that because the $5.3 million

    9 16 U. S. C. sect.sect. 470h- 2( f) and 470f. The NHPA regulations at 36 C. F. R.
    800.16 define

    “undertaking” as a project, activity, or program funded in whole
    or in part under the direct or indirect jurisdiction of a federal agency,
    including those carried out by or on behalf of a federal agency; those
    carried out with federal financial assistance; those requiring a federal
    permit, license, or approval; and those subject to state or local regulation
    administered pursuant to a delegation or approval by a federal agency.

    Page 12 GAO- 01- 434 St. Elizabeths Hospital

    was not funded for fiscal year 2001, the estimate might have to be adjusted
    to reflect additional deterioration that likely has occurred and inflation.

    The Phase II environmental and archeological studies are required prior to
    disposal. During fiscal year 2000, GSA contracted for a Phase I
    environmental study of the west campus that was paid for with HHS funds.
    This involved analyzing records and visiting the site, but it did not
    include any test borings or soil analyses. The Phase I consultants concluded
    that a Phase II study would be needed to test various sites where sufficient
    evidence of hazardous wastes was found. The Phase II archeological study is
    a follow- up to prior work by consultants that concluded that there was
    sufficient evidence to warrant additional study because of the potential for
    finding archeological sites. If sites are found, GSA officials said they
    would be responsible for developing guidelines for mitigation measures, such
    as excavation by subsequent owners in identified areas as part of the
    disposal process. An Advisory Council official added that avoidance and
    preservation- in- place, where potential sites would remain untouched, could
    be another option. HHS, as the holding agency, is responsible for funding
    the Phase II environmental study on the basis of GSA's implementing
    regulations for the Property Act. 10 HHS is also responsible for funding the
    Phase II archeological study because of its responsibilities under NHPA. 11
    According to HHS officials, because they have funds available for the Phase
    II environmental and archeological studies, this would not require a new
    appropriation. GSA officials said that the cost estimates for these studies
    are based on prior experience with similar properties.

    GSA, as the disposal agency, is required to comply with NEPA. 12 According
    to GSA officials, due to the size, complexity, and historical importance of
    the site, this will probably mean an environmental impact statement at an
    estimated cost of $2 million, based on past experience. Similarly, the
    estimate for the land use study of $1 million is also based on GSA's
    experience with these kinds of properties. GSA said it would consider hiring
    consultants to prepare a land use study to identify reasonable land use
    options and plans to coordinate this work with the District. A GSA official
    said that, in general, GSA will consider funding the land use study

    10 41 C. F. R. 101- 47. 401- 4. 11 16 U. S. C. sect.sect. 470h- 2 and 470f. 12 42 U.
    S. C. sect.sect. 4321 et seq.

    Page 13 GAO- 01- 434 St. Elizabeths Hospital

    when it is needed and is not funded by a local community. However, an HHS
    official told us that on January 17, 2001, OMB directed HHS to provide GSA
    with funds for the land use study under a reimbursable work authorization
    and that this action was completed soon thereafter. A District planning
    official whom we interviewed expressed concern that $1 million may not be
    enough for a sophisticated, high- quality land use study.

    It is important to note that these costs do not reflect all of the federal
    government's costs that will be needed to prepare the west campus for reuse.
    For example, according to a GSA official, if industrial contaminants are
    found, which is likely, there will be costs associated with remediation that
    will be the responsibility of the holding agency pursuant to the GSA
    implementing regulations for the Property Act. 13 An HHS official said that
    these additional costs would be unknown until the Phase II environmental
    study is completed in late 2001. Another item that GSA said may require
    funding is the preparation of historic preservation covenants to be added to
    the property title when it changes hands. These covenants are designed to
    ensure the historic preservation of the property. If needed, GSA estimates
    that drawing up these covenants could cost up to $500,000 given the
    complexities of the issues at the site. This cost was not included in the
    $8.5 million estimate. GSA officials also said that because the District is
    vacating the west campus, including the buildings it owns, it would likely
    have little reason to continue its maintenance and protection
    responsibilities for the entire west campus. GSA officials said that GSA,
    HHS, and the District are in the process of developing memoranda of
    understanding that will outline responsibilities for costs and actions
    during the excess and disposal process.

    Much work needs to be done to facilitate a reuse of the west campus. Because
    HHS officially notified GSA of its intention to declare the property excess,
    the Property Act, as amended, and related GSA regulations for disposing of
    excess real property govern this process. 14 On the basis of our interviews
    with HHS, GSA, and District officials, we identified a number of key actions
    that need to take place to facilitate a reuse of the site.

    13 41 C. F. R. 101- 47. 401- 4. 14 41 C. F. R. Part 101- 47. Much Work
    Needed

    To Facilitate a Reuse of the Property

    Page 14 GAO- 01- 434 St. Elizabeths Hospital

    As mentioned before, the vacant buildings on the west campus are in a badly
    deteriorated condition, and action is needed to prevent the situation from
    getting worse. The work is needed to preserve the buildings while the excess
    and disposal process takes place; and this work is the responsibility of
    HHS, the holding agency, under the Property Act and NHPA. 15

    The District plans to vacate the west campus and likely will have little
    reason to continue providing protection and maintenance services. Therefore,
    protection and maintenance plans and funding will need to be reevaluated for
    the period during the excess and disposal process. Also, GSA officials said
    that a well- planned interim use policy could sometimes help generate reuse
    of the site, but poor conditions may not make interim use a feasible option.

    The extent of environmental remediation needed at the site is not yet known.
    However, GSA officials said that it is likely that medical wastes will be
    found and asbestos, lead paint, and hazardous substance conditions will be
    analyzed for future action. HHS is responsible for the environmental
    assessment and any required remediation under the GSA implementing
    regulations for the Property Act. 16 In addition, GSA is required under NEPA
    to consider the impact of the federal government's actions to dispose of the
    site. GSA said that the District would have input to this part of the
    process.

    Given the property's NHL designation, several historic preservation issues
    will need to be addressed as part of the excess and disposal process. At a
    minimum, HHS, GSA, the District, and the Advisory Council would be
    participants in a consultation process to address these issues. GSA
    officials told us that as the disposal agency, GSA would prepare historic
    preservation covenants, if needed, that will be part of the property title
    when it changes hands. They said that these covenants are designed to ensure
    the historic preservation of the property and will likely have an impact on
    how it is eventually used. According to an official with the

    15 16 U. S. C sect.sect. 470h- 2 and 470f. 16 41 C. F. R. 101- 47. 401- 4.
    Stabilizing and Mothballing

    the Buildings Protection, Maintenance, and Interim Use

    Environmental Issues Historic Preservation

    Page 15 GAO- 01- 434 St. Elizabeths Hospital

    Advisory Council, the covenants and the scope of restriction placed on
    redevelopment could be made flexible and would be a subject of discussion
    during the consultation process.

    GSA will consider hiring a consulting team to identify reasonable land use
    options for the west campus and intends to work with the District so that
    the District's goals for the site are considered, the necessary zoning and
    other approvals for the proposed use can be obtained, and the issue of what
    to do with the five buildings the District owns can be addressed. The land
    use study, according to GSA officials, would include a building and
    infrastructure assessment, a market and economic viability analysis, an
    assessment of financing options, and recommendations for reusing the site.

    GSA officials said that once the land use study is close to completion and
    the environmental and historic preservation requirements are fully
    understood, a disposal strategy can be developed. To help identify user( s)
    for the site, GSA goes through several levels of screening that are set
    forth in the Property Act and related regulations as the land use study is
    being prepared. The first level of screening involves determining whether
    there are other federal uses for the site. If there are no federal uses, the
    next level of priority is for the site to be screened for use by the
    homeless under the Stewart B. McKinney Homeless Assistance Act, as amended.
    17 If the site is not used for the homeless, federal agencies can work with
    nonprofit organizations that may want the site for public use, such as a
    park, museum, or educational facility. The next level of screening involves
    determining if state or local governments where the property is located want
    to acquire the site. Finally, if none of these screening processes produce a
    user, the site becomes available for public sale with full and open
    competition. GSA officials said that the west campus is a unique property,
    and the entire excess and disposal process will likely take several years to
    complete.

    A District planning official whom we interviewed had concerns with allowing
    the federal portion of the west campus to be disposed of through the
    standard excess and disposal processes outlined by the Property Act and
    implementing regulations. This official said that the District does not

    17 42 U. S. C sect. 11411. Land Use Study

    Identifying User( s) for the Property

    Page 16 GAO- 01- 434 St. Elizabeths Hospital

    oppose HHS' efforts to excess the site. However, the District official was
    concerned that the District will not have enough input on key decisions
    regarding what will happen to the site under the normal disposal screening
    processes discussed above. The District official believes that another
    approach could be to either obtain a waiver from GSA or obtain special
    legislation that would exempt the site from the screening processes so that
    a joint commission could be established to determine the best use for it.
    The regulations that implement the Property Act make reference to such a
    waiver. 18 However, a GSA official informed us that the McKinney Act
    requirements related to consideration for use by the homeless cannot be
    waived.

    The District official said that a possible approach could be a three- way
    partnership involving the federal government, the District, and possibly a
    private investor to develop the site as part of a public- private
    partnership. This official said that it is likely that the District would be
    willing to commit some funds to such a partnership because the site is
    critical to the redevelopment of that part of the District. This official
    said that the District's only concern is that the disposal is properly
    planned and that the site ultimately enjoys its highest and best use. This
    official added that although the District may not be interested in gaining
    possession of the site, it does have the greatest long- term interest in
    what happens to it. An HHS official said that the federal government will
    review the District's proposals while the excess process continues.

    The west campus of St. Elizabeths is a unique property that according to
    HHS, GSA, and District officials, is in a badly deteriorated condition. Our
    evidence suggests that a significant amount of money and much work would be
    needed to prepare it for reuse. This work includes stabilizing and
    mothballing the buildings for the period of time when the excess and
    disposal process will take place, developing plans for protection and
    maintenance, addressing environmental and historic preservation issues,
    studying potential uses for the property, and identifying user( s). The
    historic significance of the property, as well as the economic implications
    of its reuse for the District, will be key factors to be considered in
    determining the future use of the property. Attaining a successful outcome
    that is agreeable to all the interested stakeholders and is in the best
    interest of the government will be a challenging and complex task.

    18 41 C. F. R. 101- 47. 203- 5. Conclusion

    Page 17 GAO- 01- 434 St. Elizabeths Hospital

    In response to our request for comments on a draft of this report, HHS'
    Acting Inspector General, on behalf of the Department, informed us that HHS
    had no comments. Budget review staff from OMB, the Executive Officer of
    GSA's National Capital Region, a Historic Preservation Specialist with the
    Advisory Council, and the Director of NCPC's Office of Plans Review provided
    oral technical comments, which we incorporated where appropriate. The
    Director of the District's Office of Planning provided written comments that
    are reprinted as appendix I.

    The Director of the Office of Planning generally agreed with the report's
    findings and said that planning for the west campus of St. Elizabeths is
    critical to the overall revitalization goals of the District in general and,
    in particular, the area of the city where St. Elizabeths is located. In
    commenting, the Director said that the District should be the lead entity
    for the planning of the site, working in close collaboration with GSA.
    According to the Director, this was due to the critical role community
    involvement will play in the ultimate reuse of the west campus, the
    importance of weaving west campus development into the myriad planning
    efforts being undertaken in that area, and the critical role St. Elizabeths
    can play in the District's overall economic development goals.

    As discussed in the report, the Property Act, as amended, and related GSA
    regulations, govern the excess and disposal process, and GSA will have the
    responsibility for managing it. As also discussed in the report, a GSA
    official said that in general, if the local jurisdiction does not fund a
    land use study, GSA would consider funding it, as needed, as part of the
    planning process. Although GSA will be responsible for the land use study
    because it was provided with the funds for it, the Executive Officer of
    GSA's National Capital Region said that the District would have an integral
    role in the process. The Director of the Office of Planning also made other
    specific points to clarify the District's views on St. Elizabeths and we
    subsequently discussed some of the Director's comments with the Executive
    Officer of GSA's National Capital Region. Our comments on some of these
    additional points are contained in appendix I.

    We are sending copies of this report to the Chairmen and Ranking Members of
    several congressional committees with jurisdiction over HHS, GSA and the
    District; the Honorable Tommy G. Thompson, Secretary of HHS; the Honorable
    Mitchell E. Daniels, Jr., Director of OMB; the Honorable Anthony A.
    Williams, Mayor of the District of Columbia; Thurman M. Davis, Sr., Acting
    Administrator of GSA; Patricia E. Gallagher, Acting Executive Director,
    National Capital Planning Commission; and Agency Comments

    and Our Evaluation

    Page 18 GAO- 01- 434 St. Elizabeths Hospital

    John M. Fowler, Executive Director of the Advisory Council on Historic
    Preservation. We will make copies available to others on request. Major
    contributors to this report were Susan Michal- Smith, David E. Sausville,
    Gerald Stankosky, and Wendy Wierzbicki. If you or your staff have any
    questions, please contact me on (202) 512- 8387 or at ungarb@ gao. gov.

    Bernard L. Ungar Director, Physical Infrastructure Issues

    Appendix I: Comments From the District of Columbia

    Page 19 GAO- 01- 434 St. Elizabeths Hospital

    Appendix I: Comments From the District of Columbia

    Note: GAO comments supplementing those in the report text appear at the end
    of this appendix.

    See comment 2. See comment 1. Note: GAO comments

    supplementing those in the report text appear at the end of this appendix.

    Appendix I: Comments From the District of Columbia

    Page 20 GAO- 01- 434 St. Elizabeths Hospital

    See comment 4. See p. 16. See comment 3.

    See p. 17. See comment 3.

    Appendix I: Comments From the District of Columbia

    Page 21 GAO- 01- 434 St. Elizabeths Hospital

    See p. 17.

    Appendix I: Comments From the District of Columbia

    Page 22 GAO- 01- 434 St. Elizabeths Hospital

    The following are GAO's comments on the letter from the District of
    Columbia.

    1. We recognized in our report that the $8.5 million estimate- which
    includes the mothballing and stabilization costs- represents what GSA and
    HHS believed would be needed to begin the excess and disposal process and
    that more funds will be needed to prepare the west campus for reuse. We did
    not do work to assess the 1993 estimate. However, once the land use study is
    completed, the stakeholders will be in a better position to assess the
    potential costs of different options.

    2. Exploring potential financing mechanisms was outside the scope of our
    review. However, as stated in the report, the land use study, according to
    GSA officials, will assess financing options.

    3. As pointed out in the report, GSA officials said that a well- planned
    interim use policy could sometimes help generate reuse of the site. However,
    they recognized that the poor conditions at the site may not make interim
    use a feasible option. If interim use does not take place, the District's
    concern about this type of use becoming permanent would not be an issue.
    Furthermore, the Executive Officer of GSA's National Capital Region told us
    that the land use study process would seek to identify a comprehensive
    solution for the site that would be agreeable to all stakeholders and that
    would prevent a fragmented, piecemeal approach.

    4. The Executive Officer of GSA's National Capital Region told us that it
    was too early to determine with more specificity how long the excess and
    disposal process would take, but GSA intends to work with the District soon
    to develop a schedule for the process. GAO Comments

    (393013)

    The first copy of each GAO report is free. Additional copies of reports are
    $2 each. A check or money order should be made out to the Superintendent of
    Documents. VISA and MasterCard credit cards are also accepted.

    Orders for 100 or more copies to be mailed to a single address are
    discounted 25 percent.

    Orders by mail:

    U. S. General Accounting Office P. O. Box 37050 Washington, DC 20013

    Orders by visiting:

    Room 1100 700 4 th St., NW (corner of 4 th and G Sts. NW) Washington, DC
    20013

    Orders by phone:

    (202) 512- 6000 fax: (202) 512- 6061 TDD (202) 512- 2537

    Each day, GAO issues a list of newly available reports and testimony. To
    receive facsimile copies of the daily list or any list from the past 30
    days, please call (202) 512- 6000 using a touchtone phone. A recorded menu
    will provide information on how to obtain these lists.

    Orders by Internet

    For information on how to access GAO reports on the Internet, send an email
    message with “info” in the body to:

    Info@ www. gao. gov or visit GAO's World Wide Web home page at: http:// www.
    gao. gov

    Contact one:

    ? Web site: http:// www. gao. gov/ fraudnet/ fraudnet. htm

    ? E- mail: fraudnet@ gao. gov

    ? 1- 800- 424- 5454 (automated answering system) Ordering Information

    To Report Fraud, Waste, and Abuse in Federal Programs
    *** End of document ***