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				 

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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)

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