Status of the L. Mendel Rivers Federal Building Exchange	 
(26-JUN-03, GAO-03-816R).					 
                                                                 
The L. Mendel Rivers Financial building (Rivers Building) in	 
Charleston, South Carolina, has been vacant since it sustained	 
damage in 1999 from Hurricane Floyd. For several years, the	 
General Services Administration (GSA) has been working with the  
City of Charleston to negotiate an exchange of the Rivers	 
Building and its site for land and a building to be constructed  
by the City. This report responds to a Congressional request for 
information on the progress of GSA's efforts to exchange the	 
Rivers Building with the City of Charleston.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-816R					        
    ACCNO:   A07381						        
  TITLE:     Status of the L. Mendel Rivers Federal Building Exchange 
     DATE:   06/26/2003 
  SUBJECT:   Facility construction				 
	     Federal facilities 				 
	     Federal facility relocation			 
	     Federal/state relations				 
	     Charleston (SC)					 

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GAO-03-816R

GAO- 03- 816R Exchange of L. Mendel Rivers Building United States General
Accounting Office

Washington, DC 20548

June 26, 2003 The Honorable Ernest F. Hollings United States Senate

Subject: Status of the L. Mendel Rivers Federal Building Exchange Dear
Senator Hollings: The L. Mendel Rivers Federal Building (Rivers Building)
in Charleston, South Carolina, has been vacant since it sustained damage
in 1999 from Hurricane Floyd. For several years, the General Services
Administration (GSA) has been working with the City of Charleston to
negotiate an exchange of the Rivers Building and its site for land and a
building to be constructed by the City. This report responds to your March
21, 2003, request for information on the progress of GSA*s efforts to
exchange the Rivers Building with the City of Charleston. To determine the
current status of the exchange, we interviewed GSA officials and reviewed
the draft Memorandum of Understanding (MOU) between GSA and the City of
Charleston. We performed our work during May and June 2003.

GSA and the City of Charleston have developed a MOU setting forth the
terms and conditions for the exchange. Under the MOU, in exchange for the
Rivers Building, the City of Charleston would convey to the federal
government a parcel of city- owned land at 101 Broad Street and construct
a building on it to support existing federal functions. This newly
constructed federal building will be located next to the existing federal
courthouse. GSA would have to approve all plans and specifications for the
new building. The City would also construct a parking garage near the new
building that would be used in part by the occupants of the new building
but would not be part of the exchange. The MOU also states that the City
would be responsible for the demolition and asbestos abatement of the
Rivers Building. GSA will retain ownership of the Rivers building until
the new federal building is constructed at 101 Broad Street and the
exchange is completed.

According to a GSA official, the MOU was approved initially by
Charleston*s City Council and GSA*s regional office. The MOU was then sent
to GSA*s Headquarters Office of Portfolio Management and reviewed by GSA*s
Office of General Counsel. We were informed that the General Counsel*s
Office made some technical changes to the MOU, and it was sent back to the
City for the Mayor*s signature. According to a GSA official, the Mayor
signed the MOU on June 17, 2003, and the Administrator of GSA is expected
to sign it in early July.

GAO- 03- 816R Exchange of L. Mendel Rivers Building Page 2

According to the MOU, the City plans a three- phase construction project.
It would start with the construction of the new building, followed by the
parking garage and then the demolition and redevelopment of the Rivers
Building site. The City and GSA are working to develop the requirements
for the new building. Once the MOU is executed, the City of Charleston can
begin the process of selecting a developer for the new building. When
construction of the building is completed and an independent appraisal
shows the value of the new building and land is equal to the appraised
value of the Rivers Building and its site, the exchange can occur. If the
values of the properties are not equal and the City of Charleston cannot
reach an agreement with GSA to provide additional consideration to recover
the disparity in value, GSA retains the right not to complete the
exchange. According to the MOU, if the exchange does not occur by February
10, 2007, the agreement will expire, and neither party will have any
obligation to the other.

Please contact me at (202) 512- 6670, or at goldsteinm@ gao. gov, if you
or your staff have any questions. We are sending copies of this report to
the Administrator of GSA and will make copies available to others upon
request.

Sincerely yours, Mark L. Goldstein Acting Director Physical Infrastructure
(543057)

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