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THE GENERAL SERVICES ADMINISTRATION'S FY2000 CAPITAL INVESTMENT PROGRAM
Tuesday, May 11, 1999
House of Representatives
Subcommittee on Economic Development, Public Buildings, Hazardous Materials and Pipeline Transportation
Committee on Transportation and Infrastructure
Washington, D.C.
The subcommittee met, pursuant to call, at 1:00 p.m., in Room 2253, Rayburn House Office Building, Hon. Bob Franks [chairman of the subcommittee] presiding.
Mr. FRANKS. Good afternoon. The subcommittee will please come to order. I wish to welcome the Members of the subcommittee to the hearing this afternoon on the General Services Administration FY2000 Capital Investment Program. We have just one witness today, Mr. Paul Chistolini, who is Deputy Commissioner for the Public Buildings Service, General Services Administration.
The FY2000 Capital Investment Program represents GSA's investments in the buildings under its jurisdiction. This year, GSA requests new authority for $36 million from this committee to design or build five border stations and to demolish one building in Manhattan. GSA proposes to build three new border stations in the coming year totaling 145,000 square feet of space, which will take the place of three existing facilities of about 35,000 square feet, or a net addition to the building net inventory of 110,000 square feet.
The GSA also proposes to demolish a 141,000 square feet building in New York City, so the net effect will be a 30,000 square feet decline in the inventory. While I can appreciate these requests on the merits of each project, I want to explore whether this is the most effective way to bring the Federal Building Funds back to its feet, since rent from Federal buildings is the basis for providing financial health to the fund.
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We are eager to receive prospectuses for leasing authority as well today. We want to know why GSA devotes 50 percent of its building budget for the rental of space, about $2.7 billion, when it only requested new authority from in committee of just $36 million to construct new facilities, or in the case of this new year's request demolish existing facilities.
I also note that GSA proposes to repair existing Federal buildings with the budget of $664 million, of which 142 million will require this committee's authorization. These requests represent major work on 10 buildings out of a total inventory of 1,800. At that rate I am concerned about the amount of time that will elapse before we are able to modernize all the buildings in the inventory.
Our recent hearing on public-private partnerships revealed the appropriate amount of resources that should be devoted to proper maintenance for buildings as between 2 and 4 percent. As I understand it, GSA is the low end of the scale. We may visit that matter today.
I would now like to recognize the Ranking Member on the subcommittee, Ms. Norton, for an opening statement.
Ms. NORTON. Thank you, Mr. Chairman. And I am pleased to be your Ranking Member for the day. Mr. Wise regrets that he could not be here. We are pleased to receive the General Services Administration's FY2000 Capital Investment Program authorization request. We cannot help but see it as a minimalist request, the minimalist request that it is.
My years on this subcommittee tells me that that has something to do with the scoring rules, rules that we have tried to get updated to meet the way in which the private sector goes about doing investments, ways that would save the taxpayers billions of dollars.
I appreciate that this forces the GSA to be even more flexible and innovative than as its usual reputation. And, of course, GSA is known for innovative techniques as it tries to manage the facilities and real estate of the Federal Government.
Let me just indicate that I appreciate how you have dealt with two projects in the District of Columbia that are already authorized in the District of Columbia—the Wilson Building and the ATF Building, which I know is now under consideration.
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I have a great concern for how the scoring rules and the OMB tracks how you do your business, if, for no other reason, than I believe it retards GSA truly moving forward with security in the state-of-the-art fashion. I recognize that our security is not in danger, in light of what we know.
I must say, though, that when you consider that we have had to close down Pennsylvania Avenue that there are around Federal buildings what can only be called makeshift ways to make sure that cars and trucks don't get too close.
Our country simply has to face the fact that it has not put together what it takes for the GSA to be able to do state-of-the-art security. I favor a commission of experts from various layers of the society, not alone security experts, but experts in an open government, psychologists, sociologists, people with defense and security capabilities to look at the state-of-the-art for securing high profile Federal facilities in the District of Columbia and elsewhere, so that we could have a more futuristic notion of where we should be headed, rather than leaving the GSA simply to catch as catch can and guard as best as we can, and that is where we are.
I think that is a most important unattended mission of the Federal Government. And I don't think the Federal Government knows what to do, because we have not put the best minds at work on the proposition.
How do you keep an open society when you are a high-target city or you run high-target facilities? I think it is unfair to say to the GSA do the best you can with what you know, pull in advice from experts, and let us see where you go from here.
We have a pending matter, although not pending enough before this committee, on a visitor center, which did not move until two policemen were assassinated. And even then—of course, it is beginning to move now, but the fact is that even with respect to this facility, a visitor center, which was on the board for almost 10 years, didn't move until there was a great tragedy. And I believe that we need to give greater direction, and I don't think it exists within the government, because I think it needs to pull together a whole set of skills, experience, and knowledge on how to secure the Capitol of the United States and the Federal facilities located elsewhere in the United States and in the world while retaining our democratic values of an open society.
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I appreciate that 2 weeks ago the Chairman held what I regard is a very important joint hearing which he worked with the Government Reform and Oversight Committee on asset management. I think that it was a revealing and important hearing.
As to the GSA, a very relevant notion that came forward was the difference between the development capability of the GSA, which is responsible for developing Federal facilities, and those of a series of other agencies, including agencies under the executive, like the Park Service and the Department of Defense, which have the ability to go forward and develop and manage their assets in a way that GSA does not. That seems to be an anomoly and one that this subcommittee should try to fix.
Finally, let me say that last year I testified, as did Mr. Oberstar and Mr. Wise, before the President's Commission on Capital Budgeting. And we supported the creation of a capital budget to fund America's infrastructure needs which includes, of course, Federal facilities. I continue to believe that with the stalemate on scoring that we ought to move forward with doing what we do in every State in the United States and every city in the United States and, that is to say, admit that we ought to have a capital budget for the United States of America and an operating budget for the United States of America.
Thank you very much, Mr. Chairman.
Mr. FRANKS. Ms. Norton, thank you very much.
Mr. Chistolini, welcome today. And we appreciate your attendance and look forward to your statement.
TESTIMONY OF PAUL CHISTOLINI, DEPUTY COMMISSIONER, PUBLIC BUILDINGS SERVICE, GENERAL SERVICES ADMINISTRATION
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Mr. CHISTOLINI. Thank you, Mr. Chairman and Members of the subcommittee. As you know, the General Services Administration's Public Buildings Service manages over 8,300 buildings. Of that total, about 1,800 are government owned and approximately 6,500 are leased from the private sector. More than 400 of those properties are historically significant, meaning they are either on the national register of historic places or eligible for inclusion on the national register. And our tenants in these building range from the smallest of agencies to U.S. attorneys to courts to even Members of Congress.
This past March, we submitted to Congress GSA's FY2000 Capital Investment Program, which you outlined in your opening statement. The highlights of this program include seven prospectus-level design and new construction projects estimated at 92.2 million; 13 prospectus-level repair and alteration projects budgeted at 201 million; 13 prospectus-level repair and alteration design projects for future construction estimated at 17.7 million; an elevator program to repair existing elevators and escalators in five different buildings at 24.2 million; and our ongoing chlorofluorocarbon program, replacement program and energy savings program, each of those amounts budgeted at $20 million.
Our capital investment and leasing program plays a key part in maintaining our current real property assets and our ability to acquire new and replacement assets. The capital programs supports several portfolio objectives which we have. One, maximizing the Federal buildings fund income; two, minimizing the drain of unproductive and assets; three, preserving the historical and cultural assets that have been placed in GSA's trust; and, finally, managing other diverse responsibilities integral to the management of the Nation's largest real estate portfolio.
All of the proposed projects across the country are evaluated in the context of the entire national portfolio. We consider three options when evaluating our client agency requirements. These include the construction or acquisition of a new facility, repair and alteration of an existing facility, or leasing space from the private sector to meet that need.
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Generally speaking, a number of factors are considered when we evaluate and prioritize our capital program: first, the economic justification in terms of financial return and present value costs, the project timing and execution, the physical urgency based on the building's condition, the customers needs and their urgency, and historic preservation and community considerations.
In the repair and alteration program area, our first capital program priority is the repair and alteration of our existing inventory. More than 43 percent of our buildings are over 50 years of age, and 51 percent are between 21 and 50 years of age. With limited resources of the Federal Buildings Fund and an increasing aging inventory, we use a ranking process and several tools to help us determine where to allocate our resources.
For instance, we consider the following criteria when evaluating repair and alteration projects: first, protecting the safety and health of the tenants, both in owned and leased space, altering vacant space in owned space to relocate client tenants who are in leased space and get them into government-owned space, and completing planned-phase modernizations, doing them in a sequence where there is one phase followed by another phase.
Now, a specific tool we use is our return on investment methodology to determine the financial impact of each repair and alteration project. The return on investment determines if a program adds or detracts from the net income into the Federal Buildings funds using this methodology in evaluating projects, assists our efforts in strengthening the long-term physical health of the Federal Buildings Fund.
When evaluating R&A projects, we also closely examine the proposed project scopes to make sure they meet the client needs, that we are not doing unnecessary work, and that we are making the most out of potential savings from that. By refining project scopes, you can reduce your budget and therefore get more bang for the buck out of our Federal Buildings Fund.
Additional criteria we consider when prioritizing major repair and alteration projects include our ability to award a project or to accomplish it in the fiscal year that we are asking the funds for; the urgency of the project's execution, such as the imminent failure of a building system or an outstanding safety issue; the immediate need of a tenant's requirements; and, finally, the assurance that we will have swing space to move people into so that the projects are well timed, and minimize the duplication of costs.
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By applying these criteria to the decision process, we prioritize the major projects, and we ensure that the national ones get to the top of the list and are put into our funding requests.
Our new construction requests for fiscal year 2000 is rather modest. It includes five border stations, the demolition of the existing U.S. Mission to the U.N. in New York, additional funding for the Food and Drug Administration Consolidation Project in Montgomery County, Maryland. And in this year's budget, we are making note of a fiscal year 2001 advance appropriation request to the Federal Buildings Fund so we can meet the needs for both the Alcohol, Tobacco and Firearms headquarters consolidation and the FDA consolidation.
This program, excluding the advance appropriations request, will be funded entirely out of the resources of the Federal Buildings Fund. Finally, we are evaluating various options to increase funding resources for new construction and to reduce our needs for leased space.
With the 50th anniversary of the creation of the General Services Administration through the Federal Property and Administrative Services Act of 1949, we have been looking at different tools and the impact that they could have to help us better manage our assets.
We have prepared legislation and sent it to the Office of Management and Budget, who are in the final stages of clearing that legislation. The proposed legislation would give us more tools to help us manage our assets.
Mr. Chairman and Members, that concludes my formal statement. And I will be glad to answer any questions you have on our program.
Mr. FRANKS. Thank you, Mr. Chistolini. Let me begin, if I may. You mention on page 1 of your testimony, that GSA has requested $92.2 million for seven prospectus-level projects.
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Does this include the project for the consolidation of the Food and Drug Administration; and, if so, do you consider this project both a prospectus-type project; and, if so, where is the prospectus?
Mr. CHISTOLINI. We believe we have the necessary authority under a previous act of Congress, and I have copies of a legal opinion which I will provide to the committee right now which gives us, we believe, the authority to do this project.
We considered the Food and Drug Administration project a very high priority. And it allows us to get out of a lot of leased space and into government-owned space.
Mr. FRANKS. Okay. I will have the staff take a look at this. I might come back to this question. Of the 13 repair and alteration projects that are budgeted at $201 million, how many of those require committee approval, and how did GSA arrive at the decision to fund those particular projects?
Mr. CHISTOLINI. They all require committee approval. As I mentioned in my statement, we go through a very rigorous ranking process where we look at the factors I described so that we come out with projects in a ranking order based on the available resources we have. We can then basically draw our line, and the projects above the line in terms of resources are the ones for which we seek appropriations.
Mr. FRANKS. Getting into that issue a bit more, in your judgment, is GSA achieving the objectives that you outline on page 2 of your statement? In other words, are you maximizing the Federal buildings income? Are you minimizing the drain on unproductive assets? Are you preserving historical and cultural assets based in GSA trust? How would you grade yourself in those functions that you outline as priority?
Mr. CHISTOLINI. I think we are making progress towards that. We have streamlined our process for disposing of unproductive assets. We basically operate like a business these days. All of our managers look at what the funds coming into each property that we manage are, so that we know which buildings add to the Federal Buildings Funds and which buildings are a drain on the Federal Buildings Fund.
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Historical buildings are a very significant—a very important factor to us. We believe that these are national treasures. They are placed in our trust, and it is our job to keep them very productive and to keep people proud of the value that the government placed in these assets.
We are continuing to look at ways to reduce our lease inventory. Of the 6,500 leases, approximately 70 percent of them are less than 10,000 square feet.
And as vacant space becomes available in Federal Buildings, we use the resources of the Federal Buildings Fund to move people into that space. And, in fact, one of the ways we rate ourselves and one of our business objectives is the percentage of nonrevenue-producing space. Everybody is basically graded on this factor and performance awards are based on how well people reduce this type of space.
So, we have nine measures that we measure ourselves on, and our ability to reduce vacant space and make it revenue-producing space is very important to us.
Mr. FRANKS. Among the strategic objectives that you seek to meet, could you tell me in the hierarchy of values where building security fits?
Mr. CHISTOLINI. You know, building security is integrated in several of our objectives. I consider one of our objectives is to promote responsible asset management. Security is certainly interlinked into any program you have for managing assets. Another one of our objectives is customer service. It is very hard to engage in a conversation today with a customer or a potential customer without the item of security coming right to the forefront.
And, for instance, in the District of Columbia here in recent months, security at the Ronald Reagan Building has been an issue, at least it has been an issue to some people. It is one of our priorities. But all of those discussions with customers and excelling at customer service, security is certainly one of the things we put a very high priority on.
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Mr. FRANKS. Could you describe the legislation that GSA intends to submit regarding amendments to the Property Act.
Mr. CHISTOLINI. I think it can be summarized by saying it makes it easier to do responsible asset management. It would provide us the ability to retain proceeds if we dispose of an asset. It would allow us to retain the proceeds in an easier fashion if we outlease vacant or underutilized Federal space.
To me, most importantly, it would allow us to enter into some public-private partnerships, which would allow us to leverage our resources to get out of leased space and get into more government-owned space.
I consider this comparable to what Ms. Norton mentioned in her statement about what State and local governments are doing all over the country.
Mr. FRANKS. Even though the renovation of the old courthouse in Savannah is not on the list for funding, could you apply the return on investment methodology to this project and show us how this project could meet that test?
Mr. CHISTOLINI. I would be glad to provide that information. I would like to say that, or add that, the historical nature of the old building is what I would consider to be one of those historic trusts that has been placed in our keeping, and the preservation of that asset is very important to us. This gets considered when we make our decisions on funding of projects, not only the return on investment numbers but also the nature of the asset that we are working on.
Mr. FRANKS. Thank you. I would like to recognize my colleague, Ms. Norton, who will not be bound by the 5-minute rule.
Ms. NORTON. Thank you, Mr. Chairman.
First, Mr. Chistolini, let me express my disappointment that for the third year in a row, there has been no funding requested for courthouse-related projects and that the Chairman has had to postpone indefinitely a special hearing on the courthouse construction program.
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I recognize what the constraints are. But, again, we are heading to where we were when I first came into this committee, a backlog of courthouses. And they run in and say we can't do our business and we can't have hearings and London Bridge is falling down. So it is a problem.
I have myself done something very unusual, which is to write to Chairman Franks and to Ranking Member Wise on the importance of the E. Barrett Prettyman Courthouse here in the District of Col
umbia, which obviously is the highest profile courthouse with the most security concerns in the country, because it hears—and alone hears--certain kinds of cases that relate to special security matters in our country. That courthouse, I don't believe, is unsecured; but it is a courthouse that needs attending to.
I would like to submit my letter to the Chairman and the Ranking Member for the record.
I would also like to ask you about the memorandum you submitted regarding the FDA consolidation. I appreciate having that memorandum for the record.
I note that the project at White Oak, Maryland, was authorized in 1990. That is before I came to Congress. I was elected then but began here in 1991. I wonder how much of the FDA was already in Maryland at the time that consolidation was authorized by this committee and by the Congress.
Mr. CHISTOLINI. I think virtually all of it, with the exception of, I believe, their facility here on 3rd and D Street.
Ms. NORTON. It was already in Maryland?
Mr. CHISTOLINI. Yes. There is a large contingent of FDA facilities in Montgomery County, as well as Prince George's County.
Ms. NORTON. I constantly get questions—and I should not say constantly—occasionally get questions about why FDA is moving out, and the first thing I say is FDA has moved out.
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Mr. CHISTOLINI. Another point, if I could add, the majority—the vast majority of it is in leased space. So getting laboratory facilities into government-owned space is good asset management.
Ms. NORTON. And, of course, that is your policy. It is also the case that there is not enough room in the District of Columbia for facilities that want to remain here. And my problem in the District of Columbia is not convincing people to remain here, but finding space for them when they want to remain here. Which brings me to my Southeast Federal Center question.
This, of course, is the biggest example of waste in your portfolio, because we have 55 acres of government-owned land, 5 minutes from the Capitol, that this committee has authorized to be used for Federal facilities and has made more attractive with an authorization for the building of facilities there that would make it more attractive for Federal employees.
Because the Federal Government itself in this authorization would build the infrastructure for restaurants and other amenities, not as if this is a waste land of some type. It is 5 minutes from the Capitol. It does have a brand new subway stop, but it is certainly the case it is not K Street and, therefore, the loss leader ought to be who owns the land.
And, of course, who owns the land is the Federal Government at the time when you are literally at your wits' end when it comes to space in the District of Columbia, and even nearby here at an affordable rate at a time when many, many facilities are in leased space.
Can you indicate to me why the Federal—the Southeast Federal Center continues to go unused?
Mr. CHISTOLINI. Well, I guess many of us are also disappointed that we have this 55-acre tract sitting on a Metro, sitting on the waterfront one mile from the Capitol as you drive down New Jersey Avenue. It is a wonderful asset. We have tried to get—do to public-private partnership. We have—until we included the language in this latest rewrite of the Federal Property Administrative Services Act been unsuccessful. With some of the other attempts—we have tried to do ground leasing there--we have run into the scoring rules.
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So our ability to maximize the development on that site has been hampered by, in one way, scoring. Back, I believe, about 1990 or 1991, there was an appropriation to do a building down there for the Corps of Engineers. It would have been their headquarters.
After we got the appropriation, the project tended—well, the project did die for a number of reasons, and the funds were reprogrammed to something else.
So many of us are just as disappointed that we have haven't been able to get something going. We haven't lost interest in it. We have in the past several years sought and received an appropriation to do environmental cleanup. We have utilized a number of small businesses, contractors.
We have, I believe, spent between 15 and $17 million to date, doing environmental cleanup of that area, so that when we get the economic tools to do the development, I think the site will be in much better shape for that.
Ms. NORTON. Well, that is certainly the case that you have moved ahead with the environmental cleanup, and each year I have written to you and gotten excellent cooperation from the Appropriations Committee to appropriate the funds; and the last remaining installment, or the last $10 million, was appropriated for use this year.
You mentioned Federal agencies; and the problem that occurred with the Corps of Engineers, which is not mentioned, is a failure to get other agencies to come, such as the Department of Justice, that was looking at it at one point.
And the real stalemate here—I mean, if taxpayers continue to want to pay for the preferences of Federal agencies, you know, be my guest. But essentially, if a Federal agency says, sorry, don't want to go there, I like it better in the middle of town, GSA says, well, there is nothing we can do, we are going to leave you where you are, we are going to continue to pay in leased space when we own this space. This is the kind of stalemate, Mr. Chistolini, that I cannot understand.
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Is there not anything in your statute which would say to multiple agencies—and that is what you have, multiple agencies—that said, sorry, treat me as if I was a private tenant; and I say to you, Mr. Government, who is paying the rent, pay it, because I am not moving; and you say, fine, I guess there is nothing we can do about it.
I mean, is there no way to breakthrough that so the taxpayers are not paying rent when we could have them in land we own? How do you continue to justify that, either if there is nothing in your authority asking us for more authority, or if there is authority, why aren't you using it to get somebody occupying those 55 acres down there of prime land, which if a developer had it, if a private developer had it, he would think Christmas had come, because he would be on the Anacostia in the Nation's capital, and he would just see himself getting rich by the moment?
Why are you—not you—at least making the taxpayers rich, richer, by putting some Federal agencies down on land that the United States of America owns?
Mr. CHISTOLINI. Well, I think you have highlighted one of the difficulties and, that is, that agencies have been very reluctant to be sort of a homesteader. I know in my days in the National Capital Region trying to get agencies interested down there, a number of them were interested.
It always seemed that the way people would move there is that you had to have such a very large appropriation that you could deliver an entire project of multiple agencies, retail space, and all of that at once; and that always ran into several hundreds of millions of dollars, which, you know, we really had no vehicle to get there.
I am hopeful that with language and authorities that would allow us to do public-private partnerships, different types of financing, we could build on just what you said, that a developer would look at this as a very large opportunity to bring a real mass of activity there. You only have to look to the adjacency of how the Navy is developed that over the years. They have continued to bring people there.
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And as part of the base closure in 1991 or 1992, a lot of elements that were previously in leased spaced in Crystal City are now being housed and will be housed in their properties there. But they were able to get a large infusion of cash. They had an existing customer base, if you will, which they simply added to. I believe when they get down, they will have close to 10,000 Navy workers there.
Ms. NORTON. Would you—you mentioned a public-private partnership. Would you support a Presido-type development at the Southeast Federal Center where you get—I mean, I am sure you are aware of that, of that development in California, to move this project along?
Mr. CHISTOLINI. Well, I think both the Commissioner and I support some sort of legislation that would give us more authority to do that. I hope we wouldn't take as long as the Presido, although we haven't done a very good job so far.
Ms. NORTON. How about the DOT? We are always told the DOT, which has been desperate for headquarters, huge agency there, can't find much space in the District of Columbia what about—and I had not understood that they had turned down the Southeast Federal Center. What is the status of the DOT?
Mr. CHISTOLINI. Well, we have authority to lease space, to do a very large lease procurement for 1.3 million square feet for DOT. We are in the process of developing that solicitation for offers.
Ms. NORTON. Good luck. They have to remain in the District of Columbia; they are a Cabinet agency. This is a small, compact city. Unless we—I mean, if there was a public-private partnership, of course, a Federal agency could be there as well.
I think that the committee, Mr. Chairman, should not stand for a single other year without making some disposition of that property one way or the other.
Mr. FRANKS. Will the gentlelady yield.
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Ms. NORTON. I will be glad to, Mr. Chairman.
Mr. FRANKS. You have got my attention on this, Ms. Norton. I am dumbstruck by the fact that we own a parcel of property this large one mile from the Capitol and would appreciate if you would lead the subcommittee on a field trip to that location so we can personally make an inspection of it over the next couple of weeks.
Ms. NORTON. I very appreciate the Chairman's interest; and I think that is what it would take to begin a breakthrough of this issue. People were just numb to it. Mr. Chairman, they have been sitting on a property for so long. I guess if you sit on a gold mine long enough, you forget it is a gold mind. I would be happy to arrange that, with only one further question. It has to do with—you mentioned historic preservation and community consideration.
I know the GSA goes before our local historic preservation and goes before our advisory neighborhood commissions. And I know that it is always a burden to go before any additional commission. They have only advisory authority, of course. Have you found that they are sometimes helpful? Have you found it to be too burdensome to go before these local commissions?
Mr. CHISTOLINI. I haven't found it to be burdensome. I found it to be a very useful mechanism of communicating what we are trying to do. Advisory committees, NCPC, Fine Arts, all of the people, some who have some approval, some who have advisory, I believe add to the process. And to me, the single thing that they add is this communications link, because those organizations are very good at getting the people who need to know into one area where you can make your presentations.
As we have done with this FDA project and projects we have done in the College Park area, the communities bringing those people together made it much easier for us to tell people what we are going to do it, when we are going to do, and what the impact on the community is.
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Ms. NORTON. Thank you very much. It is important to have your input here. Mr. Chairman, what is not known, I think generally, is that when the Republican majority came in, although the House had passed, the Senate had not passed the Congressional Accountability Act. And under that act, this Congress put itself under the same laws as the rest of the American people and businesses.
One part was left out, and that was the architect of the capitol, who is our agent. Now he is under our Congressional Accountability Act for the EO laws and those kinds of things, but not for building in the community. The Natural Resources Committee is trying to bring them under with respect to historic preservation.
I just wanted to get on the record, Mr. Chistolini—he didn't know what I was going to ask, whether or not simply going before what are only advisory committees, they can't make you do anything or stop you from doing anything.
Your answer is important to me, because what he stresses is that, if nothing else, you get this communication going so you don't get a Federal facility in the community, all kinds of hostility for no reason, the architect of the capitol that preceded this architect had a problem arise at 6th Street and North Capitol, 6th Street and East Capitol when you were taking over a Catholic school that had been abandoned for the Library of Congress.
Well, the community was glad to have somebody take an abandoned school, but they were worried about parking and what it meant. Well, the architect—this is even before the Congressional Accountability Act—the architect said, let me go out and talk to them. By simply talking to them about the kind of facility it was, making arrangements for parking, it is now seen as one of the great things that the Congress of the United States has done in the community.
So this committee has always, and the GSA has, so far as I know, always had that kind of relationship to the city. The Capitol Hill community is a very sophisticated community and understands the importance of having Congressional facilities. So I appreciate that you have been able to elucidate what it has meant for the GSA, which probably would be as much as involved in putting facilities in the community as any agency.
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Thank you, Mr. Chairman.
Mr. FRANKS. Thank you. Mr. Shows.
Mr. SHOWS. I have no questions.
Mr. FRANKS. Okay. Let me ask a couple more. Mr. Chistolini, what is the status of the 11B requests for the consolidation of the FDA?
Mr. CHISTOLINI. Based on the latest information about how the FDA project would go, we now have the data, I hope, with FDA. They are reviewing the requirements to make sure that that is what will happen—is what they need. This project is estimated at anywhere from 450 to $600 million. So it is very important to get those requirements. We expect them to transmit those requirements back to us next month, and then we will submit the 11B.
Getting those requirements back will give us the opportunity to update the estimates and give you the best information. So we will probably—my best guess is that you won't see it until the end of June.
Mr. FRANKS. Thank you. What is the current vacancy rate in the inventory, first, owned property versus leased property?
Mr. CHISTOLINI. It is around 10 percent in owned space. And then leased space, it is less than half of that. And as I said that is one of the measures that we apply to our managers, their ability to reduce that vacant space and turn nonrevenue-producing space into revenue-producing space.
Mr. FRANKS. What is the value of that lost rent?
Mr. CHISTOLINI. I will provide that for the record so I can be more accurate. I would be guessing right now.
Mr. FRANKS. Ms. Norton?
Ms. NORTON. No further questions, Mr. Chairman.
Mr. FRANKS. Okay. If GSA expends its Federal Buildings Funds for the FDA consolidation, could you expect those facilities to remain in your inventory?
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Mr. CHISTOLINI. Yes.
Mr. FRANKS. And they will earn rent.
Mr. CHISTOLINI. Let us see if I understand the question. If we expend our resources and build them, they would remain in our inventory. That is correct.
Mr. FRANKS. I apologize, Mr. Chistolini. I was going to let you go a little early. I am going to ask a couple of questions about the U.N. Mission, our Mission at the United Nations. You are requesting just over $4 million to demolish the existing building, that amounts to about $40 a square foot. Is that in line with the costs for demolition in New York City?
Mr. CHISTOLINI. Yes, I believe it is. This is a very unique site. The staff members who traveled there last year know that we are right across the street from the United Nations building. It is a very tight site. It will be very difficult to clear out a building, and that estimate is in line with that.
I might add that this morning at the Senate Environment and Public Works there was a voice vote which authorized this project. And they, too, had expressed concerns about the costs, as well as the need for the project; and they also accompanied us last December, I believe, to New York. And we got a firsthand chance to see that building and why a new building is needed.
Mr. FRANKS. Do you foresee any resistance by New York City to this project; and, moreover, are there any pending suits or complaints by neighboring owners about the possibility of disruption in this part of the city?
Mr. CHISTOLINI. No. I think the city will welcome the new building, because it tends to anchor our presence there for a much longer time period. I am not aware of any pending suits or any legal action. I know that our regional office has had a few conversations with adjoining tenants about what our long-range plans are, sort of letting the neighborhood know what we are going to do.
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Right adjacent to the site on the south side is basically a glass hotel, so doing a demolition project in Manhattan that close to a very sensitive construction site adds to that particular cost.
Mr. FRANKS. Are we to assume that the State Department tends to stay at the Waldorf for the considerable future?
Mr. CHISTOLINI. I believe that in the letter they transmitted to me about their long-range plans that, for a couple of reasons, providing housing for the Ambassador outside of the building, whether it be the Waldorf or anyplace else, is in the best interest both in terms of security, work space, added costs.
The arrangement that the State Department has with the Waldorf is quite unique in that they get a lot of extra features. There are some built-in security items. They have access to other facilities within the place, within the hotel. And, overall, I think the cost is pretty competitive for providing 4,000 square feet in New York.
Ms. NORTON. Mr. Chairman, would you yield for a moment?
Mr. FRANKS. I will.
Ms. NORTON. Talk about rented space.
Mr. FRANKS. I have always wanted to go to the Waldorf. Maybe I should change career paths.
Mr. CHISTOLINI. I believe the staff members who went last year who toured the place were singularly unimpressed with what they thought was going to be there compared to what I will call—it is not exactly spartan, but since most of the furnishings were provided by the State Department, you know, it is, you know, liveable.
Mr. FRANKS. Let me move over to Oklahoma City, if I can. The costs of the land is estimated to be at about $8 million for approximately two city blocks. Let me ask you again, is that cost in line with the real estate values in Oklahoma City?
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Mr. CHISTOLINI. It is, sir. And within that $8 million is also the funding for any relocation of people we have to move off of those sites, and there are a number of tenants already on those sites. And so within that $8 million, it includes the relocation costs, as well as the costs of acquiring those sites.
We will be briefing city officials from Oklahoma City later on in this month. I believe it is the 27th or the 29th of this month. We have had an excellent working relationship with the city so far.
Mr. FRANKS. Two questions. You indicate that the $8 million reflects the costs of both the real estate and costs for relocation of existing tenants. Can you break that out for me?
Mr. CHISTOLINI. I don't believe there is a specific breakout, but I will provide that for the record if we have estimated the difference between the two. I know that to stay within that budget, we have made some decisions about siting. For instance, a 3-block acquisition would have cost more than $8 million. So we believe we can do the two-block acquisition, relocate the tenants, and provide enough space to have a building that will have proper setbacks and provide parking and have a very nice urban setting for the city.
Mr. FRANKS. Do you expect the city to close any streets in support of this project?
Mr. CHISTOLINI. Yes, they have indicated a willingness to close the street between the two blocks that we are going to acquire and that this would fit into the overall urban plan for the city.
Mr. FRANKS. Are the Federal agencies that will be involved in support of this project?
Mr. CHISTOLINI. Yes. The tenants, the Department of Interior, and Housing and Urban Development, are the major tenants that will be in that building.
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Mr. FRANKS. And they are fully on board?
Mr. CHISTOLINI. Yes.
Mr. FRANKS. Let me move briefly to the border program, if I might. The construction request that you have made for this program shows some considerable increases. Could you help explain those increases?
Mr. CHISTOLINI. There are several factors that are involved in increases in the border program. One, a lot of the estimates were prepared back in 1995-96 and so we have some national inflation to the year 2000.
Two, a lot of these sites are remote. When some of these were first brought before me, the first thing I have to do is break out a map and try to find the highways where these sites are located. So there are a lot of additional construction and transportation costs in bringing materials to a border station.
At the same time, we always do these in partnership with either Mexico or Canada. And so we have long-range agreements; and what we try to do is acquire enough land so we will only have to do this one time and that we are able to project growth. If in the future the station grows, particularly those along the southern border, that we can then accommodate the traffic flow and the increase of employees that are necessary to deal with the goods and people that move across the service without having to start from scratch.
Mr. FRANKS. Let me ask a couple of questions about vacant space, if I might, just for a second. How does your GSA vacancy rate compare to the vacancy rate in the private sector?
Mr. CHISTOLINI. Depending on the market, in some markets we are very competitive, and other markets, we are above that. Generally, for leased space across the country, we are fairly—we are competitive with—in fact, we are probably lower than some of the big producers. What drives a lot of our government-owned space are relocations of military facilities, large blocks of warehouse space that are just no longer used, or underutilized. Some of our depo facilities have a lot of excess space.
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Mr. FRANKS. How does the vacancy rate of 5 years ago compare with today's?
Mr. CHISTOLINI. I think in leased space we have less and in government-owned space we have slightly—about the same. It has been kind of cyclical. And I will provide you that data for the last 5 years.
Mr. FRANKS. Seeing no further questions, Mr. Chistolini, thank you very much for your testimony today.
Mr. CHISTOLINI. Thank you, Mr. Chairman.
[Whereupon, at 1:59 p.m., the subcommittee was adjourned.]
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