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72–811 PDF 2012

ONE YEAR LATER: 

STILL SITTING ON OUR ASSETS 

(112–72) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND 

EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

FEBRUARY 9, 2012 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JOHN L. MICA, Florida, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

FRANK C. GUINTA, New Hampshire 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

REID J. RIBBLE, Wisconsin 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

NICK J. RAHALL II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY

MANAGEMENT

JEFF DENHAM, California, Chairman 

TIMOTHY V. JOHNSON, Illinois 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas, 

Vice Chair 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

JOHN L. MICA, Florida (Ex Officio) 

ELEANOR HOLMES NORTON, District of 

Columbia 

HEATH SHULER, North Carolina 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

TIMOTHY J. WALZ, Minnesota 

DONNA F. EDWARDS, Maryland 

BOB FILNER, California 

NICK J. RAHALL II, West Virginia 

(Ex Officio) 

(III) 

CONTENTS Page 

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

TESTIMONY 

Hon. Robert A. Peck, Commissioner, Public Buildings Service, U.S. General 

Services Administration ...................................................................................... 4 

PREPARED STATEMENT SUBMITTED BY WITNESS 

Hon. Robert A. Peck ................................................................................................ 28 

SUBMISSION FOR THE RECORD 

Hon. John L. Mica, a Representative in Congress from the State of Florida, 

request to submit the following article: Steven Pearlstein, ‘‘Heartbreak 

Hotel,’’ Washington Post Magazine, Aug. 25, 2002, at 15 ................................ 36 

iv 


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(1) 

ONE YEAR LATER: 

STILL SITTING ON OUR ASSETS 

THURSDAY, FEBRUARY 9, 2012 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC

BUILDINGS, AND EMERGENCY MANAGEMENT, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:35 p.m. at the 

Old Post Office Building, 1100 Pennsylvania Avenue, NW., Hon. 

Jeff Denham (Chairman of the subcommittee) presiding. 

Mr. DENHAM. The subcommittee will come to order. Let me welcome the public buildings commissioner, Bob Peck. 

Thank you for joining us here this afternoon. I want to congratulate you, first of all, on the start of a new development here. That 

is one of the things that has changed since a year ago today. We 

certainly want to cover a number of other topics. The other thing 

that has changed is it is a lot warmer this year. 

So I also want to thank Chairman Mica for being here today, and 

thank him for his leadership in addressing the Government’s gross 

mismanagement of Federal real estate. I am very pleased and excited that finally we have some good news when it concerns the Old 

Post Office. It is a major step in turning around this property, and 

a real success for the chairman’s efforts. 

I look forward to learning more about the selection of the Trump 

Organization today. I am also interested in learning what other 

progress and setbacks GSA has made in the last year to reduce the 

amount of vacant and underutilized property nationwide. 

One year ago we met in this building to highlight the waste of 

taxpayer money on vacant and underutilized Federal buildings. We 

chose the Old Post Office because it is a symbol of a larger national 

problem, and how the system for solving it is broken. If the taxpayer can lose $6 million a year on prime Pennsylvania Avenue 

real estate halfway between the White House and the Capitol, then 

similar properties must be sitting all across the country. 

In this case, Congress held multiple hearings and passed two 

laws requiring the redevelopment. Yet years and years passed before we could get to the point of announcing a redevelopment team. 

The bottom line is the system is broken, and we need a new process to sell or redevelop these properties. It was in our hearing last 

year that I first proposed using an independent commission to 

identify properties for sale and redevelopment, and forcing Congress to give them an up or down vote. 

2 

Since that hearing I drafted and introduced the Civilian Property 

Realignment Act. And just this week, the House passed H.R. 1734, 

the Civilian Property Realignment Act, with bipartisan support. 

That legislation will literally shrink the Federal footprint by selling 

or redeveloping high-value properties that are underused and burning a hole in the taxpayer’s pocket. 

In addition, since our hearing last year, the administration di- rected Federal agencies to save $3 billion by selling or consolidating Federal property. We want to hear about the progress that 

GSA has made, how many buildings have been sold, what were the 

sale proceeds, and how long will it take to work through the backlog of excess properties at that rate. 

Over the years, the committee highlighted several large underutilized properties. And, as far as we can tell, GSA has done little 

to sell, redevelop, or refill them with Federal employees. For example, the Dyer Federal Courthouse continues to sit completely empty 

in Miami. In the New York City area a huge Federal building has 

been 50 percent underutilized for almost a decade. In Washington, 

DC, the Cotton Annex sits empty on property CBO valued at $150 

million. 

And then there are those examples where GSA is spending millions of dollars in taxpayer—will end up with even more vacant or 

underutilized property. One of those examples that I have continued to highlight, in Los Angeles GSA intends to spend $360 million 

and completely abandon a 700,000 square-foot courthouse and a 

significant portion of a Federal building. 

In Norfolk, Virginia, we recently learned GSA was sued for condemning private land to build a courthouse that we don’t need and 

don’t have the money to construct. From our perspective, it appears 

GSA is selling or redeveloping a few properties, making little 

progress on most properties, and spending millions to add to our 

excess property inventory. 

On balance, I am not sure if our excess inventory problem is 

growing or shrinking, something we certainly want to hear about 

today. And on top of all this, GSA has failed to respond to committee requests for basic financial information about GSA’s budget. 

While I am pleased GSA has taken an important step to redevelop 

the Old Post Office, I am very concerned about what GSA is doing 

with the rest of its inventory. 

Again, I thank Mr. Peck for being here today. And at this time, 

Chairman Mica, I would like to recognize the full committee chairman, who has been a real leader in addressing this problem of 

wasteful Federal properties. 

Mr. MICA. Well, thank you, Mr. Denham, Chairman Denham, 

and thank you for your leadership on this important subcommittee, 

and following through. So often in Congress, people hold a hearing 

and not much gets done. Sometimes things warm up as a result of 

the rhetoric, and the heat—sometimes things heat up. And we are 

here on a warmer day than we were 1 year and 1 day ago. 

And things are looking brighter. And I thank Mr. Peck for his 

cooperation. GSA—there is nothing like a hearing to motivate action. I think we called a hearing, and then suddenly after a year 

there was a concurrent announcement that we would—they would 

enter into negotiations with one of those who had expressed interVerDate Aug 31 2005 14:50 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-9-12~1\72811.TXT JEAN
3 

est. That took a year. It was a bipartisan effort. Ms. Norton isn’t 

here, her staffer is here. But we want to say that this isn’t just a 

Republican idea or a Democrat idea. This is an idea for the American taxpayers. 

Now, Mr. Denham, maybe if this one hearing has got this—or 

two hearings have gotten this project going, I am told there are 

14,000 properties on the excess property list, and thousands more 

that are half-empty. So if we do five hearings a day for the next 

year, we might get rid of some of the inventory. 

But actually, I have to congratulate—this young committee 

chairman took on this issue, didn’t stop. And this past week passed 

through the House of Representatives the Civilian Property Reform 

Act, H.R. 1734 this week that will make a difference. And sometimes it is difficult for bureaucracies to move. Sometimes Mr. Peck 

and GSA is caught in the middle. But we are going to stop any of 

the delays that we can and try a way to expedite disposal, better 

utilization, whatever we can do to get the taxpayer a better deal. 

This project here—and we want to hear more about it, we don’t 

know all the details—we have got to make certain it is a successful 

project. There was an attempt before that wasn’t successful. I 

would like to know why it took a year. I have been in real estate 

and real estate development. We need to shorten that. It shouldn’t 

take more than 6 months to put out an RFP and get people to move 

forward in these projects, or less. In the private sector it can be 

done. And now we understand the negotiating time is about a year. 

We want this expedited, but we want to make certain that the public interest is protected in this. This isn’t some program to benefit 

anyone in the private sector. This is protecting public assets. 

This project alone can stop the bleeding of between $6 million 

and $10 million of taxpayer money, hard-earned taxpayer money, 

going out the door to support an empty building and a half-empty 

adjacent building. This project alone has the potential for putting 

1,000 people to work. It is two blocks—what is it, three blocks— 

to the White House, sitting here vacant and half-vacant for over a 

decade. And we have got to find a way to do better and make certain that we are on the receiving end. This project can actually 

make money for the taxpayers, put revenue in our depleted coffers. 

So the other thing, too, is we have got lots of places where we 

can hold these hearings. Mr. Denham, I suggest the Cotton Annex, 

89,000 square feet, probably no heat there. Maybe we could do it 

in a few weeks, when it warms up a little bit more. But here is 

another building. And then we hear reports—here is a building 

half-empty, 900,000 square feet, Social Security Administration office in Jamaica, New York. 

So we have got examples not only here in the capital, but 

throughout the United States, thousands of opportunities to stop 

sitting on our assets and turn those assets into something that can 

benefit the American taxpayer who is on the hook for all of this inactivity or lack of attention or lack of initiative in moving forward 

to make these properties and these assets valuable again for return. And when you are approaching a $17 trillion deficit, every 

one of these opportunities that are missed is sad for the people of 

the United States and their future. 

4 

So, with that, we do have a number of questions, and we want 

to express our, again, gratitude for GSA moving forward here. If 

there are any impediments that we can help them with that would 

make this go faster, and then ensure the success of this project. 

One announcement for the ladies waiting in the back. Donald is 

not coming today, so you just got me. Sorry. But hopefully he will 

be successful when he and his development company take this 

project and turn a very rough, rough stone into a diamond. Thank 

you. 

Mr. DENHAM. Thank you, Chairman Mica. Today we have just 

got one panel: Mr. Robert Peck, Commissioner of Public Buildings 

Service, U.S. General Services Administration. First of all, I would 

like to welcome our witness and thank him for being here today 

and making this space available for the hearing. I ask unanimous 

consent that our witness’s full statement be included in the record. 

[No response.] 

Mr. DENHAM. Without objection, so ordered. Since your written 

testimony has been made part of the record, the subcommittee 

would request that you limit your oral testimony to 5 minutes. 

Mr. Peck, you may proceed. And before you proceed, let me just 

say for the record you and I have had many different conversations, and I appreciate the open dialogue that we continue to have 

to make sure that this property, as well as others, continue to move 

forward. 

TESTIMONY OF HON. ROBERT A. PECK, COMMISSIONER, PUBLIC BUILDINGS SERVICE, U.S. GENERAL SERVICES ADMINISTRATION 

Mr. PECK. Thank you, Mr. Chairman, and also Chairman Mica. 

Good afternoon. I am—I was going to say I am not totally happy 

to be back here, because I still prefer to be in warmer space, but 

it is better than last year. I want to thank you for the opportunity 

to join you here today at the Old Post Office to discuss the progress 

we have made this year in pursuing the redevelopment of this historic property, and also the progress we have made on surplus 

property around the country. 

I hope I will have an opportunity during the course of my testimony and answers to questions this afternoon to correct some of 

the mischaracterizations which I am afraid I have heard from the 

committee today and other times about the nature of the surplus 

property and our efforts. But as you noted, mostly we are working 

together very well. 

I want to congratulate you, Chairman Denham and Chairman 

Mica, on the passage in the House of the CPRA legislation. As you 

know, the Administration expressed some concerns about the legislation, but we are eager to continue working together and see if we 

can make that legislation a reality. 

As you know, we announced on Tuesday the selection of the 

Trump Organization as the preferred developer to redevelop this 

facility, the Old Post Office Building in Washington. And we are 

excited to reach this important milestone in the project. 

I would like to take a moment to remember a dear colleague, Pat 

Daniels, who worked many years as a dedicated contractor for GSA 

on this redevelopment project, and also on the Southeast Federal 

5 

Center. Pat took ill suddenly last year and passed away 3 weeks 

ago. And it saddens me that she is unable to see this great result 

of her dedicated efforts. 

This project is only one example of GSA’s ability to effectively 

utilize our owned and leased building portfolio. GSA is a leader in 

Government asset management of buildings. We are building on 

our successes with aggressive efforts to deliver new and innovative 

workplace strategies that will improve utilization even more. 

One thing I would like to just note now to—also to correct some 

misimpressions I think that the public may have, is that while the 

annex we are sitting in is vacant—and, as you can see on the chart 

I brought, has 53,000 rentable square feet—the Old Post Office 

Building itself, the historic building, which you see there, and all 

of that building which you can see—the annex is located way in the 

back, in a courtyard—the building is actually fully occupied by Federal tenants, Federal office tenants, and by retail. 

This building, interestingly, in the 1980s was a public-private 

partnership. We select—GSA at the time selected a private developer to do the retail. For all kinds of reasons it was successful for 

a while, and then not. And it—but to make a very long story short, 

it is time to take another shot at this building, and we think we 

have a much better way forward. 

Over the last decade GSA has successfully implemented a restructuring initiative to right-size our portfolio. Since 2005, GSA 

has returned disposal proceeds totaling almost $244 million. Last 

year alone we sold 14 public building service properties, returning 

$17 million to our building fund. Additionally, GSA continues to 

make progress on our aggressive goal of saving $450 million by fiscal year 2012, the end of this fiscal year, in real estate costs, which 

was put in place by the President in his June 2010 memo, ‘‘Ordering Federal Agencies to Dispose of Unneeded Federal Real Estate.’’ To date, GSA has saved more than $300 million toward our $450 

million target. We are on target to make the September 30th deadline. And we understand other agencies are meeting their targets 

as well, so that we will make or exceed the President’s $3 billion 

target. 

GSA has also led Federal efforts to utilize Government-owned 

space more effectively. Modernizing our own headquarters is an example of these efforts. Once the first phase of our modernization 

project at 1800 F Street, NW., is completed, GSA will move in 

other offices currently housed in leased space, which will significantly increase utilization and save taxpayers nearly $7 million annually in leased costs. 

During this renovation, we developed a laboratory to experiment 

with new technologies and solutions for alternative workspaces, 

such as hoteling. An entire PBS division of 87 people, for example, 

now occupies a space that previously sat only 43. This space comprises various types of workspaces designed to increase collaboration, improve productivity, and save energy. GSA is also assisting 

our customers and optimizing their space through client portfolio 

planning. We help them identify utilization opportunities to reduce 

costs and the Government’s footprint. 

Unfortunately, Mr. Chairman, our efforts have been hampered 

by our inability to get our lease prospectuses authorized. In our fisVerDate Aug 31 2005 14:50 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-9-12~1\72811.TXT JEAN
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cal year 2011 program alone, there are 20 lease prospectuses still 

under consideration. All of these lease prospectuses have been 

pending for at least a year, and, in many cases, much longer. GSA 

has proactively gone back and worked with Federal agencies to reduce lease requirements. 

Since the initial submission of our prospectuses, we have reduced 

these agencies’ total leasing needs by over 600,000 rentable square 

feet, with possible savings of over $26 million annually. GSA 

worked with the Department of Justice, for example, to reduce 

their space request by almost 83,000 rentable square feet, saving 

over $4 million a year. Most of these leases represent replacements 

for existing space that, if not acted upon, can fall into holdover, 

costing taxpayers significantly more, and negatively affecting private-sector landlords. I am hopeful we can work with this committee to move these prospectuses forward as soon as possible to 

realize these savings. 

In addition to improved leasing practices, we have successfully 

used our out-leasing authorities to improve the use of our properties, including redeveloping this building. The Old Post Office 

serves as an important landmark here. In 1982, Federal funding 

for renovation was combined, as I noted, with a private-sector outlease that provided for a retail pavilion. That lease was amended 

in 1989 to provide for construction of this annex, which, as you 

know—which, as we all know, never succeeded. 

We did issue a request for proposals in March of 2011 to pursue 

a redevelopment of the property. The RFP allowed the private sector to leverage its expertise in determining what the highest and 

best use would be for the Old Post Office, with a goal of providing 

a positive return for the Government, while maintaining the building’s historic integrity. The proposals were rated both on qualitative and quantitative factors, which included the developer’s experience, past performance, site plan and concept, financial capacity, and financial offer. 

GSA completed this review, and on Tuesday announced that the 

Trump Organization had been selected as the preferred developer. 

This is a significant step in putting this notable asset to its highest 

and best use, preserving its historic integrity, and contributing to 

the vitality of Pennsylvania Avenue, the Federal Triangle, and the 

District of Columbia. 

GSA and the Trump Organization will spend no longer than the 

next year—that is the outside limit—negotiating a detailed agreement for the building’s redevelopment. If negotiations proceed as 

anticipated, redevelopment will commence in 2014, with occupancy 

in 2016. The redevelopment of the Old Post Office is a perfect example of how the Federal Government can, in cooperation with the 

private sector, turn a less-than-optimal office building into a facility that will more efficiently serve its community and produce a 

positive financial return for the Federal Government. 

Again, I appreciate the cooperation we have had over the last 

year, and the opportunity to come here today, and look forward to 

answering your questions. 

Mr. DENHAM. Thank you for your testimony. We will have a few 

rounds of questioning today. But first of all, I want to initially 

7 

focus on the Old Post Office. You said in your testimony that the 

Post Office itself is fully utilized. How do you define fully utilized? 

Mr. PECK. Well, the historic building itself. We have only 10,000 

square feet of vacant rentable space. So, as a percent of occupancy 

and percent of vacant space, on rentable space, the building is fully 

utilized by our standards and most private sector standards. So, 

the annex building separately—which we don’t spend much money 

maintaining because, as you can tell, we are not heating it—is vacant. 

But the—so what I would like to explain is that while the building is occupied, there are hundreds of Federal employees who work 

in the building. There are retail tenants who work in here every 

day, there are tourists who come in every day. The building loses 

money because it is incredibly inefficient. The heating, ventilating, 

and air conditioning systems are very expensive to maintain. And 

the rents that we collect from the tenants and from the retail tenants just don’t cover the costs. 

Mr. DENHAM. You said hundreds of Federal employees currently 

occupy—— 

Mr. PECK. Yes, sir. 

Mr. DENHAM. What is your space utilization rate? 

Mr. PECK. The—I will have to get that for you. But it is—I suspect it is around our normal space utilization, which is, in most 

cases, between 200 and 250 square feet a person. But I will have 

to get you that for the record. 

One thing I would note about this building—and the reason that, 

I believe, that most of our proposals were not for office space, is 

that the building was built as an office building in a different era. 

And today it doesn’t lay out very efficiently as office space. The 

amount of space that you have for circulation and open area is 

much higher than we would like to see in an office building these 

days. 

Mr. DENHAM. In an office building like this, you define whether 

or not it is a good business investment or a return to the taxpayer 

based on Federal employees being in that same building. 

So what I am trying to get at is we allow a lot of Federal employees in a building like this that could be collocated somewhere else. 

So it is not really a savings or a net profit for Government. 

Mr. PECK. We absolutely agree. I am not trying to say—in fact, 

what we are all agreeing on is that this doesn’t work very well for 

Federal office occupancy. And as I said in my testimony, we are 

working with every Federal agency we can to increase the utilization of Federal space. 

One of the things—I will just say again, if you will allow me, one 

of the things that has changed in the world, and it is changing in 

the private world, too, is that with the use of technology, and the 

different ways in which people use their space, and the recognition 

that people can work from home, they can work on the road, we 

have all recognized that we just don’t need as much office space as 

people used to use. And we are trying to shed what we don’t need 

as fast as we can. 

Mr. DENHAM. Now that you have got a private investor—Trump, 

in this case—what are the next steps in the process for redevelopment? 

8 

Mr. PECK. We will, fairly quickly, sit down with the Trump Organization and try to work out the details of an agreement between 

us and figure out who does what, what our rights are to certain 

returns, what their rights are. There are historic preservation 

issues we need to work through, so they can know what aspects of 

the building they need to maintain, and what they can’t. And while 

some of that was in the request for proposals, these things get 

much more detailed. 

You know, we have a—one model to go by. We did redevelop the 

historic post office building at—on F Street, between 7th and 8th 

Street in the District, and that is now a hotel, also. So we have 

done these things before. There are a lot of details that need to be 

worked out. 

Mr. DENHAM. Is that the Monaco? 

Mr. PECK. It is the Hotel Monaco. Yes, sir. 

And the other thing that we have to do is—and we are already 

doing this—is to find another place to put the National Endowment 

for the Arts, the National Endowment for the Humanities, and the 

Advisory Council on Historic Preservation, which are the tenants 

in the building. And we have already been out looking at locations 

with them. So we are trying to get ahead of the curve on that. 

Mr. DENHAM. And what is the timeline for relocating both the 

Federal employees that currently occupy this building, as well as 

the private tenants? 

Mr. PECK. We will—we have tentatively said to the—with all of 

the offerors, that we would be able to vacate the building by about 

this time in 2014. 

Mr. DENHAM. And again, I want to make sure that the highest 

return for the taxpayers—what can you tell us about the selection 

process, and how Trump was to benefit the taxpayer? 

Mr. PECK. Thank you. I can tell you, now that we—we put out 

a request for proposals. It was open to anyone. We got 10 proposals—I am now allowed to say that, as well. Most of them were 

for hotel use. There were some that were for office use. All of them 

included some kind of mixed use arrangement. 

We had a—we first had a—we have a selection panel of Government employees. We are required to have Government employees 

make the final selection, of course. But they were advised by outside economic advisors who took a look both at the qualitative and 

quantitative aspects of the proposal. 

Our RFP said that we were going to look at financial return, on 

the one hand, and on technical qualifications, on the other. So we 

looked at the backgrounds, previous performance, of all of the people who responded. We took a look at their concepts for the building, and we came up with a tentative ranking. 

We then—as we had said we might do in the RFP, we then decided that it made sense to have all of the people offering come in 

for face-to-face interviews. Those happened in December, and then 

our committee got together and put their heads together with the 

advisors and made the selection of the Trump Organization as the 

preferred developer. In other words, we are going to negotiate with 

them and see if we can reach a detailed agreement. 

Mr. DENHAM. And on relocating the various tenants, what is the 

cost that GSA is planning on—cost associated with the entire reloVerDate Aug 31 2005 14:50 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-9-12~1\72811.TXT JEAN
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cation? Who is going to pay for that? And where will the tenants 

be relocated to, especially the Federal employees? Do they go to 

leased space or do they go to currently owned space? 

Mr. PECK. We—to answer the last question first, we are not totally sure where they are going to go. Our preference is always to 

locate Federal agencies in Government-owned space, if we have it 

available. So we have been looking at some of the—at some spaces 

that could accommodate all of the tenants, although not necessarily 

in the same place. 

We are also looking at some leased spaces. We have talked to 

them also about—and probably will allow them to make use of less 

space than they currently have. But we haven’t settled on that yet. 

Cost is a factor. We obviously want to get them in the cheapest 

space possible that allows them to meet their mission. 

And I am sorry, you had a—your first question was about the 

cost of relocating them? 

Mr. DENHAM. The cost, and who is going to pay for it. 

Mr. PECK. I will get you that, and who pays for it. The cost of 

relocation, some of it has to—some of the cost has to do with where 

they go. We have a rule of thumb cost for relocating people that 

is just the move costs. It depends on how much of their furniture 

we can re-use, how much more we have to use. And we have got 

some detailed estimates which I would rather provide. 

On the question of who pays for it—— 

Mr. DENHAM. As long as we make sure that they are provided—— 

Mr. PECK. They—— 

Mr. DENHAM. We have had some issues with making sure information is provided back to committee staff in a timely manner, 

so—— 

Mr. PECK. I know. We have—you know, every time you ask me 

to provide something I have lots of review bodies that help me provide my answers for the record. We will try to get them as fast as 

we can. 

Mr. DENHAM. Thank you. 

Mr. PECK. The—who pays. Typically, when a Federal Government agency’s lease and a building are—we have a kind of an informal lease inside the Government with agencies. When it is time 

for them to move, they have to move, mostly they have to pay. 

There are some instances in which GSA has to pick up the cost, 

and we are still working that out. 

I believe that the arts and humanities endowments, we haven’t— 

I am sorry, the budget hasn’t come out yet. So I believe you will 

see in the budget some provision for relocating the agencies. But 

I am not quite sure how that has gone in the final days of the 

budget prep, which is coming up next week. 

Mr. DENHAM. And final question. The last developer that GSA 

selected went bankrupt, and obviously this annex has sat empty 

ever since. How are we going to protect the taxpayer from the risk 

of this happening in the future? 

Mr. PECK. Well, there are—that is something that we will have 

to—that we will have in our agreement. But typically—and I have 

worked on these agreements as an advisor in the private sector, 

but with public entities—typically there are either rights for the 

10 

Government to take the space, for the owner of the building—in 

this case the Government—to take the space back, if the owner 

goes bankrupt, subject—always, I have to say—to bankruptcy court 

proceedings, and give it to somebody else. Sometimes the person in 

bankruptcy themselves have some rights to get somebody in there 

as a partner. We will probably retain a lot of rights to review what 

happens if somebody is in financial trouble. But, as I said, in the 

end we are going to maintain the ownership of the building, so we 

will have a right to step in at some point. 

Mr. DENHAM. Thank you. Chairman Mica. 

Mr. MICA. Again, I thank you, Mr. Peck, for your cooperation and 

the progress we have made to date here. 

Let me just talk about, first, the progress and the effort in getting here. It has taken some time. Again, I think in the private sector we could have put out a request for some proposals and had 

them in in a much shorter time. Is there anything in our process 

that needs to be changed legislatively or administratively, so that 

we could move this kind of project, the one we are talking about 

here, forward, based on your experience? 

Mr. PECK. Mr. Chair, I don’t think we need—in this particular 

process, because it is under section 111 of the National Historic 

Preservation Act, we actually have a decent amount of leeway to 

move. 

I will say that, you know, this is true—and I found this to be 

true in State and local governments as well—because it is a Government process, the Government is more open, transparent, and 

we allow—we take a lot more time evaluating proposals than do 

private sector groups, because you are just a lot more open to people suggesting that either political influence—it is beyond—or 

something else intervenes. So we—— 

Mr. MICA. Was there any political influence in this one? 

Mr. PECK. There was not. 

Mr. MICA. Swear to tell the truth, nothing but the truth? 

Mr. PECK. No, I do. And I want to say—— 

Mr. MICA. I never contacted you. I don’t care who you put in 

here, just so it is a viable firm and we don’t have to—I mean—and 

I heard from reports that you had substantial—well, the participants who expressed interest—and I think that is the case, I see— 

I guess they are GSA people, or just people that like to agree with 

me. 

[Laughter.] 

Mr. MICA. But there was good interest. But it seemed like it 

went on a long time. I mean look at the proposals, you look at the 

return, you sit down, you get some details. My God, it is a year 

later. 

Mr. PECK. Well, OK. But let me answer the political influence 

thing first, because I am glad you asked the question, because I 

really—— 

Mr. MICA. And you know, if there is—anybody does mess around 

with this kind of stuff, maybe we should do—add an addendum to 

the insider trading or something. I know politics, for some reason, 

does take place in this. But I don’t think any of it was from anybody with the committee, interference, and there shouldn’t be in 

the process. 

11 

So—and if you don’t want to talk about it here, and you have any 

suggestions that we can make certain that we tighten that up, so— 

we rely on you to sort through that maze. But it did take a long 

time. 

Mr. PECK. I want to—first of all, I want to assure the public that, 

one, there were no political appointees who sat—I am one—who sat 

in on the selection. They weren’t telling me what was going on very 

much, as it happened, other than telling me what the schedule 

was. 

Two—and I want to compliment the Congress—I know that there 

were offerors who exercised every right, the right they have to talk 

to Members of Congress. And I know that no one in the Congress, 

to my knowledge—— 

Mr. MICA. Made any—— 

Mr. PECK [continuing]. Contacted us about any of that. 

Mr. MICA. That is good. 

Mr. PECK. Finally, I will just note that there were—happen to 

know now who the offers came from. Some of them are people who 

support Democrats, some are people who support Republicans. Obviously, we picked a developer who—— 

Mr. MICA. Better not—— 

Mr. PECK [continuing]. Has a political affiliation, and it isn’t 

mine. And finally, I would say but in the process we got a request 

for proposals out about a month after the hearing last year. 

Mr. MICA. Right. 

Mr. PECK. This is a complicated deal. And the people who offered 

needed some time to go through the building, see what it looks like, 

see what condition it is in, and then we needed some time. I don’t 

think, even in the private sector—you might have shaved a couple 

of months off, but probably not much. 

Mr. MICA. OK. Well, again, this is a big project, not just the 

annex that we are in, but the post office. We want it successful. 

You had mentioned Hotel Monaco, and I have to cite and maybe 

put in the record an article from August 25, 2002, that says, 

‘‘Watch your step. When West Coast entrepreneurs hooked up with 

Federal bureaucrats to convert a DC landmark into a luxury hotel, 

they had no idea what they were getting into.’’ But this describes 

the nightmare, the bureaucratic nightmare, and the problems that 

were incurred there. Are you familiar with this? 

Mr. PECK. I am. I read that article. 

Mr. MICA. Maybe you could tell us how we will avoid some of 

that, and—— 

Mr. PECK. I have to say I happen to think that it is a great 

project, and I think that the hotel developer is a terrific hotel developer. I think—— 

Mr. MICA. The process was—they described it as a bureaucratic 

nightmare—dealing with the Federal Government to get that done. 

Mr. PECK. I think they were—I will just say this. I think they 

were a little bit naive about the historic preservation process, although they had a lot of experience in historic preservation. We are 

pretty strict on that, and that is one of the things they complained 

about in the article. 

On the other hand, I think that, in the end, they agreed that 

they got a pretty good product out of it, and they are making 

12 

money. So I am—I suspect, if they were interviewed today, they 

would have a different view. 

Mr. MICA. Well, and—— 

Mr. PECK. And we will be more streamlined. Can I say that—— 

Mr. MICA. There is a description in that of a very bureaucratic 

process. And, you know, no one is interested in giving away the 

store in rapid order. We want the public interest protected. But we 

also want the process expedited, so that we can have successes, 

whether it is this project or other projects. 

Do you expect revenue to come in from this deal? And was that 

part of the basis to—it had to be part of the basis of the decision 

to select this particular company. So—— 

Mr. PECK. Yes, sir. 

Mr. MICA [continuing]. I know it has cost us money to keep this, 

even though we have Federal occupancy and some other occupied 

area. But it has still been a net expense. 

Mr. PECK. Yes, sir. 

Mr. MICA. We are moving that into the positive column under 

the proposals, I would assume, and that was one of the bases and 

criteria by which the final winner was selected. 

Mr. PECK. Yes, sir. We don’t—as I said, we are going to—— 

Mr. MICA. We can’t talk about the return, but it will not become 

a drag, a financial drag. It should be, actually—— 

Mr. PECK. No, sir. And I can tell you—— 

Mr. MICA [continuing]. Revenue-positive to the taxpayer. 

Mr. PECK. Yes, sir. And the magnitude of the revenue proposed 

by the preferred selected developer had an influence on his selection. 

Mr. MICA. OK. But we didn’t want to speed you up or anything, 

but when we announced the hearing, you did make the announcement. You think if we did all those hearings it would help motivate 

and then—but we will be doing a few more. And that brings up 

the—I always look forward to seeing the inside of the Cotton 

Annex. And do you know how long that has been vacant? 

Mr. PECK. I forget how long that has been vacant. But—— 

Mr. MICA. You forget? 

Mr. PECK. But Mr.—— 

Mr. MICA. It has been vacant that long? 

Mr. PECK. Mr. Chairman, you know, the Cotton Annex, though, 

is—I have to say there is a shared responsibility for the vacancy—— 

Mr. MICA. OK. 

Mr. PECK [continuing]. On some Federal properties. And—— 

Mr. MICA. Well, that is what we have got to identify. And then 

you shouldn’t be sitting there by yourself, taking all the heat in the 

cold. You should—— 

[Laughter.] 

Mr. MICA. We need to expand the witness table. Who else might 

be responsible? 

Mr. PECK. Well—— 

Mr. MICA. And I want you to give us suggestions for witnesses 

in—for the hearing that will be held soon in the Cotton Annex. 

13 

Mr. PECK. Well, there have been proposals that the Cotton 

Annex be used for certain non-profit cultural purposes. And some 

of those have been promoted by Members of Congress. So—— 

Mr. MICA. Can you get the FTC in there? 

Mr. PECK. We have looked at that. It is not quite big enough, and 

it is an awkward site, because there is a freeway that runs right 

by it and under it. But there—you know, but for example, can I 

just say the old—— 

Mr. MICA. That is called transit-oriented development. 

[Laughter.] 

Mr. PECK. The Old Post Office, this building itself, the Old Post 

Office Building, GSA actually proposed redeveloping this building 

back in about 1999 or 2000. And then we were stopped when a 

rider appeared in appropriation legislation from the Senate side, 

telling us that any redevelopment would have to go through authorization and appropriations reviews. And informally we were 

told that we were not to do certain kinds of redevelopment. 

Mr. MICA. Does that still prevail? That was in 1999? 

Mr. PECK. No, sir. It is—— 

Mr. MICA. So that excuse has lapsed. 

Mr. PECK. That was superseded by Ms. Norton’s legislation, 

thank goodness. So we are—which does have a review, but which 

ordered us to redevelop the building. 

Mr. MICA. Is there heat in that building? 

Mr. PECK. No, I am sorry, we are talking about the Old Post Office Building. 

Mr. MICA. Oh. 

Mr. PECK. We are talking about the Old Post Office Building—— 

Mr. MICA. No, I was talking—I am past the Post Office on to the 

Cotton. 

Mr. PECK. The Cotton Annex, we are looking again. There have 

been lots of proposals for that building, and lots of ideas about 

what to do with it. And I am hopeful—we are looking at it as part 

of—we have a number of surplus properties on that side of the 

Mall which we would like to move out, and are having active conversations with lots of people about how that might happen. 

Mr. MICA. Mr. Denham, if you could, maybe we could schedule 

one a month, at least, clear up a—that only—let’s see, we got another 10 months left. We could clear up some of the inventory. He 

said a dozen or more. 

In the District? 

Mr. PECK. I didn’t say a dozen, I just said a number of properties—— 

Mr. MICA. OK. 

Mr. PECK [continuing]. On the south side of the Mall that are potentially surplus properties. 

Mr. MICA. Well, again, as the chair of the committee, I look forward to your scheduling at least a hearing a month. We will visit 

the properties together. Maybe we can put a plan together and take 

them off the, you know, static asset basis and put them into productive use. And maybe, God forbid, we should have a return, but 

we just want to stop the bleeding. 

So, that is one little thing that maybe we could accomplish here. 

First, we want to make certain this project moves forward. Then 

14 

secondly, look at other projects, both in the District. Then, there is 

14,000, I guess, and then thousands outside, some that are partially vacant. We are going to be busy a long time. But we can pick 

some sites and maybe advise the committee staff to look south during the winter months here on our visits to some of those sites. And 

then we can move into the warmer climes as we hold the field 

hearings across the country this year. 

So, we are just doing this one, but this is a followup. And then 

we will have a year-long series of hearings, both in the District and 

in the field, to highlight those. And if you could help staff comply 

with that, and Mr. Denham direct that, as the chair of the subcommittee, I would be grateful. He is—this guy is good. He is a— 

he is like a bulldog, I love it. 

Now, we—let’s turn to the 21 lease prospectuses that are pending. And some of the problem we have is that there are requirements, I understand, for more space but no increase in personnel. 

And some of that is being negotiated. Is there any way to speed 

that up, other than just continue the negotiations? 

Mr. PECK. Well, I believe that we have—on the leases that are 

pending, on many of them, we have already negotiated reduced requirements with the agencies that are involved. 

Mr. MICA. OK. 

Mr. PECK. So that whether we renew the leases or move, there 

will be less square footage than we originally proposed in those 

prospectuses. 

Mr. MICA. Can we get a list of maybe those for the record, and 

include them in the record, so we can see, you know, how we can 

help move that forward? 

And in the budget, the President’s budget, will we find attention 

to some of the problems we have had? Again, space versus the 

number of people? Because a lot of plans for expansion have, in the 

last year, suddenly run into some road blocks. I don’t know why, 

but there is a different crowd at least in charge of one-third of the 

Government who put the brakes on some of this. Is there a reflection in, again, the budget you have been recommending to the 

White House? Can you give us a little preview of what we will see? 

Mr. PECK. I can’t. I am not allowed to divulge what is in the 

budget. But let me—I am happy to tell you that a—— 

Mr. MICA. We can look for—— 

Mr. PECK. I am happy to tell you that over the past year we 

have—the Administrator of General Services, Martha Johnson, and 

I have had any number of meetings with Federal agencies who 

have come to us, both because of the administration’s focus on overhead costs in the Government and Congress’ focus on it, who come 

to us asking how they can reduce the amount of real estate that 

they occupy. 

We have conducted national portfolio reviews with three major 

Federal agencies, and we are about to go out for, I think, three or 

five others. That includes really large ones, like the Social Security 

Administration. And I think you will see reflected in the budget a 

reduction overall in Federal space occupancy. 

Mr. MICA. Yes, they started in my district with one of the offices 

for Social Security in one of my smaller communities, which—what 

is interesting is we have no problem with that. The local commuVerDate Aug 31 2005 14:50 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-9-12~1\72811.TXT JEAN
15 

nity even offered a space for them to occupy. They came up with 

more cockamamie reasons why they couldn’t do that. So, instead of 

having 60 to 100 people drive 60 miles to Jacksonville, and each 

day, and 1 or 2 Social Security employees to come to a existing 

State or community facility, we got an incredible runaround. Is 

there anything we can do to allow those kinds of activities to, you 

know, have some commonsense approach? 

Mr. PECK. Well, Mr. Chairman, we have talked to Social Security 

and the Internal Revenue Service about where they locate their 

field offices, where they are best located with respect to where— 

the most important issue is where their clients are. But also, 

with—— 

Mr. MICA. But again, it just doesn’t make any sense to me to 

have—and most of those are elderly, or people that are disabled or 

trying to get to the Social Security office and move one or two people, even if they commuted, as opposed to 300 or 400 trying to get 

to Jacksonville, some 50, 60 miles away. And—— 

Mr. PECK. Well—— 

Mr. MICA. Is there a prohibition, or something we can work on? 

Mr. PECK. Well, I think—— 

Mr. MICA. Maybe we can try to do that as we downsize a cooperative State, Federal, local initiative. Do we have to have—rent 

space? Do we have to do things that don’t make sense? 

Mr. PECK. Well, Mr. Chairman, I think you are expressing some 

of the tensions that we have. On the one hand, if you are trying 

to consolidate space and reduce the number of Federal locations, 

you do—sometimes you have to balance that against inconveniencing the public, which may have to go farther. 

On the other hand, I will give you an example. We have had conversations with the Agriculture Department about some of their 

field offices that were built in an era when you had to go visit the 

Agriculture Department—— 

Mr. MICA. Right. 

Mr. PECK [continuing]. To get your agricultural crop support, or 

whatever it was. And these days, farmers sit on top of a combine 

that is controlled by GPS going up to a satellite, and they have got 

a laptop sitting there, and they don’t need to go to an office at all 

to communicate with Agriculture. 

Mr. MICA. Right. 

Mr. PECK. So we think we can close some of those things. Some 

of that will start to happen with Social Security, at least as my 

generation starts to get in and is computer literate. 

Mr. MICA. If you would, maybe we could take this on as a little 

project with the staff, and see what we could do to look for some 

more cost-effective space utilization by agencies. And if there is a 

prohibition for some of the agencies to occupy on a temporary basis, 

or with some sort of an agreement to house that activity, it could 

save everybody money, energy costs, it would be much more efficient. 

Of course we haven’t gotten into distance communications that 

would—distance communications. A lot of the folks don’t have access to laptops, or may not be as capable of communicating through 

modern technology. But again, we have got to keep up with current 

times. So that is another project that we can take up. 

16 

Let’s go to a couple of projects. I will start with the DHS St. Elizabeths. Maybe you can give the committee a quick update. I think 

we have got 4 million square feet out there, and 1.2 million is supposed to be occupied by the Coast Guard. What is the status of that 

project? And that leaves a substantial remainder. Could you give 

us a thumbnail sketch? 

Mr. PECK. The Coast Guard building is being completed, will be 

occupied next year by the Coast Guard. We have—— 

Mr. MICA. Is that on schedule and within budget, or what? 

Mr. PECK. Yes, sir. It is both. 

Mr. MICA. OK. 

Mr. PECK. And—however, because we have not gotten the followon—so the building itself is within budget and on schedule. We did 

not get the follow-on funding for the next phase of the project. And 

because of that, we have had to redo the way their operations center and utility hookups happen. Those will be done on time, also. 

But unfortunately, I have to report that, because of that delay, 

when we do finally move ahead with the next phase of the project 

we will have spent probably an additional $30 million to $40 million for temporary fixes, which we would not have had to do, had 

we just continued the project as it was scheduled. 

We are stretching out the schedule. We anticipate that, hopefully, when the—when budget circumstances allow us to go forward, we will complete the project. But for the moment, we have 

renovated a couple of the historic buildings for some support space. 

We will finish the Coast Guard project. And it is hard for me to 

predict right now when we will move on to the rest of the project. 

It is still our intention and that of the Department of Homeland 

Security to occupy that as its headquarters. 

One other thing I will just note is we have talked to them also 

about the possibility of locating even more people on the campus 

than they had originally projected, and they were originally projecting about 14,000 people. We think we will be able to reduce 

their space requirements elsewhere in the metropolitan Washington area, again, by taking advantage of the new kinds of space 

utilization standards that we are applying. 

Mr. MICA. Well, with the SPP provisions that the President will 

soon be signing into law, we may need maybe half the bureaucrats 

we have in TSA to run their huge screening operation. So that 

might be something else we could save substantial money on. 

Hopefully we can look at that together and reconfigure or re-estimate some of the use of that land and move forward on a schedule 

that makes sense. 

What about the FBI? Have you talked to the FBI? I keep hearing 

different things about what their plans are, the utilization of that 

building, and moving forward. 

Mr. PECK. Yes, sir. I think—we, in response to requests from this 

committee—correct? At least the Senate—all right, the Senate side 

asked us to produce a report on the FBI building and the potential 

for relocating it. We send a report that suggested that we could reduce the amount of square footage that the FBI occupies in this 

area significantly if we could move off of the—out of the FBI headquarters on Pennsylvania Avenue, relocate someplace else, and 

17 

probably sell that site to private interests who could, as with this 

project, put it to higher and better use. 

Mr. MICA. How many square feet are there? 

Mr. PECK. The FBI headquarters building is—I want to say 2 

million square—how many square feet in the building? That would 

be 700,000, 800,000 square feet. I can give you these numbers. 

Mr. MICA. So—— 

Mr. PECK. They occupy about 3.2 million square feet, including 

that building in the Washington area. We believe that, with newer 

space standards, they could—we could end up putting them in 

about 2.2 million square feet, save a million square feet, if we can 

come up with a creative way to move out of there and finance a 

new project. 

Mr. MICA. Well, that brings me to one of my last subjects, which 

is the status of the FTC relocation. And also I know under consideration, or at least an offer may have been made or considered with 

some of the space that we are obligated to with the SEC on the 

Constitution Center space. And those opportunities do vanish as 

they try to, you know, fill that space. Is there any progress, either 

at that location or other locations? 

One of my goals, whether—you know, I am not here to say 

‘‘you’re fired.’’ In fact, we are here today to say you are still hired, 

and—I am not Donald, but one of my goals is to relocate the FTC, 

consolidate that space—you have sent us a prospectus for 427,000 

square feet. There is over 300,000 square feet in the existing Apex 

Building, where the headquarters is located that is—dates back to 

the mid-1930s that could use substantial renovation. In addition, 

on—behind Union Station—is it New Jersey—have 212,000, 

215,000 square feet of leased space. And asked again—and I think 

there is another location on top of that—and asked for a total of 

427,000 square feet in your prospectus to us. 

We, in turn, passed a resolution recommending the consolidation 

and relocation, so we could put as much of the FTC together as 

possible in one location. The—and have the National Gallery of 

Art, which is collocated across the street—and I know you have 

seen the plans they have for utilization of that space—and would 

undertake the full renovation cost at no cost to the taxpayers, 

which could be anywhere from $130 million to $200 million in 

value for renovation, plus the consolidation our staff estimates 

would save somewhere between $200 million and $250 million, a 

substantial amount of savings. 

So, I am looking forward to completion of that. I think that the 

FTC has finally come to a realization that that is going to happen, 

and it is going to happen either this year, or, I guarantee, next 

year. So any progress to date you want to report as of today? 

Mr. PECK. Mr. Chairman, the FTC lease that—lease prospectus 

that is pending, as you noted, was for 427,000 square feet. 

Mr. MICA. No, it has been reduced. 

Mr. PECK. And they have been able to reduce their space requirements by, I believe, about 80,000 square feet or 100,000 square 

feet. It is enough space that we are working—you noted the space 

that the SEC had potentially leased in Constitution—the Constitution Center building at 7th and D, SW. There is enough space 

18 

there to accommodate the lease prospectus which we had sent out 

for the FTC, now that they have reduced their space. 

With respect to the FTC headquarters building itself—and you 

and I have walked that together—we do not believe that at the current time it needs an extensive renovation. It will at some point, 

but not yet. I did also—because I know of your interest in this— 

I did have a conversation with the director of the National Gallery 

of Art to see if the gallery would be willing to pay for the value 

of the building. 

Mr. MICA. Yes. 

Mr. PECK. I know that they are prepared to pay for renovation. 

I don’t—we don’t believe that we are authorized to transfer the 

building to them without compensation. 

Mr. MICA. Do you think that if we can get—and the value is 

about $70 million, I have been told, because of the condition. And 

that is the deal-breaker in that, if I can come up with $70 million, 

that you will give me that building? 

Mr. PECK. I would have to—— 

Mr. MICA. Tell me. Come on. This is the whole truth and nothing 

but the truth. 

Mr. PECK. This is a—— 

Mr. MICA. $70 million. How about the Minority? Ms. Norton said she wanted $70 million, or whatever it is. We are going to get the 

building. It is kind of crazy to have the private—well, private 

money come in and also buy what will be public asset. It stays with 

the Government. It is not—the National Gallery doesn’t get it, it 

still stays with the taxpayer. 

Mr. PECK. But, Mr. Chairman, on—— 

Mr. MICA. But is that what we need, $70 million more? 

Mr. PECK. Mr. Chairman, on this building, Mr. Trump is proposing—— 

Mr. MICA. We will go out and get the $70 million. I got $80 million for the Visitor Center, so this is a discount deal. 

Mr. PECK. Mr. Chairman, on this building the Trump Organization is proposing to put $200 million into the building, but they are 

also going to have to pay us for the value of the building. So when 

a—when agencies transfer properties within the Government—— 

Mr. MICA. Yes, OK. 

Mr. PECK [continuing]. They are required to pay fair market 

value—— 

Mr. MICA. But I’ve got to know what—to do the deal, I’ve got to 

know what it is going to take—— 

Mr. PECK. OK. I will—— 

Mr. MICA [continuing]. To finance it. Give me a price—— 

Mr. PECK. I will give you a—— 

Mr. MICA [continuing]. And we will take that to people. Last 

night I sat in the Ford’s Theatre and all those 1 percenters came 

and gave money to do the Ford’s Theatre education center and 

other buildings. The Mellons and others across the country—the 

Visitor Center, most people don’t know this, but the evening of September 11th—I’m sorry, September 10th, the night before September 11th, I hosted the last fundraiser to raise private capital for 

the Visitor Center, and we raised millions for the Visitor Center. 

We did a coin. There is $80 million worth of private money in that 

19 

Visitor Center that no one knows or cares about. But if it takes $70 

million, I want to know how much it is going to take to get this 

done. And then we will work with them. 

The National Gallery is also leasing, I know, at least 60,000 

square feet, and has another 100,000 square feet. I have never seen 

a better plan for utilization of a building than what they presented 

to us. And we walked through there. But we are going to do that, 

one way or the other. There are lots of vehicles, too. It is not on 

the FAA bill that the President is going to sign this week. But 

mark my word, we will get that done, and it is going to be one way 

or the other. 

So, I need to know what the price tag is, or what we have to do 

to make it happen. Because I know it will save money, and I know 

it is in the best interests of the country. So I look forward for you 

submitting that request. And maybe the Minority could ask Ms. 

Norton what her price is. She had told me $70 million, or had an 

amendment at one of the committees. We are going to get it done. 

But I look forward to working with you, Mr. Peck, and I apologize that you have to put up with me. Just sometimes I am difficult, unreasonable. But we can get some things done. And I thank 

you personally for—it took a little bit longer—maybe 2 months 

longer than—as you said. But we are on our way. If you see any 

impediment, please notify me or the committee. 

And on these others, we can take them one at a time in groups. 

We will do hearings, we will do meetings, whatever it takes. And 

our staff—if there aren’t enough people here to help you on our— 

up on the Hill, I will get one or two more. I returned $2 million 

to the taxpayers for operation from my committee this past month, 

and I will spend a couple of bucks so that we can save hundreds 

of millions, maybe billions for the taxpayer. 

So with that, Mr. Chairman, have I exceeded my 5 minutes? 

[Laughter.] 

Mr. MICA. And all the GSA staff, please be very careful about 

Googling alerts; I am trying to fox the chairman. I don’t know if 

you read the CQ one on the TSA hearing, where they Googled 

the—instructed the TSA administrator on ‘‘let Mica ask one question and then take all the time so that he couldn’t have another 

opportunity.’’ It doesn’t work that way on this committee. And they 

tried it on another committee. But I outfoxed them. I took 4 minutes and 45 seconds and then just asked one pointed question the 

other day. 

But the problem was they sent—the TSA staff Googled, by mistake, their directive to the administrator to CQ. So I thought that 

was kind of funny. But it doesn’t work with the old man, so—— 

Mr. PECK. Well, I haven’t filibustered today. 

Mr. MICA. No, no. You have been great. You have answered 

every question. What you haven’t answered, we will insist on getting a response. 

Mr. PECK. Yes, Mr. Chairman. We will be happy to respond with 

the fair market value of the building. 

And I also wanted to say that we would be—we work well with 

your staff and with Chairman Denham. We are happy to brief you 

on the leases, on our surplus property efforts, as well. 

20 

Mr. MICA. OK. Excuse me, head cold. It is from doing hearings 

in cold buildings. 

[Laughter.] 

Mr. MICA. But the staff just handed me notes like you get handed notes. 

Mr. PECK. Right. 

Mr. MICA. A 2007 appraisal of $70 million. 

Mr. PECK. Right. 

Mr. MICA. Before—— 

Mr. PECK. So it may be more by now. 

Mr. MICA. So before prices go up, I want to—but let me yield 

back the balance of my time, and excuse myself, Mr. Chairman, 

and thank you again for a good hearing. Thank you, Mr. Peck. 

Mr. PECK. Thank you. 

Mr. DENHAM. Thank you, Mr. Chairman. I do want to real quickly address the prospectuses. You know, I believe that agencies have 

to live with less space. I mean that is certainly a goal that has 

been talked about by GSA and by the President. And when we 

start receiving the prospectuses that actually show that we are utilizing less space in those prospectuses, we will continue to push 

them out. Now, I have asked you in our personal conversations if 

you have critical ones that are mission critical, we will certainly 

work with you on those. 

But I just want to give one example. The revised FTC lease request includes 75,000 square feet of additional space. And the committee negotiated that down. But we are going out and asking for 

more space, even though we are not hiring more employees. The 

agency hasn’t grown, but yet we are increasing space. 

Mr. PECK. Which prospectus was that? Which prospectus was 

that? I am sorry. 

Mr. DENHAM. The revised FTC. 

Mr. PECK. 75,000 square feet more than we originally asked for? 

I don’t believe that is the case. I will look into that. 

Mr. DENHAM. You can get back to me on that. But just using 

that as an example, our goal in this committee is to reduce and live 

within our means on this. And we certainly want to work with you 

on these prospectuses, but we want to certainly show that we are 

using less space for employees. And when we have not hired new 

employees, we want to make sure that we are leasing less space 

there, as well. 

I just want to go back to a couple of other questions on the Old 

Post Office, and then I want to talk to you about some of the new— 

or actually old—issues that we may be having new hearings on. 

I mean this is a perfect example of something that sat over a 

decade, well before I came into Congress, and certainly discussing 

it with the ranking member. Took two pieces of congressional legislation to actually push this project forward, and a hearing a year 

ago and now a year later, another hearing. We want to make sure 

that, again, we are working with you. And we would like to know 

what type of impediments, not only with this project, but other 

projects, as we are looking to do the same type of redevelopment, 

what type of impediments that you are having to deal with. 

Mr. PECK. Mr. Chairman, no one is more frustrated on this than 

I am since, when I had this job the first time, I proposed redevelVerDate Aug 31 2005 14:50 Jun 04, 2012 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\2-9-12~1\72811.TXT JEAN
21 

oping the building and came back 81⁄2 years later to find out that 

nothing had happened. So I was pretty frustrated, myself. And, as 

I said, there is a shared responsibility for that. There are reasons 

why the executive branch didn’t move, and there are reasons in the 

Congress. Ms. Norton accepted why this didn’t move, because she 

was sure trying to push it. 

Among the impediments on surplus property—and we have discussed this before—are the facts: one, sometimes executive branch 

agencies believe they are going to have a need for a property and 

some of that is a wish, some of it is a—I guess a view that maybe 

some time in the future I might need it. We call that kind of landbanking. We have an example in GSA which I am happy to say we 

have gotten over the West Heating Plant in Georgetown here, 

which sat idle for a number of years because we thought we might 

need it as a backup. 

And, as I think I described to you before, we finally asked ourselves—or at least some of us asked the question, well, if you 

haven’t needed it for a backup through some terrorist incidents, 

physical, you know, weather catastrophes, we probably don’t need 

it, and we have moved that out. So we are—we have got that on 

a schedule to get—to put that out in the market. 

So sometimes it is Federal agencies that are sitting on the properties. Sometimes, as you know, the valuable properties that we 

have—and not all of those 14,000 assets are really valuable, nor 

even good enough that we can give them away. But the ones that 

are, sometimes Members of Congress, either responding to community pressure or their own views of what should be done with the 

properties, manage to get a hold on the property. And that is why 

I think that both of us have agreed that a Civilian Property Realignment Act could get us over that, just like it did on the Defense 

BRACs. And I think that is a problem. 

The final thing I will note—and it is counterintuitive and very 

hard to describe to people that impedes us both in reducing the 

amount of square footage that we occupy for our real needs, and 

sometimes moving properties out of our inventory, is the fact that 

we need some upfront investment dollars, either private or public, 

somehow, to make the properties available. 

And here is what I mean by that. In our—the success I described 

in our headquarters building, in being able to move between two 

and three times as many people back into our headquarters, is only 

going to happen because we invested more than $100 million in the 

building to renovate it. It required taking out a lot of old walls, investing in different kinds of furniture. And we will be able to get 

a lot more people. In the long run, that is a huge savings for the 

Government. Unfortunately, it requires some upfront investment. 

What I described for the FBI headquarters will require some 

combination, I believe, of public and private investment to make it 

happen. And, as you know, we are limited in the kinds of financing 

that we can do. We can either lease a building from the private sector, or we can build a building and own it. And that is—right now 

we are not getting the money to build. And so we will—in some 

cases, all we can do is revert to leasing, which, in the long run, is 

not necessarily the best deal for the Government, either. 

22 

So, there are some impediments which we have discussed. I 

know you and I—and we should talk about them in the future, as 

well. 

Mr. DENHAM. And we want to continue to have those discussions. 

And my final question, just on your overall goal, I mean the administration has come out with their number of $3 billion that is 

their goal of savings, and yet GSA’s portion of that is $450 million. 

That seems low, especially when you have things like the Cotton 

Annex that—that one property is $150 million. Why is GSA’s portion of that $3 billion so low? 

Mr. PECK. Well, because it was a—the—because that was what 

we had to anticipate from the June 2010 memo to September of 

2012 that we could move through our process and actually realize 

either a savings or a sale on. And we didn’t see—for example, on 

the Cotton Annex, we didn’t see a clear path to getting that out of 

the inventory in time. 

I will note that we have said—and I think you have said, too— 

on the Property Realignment Act, we think that that number could 

be $15 billion over the next several years, because we will streamline the process, and get more properties in the pipeline. 

The Cotton Annex, I have to say, is one of those properties that 

would benefit a lot from somebody being able, with some finality, 

to say, ‘‘Here is what we are going to do with the building.’’ We 

know we don’t need it in the Federal inventory right now. We just 

need to get everybody agreed on what we are going to do with it. 

Mr. DENHAM. And then lastly, before I discuss some specific 

properties, we have had some financial questions for you that we 

have been asking for since December. You know, what have—the 

PBS administrative costs for the past 5 years, and how much 

money is left over from completed renovation and construction 

projects each year. 

Mr. PECK. I think—— 

Mr. DENHAM. Again, I would ask you, on the record, to make 

sure that we get that information promptly. 

Mr. PECK. OK. 

Mr. DENHAM. No reason why you wouldn’t be able to provide that 

information to us, correct? 

Mr. PECK. No, there isn’t. And I have reviewed several drafts of 

the response, so I know it is around. 

Mr. DENHAM. OK, fantastic. Well then, in—last piece of this, I 

will go through a little rapid fire here, a number of different pieces 

of property that I have had a great deal of interest in, you and I 

have talked about, certainly properties we are discussing having 

hearings at. But my specific question on each of these different 

properties is if we had the Civilian Property Realignment Act in 

place today—I know that the administration is pushing this, we 

are pushing it, while we may have some—I think you and I both 

agree we have some small differences that we both—— 

Mr. PECK. Right. 

Mr. DENHAM [continuing]. Feel we can work out. I would just 

like to go through each of these properties. And if that were in 

place today, if we had that in place today, what would your opinion 

be on each of these properties? 

23 

The first one, Cotton Annex, which we have already talked 

about, 89,000 square feet that is empty, and by CBO’s estimate, 

$150 million. Again, if CPRA were in place today? 

Mr. PECK. I wouldn’t want to promise $150 million. I think that 

is high. But it sure would help us move it out of the inventory. Absolutely. 

Mr. DENHAM. But the goal would be to actually sell this property. 

Mr. PECK. Yes, sir. 

Mr. DENHAM. Or would we be looking at redeveloping? 

Mr. PECK. I—that is hard for me to know. I don’t know how historic it is considered. Anyway, I don’t know if it is a sale or a public-private partnership or whatever. But somehow it surplused to— 

I believe it is going to be surplused to our needs. 

Mr. DENHAM. But currently not part of the 14,000 properties that 

have already been declared surplus, or—— 

Mr. PECK. I think it is under—I think it is considered underutilized, isn’t it? It is considered underutilized, so I think it is considered—— 

Mr. DENHAM. So it is on that list? 

Mr. PECK. I think. Yes, sir. 

Mr. DENHAM. Second property, the Social Security Administration office in Jamaica, New York, 900,000 square feet, currently 

only 1,500 Social Security employees are there. It was designed to 

hold 3,000 employees. 

Mr. PECK. I know that, but—I know it had been—— 

Mr. DENHAM. This building could be sold, it could be redeveloped—— 

Mr. PECK. The Addabbo—— 

Mr. DENHAM [continuing]. We could combine agencies. 

Mr. PECK. The Addabbo Building? That is one my—— 

Mr. DENHAM. I don’t want to bait the witness too much on this 

one. 

[Laughter.] 

Mr. PECK. That is one, if I remember correctly, that is one where 

we either need money so that we can move other people in there 

and make better use of it, or we need to have money to move the 

remaining people out and do something else with the building. My 

guess is, given that location, it would be better off if we could move 

other Federal employees into it. But I think it is a money—it is an 

upfront investment issue, one way or the other. 

Mr. DENHAM. We have approximately 1 million square feet of 

leased space in LA. What is the ballpark estimation on how much 

leased space we have in New York? 

Mr. PECK. Oh, I would have to provide that. It is a lot. 

Mr. DENHAM. Close? 

Mr. PECK. A lot. 

Mr. DENHAM. Similar-sized city? 

Mr. PECK. My—yes, I was going to—I would guess much more 

than 1 million square feet in New York. 

Mr. DENHAM. The Walter Hoffman United States Courthouse in 

Norfolk, Virginia, 210,000 square feet. The two parcels right here 

condemned west of the courthouse for a new annex. What would 

you do with this property? 

24 

Mr. PECK. I am not sure any more. We are having some conversations about that. Because there was a—the site was acquired 

to build an annex to the courthouse. And then we acquired the site 

in two parcels. You noted that the second one we condemned. We 

didn’t actually get sued, we actually went to a condemnation suit, 

and we had to spend a lot of money on it. 

We need to take a look at what is going to—what the future of 

that project is, and what we do with the parcel. I have to say, unfortunately—I mean I defend us, I defend the Government’s actions, whether it is this administration or the previous one. On this 

one, we ended up buying a parcel. It cost more than we expected. 

I am not sure what to do with the site at this point, and I am not 

sure that the site, in the end, is one that we are going to use any 

time soon. 

The other thing I want to say to you, by the way, is—to the committee—is that we did get an authorization to spend a certain 

amount of money on a site. There was a particular site in mind. 

We went to a different site, we spent more money, and I think we 

should have notified the committee. And I apologize for not having 

done that, and it won’t happen again. 

Mr. DENHAM. Thank you. Is this on the excess or underutilized 

property list? 

Mr. PECK. No, because it is presumably on a project that is authorized. So I don’t believe it counts as underutilized yet. 

Mr. DENHAM. This is not on the underutilized list, either. Even 

though it is only—— 

Mr. PECK. That may—— 

Mr. DENHAM [continuing]. Percent occupied? 

Mr. PECK. That may be at 50 percent. If it is at 50 percent occupied, it will show as—just like a building under renovation shows 

at underutilized, that should show as underutilized on the list. I 

don’t know if it does. 

Mr. DENHAM. The staff tells me it is not on the list. 

Mr. PECK. It doesn’t? Then there is a mistake in our profile—— 

Mr. DENHAM. My point will be, as I go through all of these, we 

have 14,000 properties, many of these high-value properties, which 

you and I have both agreed are not on this list, which is part of 

the reason we need a Civilian Property Realignment Act. 

Mr. PECK. I should note that some of our joint focus in the last 

year has brought us to the understanding that that list, which was 

created for an accounting purpose some years ago doesn’t work as 

a real estate management purpose. And we are revising the way 

we—our definitions on the list, and the way we put it together. 

Hopefully it will be a better product by this time next year. 

Mr. DENHAM. My favorite topic when it comes to underutilized 

and excess properties, the courthouses in Miami, Florida, the David 

W. Dyer Federal Building, and United States Courthouse currently 

sits vacant. 

Mr. PECK. It does. 

Mr. DENHAM. Completely vacant. No phones on. We have tried 

to contact people there. It is empty. I am still looking—— 

Mr. PECK. I have—— 

Mr. DENHAM [continuing]. Forward to touring it myself, but an 

empty building. 

25 

Mr. PECK. I did. Well, you put it on the table. I did walk the 

building. It is vacant. It is—and here is—you always find something interesting in these deals. This also requires a little bit of 

money. The utilities, which go to one of—there are a number of 

courthouses in this courthouse complex, including the new one. But 

the utilities that go to some of the other occupied courthouses are 

actually located in the Dyer building. And so, we need to figure out 

a way to cut off the utilities and replicate them in another building. 

There are different ways we could do that. We could either say 

to somebody, ‘‘Take it as is, where is, but you are going to have to 

pay for us to duplicate the utilities,’’ or we have to pay for them 

ourselves. We are trying to figure out what to do. Believe me, I do 

not want that thing to sit there much more and—— 

Mr. DENHAM. Currently on the underutilized or excess property 

list? 

Mr. PECK. That is on the—it is underutilized. 

Mr. DENHAM. But it is not reported on the list? 

Mr. PECK. Not—I don’t think it has even been reported as excess, 

it is just underutilized. 

Mr. DENHAM. And, in fact, not many of the courthouses have 

been, it is my understanding, on the list of underutilized or excess—— 

Mr. PECK. We got rid of—I mean we moved out in, I don’t know, 

8, 10 years ago, I think we moved out a number of really old, underutilized, small courthouses. This one is probably not on the excess list yet, because we use the utilities in the building. So the—— 

Mr. DENHAM. And you brought up the new courthouse, the 

Wilkie D. Ferguson, Jr. United States Federal Courthouse. Obviously a new courthouse, but not fully utilized, either. 

Mr. PECK. It is—I walked through the building. I think it is fully 

occupied by the standard—if you take the standard that we get full 

rent on the building. I think the building was scoped out at a point 

at which we were designing buildings for a higher anticipated number of judgeships than we have—than have actually come about. 

And, as you know, we have scaled back—— 

Mr. DENHAM. Which is an issue of prosecution—— 

Mr. PECK. Which is an issue. And we and the courts have both 

scaled back what we do when we project the number of judgeships 

in the future. 

Mr. DENHAM. New York City, the Daniel Patrick Moynihan 

United States Courthouse. I just toured that, as well as the 

Thurgood Marshall United States Courthouse. The Thurgood Marshall, as you know, is being renovated. 

My concern here is one of the goals of the Civilian Property Realignment Act is actually space utilization. Courtroom sharing 

should be part of that. We have got courtroom sharing going on 

here. While it is still not full utilization according to the courtroom 

sharing model, we are looking at—we are renovating this. And they 

tell me the judges that are doing courtroom sharing are then moving over here. So, not only are we not meeting the goals of courtroom sharing in this building, but soon as this is done we are looking at moving a good percentage of those judges over. 

26 

Mr. PECK. Well, I think the distinction is that the judges who are 

sharing courtrooms while the Moynihan is being renovated are active judges. And under the courtroom-sharing guidelines of the judiciary, active district court judges don’t share courtrooms. Senior 

judges and magistrate judges do. 

So, we are moving them back. I mean when they move back into 

the Moynihan, as I said, they will meet the judiciary’s courtroomsharing guidelines. 

Mr. DENHAM. And then finally—again, one of my favorite topics—the current Los Angeles Federal courthouse. You will hear me 

talking about this one as much as Chairman Mica talks about FTC. 

The Roybal Federal Building and the 312 Spring Street courthouse, 

once the renovation—or the new building is complete, we are going 

to spend $365 million building a brand-new courthouse, even 

though we have got the Roybal Building that has two floors that 

are not being used for courtrooms. And then we are going to vacate 

Spring Street. 

First of all, I don’t agree that we should be building the new 

courthouse. But if we are going to build it, should we not be selling 

the empty courthouse that is going to be left vacant? 

Mr. PECK. Well, Mr. Chairman, when we build the new courthouse, we are either going to backfill the space that is vacated in 

the Spring Street courthouse, and which—and I just want to reiterate for the record that we are not going to reuse the—we are not 

going to use the Spring Street courthouse, beautiful building that 

it is, for courts any more because it doesn’t meet our security 

standards, handicapped accessibility standards. And when we are 

done, we will either backfill the building with leased space, getting 

out of leased space in Los Angeles, or we will get rid of that building. One or the other. 

Mr. DENHAM. Isn’t part of the challenge that you have with these 

historic buildings that, once they are vacated to—if you are not 

going to use them for their original intent of actually using it as 

a courtroom, then to try to put new leased space in there—I completely agree. We have got 1 million square feet of leased space in 

Los Angeles. We ought to be utilizing our Federal footprint better. 

But if it is—if you are never going to be able to put office space 

in a courtroom, wouldn’t you sell it for redevelopment or put it on 

that excess property list? 

Mr. PECK. What we are going to have to do is see what it takes 

to—you know, how much of the building can we use as-is or for 

very little investment to move people out of the leased space in Los 

Angeles and into the building. And if we can’t, then we will have 

to—that is when we will have to make the decision about doing 

something else with the building, and getting it out of the inventory, redeveloping it, selling it, whatever. But I mean we are not 

going to sit there with that building being vacant, or significant vacant. I will tell you that. 

Mr. DENHAM. Thank you. Well, I appreciate once again not only 

your time here as a witness today, but more importantly our ongoing dialogue. This truly has been a partnership to move this bill 

forward out of the House and into the Senate. We look forward to 

full cooperation to not only getting it out of the Senate, but actually 

27 

getting this signed into law and being able to work with you as it 

is implemented. 

I mean I think it is going to be a great thing for the taxpayers 

across the United States, to move out of many of these different 

buildings and sell off some of the things that we don’t need. We 

don’t want to have a fire sale, as you and I have often talked about, 

but we certainly want to get the best bang for our buck for the taxpayers. 

Mr. PECK. On that we certainly totally agree. 

Mr. DENHAM. At this time I would ask unanimous consent that 

today’s record of today’s hearing remain open until such time as 

our witnesses have provided answers to any questions that may be 

submitted to them in writing, and unanimous consent that during 

such time as the record remains open, additional comments offered 

by individuals or groups may be included in the record of today’s 

hearing. Seeing as there are no other Members up here with me, 

I don’t think anybody will object. 

[Laughter.] 

Mr. DENHAM. But without objection, so ordered. Again, I would 

like to thank our witness today for being here and for testimony. 

And at this time this committee is adjourned. 

[Whereupon, at 4:02 p.m., the subcommittee was adjourned.] 

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