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85–610 PDF 2014

FEDERAL TRIANGLE SOUTH: REDEVELOPING 

UNDERUTILIZED FEDERAL PROPERTY THROUGH 

PUBLIC-PRIVATE PARTNERSHIPS 

(113–43) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND 

EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

NOVEMBER 19, 2013 

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 

BILL SHUSTER, Pennsylvania, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

STEVE SOUTHERLAND, II, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

STEVE DAINES, Montana 

TOM RICE, South Carolina 

MARKWAYNE MULLIN, Oklahoma 

ROGER WILLIAMS, Texas 

TREY RADEL, Florida 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

JOHN GARAMENDI, California 

ANDRE ́ CARSON, Indiana 

JANICE HAHN, California 

RICHARD M. NOLAN, Minnesota 

ANN KIRKPATRICK, Arizona 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

ELIZABETH H. ESTY, Connecticut 

LOIS FRANKEL, Florida 

CHERI BUSTOS, Illinois 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY

MANAGEMENT

LOU BARLETTA, Pennsylvania, Chairman 

THOMAS E. PETRI, Wisconsin 

JOHN L. MICA, Florida 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

BLAKE FARENTHOLD, Texas, Vice Chair 

MARKWAYNE MULLIN, Oklahoma 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

MARK SANFORD, South Carolina 

BILL SHUSTER, Pennsylvania (Ex Officio) 

ANDRE ́ CARSON, Indiana 

ELEANOR HOLMES NORTON, District of 

Columbia 

MICHAEL H. MICHAUD, Maine 

TIMOTHY J. WALZ, Minnesota 

DONNA F. EDWARDS, Maryland 

RICHARD M. NOLAN, Minnesota 

DINA TITUS, Nevada 

NICK J. RAHALL, II, West Virginia 

(Ex Officio) 

(III) 

CONTENTS Page 

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

TESTIMONY 

PANEL 1 

Hon. Jeff Denham, a Representative in Congress from the State of California . 3 

PANEL 2 

Hon. Daniel Tangherlini, Administrator, U.S. General Services Administration ........................................................................................................................ 6 

L. Preston Bryant, Jr., Chairman, National Capital Planning Commission ...... 6 

David L. Winstead, Chair, Public Development and Infrastructure Council, 

Urban Land Institute ........................................................................................... 6 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Hon. Jeff Denham .................................................................................................... 31 

Hon. Daniel Tangherlini ......................................................................................... 38 

L. Preston Bryant, Jr. ............................................................................................. 56 

David L. Winstead ................................................................................................... 64 

SUBMISSION FOR THE RECORD 

Hon. Daniel Tangherlini, Administrator, U.S. General Services Administration, answers to questions for the record from the following Representatives 

and Delegate: 

Hon. Lou Barletta, of Pennsylvania ................................................................ 42 

Hon. Eleanor Holmes Norton, of the District of Columbia ........................... 45 

Hon. Andre ́ Carson, of Indiana ....................................................................... 45 

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(1) 

FEDERAL TRIANGLE SOUTH: REDEVELOPING 

UNDERUTILIZED FEDERAL PROPERTY 

THROUGH PUBLIC-PRIVATE PARTNERSHIPS 

TUESDAY, NOVEMBER 19, 2013 

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 10:03 a.m., in 

Room 2253, Rayburn House Office Building, Hon. Lou Barletta 

(Chairman of the subcommittee) presiding. 

Mr. BARLETTA. Today’s hearing is on Federal Triangle South in 

Washington, DC, and how we can use public-private partnerships, 

or P3s, to redevelop underutilized Federal real property. 

There are key challenges that we face today with managing the 

Federal real property inventory. One challenge is to get Federal 

agencies to think differently about the space they use. While the 

private sector understands that space is money and so has moved 

towards smaller, more efficient space solutions, the Federal Government has been slow to adopt this philosophy. 

This committee worked in recent years on a bipartisan basis to 

reduce the Federal real property footprint and to get Federal agencies to use space more efficiently. We succeeded in getting agencies 

to reduce their space requests submitted to this committee, and the 

administration has issued directives on freezing the Federal space 

footprint. 

While there are still agencies that seem to be slow in getting the 

memo, many others have started realizing that the more they pay 

for space, the less funding they have for people and their core missions, but even as we move towards freezing or even reducing the 

space footprint, the reality is Federal agencies are going to continue to need space to do their jobs. 

The question is: how do we ensure we are optimizing the utilization of that space and reducing the costs to the taxpayer? 

Much of the Federal space inventory is aging and inefficient, and 

with current budget climate and record deficits, we must look for 

alternatives to traditional Federal construction for new space. That 

is why when I became chairman of this subcommittee, I began to 

explore how P3s could be used in Federal real estate. 

Earlier this year, we held a hearing focusing on options for a new 

FBI headquarters, and I hosted a roundtable to begin a dialogue 

with public and private real estate experts on P3s. In recent years, 

2 

there has been significant interest in exploring the use of P3s and 

redeveloping the area known as Federal Triangle South here in the 

Nation’s Capital. This site, adjacent to the National Mall, has a 

combination of underutilized and vacant properties. 

The current Federal tenants include the Department of Energy, 

FAA, and GSA. The buildings that are used are inefficient and 

costly to maintain and sit on underutilized prime real estate in the 

heart of DC. 

As a first step towards redeveloping this site in 2012, GSA issued 

a Request for Information, an RFI, seeking input from the private 

sector. If done correctly, redevelopment of this area leveraging private investment could benefit the Federal taxpayer, the tenant 

agencies, as well as the local community. 

Unfortunately, there are underutilized and vacant Federal properties across our entire Nation. There are not only direct costs to 

the taxpayers in maintaining and operating them, but they also impact the communities in which they sit, often limiting private investment and development of prime real estate. 

I hope that proposals like the one for Federal Triangle South can 

be a template for how we can use P3s to address the problem of 

underutilized and inefficient Federal real estate across the country. 

I look forward to hearing today where we are in the process of 

redeveloping Federal Triangle South, what benefits would be, and 

how we can use P3s to address the problem of underutilized properties. 

I want to thank you all for being here today. 

I will now call on ranking member of the subcommittee, Mr. Carson, for a brief opening statement. 

Mr. CARSON. Good morning. I would like to thank Chairman 

Barletta for his leadership in calling today’s hearing on Federal 

Triangle South, a part of Federal land located just a few blocks 

west of the U.S. Capitol, which contains over a million square feet 

of Federal office space. 

Today’s hearing asks an important question: what can we do to 

develop and maintain the Federal real estate portfolio? In an ideal 

world, Congress would vote for a robust annual appropriation for 

GSA’s revolving fund to support a proper investment in the existing portfolio. These funds would be used to renovate existing structures; and instead of engaging in costly long-term leases, new 

buildings could be constructed where there is long-term need for 

real estate by a Federal agency. 

Unfortunately, because of Congress’ repeated cuts in GSA’s construction and renovation budget, and because of arcane budget 

scoring rules, GSA has not been able to fund projects that maintain 

the aging inventory of buildings. My first choice, which is the most 

cost-efficient choice, was to simply allow GSA to use the funds it 

collects from other agencies to maintain its portfolio. 

The next choice is using public-private partnerships to extract 

value from aging assets located in valuable areas around the country. These partnerships should be used to either fund the construction of new buildings or renovate existing structures in the GSA 

real estate portfolio. We know that GSA is capable of presiding 

over terrific public-private investments. In the District of Columbia, there are two good models: the highly regarded GSA renovaVerDate Aug 31 2005 11:36 Jun 06, 2014 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\ED\2013\11-19-~1\85610.TXT JEAN
3 

tion of the Hotel Monaco, formerly the Tariff Building, and the Old 

Post Office Building. 

These projects demonstrate that GSA could make excellent use 

of otherwise antiquated and virtually useless Federal structures 

and turn them into income producing properties. We should be able 

to repeat the process that led to these successful projects and revitalize the existing public building service portfolio. 

The subcommittee crafted new tools to develop GSA property 

using public-private partnerships. In 2007, Congress enacted and 

the President signed Public Law 108–447. This granted GSA the 

authority to engage in leaseback arrangements and exchanges for 

Federal property that could facilitate a public-private partnership. 

To date, GSA has yet to implement this authority to redevelop any 

of its underutilized properties. 

This needs to change because there are opportunities across the 

country that could bring the Government an excellent return on its 

investment. We hope to hear from today’s witnesses about their 

concrete plans for extracting value out of Federal Triangle South 

by using public-private partnerships. This could ultimately provide 

more energy and space efficient workspace for Federal agencies and 

save taxpayer dollars. 

So I thank each of our witnesses for their testimony today, and 

I yield back the balance of my time. 

Mr. BARLETTA. Thank you, Ranking Member Carson. 

On our first panel today is former chairman of this subcommittee 

and current chairman of the Subcommittee on Railroads, Pipelines 

and Hazardous Materials, Representative Jeff Denham. 

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

Without objection, so ordered. 

Since your written testimony has been made a part of the record, 

the subcommittee would request that you limit your oral testimony 

to 5 minutes. 

Chairman Denham, you may proceed. 

TESTIMONY OF HON. JEFF DENHAM, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. DENHAM. Thank you, Mr. Chairman, and thank you, Ranking Member Carson. Both of you guys have been leaders on this 

issue. 

Specifically the work I wanted to thank you for is the authoring 

of the Public Building Savings and Reform Act of 2013. It is a bipartisan matter, and we need to see much more of that, especially 

on reducing our debt. 

We have got over a trillion dollars deficit and skyrocketing debt, 

and we must examine every area of Government and look for ways 

to cut that spending. 

I would also like to thank Chairman Shuster for working with 

me on this issue to ensure that it receives the proper oversight and 

attention. Since taking the helm of this committee, Chairman Shuster has worked to create bipartisan solutions for our Nation’s 

problems, which is fitting for this topic that we are here to discuss 

today. 

4 

I am here today to talk about a bill that I authored and continue 

to work on with the assistance of Chairman Barletta and Chairman Shuster, who have been strong voices in cutting Government. 

H.R. 695, the Civilian Property Realignment Act, or CPRA as it is 

referred to, would create a nonpartisan, professional commission to 

root out ways to inefficiencies in the way that we manage our public building. 

The principles of this bill are the driving forces behind the effort 

to redevelop the Federal Triangle and serve as a model of how we 

manage property nationwide. 

I first proposed a civilian commission at the subcommittee’s first 

hearing in February 2011, and the President proposed a commission in his 2012 budget. In recent years, the GAO identified billions 

of dollars of waste through mismanagement over building and an 

overreliance on costly lease space to meet long-term housing needs. 

And on a bipartisan basis, this committee has struggled to house 

Federal employees in the most cost effective manner possible, 

though I am proud to say that due to the actions of this subcommittee, GSA leasing prospectuses are becoming much more efficient and saving taxpayer dollars. I believe the potential to save 

billions, tens of billions of dollars is real. 

I am very pleased that the President made Federal real estate 

a national priority by including it in his State of the Union in 2011 

and his official budget to Congress. Additionally, both houses of 

Congress have included this idea in their budget concerns and their 

budget documents. 

To be successful the commission will need to do five things: consolidate the Federal footprint, real estate footprint; house more 

Federal employees in less space; reduce our reliance on costly 

leased space; sell or redevelop high-value assets that are underutilized or too valuable for housing Federal employee like the Old Post 

Office that Trump is redeveloping here in DC; and then finally, dispose of surplus property more quickly. 

In my first term, I had a post office in my district, certainly controversial, but believe that we have got to sell off those things that 

just are not being used today. Today we are redeveloping that, creating jobs in our local community and actually having a new business that will be right there across from the courthouse. 

These properties can be redeveloped creating those local jobs, but 

also that ongoing boost to our local economies. So I believe a commission that uses these five principles to guide its decisions can 

have an immediate savings of upwards of $15 billion. We have got 

to have a solution that incorporates all five principles. 

For example, if the commission has a fire sale of worthless properties in one of the worst real estate markets in our lifetime, then 

we should not expect to save a lot of money. Simply dumping these 

vacant properties on a market is not a long-term solution. What we 

need is a CPRA, which is designed to reshape the way that this 

country manages the Federal footprint, and fortunately, this administration recognizes the same problem. 

At the end of the day, the total cost of housing the Federal Government is directly proportional to how much real estate we hold. 

To save money, we have to consolidate that footprint. To consoliVerDate Aug 31 2005 11:36 Jun 06, 2014 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\ED\2013\11-19-~1\85610.TXT JEAN
5 

date, we must house more employees in less space. Fortunately 

there are tremendous opportunities to have savings in this area. 

GSA is working to reconfigure its headquarters building to triple 

the number of employees working there from 2,000 to 6,000 in the 

same building, allowing GSA to vacate two other buildings. 

The private sector has been increasing its utilization rates for 

over a decade, and a commission can achieve the same results in 

the Federal Government. Reducing expensive leased space is another principle necessary for a successful commission. The Federal 

Government spent well over a billion dollars to lease space for the 

Department of Transportation’s headquarters, yet the Government 

could have purchased several buildings for this amount and housed 

thousands of employees for much less money. 

Perhaps one of the greatest areas for taxpayer savings will be in 

the redevelopment or sale of high-value, underutilized properties. 

The Postal Service used a private developer to transform a rundown, money pit with a great location into $150 million in revenue 

and a fully renovated building without any taxpayer money. 

While the Government retained ownership of this property, in 

other cases selling may generate the greatest savings for the taxpayer. There are high-value properties all across the country that 

are being used inefficiently and oftentimes have large amounts of 

vacant space. Maximizing this value is what CPRA seeks to 

achieve, and I am proud that not only do we have bipartisan support in the House and Senate, but the President actually wants to 

engage on this issue. We can save billions of dollars by working together. 

Mr. BARLETTA. Thank you for your testimony, Chairman 

Denham, and for your work on these issues, and I would like to 

note that Senator Warner has introduced a companion bill to yours 

in the Senate. I think that is a big step and shows your approach 

has strong support in the House, Senate and in the White House. 

Your comments have been very helpful to today’s discussion. 

Mr. DENHAM. Thank you. 

Mr. BARLETTA. Thank you for coming. 

On our second panel today we have the Honorable Daniel 

Tangherlini, Administrator of General Services Administration; Dr. 

L. Preston Bryant, Jr., Chairman of the National Capital Planning 

Commission; and Mr. David Winstead, chair of the Public Development and Infrastructure Council of the Urban Land Institute. 

I ask unanimous consent that our witnesses’ full statements be 

included in the record. 

Without objection. 

Since your written testimony has been made a part of the record, 

the subcommittee would request that you limit your oral testimony 

to 5 minutes. 

Administrator Tangherlini, you may proceed. 

6 

TESTIMONY OF HON. DANIEL TANGHERLINI, ADMINISTRATOR, 

U.S. GENERAL SERVICES ADMINISTRATION; L. PRESTON 

BRYANT, JR., CHAIRMAN, NATIONAL CAPITAL PLANNING 

COMMISSION; AND DAVID L. WINSTEAD, CHAIR, PUBLIC DEVELOPMENT AND INFRASTRUCTURE COUNCIL, URBAN 

LAND INSTITUTE 

Mr. TANGHERLINI. Thank you very much, and good morning, 

Chairman Barletta, Ranking Member Carson, Congresswoman 

Norton and Congressman Nolan. I also want to thank Chairman 

Denham for his testimony and leadership on this issue. 

I also appreciate you inviting me to appear before you today. 

We are here today to explore the increased utilization of publicprivate partnerships both at GSA and across the Government. Public-private partnerships are essential to what GSA already does. In 

a very real way our Public Building Service is a public-private 

partnership. 

Approximately 92 percent of the revenue in the Federal Buildings Fund is invested in the private sector. These funds pay private 

sector landlords for existing lease obligations, service companies to 

operate and maintain our buildings, and design and construction 

firms to repair and construct our facilities. 

At GSA, we are dealing with a building inventory that includes 

some of the oldest buildings in the country, buildings that not only 

need repairs to keep them in working order, but often require renovations to ensure that they are up to the standards of 21st-century Government. 

Unfortunately in recent years, as Ranking Member Carson pointed out, GSA has been unable to use rent that we receive from our 

partner agencies to fund the high-priority mission needs of Federal 

agencies and to make basic repairs to the public buildings we hold 

in trust. In fact, we are now faced with cuts that would limit GSA’s 

ability to meet even our existing lease obligations. 

In the face of these continued challenges, I am committed to exploring all of GSA’s authorities to reduce the cost of real estate, 

meet our partner agencies’ needs, and repair and maintain our 

public buildings. GSA partners with private industry to deliver 

needed space and service to our agency partners. Beyond our traditional ongoing partnership with private industry, GSA is interested 

in further exploring the use of flexible authorities that do not require upfront funding. 

To that end, with the direction from Congress and this committee, in particular, this year GSA used its authority under Section 111 of the National Historic Preservation Act to out-lease the 

Old Post Office. The funds that GSA receives from the Old Post Office lease will be deposited in the Federal Buildings Fund and 

could be used for repair and upkeep of historic Federal buildings 

across GSA’s inventory, saving additional taxpayers’ dollars. 

We are also actively exploring new approaches to leverage the 

value of our older, outdated buildings to get new, highly efficient 

space for our partner agencies. We have put in motion several potential exchange projects, including the J. Edgar Hoover Building 

here in Washington, DC, and of course, the project that is the subject of today’s hearing, Federal Triangle South. 

7 

Federal Triangle South is actually a series of projects that could 

use exchange to leverage the value of several buildings in Southwest DC to fund new, highly efficient space for the agencies currently housed there. Right now the buildings that comprise this 

area represent a significant challenge, as well as an opportunity for 

both GSA and the agencies that occupy them. 

The Cotton Annex is empty. The GSA Regional Office Building 

Seventh and D Streets, SW., is an inefficient and unattractive 

space that was not constructed with the modern realities of a mobile workplace in mind. The Department of Energy Building is another facility that does not accommodate its tenants’ needs for 

space or facility amenities and underutilizes the valuable land on 

which it sits. 

The Federal Aviation Administration buildings are in the best 

shape of any of these facilities, but they, too, are not equipped to 

meet the needs of 21st-century Government. 

On December 2, 2012, GSA issued a request for information to 

identify creative solutions to the challenges presented by these 

buildings, and on February 4, 2013, we received 10 responses. GSA 

has evaluated these responses and developed a strategy on how 

best to proceed. GSA intends to release an RFP in the very near 

future to exchange the Cotton Annex property and the Regional Office Building for services. This exchange would facilitate completing 

construction and further consolidation of the GSA Headquarters, as 

well as advance efforts to support DHS’s consolidation at St. Elizabeths. 

We will continue to explore options to address the needs of other 

agencies in the Federal Triangle South area. 

We are excited about the prospect of exchanging some of our existing inefficient and outdated properties for facilities that better 

serve today’s needs. We believe that this will facilitate the District’s efforts to transform the properties at Federal Triangle South 

and upgrade a thriving, mixed use neighborhood. 

Through this initiative, we can provide for both the 21st-century 

space needs of Federal employees, while also creating a place in 

which people will want to work, live, play and learn. By exchanging 

underperforming Federal property for services to upgrade and renovate other Federal facilities, we can help replace a cold, sterile, 

utilitarian, single use enclave with a vibrant, diverse, and special 

community of its own 

I thank the committee for the opportunity to testify today, and 

I look forward to answering your questions. 

Mr. BARLETTA. Thank you for your testimony, Administrator 

Tangherlini. 

Chairman Bryant, you may proceed. 

Mr. BRYANT. Good morning, Chairman Barletta and members of 

the subcommittee. My name is Preston Bryant, and I serve as 

Chairman of the National Capital Planning Commission. 

NCPC is the Federal Government’s central planning agency for 

all Federal lands and buildings in the greater Washington, DC, 

area, and I am pleased to have this opportunity to speak with you 

about NCPC’s role in planning the area south of the National Mall, 

and the purpose of my testimony today is to highlight NCPC’s what 

8 

we call the SW Ecodistrict Initiative and to provide context for 

GSA’s Federal Triangle South project. 

As the Nation’s Capital and seat of the Government, Washington, 

DC, has unique needs, and NCPC, our planning agency, works to 

do three things: to protect our symbolic and cultural heritage; to 

ensure that there is room for future generations to locate new memorials and museums and host national events; and third, in consultation and partnership with GSA and others, to ensure that the 

Federal facilities meet agency needs and provide for a safe, efficient, and attractive workplace. 

NCPC believes that the SW Ecodistrict Initiative is a roadmap 

to meet these goals and a great example of the ability of partnerships to achieve these greater results. We are excited that GSA is 

an important partner in this process and that they are using the 

SW Ecodistrict Plan to inform their approach to Federal Triangle 

South. 

The SW Ecodistrict Initiative stems from several earlier NCPC 

studies to identify opportunities to fully modernize and reconnect 

several Federal precincts around the National Mall. Perhaps the 

greatest opportunity is the area we are talking about today, and 

that is the area just south of the Mall. It is 110 acres of Federal 

and private properties and is bounded by Independence Avenue on 

the north, Maine Avenue on the south, Fourth Street to the east 

and Twelfth Street to the west. 

GSA’s Federal Triangle South Initiative comprises 35 acres of 

these broader 110 acres. Today this area is identified by super 

blocks with predominantly single use, aging Federal office buildings. The size and design of these buildings, the tangled network 

of infrastructure and, frankly, the lifelessness after 6 p.m. public 

realm contribute to the inefficient use of these lands and buildings. 

Now there are several efforts underway to create a once in a lifetime opportunity for transformation. This is consistent with the administration’s ‘‘Freeze the Footprint’’ policy. Now the Federal Government is reexamining its property to create more efficient workspaces for a modern workforce, dispose of unneeded property, and 

reduce its operating costs. In addition, there is a multibillion-dollar 

private project going on in the same area. 

In 2010, in close consultation with GSA, the National Park Service, the Commission of Fine Arts and the District of Columbia, we 

created a partnership of 17 Federal and local agencies to think 

through the SW Ecodistrict Initiative. We also consulted with residents, private sector businesses, property owners, and service providers to fully explore how we can synchronize projects, leverage 

resources, and develop mutually beneficial partnerships. 

Through this partnership and a lot of detailed technical work 

over the last 3 years we have built a compelling case to work with 

GSA and others to revitalize this important part of our city. The 

SW Ecodistrict Plan recommends how best to accommodate future 

Federal office space needs and use land efficiently while creating 

a new, vibrant mixed use neighborhood. 

The opportunities abound. We can reduce operating and maintenance expenses, reduce ongoing lease expenses, generate new tax 

revenue for the District of Columbia, retain and improve the efficiency of Federal office space and accommodate more employees, 

9 

create additional residential, hotel and private office space, and 

create new sites for museums and monuments adjacent to the National Mall. 

The approach we are using for this plan is an areawide one as 

opposed to a building-by-building approach, and by taking an 

areawide approach, we can, for example, manage 110 acres of 

stormwater. We can significantly reduce the potable water use, and 

we can reduce greenhouse gas emissions by more than 50 percent. 

High-level analyses have shown that the benefits to the Federal 

Government and the taxpayer, to the District of Columbia, and to 

private developers exceeds the costs. The challenge, however, is the 

scale and complexity. This is a huge project. Implementation can 

only be achieved through collaborative action by both the public 

and private sectors, and the SW Ecodistrict Plan identifies several 

opportunities which we recognize will be difficult in the current 

economic environment to do these. 

We can, for example, as I mentioned, implement areawide 

stormwater management systems; modernize and expand GSA’s 

central utility plant; make public realm improvements by working 

with others in the neighborhood; and to redevelop and rehab Federal property to meet GSA’s needs for a modern workforce. My further statement is in the record, and I will be happy to take questions. Thank you. 

Mr. BARLETTA. Thank you for your testimony, Mr. Bryant. 

Mr. Winstead, you can proceed. 

Mr. WINSTEAD. Chairman Barletta, Congressman Carson, Delegate Norton, I am pleased to be here. I am David Winstead. 

The staff asked me to talk about my perspective on this project 

and others from the viewpoint of the Urban Land Institute. I am 

immediate past chair of the Public Development and Infrastructure 

Council, which was formed in 2007. I was Commissioner of Public 

Buildings at GSA in that year, and we very much were looking for 

a forum of both public real estate executives and private to talk 

about the structure of the best deals, the authorities in looking at 

public-private approaches to real property. 

This council, I have shared with the committee various white papers and case studies that were done looking at exactly the structure of the kind of project the Administrator is looking at. We actually developed a framework for policy development and valuation 

of public-private real estate ventures. We have looked at completed 

case studies as well as hypothetical studies, such as the South Federal Center, as well as a headquarter project and a couple of others. 

Members of PDIC have a broad experience in real estate. Former 

Commissioner Bob Peck has recently joined the council. We realize 

the challenge that the Administrator and the committee recognize 

in terms of shrinking resources, the Federal Building Fund, the 

rental issues, and revenues. So looking at private delivery and efficiencies in rentable space, delivery and finance, and living within 

the Federal budget is really key. 

I struggle with, and I know Dan does, as well, the rent relationship to the Federal Building Fund and the imposition it has or the 

limits it has on the ability for Federal construction. 

10 

There are two obviously RFIs and others. The Post Office has 

been settled, but Federal Center South as well as the FBI Headquarters Project are in the RFI stage, looking for interest in the 

private sector and approaches. 

Several case studies looked at surplus Federal real estate or 

underrenovated Federal real estate and that backlog that GSA still 

has. We have looked at utilizing private entities to secure financing 

and development of needed projects on existing federally owned 

land, achieving Federal land ownership through purchase, exchanges as the Administrator mentioned, or donation. 

Ground lease models can vary from 30 to 65 years, which allow 

for GSA lease which can be properly scored by OMB, and the ownership of the asset remaining with the leaseholder during the term 

and being able to structure it in a way that it is not a below market purchase option at the end. So we have looked at that in a 

number of different ways, and as I said earlier, these cases are on 

our Web site, utilize ULI as a nonprofit real estate association. 

So I would urge the committee to look at these and take advantage of them. I know that GSA is. 

There are other projects that we have looked at, the ground lease 

operating structures, for example, the Veterans Benefit Regional 

Office in Atlanta; the Argonne National Laboratory in Illinois; the 

Military Housing Program which has been very successful, and the 

Ford Island Redevelopment, which is a combination of both. Enhanced use leasing in Houston at the Brook Army Medical Center, 

and also Camp Pendleton, and also, as Dan mentioned, with the 

Post Office utilizing historic preservation leasing authority such as 

the Monaco Hotel, Fort Hancock and Virginia Medical Center. 

ULI also has a local council. But I chaired the national PDIC 

committee as I mentioned, that looks at this issue: how do you take 

the viewpoint of the public real estate executive in facing these 

kinds of real estate management needs and meeting tenant interest 

of Federal agencies. 

On March 27th of 2011, ULI participated with NCPC and GSA 

and others in looking at the Federal Center South Project. I think 

there was a lot of exchange back and forth about proposed zoning 

and the upscale and mixed use nature of it, and how you can leverage the value of select public office buildings and land, and revitalize the areas to accommodate 14,000 Federal tenants ultimately. 

Although I did not participate in that charrette, Lisa Rother who 

heads up the council staff-wise did, and I think she found it was 

very valuable. I know GSA is looking at proposals. So it is still very 

much in process. 

Based upon some of the discussion I have had with Lisa, I think 

the challenges that some of the ULI participants saw was really in 

the land created from the transfer is going to be inadequate for the 

requirements of all that build-out in the Federal Triangle area. 

Two reasons for that are historic preservation requirements, and 

the encouragement to put in a street complex within the Federal 

Center South that will diminish density to a certain extent. So a 

lot of this is planning, and I am sure NCPC and DC Planning will 

engage. 

The parcels along Independence Avenue are clearly institutional 

Government functions. So they are really not in play. The sense of 

11 

it is that there is an awful lot of interest, but one approach that 

might come out of that is importantly matching parcels that create 

value with development that meet Government needs and looking 

at that on a smaller level, like parcel by parcel, to see how you can, 

in fact, build out the vision that NCPC and the District will have. 

I hope these comments are helpful. I would refer the committee, 

and I know the staff is aware of this, to ULI’s efforts in this area. 

If the committee would like us to look at anything in the future, 

we would be happy to do so. 

Thank you. 

Mr. BARLETTA. Thank you for your testimony, Mr. Winstead. 

I just want to say yesterday I had an opportunity to tour Southeast Federal Center, and I know Representative Norton played a 

major role in that, and as a former mayor, it almost made we want 

to be mayor again, you know, seeing the excitement of taking a 

very challenging project because of the environmental concerns 

there and turning it into a real tax base again, and there is no 

question that projects such as this could take the more difficult 

pieces of real estate and turn them into an economic advantage 

where the local community is a winner with increased tax revenue, 

and the taxpayer is also a winner and the Federal agencies as well. 

So you know, I think there is agreement here that this could be 

a direction and should be a direction that our country goes in for 

the benefit, and overcoming the challenges along the way that we 

will have. And there will be some obviously, but I think we are all 

committed to overcoming those. 

I will begin the first round of questions limited to 5 minutes for 

each Member. If there are additional questions following the first 

round, we will have additional rounds of questions as needed. 

And I will start, Administrator Tangherlini. Again, thank you for 

coming. 

How many responses did GSA receive from their Request for Information on Federal Triangle South? 

And what did GSA learn from those responses and the feasibility 

of redeveloping that area? 

Mr. TANGHERLINI. We received, as I said in my testimony, about 

10 responses from the private sector on Federal Triangle South, 

and what we learned was that there is actually an awful lot of 

market enthusiasm for working with GSA, with NCPC, with the 

city, with the public sector more broadly, to look at opportunities 

to really leverage the available land there and to help us revisit the 

way we make investments to serve the agencies that we provide facilities to. 

So what we took away from that was that there is a project or 

projects that are actually viable, that are doable, that can start a 

long-term vision, delivering our long-term vision that I think the 

city and NCPC should be commended for sitting down and actually 

trying to develop. 

Mr. BARLETTA. Administrator Tangherlini, is GSA working with 

DOE and FAA? And how open are they to your redevelopment 

plans? 

Mr. TANGHERLINI. We are working very closely with DOE, FAA 

and FAA’s parent agency, the Department of Transportation, and 

frankly, all of them are very interested. 

12 

We are also working, by the way, with the Department of Homeland Security, which is a tenant of ours in the Regional Office 

Building, and working closely with our own region, frankly. 

Look. Everyone out there knows that there is the possibility that 

they can get more productive, more sustainable 21st-century space 

to deliver on their mission. The irony of the Department of Energy 

Building being as energy inefficient as it is is not lost on the Department of Energy. They want better facilities so that they can 

meet their growing, not to mention demands for services and 

things we are asking them to do. 

So they see this as an opportunity in partnership with GSA, in 

partnership with the private sector to get what they need in terms 

of facilities to deliver on their mission. 

Mr. BARLETTA. And we understand that the buildings that currently house DOE and FAA are costly to maintain. They have a 

backlog of repairs and are inefficient. How would the use of publicprivate partnerships help address these issues and benefit the taxpayer? 

Mr. TANGHERLINI. Well, we think starting with an empty building like the Cotton Annex that, frankly, we can return that back 

to economic value within the community. 

What you saw down in the Southeast Federal Center was land 

that was not being put to its highest and best use being converted 

into land that could attain its economic potential and value. That 

required every bit of 15 years of hard work to get that done, but 

it started with a vision. It started with a concept, and then it was 

a project-by-project effort. 

We think that the private sector can help us make the investments necessary to meet the needs of these agencies by engaging 

in a partnership and perhaps exchanging value, taking something 

that is worth value that is not fully being realized, such as the 

floor area ratio of some of the buildings out there that are not 

being fully utilized; put that back into the marketplace; and get 

back services and facilities that meet the needs going forward. 

Mr. BARLETTA. Thank you. 

Chairman Bryant, I understand that the NCPC has also been examining how to better utilize underused and underdeveloped property. In your view are the current uses of this site maximizing the 

value for the taxpayer? 

Mr. BRYANT. This perhaps is as much Mr. Tangherlini’s realm as 

mine, but the short answer is no. That is why we began looking 

at this precinct, these 110 acres, more than 3 or 4 years ago. 

There are many buildings that do not occupy or fully use their 

existing site. DC has a height limit, but there are some buildings 

that could be taller. They are not reaching the current height now. 

We have worked very closely with the private sector. Again, as 

I mentioned, there is a major waterfront development being 

planned, a multibillion-dollar development. So we have been working in conjunction with private sector developers who are active in 

the area to make sure that our plan and our vision complements 

what they are going to do so that we can better utilize and max 

out these sites. 

So the short answer is, no, they are not fully utilized and they 

can be improved. 

13 

Mr. BARLETTA. Thank you. 

I would like to now recognize Ranking Member Carson for 5 minutes of questions. 

Mr. CARSON. Thank you, Chairman Barletta. 

Administrator Tangherlini, will an RFP for Federal Triangle 

South represent the approach that the GSA is expected to take 

with the exchange being contemplated for the downtown FBI Hoover Building? 

How long will the taxpayer’s interest be protected in that deal? 

If the Hoover Building does not cover the cost of full consolidation of the FBI, how will GSA pay for additional costs? 

And lastly, how will GSA vet this plan for financial viability? 

Mr. TANGHERLINI. Those are great questions. Frankly, what we 

are trying to do in each of these instances is recognize the limits 

that have been imposed on GSA in terms of our ability to tap into 

the Federal Buildings Fund and move forward and make the kind 

of necessary investments that we should be making to provide 21stcentury facilities for agencies to meet their needs. 

And so looking at our authorities we are asking ourselves how 

can we work closely with the private sector to meet those needs. 

What we have proposed as a possible development scenario for 

FBI and as parts of Federal Triangle South is the idea of an exchange using existing GSA authorities, asking what the market 

would give us in exchange for the actual possession of that property. Frankly, we will not know what the gap will be until we actually get expressions of interest from the private sector, and so we 

have to leave as an opening a question of how would we fill that 

gap if there is one. 

Mr. CARSON. Is this plan viable if interest rates rise to historical 

norms? 

Mr. TANGHERLINI. You know, that is a great question. What 

would be the viability of any private sector participation in a PPP 

if interest rates changed dramatically? 

That is why it is very important for us to move quickly while we 

have the favorable interest rate environment we have right now. 

Mr. CARSON. Mr. Winstead, in your testimony you discuss previous Federal projects that are good examples of public-private 

partnerships. Are there any examples that use the kind of swap 

GSA is proposing with Federal Triangle South? 

Can you please describe how those deals were effectively structured? 

Mr. WINSTEAD. Congressmen, there are a couple. I think the two 

that are most relevant are the Argonne National Lab, and I gave 

you a copy of the case study where it was really premised on a public-private exchange where DOE’s Atomic Energy Act was provided 

authority to have an arm’s length transaction where there was an 

exchange of land value and secured financing through in that 

project the Illinois Finance Authority, which organized an RFI and 

went out with a ground lease where the special purpose entity had 

a long-term lease of the space and the to be constructed facility 

with required parking. 

The operating lease was reviewed and constructed based on the 

value of the property and the lease. So that is one example. 

14 

Another one is looking at the VA office in Atlanta, Georgia. It is 

called the VARO Office Building, which was developed by the Authority under public-private partnership. Again, you had the value 

of the land and looking at a ground lease exchange where the Authority commitment included providing financing through the 

issuance of taxable revenue bonds and secured developer by means 

of an organized competition. 

Once the ground lease was secured, the financing was arranged 

and the Authority entered into a lease of space with the VA for its 

use of to be constructed office building in Atlanta. So there are existing cases, and I have provided those to the committee and would 

be happy to provide more. 

I think I covered in my remarks the ones that we have looked 

at and are aware of. I would mention that in terms of Federal Center South, one of the biggest struggles, and I had an inside view 

of this for 3 years, is this issue of deferred maintenance of Federal 

buildings. I think the concentration of these properties in this incredibly monumental spot of Washington, DC, next to the Mall and 

trying to open that vista, really do have values. If you can look at 

them, I think one of the concerns that the ULI charrette yielded 

was you have to almost look at it parcel by parcel in order to really 

create and maximize the values. 

But there are examples and structures I am privy to, and I am 

sure the staff is, of how to approach these projects on that basis. 

The FBI RFI is now out there, and that is going to be an exchange 

of the Hoover Building, discounting construction over a long-term 

ground lease that will bring the value to the taxpayer, you know, 

maybe $50 million a year in rent. 

So there are cases, these specifically, and we can provide others. 

Mr. CARSON. Thank you. 

Mr. Chairman. 

Mr. BARLETTA. The Chair recognizes Representative Norton for 5 

minutes. 

Ms. NORTON. Thank you, Mr. Chairman, and I appreciate very 

much that you are holding this hearing at this time. 

Mr. Chairman, this is a city 10 miles square. I do not know how 

many acres you would say the District of Columbia is, but when 

there are large tracts of land in a city that does not have a great 

deal of underdeveloped land, and it turns out to be Federal land, 

that is on us and it is on GSA. So it is a very important hearing. 

I want to thank all of you for your testimony because I found it 

all very helpful. I want to particularly thank Mr. Tangherlini for 

taking the GSA in an entirely new direction. Some of us who have 

been on the committee and subcommittee for some time have been 

concerned that GSA has long been a powerful agency, but reluctant 

to use its authorities even when this subcommittee gave it new authorities. 

The chairman mentioned the Southeast Federal Center. I grew 

really frustrated that there were 57 prime acres there and the Federal Government could not figure out what to do with it, and they 

had really quite mundane notions about, well, you know, let us put 

some Federal workers down there, and the Federal workers did not 

want to go down there so that there it lay. 

15 

We have an Ecodistrict. Now, this is one is really shameless because that is near the Mall and really even more centrally located, 

sitting there just waiting for somebody to come forward, and this 

subcommittee has had hearings on it before. 

Now, Mr. Tangherlini, you have moved the GSA to really thinking about leveraging private sector, and its funds to accomplish 

public sector ends, like reducing the Federal footprint, even getting 

Federal revenue. I wrote you concerning what is really the 

Ecodistrict here, but I wrote you concerning a leveraging opportunity that I was concerned might be passing us up. And that is 

that the CSX Corporation, which is building a train. I mean, the 

Panama Canal is going to go from here all the way up the east 

coast and through the District, and it has a right-of-way along 

Maryland Avenue, and it must proceed when it gets here. 

Now, I was concerned that the CSX could get here with GSA sitting on its assets instead of leveraging this great opportunity that 

CSX very much needs, putting the GSA really in the catbird seat. 

There are one or two minor buildings in their way, and meanwhile 

you want to essentially build areawide. 

You responded that you were engaged in Maryland Avenue discussions. Maryland Avenue is a central avenue running through 

this area we are talking about, but you said the reconstitution of 

Maryland Avenue is a complex issue on many facets, including but 

not limited to local land use planning. 

Well, we have heard from Mr. Bryant. We know that the District 

of Columbia greets this. So we know that is not in the way now. 

So I have got to ask you: first of all, where is CSX? How far up 

the east coast has CSX come? Do you know that? Is it anywhere 

near Washington, DC, now? 

I ask this question, Mr. Chairman, because CSX is going to come 

and go whether or not GSA acts. It is just going to go right through 

here. So I am concerned simply about the timing, and I understand 

that we cannot do the whole Ecodistrict on the CSX leverage, but 

you said something in your testimony that intrigued me. You indicated that you wanted to move first on the Cotton Annex and an 

adjoining building that I think is a GSA building. 

Does that indicate that you are trying to move in time to take 

advantage of this opportunity that CSX needing some of your property offers you? 

Mr. TANGHERLINI. The short answer at some level is yes. I am 

not the best person to speak to what the status of the CSX doublestack project is. 

Ms. NORTON. Well, I would think that that would be of some— 

and I am going to ask you to find out, Mr. Tangherlini. 

Mr. TANGHERLINI. Right. 

Ms. NORTON. If you found out, for example, that CSX was already in Virginia, I do not know the path it is going to even come, 

but it is coming from south to north; if you found that they were 

somewhere in Virginia, it seems to me that that would factor in, 

or somewhere in North Carolina, that that would factor into your 

own timing for how you proceed. 

So if you do not know, could you find out and let the chairman 

know within 30 days where the CSX—just leave aside here we 

are—where is CSX coming up the road? How far has it gotten? Is 

16 

it within shouting distance of the District of Columbia? And if so, 

what would you do? 

Mr. TANGHERLINI. Well, so notwithstanding where they are in 

their project, what I was trying to convey is that we are moving 

very aggressively with identifying a project that we think relates 

to the issues that were raised. We want to maximize—— 

Ms. NORTON. So why did you choose these two buildings first? 

Mr. TANGHERLINI. So those two buildings, frankly, are the easiest 

buildings, one being empty, one being one that we occupy, for us 

to move forward. They are ones that adjoin the tracks and do relate 

directly to the first stage in the Maryland Avenue project. 

We have been working very closely with the District of Columbia 

about Maryland Avenue and how they would actually work closely 

with us to allow Maryland Avenue to be extended through. We 

have been working very closely with the NCPC. We have been very 

attentive to what the environmental impacts are and what the environmental impact process is, and so that is why we are able to 

consider the various different elements of the plan and move forward on some and further research others. 

Ms. NORTON. Just a final question. You look at the Southeast 

Federal Center. While the Government cleaned it up, the Southeast 

Federal Center yields revenue for the Federal Government. 

Mr. TANGHERLINI. Right. 

Ms. NORTON. It has essentially paid for itself, and I need to know 

whether you believe that the Ecodistrict can be developed without 

Federal funds through the use of 412 authority, other authorities 

you may have. 

To the greatest extent possible, do you think that this district 

could be developed in a way similar, say, to the way in which the 

Southeast Federal Center was developed with our Federal funds? 

Mr. TANGHERLINI. We think that there are dramatic possibilities 

for economic development in the Ecodistrict. The NCPC and the 

city have done an awful lot of work to look at what the economic 

potential both locally and nationally are. That is why we believe 

moving forward on some particular—— 

Ms. NORTON. That was not my question. My question was the 

Southeast Federal Center was developed without Federal funds, except the cleanup. And my question is: given your leveraging and 

your other authorities, do you believe that the Ecodistrict could be 

developed without Federal Funds? 

Mr. TANGHERLINI. That is our hope, and that is why we want to 

go into the market with these buildings and understand what the 

actual value and what the interest of the market is. So that is our 

hope. That is our interest. Frankly, it is clearly our desire. 

The question is: what is the market going to demonstrate? And 

we see that this is an opportunity to do something quickly that addresses the issues that you raise about the infrastructure investments that need to happen and that give us an understanding of 

what the market is interested in in giving us back. 

Ms. NORTON. Thank you, Mr. Chairman. 

Mr. BARLETTA. Thank you, Ms. Norton, and we will have a second round of questions if you have more. 

17 

And I would like to just second Ms. Norton’s point and would like 

to hear a response to her question and whether or not an evaluation was done and what those conclusions for CSX are. 

Now I would like to recognize Mr. Mica for 5 minutes. 

Mr. MICA. Thank you, Mr. Chairman. 

We are using the cheap system today. 

Well, it is good to see you back, Mr. Tangherlini and others, in 

our continuing saga. As you know, when our side was in the minority, we produced the report that was entitled ‘‘Sitting on Our Assets: The Federal Government’s Misuse of Taxpayer-Owned Assets,’’ and it has provided a guideline. 

And when I chaired the Transportation Committee, we asked Mr. 

Denham to help take the lead in going after this. We have done 

a series of hearings on empty public buildings in Washington, DC. 

We did the Post Office at least twice, and I want to commend you 

for getting that going. That is going to turn that asset, I believe. 

We will get about $250,00 a month off the lease from an asset that 

was depreciating and cost taxpayers $8 million to $10 million a 

year, a half empty, 400,000 square-foot building and an annex that 

had been vacant for 15 years. 

I see the power plant is up for sale. We did the hearing on the empty power plant, $19 million realized putting it online. 

And the Cotton Exchange is not as pretty a picture. We did the 

hearing there I am told in August of 2012, and that is part of this 

Southwest Triangle. 

You did follow up, as I am told, with a Request for Information 

last December. Now, do you have a specific time, and you had some 

interest there, when you are going to do the RFP? 

Mr. TANGHERLINI. As I mentioned in my testimony, sir, we hope 

to actually get it done I said very soon. We have committed by the 

end of January, and so we are hoping to have something out by 

then. 

Mr. MICA. By the end of January? 

Mr. TANGHERLINI. Yes, sir. 

Mr. MICA. Again, I was not here for the earlier testimony. Is that 

a partial Request for Proposal on the Cotton Exchange or is it the 

whole Southwest Triangle? 

Mr. TANGHERLINI. No, no. Our proposal at this point, and that 

is what we are still working on, is either the Cotton Exchange and 

the Regional Office Building or the two of the buildings. 

Mr. MICA. OK. This is a very slow process. Is there anything legislatively that we could do to help you speed it up? 

Mr. TANGHERLINI. Well, I actually think that given the fact that 

we have to make sure that we coordinate very closely with the city, 

with NCPC, understand what the marketplace can bear, be careful 

about understanding the historic nature of the properties, those are 

things that we have to work through, and I agree that it would be 

ideal if we could move faster. I am not exactly sure what part of 

the very complicated process that is holding us up. 

Mr. MICA. Well, if there is anything legislatively, I want you to 

report back to the committee. 

Mr. TANGHERLINI. OK. 

Mr. MICA. Because, again, it is a very, very slow process. You are 

missing some of the market opportunities, but I think you are on 

18 

the cusp. The market is still red hot in the District, and it is very 

valuable property, and it can be turned from a nonperforming 

asset. The Cotton Exchange is at least 6 years empty. We did the 

hearing on the empty Cotton Exchange. 

Mr. TANGHERLINI. Right. 

Mr. MICA. As you know, I am not a happy camper about the FTC 

and the Constitution Building. We are going to have a hearing. Is 

that next week? OK. December it has been moved to. We had this 

little thing. I do not know any reason why we cannot get the entire 

FTC into that property. 

Have you signed the contracts or any lease agreements with any 

of the endowments, for any of the endowments to occupy the Constitution space? 

Mr. TANGHERLINI. I am not sure what the status is. 

Mr. MICA. OK. I want to know that. There is no reason they cannot all be in there. You can save $400 million to $500 million by 

consolidating the FTC. You are bringing in two current vacant 

properties, and they came in with a request for additional space. 

I have had folks over there. We have looked at it, and there is 

no reason why the balance cannot be moved into it. I have talked 

to the appropriators. I am going to do everything I can to stop anybody else from the FTC but the FTC going in there. I just want 

to make it clear. 

I know you have been put in somewhat of a political bind, but 

there is no reason that that entire operation cannot be consolidated. So when we do the hearing in a couple more weeks, I expect 

answers. I expect to try to move them in there. 

The whole thing is a fiasco to begin with when you rent a lease 

of a million square feet, and end up with an agency not using it. 

I know you are doing the best to fill this space, but our job is to 

do the best possible for the taxpayers, and we can save a tremendous amount of money by that consolidation. 

So I have not let up. I am not going to stop, and we will find 

a way to get that in there, and I appreciate your cooperation. If we 

have to move some political mountains, we will do that, too, and 

you are going to cooperate, right, Mr. Tangherlini? 

Mr. TANGHERLINI. I will do my best, sir. 

Mr. MICA. Thank you. 

I yield back the balance of my time. 

Mr. BARLETTA. Thank you, Mr. Mica. 

The Chair recognizes Mr. Mullin for 5 minutes. 

Mr. MULLIN. Thank you, Mr. Chairman. 

Mr. Tangherlini, I appreciate you coming in here. Obviously you 

are rather popular today in this meeting, and you have got a tough 

situation. You have got a tough road ahead of you, and our goal, 

I believe, is to see how we can work together. 

You have two people you have got to answer to, plus your job to 

do. I do not envy you, and I wish you the best of luck, truly. 

And so my question kind of has to do with how can we work together. So I understand that the GSA already has the authority to 

sell and redevelop underutilized properties; is that correct? 

Mr. TANGHERLINI. That is true. 

19 

Mr. MULLIN. All right. And so when you enter a public-private 

partnership to offset the costs associated with renovating or creating these spaces, you have the authority to do that, too, right? 

Mr. TANGHERLINI. We have certain authorities that can help with 

that, yes. 

Mr. MULLIN. OK. Are there any things that prolong or slow down 

the agency’s abilities to do that? 

Because obviously, you have a tremendous amount of property. 

I actually own two property companies myself, and vacant property 

is probably the biggest pet peeve I have, and there has to be money 

to be able to do it, which if you are able to offset it with, you know, 

public-private partnerships, it seems like you have the ability to do 

so. 

So what else is holding it up? 

Mr. TANGHERLINI. Well, I would like to make a couple of points 

that might clear up some misconceptions. The General Services Administration manages an awful lot of property. 

Mr. MULLIN. Yes. 

Mr. TANGHERLINI. A third of a billion square feet of commercial 

real estate. So we are one of the biggest commercial real estate 

land managers in the world. 

But we only represent about 10 percent of all the land actually 

controlled by the Federal Government, and our vacancy rate is actually very low. It is roughly around 3 percent. 

Mr. MULLIN. No offense. 

Mr. TANGHERLINI. None taken. 

Mr. MULLIN. But you are comparing yourself to worse and worse. 

Mr. TANGHERLINI. OK. 

Mr. MULLIN. So why would we compare ourselves to something 

that is already bad. Let us think about what you have. You have 

a third of it, right? Is that what you said? 

Mr. TANGHERLINI. No, no. We have 10 percent. 

Mr. MULLIN. Ten percent. OK. So you have 10 percent of it. So 

we have a saying in our company: pay attention to the pennies and 

the dollars will take care of themselves. So let us pay attention to 

your pennies then. 

Mr. TANGHERLINI. No, I agree. All I am saying is that we are 

working very hard on the vacant property that we have, but it is 

actually very small amount of the GSA portfolio, and so that is why 

we have been working very closely through OMB to work with 

other agencies to find vacant and underutilized property that other 

agencies have so that we can help them bring it to market. 

So, for instance, in California we have been working very closely 

with NASA. 

Mr. MULLIN. We are getting away from the question. The question was what is prolonging or slowing it down. What are the hurdles that are in front of you keeping this from actually happening? 

Mr. TANGHERLINI. And my point was that it is actually happening. Now, we do have requirements, often legal requirements, 

such as the NEPA Act, which makes sure we are careful about how 

we impact the environment in communities in which we operate. 

We have historic preservation laws which make sure that we do 

not take these assets which people have invested in over a long 

20 

time like the Old Post Office and not treat them appropriately and 

respectfully. 

These are the things that actually lend to some additional time 

in the Federal Government doing redevelopment versus what it 

might take in the private sector. 

Mr. MULLIN. So what is your average turnaround on a piece of 

property? What is your average property set bank it? 

Mr. TANGHERLINI. I do not actually have a number for you right 

now, but I could find it. 

Mr. MULLIN. Have you got a guess? I mean, I can guess and I 

am up here all the time. I do not even really get to manage it anymore and I can give you an idea. 

Now, granted, I am not controlling as much as what you have, 

but still it is what we have, and I can still give you an estimated 

approximate time. 

I mean, are we talking about months, year, years? 

Mr. TANGHERLINI. I can tell you for the properties that have been 

brought to my attention in the time I have been at GSA for the last 

year and a half, we have turned around all of those properties in 

the last year and half, either getting an RFI or an RFP or negotiating with our local jurisdictions. 

But as you heard in my conversation with Congresswoman Norton, even getting to the RFI, that does not get us necessarily to the 

actual development happening. That at least lets us gauge market 

interest, and then from there we have to go into the historical preservation evaluation. We have to do the environmental work. That 

can take, you know, in the case of FBI we estimate it will be about 

2 years to get through that process. 

Mr. MULLIN. Environmental work because of the material used, 

like asbestos towels, stuff like that? 

Mr. TANGHERLINI. No, more actually if you are going to move a 

building, relocate a building, sell something of historic significance. 

You have to gauge the impact that that has either on the community, gauge the impact that has economically, and potentially gauge 

the impact that that has environmentally on traffic, on pollution, 

et cetera. 

Mr. MULLIN. I want to work with you however possible. So if you 

run up against hurdles that my office can be helpful with, would 

you please reach out to us? 

Mr. TANGHERLINI. Yes, sir, I will. 

Mr. MULLIN. I am not here to just throw arrows at you. In all 

seriousness, it is something that we could work together. It is 

something I do know a little about, and I would look forward to 

working with you as much as we can. 

Mr. TANGHERLINI. Great. Thank you. 

Mr. MULLIN. Thank you, Mr. Chairman. 

Mr. BARLETTA. Thank you, Mr. Mullin. 

We will now begin our second round of questioning, and I will 

recognize myself for 5 minutes. 

Mr. Winstead, so far GSA has made a number of proposals primarily focused on its exchange authority as opposed leaseback arrangements and similar authorities. How important is it in 

leveraging private dollars to look at all the tools in GSA’s toolkit? 

21 

Mr. WINSTEAD. Mr. Barletta, I think that comments that Mr. 

Tangherlini has made and Delegate Norton mentioned, the administration has really pushed the gauntlet in this area. The results 

of leadership of Ms. Norton we got in 2005 language that, in fact, 

gives us the 412 authority, thus strengthening the retention of revenues from the sale or properties and go back into investment of 

existing buildings from sale lease-back or exchange. 

One of the concerns from the private sector side noted by Congressman Mullin deals with this delay issue and inconsistency. In 

my opinion, the view of these innovative financing deals from the 

perspective of OMB and CBO has varied. I think that, you know, 

it is an artful form, and I know David Hahn very well and have 

met with him since I left GSA to discuss consistency. 

But it is a very artful form to make these things structured from 

both a financing standpoint and tax standpoint work. I think others in the private sector and some behind me understand this art 

form and resulting delays of decisionmaking and reviews of 

prospectuses that really do prevent a lot of projects moving as 

quickly. 

It is not GSA’s fault. It is these other reviews and CBO and 

OMB level from my perspective. So, you know, I do think it is important to use these other authorities. In my testimony, and I provide to the committee examples of enhanced use leasing exchange 

as well as ground lease structures. I think it is a very positive time 

that we are starting to see these RFIs come out in a very fast order 

to move both potential redevelopment, as well as to look at exchange in value. 

I, frankly, think that there is a huge market out there for that. 

GSA does not have the authorization to deal with the renovation 

of these buildings. If you can take one of these properties or several 

of these properties in the South Federal Center and convey that information and value of that property for construction services, I 

think it is a very, very good move, and there is a lot of interest in 

the market. I can give you a sense of that. 

Mr. BARLETTA. Thank you. 

You know, a concern that the notion that GSA could exchange 

billions of dollars of inventory for services without further action by 

this committee or appropriations is unprecedented and raises significant questions about appropriate oversight of taxpayer dollars 

and the role of Congress and the role that Congress has there. 

Administrator Tangherlini, GSA has proposed using its exchange 

authority in a number of cases. However, as you know, GSA has 

a number of exchange authorities, each of which has its own requirements and limitations. 

Which exchange authorities do you say are intending to use for 

the FBI Headquarters and potentially for Federal Triangle South? 

Mr. TANGHERLINI. I think I will get back to you with the specifics 

about the actual sites, but Section 412 and Section 585, we have 

other exchange authorities that are related to our organic statute. 

I would like to point out though that I wish I could take credit 

for inventing this idea. These are authorities that have, frankly, 

been given to us by Congress, and we have used roughly a dozen 

times. The best example is, frankly, in San Antonio where we tradVerDate Aug 31 2005 11:36 Jun 06, 2014 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\ED\2013\11-19-~1\85610.TXT JEAN
22 

ed properties and facilities for the construction of a parking garage 

just last year. 

And so I think the real issue is how do we work as closely as 

possible with this committee, with the Appropriations Committees 

to make you aware of what we are trying to do so that we can continue to reinvest in these assets while we continue to face, frankly, 

the limitation that is being imposed on us by the inability for us 

to access the rent, the market based rent, which we are legally required to collect from each agency, while we have not been able to 

access that rent so that we can make reinvestments in those facilities. 

That deficit, frankly, that reinvestment deficit is at $4.5 billion 

and counting right now. So I want to work very closely with this 

committee, with the Appropriations Committees. We are not going 

to do anything, you know, secretly. We are going to do it through 

RFIs, through RFPs. We are going to work closely with staff in 

these committees. We are going to come these hearings. We are 

going to answer questions, respond to letters, and do whatever we 

can, at the same time maintaining our stewardship responsibility 

to these assets that the American people have bought and invested 

in. 

Mr. BARLETTA. Sure. You know, realizing that the parking ga- rage was a $5 million project, this is obviously much bigger. Could 

you provide for the committee, in writing, if you can, an official 

legal analysis on GSA’s exchange authority, on what basis GSA believes it can enter into an exchange for services on namely to construct a new facility without an approved prospectus or approval 

through the appropriations process? 

Mr. TANGHERLINI. Yes, we will provide that information. 

Mr. BARLETTA. OK. Thank you. 

The Chair recognizes Ranking Member Carson. 

Mr. CARSON. Thank you, Mr. Chairman. 

Mr. Winstead, in your testimony you highlighted several Federal 

projects that use public-private partnerships to develop Federalowned parcels. What are some of the challenges in your mind in 

protecting taxpayer interest in these kinds of deals? 

And what is your recommendation for us so that we can ensure 

that taxpayers receive fair value in exchange for Federal properties? 

Mr. WINSTEAD. Congressman, I think that the biggest issue in 

this whole alternative finance strategy is really the issue of clarity 

of equities and the risk assumption of the parties between the Government and contractor or developer. And what the ULI council 

has done—and I can provide examples—is a structure of how you 

can make sure with full view of taxpayer and all parties involved 

are dealt with in terms of both the responsibilities of the developer 

or offeror, in terms of obtaining financing, what those financing 

costs are, what, in fact, the fixed return is and clarity through that 

deal. Candidly, both ULI and our council, as well as the national 

Public-Private Partnership Association, have very much stressed 

this, and you really cannot get away with it any other way. 

I mean, the process in which you approach and how you structure these deals, looking at both legal, tax, financial and disclosure 

issues, can start very early on. You get a comfort level. 

23 

The only other comment I would make is, you know, we have a 

kind of perfect storm here at this point. Unfortunately Administrator Tangherlini cannot tap that $2.5 billion that he needs to renovate the buildings, but we do have an incredible amount of private 

capital interested in the real estate markets from everywhere. Although I watched the Washington market drop at our last meeting 

of ULI from the top 10 for the first time in 3 or 4 years, it still 

is one of the best markets in the world. 

So the opportunity is there, and I think we would be happy to 

provide both legal documents of how these past ones have been 

structured to the committee. We would be happy to work if the 

committee were to ask us or GSA, but it is really a question of 

looking at disclosure upfront about what, in fact, are the risk allocations, returns for both parties, and building in that obviously the 

returns for the off-award developer. 

Mr. CARSON. Thank you. 

Mr. Bryant, has the District of Columbia endorsed the Ecodistrict 

Redevelopment Plan? 

Mr. BRYANT. Yes, sir, I am pleased to say that over the last 3 

or 4 years the District of Columbia government, specifically, the 

DC Office of Planning, has been a true partner, and they have been 

part of the 17-agency partnership where we have done all the planning, all of the envisioning together, and the District has, indeed, 

endorsed the plan going forward. 

You know, the SW Ecodistrict at 110 acres, it is largely Federal. 

It is 60 percent public buildings, 40 percent private buildings. Thirty-two thousand people work there during the day, but after 6 

o’clock it is a ghost town. Very few people live in the area. It has 

got significant infrastructure needs. 

So the District has joined us in looking at the economic development potential. We could get 4 million square feet more in the 

ecodistrict for public and private use. That translates to, you know, 

taxpayer dollars, public real estate taxes. It could generate, depending on the infrastructure investment, somewhere between 

$150 million and $300 million over 30 years for the District in just 

property taxes, not counting sales taxes and others. 

So, you know, the District government has been very much involved and very supportive of the process. 

Mr. CARSON. How essential is zoning to the success of this 

project? 

Mr. BRYANT. Zoning discussions are underway right now, and 

there is going to have to be a new zoning designation, but that is 

entirely the District’s prerogative, and they are working with the 

National Capital Planning Commission on all zoning related questions as well. 

So we are moving together forward on those issues. 

Mr. CARSON. Mr. Chairman, I yield back. 

Mr. BARLETTA. Thank you. 

The Chair recognizes Ms. Norton for 5 minutes. 

Ms. NORTON. Thank you, Mr. Chairman. 

Mr. Tangherlini, some of the process that you have been able to 

make may come from the fact that you yourself come from OMB 

and understand OMB. But you also understand real estate. I must 

tell you that OMB has been a roadblock to this committee and to 

24 

development. The Old Post Office, now who took the hit Mr. 

Winstead will tell you was the GSA because the GSA was not the 

problem. The reason I had to put an actual bill in for the Old Post 

Office was that the OMB personnel, the kind of line personnel, had 

outrageous ideas. One of them was there are already some Federal 

agencies in there. There were two or three small Federal agencies. 

It was unfit for Federal agencies or any other kind of agencies. 

OMB has tended essentially to look at real estate as just a commodity. It does not understand real estate. So I have to ask you, 

as you have raised our hopes whether you have been in touch with 

OMB or whether you expect OMB will be in sync with you as you 

begin to go down roads that OMB would have regarded as unholy 

for GSA to even proceed toward. 

You know, is this a dream in your head or are you talking with 

these people who stood in the way? 

Let me tell you these are the people who, just to give you an 

idea, Mr. Chairman, of just how retrograde OMB has been in allowing GSA to use the kind of authority it is trying to use know, 

we built a Department of Transportation Building. It is a huge, terrific new headquarters. Whoever heard of building a headquarters 

on a 15-year lease so that they are going to have to come back to 

the Government to get more money to pay the developer for their 

lease? 

Nobody in his right mind would have done that, but the OMB 

rules essentially cost the taxpayers’ money. So I have to ask you: 

are we going to have that roadblock or what have you, because you 

come from OMB and perhaps they have greater confidence in you 

and you understand real estate and OMB, have you worked 

through some of these issues with OMB? 

Mr. TANGHERLINI. So I have worked very closely with OMB in 

every one of our RFIs and every one of our RFPs we have put together with the review and comments of OMB. We have tried to 

be very inclusive of OMB so that we recognize that together actually our job is to deliver on administration priorities and the administration’s direction. 

And this administration has been very committed to investing in 

infrastructure and reducing the Federal footprint. At the same time 

though, OMB faces challenges that come out of other legislative requirements, and OMB and CBO are actually in charge of maintaining the scoring rules that come out of things like the Budget Enforcement Act and subsequent amendments. 

The rules we deal with now relate to agreements that have been 

arrived at over time between OMB, CBO, GAO and the Congress 

about how we are going to score congressional action. 

Ms. NORTON. And do you think that there are scoring roadblocks 

to what you are proposing? 

Mr. TANGHERLINI. So we think actually everything we have done 

has been consistent with scoring, and so the question is to have a 

broader discussion about what are the principles that underlie scoring. What are we trying to achieve through scoring? How do we 

measure the long-term impacts of certain ways we score things 

versus others? 

And that is the kind of dialogue, frankly, a hearing like this allows us to get into at an intellectual level rather than at a conflict 

25 

level. And I think too oftentimes we have engaged in conflict. Hopefully what we will get is good information. We will get good dialogue. 

Ms. NORTON. Oh, there was not any conflict. There was not any 

conflict. There was just an ironclad notion that if it scored, no one 

wanted to go through the process you just said, which is what are 

you trying to achieve, what would cost the Government more 

money, is it consistent with rules. That dialogue never occurred. It 

was not that this committee had conflict with scoring. 

Mr. TANGHERLINI. No. 

Ms. NORTON. It is that we are faced with, ‘‘Shut up. It scores.’’ 

Mr. TANGHERLINI. Right. 

Ms. NORTON. And you are saying that is not how these deals are 

going to be handled. 

Mr. TANGHERLINI. Well, and I think the evidence suggests that 

we are trying very hard to be as creative and as thoughtful and as 

flexible as possible. You know, the offer that David proffered working with ULI to further this discussion is, I think, also further evidence of the progress we are having, where people recognize that 

perhaps the way we are doing things is not going to work with the 

way we need to get them done. 

Ms. NORTON. Mr. Tangherlini, we have just opened the Coast 

Guard Building. 

Mr. TANGHERLINI. Right. 

Ms. NORTON. It was a very proud moment, named for the only 

Medal of Honor winner of the Coast Guard, and the Coast Guard 

has fully moved in. They are the first agency to go down there. 

Are you considering ways to complete the Department of Homeland Security with this terrific start there with the other buildings? 

For example, the Secretary is slated to come next in one of the 

reuse buildings. Could you tell the committee what you are doing? 

Mr. TANGHERLINI. Absolutely. Starting with the President’s 2014 

budget request, which would have allowed us to move into Phase 

2, and through everything else we are trying to make sure that we 

realize the vision of the more than $400 million that the taxpayers 

already invested in the St. Elizabeths campus. We are not going to 

get the benefit as taxpayers of that initial investment if we do not 

make the subsequent investments and begin to allow the Department of Homeland Security to actually create a cohesive and consolidated headquarters unit. 

As I mentioned, as one of the proposals for the first project we 

are proposing as part of this broader Ecodistrict plan is to take 

some of the revenue or the value generated by the transfer of the 

exchange of one of our buildings and put it into the St. Elizabeths 

campus. We are trying anything we can to make sure that we keep 

fealty with the investments that the American people have already 

made in St. Elizabeths. 

Ms. NORTON. That is excellent to hear you say. 

Not to mention that the Department of Homeland Security is 

paying for rent in 60 different locations and is having to do shortterm and long-term extensions now because it is waiting to see 

when the rest of it will move. 

26 

I would just like to ask you about two vacant properties in the 

District of Columbia that this committee has mentioned in prior 

hearings. We had a whole hearing on 49 L Street. 

Mr. TANGHERLINI. Right. 

Ms. NORTON. I have a special interest in 49 L Street because it 

is part of the Southeast Federal Center or Yards District, this new 

district in Southeast, huge. It must have been a warehouse or 

something, and for some time it was held because you thought it 

would become a veterans court, but for a long time it was clear 

that that was not going to happen. 

But I have not heard anything since we had a hearing perhaps 

was it last year on 49 L Street. 

Mr. TANGHERLINI. So we have been working very closely—— 

Ms. NORTON. If I may say so, the community was so concerned 

that since this place was surrounded by development that they 

themselves came up with a plan to develop it, and that is why I 

would like to know where we are on that. 

Mr. TANGHERLINI. So we have been working very closely with 

local authorities and other planning authorities, and we think we 

are very close to actually having an announcement as to what we 

will do next with 49 L, but we heard the issues and concerns raised 

by you and other members of this committee at the hearing that 

was held there, and we have been working diligently to make sure 

that that building as well—— 

Ms. NORTON. Do you expect that to come forward this year? 

Mr. TANGHERLINI. Probably not this calendar year, but I expect 

it to come forward very, very soon. 

Ms. NORTON. And there is one other property, Tenth and H 

Street, NW., which is near the Secret Service Building. 

Mr. TANGHERLINI. Yes, the Webster School. 

Ms. NORTON. Yes. 

Mr. TANGHERLINI. And I can tell you that that is one that has 

been a concern of mine in several of my jobs, and I can tell you 

that I will make a commitment that we are going to do something 

about the Webster School. We are working closely to try to put together a panel to give us ideas and suggestions of how we both 

meet the needs of the Secret Service in terms of their security, but 

also meet the needs of the community in terms of not having a 

blighted, vacant but also historic building sitting right at the corner of essentially Main and Main now after the old Convention 

Center redevelopment has been realized. 

Ms. NORTON. Yes. You do need a panel. You need somebody to 

look closely at it, taking into account all of the concerns, and if you 

give your attention to it, I think you can solve that problem. 

Mr. TANGHERLINI. I agree. 

Ms. NORTON. Thank you very much. 

Mr. BARLETTA. Thank you. 

Let me just say the exchange is not a panacea. They are complicated, and they have more risk than traditional approaches like 

leasing. I would hope that you will keep the lease-back tool on the 

table. 

Mr. TANGHERLINI. Well, you know, absolutely. I would like to explore ways that we can keep other parts of the authority and not 

just hit one note on the piano. That having been said, to the extent 

27 

that we have authority and opportunity in these instances, I think 

we should also be smart about leveraging them as quickly as possible so we do not miss market opportunities, and then explore a 

broader conversation that will allow us to maybe explore the opportunities to leverage other tools that the Congress has been so kind 

to provide us. 

Mr. BARLETTA. I just have a couple more questions, and if the 

panel has any more, they could also ask them. 

Mr. Winstead, can you talk about one of the authorities GSA has 

under Section 412, the ground lease with a lease-back, and explain 

how it is possible to utilize this authority under the scoring rules? 

Mr. WINSTEAD. Mr. Chairman, there are structures that have 

been in place and there are components that are well known and 

have been vetted from both the legal standpoint and tax related 

issues and revenue. I think the recent conversation with the Administrator is pointing at the issue of concurrence and engaging 

the minds at OMB and CBO in a partnership on this, looking at 

the scoring rules protecting future taxpayers, which is why the 

scoring rules and budget rules are there—to not have obligations 

that blow up in the future on taxpayers. 

But there are ways to do this, and I have provided the committee 

staff the details of that involving an exchange of property. Looking 

at ways in which the parcel where the building is constructed, can 

be titled to the Government, leased to a private party for no less 

than the ground lease structure, 65 years, where the building 

would be leased for 20-year terms. The occupancy lease does not 

offer a purchase option, a bargain basement structure, which is of 

concern. One of the criteria in the scoring rules is satisfied by the 

building being leased on newly constructed with a life cycle of 40 

years. 

And then Step 4 would be really structuring the net present 

value or the minimum rents on a combined lease that is equivalent 

to about 65 percent of the fair market value. So you are below the 

threshold of the 90-percent rule, and the majority of the Government-leased properties is for general purpose office space. I think 

that is the case in both Federal Center South, as well as the FBI 

RFI. 

Now, granted they have huge security requirements, but they, in 

fact, can be termed as general office use buildings. 

GSA, by the way, in recent years, has seen reduction of space 

and is doing much more open space configuration of workspace, 

which is applicable both to Government tenant use as well as private sector use. 

A sixth criteria to approach it is a strong private sector interest 

which is out there in Government lease properties, which underscores the reality that this can be construed as general office space, 

not special purpose Federal space. 

So you are satisfying these criteria, in my judgment, being able 

to take a land exchange value to create savings to the Government, 

and ULI did a case study 2 years ago which I provided the committee that approach. It looked at both Federal construction; it 

looked at leased construction; and it looked at leased construction 

on Federal land. It involved private sector people, public sector people, and basically looking at about 2 million square feet of space. 

28 

There was actually a savings because of the ability to have a 

ground lease and accrued credit to the lease which eliminates essentially that issue of bargain basement pricing or gift at the end. 

So these models are out there. There are lawyers that can construct it as well as tax experts. There is interest in the private sector to do these, and I would just stress that, as the Administrator 

said, ULI has a strong District Council here in Washington. We 

would be happy to work with the committee or get CBO, OMB and 

GSA obviously involved. 

But there are ways that it can be done. They have been proven 

to be done, and they can satisfy scoring rules and create value for 

the taxpayer. 

In the case of the case study we did for a 2 million-square-foot building, it showed a consolidation lease savings of around $50 million, which was huge. So, you know, I would be happy to share that 

with you if you have not seen that case study. 

Mr. BARLETTA. The bottom line is do you think this can work for 

the FBI and allow for consideration of the FBI from consolidation 

from 3 billion to 2 million square feet? Because I think that is 

where the savings comes from. 

Mr. WINSTEAD. Well, it has been quite a few years since I was 

looking at their lease structure, and I would not be privy to it anyway, but I do believe there are savings. Clearly the Federal Government in exchange of value of a building like the Hoover Building, that there are savings that can be accrued because of the new 

construction cost of a new building, generic in many ways in workspace and obviously greener. So it is going to have savings in terms 

of the functions of the building and cost of maintaining it every 

year. 

So there is interest. I do not know what the interest is or the 

level of it, but there is clearly interest that has been expressed to 

GSA. Again, if you can take an administration that is very focused 

on this and ensure that both the real estate agency and the OMB 

people are working in unison, which they seem to be, I think it is 

a real opportunity and the market is ripe. 

Interest rates are historically low. I remember in 1995 when I 

used to have to go to the legislature in Maryland as Secretary of 

Transportation, talking about the construction of transportation facilities out of our transportation fund versus the ability to do it 

under public-private. In those days you could not sell it from a public policy standpoint because interest rates were 7 percent. So they 

go, ‘‘Well, why would you do that if you can take the money out 

of the transportation authority, put tolls on it, and pay for it 

through the authority?’’ 

That is not the case now. I mean, it is a very ripe market with 

a lot of interest. 

Mr. BARLETTA. Thank you. 

One last question. Mr. Tangherlini, you mentioned a little earlier 

an historic review for the Hoover Building. Are you suggesting 

there is an historic review pending or a problem? 

Mr. TANGHERLINI. I am not. I am just saying that that is one of 

our obligations, is to go through the full NEPA process and all of 

the other processes, many established by statute, that ensure that 

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thing that the American people paid for and made investments in 

over time. 

And so to some extent that is going to be one of our challenges 

as a public entity, is that we are always going to have to be a little 

more thoughtful, a little more careful, and as a result a little more 

slow than the private sector because we have this higher bar of responsibility. 

Mr. BARLETTA. Great. I just wanted to clear that up. 

Mr. TANGHERLINI. OK. 

Mr. BARLETTA. If there are no further questions? 

Mr. CARSON. One more question for Administrator Tangherlini. 

What is the best way to fund the maintenance of the GSA real 

estate portfolio? And what has been the impact of Congress not 

fully appropriating the rent that GSA receives from other Federal 

agencies that are housed in GSA-owned space? 

Mr. TANGHERLINI. It is a great question, and I appreciate your 

asking it because oftentimes you hear conversations about how we 

want Government to operate more like a business, and there are 

a few places actually in Government where we operate more like 

a business than, frankly, in the Public Building Service and the 

Federal Buildings Fund of the United States General Services Administration. 

By law, the Congress had the wisdom to suggest that we need 

to collect market-based rents, rents that we determine using valuation, market-based evaluations of what the rents are in the marketplace. We charge that to the agencies. That is deposited back 

into the Federal Buildings Fund so that we can then reinvest it in 

the buildings. We pay our rent. We reinvest it in the buildings. 

The problem is for the last 4 years as part of the issues we have 

had generally with appropriations, we have never received the full 

appropriation in the amount of money we have collected as rent 

from those Federal agencies. So we have not been able to reinvest 

it in the buildings. 

We received a sizable amount of money in the Recovery Act, but 

we have actually over time not received as much back in rent as 

we got in the Recovery Act. So at this point we are no longer making the kind of major repair and alteration, even in some cases 

minor repair and alteration, never mind longer term capital investment in the assets that we have. 

Mr. CARSON. Thank you. 

Thank you, Mr. Chairman. 

Mr. BARLETTA. I would like to thank all of you for your testimony 

today. Your comments have been helpful in today’s discussion. 

If there are no further questions, I would ask unanimous consent 

that the record of today’s hearing remain open until such time as 

witnesses have provided answers to any questions that may be submitted to them in writing, and unanimous consent that the record 

remain open for 15 days for any additional comments and information submitted by Members or witnesses to be included in the 

record of today’s hearing. 

Without objection, so ordered. 

30 

I would like to again thank our witnesses for their testimony 

today. If no other Members have anything to add, the subcommittee stands adjourned. 

[Whereupon, at 11:37 a.m., the subcommittee was adjourned.] 

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