U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

41–941 PDF 2008

THE OLD POST OFFICE BUILDING: THE 

GENERAL SERVICES ADMINISTRATION’S PLANS FOR FUTURE USE 

(110–113) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND 

EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

APRIL 10, 2008 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia, Vice 

Chair 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

ELLEN O. TAUSCHER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

DORIS O. MATSUI, California 

NICK LAMPSON, Texas 

ZACHARY T. SPACE, Ohio 

MAZIE K. HIRONO, Hawaii 

BRUCE L. BRALEY, Iowa 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ACURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

JERRY MCNERNEY, California 

LAURA A. RICHARDSON, California 

ALBIO SIRES, New Jersey 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

WAYNE T. GILCHREST, Maryland 

VERNON J. EHLERS, Michigan 

STEVEN C. LATOURETTE, Ohio 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

LYNN A WESTMORELAND, Georgia 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

ROBERT E. LATTA, Ohio 

(II) 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY

MANAGEMENT

ELEANOR HOLMES NORTON, District of Columbia, Chairwoman 

MICHAEL H. MICHAUD, Maine 

JASON ALTMIRE, Pennsylvania 

MICHAEL A. ARCURI, New York 

CHRISTOPHER P. CARNEY, Pennsylvania, 

Vice Chair 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

CHARLES W. DENT, Pennsylvania 

JOHN R. ‘RANDY’ KUHL, JR., New York 

JOHN L. MICA, Florida 

(Ex Officio) 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Winstead, Hon. David, Commissioner, Public Buildings Service, General Services Administration .............................................................................................. 5 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Altmire, Hon. Jason, of Pennsylvania .................................................................... 24 

Norton, Hon. Eleanor Holmes, of the District of Columbia ................................. 25 

Oberstar, Hon. James L., of Minnesota ................................................................. 28 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Winstead, Hon. David ............................................................................................. 30 

SUBMISSIONS FOR THE RECORD 

Winstead, Hon. David, Commissioner, Public Buildings Service, General Services Administration, responses to questions from the Subcommittee .............. 34 

vi 


41941.001
vii 


41941.002
viii 


41941.003
ix 


41941.004
(1) 

THE OLD POST OFFICE BUILDING: THE GENERAL SERVICES ADMINISTRATION PLANS 

FOR FUTURE USE 

Thursday, April 10, 2008 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC

BUILDINGS, AND EMERGENCY MANAGEMENT, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 2:05 p.m., in Room 

2167, Rayburn House Office Building, Hon. Eleanor Holmes Norton 

[Chairman of the Subcommittee] presiding. 

Ms. NORTON. Good afternoon, and welcome to all to today’s hearing this afternoon. I am pleased to welcome Public Building Commissioner David Winstead of the General Services Administration. 

I very much look forward to his testimony. 

On January 16th, 2008, I had no option but to introduce a bill, 

H.R. 5001, the Old Post Office Development Act, to develop the 

nearly empty, so-called ′′Old Post Office′′—a unique, historic treasure located at 1100 Pennsylvania Avenue, Northwest, owned by the 

Federal Government’s GSA. 

For more than 10 years, our Subcommittee on Economic Development, Public Buildings and Emergency Management has expressed 

mounting concern about the neglect and underutilization of this 

valuable Government site and has pressed GSA to develop and use 

this building to its full potential. 

The Old Post Office Building, completed in 1899, is one of the 

oldest buildings here that has yet to be rehabilitated and preserved. This grand example of Romanesque Revival occupies an entire city block because it was the main post office of the Nation’s 

capital. The building was placed on the historic register in 1973, 

and it remains one of the city’s most unusual, interesting and appealing landmarks. Part of the appeal of the Old Post Office Building also is its central location in the Federal Triangle, its proximity 

to many Federal historic sites and buildings and its several Metro 

lines, as well as a host of restaurants and other amenities that surround the location. Its present design as a post office is straight out 

of the 19th Century and makes the building virtually unusable for 

any purpose absent appropriate remodeling to maximize return on 

the building to the Government. 

During decades of underutilization, the GSA has attempted to 

make the space suitable for office space, but the building’s huge, 

cavernous, central area and the narrow shelf that surrounds the 

2 

atrium can accommodate only very few small agencies. Efforts to 

introduce amenities have either failed or have proven entirely unsatisfactory. In what appeared to be desperation to create some 

benefit from the site, GSA built an annex to the rear of the building that it hoped would become a shopping mall, but this plan also 

failed. 

The waste and risk posed by the Old Post Office Building became 

even more apparent following a violent altercation and killing of a 

George Washington University student outside the Old Post Office 

Building in May 2005. This killing followed an event in which the 

GSA rented the facility to gain revenue from the building. Only 

after this embarrassment did the OMB, which has been a principal 

impediment to the redevelopment of the building, allow GSA to 

proceed. We were pleased when the GSA issued a 2005 Request for 

Expression of Interest to which it received a number of indications 

of interest from the private sector. Yet, for no good or sufficient 

reason that it has been able or allowed to articulate, GSA has 

never proceeded to the next step. It is holding all of these indications of interest from the private sector. 

Consequently, I have introduced a bill to assure the full use of 

the Old Post Office for the benefit of our Federal taxpayers and for 

this city. A delay in making use of this centrally located, historic 

treasure has made it one of the Government’s most wasted assets 

and a public embarrassment. It is bad enough that the Government 

gets no revenue from beneficial use of the space. It is worse that 

the building has drained huge sums from the Federal Building 

Fund. The building’s 2007 rent payments of $5.4 million paled in 

comparison to the total expenses for the property of $11.9 million, 

resulting in a loss of $6.1 million in 2007. 

To understand the financial burden, the drain on the Federal 

Government, one has only to multiply this figure—this $11 millionplus figure—over the many decades during which the Government 

has taken millions upon millions of dollars in losses on the Old 

Post Office; add this amount to millions of dollars in renovations 

and additions that eventually proved useless in making the building a viable source of revenue, and we begin to get a clear picture 

of the need to move this project forward quickly. 

The highly regarded GSA renovation of the nearby Tariff Building demonstrates the GSA record of making excellent use of otherwise antiquated and virtually useless Federal structures. The process that preserved the Tariff Building, while returning it to productive use as the Hotel Monaco with revenue for the Government, is 

the most recent model for the Old Post Office. Only the Federal 

Government has the resources and capability to properly renovate 

such an historic property, but the return on the investment is virtually assured. The redevelopment of the Tariff Building shows 

what can be achieved when the Federal Government works with 

the private sector to produce a site that brings a return to the Government, provides a safe and necessary facility for the Government 

or for the city and preserves an historic treasure all at the same 

time. The historic Old Post Office Building, centrally located in the 

heart of the Nation’s capital on Pennsylvania Avenue, provides an 

opportunity to replicate the return to the Government we have 

seen from Hotel Monaco and from other historic structures. 

3 

The policy of the Federal Government has long been and always 

will be to preserve and to make usable historic properties rather 

than sell them for revenue. Preservation and use are particularly 

important for this property, where not only the historic status of 

the Old Post Office but security concerns inherent in its location 

mean that the property must be maintained by the Federal Government. In today’s climate of budget deficits, it is imperative that 

the Federal Government maximize the use of the assets it has 

available. The Old Post Office is an underperforming asset and is 

a drain on revenue while its full use, its central location and its 

unique, historic value could provide a handsome financial return to 

the Government. 

Barring unforeseen matters in today’s testimony, I intend to 

move this bill to the Full Committee and to the floor at the earliest 

time available. 

The Subcommittee received today’s testimony an hour before the 

hearing. Although informed of the applicable procedures by Subcommittee staff, GSA staff persisted in its adherence to incorrect 

procedures. GSA is all too familiar with the underlying issues and 

had ample notice and time to prepare for this hearing. The Subcommittee is always ready to allow for exigencies, but this delay 

was unnecessary and unacceptable and should not be repeated. The 

Subcommittee appreciates receiving today’s testimony from Commissioner Winstead about the development potential of the Old 

Post Office. 

I am pleased to have remarks from the Ranking Member, Mr. 

Graves. 

Mr. GRAVES. Thank you, Madam Chair, for holding this hearing. 

I want to very much thank Public Building Commissioner David 

Winstead for testifying today and for being here. I look forward to 

hearing your testimony today on the future plans of the Old Post 

Office. 

Despite its central location here in the Nation’s capital, the Old 

Post Office Building is an underutilized Federal asset and is a financial drain on the Federal Building Fund. The costs of operating 

and maintaining this aging and inefficient historic building are 

quite high. For example, GSA received $5.4 million in 2007 for rent 

payments from Federal tenants occupying the building. However, 

the total expenses for the property were $11.9 million, resulting in 

a net loss to the Federal Building Fund of $6.5 million. 

Our Subcommittee Chairman, Ms. Norton, has introduced a bill 

to authorize GSA to enter into a public-private partnership to leverage private funding to redevelop this historic landmark. Moving 

this building from a liability to an asset on the Federal Building 

Fund’s balance sheet should benefit the American taxpayer. As 

part of the redevelopment of this property, the current tenants 

must be relocated. These include the National Endowment for the 

Arts, the National Endowment for the Humanities, the Advisory 

Council on Historic Preservation, and the Department of Education. This move will be necessary in order to accomplish the economic turnaround of this property. 

Again, I want to thank Public Building Commissioner Winstead 

for being here today, and I look forward to hearing your testimony 

and to learning more about this project. 

4 

Thanks, Madam Chair. 

Ms. NORTON. Thank you, Mr. Graves. 

We are pleased to have been joined by the Ranking Member of 

the Full Committee, Mr. Mica. 

Mr. Mica, do you have any remarks you would like to make at 

this time? 

Mr. MICA. Well, first of all, I thank you for recognizing me. Secondly, I came down to compliment Ms. Norton and our Ranking 

Member for conducting this hearing. I think we have discussed the 

issue of having public assets’ values not realized. In fact, to put it 

humorously, I am tired of our sitting on our assets and not realizing their full potential. 

Your remarks, Madam Chairman and Mr. Graves, are right on 

target. This is a valuable public asset. Let me say, I am ashamed 

that with a Republican administration and with a Republican Congress that we allowed this to continue, and I am glad to see that 

you are taking this forward. I support your legislative efforts. We 

have talked about other public buildings and other GSA properties 

that have not fully realized their potential. I will do anything I can 

to assist you. 

I am pleased to see our GSA Public Buildings administrator, Mr. 

Winstead, here. I hope he understands that we will back GSA. If 

it takes going to OMB, the administration or whatever it takes, I 

am committed, and I will use any resources we have to work with 

the administration to make this successful. You cited great examples—the Monaco building and others—where there has been success. Our public trust deserves no less than fully utilizing the potential of these assets. 

I will work with you. We will do anything we can, Ms. Norton. 

Again, I am not going to be able to stay, but I came down just to 

say thank you for moving this forward. I want to hear the results 

of this hearing and what comes forward and what the delays are 

or anything that is identified by the Public Building Commissioner 

that we need to work on, and we will do that together. 

So thank you again. 

Ms. NORTON. I want to thank the Ranking Member of the Full 

Committee for taking the time to come here. He has been Chair of 

this Subcommittee. He knows whereof he speaks. While he speaks 

about how, when we were in the minority that the majority did not 

move it, I must say that the majority at that time was every bit 

as adamant as I am today. 

Mr. MICA. We did not get the job done. 

Ms. NORTON. The two or three Chairs that have pressed this 

issue have given GSA every opportunity, but the bipartisan note 

that you and Mr. Graves have struck should leave no doubt with 

Mr. Winstead and with the GSA that there is no way to stop our 

moving. We are not going to continue to pay for a building that can 

be paying us, fellas. That is the bottom line here. The full support 

you see here is important. 

If I may say so to the Ranking Member of the Full Committee 

and of the Subcommittee, they know how unusual it is for us to 

have to put in a bill to move a project forward. We just do not do 

that. We have never had to do that with GSA. Now, we do not 

know where the trouble is. If the trouble is at OMB, really, shame 

5 

on them because they are the keeper of the dollars. If anyone were 

under the illusion that this Subcommittee would ever sell a historic 

property, it was surely an illusion because, when I came here and 

sitting for 12 years in the minority, the Subcommittee over and 

over again has made it clear that all over the country historic properties are precious and that these properties will never be sold. 

Knowing that, hearing that from the minority, hearing that from 

the majority, the only thing we could think to do was to put in a 

bill with bipartisan support. We have done that, and you have 

heard from both sides of the aisle. I am pleased to receive your testimony and to thank the Ranking Member. 

Mr. MICA. Will the gentlelady yield for just a second. 

Also, this is not just any building or asset that we own. This is 

in our Nation’s capital. It is in a very strategic location, and it is 

an important asset for us to retain. This is also an economic development project that will create jobs, that will give people opportunity, that will get a return for the taxpayer. It is located, again, 

in the heart of our Nation’s capital, so there is even more urgency 

to this, not only because of its strategic site but also because of the 

need to stimulate the economy. This is a project that can do that. 

So, again, I compliment you. Whatever it takes, we will work together to get this done. I know Mr. Oberstar will join me in that 

effort. 

Ms. NORTON. Thank you again, Mr. Mica. 

Indeed, Mr. Mica indicates the location. Here we have an historic 

slum—let’s call it what it is—within a stone’s throw from the 

White House. People look at the building. It is a curiosity. It is gorgeous. There is no landmark like it in Washington. They pass by 

it. If they go into it, they are truly bewildered that such an asset 

could remain in this condition, and it is not going to remain in this 

condition past this session of Congress. 

I had hoped that by simply introducing a bill, unheard of in my 

term in the Congress, which is 17 years—unheard of—that that 

would be all it took to move the bill forward, and here we are having a hearing. I hope this proves an embarrassment to the GSA 

that we are having to tell the world that the GSA has been sitting 

on an historic property that can bring in money but is spending 

taxpayers’ money, and we do not mean to keep it to ourselves any 

longer. 

Mr. Winstead, we are glad to hear from you at this time. 

TESTIMONY OF HON. DAVID WINSTEAD, COMMISSIONER, PUBLIC BUILDINGS SERVICE, GENERAL SERVICES ADMINISTRATION 

Mr. WINSTEAD. Chairwoman Norton, Ranking Member Graves, 

Ranking Member Mica, I am pleased to be here. I am David 

Winstead, Commissioner of the Public Buildings Service, appearing 

before the Subcommittee to talk about the future of the historic Old 

Post Office on Pennsylvania Avenue in Washington, DC. 

I would like to start out by sort of reviewing this asset. I know 

you all have expressed a great deal of concern about the current 

state of it and how we are managing it through the National Capital Region and what we intend to do with it. I would mention, 

though, that, despite your concerns and despite the issues raised 

6 

by you all, I think we have made an awful lot of progress overall 

on the inventory on a lot of historic buildings and in the management of the Federal assets. 

As you know, over the last 5 years, we have mounted a very progressive management of our real estate assets through the President’s management agenda and through the Federal Real Property 

Council. In fact, we have focused on restructuring assets to get rid 

of those that are underutilized, to do private-sector, public-private 

partnerships under the constraints of the scoring rules and under 

the authorities we have. We have actually achieved quite a lot. We 

have improved utilization and have increased vacancies—or occupancies, rather—by 1.5 percent over the last 6 years. We have basically been operating at 1.6 percent per market. We have reduced 

energy consumption by 8 percent. I did want to mention that we 

just came out with the new portfolio (State of the Portfolio FY07 

report), which is a document that really sets forth what we have 

been doing with all of the assets in the inventory. I will just call 

it to your attention because I think, overall, we have made a great 

deal of progress in that regard. 

In terms of the Old Post Office, itself, obviously, the Chairwoman 

and Ranking Members have commented on it. It is a very old building. It was, obviously, built between 1892 and 1899. It is a ninestory building with a 315-foot clock tower and a glass-enclosed atrium for the public that comes to view Washington, D.C., the Mall 

and the Federal buildings in the Triangle. OPO has a total of about 

315,000 square feet, plus an unoccupied Annex of 64,000 square 

feet that was, in fact, flooded 2 years ago in the floods that took 

out the IRS building behind it. 

The first three floors are occupied by retail activity. Federal tenants on the upper floors include the Department of Education, the 

Advisory Council on Historic Preservation, the National Endowment for the Arts, the National Endowment for the Humanities, 

and the President’s Committee on Arts and Humanities. 

I will mention that, despite the conditions that you have highlighted on this building, I have had the pleasure in recent years 

of attending an historic preservation conference in the facilities of 

the Advisory Council on Historic Preservation where the Nation’s 

historic preservation officers came to the Old Post Office to conduct 

and to look at the building and to talk about historic preservation, 

GSA’s efforts as well as other Federal agency efforts. 

When the Post Office was completed, it was, in fact, the second 

tallest building in Washington, exceeded only by the Washington 

Monument. It is 28 feet, essentially, taller than the Statue of Freedom on the Capitol. It was built entirely by steel and iron. Except 

for a load-bearing tower, the brick backing and granite wall are 

supported only by their weight. This is really the first major steel 

structure that is a self-supporting building erected in the Washington, D.C. area. The most remarkable internal feature, as you all 

well know, is the nine-story light court, topped by an enormous 

skylight, which has a lot of natural light. 

Madam Chairman, I remember being here about a year ago for 

the sustainability hearing. I remember you pulled back the curtains in this hearing room to let in natural light, and I think the 

building interior, actually, is very well lit. Also, that atrium does, 

7 

in fact, impede on its efficiency, and I will mention about that and 

about some of the challenges that it has presented to both us and 

to our tenants. 

The Old Post Office Building is the first Federal building erected 

on the avenue between the Capitol and the White House. In 1914, 

the city’s post office moved to new quarters. In 1928, as a part of 

the McMillan Commission, the plans for the Federal Triangle were 

delineated, and OPO was slated for demolition, and there was a 

lack of funding in the Federal budget due to the Depression. Essentially, there was an effort that went on for 36 years to save the 

OPO. 

In 1964, there were plans to complete the original Federal Triangle design for 12th Street, and a proposal was in place to demolish the OPO, preserving only the clock tower. There was a lot of 

local support I know you are well aware of through Do Not Tear 

It Down and through other coalitions—the Endowment of the 

Arts—that saved the building. 

In 1971, there were congressional hearings that did explore the 

future as well as looking at executive orders to protect Federal 

structures. In 1973, as you noted, Madam Chairman, it was listed 

on the National Register of Historic Places. When the Pennsylvania 

Avenue Development Corporation got formed in 1974, there was a 

promise it would be saved. Given its history and importance in security conditions—and I underline that—there are enormous security installations and concerns in the tower, itself. It was continued. It has always been viewed that this property is a necessary, 

important part, an historical part of the Federal inventory and that 

it is important for the American people. In 1976, Congress passed 

the Public Buildings Cooperative Use Act, permitting space used in 

Federal buildings to be leased out for cultural, recreational and 

educational purposes. This Act was passed, in part, to provide additional uses for the OPO. 

In 1982, we were awarded a master lease for a portion of the 

OPO known as the ′′Pavilion.′′ The building houses Federal offices 

as you know. Above the Pavilion floor, currently, we have about 

200,000 square feet of tenants. I mentioned them earlier. In the 

Federal office space portion, there is about a 3 percent vacancy. 

Overall in the building, it is less than a 25 percent vacancy. The 

initial retail concept for the Pavilion, unfortunately, was not successful. The master lease was amended in 1989 to enable the construction of a new retail facility, the Annex, to be built in the courtyard of approximately 64,000 square feet. 

In March of 1992, the annex was constructed, and there were 

Federal funds totaling $1.7 million and private funds of $5.5 million invested. The development of the OPO and the annex was not, 

fortunately, financially successful. I am sure part of the reason was 

the real estate market in 1992 was quite a bit distinguishable from 

the Washington market today, and it probably played into that. 

There are several reasons, in addition, for the failure back in the 

early 1990s. There was poor tenant satisfaction, and there was a 

constant retail turnover in the space that is mixed use and that 

has retail and food service. There was poor financial performance 

in the retail element due to market conditions, as I mentioned earlier. There was no clear destination/identity associated. I know that 

8 

has changed quite a bit in terms of what has happened in PADC’s 

efforts in the Federal Triangle. 

Now MCP sees vision for the Federal Triangle and for attractions 

off of the Mall. An investment company acquired the leasehold interest shortly thereafter, $8.5 million in foreclosure. The company 

hired a property management/leasing consultant to operate the facility in the interim. In 1998, following unsuccessful attempts to restructure the lease, GSA began to look at the entire building as a 

unified approach, utilizing a competitive process and a prudent approach to reposition the building. 

In 2001, GSA acquired the leasehold interest for $7.1 million. As 

a result, the annex as well as tenant improvements in the lease 

portion of OPO are now unencumbered by any long-term lease, 

which financially and from a standpoint of ownership in how we 

proceed is a very positive event. In June of 2002, GSA began a 

process of tapping the expertise of the private sector in terms of 

providing guidance on the possibility of the redevelopment of the 

OPO. GSA issued an outline, a request for qualifications—an 

RFQ—to elicit public comment and to established a Web site for 

this purpose. 

In 2005, GSA realized that, due to the rapidly changing real estate market, it needed new market information. We once again 

went out in the market with an RFI for the redevelopment of the 

OPO, and we expressed in that RFI that the Government reserved 

the right at any time to terminate the process if we concluded that 

the redevelopment of the property was not in the Government’s 

best interest. 

I will state and this Committee should be aware of the fact that 

there were some 20 responses to that RFI issued in 2005. A majority of them came from groups with, quite frankly, significant development expertise, particularly in adaptive-reuse and in mixed-use 

development. Most respondents visualized a mixed-use type of 

project involving a luxury hotel, residential units, related units 

such as restaurants, meeting places, function spaces, and spas, but 

other concepts included the possibility of incorporating museums. 

We have had a number of expressions of interest from museums in 

the use of some space in the OPO. There was also a proposal for 

a live television studio because of the aesthetics and the architectural setting of the Old Post Office. 

After reviewing the responses to the RFI, GSA has been working 

to evaluate and to determine how best to proceed on this building. 

It is a very historic building. Obviously, you have mentioned that, 

Madam Chairman and Ranking Minority Member. It is very close 

to the White House. It could be in our view as well as in your view 

and in this Committee’s view better utilized, and we need to do 

that. We need to move forward on that. 

The Federal cultural agencies currently housed in the OPO, I 

would mention that this Committee should be aware, do have a 

great appreciation for the building value as a symbol of the architectural destiny and historic preservation. As I mentioned, I have 

attended historic preservation conferences held by the Advisory 

Council for Historic Preservation, and there are great expressions 

of interest in continued tenancy of NEA. Ultimately, the building’s 

location is too important not to have optimum use, and we have 

9 

been evaluating, and we will continue to evaluate. This Committee’s interest is taken under full consideration, and we will be very 

responsive to what I have heard here today. 

I will tell you that, nationwide, we continue to have a large draw 

on our R&A accounts that you all will be hearing in a month or 

so. We do have a substantial backlog of renovation needs in our 

old, historic properties. We have some 268 national historic landmarks. The Chairwoman is well aware of our efforts with St. Elizabeth’s in modernizing and in revitalizing those buildings for use by 

DHS, but there are many, many other properties at 268. Our need 

in that regard is upwards of $7 billion. We anticipate that NCR 

needs a renovation of $2.6 billion. 

We are constantly evaluating options for upgrading existing older 

buildings—historic site, adaptive reuse. Obviously, the Old Post Office is one of those assets that requires considerable evaluation and 

considerable reinvestment. At last estimated in 2007, it would cost 

well over $100 million to modernize the Old Post Office. It is estimated that if we were to invest that in the Old Post Office for the 

existing Federal office need for our 200,000 square foot of users in 

that building, for that same amount of money due to the cost of 

renovation of the Old Post Office and with the space and configuration of the open atrium, we could create with that same level of investment another building with potentially 40 percent more space 

with the same investment dollars. 

So there is indication through our current and recent analysis 

that, with investments in office space use in this building, there 

are options that do have greater return, as I said, more space for 

the same dollar. 

Section 111 of the National Historic Preservation Act authorizes 

Federal agencies to lease space not currently needed for Federal 

use to non-Federal entities. We have used this authority to lease 

space in more than 40 buildings nationwide. These leases have 

ranged from storage rooms at 50 U.N. Plaza in San Francisco to 

an amazing project that, obviously, has had much more progress 

than the Old Post Office, and that is in Boston, Massachusetts 

where we recently outleased the entire McCormack Post Office and 

courthouse building to the State courts of the State of Massachusetts. Now they have moved back out. We are now renovating that 

building for office space needs of agencies like the EPA. 

So this section 111 is a very viable tool, and we have seen evidence in Boston. Obviously, Hotel Monaco is another example of 

that that enables us to work in partnership with the private sector 

to preserve both the historic significance and security concerns that 

we have, particularly of the OPO. 

As I mentioned earlier, the Public Buildings Cooperative Use Act 

provides and permits a portion of the space to be used for these 

mixed uses of purpose. Section 111 requires that, if we outlease 

under that, revenues coming back have to go back into historic 

buildings, of which we have plenty—268 nationwide—that we can 

reinvest those proceeds in. 

So, in conclusion, Madam Chair, I would like to reiterate my concern I have heard here today from you and from both the Ranking 

Member of the Subcommittee and from the Ranking Member of the 

Full Committee over the length of time it has taken us to evaluate 

10 

this, to look at these options, to test the market, and to come to 

the conclusion that adaptive reuse is a major opportunity that we 

should look at. 

I will tell you that I have had discussions with Administrator 

Doan of our agency. As you, Madam Chairman, stated in your comments, it is not her interest that this be sold out of the Federal inventory. So we are looking at a way to both retain it because of its 

significance in the Federal Triangle and also to get greater return. 

I am well aware of Bart Bush, who is our NCR Assistant Regional 

Administrator, is here today with me for any particular questions 

that might come up as well as Tony Costa, my Deputy Commissioner, who was the head of NCR for 7 or 8 years and who was actually there when a lot of these issues that I have mentioned had 

come up. So he is also available. I would be happy to welcome him 

to come up here with me if that is okay with the Committee. 

In conclusion, I would like to reiterate that I am very concerned 

about what I have heard here today. I also apologize for the tardiness in the submittal of my statement. We will make sure that that 

will not happen in the future. I look forward to not only your initiative here and to the legislation but also in continuing to work with 

this Committee in trying to move this project forward. 

I will tell you that—and Bart Bush can give you evidence—I 

have heard directly from the current tenants not on full utilization 

and not on the highest and best use but that they do love this facility and that they do currently have a lot of activity and competent 

use of this space. 

So I would like to conclude my comments, and I will provide 

today or at any time following up to this hearing all possible data 

about this analysis that I have mentioned that we have done. What 

we are doing currently is reevaluating those and are trying to 

reach a decision about how to proceed on the highest and best use 

of the Old Post Office. 

Madam Chair, I will stop at this point. I might ask, with your 

concurrence and with that of counsel’s, if Tony Costa could come 

up here just in case there are some historic questions and if that 

would be all right. 

Ms. NORTON. What was your last comment? 

Mr. WINSTEAD. I apologize, Madam Chair. I would like, if I could, 

to have Tony Costa, who is former ARA. 

Ms. NORTON. He is welcome to the table. 

Mr. WINSTEAD. Thank you, Madam Chair. 

Ms. NORTON. He has got a lot to answer for. 

Mr. WINSTEAD. Tony, do you want to come on up? 

Thank you. 

Ms. NORTON. Let me just read from your testimony to begin 

with. 

First, let me ask whether you are aware or whether Mr. Costa 

is aware of what the Ranking Member and I have said about this 

being under advisement, this building, in the sense that Congress 

has been pressing for its renovation and for its beneficial use for 

upwards of 8 to 10 years. 

Is that understood? 

Mr. WINSTEAD. Yes, ma’am, I fully understand that. 

11 

Ms. NORTON. Can we agree that in 2005—3 years ago—that you, 

indeed, did come forward after the murder in front of the building 

and put out an RFI? Is that not the case? 

Mr. WINSTEAD. Yes, ma’am. 

Ms. NORTON. Then I would like you to explain these sentences 

in your testimony. 

After reviewing responses to the RFI—this is on page 4—GSA 

has been working to evaluate and determine what the best course 

of action would be for this building. This very historic building in 

close proximity to the White House could be better utilized, but we 

need to do it right. The Federal cultural agencies currently housed 

in the OPO appreciate the building’s value as a symbol of artistic 

destination. Ultimately, the building and its location are too important to rush to a decision on what is the best use of the OPO in 

the future. We are looking at all of the options. 

Now, the rush would be between now and 2005, not to mention 

10 years ago when Congress, on a bipartisan basis, had been pressing. Could you explain to me, with almost 3 years of an RFI, leaving the private sector that has to invest money in order to respond 

to the RFI, whether that is fair to them or to us and why? Three 

years is not enough to have evaluated the option that you, yourself, 

indicated was the best option, which was to put this matter out for 

RFI. 

Why is 3 years, not to mention the time before, not enough time 

to evaluate the proposals you have received? 

Mr. WINSTEAD. Well, Madam Chair—— 

Ms. NORTON. What more needs to be done? 

Mr. WINSTEAD. Madam Chair, as you know, we have highlighted 

that comment. We, obviously, did have through RFI a great deal 

of response. I have a copy of it if the Committee—I am sure the 

Committee has it. 

Ms. NORTON. Has anybody been looking at those responses? 

Mr. WINSTEAD. Yes, ma’am, we have been. 

Ms. NORTON. Would you explain to the Committee what the complication is. This Committee is aware of the kind of time and of the 

amount of time it usually takes for you to proceed. It takes too long 

even in the ordinary course. It normally does not take this long. 

Why has this taken longer? 

Are you looking at options beyond those in the RFI which you, 

yourself, asked for? 

Mr. WINSTEAD. Madam Chair, this actually came a little before 

I got on board, but I will tell you—— 

Ms. NORTON. Well, that is why you have Mr. Costa at the table. 

I want an answer. 

Mr. WINSTEAD. I know. Let me state what we have been doing. 

We have been engaging both Bart Bush and his staff, as well as 

us. In looking at the input from the market, I will tell you that it 

is not cheap for developers and partners to put together proposals 

of this nature, but they have been preserved, and we do have the 

currency of their ideas. The market has changed in the last 2-1/2 

years. I will admit to that. I do think that there is still a high level 

of interest, and the evaluation that has been going on is looking at 

the proposals that came back from the market as well as the economic viability of those over the long course of a lease under either 

12 

their own authority or under section 111. There has been dialogue 

both internally at PBS and with the Federal Building Fund portfolio people who are involved in this. There have been discussions 

at the NCR. There have been discussions with Mr. Costa. There 

have been discussions with the Administration. There have been 

discussions with OMB. 

Ms. NORTON. How much longer would it take to complete the 

evaluation and to come forward with your decision? 

Mr. WINSTEAD. Well, I do believe that we need, obviously, to 

make sure that we get—— 

Ms. NORTON. How much longer? Please answer the question. 

Mr. WINSTEAD. I think there are two things, Madam Chair. 

Ms. NORTON. I am not asking for the process. I am asking a 

question that goes to time, and I am asking that question on behalf 

of the entire Committee and Subcommittee. 

Given the fact that we have had 3 years with an RFI hanging 

out there—— 

Mr. WINSTEAD. Right. 

Ms. NORTON. —its having been placed, apparently, by developers 

from around the country who have invested real dollars in order to 

meet your RFI and in as much as the Subcommittee has expressed 

its impatience with the need to pour money into this building, my 

question to you is not what will the process entail. That is inside 

baseball. 

Mr. WINSTEAD. Right. 

Ms. NORTON. My question to you is: When will you be prepared 

to, in fact, indicate your decision from the RFIs that have been submitted to you? 

Mr. WINSTEAD. We are currently evaluating them within a very 

short period of time. That does involve also, as you know, a submittal to OMB and Congress of any relocation of existing tenant 

leases. 

Ms. NORTON. All right. 

Mr. WINSTEAD. That is—that is—— 

Ms. NORTON. No. If you bring these things up, I am going to 

question you on these things. 

There is now an excess of office space in the District of Columbia. 

There is also a credit crunch, and people are dying to get this space 

rented. Just to name two that come to mind out of your portfolio, 

out of this very Committee, NoMA on M Street. So let me ask you 

in light of the fact that you have raised it: 

Do you think that there would be any difficulty in relocating the 

small agencies that are now in the Old Post Office Building? 

Mr. WINSTEAD. Madam Chair, I do not. I spoke yesterday at 

the—— 

Ms. NORTON. Thank you. Let me go to the Ranking Member. 

Mr. GRAVES. Thank you, Madam Chair. 

I have got several questions, Mr. Winstead. If we could, let’s just 

move through them really quickly and get some answers. 

I do want to point out that you mentioned in your statement the 

OMB scoring rules that are a real problem. The fact is we do waste 

billions of dollars in overtime because OMB and CBO scoring forces 

GSA to rely on short-term operating leases. I would just like to 

offer to you that I would like to help with that. It is a huge probVerDate Aug 31 2005 15:14 May 07, 2009 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 P:\DOCS\41941 JASON
13 

lem, and I would like to do anything I can to help you all move 

through that process. 

Mr. WINSTEAD. Thank you, Congressman. 

Mr. GRAVES. Real quickly, a couple of things. 

What Federal agencies right now are tenants in the Old Post Office Building? 

Mr. WINSTEAD. Congressman, the dominant ones are the National Endowment for the Arts—the NEA—which occupies 85,000 

square feet, the National Endowment of Humanities that occupies 

84,000 square feet, the Department of Education that occupies 

16,000 square feet, the Department of Interior that occupies 20,000 

square feet. Part of that interior space is utilized, as I mentioned, 

by the Advisory Council on Historic Preservation, which is the advisory group to all Federal agencies on how to manage and to preserve Federal resources. So it is sort of ironic that they are in this 

wonderful building and that they love it as a result. 

Mr. GRAVES. How much do they currently pay to rent? 

Mr. WINSTEAD. Congressman, they pay about $24 a square foot 

in rent, which is obviously way below the market. The market in 

that area or NoMA, you know, particularly in that area, would be 

around $31 to $49 a square foot, so it is substantially below market. Obviously, those tenant agencies like that space because of 

that rent. 

Mr. GRAVES. They are obviously going to need to be relocated if 

the building is redeveloped, I am going to assume. Where would 

they most likely be relocated—in leased space or in Governmentowned space—do you know? 

Mr. WINSTEAD. Congressman, as you know, by policy, we always 

like to look at the Government space in the first order before we 

go to private market. As the Chairwoman mentioned, there are lots 

of options in Washington, D.C. The high probability would be that 

that amount of space would probably be delivered by the private 

sector. 

Mr. GRAVES. Will their rent payments increase after they have 

relocated? You kind of already answered that. 

Mr. WINSTEAD. Well, I just mentioned that comparable space in 

some of the newer buildings in downtown as well as at NoMA and 

at Foggy Bottom are in the $31 to $49 range, and some are above 

that. 

Mr. GRAVES. Would the tenants—and you kind of already answered this, too. Would the tenants want to move? 

Mr. WINSTEAD. I know several tenants—Tony, you wanted to 

comment on this. I know some of the tenants have contacted me. 

The Advisory Council has. I know NEA has expressed reluctance 

to move out of the Old Post Office. 

Tony, do you have something to add on that? 

Mr. COSTA. Good afternoon. 

I think the tenants love the location, but everyone is aware that 

the building does require renovation. The location is great, though. 

Mr. GRAVES. Let me ask you this: Does GSA need to seek approval from anyone before moving forward with relocating those 

current Federal tenants? 

Mr. WINSTEAD. The only thing, as I mentioned earlier, Congressman, is obviously the prospectus approval for relocating those 

14 

agencies. Obviously, we deal with OMB and with you all in that 

regard and with the administration’s concurrence, but that is what 

would be needed. 

Mr. GRAVES. Has that been done or started? 

Mr. WINSTEAD. Actually, some prospectuses were provided, but 

they are now 3 or 4 years old. They would have to be updated 

based on those agencies’ needs, and we are looking at that. Bart 

Bush is in charge of that process, and he is looking at that. 

Mr. GRAVES. Okay. Thank you very much. 

Mr. WINSTEAD. Thank you, Congressman. 

Ms. NORTON. Just let me say for the record, if there were a scoring problem, that is the first thing OMB would have told you to 

put in your testimony. The reason there is not a scoring problem, 

of course, is that we are not talking about the use of Federal 

money. We are talking about a public-private partnership. We are 

talking about the same kind of public-private partnership where 

most of the money gets dumped into a building, yes, with some 

amount of money from the Government but certainly not $100 million. It gets dumped into the building from a private developer who 

does so because he has got the right to develop on a prime spot on 

Pennsylvania Avenue, and he has got the gold standard—a Federal 

contract. Is that not the case? 

Mr. WINSTEAD. Yes, ma’am. 

Ms. NORTON. We are not talking about the Federal Government’s 

spending $100 million of Federal money, are we? 

Mr. WINSTEAD. If we renovated it as a Federal office building—— 

Ms. NORTON. But we have never talked about renovating. You 

did not put out an RFI for the Federal Government to renovate this 

building, did you? You put out a public-private partnership RFI, 

did you not? 

Mr. WINSTEAD. That is correct. It also offered flexibility in the 

RFI. We were looking for all sorts of ideas. We actually—although 

the dominant response looked at both the OPO and the annex as 

a development project overall, there were several people who came 

in just looking at one and not the other. So there were a number 

of different variations of expressions of interest and viability. You 

know, the rent ranges that were proposed were enormous, but we 

do have those facts, Madam Chair, as you mentioned, and I am 

concerned that they are several years out of date and that we need 

to obviously go back out and follow up on this. 

Ms. NORTON. Oh. You are suggesting that you need a new RFI, 

are you now? Is that what you are suggesting? 

Mr. WINSTEAD. No. No. No, ma’am. 

Ms. NORTON. All right. You testified, did you not, that the current tenants were paying $24 per square foot? 

Mr. WINSTEAD. I believe that is correct. 

Ms. NORTON. Now, on Pennsylvania Avenue, this is a prime location. Aren’t rents about $45? 

Mr. WINSTEAD. Yes, ma’am. I think they are between $31 

and—— 

Ms. NORTON.You know, I have got my ′′cha-ching′′ running. Just 

add this to what the Government is losing because it has got rent 

here, you know, that is something close to half of what somebody 

could be getting for prime time. I can think of no location—if you 

15 

talked to anybody in the real estate or development business and 

said to them ′′pick a place to have a building in the District of Columbia as the prime spot,′′ I doubt that anyone would come up with 

a better location than this location. Location. Location. Location. 

Mr. WINSTEAD. Absolutely. Also, it has a lot of, you know, public 

transit, which is obviously—— 

Ms. NORTON. Public transit. 12th Street comes right off of there. 

It just has everything. 

Now, just let me, for the record, make clear because we have just 

gone through an exercise where we changed how prospectuses will 

be evaluated. The desire of the tenants are not determinative on 

how the taxpayers’ money—are no longer determinative, I should 

say, on where the taxpayers’ money will be spent for locations in 

the District of Columbia; is that not the case? 

Mr. WINSTEAD. That is correct. 

Ms. NORTON. In fact, tenants would all desire to be exactly where 

they are. They have to be crazy to want to move from where they 

are. Yes, it is a broken-down building, but they are historic types 

anyway. They are in the best location in the District of Columbia. 

So why should they want to move? The question is: Why should the 

taxpayers have a tenant who pays $24 when they could get $45? 

I will tell you they could get more for this location on Pennsylvania 

Avenue. 

Mr. WINSTEAD. As you know, we have had some great successes 

recently in the leasing market and along NoMA and in other areas. 

So there is an awful lot of interest. 

Ms. NORTON. So we do have office space that we, ourselves, on 

this Committee would like to see used rather than in this location, 

which is where most Federal agencies want to be. Most of them 

want to be exactly here. We are trying to say, because of the lower 

costs on M Street, NoMA and such locations as that, we are not 

going to hear where you want to be. We are going to hear where, 

given all of the amenities, the best place for the agency is. 

Now, you put some boilerplate language in here, and I certainly 

hope that it will continue to be. You say at the bottom of page 3 

and going on to page 4 that the GSA expressly stated in the RFI 

that the Government reserves the right at any time to terminate 

the process if it concluded that redeveloping the building was not 

in the Government’s best financial interest. 

That is boilerplate language, is it not? 

Mr. WINSTEAD. Yes, ma’am. 

Ms. NORTON. Have you determined that, quoting you, redeveloping the building is not in the Government’s best interest? 

Mr. WINSTEAD. We have not at this point determined that it is 

not in the Government’s best interest. 

Ms. NORTON. Is it conceivable that redeveloping the building 

would not be in the Government’s best interest? 

Mr. WINSTEAD. I think, with the interest from the market, the 

options that we have looked at are, obviously, current tenancy redevelopment or renovation as an office building. I think the options 

are—we have to move forward because of the condition of the 

building. 

Ms. NORTON. Do you regard the Monaco Hotel as a precedent for 

developing an historic project of this kind? 

16 

Mr. WINSTEAD. Madam Chair, as you know, I think the Tariff 

Building was a very unique project and a very positive project in 

terms of when to move forward, I guess, in 2002, when it reopened 

its doors. We did use our authority under section 111 to outlease 

the building over a period of time. We put about $5 million into it. 

My understanding is, as a result of—— 

Ms. NORTON. Did you say $5 million? 

Mr. WINSTEAD. Yes. 

Ms. NORTON. Is that all the Government put into that building? 

Mr. WINSTEAD. Yes, ma’am. Is that right, Tony? 

Mr. COSTA. Yes. 

Mr. WINSTEAD. I do understand. Although rental payments in 

the earlier years were about $150,000—— 

Ms. NORTON. What does that contract get you—— 

Mr. WINSTEAD. I apologize. 

Ms. NORTON. —on the Monaco building? 

Mr. WINSTEAD. Last year’s revenues were $430,000. 

Ms. NORTON. $430,000 annually is what you are getting? 

Mr. WINSTEAD. Madam Chair, it is $180,000 base plus $250,000 

that we got last year. 

Mr. COSTA. It is a complicated revenue agreement, but the 

amount of revenue has gone up over the last 4 years, and it is up 

to $440,000, and we expect it to increase depending on the sales 

in the hotel because the Government does get revenue after sales 

go up beyond a certain point. 

Ms. NORTON. You are close to getting your return back already, 

aren’t you? 

Mr. COSTA. Yes. 

Ms. NORTON. And this building was started in 2003? 

Mr. COSTA. It opened in 2002. 

Ms. NORTON. It opened in 2002. In 6 years, you are already close 

to—you may already have exceeded, but you certainly are close to 

getting what you put in it that allowed you $5 million. This is a 

very expensive building. Anyone who has gone into this building 

has seen that every historic part of the building has been preserved. I hesitate to ask you—perhaps you know—how much it 

costs to renovate this building. How much does it cost? Because it 

certainly did not cost you. 

Mr. WINSTEAD. No. 

Ms. NORTON. So how much did it cost somebody to make this old 

Tariff Building into a state-of-the-art hotel? 

Mr. WINSTEAD. Madam Chair, we did have an estimate for upgrading the building to—at least the figure I had was between $20 

million and $25 million. That was basically, I think, the cost back 

then in 2002. 

Ms. NORTON. In 2002 dollars, $25 million it cost somebody to 

renovate a hotel. You put in $5 million. You have already gotten 

or are close to getting your return back in 6 years, and then all the 

rest of it is going to be gravy from there on out. Is there any reason 

to believe that that model could not be used on the Old Post Office? 

Mr. WINSTEAD. As to why this would not be used? 

Ms. NORTON. Is there any reason to believe that this model is not 

applicable? 

17 

Mr. WINSTEAD. That is one of the options that was identified by 

the RFI, and that is one of the options that is on the table. 

Ms. NORTON. We do understand we are not talking—so, for the 

record, we are not talking about a substantial investment of taxpayer dollars in this building in order to renovate this building for 

some kind of beneficial use. We are talking about the investment 

of private dollars in this building; is that not the case? 

Mr. WINSTEAD. That is one of the options. 

Ms. NORTON. What is the other option, sir? 

Mr. WINSTEAD. Well, the other options are clearly a renovation 

of the entire building for office use, but as you suggested, that 

would—— 

Ms. NORTON. By the United States of America? 

Mr. WINSTEAD. That would cost $100 million—— 

Ms. NORTON. Yes. 

Mr. WINSTEAD. —of Federal money. 

Ms. NORTON. Well, we had a hard enough time, Mr. Winstead, 

in getting the money for St. Elizabeth’s. The Committee has never 

asked you to find the money. We have never asked the administration to put money in its budget. We have always cited the Tariff 

Building, which cost the taxpayers very little. I just want the 

record to be clear. You know, you put in your testimony—the reason I am having to do this, Mr. Winstead, is that you put $100 million in your testimony. Did you think I was going to let that go by? 

You also put in your testimony that there were other buildings 

around the United States that needed renovation. 

Why aren’t you doing the same thing in other buildings around 

the United States? 

We are here because we happen to be able to look at this building every day because it is right in mainstream D.C., but your suggestion that there are other buildings like this only makes us suggest why aren’t you doing this nationwide. 

Could you provide for this Committee within 30 days a list of historic buildings in every State of the Union, owned by the GSA, and 

of their current use and of their ages within 30 days, please? 

Mr. WINSTEAD. I would be happy to. I did highlight some of those 

other properties, the Boston property being one, that is utilizing 

section 111, but we will be happy to get that together as well as 

to indicate what the outlease’s terms were as well as the tenants. 

Ms. NORTON. Yes. First of all, we have cited the fact that GSA 

has done this before. Some of these are State leases. We are not 

trying to offload the cost onto anybody who cannot pay for it. We 

are in the middle of a downturn that has everybody very fearful. 

Frankly, if we had done this—and we do not know how many of 

those people who responded to your RFI are still in a position to 

do this. I know this much. There were many, many people in 2002 

who leaped at the opportunity to submit an RFI, so we are already 

on the tail end of an economy that is going down. It is making it 

harder and harder for the Government to do what, in fact, you 

could have done years ago. 

Let me ask you: What can you tell us about the expressions of 

interest you have received? 

Mr. WINSTEAD. Madam Chair, the RFI did come in and we have 

had substantial—— 

18 

Ms. NORTON. How many expressions of interest did you have? 

Mr. WINSTEAD. We have had over 20 expressions of interest. 

Ms. NORTON. Astounding. When you consider what kind of commitment that would mean somebody was willing to make to this 

building because they understand it is a historic building, that is 

an astounding number of responses to the RFI. 

Mr. WINSTEAD. You are correct. And I think anybody looking at 

a historic building with the challenges it has in terms of infrastructure and systems, it is much harder to calculate what your costs 

are going to be and what you might encounter. So you are correct, 

it is—— 

Ms. NORTON. Well, you asked for expressions of interest. So I 

don’t accept what you just said at all, because these people have 

looked at the building. An expression of interest means this is what 

we think we would like to do, what can be done to the building. 

This wasn’t a government RFP—you know, compete to do this. This 

means I, ABC, am telling you that I think you should do this with 

the building and I, ABC, am willing to put up the cash to get almost all of it done. So don’t cite for me the usual RFP where we 

are competing a building. This is an expression of interest where 

somebody, without of course now saying he is prepared to compete 

because we have not gotten to that point yet, does say, look, this 

is what I believe should be done to the building, which means that 

if you choose me I would be prepared to go forward with doing that. 

That is a very substantial—nobody just throws in an RFI given 

what it takes to prepare a credible RFI for the government without 

calculating exactly what he is saying, what she is saying she would 

be willing herself to put up, since it is her money she is talking 

about, not yours, not the taxpayers’ money. 

Go ahead. 

Mr. WINSTEAD. Well, Madam Chair, I think you are correct. I 

didn’t mean to say—I think the sophistication of the respondents 

was quite high. Ten of them had done projects and close to a billion 

dollars. They were very sophisticated developers. So you are correct, they knew what they were looking at, they knew what the potential was, and they knew what they were getting into. So you are 

correct. 

Ms. NORTON. Given the fact that—given what you have just said, 

do you believe that—well, first of all, let me quote to you from the 

part of my testimony that was most painful for me to write. Here 

it is. The part of my testimony that was most painful for me was 

this part. 

The building’s 2007 rent payments of $5.4 million paled in comparison with the total expenses for the property of 11.9, resulting 

in a loss of 6.1 million in 2007. Then I asked that this figure be 

multiplied by the decades during which the government has taken 

money from the building fund in order to make up for the losses 

from rents and to add to that the millions of dollars in renovations 

and additions that have proved useless. 

In light of this loss to the government on a building that could, 

given the tariff building perhaps within 5 or 6 years bring us some 

revenue, is there any reason to believe that the next step after the 

RFI could not be completed within the next 2 months? 

19 

Mr. WINSTEAD. Madam Chair, we obviously will focus on getting 

this—getting—— 

Ms. NORTON. Technically would that be possible? 

Mr. WINSTEAD. I think technically the decision is made that technically—— 

Ms. NORTON. No. If we have to—we are going to carry this forward. So if you need help, you are going to get it. 

Mr. WINSTEAD. Within that period. 

Ms. NORTON. You can either do it before or you can do it after. 

But this is going to be done. It would be a real mark on the GSA 

if you had to do it that way. But I intend to carry this, as I said 

in my opening statement, straight to the first markup at Full Committee. Would you—— 

Mr. WINSTEAD. Madam Chair, just one comment. I know you 

have the figures in front of you. But the fund for operation differential, it has unfortunately in the last 2 years been significantly 

more. In fiscal year 2003 it was about a $700,000 loss; In 2004, 

200,000. It has increased because of the security costs we have 

seen in the last 2 years. The uniqueness of this structure for office 

use is being open on weekends and the added burden and cost 

ofthat—— 

Ms. NORTON. Why was it open on weekends? 

Mr. WINSTEAD. Because of obviously the retail and the other uses 

that are in the building. 

Ms. NORTON. And you were renting this building for other uses? 

You have been renting this building for other uses? 

Mr. WINSTEAD. No, no, no. The retail and food service functions 

in the building, and I do believe that occasionally we have functions in the building on the weekend as well. So there are—— 

Ms. NORTON. Do you mean for that little food court down there 

you have been keeping the building open? 

Mr. WINSTEAD. Well, the food court and the other services. There 

are shops there and there are also space that has been rented for 

events on the weekend. 

Ms. NORTON. $5.4 million worth of rent? I guess you are pretty 

desperate. I guess you have got to go for every penny because it 

reduces at least somewhat what you have to invest to make up for 

the losses. So you really are on a merry-go-round, aren’t you? You 

have got to open the building, pay for security, all of which will 

bring you a loss but it will perhaps reduce the loss that you bring. 

Mr. WINSTEAD. Your point is made, Madam Chairman. 

Ms. NORTON. Now, talk about this—I don’t know whether to call 

it a building or this addition or at the end that kind of sits aside 

from the building. It certainly doesn’t go with the historic structure. Why was such a structure put there as a shopping mall? 

Whatever happened to it? Was it ever open? 

Mr. WINSTEAD. I think I covered in my testimony—and let me 

kind of refer back to it. It was, but the original concept was for essentially a festival food court in that annex building and unfortunately I think back then the traffic that we were getting along 

Pennsylvania Avenue was not quite at the level obviously of the 

residential redevelopment of downtown. And the traffic and tourism—we have much more traffic than we did back then. The concept—the lessor at that point tried to switch from the concept of 

20 

destination retail, which unfortunately just did not attract enough 

suitable retail lessees and he went bankrupt and that was an unfortunate event as a result of that. 

Ms. NORTON. So it has been closed since when? 

Mr. COSTA. It actually never was fully occupied. For less—about 

a year, 18 months, it was partially occupied and then it just closed 

down. 

Ms. NORTON. Would you submit within 30 days the cost of that— 

that I can’t criticize there. I can see what you were doing, you were 

trying to get some greater use out of the building. But, again, there 

is always plenty of traffic on Pennsylvania Avenue. You have got 

to have somebody that knows how to market those things. And that 

is, of course, what we are seeking in the public/private partnership. 

So that has been just there with no tenant. How about renting— 

has the space been rented other than to the food court and the 

shops that are there on the first floor? 

Mr. WINSTEAD. Madam Chair, I do know during my tenure there 

has not been. That is the last 2-1/2 years. There has not been any 

rental of that space. I don’t know whether before that there had 

been. 

Ms. NORTON. Well, before that it was rented because that is 

where the killing took place outside after it was rented to someone. 

Mr. WINSTEAD. Okay. You are speaking of the atrium, not the 

annex? 

Ms. NORTON. No, not the annex. 

Mr. WINSTEAD. Oh, I am sorry. 

Ms. NORTON. The annex you say was open for a year and a half? 

Mr. WINSTEAD. Right. 

Ms. NORTON. But the building itself was rented and we can understand why because again with the losses you were getting I am 

sure you were trying to get some revenue from the building. Then 

we had the killing. Has the building been leased to any except 

those who occupy the building in the weekdays for shops, for selling things I suppose I should say? 

Mr. COSTA. There are kiosks and also events still take place. So 

we are renting out the atrium space even on weekends at times. 

Ms. NORTON. So give us examples of who you rent to. 

Mr. WINSTEAD. I do know, Madam Chair, they have—as I mention, they have conferences. I have attended one in some of the conference areas on the first floor, which is right above the retail. So 

there has been an effort to try to get rooms into at least—— 

Ms. NORTON. The Subcommittee does not take the position you 

should not be renting the space. If you were renting the space to 

some kind of rowdy student group, that was different. Would you 

submit to the Subcommittee within 30 days all of those to whom 

the space has been rented since the killing in 2005? 

Mr. WINSTEAD. I would be happy to. 

Ms. NORTON. I ask the Ranking Member if he has any further 

questions. I think that I have only a few more questions. 

The largest project that the GSA has handled is about to come 

out of the Congress. And that, of course, is the Department of 

Homeland Security. It really is going to test your own mettle to see 

if you can manage such a project, move it, move it quickly, 5 or 6 

agencies on one compound. You don’t usually supervise the buildVerDate Aug 31 2005 15:14 May 07, 2009 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 P:\DOCS\41941 JASON
21 

ing of more than one building and it is going to be a number of 

buildings over a number of years. 

Would you tell me where you are now in the process of preparing 

for St. Elizabeth’s? What work has been done and what remains to 

be done for preparation for the Department of Homeland Security 

construction? 

Mr. WINSTEAD. Madam Chairman, we continue at both the NCR 

level and the headquarters to be engaged with DHS and their tenant needs. And St. Elizabeth meetings are being held weekly. In 

that regard, as you know, we are planning still at about 4-1/2 million square feet of office and related space for about 14,000 employees on the 176-acre campus. The project overall will be about a $3 

billion project, $2 billion from GSA and 1.4 billion from DHS. We 

are still looking at construction completion in 2016. 

I will tell you that I personally—Bart Bush has been very involved in this, as well as Tony and other members of my staff. We 

are making great progress. We are meeting and we will continue 

to meet at the highest levels of the DHS, as well as the project 

management level. 

We have reached out to the community, thanks to your efforts 

quite frankly. I attended I think a year and a half ago a community 

meeting of the NC up there with you. We continue to follow up 

through our project management team. I have reached out to Harriet Tregoning, who is the Director of Planning for the District of 

Columbia at my level. I knew her from years ago in Maryland. We 

have coordinated closely with the city. We continue to make substantial progress. I was not party to a meeting that was held yesterday, but both Bart and Tony were with the top level at DHS. 

We do have a meeting with Lurita Doan, myself, somebody from 

the Park Service, as well as higher levels, I think the Deputy Secretary of DHS, in a couple of weeks just to go over everything in 

terms of the plan moving forward, of which we are very optimistic. 

I will tell you a lot of effort has gone into making sure that that 

national landmark like OPO is well managed. There is a lot of concern in that regard about density and placement of buildings. I personally got involved in that as well as Bart’s staff and Tony, as 

well as the historic preservation people at the head office, and I do 

think we are making substantial progress. We are understanding 

DHS’s needs. They are committed. We have housing plans and we 

are proceeding. I will tell you that I am pleased. 

My information might not be as current as Bart and Tony in 

terms of recent meetings, but I am pleased in the efforts I have 

made with the Dick Moe, who is the head of the National Historic 

Trust and John Nau, who chairs the Advisory Council for Historic 

Preservation, who have both gotten very involved in this process to 

ensure that we can achieve the densities on that site that satisfy 

DHS’s housing needs but also are very sensitive to the aesthetics, 

the campus at DHS and new building that we will be doing, which 

will be substantial. We are going to reuse a majority of the existing 

buildings, but there is going to be new buildings for obviously 

Coast Guard quarters and DHS headquarters. 

But I am pleased—I don’t know whether Tony has a comment or 

two about this, but we will keep this Committee informed on any 

issues that come up going forward. 

22 

Ms. NORTON. Well, we have complimented your management of 

historic properties, but you have never seen anything like this. 

That is probably dotted with historic properties everywhere. So you 

are going to be faced with not only building new structures but 

with conforming the structures there to what DHS needs, is going 

to test every bit of expertise that you supposedly have. 

Now, by law, the Coast Guard will not, cannot move unless the 

access road is provided and there were to be negotiations to make 

sure that happened with the National Park Service. I would like 

to know the exact status of that, please. 

Mr. WINSTEAD. All right. 

Mr. COSTA. We are making good progress. 

Ms. NORTON. Exactly what is the status now please? We are always making good progress. That is what bureaucrats always—you 

know, we are making progress. What is the exact status? You 

should have had this out last year. In fact, we should have had it 

out 3 years ago. So you have had extra time to negotiate the access 

road. And if that part is done, then we won’t be looking back to 

say whatever happened to the access road when what you should 

be doing is spending your time on the construction itself. So I have 

got to ask you the exact status, if there are difficulties, and you 

need to tell us what the difficulties are, so that we can be helpful 

if there are difficulties. 

Mr. COSTA. We appreciate the support. We have been doing engineering studies to actually design exchanges, access around the 

campus. The work with the National Park Service is really about 

going through statutory requirements to assess the impact of development along historic roadways. And so I know it is a bureaucratic 

answer, but it is the bureaucracy of the process of going through 

it. 

Ms. NORTON. I am not going to burden the hearing with this 

technical discussion. I will ask you to call my office. And you and 

a representative from the Park Service should come so that we can 

understand what that concern would be. The Congress is extremely 

frustrated that the Department of Homeland Security is taking so 

long to go up. I don’t want to be faced with the notion that it is 

really an access road problem. And if there are things that we need 

to do, if you would call my scheduler, we will get all the relevant 

actors together. 

What is the state of the environmental cleanup? The environmental process has been explained by the community to the community. The mayor himself and I, along with Lorita Doan were at 

a press conference informing the community, the parts of the community that live closest to St. Elizabeth’s. So all of that was done 

more than a year ago. So I want to know, have we begun the environmental cleanup? What is the status of the environmental cleanup? 

Mr. COSTA. The issue that was raised about a year ago near the 

border of the campus, we actually did testing already and there 

really was no extensive cleanup needed. There is cleanup in the 

middle of the campus associated with the old heating plant. So 

there are two separate environmental cleanup issues. Again, the 

cleanup issue related to the neighborhood, we have completed all 

testing and there is no cleanup required. 

23 

Ms. NORTON. I know that is very good news for me. I am sure 

others in the city already know it. So what we are really saying 

is that out of an abundance of caution you did in fact look at the 

area that was close to homes, found that no environmental cleanup 

in their yards or in that area was needed at all; is that correct? 

Mr. COSTA. Yes, we did. 

Ms. NORTON. Now, everyone understands what you said about 

the heating plant. This was a city within a city. What is the status 

of the environmental cleanup for inside the property? 

Mr. COSTA. Most of that cleanup will occur during construction 

and excavation. So we wouldn’t do it twice. So the plan will be as 

we excavate for construction—the basic plan is the same that we 

used for the Southeast Federal Center. 

Ms. NORTON. To hear you say that is interesting to me because 

that certainly isn’t the way we did it at the Southeast Federal Center. At the Southeast Federal Center, we had about three tranches, 

three separate appropriation years. I asked for money to clean it 

up so that by the time you got to the point that we did the public/ 

private, the Southeast Center for Public/Private Act, cleanup was 

not an issue. 

Mr. COSTA. I should have been clearer, because the Southeast 

Federal Center really had two components. One was associated 

with the request for funding where we managed contamination 

that was frankly running into the Anacostia if we didn’t do that 

cleanup. We also have additional cleanup through the development 

of the Southeast Federal Center, which actually we are trying to 

save money by doing it during excavation of the process. 

Ms. NORTON. I see. Now, who is to pay for the infrastructure? 

Mr. COSTA. For the Southeast Federal Center—— 

Ms. NORTON. No, no. 

Mr. COSTA. Those are part of our requests. 

Ms. NORTON. Those are what? 

Mr. COSTA. Those are part of our funding requests we have been 

requesting. 

Ms. NORTON. They are part of the funding request for this year? 

Mr. COSTA. Yes. There is a component for infrastructure. 

Ms. NORTON. Thank you very much. This Subcommittee works 

very closely with the GSA. We understand your concerns, but we 

are disappointed in the way this particular project has been handled. We stand ready to be helpful to the GSA. We believe that you 

have many experts who know how to do every bit of what needs 

to be done, and all we ask is candor on your part when there is 

a problem. 

We do understand the role of the OMB in all of this. But there 

is the Congress of the United States and we do have bipartisan 

support. So no Federal agency I think can keep us losing money off 

of this—from this project. We intend to move forward. We understand the position you have been put in. 

We very much appreciate your testimony. This hearing is adjourned. 

[Whereupon, at 3:25 p.m., the Subcommittee was adjourned.] 

24 


41941.005
25 


41941.006
26 


41941.007
27 


41941.008
28 


41941.009
29 


41941.010
30 


41941.011
31 


41941.012
32 


41941.013
33 


41941.014
34 


41941.015
35 


41941.016
36 


41941.017
37 


41941.018
38 


41941.019
39 


41941.020
40 


41941.021
41 


41941.022
42 


41941.023
43 


41941.024
44 


41941.025
45 


41941.026
46 


41941.027
47 


41941.028
48 

Æ 


41941.029