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SITTING ON OUR ASSETS: 

THE GEORGETOWN HEATING PLANT 

(112–89) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND 

EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JUNE 19, 2012 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

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

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JOHN L. MICA, Florida, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

FRANK C. GUINTA, New Hampshire 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

REID J. RIBBLE, Wisconsin 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

NICK J. RAHALL II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY

MANAGEMENT

JEFF DENHAM, California, Chairman 

TIMOTHY V. JOHNSON, Illinois 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas, 

Vice Chair 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

JOHN L. MICA, Florida (Ex Officio) 

ELEANOR HOLMES NORTON, District of 

Columbia 

HEATH SHULER, North Carolina 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

TIMOTHY J. WALZ, Minnesota 

DONNA F. EDWARDS, Maryland 

BOB FILNER, California 

NICK J. RAHALL II, West Virginia 

(Ex Officio) 

(III) 

CONTENTS Page 

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

TESTIMONY 

Flavio Peres, Deputy Assistant Commissioner for Real Property Utilization 

and Disposal, Public Buildings Service, U.S. General Services Administration ........................................................................................................................ 5 

PREPARED STATEMENT SUBMITTED BY WITNESS 

Flavio Peres .............................................................................................................. 28 

SUBMISSIONS FOR THE RECORD 

Flavio Peres, Deputy Assistant Commissioner for Real Property Utilization 

and Disposal, Public Buildings Service, U.S. General Services Administration: 

Supplementary information to responses to questions asked during 

the hearing ............................................................................................. 35 

List of agencies with the authority to retain proceeds ........................... 39 

List of 124 excess GSA properties ............................................................ 40 

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(1) 

SITTING ON OUR ASSETS: 

THE GEORGETOWN HEATING PLANT 

TUESDAY, JUNE 19, 2012 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND EMERGENCY MANAGEMENT, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, Washington, DC. 

The subcommittee met pursuant to notice at 10:00 a.m. at the 

Georgetown Heating Plant, 1051 29th Street, NW., Washington, 

DC, Jeffrey Denham (Chairman of the subcommittee) presiding. 

Mr. DENHAM. The subcommittee will come to order. I want to 

first thank Chairman Mica for joining us this morning, thank him 

for his tireless work on this issue and his leadership; did the ‘‘Sitting On Your Assets’’ report prior to the 112th Congress, and we 

appreciate him being here. 

First, let me say the Federal Government wastes billions of dollars every year on underutilized, unused, vacant buildings just like 

this one. This administration has said this issue is a priority, yet 

neither GSA, Acting Administrator Tangherlini, nor the current 

head of the Public Buildings Service, Ms. Chero, are here today. 

While I appreciate Mr. Peres joining us, work on this project, I 

am troubled the new GSA leadership could not make time to be 

here with us today. This is the fourth hearing in a vacant building 

this Congress. We held two in the vacant annex of the Old Post Office, and most recently the vacant Cotton Annex. 

The Post Office Annex sat vacant for more than a decade, and 

a developer was only selected to redevelop that site earlier this 

year. The Cotton Annex sat empty for more than 5 years on land 

valued at $150 million. This is an area that has nearly, or maybe 

possibly more, than 5 million square feet of leased space; yet, these 

buildings are going vacant, undeveloped, and underutilized. 

GSA still has not decided what to do with this building. Today 

we’re in Georgetown Heating Plant. This building has sat vacant 

for more than a decade, costing the taxpayers over $3.5 million. 

But, those costs don’t account for the lost opportunities. This building sits in one of the more expensive real estate areas in the Nation’s Capital surrounded by development and waterfront. Yet, 

until last November, none of these properties were on the Government’s list of excess properties. 

The Government has a list of 14,000 properties, and many of 

these properties that we continue to hold hearings at aren’t even 

on that list. I’m pleased that GSA is finally taking action on this 

site; however, its past experience is any indication. The question is 

2 

will the taxpayer get the highest return possible on the valuable 

property. Just 2 years ago, GSA sold a high-value asset in the middle of Bethesda, Maryland, for only pennies on the dollar. 

After years of sitting idle, GSA chose to sell at the bottom of the 

real estate market and seem to take few steps to ensure the taxpayer realized the significant value in that property. We have to 

ensure that GSA does all it can to sell this property at the highest 

and best use. And why did it take so long to get to this point? This 

plant was decommissioned in 2000, but yet it took until November 

of 2011 to even declare it surplus. This is exactly why I introduced 

and the House passed the Civilian Property Realignment Act to get 

agencies like GSA to get rid of or redevelop unneeded properties. 

And what makes matters worse is even after this building is 

sold, GSA continues to compound the problem of vacant space. For 

ever step forward, GSA seems to take two or three steps back, 

while GSA is finally selling this property. Across the State in my 

home State of California, Los Angeles, GSA is creating more empty 

space just as GSA has done in Miami, in New York and other big 

cities around the Nation. 

GSA plans to build an unneeded $4 million courthouse in Los 

Angeles, and then abandon a functioning courthouse six times as 

large as this Georgetown building. It seems for every vacant building finally sold by GSA, they continue to create even more wasted 

space. And despite our budget deficit and despite even the direction 

of President Obama’s own real property directive in 2010, GSA continues to cooperate as if business as usual. 

It is unacceptable and it is costly to the taxpayer. We hope today 

to hear why it has taken so long to sell this building, how GSA intends to ensure the taxpayer gets the greatest return on its sale, 

and how many vacant buildings like this does the Government actually own. 

Again, I want to thank our witnesses with us today; and, at this 

time, I would like to recognize the full committee chairman, Chairman Mica. 

Mr. MICA. Thank you. Thank you. First of all I thank the subcommittee chair, Mr. Denham, for his leadership and his determination to move forward trying to get some of these public assets 

in the win column for the taxpayers. I thank Ms. Norton for coming 

this morning to this incredibly valuable piece of property. 

Now, listen to this. This is over 2 acres in the heart of Georgetown. This is probably some of the most costly real estate on the 

east coast, certainly in the District of Columbia and in the United 

States; and, as you heard Mr. Denham say, for more than a decade 

no one made a decision to move forward with disposing of this 

building. 

Now, maybe the inside isn’t very pretty and the outside, again, 

may have some value to it, the core structure. I understand this 

building is also above the normal height limitation, so it does have 

some real estate value. But for more than a decade, it sat idle. 

Now, if you are wondering if we came here to embarrass GSA and 

highlight this building, then you are right on target. 

Mr. Denham and I set out, like a few weeks after I became chairman of the full committee last February, we did our first hearing. 

Some of you were in that cold, frozen building. The annex for the 

3 

Old Post Office that sat vacant two blocks from the White House 

for 15 years. If you are wondering what we are going to do after 

this, then you haven’t read our report. 

The report is ‘‘Sitting on Our Assets: The Federal Government’s 

Misuse of Taxpayer-Owned Assets.’’ We wrote this as Mr. Denham 

also pointed out in October of 2010. That was the same month that 

Mr. Neely was sitting in his hot tub in Las Vegas, no one minding 

the store when the other folks had control. We set out a plan and 

we intend to take this plan and ensure that the Federal Government and GSA stop sitting on valuable assets. 

So far, Mr. Denham and I have done two hearings at the annex 

to the Old Post Office, the last hearing we did in an empty building. Some of you were there. It was the Cotton Annex. Today is our 

third hearing. Now, this is our score card, folks. We only have Mr. 

Denham. There are 14,000 either vacant or partially vacant, or underutilized properties under the purview of the Federal Government. So we have 13,997 to go, and I hope you will be with us for 

all of those events. 

We will go from one end of the country to the other end of the 

country. We just started here in our Nation’s Capital; but, as you 

heard, the scene you see today with the building sitting here, 

again, for over a decade, is repeated across the country. I happen 

to be a former businessman and in real estate. Any company that 

allowed this to happen would be bankrupt, would be defunct, except for the Federal Government. Because a few blocks from here, 

there is a very full building that’s operating 24/7. 

That’s where they are printing the funny money to keep this 

game and fiasco going. Now, let me tell you something. We came 

down the Whitehurst Freeway just a few minutes ago. Did you see 

the sign up on this building? I was told the sign was put up yesterday morning. Did you see the sign when you entered? So, actually, 

before holding and announcing this meeting, there was no sign on 

the building, and the property was not put on the market for sale 

as you would do. It was probably one of the least expensive ways 

of putting it on the market. 

So we made some progress, Mr. Denham. We have got ways to 

go. There are other properties around here we could highlight. I 

have a proposal to consolidate the Federal Trade Commission Operations, which are now at least three locations. And they asked for 

427,000 square feet. Heaven forbid they should consolidate some 

space allowing other agencies to take private sector money and develop an old building! 

We wouldn’t want to do that, because that would save the taxpayers between $400 and $500 million, and that is a half a billion 

dollars on one transaction. So here we sit in an empty building in 

the heart of our Nation’s Capital. The most expensive real estate 

that you can find anywhere in the United States and on the east 

coast and in the Nation’s Capital. Nothing was done for 10 years; 

so, yes, we are here to highlight it. Yes, we are here to try to bring 

this to a halt, and we will do it one way or the other. 

Now, again, I am disappointed in not having had the cooperation 

of the acting administrator. I can tell you how hard it is to get anything done when you have an administrator, let alone an acting administrator in an agency that is in turmoil and which many of the 

4 

leaders, and actually show who testified at our very first frozen a 

la carte to hearing down the street. 

Some of those people had to step down, but we are going to do 

it either with or without GSA. We will do it now or we will do it 

in the next Congress, but we are going to keep the Federal Government from sitting on valuable assets. I will say that today. I will 

say that tomorrow, and we will say it until we get it done. With 

that, those are my comments; and, again, I look forward to working 

with everyone: the chairman, ranking member, Mr. Hanna, everyone in a positive fashion to move this forward. And, again, if you 

want the blueprint for what we are going to do, just go online and 

read it. Thank you and I yield back. 

Mr. DENHAM. Thank you. 

At this time I would like to recognize the ranking member, Ms. 

Norton, for any opening statement she may have. 

Ms. NORTON. Thank you, Mr. Chairman. 

The Georgetown West Heating Plant where this hearing is being 

held this morning, an underutilized General Services Administration building on prime land in the Georgetown neighborhood of the 

District of Columbia has been put on the market for sale. However, 

the plant, built in the late 1940s, had remained underutilized with 

no clear plan for full utilization over the past decade until the 

Obama administration began the disposal process in 2011. 

Part of the administration’s efforts to dispose of and redevelop 

underutilized Federal properties, that effort led to the administration’s submission of the Civilian Property Realignment Commission 

proposal to Congress still pending here for identifying Federal 

properties for sale, disposal or consolidation. Since GSA began to 

market this property for sale, the private sector has shown strong 

interest, and not surprisingly. With the potential of returning a significant financial gain of return to U.S. taxpayers, not unlike the 

award of the contract for redevelopment of the Old Post Office 

Building earlier this year, several questions about the site are immediately apparent. 

Beginning in 2000, instead of undertaking a cost benefit analysis 

to determine the highest and best use of this Georgetown property, 

GSA cited a number of reasons for the delay of its disposal or use, 

including the possibility of using the site for backup generation of 

power, the cost of cleanup, and questions about whether the Department of Interior controls parts of the site. Has the value that 

GSA obtained from the property plus its investment of over $3.5 

million towards maintaining it been greater than the value the 

Government would have received from selling or developing the 

property over the past 10 years? 

Has the contribution to maintaining the plant been a wise use 

of the diminished Federal buildings fund? In furtherance of the ongoing sale of the property, GSA is currently undertaking the required National Environmental Policy Act and National Historic 

Preservation Act processes for property disposal with the anticipation that these activities will be completed later this summer. My 

expectations are that GSA should work closely and quickly with 

the District of Columbia Deputy Mayor for Economic Development 

to coordinate local zoning to the extent it is possible to ensure a 

maximum financial return to Federal taxpayers. 

5 

Several months ago, I requested information on vacant or underutilized properties in the District of Columbia. At that time, the 

Georgetown West Heating Plant that is the subject of today’s hearing was listed. I will want to know today where the other properties on that list are in the disposal process and what steps have 

been taken to dispose of them, particularly the Cotton Annex 

where the subcommittee held a hearing in March. 

I am skeptical about the other two properties in the District of 

Columbia that remain underutilized. Can GSA justify the U.S. Secret Service claim that it needs a valuable abandoned property at 

9th and H Street, Northwest? Why is a warehouse in downtown 

DC that was planned for the Veteran’s Court of Appeals still vacant? As far as I’m concerned, there is a presumption against holding any property for an agency for an extended period of time unless GSA has reasons serious and realistic enough to overcome this 

presumption. 

I look forward to hearing from GSA today about its plan to auction off the Georgetown West Heating Plant and steps it has taken 

and will need to take to address the underutilized and excess properties across the country. And I thank you both, Chairman Denham 

and Chairman Mica. 

Mr. DENHAM. Thank you, Ms. Norton. 

Mr. Hanna, statements? 

Mr. HANNA. At this time I would like to invite Mr. Peres with 

an opening statement. He is our panel today: Mr. Flavio Peres, 

deputy assistant commissioner for real property utilization and disposal, U.S. General Services Administration. I would like to welcome him today, thank him for being here, and 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 part of the record, 

the subcommittee would request that you limit your oral testimony 

to 5 minutes. 

Mr. Peres, you may proceed. 

TESTIMONY OF FLAVIO PERES, DEPUTY ASSISTANT COMMISSIONER FOR REAL PROPERTY UTILIZATION AND DISPOSAL, 

PUBLIC BUILDINGS SERVICE, U.S. GENERAL SERVICES ADMINISTRATION 

Mr. PERES. Thanks, Mr. Chairman. Good morning Chairman 

Mica, Chairman Denham, and Ranking Member Norton and Congressman Hanna. 

My name is Flavio Peres and I am the deputy assistant commissioner for real property utilization and disposal at GSA’s Public 

Buildings Service. Thank you for the invitation to join you here 

today at the West Heating Plant, an exciting development opportunity in the heart of the district that GSA will auction off later 

this year. This property is an example of GSA’s revitalized push to 

aggressively right-size its portfolio in our ongoing efforts in line 

with the administration’s goals to better utilize Federal real property. While GSA has a large real estate portfolio to manage, the 

broader Federal Government portfolio is far more extensive. 

In fiscal year 2010, 24 landholding agencies report approximately 

890,000 buildings and structures governmentwide. Of which 

6 

14,000, Mr. Mica pointed out this morning, were described as excess, indicating that agencies had no further mission need for the 

asset. The administration has moved aggressively to ensure that 

Federal agencies better utilize their real estate. In June 2010, the 

President issued a memorandum entitled, ‘‘Disposing of Unneeded 

Federal Real Estate,’’ which charged civilian agencies to more effectively utilize space, reduce operating costs, and dispose of unneeded 

real property to save $3 billion by the end of fiscal year 2012. 

More recently, OMB issued a May 2012 memorandum entitled, 

‘‘Promoting Efficient Spending to Support Agency Operations’’ that 

stated, among other things, that agencies should not increase the 

size of their civilian real estate inventory. Any increase in an agency’s total square footage of civilian inventory must be offset 

through consolidation, co-location or disposal of space. From my 

vantage point, these initiatives, along with the continued discussion on real property reform, are improving the Federal Government’s management of real estate, ensuring that agencies’ decisions are made in a cost-effective way, and saving taxpayers 

money. 

Of the approximately 890,000 buildings and structures, GSA controls 9,000 assets. In square footage, this comprises about 12 percent of the total Government inventory. GSA leads the market with 

its vacancy rates and utilization. Only 3 percent—again, 3 percent—of GSA’s portfolio has been classified as under or not utilized. 

Although we work diligently to identify unneeded assets for disposal, it is important to note that not all properties labeled as underutilized are available for sale. Most of GSA’s underutilized assets are either leases that are now occupied or have expired, or 

property that is undergoing major building modernizations that 

will be backfilled with other tenants. 

Of the 14,000 assets categorized as excess, GSA identified 124 as 

excess to our own agency needs and began the disposal process for 

these assets. The other 13,876 are from agencies other than GSA, 

constituting the vast majority of excess Federal assets. Again, let 

me stress, 13,876 of the 14,000 assets cited are managed by landholding agencies other than GSA. Our low numbers of underutilized assets are a testament to a major portfolio restructuring, and 

it was implemented over the past decade, aimed at rightsizing our 

real estate portfolio. 

In the last 10 years we have disposed of over 280 GSA assets valued at $260 million. In addition to managing our own inventory, 

GSA has authority to dispose of most properties governmentwide. 

GSA develops tailored disposal strategies specific to an asset’s 

characteristics, environmental issues, community concerns, political 

concerns and market conditions affecting the repositioning of the 

unneeded asset. 

Similarly, when preparing a property for public sale, GSA develops marketing plans that optimize the public offering. We use tools 

and techniques common to the private sector, designed to reach 

very broad audiences and to target specific interests. While GSA 

has the expertise to successfully navigate properties through this 

process, each individual landholding agency is responsible for making their own asset management decisions and whether that asset 

is excess to their needs. In the last 10 years, GSA has disposed of 

7 

over 2,600 governmentwide assets, generating over $2.4 billion in 

proceeds. 

Today, the committee has chosen to host the hearing at the West 

Heating Plant, a property that will soon be available for sale at 

realestatesales.gov. The plant sits on a little more than 2 acres of 

land in prime location in the District. The plant was built in 1948 

to provide steam services to the Government buildings on the West 

Side of the city. The plant ceased steam service in 2000 and since 

then the site has served as a backup steam location, as well as providing backup fuel storage capacity and spare parts for GSA’s Central Heating Plant. 

As part of our efforts to better utilize real estate, GSA formally 

declared the parcel excess to its needs in October of 2011. As the 

first step in the disposal process, we screened the property for 

other Federal needs, and with no expression of interest declared 

the property surplus. After running through homeless screening in 

accordance with McKinney, GSA has commenced marketing and 

appraisal efforts in support of a public sale. The property will be 

sold ‘‘as-is, where-is.’’ 

GSA is currently proceeding with required reviews under NEPA 

and the National Historic Preservation Act, and these activities are 

slated for completion in the late summer. The online auction at 

realestatesales.gov will commence in the fall. Already, interest 

from private sector developers has been incredibly high. GSA is one 

of many landholding agencies in the Federal Government. We continue to aggressively manage our inventory to dispose of unneeded 

properties, and we continue to work in concert with the administration and other landholding agencies in the Government to more effectively use real estate. 

The West Heating Plant is an example of GSA’s effective management of real property. The plant will be auctioned off later this 

year generating millions of dollars in proceeds, saving money in ongoing operations and maintenance and putting the property back 

to productive reuse. 

I welcome the opportunity to be here and am happy to answer 

any questions you may have. 

Mr. DENHAM. Thank you, Mr. Peres, for your testimony. 

Mr. MICA. Mr. Chairman, I request that you swear in the witness. 

Mr. DENHAM. At this time we will swear in the witness. 

Do you promise to tell the whole truth and nothing but the 

truth? 

Mr. PERES. Yes, I do. 

Mr. MICA. Thank you. 

Mr. DENHAM. Thank you. 

In 2000 this plant ceased steam generation. Is it currently on the 

excess property list, the 14,000, list of 14,000 properties? 

Mr. PERES. Yes, it is. 

Mr. DENHAM. And when did it become part of that list? 

Mr. PERES. The building was declared excess in October of 2011. 

Mr. DENHAM. Why did it take 11 years to get onto that list? Has 

it been used for anything during that 11 years? 

Mr. PERES. Chairman Denham, I had the exact same question 

when I came into my position in February of this year. I was part 

8 

of a panel that looked at what to do with this asset. The interesting 

thing about the West Heating Plant, you have to look at it in conjunction with the Central Hearing Plant. The plant was used as a 

backup facility. It was used as backup for potential failure of the 

Central Heating Plant. And, as part of the backup facility, we 

stored fuel here. It was also used as an office for maintenance and 

for spare parts for the folks working in the Central Heating Plant. 

I work in looking at highest and best use. I mean my role is really to determine that. That’s obviously not the highest and best use 

of this asset. I was part of the team working with folks to really 

look at what should we do. To get to a solution on excessing this 

property, we needed to have a way forward with the Central Heating Plant. The Central Heating Plant provides steam to over 93 

buildings in the District of Columbia. This had been used as a 

backup, but we felt if we were to be more aggressive trying to leverage financing from the private sector, we had a way forward in 

this plan. 

As part of the team, we successfully looked at ways that we can 

approach an ESPC alternative. We put a notice of opportunity out, 

working with the Department of Energy, for ESCOs to provide us 

a solution on how they would manage the Central Heating Plant 

and really do the investments that are necessary to ensure the operations of heat, chilled water and steam to the 93 buildings in the 

loop. 

When we had a way forward, we believed we have a strategy to 

go forward, the agency felt comfortable we could excess this property. So that’s why the determination was made in 2011 to excess 

this property and move in a different path with the Central Heating Plant. 

Mr. DENHAM. So this facility in particular was a backup for the 

last 11 years until it was determined that it was determined that 

it was no longer needed as a safety net. 

Mr. PERES. Correct. 

Mr. DENHAM. And then was immediately listed as excess? 

Mr. PERES. Yeah. I believe it was March of 2012 was when notice 

of opportunity went on the Central Heating Plant, but we made the 

strategic decision last year to move forward and excess this property with the vision of going forward with an ANESCO approach 

to the Central Heating Plant. 

Mr. DENHAM. The last hearing that this committee held was in 

the Cotton Annex. Was that property on the excess property list? 

Mr. PERES. That list is updated on a yearly basis. As we told you 

in the last hearing, we had recently put out this notice of opportunity to the ESCOs. We read the feedback that we got, because 

part of that analysis was looking at if the Cotton Annex site was 

necessary in terms of the solution for the Central Heating Plant. 

We have since determined that it is not necessary, so we will move 

forward with disposing of the Cotton Annex as well. 

Mr. DENHAM. So it’s on the excess list today? 

Mr. PERES. Today we’re studying the best way to do that, so it 

is unlisted towards disposal. I’m saying it’s not on the official list, 

because the snapshot is taken on a yearly basis, but it’s moving in 

that direction. 

9 

Mr. DENHAM. And, just for an example, would a 600,000-squarefoot building in the middle of a major city with just 400 employees, 

is that something that would be on the excess list? 

Mr. PERES. It depends what the utilization of the building is. Obviously, from your description there, we have to look at it; but, no. 

It seems as though it should be on the list. 

Mr. DENHAM. The Prettyman Courthouse in DC? 

Mr. PERES. I’m not aware of the utilization of that building. 

Mr. DENHAM. 400 employees, 600,000 square feet. These are the 

types of properties we want to understand exactly why they’re not 

on the list and what your proposal is for the future. Another one 

would be the L.A. courthouse. You had said that for any agency before they go out and create new space that they’re supposed to 

shrink space under the President’s own directive. 

Mr. PERES. Correct. 

Mr. DENHAM. Bob Peck had said that while that project has significantly changed, it is GSA’s intent to move forward on the L.A. 

courthouse. That’s 400,000 square feet of new space, which would 

then leave another vacant property at Spring Street of 690,000 

square feet. That does not seem to fit within the President’s directive. 

Mr. PERES. In my role in the Office of Utilization and Disposal, 

I look at highest and best use of property. I don’t necessarily look 

at the individual use and utilization inside the building. I’m interested in how we market that property and if it’s used to its highest 

and best use. So I’m not aware of the specifics regarding those assets you mentioned. 

Mr. DENHAM. Well, I would assume then, if the L.A. Courthouse 

is proposed by your agency to be moved forward and to build from 

the ground floor that you must be looking at the Spring Street 

Building to say this is coming onto the excess list. Our agency is 

determined that it is coming onto the excess list; and, you must be 

looking at marketing that now, rather than waiting a decade and 

letting it sit vacant like the Miami Courthouse and what’s happening in New York. Would that not be a correct assumption that 

you would be looking at that now? 

Mr. PERES. We are looking at strategies with what to do with 

Spring Street now. Correct. 

Mr. DENHAM. Back onto the Georgetown Heating Plant, this 

building is sitting in the middle of some of the most valuable real 

estate in the city. What is GSA doing to ensure that we get the 

highest best use for the taxpayer? I know that you had mentioned 

the online options. We have concern with some of the sales on the 

online options. 

Mr. PERES. Sure. Let me try to address that. We are working 

with how the private sector would do this. We are going to work 

with a broker to market our asset. We are hoping, really, because 

of the location of this asset. The surrounding areas—you have the 

Four Seasons right beside us and gorgeous views of the rooftop 

here—this is a prime location of undeveloped land in the heart of 

Georgetown. 

We want to get national and international exposure for this 

asset. We will work with one of the leading brokers out there. We 

put a solicitation out. We are going to receive feedback and select 

10 

someone related to the marketing effort on this property. As part 

of that effort, we are really looking at getting out the Rolodex of 

whoever that broker is to make sure we have the right folks bidding on this property. 

The online auction would go through a deliberative process that’s 

legislated to get toward sale. We are at the sale mark now. We 

have gone through the Federal screening. We have gone through 

the public benefit process and determined there is no public benefit 

need for this property at the moment, and we are finally at sale. 

We are doing the appropriate environmental research and documents that are required. And we are happy to be at the sale mark 

now. And we have already taken several developers through the 

site, so I’m happy to say we have an aggressive plan that I think 

will be successful. 

Mr. DENHAM. Thank you. My time is expired. I recognize Ms. 

Norton, ranking member, for 5 minutes. 

Ms. NORTON. Thank you very much, Mr. Chairman. 

What will be the cost of repairing this property for sale? 

Mr. PERES. I don’t have those figures in front of me, Mrs. Norton, 

because we haven’t received the submittals yet on the marketing 

proposals I mentioned. So I don’t know the figures, exactly. I can 

get back to you with it. 

Ms. NORTON. I don’t understand. You haven’t received what? 

Mr. PERES. We put out a solicitation for groups to respond to us. 

Ms. NORTON. And that determines how much you’ll have to 

spend too. 

Mr. PERES. No. No. Unfortunately, I don’t have the budget in 

front of me. I’m saying it depends on what we receive and how 

much—what the proposals are. 

Ms. NORTON. I just don’t see the relationship between what you 

receive. You mean what you receive may mean that someone who 

goes through the process is willing to help? 

Mr. PERES. Yeah. Well, the most competitive and that we believe 

meets our needs will be chosen in terms of the marketing of this 

property. 

Ms. NORTON. I see. 

Mr. PERES. We do have a budget. I just don’t have those figures 

in front of me. No. 

Ms. NORTON. OK. What is a soft auction process? 

Mr. PERES. A soft close in the auction. 

Ms. NORTON. What’s the difference between it and any other auction? 

Mr. PERES. Yeah. I’d be happy to answer. It’s different from your 

particular eBay auction that has a hard date for close. The soft 

auction is a tool that actually—we pioneered in the real estate 

area. What that does for you, once someone makes an offer in a 

property, we will extend the close of the bid an additional 24 hours. 

So it prevents folks from coming in at the last second and making their best—they’re throwing their offer in—and no one being 

able to counter that offer. After the last offer is made, we extend 

it 24 hours. If there’s no activity after that 24-hour period, we will 

close the auction. 

Ms. NORTON. Now, especially out of the figures on where the assets are, you have 124 assets that you have identified as excess. 

11 

Mr. PERES. Correct. 

Ms. NORTON. Are you saying that all those are in the process of 

being disposed of? 

Mr. PERES. No. Two-thirds of those assets aren’t underutilized 

anymore. They were assets. 

Ms. NORTON. Of the 124? 

Mr. PERES. Of the 124. 

Ms. NORTON. But that brings you down to how many? So most 

of these that were on the list you have now determined can be used 

in some other way? 

Mr. PERES. Yes, or there were leases that have expired or we’ve 

been able to backfill those leases. 

Ms. NORTON. So that leaves us where most of the assets are. So 

you have 14,000 categorized—I’m looking at your testimony—— 

Mr. PERES. Sure. 

Ms. NORTON [continuing]. As excess. Turns out that two-thirds of 

those are not excess at all. So we look at where the excess assets 

are in the Federal Government. So as compared to your 14,000, 

your testimony says 13,876 are from agencies other than the GSA. 

Well, that’s what interests me. 

Mr. PERES. Correct. 

Ms. NORTON. Because we have a bill here that has been passed. 

Actually, we have two bills that have been passed; and, these bills 

were necessary, because although any administration has control 

over agencies and can dispose of properties, there is always political feedback from Members of the House and Senate if you try to 

sell a property in their district of State. So this civilian BRAC bill 

requiring an up or down vote was designed to do for the civilian 

process what BRAC has done for the other process. 

Now, unfortunately, that bill has not passed both houses, but you 

say in your testimony that you are helping some of these agencies 

to target properties for disposal. It seems to me that most of your 

energy ought to go if that’s where the property is. Could you describe that process of helping the agencies which had not only the 

lion’s share but a huge share of these properties, the properties 

that our hearing aimed at during the BRAC disposal hearings that 

we had earlier last year. 

Mr. PERES. Thanks Congresswoman. My office is set up to help 

those exact agencies get that decision to declare the property excess. So I have two branches: the Utilization branch and the Disposal branch that deals with those properties that have already 

been declared excess. So the group that works on utilization, we try 

to get in and analyze the portfolio of that agency to help them 

make the determination on highest and best use. 

Ms. NORTON. How many agencies are there that have these excess properties? 

Mr. PERES. There are 24 landholding agencies. 

Ms. NORTON. Well, what agencies have most of these properties 

in excess? 

Mr. PERES. DOD has a lot, VA, the Interior Department, are big 

landholding agencies that have a lot of those. 

Ms. NORTON. Now, this sounds like a lot of properties. Are those 

agencies—do they have staff large enough to work with you to deal 

12 

with what turns out to be where most of the properties are around 

the Government, DOD. And what other agency did you say? 

Mr. PERES. DOI and Interior, as an example. Well, we’re not the 

only disposal agent of the Federal Government. Some of these landholding agencies also have their own authority to dispose of. 

Ms. NORTON. But isn’t that the problem? Because if there’s 

13,000 plus, have they been using that authority to dispose? 

Mr. PERES. Yes, some of these properties are lighthouses, for example, that we’re moving aggressively. We have a group that’s 

moving on, disposing of those housing facilities, Forest Service, 

Army Reserve Centers. 

Ms. NORTON. Do these agencies have—I mean the Federal Government has a central agency for leasing and construction. That’s 

GSA. Do these other agencies have the expertise to go market properties, dispose of them and get a fair return for the Government? 

Mr. PERES. I can’t speak to their expertise. I can say we do have 

the expertise, and we are happy to take on that challenge. 

Ms. NORTON. Yes. So somebody may do it without coming to you 

and then he’s on his own. 

Mr. DENHAM. I want to continue down this path, but at this time 

I will recognize Chairman Mica. 

Mr. MICA. Thank you, Mr. Peres. How long have you been with 

GSA? 

Mr. PERES. Since May of 2002. 

Mr. MICA. May of 2002? 

Mr. PERES. Correct, yes. 

Mr. MICA. And you’ve been in the same position for how long? 

What is your title now? 

Mr. PERES. I am the deputy assistant commissioner for real property utilization and disposal. I have been in that position since February. 

Mr. MICA. Of this year? 

Mr. PERES. Of this year, correct. 

Mr. MICA. What did you do before then? 

Mr. PERES. I worked in the portfolio arena. Before moving towards disposal, I was the deputy assistant commissioner for portfolio management. 

Mr. MICA. Did you work on this property at all in that position? 

Mr. PERES. I worked in the headquarters office. 

Mr. MICA. Was it under your portfolio? 

Mr. PERES. It was under my portfolio. Correct. 

Mr. MICA. So you were there from 2000 ’til we made a decision 

in October of last year. 2002, did you say? 

Mr. PERES. Correct. 

Mr. MICA. OK. And, now, if you are going to put a property up 

for sale, now in real estate the first thing I do is put the sign up. 

When did you all put the sign up that’s on the building? 

Mr. PERES. The sign was put up yesterday afternoon. 

Mr. MICA. OK. It was put up yesterday. The one at the entrance 

too? The same, or that was there before? 

Mr. PERES. Typically, the sign is part of the marketing campaign, 

but I wanted to make sure we put a sign up as fast as we could 

after we have gotten through the public screening process. 

13 

Mr. MICA. So that was last October we started this process, but 

we’ve got the sign up yesterday. Did you participate in the discussion to put the sign up? 

Mr. PERES. Yes, I did. 

Mr. MICA. And who was involved in the discussion to put the 

sign up before the hearing today? 

Mr. PERES. It was myself and the regional disposal office. 

Mr. MICA. Tangherlini didn’t participate? 

Mr. PERES. No. He did not. 

Mr. MICA. And, so, it was your decision after? 

Mr. PERES. It was my decision. 

Mr. MICA. How many months to put the sign up, OK. And then 

from 2002, this is under your portfolio. Now, you said the highest 

and best use, that you use this for storage of parts and also some 

fuel, and a backup facility. 

Mr. PERES. Yes, it was a backup facility. 

Mr. MICA. When was the last time it was turned on? 

Mr. PERES. I do not know. 

Mr. MICA. Now, wait a second. You told me you were in charge 

of the portfolio. This is going to be a backup facility and you don’t 

know if it was ever turned on. So you wouldn’t know if it was actually used to its highest and best use. Would it? 

Does it have an operating permit? You don’t know? It was under 

your portfolio, but you didn’t know if it was actually ever turned 

on, or if it was used. And you’re telling me you don’t know if it had 

an operating permit. 

Mr. PERES. It was under the regional portfolio I managed nationally. In terms of an operating permit, we had maintenance staff 

that were responsible. 

Mr. MICA. And what’s interesting, Ms. Norton says it costs $31⁄2

million to maintain the empty building. Is that right? 

Mr. PERES. Over a 10-year period, yes. 

Mr. MICA. That would only be $350,000. We’ll round it out to $300,000 a year. I guess that’s just an accounting digit with the 

digit around, but not real money, since somebody else is paying for 

it. We were going to get the highest and best use. What’s stored 

here? 

Mr. PERES. As you can see when you walk through the building, 

several spare parts as well as fuel. 

Mr. MICA. Where in this—— 

Mr. PERES. You can look at the storage tanks there. 

Mr. MICA. Were they taken out of there? 

Mr. PERES. Yes. 

Mr. MICA. When did you take them out and where did you put 

them? 

Mr. PERES. Yes, we recently took the fuel out a couple months 

ago. 

Mr. MICA. How many other places are there like this for backup? 

Mr. PERES. There’s no other place like this for backup. 

Mr. MICA. There’s no other place. Now, where did you put the 

parts? 

Mr. PERES. We’re moving those parts into this plant. 

Mr. MICA. You told me you already moved the parts. Are the 

parts here? 

14 

Mr. PERES. We’ve moved them to the Central Plant. 

Mr. MICA. So they have been moved to the Central Plant. Was 

there room during the last—was the Central Plant there all the 

time during the last 10 years? 

Mr. PERES. Yes, it was. 

Mr. MICA. And we couldn’t have moved them out? 

Mr. PERES. Well, we are able to make a proper—— 

Mr. MICA. It took us 10 years to make a decision to move the 

spare parts out. How big were the spare parts? Bigger than a 

breadbox? 

Mr. PERES. Much bigger than a breadbox. 

Mr. MICA. OK. All right. Well, again, it just doesn’t seem like 

anybody is minding the store or taking care of the assets. This is 

a pretty valuable piece of property. Are there any other properties 

for sale over 2 acres in Georgetown? 

Mr. PERES. Not that I am aware of. 

Mr. MICA. We don’t know if it was turned on. And we don’t know 

if there is an operating license. We had other places to store what 

was stored here. I think you moved the fuel recently. Where did 

you move the fuel? 

Mr. PERES. I do not know the specifics of it. 

Mr. MICA. OK. You’ve got to come prepared to these hearings, because I’m going to ask tough questions. Are there any other power 

plants in here to—you said that services 90 some buildings or facilities? 

Mr. PERES. Ninety-three buildings, correct. 

Mr. MICA. It’s just the Central Plant now? 

Mr. PERES. Correct. 

Mr. MICA. How is that fired? Coal? 

Mr. PERES. It is—— 

Mr. MICA. Is it oil? Is it gas? Is it combo? 

Mr. PERES. Yes. 

Mr. MICA. OK. Ms. Norton was talking about the numbers. I almost fell off the chair when you said you’re the most efficient at 

getting rid of properties. Dear God, help us. You are the most efficient? Is that your claim? 

Mr. PERES. Yeah. That was my claim, if you look at the numbers 

they provide. 

Mr. MICA. Mr. Denham and Ms. Norton, if this is the example 

of efficiency, we need to broaden our scope of work here. Maybe I’ll 

need to talk to Darrell Issa and get a little bit of authority beyond 

this committee. That’s one of the most frightening things I’ve 

heard. I mean that is really frightening. If this is an example of 

efficiency, God help the United States taxpayers. 

Now, we have several authorities that were granted. One is 

called Section 412, 585, an Appropriations Act of 2008, which allow 

you to expedite, exchange, lease, do a whole host of things with 

properties. Were the provisions of 412 or 585 used or considered for 

doing something with the assets that’s been sitting here? 

Mr. PERES. We have looked at that authority. 

Mr. MICA. But did anyone in your portfolio out of your portfolio, 

preparing for the hearing, did anyone ever look at using that authority? 

15 

Mr. PERES. Yes, we did, but we felt the most aggressive way 

to—— 

Mr. MICA. Is there something wrong? Is something lacking? Do 

you have enough authority under the provisions of that law? Is 

there something that can make these things happen quicker or 

move these projects forward faster? Is this inadequate? 

Mr. PERES. We have the authority under Section 412. 

Mr. MICA. But you decided not to use it? 

Mr. PERES. It didn’t make sense in this property. It made sense 

to go to sale, and when I became responsible for that I moved into 

property for sale. 

Mr. MICA. OK. And yesterday we put the for sale sign up. You 

don’t want to do it too soon. You know. You might get a rush. You 

know. We might have people backed up here with offers, so that 

wouldn’t look good. 

Final question, if I may, Mr. Chairman. OK. On my turf, 3 years 

ago members of our committee visited the Miami—well, we visited 

Miami and the old Miami Courthouse. It was vacant then. Is it still 

vacant today? 

Mr. PERES. Yes, I believe so. 

Mr. MICA. OK. Maybe November or December or January I 

might invite the committee down there. We will take the cooler 

climes for the 13,997. Is there anything that has been done you 

could report finally to the committee on disposing of the Miami vacant courthouse building? 

Mr. PERES. I can tell you that my office is now engaged. I’ve sent 

a group down to look at the asset, as Bob had testified in the previous year. 

Mr. MICA. How much did the for sale sign cost here? 

Mr. PERES. The for sale sign here? 

Mr. MICA. Yeah. The one you got, the big one. I don’t even have 

to have one that big. Maybe I could get a smaller one and put it 

down on the Miami Courthouse. 

Mr. PERES. I can lend you that one to put up on the courthouse. 

Mr. MICA. Thank you. Thank you. I yield back. We are in trouble, Mr. Chairman. 

Mr. DENHAM. Thank you. 

Mr. Hanna? 

Mr. HANNA. Thank you, Mr. Chairman. 

The administration claims approximately a $3 billion savings 

over real estate property. How do they come up with that number? 

Mr. PERES. I can’t speak to how the administration came up with 

that number. 

Mr. HANNA. You have disposed of 88 properties totaling about 4 

million square feet out of 370 million square feet. That’s about 1 

percent, a little more than 1 percent. If that kind of savings is 

available and you disposed of roughly 1 percent, shouldn’t there be 

a rush to move these properties? And, if you agree with that, why 

wouldn’t you be moving faster? 

And do you consider the time value of money, say, in a building 

like this? I could store a lot of parts for this vacant, empty building, that apparently a good demand for. And, one last piece of it. 

I’m sure you must know something about what this building’s 

16 

worth. To speak about the time, value and money, what is this 

building expected to be worth? 

Mr. PERES. I would love to answer that question, Mr. Hanna, in 

terms of the value; but, because we are going forward in a process 

where we want to auction this off, I don’t want to artificially set 

a deadline. 

Mr. HANNA. Sure. 

Mr. PERES. I would be happy to talk to you about that. 

Mr. HANNA. But it is substantial? 

Mr. PERES. Substantial, obviously, this land is extremely valuable where we’re at. 

Mr. HANNA. So there’s a big cost to ownership. So the longer we 

take to dispose of any of this property that you have such a strong 

potential demand for is actually a hidden cost in and of itself, the 

time, value and money. So why are we sitting on so many properties? 

Mr. PERES. I could tell you GSA has a strategy for each of those 

properties my office is now moving aggressively on. I can say in the 

last year we’ve disposed of 120 properties governmentwide, generating over $40 million in sales. I can say, and I say this now, we 

are going to do everything in our power to move these properties 

sooner. 

And I think discussions, such as the Real Property Reform legislation, unfortunately, a lot of times it takes upfront investment, as 

you know, in your background, to be able to move these properties. 

And I can get you a short pay-back, but how can that upfront capital that can relocate an agency from the building to allow us to 

move forward, depending what the property is, in these budgetary 

times is difficult for us. 

Mr. HANNA. Sure. 

Mr. PERES. So anything in a reform bill that can help us get 

there, that can incentivize agencies with retention of proceeds, for 

them to make the right capital asset decision. That’s another thing 

we run up against. And for my office to be as effective as we can 

be in helping other agencies is to give them that incentive to really 

move their properties. 

Mr. HANNA. Do you think this might be handled better in total 

by the private sector? 

Mr. PERES. No. I do not with the figures that I’ve quoted. And 

I believe our office is able to do this cost efficiently. If you look at 

how much our services cost to help agencies, we’re very competitive 

now and below where the private sectors are. And we are engaging 

them in these disposal activities. As I mentioned in my response 

to Ms. Norton’s question, we are looking at using services from brokerage firms to really reach that Rolodex to increase the value of 

this property. 

Mr. HANNA. So what do you expect to do in the next year? We 

have got quite a list here. You obviously are aware of the problem. 

You agree there’s a problem. You want to pick up speed and move 

toward the resolutions of some of this. What are your plans to effect that change? 

Mr. PERES. My plans, really, I’ve challenged my staff. I think one 

thing we need to look at is market share. Let’s do more disposals. 

Let’s get out there to try to see if we can help more agencies make 

17 

the decision to move their properties. The properties that PBS currently owns that have come up at this hearing: Cotton Annex, 

Miami. We need a solution for these properties. We want to move 

aggressively to come up with that solution, and I hope to report 

back to you all where we are at in a couple of months. 

Mr. HANNA. All right. I defer the balance of my time to Mr. 

Denham. 

Mr. DENHAM. Thank you. Just following up on that I am somewhat surprised that you are really carrying the banner of GSA and 

how great things are going, because from this committee’s perspective, they don’t seem to be going very well. 14,000 properties, and 

yet this property is not on the list. The Cotton Annex is not on the 

list. Prettyman Courthouse is not on the list. New York Courthouse 

is not on the list. Miami Courthouse is not on the list. You are 

going to build a new courthouse in L.A., and you’re saying private 

industry can’t do it better? There’s not a good track record here. 

First of all, it’s not a good track record for defining excess, underutilized properties when none of those properties, which we have 

had to send our staff out to, which we have actually spent time 

going out and touring to see how empty they are, which we have 

held hearings in to force GSA to take action on them, to even declare them as excess surplus, it is amazing to me that you are here 

to justify and defend GSA’s record; but, secondly, to say that private industry can’t do it better, I want to see you be able to justify 

that. So, go ahead. You can respond. 

Mr. PERES. Say of the 14,000 we are responsible in GSA’s portfolio for 124 of those 14,000 properties. I am speaking to what I 

know on those 124 properties. 

Mr. DENHAM. So out of the 14,000 properties, GSA is only in 

charge of 124 of them? 

Mr. PERES. Of the excess, correct, yes. 

Mr. DENHAM. And what are you doing to put more properties on 

the excess list? 

Mr. PERES. That is we are really looking at, and I know a lot of 

the questions that have come up here. It’s not in my area, the disposal arena, but improving the utilization of those properties. But, 

again, to improve the utilization of those properties, it takes upfront capital investment. 

We need to be able to modify space, to move tenants, to do the 

IT investment, to get folks to an improved utilization of space, to 

bring folks in from leased space, to better occupy the owned assets. 

However, in strong markets that is a 3-year payback. We need the 

upfront capital investment to be able to do that. 

Mr. DENHAM. The upfront capital investment, when we are cutting budgets across the Nation, GSA had $5 billion to work with 

as upfront money to go ahead and go out and sell these properties. 

What’s happened to the $5 billion? 

Mr. PERES. What, the—— 

Mr. DENHAM. The stimulus dollars that were supposed to be utilized in this arena? 

Mr. PERES. The stimulus dollars to my understanding were focused on sustainability. They weren’t necessarily directed towards 

improving, to do this type of work that we are talking about now. 

18 

Some of those projects were accomplished in improving utilization, 

but the bulk of those funds were used on sustainability. 

Mr. DENHAM. So you’re only in charge of the 124 properties out 

of the 14,000 properties. 

Mr. PERES. Once those properties are declared excess, yes, then 

I’m in charge of those. 

Mr. DENHAM. OK. And the Civilian Property Realignment Act, I 

assume, since that is redefining the way we do business, is governmentwide. I assume that you have taken a look at that bill? 

Mr. PERES. Yes, I have. 

Mr. DENHAM. And I would also assume that taking it all under 

one house and being able to sell properties in tranches would help 

us to move through the 14,000 quicker? 

Mr. PERES. I agree. 

Mr. DENHAM. Has GSA taken a position on either the bill that 

we sent over to the Senate or the bill that’s in the Senate, the Senate bill, the companion bill that’s coming over this way? 

Mr. PERES. I believe there are three things and each bill addresses these things a little bit differently that are important in moving 

property, and you have talked about them in your bill: addressing 

the upfront cost of disposal, that I have mentioned a couple in my 

response here. We need to have the ability to front money for successful dispositions of properties; incentivizing agencies by allowing 

them to have retention of proceeds, or something that can help 

them make the decision to move properties. And, finally, your last 

point, resolving competing stakeholder interests and property I 

think is huge, because every property has several folks that are interested, different groups and stakeholders that provide an important voice, but that can also delay the process. 

Mr. DENHAM. Have you issued any type of recommendation to either the House or the Senate on what GSA would be helpful in the 

Civilian Property Realignment Act? 

Mr. PERES. We have worked with several staffers in talking 

about those three premises and how we’d be willing to help participate in decisionmaking on how to move these properties and different ideas we have to make the disposal process more effective. 

Mr. DENHAM. OK. Here’s what I don’t understand. We have a bipartisan agreement. In this House we have sent the bill over to the 

Senate. The Senate has a companion bill. Both the House and the 

Senate have worked with the President. The President has issued 

a directive saying that we are going to sell more properties, and 

your job is to liquidate those properties, yet we are not liquidating 

properties. 

So if the President wants to have this bill, if the President wants 

both parties to work together, if the President wants both houses 

to work together, why isn’t the President issuing a directive to the 

Senate or the House to say, give me the bill? Give me the bill; let’s 

get this done? Because today you can’t get your job done. 

You have 124 properties out of 14,000 properties. This is one 

property that I don’t care if it is a Republican or a Democratic administration, if it is this administration or a previous administration, the job is not getting done. So I, first of all, don’t see how you 

can defend your record; but, secondly, why you are not more pasVerDate Aug 31 2005 11:35 Aug 14, 2012 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\6-19-1~1\74628.TXT JEAN
19 

sionate, why the President is not more passionate about coming up 

with a solution. 

Mr. PERES. I can’t speak to that. 

Mr. DENHAM. Let me ask one final question. This property is 

going to online auctions. 

Mr. PERES. Correct. 

Mr. DENHAM. Two years ago, GSA sold a building in Bethesda. 

It is another highly valued real estate property, but we received 

less than what was estimated at its fair market value. How is GSA 

going to ensure that this time we do get the highest value on this 

property that is the biggest piece of acreage in downtown Georgetown? 

Mr. PERES. I would say news like this help market the property 

as well. We want to get word out. We have worked with developers. 

We have done various tours already of this property. The Bethesda 

property, timing of the market did not help in that sale, obviously. 

GSA put the property on the market when there was a downturn 

in the market, and we weren’t able to achieve the fair market value 

that was established a couple years prior to that. 

We feel the market year is strong. If you look at the recent developments in Georgetown, there has been a lot of buzz on this property already; therefore, working with a leading broker in the field, 

we believe we can maximize value for this property. 

Mr. DENHAM. Well, good. I am very glad to hear that you think 

these hearings are helpful, because you are going to see a lot more 

of them. We are going to go across the Nation. If I have to hold 

a hearing every day during break on every different property 

across the Nation, we are going to do it, because we want to make 

sure that we help you market these properties. Because when these 

properties sit for over a decade, it is irresponsible; again, not a Republican or a Democrat issue. This is the taxpayers’ dollar, that 

both parties should be able to come together and say we just got 

to do things better, and GSA should be responsible for that as well. 

So, I am glad to hear you say that this is helpful. We are going 

to make sure we are very helpful to you. I yield to Ms. Norton for 

a final round of questioning. 

Ms. NORTON. Thank you, Mr. Chairman. 

Chairman Mica raised 412 authority. This has been the bane of 

our existence as a committee, because we got 412 authority in our 

appropriation through this committee, because we wanted to give 

GSA some flexibility to bring in the private sector when it didn’t 

have the funds, for example, to redevelop properties. 

You indicated that you wanted to see the redevelopment of some 

of these properties. Has the agency ever used 412 authority since 

we granted it some years ago? And, if not, why not? 

Mr. PERES. I know my understanding of 412, we have been able 

to receive—part of 412 was receipt of proceeds for the property. 

The outlease leaseback component that I believe you’re referring to, 

I don’t know if a transaction that we have been able to leverage 

that framework for 412. 

Ms. NORTON. I think one of the things the committee needs to 

inquire, OMB in both Republican and Democratic administrations, 

I understand, when we have pressed this issue, although the GSA 

refuses to say so, it is my belief that somehow there is an endemic 

20 

problem in OMB across administrations. It keeps the use of 412 

authority, granted by Congress, from getting the highest and best 

use of properties that should not be disposed of. I am very concerned that 412 authority lies on the table, while you were saying 

that, yeah, you would like to develop some of these properties. You 

know good and well you can’t develop them unless the private sector is brought into this equation. When did you begin marketing 

this facility, and when do you expect it to be sold? 

Mr. PERES. We expect the property to go to auction in late September. So we have begun the marketing process officially, really, 

it is through word of mouth until we have done that contract, while 

we finish our NEPA and historic 106 process. Hopefully, that will 

be done by the end of June and then we will be aggressively marketing this property. 

We already have banners. We want to generate word of mouth 

on the property, but we are beginning the process now. I’m sorry. 

Was there another part of the question? 

Ms. NORTON. When do you expect it to be sold? 

Mr. PERES. We expect it to be sold, holding the auction for 30 

days, 30 or 60 days. I have to talk to the team. I am not exactly 

sure, and then we will go from there. 

Ms. NORTON. If you sell it, if you sell it before the zoning process 

and the District of Columbia is completed, could that affect the 

price? 

Mr. PERES. We feel we have engaged the city in various different 

discussions on zoning for this property. We are currently in the 

NEPA discussion. Now, the environmental assessment as part of 

the environmental assessment, future use of the property is analyzed, and all potential, future use has been looked at, the W2 zoning area for this particular locale. And the district has agreed with 

that, and they are part of reviewing the NEPA documentation. 

Ms. NORTON. The District has agreed with what? I’m sorry. 

Mr. PERES. With the zoning proposed. 

Ms. NORTON. Which is what? 

Mr. PERES. In the NEPA, which is W2, which is similar. I think 

it is framed as middle level density. So mixed use for the property 

would leave it as of 4.0. 

Ms. NORTON. Like the other properties in Georgetown. 

Mr. PERES. Exactly, like the surrounding properties here, so with 

the hotel next door, the Four Seasons, plus some of the residential 

development here would fall under that zoning category. 

Ms. NORTON. Now, we recognize the need for Civilian BRAC, but 

we had hearings on it. The administration has pressed it as well. 

The Senate has a different view, but I agree with Chairman 

Denham that this is one issue we ought to be able to agree on, 

since there is widespread agreement that we should sell or use 

these properties. 

Now, my recollection is that the Civilian BRAC bill allows the 

agencies to retain some of the proceeds. If the agency turns over 

the property to GSA today, I take it the proceeds go with it. There 

is no incentive? 

Mr. PERES. No. We are just the broker for that agency, if you 

will. The landholding agency has retention of proceeds authority. 

21 

We can help dispose of the property. They would still retain the 

proceeds for the property. 

Ms. NORTON. So there is no need for an additional incentive since 

it is their property, and turning it over to you is not really turning 

over ownership to you. 

Mr. PERES. Correct. But not every agency has retention of proceeds, and different discussions—— 

Ms. NORTON. Well, that is what I am asking. Some agencies do 

and some agencies don’t? 

Mr. PERES. Correct. 

Ms. NORTON. Does DOD have retention of proceeds? 

Mr. PERES. Yes. I can get you a list of the agencies that have retention of proceeds. 

Ms. NORTON. Very important, because if they know that they can 

take, particularly in this budget climate, that they can get some 

revenue from this process, it seems to me that we ought to be focusing on those. You don’t know, or do you know what has determined those who can retain and those who cannot? 

Mr. PERES. I think it is different legislative authorities. I don’t 

know. 

Ms. NORTON. It is probably the way we do legislation here, where 

some got it and some didn’t. I want to ask you about the properties 

that I mentioned in my opening testimony. 

First of all, I was just appalled about the Cotton Annex for a 

number of reasons; but, particularly given its location on the mall, 

and that is the most prime of prime properties, even more prime 

than this property. And it seemed to me that what was missing 

was not just you sold this property or that property, but there was 

land around the Cotton Annex, so that and indeed there was some 

discussion at the hearing, that if you look at the Cotton Annex and 

what surrounds it, you have an even more valuable piece of property. 

So I have to ask you what are your intentions with respect to the 

Cotton Annex specifically. Do you intend to redevelop it? This is a 

site on the mall, so it can’t be redeveloped the way, for example, 

the site in Georgetown is. It is much more difficult. What is your 

analysis of what should be done with the Cotton Annex? 

Mr. PERES. We are looking at it now and really analyzing it with 

the full range of our authorities on what can be done with the property. We have a relocation authority, for example, that allows us 

to relocate the current screening facility there, and maybe relocating it. 

Ms. NORTON. I’m sorry. The current what? 

Mr. PERES. The FPS screening facility, the truck screening facility that exists there. 

Ms. NORTON. On the mall? Close to the mall? 

Mr. PERES. Relocating it elsewhere so that we can effectively dispose of that property is what I am getting it. So we are trying to 

analyze what is the best solution for that property. My office is now 

engaging in this and trying to explore where the full range is. 

Ms. NORTON. Are you looking at the surrounding properties? 

Mr. PERES. Absolutely, because all the parcels and the land there 

make up the value, too, for that property. 

22 

Ms. NORTON. So are you are doing it as a consolidated matter, 

or are you looking only at the Cotton Annex? 

Mr. PERES. We are looking at it as a holistic strategy on the best 

way to extract value there for the taxpayers. 

Ms. NORTON. I mentioned two properties that are on the list, but 

GSA has been unable to move. Secret Service, I know, gets its way 

a lot of the time; but, when it comes to a property that is close to 

the Secret Service and they say we’re going to need it—they themselves are located in downtown DC as are many of our agencies— 

I need a justification for why that property at 9th and H Street 

cannot be sold or used by another Federal agency, or used in some 

way that is useful to the Government. 

Mr. PERES. I’ll be happy to provide that. I don’t have the details 

with me today. 

Ms. NORTON. I wish you would provide it to the chairman within 

30 days. 

Mr. DENHAM. Any reason why you can’t do that in 30 days? 

Mr. PERES. No. I think we can do that. 

Mr. DENHAM. Thank you. 

Ms. NORTON. The other property I mentioned, which is the only 

other one that was listed and one that it looks like you have some 

hold on doing anything about, was a warehouse, which, as we understand it, was to be used for a Court of Appeal and is still vacant. Now, do you have any information on that property? 

Mr. PERES. That is my understanding as well. It was initially 

framed as the site for a potential courthouse for the Court of Veterans Appeal. And it doesn’t look like there was funding for that 

project to move forward, so we are reevaluating that. I can also 

provide a fact sheet on that project. 

Mr. DENHAM. Within 30 days? 

Mr. PERES. Sure. 

Ms. NORTON. Thank you, Mr. Chairman. Those are my questions. 

Mr. DENHAM. Mr. Chairman Mica? 

Mr. MICA. Mr. Peres, where did you go to school? 

Mr. PERES. My undergrad at Maryland and my MBA from 

George Washington. 

Mr. MICA. I just went to the University of Florida, so I am not 

as fancy schooled, but I have a little experience in business. You 

told Ms. Norton that you began marketing this property. When did 

you begin marketing it? 

Mr. PERES. The process, we declared the property excess. 

Mr. MICA. We—yeah. 

Mr. PERES. I just want to answer your question, Mr. Chairman, 

in the right way. So I can go through the step in chronology. 

Mr. MICA. Well, just marketing, letting the public know that it 

was available. I know you have certain steps, but when did you 

start that? 

Mr. PERES. Really, just recently. 

Mr. MICA. Like yesterday when we put the sign up? Did you list 

it on eBay, Craigslist? 

Mr. PERES. Yes, we have a realestatesales.gov, which is our Web 

site. 

Mr. MICA. When did you put it on? 

Mr. PERES. Three weeks ago—— 

23 

Mr. MICA. Oh. Three weeks ago. OK. 

Mr. PERES [continuing]. It was on that list. And feel free to go 

to the Web site. 

Mr. MICA. Was that sort of in concurrence with announcement of 

this hearing? 

Mr. PERES. No. It is part of the process, because we have to get 

through the public benefit screening process. 

Mr. MICA. And the sign just happened to go up yesterday, so we 

have actually been marketing this for 3 weeks. 

When did we give notice on this, staff? About 3 weeks ago? 

Staff MEMBER. At least, about 2 weeks ago. 

Mr. MICA. Yeah. OK. And when I asked Mr. Denham to swear 

you in, you were going to tell us the whole truth and nothing but 

the truth. Right? 

Mr. PERES. Correct. 

Mr. MICA. So you said your job is actually—and responsibility at 

GSA is to really obtain the highest and best use of these facilities. 

Right? You testified to that. 

Mr. PERES. Correct, yes. 

Mr. MICA. Then you told the subcommittee this morning that 

this was going to be a backup facility for power. Is that right? 

Mr. PERES. I said that was the reason for keeping the property. 

Mr. MICA. Primary backup, and then secondary for storage, and 

you mentioned some storage. 

Mr. PERES. Fuel and a maintenance storage. 

Mr. MICA. Yeah. No. I don’t think you checked this out very well, 

because I just did an intensive examination walking back to the 

men’s room and I asked the question. The last time this place has 

been fueled up was 2000. Any staffers, workers, anybody know any 

differently? I was told 2000. Then I was told that after 2000 what 

they started doing, they started looking at some of this equipment. 

You know. I only have a University of Florida degree, but they 

told me they started cannibalizing this place; that means taking 

parts out. Go look. They are parts here. So that this property 

couldn’t have been a backup for those 10 years, because they were 

cannibalizing the place. Did you know that? 

Mr. PERES. A backup, yes. A backup for necessary parts and for 

the fuel. 

Mr. MICA. Oh. It’s a backup for necessary power? 

Mr. PERES. If we had to run the plant, that could have been 

made to make sure the plant was able to generate the steam. 

Mr. MICA. Hm-hmm. And then we decided we had no other place 

we could store the parts. So, again, I am very disappointed. That 

is not the highest and best use. It was to pay a third, $333,000 a 

year for 10 years to use this as a storage facility, probably get some 

nice retail space to store some of that up M Street or Wisconsin at 

those prices. Again, some of this just defies common sense and logic 

that we would leave an asset, a valuable property, but we have had 

some great heights in the real estate market. We are coming back, 

and this area has always held its value pretty well. And this isn’t 

rocket science that we are going to get our money out of this or not. 

I mean you can do an appraisal of it, and we get the appraised 

market value at the time. Is it a wise decision to sell at that time? 

Somebody can make that decision. Maybe we should do a lease, 

24 

lease purchase. If we are going to attract private capital, we attract 

private capital to the property and do a deal, but this is a property 

that sat here with no one really making a decision in the best interest of the taxpayers for more than a decade. Would you agree? 

Mr. PERES. I would agree, and I think I could help make that decision to move the property to the disclosure process. 

Mr. MICA. Well, I am glad you got the promotion to your position; 

but, again, somebody had to overlook the portfolio and make a decision during the 10 years in which the property sat vacant and we 

had a bogus reason for even keeping the property, because it could 

never be used as a backup for power, because they were 

cannibalizing the parts from 2000 when they turned the thing off 

the last time, which was in 2000. So, again, some of it just doesn’t 

hold water. It’s an expensive abuse and misuse of taxpayer assets. 

Mr. Denham and I will continue this. We will hold hearings in 

Washington. Unfortunately, folks, this is just the beginning of 

Washington. We are trying to get out of town and do some of the 

other areas across the Nation and look at buildings similar to this 

that are underutilized that are sitting there and not getting a fair 

return for the taxpayers. 

So thank you for holding this hearing. We will continue. This is 

one I hope in a series in which we will make additional progress. 

Let’s see if we can’t get a good deal on the sign, the guy that painted the sign. We will take one down to Miami Courthouse, and I will 

help you hang it. Thank you. Yield back. 

Mr. DENHAM. Mr. Hanna? 

Mr. HANNA. Yeah. Quick question. You don’t mind. Do you, 

John? 

Mr. MICA. No. 

Mr. HANNA. Thank you. If you can agree that a place like this 

lay fallow for 10 years, costing whatever it cost, and there was no 

urgency, apparently, in any department, any person who was in 

charge to deal with this who saw it as somehow a trust of theirs 

to be more efficient, and you have 14,000. Not you. You have a few 

hundred. How widespread is this problem, as long as we can agree 

it is a problem? 

Mr. PERES. It is hard for me to answer that question. I could say 

there are complex issues involved in every disposal. This asset, 

part of it, was the finance solution for the Central Heating Plant 

that needs reinvestment as well. And there was the risk, obviously, 

until there is another way forward of keeping this plant before 

moving down that road. And I think Federal agencies are dealing 

with this issue throughout the country, changing in operations, trying to improve utilization of properties, ongoing O&M costs. 

Until there are incentives that help them push their real estate 

decisions, I think it might continue. I am hoping that’s not the 

case, and we can provide the correct incentives for folks to move 

properties. 

Mr. HANNA. Well, what would that look like? I mean incentives 

to whom? 

Mr. PERES. Incentives that I tried to address, I believe, in Chairman Denham’s question. I’m looking at providing an upfront capital base for that move for folks to get out of property for us to 

achieve kind of a pretty damn good payback on these properties 

25 

and achieve billions of dollars in savings. If you just look at the 10- 

year number that I quoted in terms of savings over—I forgot the 

exact number, but generating $4.2 billion in proceeds in 10 years. 

The numbers are there. The properties exist out there. I’m hoping we can move aggressively on these. 

Mr. HANNA. Thank you. No more questions from me. Thank you, 

Chairman. 

Mr. DENHAM. Thank you, Mr. Peres, for joining us here today. 

We are going to give you plenty of other opportunities. We want 

to help you to market all of these various properties and we are 

going to be very aggressive on it. I just want to summarize this 

hearing, some of the expectations that this committee and these 

Members have. 

As you heard from Ms. Norton, she asked earlier this committee 

demand this various information, and we will continue to bring it 

up until we get the information. But, first of all, she inquired about 

cost of preparing this property for sale. We would like to see what 

goes into it, so we can understand how better to help you with 

some of these other properties as well the Cotton Annex, what 

went into that. 

We are going to continue to talk about that until it gets on the 

list until we actually get that one up for sale as well. Each of these 

different properties, you should not wait for us to help you to market them. We would hope that you would go out on your own initiative and talk to every other agency within the administration, and 

ask them to actually follow the President’s memorandum. 

We would expect the President of the United States to actually 

hold each of the agencies accountable; but, if he is not going to 

show that leadership, this committee will. And, we will continue to 

go out throughout the Nation and help you to market these properties. As well, Ms. Norton talked about the Social Security Building and property on 9th as well as the Court of Appeals for the 

Veterans. 

As you have heard me bring up several times now, the L.A. 

courthouse, that is a property that even though we have got less 

judges than a decade ago, GSA under Mr. Peck had said they were 

going to go ahead and spend that money anyways. Mr. Tangherlini 

said they were now reviewing the project. We expect to see that full 

review and understand exactly what GSA’s intention is. 

Miami Courthouse, another one that we are spending money on 

today, it’s not on the excess list, but yet it is sitting vacant in 

Miami. I imagine while I am not from the great State of Florida, 

I imagine the property rates there are pretty high in Miami, and 

that is another property that would be a high-value property as 

well. 

I would like to see what is in the 124 properties. I cannot imagine that the list of 14,000 properties, the majority of those properties are lighthouses. I’ve got to imagine that a lot of properties 

in that 14,000 that should be sold as well as thousands, tens of 

thousands of properties that are sitting underutilized that should 

be part of that list. 

So we want to know exactly what are the steps that are being 

taken to evaluate whether selling the property are better done as 

reuse, redevelopment, and what the current standard is for utilizaVerDate Aug 31 2005 11:35 Aug 14, 2012 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\ED\6-19-1~1\74628.TXT JEAN
26 

tion. I also want to know what the timeline is on this building. I 

assume you have a written timeline? 

Mr. PERES. Yes, somewhere here. Give me a second. 

Mr. DENHAM. If you could just submit it back to the committee, 

we will try to be timely with finishing up this. I assume you have 

also got a written plan on how you define what is underutilized. 

Mr. PERES. Yes. 

Mr. DENHAM. We would like to see that written plan. 

Mr. PERES. OK. 

Mr. DENHAM. I assume you have got a written plan on identifying properties that are not utilized and underutilized before they 

even get to that list. You can submit that plan as well? 

Mr. PERES. Yes. And we are hoping to begin the auction in September, just to answer that question. I will give you the full 

timeline in response to that. 

Mr. DENHAM. Thank you. And, lastly, the administration claims 

that there’s $3 billion in savings. We would like to see what that 

list is comprised of, whether it is sale of property, whether it is redevelopment, whether it is reused, whether it is combining the footprint so that we can be active and helpful as well working with the 

President to help him not only reach that goal of $3 billion, but 

this committee is going to be very aggressive in seeing how we can 

far exceed that goal and make sure we are getting the best value 

for the taxpayer. 

In my opinion as the chair of this committee, I believe we are 

moving way too slow; not only on the properties that are under 

your purview, but, more importantly, under the properties across 

the Nation, which is why this committee has worked with the administration in defining the bill as the Civilian Property Realignment Act, which is why the Senate—I know their version. They 

have worked with the administration as well. But sitting on our 

hands and waiting to see how much more debt we rack up is not 

a solution. 

So we are going to do everything we can to market these properties with you, to continue to hold these hearings. We will hold as 

many as we need. And if GSA tries to drag their feet and not give 

us the information that we are asking for, we are going to dedicate 

our staff to go on doing the job for you. We will go out across the 

Nation and define what the properties are, what the utilization 

rate is and how much vacant property they have. 

We would hope that we would continue to work together; but, 

right now, we have not seen a great deal of emphasis or leadership 

from the administration in putting the Civilian Property Realignment Act, not only getting it through both houses, but certainly the 

President should be demanding that. The President wants acting 

out of the House, but we want the President to actually show some 

leadership in getting the bill to them. We want to sell properties, 

and we want to work together, but we are going to need his support in getting that done. 

So, my recommendation to GSA is buy some cotton suits, because 

we are going to be doing hearings in Miami, Texas and L.A. in the 

heat of the summer. And I would go out and buy some cold weather 

gear, as well, because we will also be doing some hearings this winter, I am assuming, in Alaska, South Dakota, and many cold areas 

27 

as well. But we are going to go across the Nation and help you to 

market these properties. 

I will hold a hearing every day, if we have to; but, we’ve got to 

get a better response for the taxpayer, and I think this is one of 

the best ways to get rid of wasting Government, to bring one-time 

revenue to help us to rid of us debt, and a good way for Republicans and Democrats to come together and just get rid of waste. 

We need the administration and the President’s support in doing 

so. 

With that, I’d like to thank you again for your testimony. If there 

are no further questions, I would ask unanimous consent that the 

record of today’s hearing remain open until such time as our witness has provided answers to any and all of the questions. You did 

say you would get back to us within 30 days. We may be having 

a hearing within the next 30 days. 

And I ask unanimous consent that during such time as the 

record remains open, additional comments offered by individuals or 

groups may be included in the record of today’s hearing. Without 

objection, so ordered. 

I would like to thank our witness again for the testimony today. 

If no other Members have anything to add, the subcommittee 

stands adjourned. 

[Whereupon, at 11:20 a.m., the subcommittee was adjourned.] 

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