GAO-01-537R National Museum of American Music

United States General Accounting Office

Washington, DC 20548

March 23, 2001

The Honorable Mike DeWine

Chairman

The Honorable Mary Landrieu

Ranking Member

Subcommittee on the District

 of Columbia

Committee on Appropriations

United States Senate

The Honorable Joe Knollenberg

Chairman

The Honorable Chaka Fattah

Ranking Minority Member

Subcommittee on the District

 of Columbia

Committee on Appropriations

House of Representatives

Subject: District of Columbia: National Museum of American Music

The conference report accompanying the District of Columbia Appropriations Act of

Fiscal Year 2001 directed us to review the National Museum of American Music

(NMAM) proposal targeted for the current Convention Center site in downtown

Washington, D.C., and to provide certain information to the Appropriations

Committees by April 1, 2001. The NMAM proposal is in the conceptual stage and the

Mayor’s office has not yet decided on how to use the current Convention Center site

once the new Convention Center is ready. Therefore, as agreed with your staff, we

obtained information on the status of the NMAM proposal and the decision process of

the Convention Center Redevelopment Task Force as well as information currently

available related to the four questions in the conference report.

On March 1, 2001, we briefed the staff of both of your Subcommittees on the results

of our review. Your staff asked us to provide additional information about the use of

the $300,000 appropriation for the needs and design study for the proposed NMAM.

We have incorporated this information in the briefing slides enclosed with this letter.

Also, we agreed to monitor the ongoing events related to the NMAM proposal until

the District makes a decision and to keep your offices informed of any major

developments.
Page 2 GAO-01-537R National Museum of American Music

We are sending copies of this letter to Senator George V. Voinovich, Senator

Richard J. Durbin, Representative Constance A. Morella, and Representative Eleanor

Holmes Norton in their capacities as Chair or Ranking Minority Member of Senate

and House Committees and Subcommittees. This letter will also be available on

GAO’s home page at http://www.gao.gov.

If you have any questions, please contact me at (202) 512-9450 or by e-mail at

steinhoffj@gao.gov or Jeanette Franzel, Acting Director, at (202) 512-9471, or by

e-mail at franzelj@gao.gov. Key contributors to this letter were Ronald L. King,

Keith A. Thompson, Anne M. Hilleary, Wendy Wierzbicki, Arkelga L. Braxton, and

Louis Fernheimer.

Jeffrey C. Steinhoff

Managing Director

Financial Management and Assurance

Enclosure
Enclosure

Page 3 GAO-01-537R National Museum of American Music

March 1, 2001, Briefing on the National Museum of American Music

1

Financial Management and Assurance Team

District of Columbia Government Issues: National

Museum of American Music

Briefing for the Staff of the

Senate Committee on Appropriations, Subcommittee on the

District of Columbia

House Committee on Appropriations, Subcommittee on the

District of Columbia

March 1, 2001
Enclosure

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2

Introduction/Objectives

• The Conference Report accompanying the District’s Fiscal Year 2001

Appropriations Act (Public Law 106-522) directs GAO to review the

National Museum of American Music (NMAM) proposal and report to the

Appropriations Committees by April 1, 2001, on the information

contained in the proposal related to:

• the total estimated project costs;

• all potential funding sources;

• whether the proposed project is suited for the site of the current

Convention Center; and

• whether the NMAM proposal constitutes the highest and best use of

the property at issue.
Enclosure

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3

Modified Objectives

• Because the NMAM proposal is in the conceptual stage and the Mayor’s

office has not yet reached a decision on the use of the Convention

Center site, currently, only limited information is available to address the

four questions.

• Accordingly, as agreed to by the Subcommittees’ staff, the objectives of

our review have been modified as follows.

• Provide an update on the status of the NMAM proposal, which includes:

• information on the timing of the Mayor’s decision process related to

the NMAM proposal and other proposals submitted for consideration

and

• summary level information about the total cost of the Federal City

Council (FCC) proposal for the NMAM and how the $300,000

appropriated by the Congress for the proposal was used.
Enclosure

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4

Modified Objectives

• Provide information on the Convention Center Redevelopment Task

Force (Mayor’s task force) including descriptions of:

• the Mayor’s task force that was established to study the potential

uses and make recommendations for redevelopment of the

Convention Center site;

• the level of communication and coordination between the task force

and District officials; and

• the points of agreement and disagreement between the FCC, the

task force, and District officials related to the NMAM proposal and

other proposals.

• Provide any available information on the four questions presented in the

conference report for Public Law 106-522.
Enclosure

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5

Scope and Methodology

• In order to meet the above objectives, we

• interviewed officials from the FCC, the District’s Office of Planning,

the Convention Center Redevelopment Task Force, the Library of

Congress, the Smithsonian Institution, the Washington Metropolitan

Area Transit Authority (WMATA), and the Kennedy Center and

• reviewed the NMAM proposal and analyzed other related

documents including FCC meeting minutes, newsletters,

memorandums, cost schedules, and information received from the

task force.

• We conducted our work from November 2000 through February 2001 in

accordance with generally accepted government auditing standards.
Enclosure

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6

Scope and Methodology

• We did not perform any independent analysis of the information

contained in the NMAM proposal.

• We requested comments on a draft of these briefing slides from officials

of the D.C. Office of Planning and the FCC. These comments are

discussed in the last section of this briefing.
Enclosure

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7

Background

• The fiscal year 1999 District Appropriations Act (Public Law 105-277)

provided the FCC with $300,000 to perform a needs and design study

for the proposed NMAM.

• The FCC is a non-profit and non-partisan organization dedicated to the

improvement of the Nation’s Capital. FCC was established in 1954 and

is composed of and financed by 150 business, professional, educational,

and civic leaders.

• The Mayor established the Convention Center Redevelopment Task

Force in July 2000 to develop a plan to maximize the potential use of the

existing Convention Center site.
Enclosure

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8

Results in Brief

• The FCC proposal is currently in the conceptual stage.

• The FCC proposal anticipates that the NMAM will be located at the

existing Convention Center site and that it will be part of a major mixeduse complex that includes retail, entertainment, and performance

venues.

• The key elements of the FCC’s overall proposal include not only the

NMAM but also a large public plaza; a performing arts theater; a

headquarters convention hotel; retail, dining, and entertainment facilities;

and parking. The key elements of the NMAM component include 75,000

square feet of exhibit space, two performance venues, a museum shop,

food and beverage facilities, and a public school with a music and arts

centered curriculum.
Enclosure

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9

Results in Brief

• FCC hired a consultant to develop an econometric model used to

estimate project costs and forecast revenue.

• The total estimated cost for the FCC’s mixed-use proposal is $1.1 billion,

with $172.5 million attributed to the music museum. Additionally, the

proposal shows that the District would receive annual land rent of $13

million, equivalent to a 7-percent return on the estimated land value of

$183 million. Under the FCC’s proposal, $42 million of infrastructure

costs would be covered by public funding sources.

• The D.C. Office of Planning published the Downtown Action Agenda

(DAA) in November 2000, and the DAA lists three underlying goals for

developing the District’s downtown.

• Separately, the Mayor established a task force to develop a three-phase

plan for determining the maximum potential use of the Convention

Center site.
Enclosure

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10

Results in Brief

• District and task force representatives estimate that a final decision for

their recommended use of the existing Convention Center site could be

made between September 2001 and December 2001. Officials from the

District’s Office of Planning have indicated that this timetable is

dependent upon the disposition method selected. They are still in the

process of determining the best use for the site.

• The Mayor’s task force has not yet considered any specific proposals,

including the FCC’s NMAM proposal for use of the existing Convention

Center site.

• The task force is currently developing a process to both solicit and

evaluate independently generated proposals for the site. This process

will provide the opportunity for substantive discussions between the

FCC and the Mayor’s task force.
Enclosure

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11

Results in Brief

• The FCC spent the $300,000 federal appropriation on project

management services provided by the Smithsonian Institution.

• Information currently available to address the four questions posed in

the conference report is included in a subsequent section of this briefing.

• The FCC and the D.C. Office of Planning generally agreed with the

contents of our briefing slides.
Enclosure

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FCC Proposal

• On July 8, 1998, the leaders of the Smithsonian Institution and the

Library of Congress joined with FCC officials to announce plans to

explore the feasibility of developing the NMAM. They were seeking a

suitable location to display the musical archives and memorabilia,

musical instruments, scores and parts, recordings, and other music

related collections currently owned by the federal government.

• Subsequent to the July 1998 announcement, the John F. Kennedy

Center for the Performing Arts joined the project, hoping to develop a

major performing arts theater downtown.
Enclosure

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13

FCC Proposal

• FCC officials stated that the FCC established an affiliation program with

the Smithsonian in the form of a Memorandum of Understanding (MOU)

under which the FCC will seek funding to carry out studies to determine

the feasibility of developing the NMAM and identify specific objects and

artifacts that the Smithsonian can loan to the NMAM under separate

loan agreements.

• Library of Congress (LOC) officials stated that LOC made a formal

arrangement with the FCC in the form of an MOU that describes their

working relationship and legally outlines LOC’s role in the Music

Museum.

• The Smithsonian and the LOC have committed to provide the NMAM

with artifacts and items from music collections owned by the federal

government that have an estimated value of $500 million.
Enclosure

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14

FCC Proposal

• FCC staff, the Smithsonian, and the LOC organized 7 planning meetings

called “charrettes” that involved over 150 musicians, composers, music

industry figures, educators, museum professionals, designers,

historians, developers, retailers, and government officials. As a result of

the charrette process, the FCC proposed that:

• the Museum be part of a major mixed-use complex that includes

performance venues, retail and entertainment uses, dining facilities,

a major performance center, and a music and arts public school and

• the current Convention Center site could be an ideal location for this

mixed-use complex because it is large enough to accommodate the

Museum as well as the other components included in the FCC’s

mixed-use concept.
Enclosure

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15

FCC Proposal

• The key elements of the FCC’s mixed-use concept are the NMAM, a

large public plaza that would function as an outdoor extension of the

museum, and a major 3,300-seat performing arts theater. Other key

elements are as follows:

• 250,000 square feet of convention center expansion space located

underground at the existing Convention Center site connected to the

new Convention Center via a pedestrian tunnel;

• a headquarters convention hotel with approximately 1,500 rooms;

• a theme hotel with approximately 600 rooms or a building with 600

housing units; and

• 150,000 square feet of retail, entertainment, and dining facilities and

2,000 parking spaces.
Enclosure

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16

FCC Proposal

• The design concept envisions the NMAM to be approximately 250,000

square feet. The key elements of the NMAM are:

• 75,000 square feet of exhibit space and 600 seat and 200 seat

performance venues and

• a museum shop, food and beverage facilities, and a District public

school for 300 students with a music and arts curriculum.

• FCC hired a consultant to perform a development economics and fiscal

benefits study for its mixed use concept, including the NMAM.

• The proposal identified four categories of costs: infrastructure, cultural

components, commercial uses, and Convention Center expansion.
Enclosure

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FCC Proposal

• The total estimated cost of the mixed-use complex included in the

proposal is $1.1 billion, with a contingency rate of 12 percent for cost

overruns and unanticipated costs.

• Infrastructure costs of $42 million were designated as being covered by

public funding sources.

• The District would receive annual land rent of $13 million, which is

equivalent to a 7-percent return on the land which FCC’s consultant

valued at $183 million.
Enclosure

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FCC Use of Appropriation and Other

Funding

• FCC expended the $300,000 federal appropriation on project

management services provided by the Smithsonian Institution. This

included salary and related benefits costs for a senior level staff person

and administrative support staff for a 2-year period.1 Also, FCC

received $653,993 of in-kind services, which included the numerous

hours that members spent at planning sessions and architectural

services provided on a pro-bono basis.

• The $385,000 of private funding was spent as follows:

• $97,926 was spent on additional project management services

provided by the Smithsonian and

• the remaining $287,074 was spent on general and administrative

expenses, rent, phone, travel, and other consulting services that

included a charrette facilitator, architectural and design services,

financial analysis, and a government relations specialist. (See table

1.) 1Services provided were based on an agreement established between the Smithsonian Institution

 and FCC.
Enclosure

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FCC Use of Appropriation and Other

Funding

Table 1: Cost of Proposal by Type of Funding

Federal

Funding/Expense appropriation Contribution In-Kind Total

Funds provided $ 385,000 300,000 $ 653,993 $ 1,338,993

Expenses:

Project management services 300,000 97,926 397,926

Architectural and design services 123,789 123,789

Charrette facilitator 21,100 21,100

Financial analysis 28,139 28,139

Government relations specialist 22,875 22,875

In-kind services 653,993 653,993

Rent, phone, and travel 46,400 46,400

Overhead: general and admin. 44,771 44,771

Total $300,000 $385,000 $653,993 $1,338,993

Source: The financial information was provided by the FCC.

Amounts are unaudited

$
Enclosure

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Downtown Action Agenda

• The District’s Office of Planning published the Downtown Action Agenda

(DAA) in November 2000. It has three underlying goals:

• refine the vision of a vibrant, mixed-use “living” downtown;

• establish direction for new growth to include emerging districts to the

east of downtown and improve links to other city neighborhoods;

and

• identify strategic actions to be taken by public and private sectors to

maximize their collective resources and sustain downtown’s current

economic momentum.

• The D.C. Office of Planning is the lead District agency for decisionmaking on the existing Convention Center site redevelopment, which is

part of the surrounding downtown area to be developed.
Enclosure

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Downtown Action Agenda

• According to the DAA, one of the key strategies is to capitalize on key

opportunity sites. The DAA notes that the existing Convention Center

site is a key site and offers a special opportunity to complete the vision

of a “living” downtown. The DAA noted that the site has the potential to

• create a great civic space;

• maximize downtown housing;

• create a destination to enjoy and celebrate downtown;

• complement and complete the retail/entertainment focus at

Gallery Place; and

• create a gateway for the new Convention Center.
Enclosure

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Convention Center Redevelopment Task

Force

• In conjunction with the recommendation in the draft2 DAA regarding

future use of the existing Convention Center site, the Mayor established

the Convention Center Redevelopment Task Force (Mayor’s task force)

in July 2000. The task force is organized by the DC Office of Planning

and is comprised of business and community leaders. Its mission is to:

• recommend a set of uses and a redevelopment plan that make the

Convention Center site a major contributor to the District’s “living”

downtown by bringing life to the city 18 hours a day;

• build the District’s tax base and help secure its financial foundation

and meet its housing, commercial, and cultural goals;

• diversify the District’s economic base by attracting new uses to the

city and contribute to the life and health of the neighborhoods; and

2The final DAA was officially published in November 2000.
Enclosure

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Convention Center Redevelopment Task

Force

• assist the District in becoming a great urban place with world class

architecture and public spaces.

• The following objectives were developed to achieve the Mayor’s task

force mission:

• study the potential uses for the Convention Center site and

recommend the best possible redevelopment to maximize its

potential as a contributor to the “living” downtown, the

neighborhoods, and the city’s fiscal health and

• recommend an appropriate redevelopment process to best

implement the recommended development use.
Enclosure

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Convention Center Redevelopment Task

Force

• The Mayor’s task force is comprised of 52 members representing the

• Office of Management and Budget,

• D.C. Office of Planning,

• D.C. Office of the Mayor,

• D.C. Office of the Deputy Mayor for Planning and Economic Development,

• D.C. City Council,

• D.C. Chamber of Commerce,

• D.C. Commission on the Arts,

• Washington Metropolitan Area Transportation Authority (WMATA),

• Washington Convention Center Authority, and

• FCC and other private organizations.

• The District’s Office of Planning and task force representatives anticipate that

between September 2001 and December 2001, a decision could be made on a

recommendation for how the existing Convention Center site should be

redeveloped. Officials from the District’s Office of Planning have indicated that

this timetable is dependent upon the disposition method selected.
Enclosure

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Convention Center Redevelopment Task

Force

• Until a decision is made regarding the recommended uses for the site,

the District does not recommend that any public funds be expended for

the development of site specific plans or design studies for the existing

Convention Center site.

• The task force has not yet considered any specific proposals, including

the NMAM, for redevelopment of the existing Convention Center site.

The NMAM is one of many cultural and entertainment facilities that may

be considered for the site.

• The D.C. Office of Planning hired a consulting team to assess the city’s

development needs for the site, define the re-development opportunities

and options for the site, and analyze the economic and social impacts of

the various options.
Enclosure

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Convention Center Redevelopment Task

Force

• According to the task force and the D.C. Planning Office, the consulting

team is developing a three-phase plan as follows:

• Phase I consists of identifying potential uses of the existing

Convention Center site;

• Phase II consists of implementing the identified uses, preparing the

site plan, and determining the best development entity for

overseeing the project.

• Phase III is contingent on the successful completion of phases I and

II. It will consist of the development entity executing the

redevelopment plan in conjunction with the District’s Office of

Planning. (See table 2.)

• The task force is currently developing a process to solicit and evaluate

independently generated proposals for the existing Convention Center

site. Once this process is developed, the opportunity will exist for

substantive discussions between the FCC and the Mayor’s task force.
Enclosure

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Three-Phase Plan

Table 2: Three-Phase Plan for Site Utilization R edevelopment planExisting Convention Center site

Phases Phase I Phase II Phase IIIa

Time frames Anticipated to end March 2001. Anticipated April 2001 through September

2001 or D ecember 2001.

Anticipated January 2002 through March

2003.

Objectives/Actions To identify potential uses for the

existing Convention C enter site.

Identifying uses, preparing the site plan,

and determining the best development

entity to oversee the project.

The development entity will execute the

redevelopment plan in conjunction with the

D.C . Office of Planning.

D ecisions/Conclusions 1. A headquarters hotel should be

developed but preferably not on the

existing Convention C enter site.

1. Decide where the headquarters hotel will

be located.

1. The entity sends out request for proposals

to the development community, reviews

responses, and selects a contractor.

2. 400 to 1,000 residential housing

units should be included on the site.

2. Decide whether additional exhibit space

is needed and its location.

2. The task force would phase out during this

period.

3. A main attraction that will draw at

least 3 million people a year should

be included on the site.

3. Determine whether WMATA will want to

build a metro station underground on the

site.

3. The entity would develop cost estimates,

identify funding sources, and estimate

revenue for the city.

4. A public open space that is

controlled by the District should be

included on the site.

4. Determine what main attraction will be

located on the site.

5. A smaller hotel should be included

on the site.

5. Prepare a small area plan that will

include traffic patterns, parking, and design

guidelines for the area around the site.

6. Underground uses include parking,

additional exhibit space for the new

Convention Center, and a metro yard.

6. Decide on what type of development

entity will be established and how the land

will be transferred to this entity.

Issues/Products The D . C. Office of Planning will issue

a report identifying these uses to the

Mayor and the Task Force in March

2001.

1. Present the site uses, small area plan,

and the type of development entity needed

to the City Council.

Not Applicable.

2. The City Council will prepare a statute to

allow the Mayor to establish this entity and

transfer ownership of the land.

a Phase III is a proposed phase and is contingent on successful completion of phases I and II. Details are very limited at this time.

Source: D.C. Office of Planning
Enclosure

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Convention Center Redevelopment Task

Force

• The D.C. Office of Planning representative told us that the decision on

whether to include the NMAM on the existing Convention Center site

could be made by the end of phase II. Such a decision will depend on

the Music Museum’s suitability to the site and the proposal’s

demonstration of its ability to secure financing and other support.

• The District has been approached by a number of interested parties with

various ideas regarding redevelopment of this site. These include a

science museum, music museum, new location for the Martin Luther

King library, and a major performing arts center. FCC’s NMAM proposal

is the only formal proposal the District has received.

• Task force representatives stated that they support the concept of a

music museum in the District. They further indicated that if the museum

were not included on the site, the District Office of Planning would help

the FCC identify another city location for the NMAM.
Enclosure

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Information Currently Available on the

Four Questions in Conference Report

1. What are the total cost estimates?

• FCC total estimated project costs of the mixed-use complex are $1.1

billion with a 12 percent contingency rate for cost overruns and

unanticipated costs. Since construction could not begin until March

2003 at the earliest, which is when the new Convention Center is slated

to open, this figure will likely change. The FCC’s NMAM proposal is site

specific and may have to be substantially modified if the NMAM is

located on other than the existing Convention Center site.

2. What are the potential funding sources?

• The FCC’s consultant identified the following potential sources of

funding for the $1.1 billion of estimated costs for the mixed-use complex:
Enclosure

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Information Currently Available on the

Four Questions in Conference Report

• Unallocated infrastructure costs are estimated at $42 million and

would be covered by public funding sources.

• Commercial development costs are estimated at $564 million and

would be paid by private investment.

• Cultural development costs are estimated at $362 million and

include the NMAM’s costs, which are estimated at $172.5 million.

FCC envisioned that these costs would be covered by currently

undefined sources it characterized as sponsor contributions.

• Convention Center expansion development costs are estimated at

$129 million and would be covered by currently undefined sources

characterized as sponsor contributions.
Enclosure

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Information Currently Available on the

Four Questions in Conference Report

3. Is the proposed NMAM suited for the current Convention Center site?

• As previously noted, the Mayor has established a task force to study the

potential uses for the Convention Center site and to recommend the

best uses of the site. The task force has a three-phase plan to

determine the best use for the site and estimates that most major

decisions about the specific use of the site will be made between

September 2001 and December 2001.

4. Does the NMAM proposal constitute the highest and best use of the

Convention Center site?

• As previously stated, the D.C. Office of Planning and the Mayor’s task

force are currently implementing a redevelopment plan to determine the

highest and best use of the Convention Center site.
Enclosure

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Agency Comments

• The FCC and the D.C. Office of Planning generally agreed with the

contents of our briefing slides. We have incorporated their comments as

appropriate throughout the briefing slides.

(194005)