```

[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 LEGISLATIVE PROPOSALS TO REFORM THE GOVERNMENT'S APPROACH TO PROPERTY 
MANAGEMENT: S. 2805, THE FEDERAL PROPERTY ASSET MANAGEMENT REFORM ACT; 
      AND H.R. 3285, THE FEDERAL ASSET MANAGEMENT IMPROVEMENT ACT

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                      INFORMATION, AND TECHNOLOGY

                                 of the

                     COMMITTEE ON GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                                   ON

                                S. 2805

TO AMEND THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 
AS AMENDED, TO ENHANCE FEDERAL ASSET MANAGEMENT, AND FOR OTHER PURPOSES

                                 AND ON

                               H.R. 3285

 TO AUTHORIZE PUBLIC-PRIVATE PARTNERSHIPS TO REHABILITATE FEDERAL REAL 
                    PROPERTY, AND FOR OTHER PURPOSES

                               __________

                             JULY 12, 2000

                               __________

                           Serial No. 106-237

                               __________

       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                               -----------

                   U.S. GOVERNMENT PRINTING OFFICE
72-934                     WASHINGTON : 2001

_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)
DAVID VITTER, Louisiana

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                        Robert A. Briggs, Clerk
                 Phil Schiliro, Minority Staff Director

   Subcommittee on Government Management, Information, and Technology

                   STEPHEN HORN, California, Chairman
JUDY BIGGERT, Illinois               JIM TURNER, Texas
THOMAS M. DAVIS, Virginia            PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon                  MAJOR R. OWENS, New York
DOUG OSE, California                 PATSY T. MINK, Hawaii
PAUL RYAN, Wisconsin                 CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
                         Randy Kaplan, Counsel
                           Bryan Sisk, Clerk
                    Trey Henderson, Minority Counsel

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 12, 2000....................................     1
    Text of S. 2805..............................................     3
    Text of H.R. 3285............................................    36
Statement of:
    Barram, David, Administrator, General Services 
      Administration, accompanied by David Bibb, Deputy Associate 
      Administrator for Real Property, General Services 
      Administration; and Becky Rhodes, Deputy Associate 
      Administrator for Personal Property, General Services 
      Administration.............................................    39
    Ungar, Bernie, Director, Governmentwide Business Operations 
      Issues, General Accounting Office; David Bibb, Deputy 
      Associate Administrator, Office of Governmentwide Policy, 
      General Services Administration; Rear Admiral Ronald F. 
      Silva, Assistant Commandant for Systems and Chief Engineer, 
      U.S. Coast Guard; Steven J. Weiner, president, Signet 
      Partners; Maria Foscarinis, executive director, National 
      Law Center on Homelessness and Poverty, accompanied by 
      Laurel Weir, Policy Director; and Steve Perica, director of 
      the Arizona State Agency for Surplus Property, president of 
      the National Association of State Agencies for Surplus 
      Property...................................................    41
Letters, statements, etc., submitted for the record by:
    Bibb, David, Deputy Associate Administrator, Office of 
      Governmentwide Policy, General Services Administration, 
      prepared statement of......................................    59
    Foscarinis, Maria, executive director, National Law Center on 
      Homelessness and Poverty, prepared statement of............    82
    Horn, Hon. Stephen, a Representative in Congress from the 
      State of California:
        Information concerning judicial review...................   106
        Letter dated February 24, 2000...........................   135
        Prepared statement of....................................    37
    Perica, Steve, director of the Arizona State Agency for 
      Surplus Property, president of the National Association of 
      State Agencies for Surplus Property, prepared statement of.    98
    Silva, Rear Admiral Ronald F., Assistant Commandant for 
      Systems and Chief Engineer, U.S. Coast Guard, prepared 
      statement of...............................................    68
    Ungar, Bernie, Director, Governmentwide Business Operations 
      Issues, General Accounting Office, prepared statement of...    43
    Weiner, Steven J., president, Signet Partners, prepared 
      statement of...............................................    75

 
 LEGISLATIVE PROPOSALS TO REFORM THE GOVERNMENT'S APPROACH TO PROPERTY 
MANAGEMENT: S. 2805, THE FEDERAL PROPERTY ASSET MANAGEMENT REFORM ACT; 
      AND H.R. 3285, THE FEDERAL ASSET MANAGEMENT IMPROVEMENT ACT

                              ----------                              

                        WEDNESDAY, JULY 12, 2000

                  House of Representatives,
Subcommittee on Government Management, Information, 
                                    and Technology,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:10 a.m., in 
room 2247, Rayburn House Office Building, Hon. Stephen Horn 
(chairman of the subcommittee) presiding.
    Present: Representatives Horn, Ose, Turner, and Kanjorski.
    Staff present: J. Russell George, staff director and chief 
counsel; Randy Kaplan, counsel; Bonnie Heald, director of 
communications; Bryan Sisk, clerk; Elizabeth Seong, staff 
assistant; Will Ackerly, Chris Dollar, and Davidson Hulfish, 
interns; Trey Henderson, minority counsel; and Jean Gosa, 
minority assistant clerk.
    Mr. Horn. A quorum being present, the Subcommittee on 
Government Management, Information, and Technology will come to 
order.
    Effective management of the Federal Government's real and 
personal property assets is an important issue involving 
billions of dollars and affecting hundreds of communities 
across our Nation. The government's worldwide real estate 
portfolio consists of more than 500,000 buildings and over half 
a billion acres of land. This property houses Federal workers; 
stores historic, cultural and educational artifacts; and 
provides services to the public. However, as agencies have 
streamlined their operations and realigned their missions, the 
need for this government property has lessened.
    The National Research Council and the General Accounting 
Office have both reported that the physical condition, 
functionality and quality of Federal facilities is 
deteriorating. Management of Federal buildings is especially 
challenging, considering that roughly half of them are 40 to 50 
years old. A March 2000 General Accounting Office report noted 
that the General Services Administration has struggled over the 
years to meet the repair and alteration needs of these 
buildings. Nevertheless, billions of dollars will be required 
to bring them up to usable standards.
    The Federal Property and Administrative Services Act of 
1949 is the general authority governing the government's 
approach to property management. This law established a 
framework for the purchase, use and disposal of real and 
personal property, as well as government services. Although it 
has been amended several times, Federal policies and methods 
regarding real property acquisitions and disposals have 
generally remained unchanged.
    There is a concern that the Property Act no longer 
adequately meets the government's needs. In fact, increased 
funding pressures in recent years have led several agencies to 
seek authority to dispose of or lease unneeded property outside 
the Property Act and use the proceeds to further their core 
missions. At a subcommittee hearing in April 1999, we heard 
from witnesses representing some of those Federal departments 
and agencies that have been granted this specific legislative 
authority.
    Today we will examine two legislative proposals designed to 
reform the government's approach to property management. The 
first bill is the product of an extensive review of the 
Property Act conducted by the General Services Administration 
in collaboration with other Federal agencies. This proposal, 
recently introduced in the Senate by Senators Fred Thompson and 
Joseph Lieberman as Senate bill 2805, contains a variety of 
provisions to improve the government's real and personal 
property management. For example, the bill would require 
agencies to develop asset plans to ensure that their real 
property holdings are consistent with their strategic mission 
goals and objectives. The bill would also grant agencies the 
authority to sell or exchange property so they could acquire 
property that is more suited to their mission. As an incentive, 
an agency would be authorized to retain the proceeds from a 
real property transaction and use it to help meet their capital 
asset needs.
    The second proposal, H.R. 3285, the Federal Asset 
Management Improvement Act, introduced by Representative Pete 
Sessions of Texas, would authorize the General Services 
Administration or other agencies under delegated authority to 
enlist the private sector capital and expertise in public-
private partnership ventures to develop or improve Federal real 
property.
    [The texts of S. 2805 and H.R. 3285 follow:]

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    Mr. Horn. We have before us many knowledgeable witnesses 
who will--beginning with the Administrator of the General 
Services Administration, who will discuss the merits of these 
legislative proposals. We welcome our witnesses. We look 
forward to their testimony.
    But now I yield for an opening statement to the 
distinguished ranking member on this subcommittee, the 
gentleman from Texas Mr. Turner.
    [The prepared statement of Hon. Stephen Horn follows:]

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    Mr. Turner. Thank you, Mr. Chairman.
    Clearly the Federal Government must be the world's largest 
property owner and manager, and inasmuch as we have been 
operating under the Federal Property Administration Services 
Act of 1949, with some amendments, it is perhaps time to update 
our laws regarding Federal property management.
    The principles that were established in the law have worked 
extremely well over the years, and I think they have assured 
the American people the value of Federal property will be 
maximized, but it does seem that in many cases we do not have 
the flexibility that we really need to be good Federal property 
managers.
    We're going to hear testimony today relating to two bills, 
one of the bills introduced by Congressman Sessions, H.R. 3285. 
Mr. Sessions has recommended that the GSA be allowed to enter 
into public-private partnerships to lease Federal property, 
renovate current Federal property and develop new Federal 
property.
    The other legislation yet to be introduced is the work 
product of the General Services Administration in collaboration 
with other agencies. It's called the Federal Property Asset 
Management Reform Act, and I want to commend the GSA on their 
excellent work in putting together this piece of legislation. I 
think it offers much to the committee and to the Congress in 
terms of improving Federal property management and moving us in 
the right direction.
    So, Mr. Chairman, I look forward to hearing from the 
witnesses today on this very critical issue.
    Mr. Horn. I thank you very much.
    Mr. Sessions is apparently delayed, probably the same 
reason I was, and we'll move to panel two and the Honorable 
David Barram, the Administrator of the General Services 
Administration. We're glad to have you here.

  STATEMENTS OF DAVID BARRAM, ADMINISTRATOR, GENERAL SERVICES 
  ADMINISTRATION, ACCOMPANIED BY DAVID BIBB, DEPUTY ASSOCIATE 
       ADMINISTRATOR FOR REAL PROPERTY, GENERAL SERVICES 
      ADMINISTRATION; AND BECKY RHODES, DEPUTY ASSOCIATE 
     ADMINISTRATOR FOR PERSONAL PROPERTY, GENERAL SERVICES 
                         ADMINISTRATION

    Mr. Barram. Thank you, Mr. Chairman, Mr. Ranking Member and 
other Members. Thank you for asking us here today to discuss 
our legislative proposal to amend the Federal Property and 
Administrative Services Act of 1949. Accompanying me from GSA's 
Office of Governmentwide Policy are Mr. David Bibb, Deputy 
Associate Administrator for Real Property, and Ms. Becky 
Rhodes, Deputy Associate Administrator for Personal Property.
    I'd like to speak for 1 minute, introductory remarks, and 
let you bring up David and Becky and others who know really 
what's going on. Thank you for letting me do that.
    Over the last several years we have worked together on a 
number of significant issues addressing change and a need for 
Federal Government reform. Your help was instrumental to our 
success, and we thank you. Today we have another occasion where 
we can work together to get things done, Federal asset 
management reform.
    Mr. Chairman, you commented today, and I'd like to quote 
also from your opening statement from last April's hearing on 
Federal real property management, you said, overall the Federal 
Government has not been a very good steward. While we have made 
many improvements within existing law, collectively we have not 
been the kind of stewards and good asset managers that we could 
have been. Why? Because the business rules by which Federal 
agencies manage their assets were established over a half 
century ago and were obsolete years ago.
    As you both have noted this morning, the Federal Property 
Act is 50 years old. With the dollar value of Federal real and 
personal property assets estimated to be in the hundreds of 
billions of dollars, it is increasingly imperative that 
prevailing policies ensure their efficient and effective 
stewardship.
    It's time we used the same common-sense property management 
strategies in the Federal Government that have already proven 
successful in the private sector. I think we all recognize that 
we must make the Federal Government more efficient and more 
accountable. This bill represents a big step forward in 
achieving that goal. It is simply good government.
    I believe you will quickly see that its enactment will 
result in a governmentwide property management system that, 
quote, works better and costs less. It reflects the way we 
should be doing business in the 21st century.
    Thank you.
    Mr. Horn. Well, we thank you, and we will now begin with 
panel three, who will join you at the table to stay there as--
because we'd like during the question period to have a dialog. 
And the panel three is Bernie Ungar, the Director, 
Governmentwide Business Operations Issues, GAO; David Bibb, 
Deputy Associate Administrator, Office of Governmentwide 
Policy, General Services Administration; Rear Admiral Ronald F. 
Silva, Assistant Commandant for Systems and Chief Engineer, 
U.S. Coast Guard; Steven Weiner, president, Signet Partners; 
Maria Foscarinis, executive director, National Law Center on 
Homelessness and Poverty, and is accompanied by Laurel Weir; 
Steve Perica, director of Arizona State Agency for Surplus 
Property.
    We're going to, if you will--we take the oath, and please 
stand, raise your right hands, and that will include support 
people that also whisper in your ears. So get them all up, and 
the clerk will take their name.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note all who have stood and get 
the names of the assistants.
    We thank you. And just the way we have the routine here is 
we have all had a chance to read the papers, if they got in 
last night, and your written statement is automatically put in 
the record, so you don't have to ask for it. It's done, so is 
your resume. And we'd like you to summarize your testimony in 5 
minutes, if you could, 5 to 6 minutes, and then we'd like to 
open it up to questions, and I want--to not only the members 
here and will be here, but also to bring the issues to point 
with those that are with you at the table. So let us start with 
Bernie Ungar, the Director, Governmentwide Business Operations 
Issues, U.S. General Accounting Office, part of the legislative 
branch, and we depend on GAO heavily for good basic research 
and we're delighted to have Mr. Ungar here.

 STATEMENTS OF BERNIE UNGAR, DIRECTOR, GOVERNMENTWIDE BUSINESS 
   OPERATIONS ISSUES, GENERAL ACCOUNTING OFFICE; DAVID BIBB, 
   DEPUTY ASSOCIATE ADMINISTRATOR, OFFICE OF GOVERNMENTWIDE 
POLICY, GENERAL SERVICES ADMINISTRATION; REAR ADMIRAL RONALD F. 
  SILVA, ASSISTANT COMMANDANT FOR SYSTEMS AND CHIEF ENGINEER, 
U.S. COAST GUARD; STEVEN J. WEINER, PRESIDENT, SIGNET PARTNERS; 
 MARIA FOSCARINIS, EXECUTIVE DIRECTOR, NATIONAL LAW CENTER ON 
 HOMELESSNESS AND POVERTY, ACCOMPANIED BY LAUREL WEIR, POLICY 
   DIRECTOR; AND STEVE PERICA, DIRECTOR OF THE ARIZONA STATE 
    AGENCY FOR SURPLUS PROPERTY, PRESIDENT OF THE NATIONAL 
       ASSOCIATION OF STATE AGENCIES FOR SURPLUS PROPERTY

    Mr. Ungar. Thank you, Mr. Chairman. Mr. Turner, other 
members of the subcommittee, staff, we're certainly pleased to 
be here this morning to help the subcommittee consider the two 
proposals for reforming Federal real property management. I'm 
accompanied today by Donald Bumgardner and Gary Lawson, both 
senior evaluators in GAO. As you requested, I'd like to 
summarize my statement.
    While we have not had time to fully analyze all the 
implications of the provisions of the bills, particularly S. 
2805, we have certainly looked at them and we believe the 
thrust of both the Senate bill as well as H.R. 3285 are in line 
with information that we have reported for over a decade. They 
would certainly help address a number of the problems that we 
have identified and reported on, as well as provide Federal 
agencies the opportunity to adopt and use some innovative and 
best practices that are being used by other organizations.
    I would like to focus on two areas this morning very 
briefly. First is real property leadership. S. 2805 would 
require GSA to take a greater leadership role in Federal real 
property management and require landholding agencies to focus 
accountability on real property management by designating 
senior real property managers. H.R. 3285--in a little different 
vein but in the same general direction--would require GSA to 
establish governmentwide property management measures. These 
provisions are consistent with actions that we have recommended 
as far back as our general management review of GSA in 1989. 
However, we note that S. 2805 does not contain any 
qualification requirements for the senior real property 
managers. Considering the complexity and the diversity of the 
portfolio of assets that the Federal Government controls and 
owns and has to manage, and the complicated nature of the 
transactions that the bill would authorize, we believe it's 
important that the subcommittee consider this and may want to 
add some qualification requirements in terms of experience or 
training or professional certifications for the persons that 
are going to be holding these positions.
    Second, both bills would provide managers at Federal 
agencies that hold land with greater flexibility and incentives 
for better property management. Our work has shown that 
agencies need more flexibility and certainly more incentives to 
manage real property more effectively and in the same vein as 
the private sector is able to do. There are three issues that I 
would like to point out for the subcommittee's consideration 
this morning.
    The first is that S. 2805 does contain a general 20-year 
limit on the outleasing authority that would be granted to the 
landholding agencies. We believe that this 20-year limit could 
limit the usefulness of this tool for the agencies, 
particularly in those cases where you're dealing with a 
historically significant property or a property that might be 
in an economically depressed area. This is because a 
substantial amount of investment would probably be required to 
bring those types of facilities up to date and meet local 
health, and safety and quality standards and private sector 
developers would probably be unlikely to enter into an 
agreement for a period that would be 20 years or less, given 
the need to make an adequate return on their investment and 
have an adequate payback period.
    Second, while allowing agencies to retain the funds that 
they would receive in exercising or using the new tools and 
flexibilities that both bills would provide, that provision, or 
that allowance, would limit congressional flexibility in 
overseeing or reviewing how these funds are allocated among 
agencies, and should governmentwide priorities change, it could 
cause a misallocation. Therefore, the subcommittee may want to 
consider whether the funds ought to be controlled by a central 
organization or by each agency. On the other hand, we recognize 
if the funds were controlled by a central agency, this 
certainly could limit the incentives that go to the individual 
agency. So therefore, the Congress has a tradeoff there to 
consider.
    Finally, although both bills would provide Congress with 
information before and after the individual tools would be 
applied that are authorized by both bills, it's unclear to us 
in both cases what information, what specific information, the 
Congress would receive on how the moneys generated by these 
tools would be used by the agencies. Therefore, we think it's 
very important that the subcommittee explore this area this 
morning and in the future to make sure that it is comfortable 
with the amount of information it's going to receive and the 
oversight and review it will be able to exercise over the 
proposed use of these funds that the agencies retain.
    That would conclude my summary, Mr. Chairman.
    Mr. Horn. Thank you very much.
    [The prepared statement of Mr. Ungar follows:]

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    Mr. Horn. And we now move to the next witness, who is David 
L. Bibb, the Deputy Associate Administrator, Office of 
Governmentwide Policy of the General Services Administration.
    Mr. Bibb.
    Mr. Bibb. Thank you, Mr. Chairman, Mr. Turner, Mr. 
Kanjorski and staff. It is a pleasure to be here today. I'm 
David Bibb, Deputy Associate Administrator for Real Property at 
GSA. With me today, as Dave Barram has said, is Becky Rhodes, 
Deputy Associate Administrator for Transportation and Personal 
Property.
    The Property Act, the law of general application governing 
properties acquired to carry out Federal agency program 
missions, is over 50 years old, as you've indicated. While much 
has occurred over the past half century, the policies governing 
these assets have generally remained unchanged.
    We think it's imperative that our Nation's governing asset 
management policies ensure their efficient and effective 
stewardship on a solid businesslike basis, and we firmly 
believe that enactment of the Federal Property Asset Management 
Reform Act will do just that.
    Briefly, the bill contains four concepts: First, the bill 
deals with life cycle planning and management. Effective asset 
management must consider the entire life cycle of a property. 
However, the present focus of the Property Act is oriented 
toward the disposal phase of the asset. Some agencies lack a 
full range of policy guidance, accountable management 
structures, information on their property holdings, and 
planning processes necessary to manage their property holdings 
effectively in support of their missions.
    Specifically, to deal with life cycle planning and 
management, the bill proposes several things. One is adoption 
of governmentwide asset management principles; another is 
development of strategic real property planning; the third is 
designation by each agency of a senior real property officer 
who would be accountable for the performance of the inventory; 
and fourth would be a statutory basis for a governmentwide real 
property information data base. So that's the first concept.
    The second concept is flexibility to optimize asset 
performance. Federal managers are being encouraged to be more 
businesslike and innovative. However, in our judgment, too 
often when something makes sense, the government simply can't 
do it. The average age of government-owned buildings has 
increased to nearly 50 years. Many of these buildings are 
inefficient and functionally obsolete. Unlike the private 
sector, most Federal agencies have no opportunity to apply any 
value or underlying equity of the property that may reside in 
underused or obsolete property toward meeting their ongoing or 
future facility needs. With few exceptions, agencies are not 
currently authorized to sell, exchange, sublease or outlease 
capital assets that they still need, but which no longer 
support their missions well and to use the proceeds for newer 
replacement capital projects. Agencies lacking sufficient 
appropriations often have to make do with substandard 
facilities.
    To improve this situation, the proposed bill would give 
agencies several new authorities: One, exchange/sale of 
personal property; two, exchange/sale of real property; 
subleasing; outleasing. The bill would authorize agencies to 
outlease to the private sector assets that must remain in 
Federal ownership and underutilized portions of nonexcess 
government-owned property.
    However, I must note at this point that the administration 
opposes the use of such outleases, that is public private 
partnerships, solely or primarily as a vehicle for obtaining 
private financing of Federal construction and repair projects 
for the simple reason that private financing is more expensive 
to the Federal taxpayer than government financing. In this 
regard, the bill permits an outlease/leaseback arrangement to 
the government only when it's less expensive than direct 
Federal renovation or construction.
    The third concept under our bill deals with incentives for 
better property management. Federal agencies lack incentives. 
This has resulted in agencies not pursuing optimal use of 
property and to retaining assets that are of diminished 
functional value to their missions. The Property Act reform 
bill would provide a much needed catalyst for sound asset 
decisionmaking and would permit agency use of proceeds as 
follows: For personal property, it would authorize agencies to 
retain proceeds from the sale of surplus personal property and 
offset direct and indirect disposal costs. For real property, 
it would authorize agencies to retain the bulk of proceeds from 
real property transactions and allow such funds to be used to 
offset direct and indirect disposal costs and in meeting agency 
capital asset needs.
    To strengthen this incentive, the proposed bill would also 
put agencies in charge of disposing of their surplus real 
property, an authority that the GSA administrator currently has 
alone. Agencies, under the bill, will still have the ability to 
use GSA to manage the disposal process and to delegate disposal 
property disposal decisions to GSA if they wish.
    Our fourth concept is to streamline and enhance processes. 
The governmentwide review of the act, which we performed, 
identified opportunities to redefine other sections of the act 
to deliver savings and improve productivity.
    None of these changes is major in our judgment by itself, 
but taken together, they will increase efficiency, deliver 
savings, reduce administrative burdens and streamline asset 
management processes.
    Mr. Chairman, this concludes my statement. I would be glad 
to answer questions when that point comes.
    Mr. Horn. I thank you.
    [The prepared statement of Mr. Bibb follows:]

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    Mr. Horn. And the next presenter is Rear Admiral Ronald F. 
Silva, the Assistant Commandant for Systems and Chief Engineer 
of the U.S. Coast Guard.
    Admiral Silva. Good morning, Mr. Chairman, Mr. Ranking 
Member and members of the subcommittee. I'm Rear Admiral Ron 
Silva, U.S. Coast Guard, Assistant Commandant for Systems and 
Chief Engineer. I appreciate the opportunity to speak with you 
today and thank you for your consideration of the General 
Services Administration proposal to amend the 1949 Property 
Act.
    I am the designated corporate asset manager for the Coast 
Guard as shore facilities. What this means, in brief, is that I 
have the responsibility to ensure that the Coast Guard's shore 
assets are the right sizes in the right place and provided at 
the right cost to enable the Coast Guard to accomplish our 
missions, our visions and our strategic goals. We have been 
working closely with the General Services Administration to 
ensure that our business practices are all that they can be 
under the existing authorities. The forums that the GSA 
provides, especially through their Office of Governmentwide 
Policy, are an invaluable service for landholding agencies to 
compare best practices and discuss progressive concepts, such 
as sustainable development. Their efforts have helped make us 
all better stewards of the property entrusted to us.
    The Coast Guard's process for developing policies to be 
better stewards of the property we hold is called ``shore 
facility capital asset management.'' This initiative is an 
integral part of the Coast Guard's current strategic plan. Our 
shore infrastructure is spread across 1,600 sites and consists 
of over 23,000 buildings and structures. These facilities have 
an average age of 37 years and a replacement value of over $7 
billion exclusive of land value.
    These facilities support 43,000 personnel, 230 ships, 1,400 
small boats and 197 aircraft, as they go about the Coast 
Guard's business of protecting the public, our environment and 
U.S. economic interests. The combined acreage of those 1,600 
sites is only 66,000 acres. The amount of the acreage we hold 
is not large in comparison with many other agencies, but the 
nature of these sites along all of the Nation's ports, coasts 
and waterways, makes them unique and valuable national assets 
deserving of the best care that we can provide.
    Our asset management initiative is an integrated approach 
that will help align the Coast Guard's shore facility inventory 
to operational and support requirements. The guiding principles 
of good asset management take into consideration the entire 
shore facility life cycle which consists of planning, 
investing, using, and disposing of shore facilities and 
infrastructure. We believe the proposed legislation facilitates 
our asset management initiative.
    The Coast Guard's asset management initiative seeks to 
improve our portfolio of real property assets by managing them 
from a life cycle perspective. The following principles will 
guide all of our new capital asset management activities, and 
ensure the best value shore capability for the Coast Guard, 
match shore capabilities mission, keep a life cycle 
perspective, encourage collaboration and feedback, provide top 
down direction, use information technology effectively, and 
foster professional development. Shore facility capital asset 
requirements will be incorporated into all aspects of Coast 
Guard strategic planning. We are working to better link our 
shore capital asset requirements as identified in our agency 
capital plan that is primarily developed from our field 
commanders' Regional Strategic Assessments, our Headquarters 
Assistant Commandants' business plans and our leadership 
council goals.
    We are also pursuing a program to revitalize the master 
planning efforts throughout the Coast Guard. As mentioned, the 
Commandant of the Coast Guard has designated me as the 
corporate asset manager for shore facilities. He did this in 
recognition of the impact that strategic portfolio management 
of real property assets has on the accomplishment of Coast 
Guard missions. This initiative also recognizes the importance 
of a centralized information technology system to manage our 
real property holdings.
    We are currently developing the requirements upon which to 
build this system. These efforts will be closely coordinated 
with General Services Administration to ensure compatibility 
with their proposed governmentwide real property information 
data base. Our current portfolio of real property assets is an 
assortment of inheritances from our antecedent agencies, the 
U.S. Lighthouse Service, the U.S. Lifesaving Service, and the 
Revenue Cutter Service, as well as numerous targets of 
opportunity afforded to us by the Department of Defense during 
their restructuring. This has resulted in a shore plant that is 
not optimally sized or configured to carry out our modern day 
missions.
    I believe that the proposed changes to the Federal Property 
and Administrative Services Act of 1949 relating to the 
exchanges, sales, subleasing and outleasing of real property 
assets will provide us with the flexibility to align our shore 
capital asset inventory with our Coast Guard mission needs. The 
enactment of this legislation is an important step toward 
improving the management in Federal real property assets and is 
required for the Coast Guard to fully implement our SFCAM 
strategic initiative.
    Mr. Chairman and members of the subcommittee, this 
concludes my prepared remarks, and again, thank you for the 
opportunity to appear before this distinguished subcommittee to 
discuss the proposed Property Reform Act bill. I welcome the 
opportunity to address any questions that you or the members of 
the subcommittee may have. Thank you.
    Mr. Horn. Thank you, Admiral.
    [The prepared statement of Admiral Silva follows:]

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    Mr. Horn. We're going to have to recess until 10:50 because 
we have a vote on the floor right now. So we are in recess 
until 10:50.
    [Recess.]
    Mr. Horn. We thank you, Admiral, and now we move to Steven 
Weiner, the president of Signet Partners.
    Mr. Weiner.
    Mr. Weiner. Mr. Chairman and members of the committee, 
thank you very much for giving me the opportunity to speak to 
the two bills before you. My comments tend to be directed 
toward private-public partnerships.
    Signet Partner is a real estate and financial adviser to 
State, local and Federal Government agencies. Our firm has run 
public-private partnerships for the FDIC and RTC. We have 
consulted to GSA in the past on private sector practices and 
portfolio management in public private partnerships, and we 
remain active participants in private real estate investments 
and development projects.
    Real estate partnerships are a way of life in the private 
sector. These partnerships bring together expertise, money and 
business opportunities. It's the way the private sector 
develops real estate. Increasingly, they're used more and more 
by local, State and now Federal Government agencies. They have 
different names, these partnerships do, and they tend to be a 
patch quilt of approaches, each having its own procedures and 
its own bureaucracy, but they all have a common story, 
shrinking dollars from traditional sources of funding.
    The ideal Federal public private partnership has five 
elements. No. 1, selected properties and projects will only 
serve agency space needs with renovation and the prerequisite 
here is that appropriation funds are not available. If you have 
the funds, chances are you don't need to look at a public-
private partnership.
    No. 2, the partnership structure mirrors the private 
sector. As Mr. Barram pointed out, keep it simple, use a 
familiar structure, this will encourage private sector 
involvement.
    No. 3, governmentwide application. Use a common approach. 
This reduces bureaucracies, it motivates the private sector, 
and most of all, it speeds up the process.
    No. 4, the private sector runs the partnership and carries 
the financial risk. The reward to the private sector has to be 
commensurate with the perceived risk, but these tradeoffs, this 
balance is compatible for Federal projects from what we've 
already seen.
    And No. 5, Federal agencies are allowed to retain the 
government's share of partnership proceeds. We need to motivate 
those who are charged with implementation of partnership 
projects.
    With respect to the two bills, the Sessions bill uses the 
successful features of existing authorities, that's existing 
Federal authority. It applies governmentwide. It has a simple 
private sector structure, and it allows flexibility in the 
partnership agreements.
    Now the administration bill, let me start by first 
injecting something that the Admiral and I talked about, and 
that is the administration bill, it facilitates changing the 
mix of the national portfolio. This is really good because you 
have to change the mix on a global basis to be in line with the 
changing needs of government. The portfolio can't remain 
static. So that's a tremendous feature.
    But the closest the administration's bill comes to public-
private partnership is in section 401, having to do with 
outleasing of vacant space to private users. This can be good 
fiscal policy for space that otherwise remains vacant. However, 
if space once renovated could be used by Federal agencies, then 
the bill provides for a 20-year so called outlease to a private 
user. The private user then would renovate the space and lease 
it back to the government.
    Well, there's two fatal flaws with this approach. No. 1, 
the leaseback can only take place if it's found to be less 
expensive than appropriations. To me that's like an oxymoron. 
The point that seems to be lost is increasingly appropriations 
are just not available. The leaseback will almost always be, or 
I should say always will be, more expensive than GSA building 
out the space with its own appropriations. Why? Because the 
private sector has a cost of capital of about 10 percent, and 
the private sector is going to need, perhaps, a 15 percent 
profit margin on a project. That's compared to GSA's cost to 
capital of, say, 6 percent.
    The real issue is, in the absence of appropriations 
funding, is a public-private partnership economically--an 
economically viable alternative for the government. Well, the 
answer is on a case-by-case basis. From what we have already 
seen and from what GAO has looked at, and from other 
feasibility studies that have been done within GSA, the answer 
can be yes. You know, there's an expression about giving 
someone the sleeves out of your vest. I think that's what the 
administration bill does, it gives GSA an unworkable supplement 
to appropriations. It renders GSA to the status quo.
    The other problem, No. 2, with the bill is the 20-year 
lease term. It's just too short. Based on our experience and 
extensive interviews with institutional players and major 
developers throughout the country, across the board, all feel 
that for the kind of projects that they would get involved in, 
the magnitude of projects they would get involved in, they need 
at least 50 years. They need that 50 years to amortize their 
front end investment, and they need that 50 years to allow them 
to have an economic and functional life for the project. A 20-
year lease term just doesn't make it. GAO found much of this to 
be the case in several projects it studied, and probably the 
classic example is Grand Central Station that was done by the 
U.S. Postal Service, where the required lease term was 99 
years. A lease has to act to the private sector as effectively 
the conveyance of fee simple land. It can't have a short fuse.
    So in summary, I've seen a diligent effort by GSA and GAO, 
among others, to identify a workable public-private partnership 
for governmentwide application at the Federal level, but this 
bill fails to reflect that research. Therefore, aggressive and 
continued involvement by Congress and this subcommittee is 
going to be necessary not only to get a workable bill in place, 
but more importantly, to make sure that it's implemented, and 
that those charged with responsibility to implement the program 
are held accountable.
    Accordingly, I recommend, No. 1, that you enact a public-
private partnership as a complement, not as a substitute, to 
appropriations.
    No. 2, that you use a proven and simple private sector 
model.
    No. 3, that you merge both bills.
    And No. 4, that you eliminate portions of the 
administration's bill beyond the simple outlease of vacant 
space.
    I think by combining the two bills, you will have a global 
package that gives the agencies, not only GSA, but other 
agencies, the tools, it's not a panacea, but it is a powerful 
tool that can address situations where appropriations just 
aren't there.
    Thank you.
    Mr. Horn. Thank you very much. And you've raised some very 
good questions.
    [The prepared statement of Mr. Weiner follows:]

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    Mr. Horn. Maria Foscarinis is the executive director of the 
National Law Center on Homelessness and Poverty, and she is 
accompanied by Laurel Weir, the policy director.
    Ms. Foscarinis. Thank you very much, Mr. Chairman, and 
members of the committee. We very much appreciate the 
opportunity to testify. The National Law Center has been 
actively working to implement the Federal Surplus Property 
Program since its inception. We're very familiar with it and we 
appreciate the chance to speak on its impact, the impact of 
this legislation on homeless people.
    The Federal Surplus Property is essential to the national 
effort to address homelessness in America. It is a common 
sense, cost-effective approach and it uses public resources to 
meet an important public problem, the problem of homelessness 
in America. And according to recent estimates, over 800,000 
Americans are homeless on any given night across the country, 
men, women and children.
    Vacant Federal property is a key part of the Federal 
Government's response to homelessness. Just this past year 
alone, over 140,000 homeless persons will be served through the 
property program. Under Title V of the Stewart B. McKinney 
Homeless Assistant Act, which is a major Federal law addressing 
homelessness, groups that serve homeless people, groups that 
help homeless people, which include State entities, local 
governments and private nonprofit voluntary groups, have the 
right to apply for unused Federal property and acquire it 
either through a no-cost lease or deeding, and use it to 
provide services to homeless people from shelters to job 
training to transitional housing, to day care. And just this 
past year, 140,000 people were served at sites across the 
country using these facilities.
    We had prepared a slide show to give the members of the 
committee a more concrete idea of how these properties can be 
put to these good uses. Unfortunately, the room cannot 
accommodate slides, but in your packets you should have 
photographs of selected properties, like the VA Medical Center 
in Los Angeles, which now serves homeless veterans; the site in 
Tucson, AZ, that is run by Vietnam Veterans of America; a site 
in Little Rock, AR that provides transitional housing and job 
training and day care for homeless families. There are several 
more, and there are many more all across the country. These are 
essential to the effort to address homelessness.
    Property is key for many groups that often operate on 
shoestring budgets or cash-strapped local governments seeking 
to address the problem of homelessness in their communities, 
and as the committee members may know, especially during our 
booming, the time of our economic prosperity, our booming 
economy, the cost to property has risen tremendously, and often 
it's access to property that makes the key difference to 
whether groups can actually provide the services they need. If 
a group can acquire vacant Federal property at no cost, that 
will allow it to leverage other resources and to make the 
difference between a program going forward or not going forward 
at all. So this is a very important program.
    Now to get to the draft legislation. We're especially 
concerned about the administration's proposal, and I'll just 
run through that quickly. First of all, the draft legislation, 
the administration's draft exempts property, as we've heard, 
that is leased or sold to a third party if the revenue 
generated is then used to acquire capital assets. Essentially 
what this does is it gives unbridled discretion to the agency 
to create its own fund, what we've called a slush fund, which 
it can use for its own purposes from the sale of property that 
is a public resource and takes away the opportunity to use that 
property for the public interest for homeless Americans, but 
also would take it away from other public benefit uses, as has 
been provided for by the Property Act since its inception. For 
example education uses or health uses. Our particular concern 
is homeless uses.
    There will be no oversight. It's basically the agency's 
skirting their--there is already a process in place. It's the 
appropriations process. That provides for reasoned government 
oversight in the allocation of public resources. What the 
administration's bill would do is take that away and it would 
take it away at the expense of homeless Americans who 
desperately need these resources.
    And I can give you some examples. This isn't just 
speculation. The agencies have been reluctant to comply with 
Title V of the McKinney Act ever since it was passed. In one 
case, for instance, the Department of Veterans Affairs owns 
property, the VA Medical Center in Los Angeles, and rented that 
property out to a movie studio and generated money which it 
then did not use for a public benefit purpose. It was only 
after the National Law Center got involved and we threatened to 
litigate that the property was even put through the McKinney 
Act process as is required by Federal law, and as a result of 
that intervention, the property is now being used to serve 
homeless veterans, and 156 homeless veterans are helped each 
day there with housing, substance abuse treatment and job 
training.
    Second point, the administration's draft would eliminate 
the ability to sue GSA and the other landholding agencies if 
they failed to comply with its provisions. That alone would 
essentially gut this program. And again, this is based on not 
on speculation, but on our direct experience. In order to 
enforce Title V of the McKinney Act, we have had to go to 
court. There is now a court injunction in place enforcing the 
program.
    We've been to court a total of five times so far, most 
recently this past spring, to enforce compliance with this law. 
This past spring we were in court because of what the judge 
said was an effort to get around the law and we had GSA 
internal documents demonstrating that the clear intent was to 
avoid compliance with the Stewart McKinney Act.
    Third, the administration's bill would limit the 
application period for groups serving homeless people to a 
single 90-day window of time. This would severely undermine the 
McKinney Act. It would make it very difficult for providers to 
find out about and apply for the property. It is already very 
difficult as it is. There is an outreach provision in the law, 
and also in one of the court orders, but it has been extremely 
difficult to get the agencies to comply with that. It's hard 
for these providers. Many of them are small grassroots groups, 
run by volunteers. They don't necessarily get the Federal 
Register where these properties are published. It's hard enough 
for them as it is to find out about the program and to get 
access to the property.
    One of the reasons for this provision is to bring finality 
to the process and not tie up property, but we believe that if 
the agencies were to take seriously their outreach obligations, 
then groups would find out about the property--and I'm sorry, I 
guess I'm going on too long, but this is important.
    Mr. Horn. We would like you to summarize. We've got the 
statement.
    Ms. Foscarinis. I'm almost at the end.
    Mr. Horn. Reading it doesn't help us. We want you to 
summarize.
    Ms. Foscarinis. I am. The written version is actually much 
longer.
    Mr. Horn. OK.
    Ms. Foscarinis. The last portion we're objecting to is the 
portion that limits authority to make the property available 
only to groups whose primary function is to serve homeless 
groups. This would effectively eliminate many church groups 
whose primary function is not to serve the homeless, but who 
now use the program.
    These are our major concerns. We also have concerns with 
H.R. 3285 again, because there is a lack of definition in that 
provision, but I will--I know I have gone over, and we'd be 
happy to answer any questions. We'd also be happy to work with 
the committee after the hearing. Thank you very much.
    Mr. Horn. The exhibits you showed are not with your 
testimony. Can we put them in the record with your testimony?
    Ms. Foscarinis. Yes, absolutely.
    Mr. Horn. All right. I'd like to ask GSA and GAO to give us 
a list of the various homeless projects around the country. If 
you have it, fine, but I want it checked by GSA and GAO so we 
have in one place what has happened, and I'm particularly 
interested in the LA case, and to what degree on-the-job 
training are these people getting jobs, and that to me is the 
key, is it training or does it train for a job and how many--
and take your time on that. Just file it with us if you have 
the data.
    Ms. Foscarinis. Sure. We'd be happy to address that.
    Mr. Horn. OK. Thank you.
    [The prepared statement of Ms. Foscarinis follows:]

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    Mr. Horn. OK. We have our last presenter is Steve Perica 
the director of the Arizona State agency for surplus property 
and he's the president of the National Association of State 
Agencies for Surplus Property, and I assume you're speaking on 
their behalf.
    Mr. Perica. Yes, thank you. Mr. Chairman, members of the 
committee, my name is Steve Perica. I manage the Federal 
Surplus Personal Property Donation Program in Arizona and am 
President of the National Association of State Agencies for 
Surplus Property. Joining me today is Scott Pepperman, my 
colleague from the Commonwealth of Pennsylvania and Ann 
McKinnon, colleague from the State of Maryland who also manage 
those programs respectively in their States and commonwealth.
    On behalf of the 56 State agencies, territories and 
possessions that comprise the membership of the National 
Association and the over 60,000 donee organizations that 
participate in the Federal Personal Property Donation Program, 
I wanted to thank you for the opportunity to speak with you. 
The State Agencies for Surplus Property have served as the 
primary conduit for the donation of personal property from the 
Federal Government to the States for over 50 years since the 
passage of the Federal Property Administrative Services Act of 
1949.
    Through the donation program, countless agencies, emergency 
services providers and public safety organizations have 
benefited from property that is no longer needed by our Federal 
Government. The Federal Property Asset Reform--excuse me, I 
have got to get that correct--the Federal Property Asset 
Management Reform Act--too many acts and reforms today--
legislation before you affects the donation program in four 
areas.
    First, subject to regulation, it provides for title passage 
from the Federal Government to the end recipient, which is, we 
term the donee immediately upon the transfer from the State 
agency with no recompliance requirement.
    And second, it cleans up some inconsistencies in current 
statute regarding service educational organizations, replaces 
some outmoded language, and establishes a dedicated category of 
eligibility for food banks and providers of assistance to the 
impoverished and homeless.
    Third, it provides additional incentives, we believe, for 
agencies to bypass redistribution channels for personal 
property through a further expansion of the exchange sale 
authority.
    Fourth, we believe it reinforces these incentives by 
allowing the retention of sales proceeds from the sale of 
undistributed Federal personal property.
    The title passage portion of the bill is our first area of 
concern. We believe that this potentially could create an 
administrative nightmare for the State agencies, the General 
Services Administration, and the donees because it will create 
two distinct classes of property that are transferred through 
the program, first property with compliance, property without. 
Essentially, they could be identical, just separated by 
acquisition or condition.
    So we believe it could be very difficult for the donee to 
figure out what they have up to 5-year compliance or an 18-
month or a 1-year compliance on and property that has no 
compliance restriction period. We're always worried about 
fraud, waste, abuse. We feel that this might be a thing that 
could lead for donees to be confused and make mistakes they 
shouldn't make.
    Second, while--this comes in section 605. The second 
portion of section 605 clarifies our eligible donees, we think 
that's a good idea, cleaning up the language, taking outmoded 
language out of the bill or out of the act, creating the 
separate class of providers for providers of assistance to 
homeless and impoverished is a good idea. It would also help 
clarify it from an eligibility standpoint. We're very much in 
favor of that.
    The personal property exchange sale provision of this act 
we believe will change the face of reutilization by allowing 
executive agencies of the Federal Government to generate 
revenue by circumventing the redistribution system. 
Specifically, section 603 of this bill grants agencies the 
freedom to divest the assets of government, hard assets, things 
our taxpayers have purchased, for services. For example, we 
believe that an agency could take lab equipment that is being 
used in universities and schools that come through the donation 
program, and they could use that to pay for the demolition of a 
building that was housed within that building.
    Redistribution of excess and surplus property has 
historically been our country's first source of supply. It has 
been a central theme of our personal property management 
structure for over 50 years. On the excess level, it prevents 
government waste by allocating the extra resources of one 
agency and allowing another agency to use it. We see the Law 
Enforcement Support program, the Forest Services Excess and 
Personal Property Program, the National Science Foundation's 
programs, USDA programs, all of these passing the assets of 
government around, making the fullest use of the taxpayer's 
dollars.
    Given that currently we believe there's no oversight of the 
exchange sale provisions, we feel that expansion further at 
this point would be premature.
    I realize I'm out of time. In summation, I would like to 
say thank you for the opportunity to allow us to speak today. 
We realize that the majority of the presenters have been 
talking about real property, and we are here talking about 
personal property, and we appreciate your indulgence. Again, we 
would like to take any opportunity for questions from the 
committee and like a further dialog if possible. Thank you.
    [The prepared statement of Mr. Perica follows:]

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    Mr. Horn. We thank you and we have been joined by Mr. 
Sessions, and I need the consent of our colleagues to have him 
sit with us and make a statement and also participate in the 
questions.
    Mr. Turner. No objection.
    Mr. Ose. Can we put that to a vote, Mr. Chairman?
    Mr. Horn. Without objection. Some stern people around here. 
OK.
    Mr. Sessions, if you want a few opening remarks.
    Mr. Sessions. Mr. Chairman, thank you so much. I will tell 
you I appreciate my colleague Mr. Turner, the gentleman from 
Texas, and Mr. Kanjorski, for being on my side today. It is not 
unusual for me, whether it's Methodist church or Rotary Club to 
not have unanimous vote about anything that I'm a part of. And 
I also apologize for being late. I was over with royalty today 
on the Senate side for another bill that I have got that I 
appeared with Senator Kennedy from Massachusetts that I was 
working on.
    I'd like to thank you, Chairman Horn and this subcommittee 
and the members for allowing me to testify today on my 
legislation, H.R. 3285, the Federal Asset Management 
Improvement Act of 2000. I appreciate each of the witnesses 
joining us today to talk about their support and their ideas 
about improving Federal property management. It is my hope that 
this hearing will resolve the billions of dollars in waste that 
are lost each year from underutilized Federal buildings.
    As chairman of the Results Caucus, I have sought to 
highlight the waste, inefficiency and mismanagement found in 
our government and looked for innovative solutions to these 
problems. Accordingly, I have introduced H.R. 3285, the Federal 
Asset Management Improvement Act. This would benefit government 
by turning aging Federal properties that have become financial 
liabilities into modern facilities that are an asset to the 
taxpayer.
    The government is the largest holder of property in the 
United States. Unfortunately, many of those facilities are 
underutilized and unneeded. For example, the GAO has found that 
the Veteran's Administration spends about $1 million a day to 
operate unneeded hospital buildings. Unfortunately, this is 
only the tip of the iceberg.
    As Federal agencies and programs evolve, their facilities 
need changes. As a consequence, government-owned real estate 
often becomes underperforming, inefficient and functionally 
obsolete. The real estate marketplace is constantly changing 
making portfolio management increasingly challenging to the 
Federal Government. The GSA's property inventory has a 
replacement value of approximately $30 billion; 50 percent of 
its government-owned space is more than 45 years old. GSA 
estimates that its current reinvestment needs exceed $4 billion 
over the next 5 years.
    This legislation will correct problems in current law which 
allow these buildings to be--today to be underutilized and 
wasting taxpayer dollars. By partnering government agencies 
with private sector investment interests to revitalize the 
property without lease obligations and debt guarantees by the 
Federal Government. This means that the Federal Government can 
stop wasting taxpayers dollars on empty buildings.
    I appreciate the continuing dialog I have had with the 
administration, GSA and other Federal agencies on this 
legislation, and look forward to working with them to pass much 
needed legislation.
    I want to thank you, Mr. Chairman, for your interest in 
this matter and holding this hearing, and I hope that we can 
highlight changes that are necessary and needed in the law and 
I thank each of the witnesses for their attention today to the 
efficiency of the U.S. Government.
    Thank you, Chairman.
    Mr. Horn. Thank you very much.
    I have one question, then I'm going to turn to Mr. Turner 
and then we'll alternate 5 minutes per person. What I want to 
know just going down the line is what do you feel is the proper 
number of years for a lease term, and what's your rationale 
behind it, if we can do it very succinctly? Yes, let's start 
with GAO.
    Mr. Ungar. Mr. Chairman, I don't have a magic number. I 
think for the situations that we're talking about here with 
partnerships with the private sector, it certainly would be 
enough years that the private sector would find it advantageous 
to enter into the agreement, and in those cases where I 
indicated where we're dealing with special properties that 
needed a substantial investment, it's more likely to be more 
than 20 years and maybe more than 30 years obviously.
    Mr. Horn. So you would do 30.
    Mr. Ungar. At least that, and probably more in those cases 
where we're talking about historical properties or properties 
in economically depressed areas that require a substantial 
amount of reinvestment. In those cases, it may have to be 
beyond 30, but there ought to be probably a general rule and 
Congress can control that by perhaps saying if it's more than a 
certain amount of time, because it's 30 years, having some kind 
of a special process within maybe GSA or elsewhere to approve 
it.
    Mr. Horn. Mr. Bibb, how about you?
    Mr. Bibb. Well, Mr. Chairman I think my answer would depend 
upon the use that you're putting the property to. Certainly if 
you're talking about simple vacant space within a Federal 
building, a 20-year term to recover the amortization and space 
improvements would be fine. If you're talking about the type of 
full blown public-private partnership that Congressman Sessions 
has proposed where you are dealing with complete renovation of 
a building, I agree with some of the comments that Mr. Weiner 
made, that the longer the term, the more like ownership--more 
like an ownership position that the developer for the 
development entity has, probably the better rates you can get. 
So I can't give you an exact number. We've proposed either 20 
or 35 years, depending upon the situation, but we've also 
recognized that the legislation is not really intended to 
develop property for leaseback for Federal agencies. I think if 
you're going to do that economically, it would take a longer 
term.
    Mr. Horn. Admiral.
    Admiral Silva. Mr. Chairman, my comments are very similar 
to the first two witnesses and the statement made by Mr. 
Weiner. I really don't have a lot of practical experience with 
this, but I believe that it should be looked at on a case-by-
case basis or a category-of-use by category-of-use basis. And 
that's all I have, sir.
    Mr. Horn. Mr. Weiner, how about it?
    Mr. Weiner. The timeframe has to be, for a project of any 
consequence, at least 50 years. Thirty-five years that the VA 
has used has limited the size and scope of a number of 
projects. The developer--the private sector developer that goes 
into a partnership goes in thinking about its exit strategy. 
That's the nature of real estate business. The developer wants 
to be in for 3 to 5 years, maybe 10 on a complex project, and 
then sell its interest to a long-term player like a pension 
plan or a life company. They need a long lease term so they 
have something to sell as part of their exit strategy, and even 
35 years is just too short for major projects.
    Mr. Horn. Ms. Foscarinis, what are your feelings on this?
    Ms. Foscarinis. I don't think we have anything to say on 
this particular provision since that's not really our concern.
    Mr. Horn. OK. Mr. Perica--you finished on that?
    Ms. Foscarinis. Yeah.
    Mr. Horn. Mr. Perica.
    Mr. Perica. I believe the National Association would not 
have any input on this particular provision.
    Mr. Horn. Now, is your group primarily on personal 
property, not the real estate?
    Mr. Perica. Not on the real property at all.
    Mr. Horn. So you don't have an opinion either on this then?
    Mr. Perica. No.
    Mr. Horn. OK. Well that's one thing I think we have got to 
deal with, so I was interested in what you have to say on it.
    I now yield 5 minutes to the gentleman from Texas, Mr. 
Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    It seems clear to me when I look at the comparison between 
the GSA draft bill that's already been introduced in the Senate 
and H.R. 3285 that it presents several very key and critical 
issues that we have to resolve. I know suggestion was made a 
minute ago that perhaps some of the provisions could be merged, 
but when I look at the comparison, there are pretty clear 
conflicts in what the two bills would propose to do, and I 
think that we need some comment on that.
    I don't know how many of you have looked at the comparison 
that I have in my hand. I don't know who put this together, if 
staff did, but I think it would be helpful for our witnesses to 
look at that and give us our thoughts on the differing 
approaches to the problem.
    And I guess to get ahold of one that maybe is a little more 
manageable, I found it interesting here, the testimony on the 
provision of the law regarding the homeless. And perhaps Mr. 
Bibb is the one to ask the question, but I'd like to know a 
little bit more about what the controversy was in the case 
involving the Federal courthouse in Lafayette. Because, 
obviously, there seems to be a problem in this area that we 
probably have an obligation to ferret out and to try to 
resolve; and, obviously, the two bills even deal with that 
issue a little differently. Could you give us a little history 
on that and what the conflict is and why that conflict arises 
apparently more often than we would like?
    Mr. Bibb. I'd be glad to. Would you like me to start with 
comparison of the two bills or move to Lafayette?
    Mr. Turner. Perhaps you could tell us how the two bills 
differ, and then maybe that will work into your discussion of 
what happened in Lafayette.
    Mr. Bibb. OK. Just briefly, there are areas where the bills 
are very compatible. The GSA bill is broader in that I 
represent the Office of Governmentwide Policy, and the bill has 
been written to affect all agencies who are covered by the 
Federal Property Act. Congressman Sessions' bill, although it 
does allow for the GSA administrator to delegate certain 
authorities, is aimed more at the GSA inventory, which is 
really only one-tenth of the total Federal inventory of real 
property.
    So our bill is broader. We have pieces on sound life-cycle 
planning and management, like the appointment of a senior real 
property officer. We think this front-end planning phase is 
important. That's not to say that Congressman Sessions wouldn't 
agree with that, but we have actually placed that into the 
bill.
    We have a broader variety of tools. In addition to 
outleasing, we have sale exchange, retention of proceeds if a 
property is sold, and public-private partnership, as we have 
discussed.
    Congressman Sessions' bill is very broad, intended for 
broad use by Federal agencies in leasing back either the 
renovated or newly constructed facilities. Our bill was 
submitted in recognition by the administration that because 
cash on the barrel is a less costly alternative than financing 
from the private sector that we would not use that or would not 
recommend using that as a major tool for meeting Federal space 
needs.
    And then Congressman Sessions has a broad section on 
governmentwide performance measures which we do not have in our 
bill. We like performance measures. In fact, we've been leading 
a governmentwide effort to begin to compile those from agency 
to agency. We've been doing that voluntarily and would, 
frankly, like to pursue that. But the inclusion of performance 
measures in our bill is something we don't have there, but 
certainly we could discuss.
    So I think the thrust is to get the agencies to manage 
their assets better, and there are varying tools in the two 
bills, but the idea is common, I believe.
    On the homeless issue, I would like to make just--if I 
could have just a couple of minutes to respond to Ms. 
Foscarinis' concerns and questions--is that acceptable? And 
then I'll move to the Lafayette.
    Just in perspective, and we will submit the records we have 
on transfers to homeless groups, our numbers, the numbers I 
have with me show over 60 properties valued at over $60 million 
since the act was passed.
    We believe by introducing incentives into Federal real 
property management that we're going to create a climate where 
more properties are identified for a variety of different uses, 
whether it's sale exchange, either limited or more full public-
private partnerships, for sale for retention of proceeds, and 
as unutilized or underutilized. This means homeless groups get 
an opportunity at the property. So I envision more, not less.
    Another point I'd like to make is simply the huge magnitude 
of the Federal inventory. We have in all agencies 3.2 billion 
square feet of space. That's a staggering number.
    Just to put it in perspective, if you take the Washington, 
DC, market from the Dulles corridor to Rosslyn to downtown 
Washington to Bethesda, there's some 22 million square feet in 
the Washington, DC, market of commercial space. The Federal 
Government owns approximately 14 times the amount of space as 
in the entire Washington market.
    That's not all in office buildings. A lot of that is in 
storage, special space. But the point I'm making is, it is a 
huge inventory, almost beyond the ability to grasp it; and 
within that kind of inventory my feeling is there are all kinds 
of opportunities for everybody to play here. There are lots of 
opportunities for public benefit discounts for park land and 
that sort of use. There are lots of opportunities for homeless 
groups to acquire properties, and there are lots of 
opportunities for the Federal Government to recoup or take 
advantage of the equity in their properties and do something 
with them.
    I'm not going to comment about each of the factors that 
were identified as being in the bill. Some of them I'm a little 
mystified by, such as the taking away----
    Mr. Horn. Would you mind sending us a letter on this that 
we can put in the record at this point?
    Mr. Bibb. I certainly will.
    One last point on that. I would say I'm a little surprised, 
genuinely surprised. We felt that we had coordinated the entire 
bill with the--Ms. Foscarinis' group through both the Domestic 
Policy Council and HUD and had, in fact, offered an annual 
payment from property proceeds in lieu of a claim on each and 
every property. So I'm surprised. I felt like we'd reached 
agreement. Obviously, we hadn't; and we'd be happy to work to 
resolve those.
    On the Lafayette case, I don't know the details other than 
at just a very surface level; and I'd be glad to provide that 
for the record.
    Mr. Horn. Without objection, it will be put in at this 
point.
    Mr. Bibb. My understanding is the disposing agency--in this 
case it was a public building service property, a GSA 
property--that the folks dealing with the disposal of that 
embarked on using a piece of the--not a piece of the Property 
Act, an older Surplus Property Act. Whether they should have or 
not, I don't know. As I understand it, it's been in court; and 
the court will resolve that.
    Mr. Horn. We have a vote on the floor, and so I'm going to 
ask Mr. Ose--5 minutes for questioning. And then we'll go over 
to the floor, and we'll be in recess until probably 10 after 
noon, and we'd like you to stay for the questions.
    Ms. Foscarinis. Mr. Chairman, perhaps we could respond then 
in writing if we're not going to--if we don't have an 
opportunity to respond now to your questions about Lafayette.
    Mr. Horn. If you could file it for the record. Thank you. 
We'll put it at this point.
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    Mr. Horn. Mr. Ose.
    Mr. Ose. Mr. Chairman, I don't need the 5 minutes. I can 
submit my question in writing.
    The question--that really boils down to, I have a copy of a 
letter dated February 24th signed by Jacob Lew suggesting that 
agencies retain the excess proceeds from a redeployment of 
their real property assets, and that is reflected in the GSA's 
draft bill also. And I guess my question would be, is why would 
Congress not retain discretionary authority over an 
appropriation? I don't understand the logic behind giving the 
agencies the discretion over the recaptured proceeds. So I will 
submit a question in the interest of time.
    Mr. Horn. You might want to do it now while the Federal 
officials are here.
    Mr. Ose. Paul may have some questions, and I'd be happy to 
defer to him. I'd be happy to submit it in writing.
    Mr. Horn. OK. Any other questions?
    Mr. Ose. No. It was just very structural in nature.
    Mr. Horn. Gentleman from Pennsylvania, Mr. Kanjorski, 5 
minutes for questioning.
    Mr. Kanjorski. I don't know if we're going to have 5 
minutes, but I'll try and be prepared when the next bell goes 
off.
    Sitting here and listening to the testimony today and some 
of the Members' questions, it seems to me that we really have a 
hearing on three distinct areas, and that is, one, the handling 
of surplus real estate for nonreuse of the Federal Government. 
And that is a problem, and we should address it as a problem. 
Then we have Mr. Weiner's position of using the private sector 
to avoid immediate appropriations and provide for the needs of 
the Federal Government in a leasing operation, which is I think 
acceptable.
    Mr. Horn. Let me interject and say, when Mr. Kanjorski is 
done, we will be in recess until 10 after 12.
    Mr. Kanjorski. We should study that as to its ramifications 
governmentwide. And then, of course, we should examine the 
private property problem, and how it impacts on everything from 
the HAP program to the homeless program to the State program, 
which is very complicated.
    I think that in listening I'm not sure that all of us 
understand how big a problem we're talking about and how large 
a ramification it is and why it should take a great deal of the 
attention of the Congress to work with the Federal agencies to 
do it.
    First, I would compliment GSA. I've worked with them over 
the years. They have very frustrating problems where they can 
do things that are effective and efficient, but they don't have 
the legal authority to do it and, very often, a very valuable 
piece of Federal property will go literally to waste because 
there's no way under the existing authorities of the law to 
handle the problem.
    Two, there's a tremendous turnover in government, so we 
lack sometimes institutional memory, which is a big problem.
    Three, we do not have transparency of the Federal inventory 
of property because there's literally no way to know all the 
property of the Federal Government that's available both in the 
nature of real estate and personal property. So that there 
develops a culture within the reuse of the property community 
that has to be watched out for because it could eventually 
cause abuse and fraud and mismanagement. I think every 
administrator that I've been working with at GSA has struggled 
with it, every property person has struggled with that, and I 
think that's what our friend here from the State agencies 
talked about.
    It is very nice to limit the timeframe in which you control 
property, 18 months or 5 years. But in some communities you 
find people going to work using the State system. They get a 
piece of property, and if the day after they have that property 
they can pass it off as a private transaction, they will go 
into business for themselves. Then you have a problem diverse 
across the country of small communities versus large 
communities, sophisticated States and unsophisticated States 
and the balance of those assets going back.
    And then, finally, particularly in the real estate field, 
if you look at the map of the United States and you take the 
Mississippi as the dividing line, two-thirds of the land mass 
West of the Mississippi is Federal property. Now that property 
was either acquired by purchase or development; and the 
question is, who in the Federal Government should benefit from 
it? Who in the various States should benefit from it?
    I think I made a point the other day addressing this issue 
that in the buildup of the cold war, States like Pennsylvania 
who are not well-known for industrial--military industrial 
complexes or military installations didn't receive the economic 
largess of the Federal Government, but it was a war effort. Now 
that the Third World War has not been fought and the cold war 
is, for all intents and purposes over, all these Federal 
assets, both in the Defense Department and the Energy 
Department, which amount to hundreds of billions of dollars in 
assets, how should they be disposed of in an equitable way to 
the taxpayers who put in the money to pay for it?
    Well, if you are going to give it to the communities or to 
the States where the property is located, you're going to find 
out that probably a third of the property goes to the South, 
and the other third or 40 percent goes to the West, and maybe 5 
or 10 percent ends up in the rust mill of the Midwest or 
Northeastern part of the country; grossly unfair distribution 
of assets.
    As a matter of fact, in our base closing policy that we 
activated several years ago, it was a perfect example of what 
really was a detrimental occurrence. You have distressed 
communities of the United States that do not have Federal 
property or Federal investments that can be reutilized, and yet 
you have very wealthy and very successful areas in the United 
States that have the benefit of a growing economy because of 
the largess of the Federal Government investment. And then, 
when we closed the bases, we handed these facilities over to 
these States and these localities. So that the disproportionate 
fact is Texas and California got superindustrial parks with 
airports and warehouses. The Midwest, to a large extent, and 
northeastern Pennsylvania got very little.
    So it was a negative hit in an economic development sense 
toward the States that didn't benefit from the largesse of the 
buildup of the cold war. And now when we build down we lose 
again, and I think that's something to look at.
    In listening to the homeless organization, I think that's a 
problem that can be solved, and I calculated in my mind about 
$4 billion would house all 800,000 homeless people. That should 
not be a holdup. In a lot of instances, while we did act 
sympathetic, we gave rights that now cost us hundreds of 
millions or maybe billions of dollars of losses to protect 
those rights.
    Anyway, I think these issues are very large. I think they 
certainly warrant further hearings and examination, and I am 
certainly available to work with all my friends on that.
    Mr. Ose [presiding]. Congressman Kanjorski, could we 
recess? We'd be happy to come back for questions. So we're in 
recess until 12:10.
    [Recess.]
    Mr. Horn [presiding]. Subcommittee will come to order.
    Let me ask you, just down the line, the administration's 
bill would authorize agencies to retain and spend proceeds from 
the sale of real property assets without further authorization 
or appropriation. While creating an incentive, this approach 
reduces Congress' ability to oversee these funds. I'd just be 
curious how you think about that.
    Mr. Ungar.
    Mr. Ungar. Mr. Chairman, we certainly think that this is an 
issue that the subcommittee needs to address. It was one of the 
concerns that we certainly had when we looked at the bill. 
There's no question in our mind that the agencies need to have 
a source of funds in addition to appropriations for repair and 
alterations. We found that across government, including in DOD, 
VA, GSA, and other agencies.
    The question is how far you want to go with that, and I 
think that's up to you. One possibility would be to require a 
plan in advance as to how the agencies want to spend the 
proceeds and then having some kind of report at the tail end as 
to how they actually did.
    There is a requirement in one of the bills for a report 
after 5 years from GSA and also a review by GAO. That would 
certainly help, but that's a long period of time to go without 
any congressional oversight.
    Mr. Horn. Well, as you look at--and I don't know what 
comparisons the GAO has on it--but how can Congress ensure that 
proceeds from the sale of real property assets are 
appropriately spent by the Federal agencies? What is the 
process now? I know we're probably short on preventive 
maintenance.
    Mr. Ungar. I'll start, and maybe Dave Bibb would like to 
add on. I know right now for the larger dollar projects there's 
a prospectus process, at least in GSA's case, whereby for 
projects that involve $2 million or thereabout, GSA has to 
provide what's called a prospectus, or a plan, to the 
appropriate House and Senate authorizing committees. They would 
review that plan. The plan looks at the need for the project, 
discusses alternatives, and then explains how GSA arrived at 
the decision it did. This provides both Houses of Congress and 
relevant committees with background information and details 
which they can then decide upon.
    While the processes in these bills would provide 
information front for the actual use of the tools, such an 
arrangement is not identical to the prospectus process, but it 
at least would give you some information. Where it's a little 
unclear is on the tail end. Once the agency goes through the 
transaction and has the money in a capital account, what 
oversight does Congress have there? And it's at that point 
where we think there needs to be some information coming to 
Congress on perhaps the planned use and then something on 
actual use.
    Mr. Horn. Mr. Bibb, and I guess Admiral Silva also, with 
all of the property you have, what are your thoughts on the 
approach suggested by the General Accounting Office that would 
require proceeds from the sale of property to be deposited into 
a centrally managed account?
    Mr. Bibb. Mr. Chairman, I think we're not particularly in 
favor of a central account simply because we're trying to 
encourage responsible asset management by each Federal agency. 
We'd prefer to see individual accounts.
    We do think some controls are needed. There are some 
controls in the bill, such as specifying what the amounts in 
that fund could be used for, but I expect that is an issue we 
need to have extensive discussion about before the bill is 
finally passed. I believe central control--the government is so 
big in its real property inventory that I'm not comfortable 
with one place making decisions on each and every transaction.
    Mr. Horn. I take it in your development of it you would 
want to place the responsibility on the chief operating 
officer, chief executive of the particular department or 
agency?
    Mr. Bibb. The bill would provide for a senior real property 
officer, and that's where we would like to place the 
accountability, yes.
    Mr. Horn. And that would essentially be in the Treasury?
    Mr. Bibb. That would be an officer in each agency 
responsible for prioritizing and accountable for the spending 
of that money.
    Mr. Horn. And it would be deposited in the Treasury in some 
account I take it?
    Mr. Bibb. Yes. There would be agency accounts established 
within the Treasury.
    Mr. Horn. Yes. And the use of it would simply be whether 
the chief executive or chief operating officer signs off on it 
or delegates it?
    Mr. Bibb. As long as it's used for the purposes specified 
in the bill.
    Mr. Horn. Do any States have this type of process, do we 
know?
    Mr. Bibb. I don't know the State process on that particular 
piece. We have talked with the States about using some of the 
other tools in the bill but not on that particular one.
    Mr. Horn. You might want to check if the GAO could on--with 
the State of California and the State of New York, they have 
extensive real estate, and how do they handle the maintenance 
which everybody seems to want to avoid? And when we looked at 
one university in California they had $4 billion in back 
maintenance that they hadn't done. They just let that account 
go. So now they have a real problem, to say the least.
    Well, any other thoughts here on this issue?
    Admiral Silva. Yes, Mr. Chairman.
    As we strive to be leaders and innovators in real property 
management, the more tools that a land holding agency has I 
think that is good. But I also think that having some kind of a 
measured and controlled way where the agencies can retain some, 
if not all, of the proceeds from the real property transaction 
will provide some incentives. I think that a lot of the 
agencies need to not only have incentives but be able to 
reinvest through good initiatives into opportunities that make 
sense. To your point about the maintenance backlog growing, the 
opportunity to divest or through constructive reuse of 
facilities as to possibly avoid those costs, those maintenance 
costs.
    I think it provides a great incentive, particularly as you 
move into good asset management through the Federal Government.
    Mr. Horn. Let me ask you about Governors Island. We have 
had a hearing up there, and the Coast Guard for a while had 
custodianship. Do you still have it?
    Admiral Silva. Yes, sir. It's funded--protection and 
maintenance funding is provided by GSA. But in our partnership 
agreement we still have resources that provide the protection 
and maintenance on Governors Island and carrying on the 
stewardship through the disposal process.
    Mr. Horn. Well, where are we on that process? Last I knew 
we had the city and the State and some universities that 
perhaps wanted to use it.
    Admiral Silva. GSA should probably speak to that issue. 
They're the disposal agent. The process is, to my 
understanding, continuing; and that's the extent of my 
knowledge on it.
    Mr. Bibb. Thanks a lot, Admiral.
    Mr. Chairman, I don't have that information. I'm not in the 
operational side of GSA, but we will certainly----
    Mr. Horn. Can we get a statement as to status of where we 
are, just for the interest of it all? Does anybody have any 
thoughts over here on that particular question of deferred 
maintenance and central accounts versus agency accounts?
    Yes, Mr. Weiner.
    Mr. Weiner. Just one brief comment that Mr. Sessions spoke 
to waste in the use of the existing inventory----
    Mr. Horn. Pull it toward you, the whole works. Horrible 
microphones in this building.
    Mr. Weiner. Just as Mr. Sessions spoke to waste in the 
operation of the current inventory, there is the potential that 
the proceeds that are retained by individual agencies could 
also be subject to waste. What is needed, though, is an 
incentive within the agencies to motivate the agencies to 
participate. So with a properly designed program that has 
accountability and addresses the sources of where these 
proceeds are going to come from and what the end intended uses 
are, subject to some oversight or review, perhaps by this 
subcommittee, then you have the checks and balances that can be 
a successful program.
    Mr. Horn. Any other thoughts, Miss?
    Ms. Foscarinis. Yes. I would like to point out two things. 
One is that this process would represent a major shift in 
Federal policy away from using these resources for public 
benefit uses and toward using them for--to serve the agencies' 
specific interest. I think maintenance is important, clearly 
maintenance is important, but providing for maintenance at the 
expense of this shift in policy I don't think is appropriate. I 
also think it provides an incentive for agencies to dispose of 
property, again, potentially at the expense of other uses of 
these resources.
    Mr. Horn. Mr. Perica.
    Mr. Perica. With respect to retention of sales proceeds, we 
have a couple of thoughts, both from the personal property side 
and the real property side.
    One, we'll echo the thoughts on accountability. We believe 
that you all do a really good job of taking care of figuring 
out where you want the taxpayers' money to be spent, and we 
feel that the Federal agencies may not be concerned with the 
full aspect of what the taxpayer wants, more to the point of 
what they're trying to accomplish within their agency.
    We feel by allowing retention of proceeds and that in that 
particular function of government of allocating those resources 
is taken out of your hands, and we're somewhat concerned over 
that, with respect to the accountability. That's about it with 
respect to real and personal property, if that makes any sense. 
Thank you.
    Mr. Horn. Now, Mr. Kanjorski was questioning the witnesses 
when we broke for the four votes. Did you get all 5 minutes in?
    Mr. Kanjorski. I'm not sure if I did, Mr. Chairman, but I'm 
willing to take another 5.
    Mr. Horn. Well, one person hasn't had a chance here, Mr. 
Sessions, 5 minutes; and then back to Mr. Kanjorski.
    Mr. Sessions. Also, Mr. Chairman, I recognize that I have 
been given the opportunity to be here today as a result of the 
favorability of this committee. I would be very pleased to 
yield my time to the gentleman. I'm not trying to consume----
    Mr. Kanjorski. If you have questions, go ahead.
    Mr. Sessions. That will be fine then. Thank you, Mr. 
Chairman.
    I would like to direct my comments to Mr. Weiner, if you 
could begin, and Rear Admiral Silva and Mr. Bibb.
    I'm interested in specifically those things that deal with 
H.R. 3285, which is my bill. If you could take just a minute--
because I know that we've heard a lot of testimony today. If 
you could kind of paint a picture about if this became a law 
what would happen, the dynamic nature of what this would do to 
the marketplace and to the realization of helping the 
government. Or, in your opinion, Mr. Bibb or Mr. Silva, if you 
believe that there's a downside, if you would, or Mr. Weiner, 
if you see a downside to it, also.
    Mr. Weiner. Well, this is not a panacea, and we're talking 
about your bill specifically.
    Mr. Sessions. My wife tells me that every day, that I have 
some good ideas, but it's not everything. I must confess to you 
I'm used to hearing this at home, too.
    Mr. Weiner. Well, I'm trying to make you feel at home.
    Mr. Sessions. Thank you.
    Mr. Weiner. It's a tool, and not all properties would lend 
themselves to a partnership approach. But the point is, if you 
have the choice of letting a property sit underutilized, being 
a budgetary liability instead of treating it like a financial 
asset, that is waste; and if that particular property can serve 
a need of a Federal agency and if its location and its other 
amenities make it attractive for private investment, then 
you're going to turn a liability into an asset which will 
produce income, not drain income, to the Federal Government.
    So if the projects are properly selected--and I can't 
emphasize that enough, that this may apply to less than 10 
percent or 5 percent of the national portfolio--but if it's 
there and it can be utilized, then it will have a tremendous 
benefit.
    The current prospectus program that's used for 
appropriations, that can take at least 3 years, often more for 
major capital projects; and by the time those projects are 
approved, money is appropriated, the need has shifted. The 
money's been appropriated. We really don't need it. Gee, we 
better spend it or we're going to lose it.
    So things are just really inefficient the way they're 
currently conducted. Again, this is viewed as a supplement, not 
a replacement to appropriations.
    Mr. Sessions. And do you believe that the marketplace, 
people who are engaged in this business across the country, 
would view this as being favorable?
    Mr. Weiner. Absolutely. We interviewed many of the large 
investors and developers years ago; and, if anything, the 
situation has improved where developers are squeezed or pressed 
to find projects that will drive the kind of returns I'm 
convinced these public-private partnerships can produce at the 
Federal level.
    Mr. Sessions. One thing in addition that I believe you and 
I spoke about--and it was my view, you did not have to agree--
but this helps us use an existing supply of buildings that we 
have, rather than going out and rebuilding.
    Mr. Weiner. Absolutely.
    Mr. Sessions. It helps us with a term that we all know, is 
urban sprawl. It helps to utilize very carefully those things 
that are, many times, on bus routes, in inner cities where we 
already have goods and services, where we already have 
infrastructure around those areas. And I think that that's a 
real advantage, and I hope it will be seen this way by the 
marketplace.
    Mr. Weiner. And to embellish that point, in some situations 
that I'm familiar with, the local governments view that as an 
incentive to urban renewal, that it can help facilitate their 
urban renewal plans by seeing the renovation of Federal 
facilities. So it really has a lot of local public policy 
benefit potential.
    Mr. Sessions. That which one time was a diamond or a jewel 
could still be that in the current place by someone else, and I 
think that that's an advantage.
    Admiral, do you have any comments related to either of 
those questions?
    Admiral Silva. Yes, sir. As I said before, I'm looking for 
all the tools that I can get to manage our shore assets better. 
However, I think that the tool of the public-private 
partnership for the Coast Guard is a limited tool, limited use 
tool from the prospective of we have very few large facilities 
and very many very small facilities, that I'm just wondering 
whether it would be that the tool of public-private 
partnerships would be applicable and economically advantageous 
to you.
    As I mentioned, we have like 1,600 sites in my opening 
statement, which we have 66,000 acres of property. So most of 
our assets are 25-person small boat stations up and down the 
coast and on the rivers and so forth; and I'm not sure that 
that tool, while we'd be able to use it to a certain extent, 
would be the total solution for the Coast Guard.
    Mr. Sessions. Good. Thank you.
    Mr. Bibb.
    Mr. Bibb. Mr. Sessions, from a parochial standpoint I think 
it's a terrific real estate tool and would have broad 
application, but I recognize and I think this committee has to 
look hard at the broader issues, and it's in the context of the 
broader budgeting issues that we have to look at this.
    In February, the Director of OMB wrote a letter to Chairman 
Horn expressing the administration's position. That was not 
done lightly. I can assure you there was a lot of discussion 
within the administration about whether this tool was the way 
to go or not.
    The bottom line was the administration felt that it could 
not endorse a tool which is second best in terms of budgetary 
impact. We would all agree that cash on the barrel is the least 
expensive alternative--pay cash for your renovation on your 
facility. And, ultimately, a decision was made within the 
administration to recommend as a matter of policy to the 
Congress that we go with the second-best alternative would not 
be, within the context of the larger budget debates, the 
responsible thing to do. So, from that standpoint, it was not 
offered up, but it was certainly looked at hard.
    And again, from a very selfish standpoint, I would love to 
have the tool to run a real estate program with. It's just this 
larger context----
    Mr. Horn. Without objection, I would like to put in the 
record at this point the letter to which you referred from the 
Director of OMB to myself and a copy to Mr. Turner dated 
February 24, 2000.
    [The information referred to follows:]

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    Mr. Sessions. Chairman, I would like to thank the witnesses 
that we've had today. I believe each and every one of them have 
brought forth not only compelling arguments but it's been done 
so in a very forthright manner, and I appreciate not only their 
indulgence on this matter but also my colleagues on both sides 
of the aisle to be here today on this important issue. I yield 
back.
    Mr. Horn. Thank you.
    The gentleman from Pennsylvania, Mr. Kanjorski, for 5 
minutes.
    Mr. Kanjorski. Mr. Chairman, I'm going to give an example 
of sometimes how you can't make an evaluation whether something 
is more efficient being done by the appropriation method or the 
lease-back private partnership.
    In my District, I have an experience where we have a 
beautiful GSA-constructed facility, a computer facility for the 
Social Security Administration. It's well designed, well-built, 
but it took 10 years from the point where we appropriated and 
authorized the construction until final construction.
    On the other hand, I have an example of an old brewery that 
was in existence and abandoned for 20 years, and the post 
office needed to expand its facility. And in an arrangement 
between the GSA, the post office and a private partnership, 
work was completed within 2 years----
    Mr. Horn. What city was that in?
    Mr. Kanjorski. Wilkes-Barre.
    Mr. Horn. Wilkes-Barre.
    Mr. Kanjorski. And if you looked at the 8 years of delay 
and tie-up of funds and you amortize that value on the front 
end cost, you may actually find out that the private 
partnership in reconstruction rehabilitation was a much cheaper 
investment for the U.S. Government. And so I am delighted that 
we have the issue, but I think it is a very complicated issue.
    I particularly have worked very long over the last 5 or 6 
years with the Department of Energy. The Department of Energy 
has identified approximately $50 billion worth of excess assets 
amounting to 12,000 real estate locations and 4,000 warehouses. 
I'm embarrassed to say most people don't know what's in those 
warehouses in terms of actual equipment or value or reuse 
potential.
    If we were to perhaps go as broad as we are going now 
without the protections, the fear that I would have with the 
turnover of the high administration people over 2 years in the 
Federal departments, nobody would have an institutional memory 
or knowledge of what's going on. And there is a culture that 
would grow, just as the Beltway bandits have grown up to become 
contractors of the government. If you turn loose $100 billion 
worth of property for reuse reallocation sales, you're inviting 
that without really adequate control and oversight by the 
Congress and the agencies and someone with that institutional 
memory.
    So I would like to see the process move forward but with a 
little more involved hearing processes and field examinations 
and really getting out there and working with these people.
    And, ultimately, if I had my way--you know, we've heard 
such a divergence of testimony of different interests and 
potential happenings, everybody with the common end, we want to 
get a better bang for the buck for the Federal taxpayer, but 
the question of how to get it done remains. It seems to me, 
just by calling this hearing, what you succeeded in doing is 
showing how multifaceted the problem is. And in order to iron 
out these differences maybe we have to break the bills up into 
two or three, concentrating on real estate, concentrating on 
avoiding the appropriation process and going through the 
partnership process and how to handle personal property.
    But it would seem to me a roundtable discussion on these 
various aspects, allowing more concentration and greater focus, 
would be very helpful. In this discussion, the real people and 
those in the audience here that have the insight and knowledge 
of what's going on could have their information and knowledge 
used in the structure of the legislation to go forward.
    But I think we have to--to the best of my mind is--identify 
Energy, Department of Defense and probably GSA as the major 
property people, and they hold excess property well over $100 
billion. I couldn't even estimate it.
    If we pass this bill, it would seem to me--give an example 
to the Admiral here. I represent a development company, and I 
come to you, and I say, you've only got 66,000 acres of land, 
but they're on the East Coast of the United States, Florida to 
Maine, and the West Coast of the United States, Seattle to San 
Diego, awfully nice. I just spent a week in Florida at one of 
your installations, right near it, 166 acres at a little inlet, 
a little Coast Guard station, a doctor's inlet I think it is; 
and I sighted about 10 acres of land that would be beautiful 
for a 300 to 400 apartment condominium.
    Now, I have this bill. I want to rent that land from you. I 
want to put up the 300 condominiums, and you're going to derive 
out of that, say, the value--pick a figure--$10 million, and 
you don't have to do anything with it. And the commander would 
like another jet plane. He says, hell, I just trade this little 
lease off, and I got myself a jet plane.
    And I think that's a problem. I think if you magnify that 
problem what it could be--maladministration, misadministration 
or lack of information--could be a catastrophe. And I think, in 
anything we do like this, that I have worked with GSA and 
surplus property for 16 years now, actually longer than that, 
before I came to Congress--they are very successful sometimes 
in the reutilization of property, particularly to the States 
and municipalities, but it doesn't work perfectly.
    I think if we don't take the time when we're making the 
correction we may have a possibility that we'll--maybe only 1 
out of 100 will be a charlatan, but, believe you and me, the 
administration, the leadership of that Department and this 
Congress will be grossly embarrassed if that one out of a 
hundred charlatans occurs.
    So the ownership of property in the Federal Government is 
so huge, so diverse and so complicated an issue that I'm not 
sure a single bill addressing all of those issues can be added.
    Let me give you one example, again going to surplus 
property; and we talked about it the other day. The Federal 
Government allowed an amendment to this bill to allow the HAP 
project, which is overseas nations coming in and getting 
surplus personal property from the U.S. Government. It 
initially occurred in overseas bases, and it was intended for 
poor countries who needed pieces of equipment. But now it's 
been extended to the extent that foreign representatives can 
come to the United States to any surplus area and have priority 
over any State or municipality or any other agency of 
government of getting this equipment. And I've seen experiences 
where they literally have come in and taken millions of dollars 
worth of equipment. The government pays to haul it to wherever 
they want to take it.
    Mr. Horn. We'll continue this, but could we have Mr. 
Sessions 5 minutes and you get another 5?
    Mr. Kanjorski. It sits there and deteriorates. And I think 
we have to look at those programs, too, and put them in 
perspective.
    Mr. Horn. Those are good suggestions.
    Gentleman from Texas, 5 minutes.
    Mr. Sessions. Mr. Chairman, thank you.
    I would just respond back to my colleague who has offered 
some very thoughtful insight, and I would say that I think that 
there could be a way for us to get together. It could be one 
piece of legislation. I think we could incorporate the feedback 
that we've received from each one of you today.
    As the main sponsor of this bill, I will tell you that I 
intend to do that. I intend for us to work together. I intend 
for us to take the good parts of the bill, being as reasonable 
as I am, and taking the things that some other people feel are 
reasonable. I intend to move this bill. I intend to take the 
feedback that's been given today, and I intend for it to be an 
opportunity for my colleagues on both sides of the aisle and 
for those in the administration and outside to come together on 
a consensus bill. I think it's possible. I think it's possible 
for me to take what we've heard today and move it forward.
    I would also, with great respect, tell the gentleman from 
Pennsylvania that if we had been able to do this that I would 
like to move it. If we have not, then I will engage in hearing 
more testimony, and I would ask this chairman to do that. But I 
believe that for the good of the taxpayer and the good of the 
industry and the people, the industries and the people who are 
here, that I think we can get closer and that, in my opinion, I 
have gained great knowledge and have benefited from what has 
happened today.
    So I intend to move forward to see if we can gain 
consensus. Mr. Kanjorski, I promise that I will continue in 
this endeavor and will work with you, including the gentleman 
from Texas, Mr. Turner, who brings great depth to this argument 
and discussion also.
    So, Mr. Chairman, I yield back my time, but that is what I 
intend to do as a result of this time that we've spent 
together.
    Mr. Horn. I think it's a good suggestion. And we will have 
Mr. Turner, Mr. Kanjorski and Mr. Sessions all, two Texans and 
a Pennsylvanian, and that will be the subcommittee that put 
this all together which I will delegate delightedly to see what 
happens. So we'll proceed in that way, and you can all share 
ideas with each other, and I think you will have a pretty good 
product coming out of this. And if you want to do it before the 
August break, why good luck. If you want to do it after, we're 
going to be here every day in September, probably so.
    Mr. Sessions. Well, I would, as the chairman has offered, I 
do intend to work diligently and would anticipate that 
September--before the end of September timing, would say that 
we must do that, and so I will engage in that time line. Thank 
you, Mr. Chairman.
    Mr. Horn. Admiral, I have just got one question. Since Mr. 
Kanjorski has explored all the Coast Guard properties on the 
East Coast, I want to say something for the West Coast. Have 
you ever been at the--what was the home of the commandant 
commander of the 11th Coast Guard District? Have you ever been 
there on Terminal Island?
    Admiral Silva. No, sir.
    Mr. Horn. OK. Well, you should go there. It's really a 
marvelous piece of land, and we're very sorry--we have great 
respect for the Coast Guard, but we're sorry you moved out of 
southern California where the action is up there, where you've 
got a couple of bridges you can look at. But another part of 
the State--you've been to San Diego?
    Admiral Silva. I'm on a plane to San Diego this afternoon, 
sir.
    Mr. Horn. Well, take it to Terminal Island. Because that 
property--the only worry is when you have got a few escapees 
from the Federal prison on that property, but that's under 
control, usually. But this is one of the most beautiful homes 
in southern California, with several acres around it. If you 
put that out for auction, you would either put it in the Coast 
Guard Academy's foundation or some place--let me tell you, that 
would be at least $10 million for that home. Now that home was 
never built for the Coast Guard. Believe it or not, it was 
built for the chief public health officer in 1934, and they 
lived very well.
    Mr. Sessions. Or did.
    Mr. Horn. Well, the Coast Guard Commander, until they moved 
north, that was his home; and it was a great place to 
entertain.
    So I like the suggestions you gentlemen have agreed on. And 
so let's hear what we get out of that, and I'll be glad to do 
whatever you want in getting more witnesses in, whatever. So 
you're quite welcome. So if there's no further questions--do 
you have some more? Do you have any more?
    Mr. Sessions. I'm done, sir. Thank you.
    Mr. Horn. We will then put this in recess rather than 
adjourn. We're in recess subject to call of the Chair. Thank 
you very much.
    I would also like to thank the following people: J. Russell 
George, staff director and chief counsel; Randy Kaplan, 
counsel; Bonnie Heald, director of communications; Bryan Sisk, 
clerk; Elizabeth Seong, staff assistant; Will Ackerly, intern; 
Chris Dollar, intern; Davison Hulfish, intern. And for the 
minority, Trey Henderson, counsel; and Jean Gosa, minority 
clerk. Also, our court reporter of debates, Melinda Walker.
    [Whereupon, at 12:50 p.m., the subcommittee was adjourned, 
subject to the call of the Chair.]
    [Additional information submitted for the hearing record 
follows:]

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