Federal Courthouses: Better Planning Needed Regarding Reuse of Old Courthouses
Released: 2013-12-09T00:00:00

Letter

Background

Since 1993, GSA has built 79 new courthouses that replaced or supplemented 66 old courthouses. GSA considers 15 of the new courthouses to be annexes—additions that are often larger than the old courthouses. The judiciary identifies potential courthouse projects based on a capital-planning process that involves consultation with GSA. GSA is responsible for reviewing these projects and completing a feasibility study to further analyze and determine the best option, which may differ from the judiciary’s preferred option, before forwarding projects it approves to the Office of Management and Budget (OMB). If approved by OMB, GSA is responsible for submitting requests to congressional authorizing committees in the form of detailed descriptions or prospectuses, hereafter referred to as “new courthouse proposals.” Following congressional authorization and the appropriation of funds for the projects, GSA manages the site, design, and construction phases. After the tenants occupy the space, GSA charges federal tenants, such as the judiciary, rent for the space they occupy and for their respective share of common areas. In fiscal year 2012, the judiciary’s rent payments to GSA totaled over $1 billion for approximately 42.4 million square feet of space in 779 buildings that include 446 federal courthouses. When new courthouses are built, GSA sometimes retains the buildings for occupancy by the judiciary or other federal tenants or GSA, which has custody and control of the federally-owned buildings, disposes of them as surplus real property. GSA works with the Administrative Office of the U.S. Courts (AOUSC), the judiciary’s administrative office, in addressing courthouse space needs and issues.

The rent that federal tenants pay GSA is deposited into the Federal Buildings Fund, a revolving fund that GSA uses to finance the operating and capital costs associated with federal space such as repairs and alterations, new construction, and operations and maintenance. When the costs of a project’s capital improvements exceed a specific threshold, currently set at $2.79 million, GSA must submit a prospectus to certain congressional committees for approval prior to the appropriation of funds to meet repair or new construction needs.

The judiciary leases more space in federally-owned buildings than any executive or legislative branch agency. Judiciary components housed in courthouses may include a U.S. court of appeals (court of appeals judges, senior circuit judges, and staff); U.S. district court (district judges, magistrate judges, and clerk’s office staff); U.S. bankruptcy court (judges and clerk’s office staff); probation and pretrial services staff; or the office of the federal public defender. In addition to these judicial components, certain executive branch agencies integrally involved with U.S. court activities often lease space in federal courthouses, including the Department of Justice’s U.S. Marshals Service, U.S. Attorney’s Office, and the Office of the U.S. Trustee. In some cases, GSA also leases space for the judiciary in private office buildings. The district courts are the trial courts of the federal court system and occupy the most judiciary space. There are 94 federal judicial districts—at least one for each state, the District of Columbia, and four U.S. territories—organized into 12 regional circuits. Each circuit has a court of appeals whose jurisdiction includes appeals from the district and bankruptcy courts located within the circuit, as well as appeals from decisions of federal administrative agencies.

When a new courthouse is built, GSA—rather than the judiciary—decides whether to retain the old courthouse and, when the building is retained, determines how it should be reused. In determining whether to retain an old courthouse, GSA considers the building’s condition; its historic or architectural significance; the judiciary’s interest in occupying the building; local market conditions, such as prevailing lease rates for commercial space; and the existing and projected base of other prospective federal tenants within the area. According to GSA, if the agency determines that the government no longer needs the building, the agency generally uses the Federal Property and Administrative Services Act of 1949, as amended, (Property Act) to dispose of it, following the process shown in figure 1. In addition, GSA has other authorities to dispose of old courthouses, such as the Public Buildings Act of 1959, as amended, which follow a different process. As shown in figure 1, GSA may dispose of federal real property through public benefit conveyances (PBC) to state or local governments and certain nonprofits for approved public benefit uses or negotiated sale to state and local government entities, but not before screening the property for use by other federal agencies and homeless service providers if the Department of Housing and Urban Development (HUD) has determined the property suitable for homeless assistance. If no interest is received from eligible public or nonprofit entities, the agency concludes that there is no public benefit use for the property and proceeds with plans to market it for competitive public sale.

Many Old Courthouses Were Retained, but Challenges Sometimes Exist with Building Costs, Replacing Tenants, and Space Utilization

Federal Government Still Owns Nearly Two-Thirds of the Old Courthouses

Forty of the 66 old courthouses replaced or supplemented by new courthouses since 1993 were retained for reuse by the government. GSA disposed of most of the remaining old courthouses through PBCs or sales to state and local governments, eligible nonprofits, or private sector entities. As figure 2 illustrates, of the 40 retained old courthouses, 36 were being reused by the judiciary and other federal tenants; 3 were vacant; and 1 was largely closed for a major renovation. Appendix II contains detailed information about the 66 courthouses, including their status, disposal method, proceeds, and current uses or major tenants.

Among the retained and reused old courthouses, the judiciary had the largest share of space in 25, some space in 5, and occupied no space in the other 6. The various judiciary tenants are sometimes co-located within the same old courthouse. As of June 2013, of the retained old courthouses, the U.S. district courts occupied space in 15 and the U.S. bankruptcy courts occupied space in 19. The U.S. courts of appeals were using five old courthouses to hear cases. In addition, the judiciary and other federal agencies are sometimes co-located in the same old courthouse. Executive branch agencies, particularly the U.S. Department of Justice, had the largest share of space in 11 of the retained and reused old courthouses.

Old Courthouses Have More Vacant Space and Many Do Not Cover Their Costs

Among the retained old courthouses we reviewed, excluding one building that was under major renovation, about 14 percent of the total space (nearly 1-million square feet) in them was vacant as of May 2013— significantly higher than the 4.8 percent overall vacant space among federally-owned buildings in 2012. Eleven of these old courthouses were more than 25 percent vacant, including three (Miami, FL; Buffalo, NY; and Austin, TX) that were completely vacant. GSA officials told us that replacing tenants in old courthouses can be challenging due to the buildings’ condition and needed renovations, among other reasons, as will be discussed later in this report. For example, the old courthouse in Miami has been vacant since 2008 because, according to GSA, of the high costs to renovate it for reuse. The agency plans to either dispose of the building or lease it to nonfederal tenants. The old courthouse in Buffalo has been vacant since 2011 because, according to GSA, it requires renovations that were not requested in the new courthouse proposal, as will be discussed in further detail later in this report. According to GSA officials, the old courthouse in Austin was vacated in December 2012 and GSA is working with the judiciary on a possible plan to reuse the building for the U.S. Court of Appeals for the Fifth Circuit.

Forty-one percent of the old courthouses were classified by GSA in 2013 as “nonperforming”—i.e., buildings that do not cover their operating expenses and require moderate to significant renovation. In 2012, 30 percent of all federally-owned buildings were classified by the agency as “nonperforming.” Among other factors, GSA considers net operating income in classifying buildings as “nonperforming.” Buildings with net- operating-income losses drain the Federal Buildings Fund, which is GSA’s main source of funding used to maintain, operate, and improve federally-owned buildings. Therefore, old courthouses with net-operating- income losses subtract financial resources that could have been used for other buildings and projects. According to GSA, the financial performance of old courthouses may be affected by vacancy rates, low local commercial-market rental rates on which GSA bases its rates for federal tenants, as well as operational and administrative expenses associated with the buildings. Of the 41 federally-owned old courthouses, 31 (76 percent) had positive net operating income, totaling about $119 million in fiscal year 2012. The remaining 10 old courthouses had net-operating- income losses totaling about $13 million, most of which was the result of an approximately $9-million loss at the old courthouse in New York City (the Thurgood Marshall U.S. Courthouse) that was wholly vacant for major renovations, followed by the vacant old courthouses in Miami and Buffalo, which had net-operating-income losses of about $1 million and $695,000, respectively. According to GSA officials, the agency focuses on “nonperforming” buildings by developing strategies to address their problems, such as high rates of vacancy.

Replacing Tenants in Old Courthouses Can Be Difficult

Many old courthouses cannot be easily reconfigured to meet current federal space needs, and thus replacing previous tenants can prove difficult. For example, current U.S. courthouse security standards require the construction of three separate circulation patterns for judges, prisoners, and the public, which many old courthouses do not have. In addition, because of their age, old courthouses often need costly renovations, new mechanical systems, and other improvements before they are suitable for reuse. Further, because many of old courthouses have official historic status—that is, they are listed on the National Register of Historic Places or are eligible for listing—renovations by federal agencies to reuse these buildings for modern office space, for example, must follow the requirements of the National Historic Preservation Act of 1966, as amended, including, among others, compliance with Department of the Interior’s historic preservation standards.

Although an Executive Order and GSA regulations encourage executive branch agencies to seek federally-controlled space, especially in centrally located historic buildings, we found several cases in which GSA faced challenges replacing tenants in old courthouses. For example, according to GSA officials, it took more than 10 years to fill the old courthouse in Sacramento, California, after the judiciary moved to a new courthouse in 1999. The officials said that although the old courthouse is centrally located adjacent to California state office buildings in the downtown area, the building needed renovations before it could be reused by other federal tenants, and that limited parking made it difficult to attract new tenants. In Portland, Oregon, GSA officials told us that the 66-year-old courthouse was not extensively renovated after the judiciary moved to the new courthouse in 1998 and, as a result, some space remains vacant, including three former district courtrooms. Other old courthouses have experienced greater difficulty in attracting new tenants after the judiciary moved out. The old courthouse in Reno, Nevada, for example, remained nearly half vacant for almost 20 years after the U.S. district court moved to the new courthouse in 1996 and the bankruptcy court remained. GSA officials also said that it takes time––sometimes years––for federal agencies’ leases in commercial buildings to expire before they could re- locate to federally-owned space. Moreover, in some cases, we found that GSA has been unable to find enough tenants to justify retaining buildings.

For example, in Springfield, Massachusetts, although GSA initially planned to retain the old courthouse, the agency decided to dispose of it after the federal tenants that were expected to occupy the building changed their plans, which GSA determined would have resulted in a long-term vacancy rate of at least 40 percent.

Some Judiciary Space in Old Courthouses Remains Unused or Underutilized

Even when federal tenants, such as the judiciary, rent space in old courthouses, the space may sometimes be un-used or underutilized. In Trenton, New Jersey, for example, we found that the judiciary paid rent to GSA for space that, according to the judiciary, was used as a district courtroom until the construction of the new courthouse in 1994. However, the judiciary only released this space to GSA in 2012. In addition, the judiciary was also paying rent for 3 other courtrooms in the same building but using them as office and meeting space instead of using them to conduct trials (fig. 3). According to the judiciary, these rooms were not used as courtrooms because, among other reasons, they did not meet modern security standards. We have previously raised concerns about the amount of space that the judiciary occupies. The judiciary plans to return 2 of the 3 courtrooms to GSA in October 2013.

Similarly, in Camden, New Jersey, we found that the judiciary paid rent to GSA since 1994 for courtroom space that has not been built, underscoring the importance of effective space planning in new and old courthouses to reduce the government’s real property costs. The judiciary plans to return that space to GSA in October 2013.

We also found the judiciary’s space planning in old courthouses may need to further consider changes in technology and trends in court operations. For example, in Camden, a U.S. bankruptcy court official told us that the need for file space had been reduced with growth in electronic filing. In Richmond, Virginia, judiciary officials told us that the use of law libraries has decreased with the growing popularity of online legal research. In addition, we found that the old courthouse in Richmond was mostly retained for use by the U.S. courts of appeals even though it is unclear whether the caseload at this location justified that amount of space. Specifically, an appellate judge in Richmond told us that the court has reduced how often it uses the courthouse for oral arguments (4-day periods known as “court weeks”) from eight times per year to six times per year due to improvements in efficiency. We found the appeals court in Richmond generally uses its six courtrooms simultaneously about 16 percent of the time. We have previously noted that older courthouses are suitable for use by the U.S. courts of appeals, given their comparatively lower security needs. Judiciary officials added that reuse of old courthouses with historic features, such as in Richmond, is an ideal arrangement given limited opportunities for other reuses. However, we have previously raised concerns about the lack of space allocation criteria for the U.S. courts of appeals and will review space utilization by the appeals court in a future study.

The difference between the U.S. Courts Design Guide (Design Guide) baseline for libraries in new courthouses, about 9,200 square feet, and the existing library space in Richmond, about 17,000 square feet, raises questions about whether the entire space is needed. The Design Guide does not specify how much space should be allotted for judiciary functions, such as clerk space, libraries, and courtrooms, in existing buildings. According to judiciary officials, space configurations in existing buildings make them difficult to retrofit consistent with current design standards. As a result, the judiciary does not apply its space planning tool, which uses Design Guide specifications, for space planning in old courthouses. However, AOUSC officials told us that the judiciary’s annual $1-billion rent costs are unsustainable and that they are developing a program, called Right Fit, to examine opportunities to reduce the amount of space leased from GSA.

GSA Disposed of Many Old Courthouses That Are Being Reused for a Variety of Purposes, but the Process Can Be Lengthy

GSA Disposed of More Than One Third of the Old Courthouses

GSA disposed of 25 of the 66 old courthouses we reviewed by PBCs, sales, or exchanges. As shown in figure 4, GSA disposed of most courthouses through sales or exchanges (65 percent) followed by PBCs (31 percent).

Of the 17 old courthouses that GSA sold or exchanged, 14 were sold and 3 were exchanged for land used for the new courthouse. From buildings GSA sold, it realized a total of about $20 million in proceeds. Sales prices for these buildings ranged from $200,000 for the old courthouse in Greeneville, Tennessee, to $5.4 million for the old courthouse in Minneapolis, Minnesota, with an average sale price of $1.5 million. Purchasers of the 14 old courthouses disposed by sale included state and local governments as well as private sector entities. Most old courthouses disposed by PBC were disposed using historic monument conveyances, which, according to GSA, provide the greatest flexibility with regard to the future use of the building. Specifically, as long as the buildings’ historic features are preserved in accordance with the Secretary of the Interior’s Standards for Rehabilitation, the recipients may develop plans for a wide variety of uses. For example, old courthouses that were disposed of by historic monument conveyance included buildings that are being reused or plan to be used as affordable housing, a hotel, and for state and local government functions. Other old courthouses that were disposed of by PBCs were being used for educational and for criminal justice purposes such as juvenile justice centers. Although PBCs do not typically generate any financial proceeds for the federal government, the public continues to realize a benefit from the buildings because they are conveyed with deed restrictions that ensure the building will be used for the approved public benefit purpose. According to GSA, cost savings and cost avoidance is often realized with the disposal of unused or underutilized property, including properties disposed of via PBC.

GSA’s Process for Disposing of Old Courthouses Is Often Lengthy

We found that it took GSA an average of 525 days, or 1.4 years, to dispose of the old courthouses we reviewed. This excludes any time the buildings may have been vacant—sometimes years—before they were declared excess, the point at which GSA decides to dispose of them. GSA officials said that the disposal process can be lengthy because old courthouses often (1) have a high level of congressional and public interest that can generate competing inquiries regarding their future use; (2) are historic and, thus, subject to lengthy reviews; and (3) have specialized designs that make the buildings difficult to reuse for other purposes. We attempted to compare how long it took GSA to dispose of the old courthouses with the length of time it took to dispose of all types of properties from its nationwide portfolio of federally-owned buildings, but were unable to make such a comparison due to data reliability issues. GSA’s data on disposal times for all properties in its portfolio included “holds” when the disposal times were suspended to account for situations that GSA deemed to be out of its control, such as pending legislation, litigation, environmental concerns, and historic preservation reviews. To attempt to review comparable data, we asked GSA to provide information on the length of holds and the reasons for the holds that were placed on the disposal times for old courthouses in our review. However, the data were incomplete, and in some cases, the explanations for the holds did not fall within the categories that GSA defined as being out of its control.

As noted above, we found that during the disposal process, buildings might remain vacant for extended periods of time and, thus, do not earn any revenue to help offset the costs to operate mechanical systems and perform maintenance to help prevent deterioration, for example:

Hammond, Indiana: Disposal of the old courthouse took 2 years.

According to GSA, after the judiciary vacated the old courthouse in 2002, GSA and the City of Hammond conducted extensive discussions regarding the possibility of exchanging the building for city-owned land that could be used for parking space at the new courthouse. Those negotiations, however, were unsuccessful. After remaining vacant for 6 years, in 2006, GSA declared the property excess at which point the City of Hammond expressed interest in purchasing it through a negotiated sale. When the city subsequently decided it did not want the building, GSA decided against holding a public auction, given the minimal demand for property in the local market. In 2009, GSA sold the building through a negotiated sale to the First Baptist Church of Hammond, which owned a complex of buildings near the old courthouse, for $550,000.

Kansas City, Missouri: Disposal of the old courthouse took 3 years. After the judiciary vacated the old courthouse in 1998, GSA initially tried to retain the building, which opened in 1939, because of its historical significance and location, but after studying alternative uses, found that it was impractical for the federal government to reinvest in the building. In 2003, GSA retained a private development company to explore and promote public uses of the building by local governments and institutions, but none demonstrated the ability to make full use of the old courthouse. As a result, after remaining vacant for 7 years, in 2005, GSA determined that the building was excess property and it was screened for PBC use. Subsequently, the City of Kansas City applied for a historic monument PBC and the building was conveyed to the city in 2008. According to GSA officials, the length of time between the report of excess by GSA and its conveyance to the city was partly caused by the complexity of the project’s financing.

Nearly half of the 25 disposed old courthouses were historic buildings and listed on the National Register of Historic Places. According to GSA, any actions, including disposal, of buildings that are listed or eligible for listing on the National Register of Historic places, as required by National Historic Preservation Act, may be very lengthy. Disposing of old courthouses also involves the screening of properties for potential use by organizations for the homeless. More specifically, under the McKinney- Vento Homeless Assistance (McKinney-Vento) Act, as amended, HUD is to solicit information on a quarterly basis from federal landholding agencies regarding federal buildings that are excess property, surplus property, or that are described as unutilized or underutilized in surveys by the heads of landholding agencies. HUD is then to identify and publish in the Federal Register those buildings that are suitable for use to assist the homeless. The Secretary of Health and Human Services is then to evaluate applications by representatives of the homeless for the use of such properties. In general, upon an approved application, such property is to be disposed of with priority consideration of surplus property given to potential uses to assist the homeless. Although excess real property, including old courthouses, must be reported to and evaluated by HUD for suitability for homeless use, we found no instances in which old courthouses were conveyed for this purpose.

We found only one case, in Coeur d’Alene, Idaho, in which a homeless services provider’s application to use the old courthouse was approved, but the organization subsequently withdrew its application after determining that the expense of renovating, maintaining, and operating the building would have been too costly. The old courthouse in Coeur d’Alene was eventually conveyed to the county government under a historic monument PBC and is now used as a juvenile justice facility. In 1997 and 2000, GSA disposed of two old courthouses (St. Louis and Ft. Myers) using an authority known as the “35 Act.” The agency interpreted the “35 Act” as not being subject to the surveying and reporting requirements of the Property Act and, in turn, the homeless-assistance screening process established by the McKinney-Vento Act because according to the GSA, the “35 Act” did not require GSA to declare a property as excess or surplus. As a result, GSA allowed the properties to be sold to local governments without reporting such property to HUD and did not undergo the homeless-assistance screening process. However, an April 2000 federal district court opinion regarding the potential sale of a Lafayette, Louisiana, courthouse under this authority rejected GSA’s interpretation of the law, ruling that property transferrable under the “35 Act” is subject to the surveying and reporting requirements of the Property Act and the McKinney-Vento Act.

In addition, we found that GSA’s decision to dispose of old courthouses may be subject to change. For example, in Reno, Nevada, GSA initially decided to dispose of the old courthouse, but later decided to retain it after the judiciary raised objections and GSA further studied its decision. According to GSA, the agency had decided to dispose of the old courthouse because of the high cost of reinforcing the building against potential earthquake damage, but subsequently determined that it was the least costly alternative for housing the U.S. bankruptcy court, which was already occupying space in the building and preferred to stay. Moreover, the agency determined that tenants could reasonably accept the seismic risk of occupying the building through 2022. Other alternatives that GSA considered for housing the U.S. bankruptcy court in Reno included constructing a new building or expanding the existing new courthouse, which would likely have required additional congressional appropriations.

New Owners of Disposed Old Courthouses Are Re- Using the Buildings for a Variety of Purposes

Potential new owners of old courthouses face some challenges similar to those that GSA faced in re-using old courthouses. These challenges can affect the agency’s ability to dispose of the buildings. Representatives of the new owners of six old courthouses we reviewed told us that the buildings were being used––or will be used––for an art center, hotel, bank, affordable housing, church administration, and office space. In adapting the old courthouses to their current uses, these representatives told us they faced various challenges, including securing financing, making renovations, and meeting historic preservation requirements. However, several representatives said they were interested in acquiring the old courthouses for reasons such as their locations, architectural style, the quality of the construction materials, historic significance, and because they were able to purchase them at prices that were lower than the cost of constructing new buildings. In addition, two representatives said that historic preservation tax credits are sometimes an important incentive in redeveloping historic buildings that the government is disposing of. For example, the developer’s representative for the old courthouse in Tampa, which is being converted into a hotel, said his company specifically became interested in the building because it qualified for federal historic-preservation tax credits. Those tax credits authorize a 20 percent credit in any taxable year on qualified rehabilitation expenses with respect to certified historic structures. Below are examples of old courthouses converted for alternate uses. (Additional examples are provided in Appendix III.)

Former U.S. Courthouse, Kansas City, Missouri, now the Courthouse The former U.S. Courthouse in Kansas City, Missouri, built in 1940, is now an apartment building (see fig.5). In 2008, after finding no other tenants or uses for the building, GSA conveyed it by PBC to a Kansas City redevelopment agency. The city worked with a developer to convert the old courthouse into an affordable-housing development that opened in 2011. An official from the city agency that acquired the old courthouse said the building’s conversion to affordable housing was part of downtown revitalization efforts. A representative of the building’s developer told us that the building has 176 loft-style apartments and offices of a law firm. The representative added that because the retained former courtrooms are not frequently used, the company is exploring having them used as a law library or as a venue for mock trials.

Former George W. Whitehurst Federal Building in Ft. Myers, Florida, now the Sidney & Berne Davis Art Center The former George W. Whitehurst Federal Building in Ft. Myers, Florida, built in 1933, is now used as an art center and event space. In 2000, GSA sold the building to the City of Ft. Myers for $215,000 (see fig. 6). In 2003, after soliciting proposals to use the building, the city leased it to Florida Arts, Incorporated and is now known as the Sidney & Berne Davis Art Center. According to an art center representative, the building is now used for events such as musical, dance, and theatrical performances. The representative added that the two former courtrooms were not historic and were not retained.

New Courthouse Proposals Did Not Consistently Address the Need for Old Courthouse Renovations

While old courthouses are often retained to meet federal space needs, potential renovations key to re-using old courthouses are often not included in GSA’s proposals to Congress for new courthouses. GSA is not specifically required by statute to include plans for old courthouses in its proposals to Congress for new buildings. According to GSA officials, it can be challenging to include these plans because new courthouses often take many years to complete and reliable cost estimates for renovations are not always available when they are proposed. However, GSA’s proposals are required under statute to include, among other things, a “comprehensive plan” to, in general, provide space for all federal employees in the locality of a proposed new building “having due regard” for suitable space that may continue to be available in nearby existing government buildings. In addition, OMB and we have previously reported that complete cost estimates are a best practice in capital planning, Moreover, while old courthouse plans may not be available when a new courthouse is initially proposed, GSA periodically updates Congress after the initial proposal to obtain additional authorizations. Since fiscal year 1993, Congress has appropriated a total of more than $760 million for courthouse renovations and with 12 new courthouses planned to replace or supplement existing courthouses, more funding requests for renovations will likely be forthcoming.

GSA officials told us that renovations are often necessary to effectively reuse old courthouses and that several old courthouses were underutilized because they need renovating. We found that new courthouse proposals often included plans for the old courthouses, but few discussed whether renovations were needed to realize these plans. For 33 of the 40 old courthouses retained by GSA, the new courthouse proposals specified that the old courthouses would be reused for federal tenants. However, only 15 of the 40 of new courthouse proposals addressed whether renovations were needed in the old courthouse and only 11 included estimates of the renovation costs. Nearly all of the proposals that included a renovation cost were annexes to the old courthouses and, in such cases, costs related to courthouse renovation are often included in the cost of constructing the annex because GSA cannot separate out the costs.

Among the retained old courthouses that we visited, seven required renovations to be reused; three still require renovations; and one neither had nor requires renovations. For seven of those we visited, the new courthouse proposal included no discussion of the need to renovate the existing courthouse. Moreover, for eight, the new courthouse proposal did not include discussion of federal tenants in commercially leased space near the old courthouses, and none included discussion of the long-term costs associated with federal tenants staying in commercially-leased space versus occupying space in the old courthouses. In contrast, we found that most of the 40 new courthouse proposals we reviewed included discussion of the 30-year costs associated with using commercially-leased space versus building a new courthouse. We have previously reported that leasing commercial space is often more costly than using government-owned space. Examples of old courthouses we visited for which the new courthouse proposal did not include discussions of renovations or federal tenants in nearby commercially-leased space include:

Portland, Oregon: About 21 percent of the old courthouse (approximately 33,000 square feet) was vacant as of May 2013, including three courtrooms. (See fig. 7.) The new courthouse proposal specified that the U.S. bankruptcy court would move into the old courthouse. However, according to judiciary and GSA officials, this plan was contingent on renovation needs and costs, which we found were not included in the new courthouse proposal. These renovations have not been completed and the bankruptcy court instead leases space in a commercial building at an annual cost of about $1.3 million.

Richmond, Virginia: About 15 percent of the old courthouse (approximately 26,000 square feet) was vacant as of May 2013. Although the new courthouse proposal specified that the existing courthouse would be used by the U.S. court of appeals, it did not specify that renovations would be needed to fully realize this plan. As a result, although the U.S. district court re-located from the building in 2008, a U.S. court of appeals office has remained in commercially- leased space in the city at an annual cost of about $362,000. In 2013, GSA requested $3.9 million to renovate the vacant space so that it can be reused by the U.S. court of appeals.

Orlando, Florida: The new courthouse opened in 2007, but the old courthouse remained mostly vacant for several years until renovations not specified in the new courthouse proposal were completed. Specifically, according to GSA, about 85 percent of the old courthouse remained vacant until a $48 million renovation project was completed with funding provided under the American Recovery and Reinvestment Act of 2009. As of May 2013, the vacancy rate fell to about 23 percent (approximately 45,500 square feet). Judiciary officials noted that when new courthouse space is constructed as an annex, such as in Orlando, the old courthouse must be retained for use by the judiciary either in full or in part. The Orlando case illustrates the importance of planning for the old courthouse when the new courthouse will be an annex to the old building.

In addition to the courthouses that we visited, we also found that other old courthouses were wholly or mostly vacant due to needed renovations not included in the new courthouse proposals. In Miami, the new courthouse proposal specified that the U.S. bankruptcy court and other tenants would move into the old courthouse. (See fig. 8.) However, according to GSA, renovation needs totaling about $60 million prevent this plan from proceeding, and, as a result, the building remains vacant. GSA indicated that more than $10 million would be required to separate the old courthouse in our review (David W. Dyer Federal Building and U.S. Courthouse) from another old courthouse built in 1983 (C. Clyde Atkins U.S. Courthouse), which share building systems, a common courtyard, and underground parking facility.

In Buffalo, the new courthouse proposal specified that the U.S. bankruptcy court and other government tenants would relocate to the old courthouse. However, while tenants relocated from the old courthouse in 2011, it remains vacant pending $25 million in renovations that were not included in the new courthouse proposal. According to GSA, numerous federal tenants remained in commercially leased space in Buffalo, including the U.S. bankruptcy court, at an annual cost of about $360,000.

In Columbia, South Carolina, about 73 percent of the old courthouse was vacant as of May 2013, including large areas designed for court use, which, according to GSA, would cost about $38 million to renovate for other uses. The new courthouse proposal specified that the U.S. bankruptcy court would move into the old courthouse, yet the bankruptcy court instead occupies another old federal courthouse, leaving GSA with court-configured space in the old courthouse that the agency has had difficulty re-using.

Conclusions

Given the government’s multibillion-dollar investment in new courthouses and the challenges inherent to re-using or disposing of old courthouses, comprehensive planning regarding both the new and old courthouses is critical to ensure that federal operations are housed in the most cost- effective manner. We believe that comprehensive planning includes identifying challenges associated with re-using or disposing of the old courthouses, including renovation needs and estimated costs when the buildings are expected to be reused. By not consistently including the need for renovation and estimates of renovation costs in its new courthouse proposals, GSA is not providing Congress and other stakeholders with key information needed to make informed decisions about new courthouse projects. Although there may be challenges to providing accurate costs for future renovations to the old courthouses, estimates of these costs and, as necessary, periodic updates of changes in these costs would provide greater transparency to congressional decision makers regarding the full costs of courthouse projects. Further, although neither federal statute nor GSA specifically requires proposals for courthouses to include plans for old courthouses, federal statute does require GSA’s proposals to include a comprehensive plan considering space that may continue to be available in nearby existing government buildings. To the extent that the agency’s plans for housing federal tenants include using both the old and new courthouses, we believe such related renovation plans should be viewed as an integral part of the comprehensive plan. Moreover, when the plans involve re-locating federal tenants from commercially-leased space to the old courthouses, a comprehensive plan would include estimates regarding long-term costs versus continuing to use commercially-leased space.

Recommendation

To improve the transparency of cost information regarding the retention and reuse of old courthouses, we recommend that when proposing new courthouses, the Administrator of the General Services Administration, in consultation with the judiciary as appropriate, include plans for re-using or disposing of the old courthouses; challenges with implementing those plans, including any required renovations and related cost estimates, to be updated as needed; and when the plans involve re-locating federal tenants from commercially- leased space to the old courthouses, estimates of the long-term costs of occupying the old courthouses versus continuing to occupy commercially leased space.

Agency Comments

We provided copies of a draft of this report to GSA and AOUSC for review and comment. GSA concurred with the recommendation and AOUSC agreed that GSA and the judiciary should continue to work together to address the judiciary’s housing needs, but indicated that it is important not to delay the authorization and funding of new projects.

GSA’s letter can be found in Appendix IV. AOUSC’s letter can be found in Appendix V.

As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the Administrator of GSA and the Director of the AOUSC. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-2834 or GoldsteinM@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VI.

Appendix I: Objectives, Scope, and Methodology

Our objectives were (1) how the government is re-using old courthouses that were retained and the challenges involved; (2) how GSA disposed of old courthouses, the process involved, and the results; and (3) the extent to which GSA’s proposals for new courthouses considered the future use of the old courthouses.

To determine how the government is re-using old courthouses that were retained and the challenges involved, we collected and analyzed GSA data on the 66 old courthouses that were replaced or supplemented by new courthouses from 1993 to 2012. With regard to old courthouses that GSA retained, we reviewed GSA data on the buildings’ current uses, tenants, financial performance, and vacancy rates. For comparison purposes, we analyzed GSA data on the percentage of old courthouses that the agency categorized as “nonperforming” with the percentage in the agency’s national real estate portfolio during 2012.

To determine how GSA disposed of old courthouses, the process involved, and the results, we reviewed the authorities that GSA used to dispose of the buildings, data on the length of time it took to dispose of them, the proceeds, and interviewed representatives of the new owners of selected disposed old courthouses. We attempted to compare how long it took for GSA, on average, to dispose of the old courthouses in our review with how long GSA took to dispose of all types of properties from its nationwide portfolio of federally-owned buildings, but were unable to make such a comparison due to data reliability issues. GSA’s data on disposal times for all properties in its portfolio included “holds” when the disposal times were suspended to account for situations that it deemed to be out of its control, such as pending legislation, litigation, environmental concerns, and historic preservation reviews. To attempt to review comparable data, we asked GSA to provide information on the length of holds and the reasons for the holds that were placed on the disposal times for old courthouses in our review. However, the data were incomplete, and in some cases, the explanations for the holds did not fall within the categories that GSA defined as being out of its control. We also reviewed other GSA data for completeness and determined that they were sufficiently reliable for the purposes of this report. To verify the data, we obtained information from GSA about how the data were collected, reviewed our prior evaluation of similar GSA data, and corroborated certain data with current and previous owners of old courthouses and through our research.

We also interviewed GSA officials about the factors they considered when deciding whether to reuse or dispose of old courthouses and the challenges involved, and reviewed building retention and disposal studies and applicable laws, regulations, and agency policies. In order to provide greater insight on reuses and disposals of old courthouses, we focused on 17 old courthouses as case studies, including 13 that we visited (Boston, MA; Camden, NJ; Eugene, OR; Ft. Myers; FL; Orlando, FL; Portland, OR; Reno, NV; Richmond, VA; Sacramento, CA; Springfield, MA; Tallahassee, FL; Tampa, FL; and Trenton, NJ) and 4 about which we interviewed GSA officials by phone (Coeur d’Alene, ID; Greeneville, TN; Hammond, IN; and Kansas City, MO). For all of our case studies, we reviewed GSA data and other documents and interviewed GSA officials. In 10 locations, we also interviewed judges and judiciary officials about their use of the old courthouses or disposal of those buildings. We selected the 17 old courthouses that represented a mix of retained and disposed buildings located in geographically diverse areas.

We interviewed GSA officials about the old courthouse in Coeur d’Alene, Idaho, because, among the 66 old courthouses in our review, it was the only instance in which a homeless services provider’s application to use the old courthouse was approved. We interviewed representatives of new owners of six old courthouses that were converted for alternate uses (Ft. Myers, FL; Greeneville, TN; Hammond, IN; Kansas City, MO; Springfield, MA; and Tampa, FL) about challenges involved in the disposal process and buildings’ reuse. In three locations (Ft. Myers, FL; Springfield, MA; and Tampa, FL) we also visited the former courthouses. Because this is a nonprobability sample, observations made based on our review of the 17 case studies do not support generalizations about other old courthouses. Rather, the observations provided specific, detailed examples of selected old courthouse reuses.

To determine the extent to which GSA’s proposals for new courthouses built from 1993 through 2012 considered the future use of the old courthouses, we reviewed the proposals submitted to Congress for new courthouses in locations where the old courthouses were retained and appropriations made for renovating those old courthouses. We also reviewed pertinent laws, GSA regulations and policies on courthouse construction planning and space utilization, and prior GAO reports on courthouse construction and the cost of federal tenants’ use of leased versus federally-owned space. In addition, we interviewed GSA about new courthouse proposals and renovations needed to reuse old courthouse space.

We conducted this performance audit from November 2012 through September 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Status of Old U.S. Courthouses since 1993

Old courthouse (year built) Frank M. Johnson Jr. Federal Building and U.S. Courthouse (1933)

Disposal method (year disposed)

Proceeds ($)

Federal Building and U.S. Courthouse (1968)

PBC (2012)

County school administration (Central Office for the Tuscaloosa County School System)

Richard Sheppard Arnold U.S. Post Office and Courthouse (1932)

Phoenix Federal Building and U.S. Courthouse (1962)

James A. Walsh Courthouse (1930)

B.F. Sisk U.S. Courthouse (1968)

PBC (2007)

State courthouse (B.F. Sisk Courthouse)

John E. Moss Federal Building (1961)

Edward J. Schwartz Federal Building and U.S. Courthouse (1976)

Santa Ana Federal Building (1975)

Byron Rogers Federal Building and U.S. Courthouse (1965) (Mostly vacant due to major renovations)

Elijah Barrett Prettyman U.S. Courthouse (1952)

George W. Whitehurst Federal Building (1933)

Sale (2000)

Art center (Sidney & Berne Davis Art Center)

U.S. Post Office and Courthouse (1933)

Sale (2002)

David W. Dyer Federal Building and U.S. Courthouse (1933)

George C. Young Federal Building and Courthouse (1975)

U.S. Courthouse (1937)

U.S. Tampa Classic Courthouse (1905)

PBC (2003)

U.S. Post Office-Courthouse (1912)

Sale (2002)

Property exchange (2010)

City government (City Hall)

Federal Building and Courthouse (1928)

PBC (2009)

County courts (Juvenile Justice Building)

Federal Building and U.S. Courthouse (1910)

U.S. Courthouse (1977)

Property exchange (2010)

County courts (Winnebago County Juvenile Justice Center)

Federal Building and US Courthouse (1904)

PBC (1991)

County cultural center (Springer Cultural Center)

Federal Building and U.S. Courthouse (1906)

Sale (2009)

Church administration (First Baptist Church of Hammond Administrative Office Building)

Federal Building-Post Office- Courthouse (1959)

PBC (1995)

County courts (Correctional and Court Services Building)

Federal Building and U.S. Courthouse (1933)

Lafayette Federal Building & Courthouse (1960)

Sale (2001)

John W. McCormack Post Office and U.S. Courthouse (1933)

Federal Office Building (1982)

Sale (2009)

Sale (1999)

State courts (Family Justice Center)

Cape Girardeau Federal Building and Courthouse (1967)

Sale (2012)

U.S. Courthouse (1940)

PBC (2008)

Apartment building (Courthouse Lofts)

U.S. Court and Customhouse (1935)

Sale (1997)

State courts and city offices (Carnahan Courthouse)

James O. Eastland Federal Building – Courthouse (1933)

Sale (2011)

James F. Battin Federal Building and U.S. Courthouse (1965)

Sale (2013)

Federal Building/Courthouse (1931)

Edward Zorinsky Federal Building (1960)

James C. Cleveland Federal Building (1966)

U.S. Post Office and Courthouse (1932)

Clarkson S. Fisher U.S. Courthouse (1933)

D. Chavez Federal Building (1965)

Runnels Federal Building (1974)

Foley Federal Building and U.S. Courthouse (1967)

C. Clifton Young Federal Building and U.S. Courthouse (1965)

Emmanuel Celler U.S. Courthouse (1963)

Michael J. Dillon U.S. Courthouse (1936)

Thurgood Marshall U.S. Courthouse (1936)

Howard M. Metzenbaum U.S. Courthouse (1910)

Thomas D. Lambros Federal Building and U.S. Courthouse (1995)

Eugene Federal Building (1974)

Gus J. Solomon Courthouse (1933)

Federal Building and Courthouse (1938)

William J. Nealon Federal Building and Courthouse (1931)

Strom Thurmond U.S. Courthouse (1978)

Federal Building-U.S. Courthouse (1904)

Sale (2002)

Commercial bank (Greeneville Federal Bank Main Office)

Brownsville U.S. Post Office and Courthouse (1933)

Property Exchange (1996)

City government (City Hall/Old Federal Courthouse)

Corpus Christi Courthouse (1918)

Sale (2002)

Post Office and U.S. Courthouse (1906)

Martin V.B. Bostetter Courthouse (1931)

Lewis F. Powell Jr. U.S. Courthouse and Annex (1858)

William Kenzo Nakamura Courthouse (1940)

Beckley Federal Building (1933)

PBC (2001)

Regional education service agencies (RESA 1 Building)

Post Office and Courthouse (1961)

Sale (1999)

Federal Building and U.S. Courthouse (1907)

GSA did not have information on whether financial proceeds were received regarding the property exchange involving the old courthouse in Brownsville.

Appendix III: Additional Examples of Old Courthouses Converted to Other Uses

Former Federal Building and U.S. Courthouse, Hammond, Indiana, now the Administrative Office Building of the First Baptist Church of Hammond The former Federal Building and U.S. Courthouse in Hammond, Indiana, built in 1906, is now used by a church for office and meeting space (see fig. 9). In 2009, GSA sold the old courthouse to the First Baptist Church of Hammond for $550,000. According to a church representative, one of the building’s three former courtrooms is mainly used as a meeting room, but also for church services, weddings, and funerals, and that the other two former courtrooms have few or no remnants of their prior use.

Former Federal Building-U.S. Courthouse, Greeneville, Tennessee, now the Greeneville Federal Bank Main Office The former Federal Building-U.S. Courthouse in Greeneville, Tennessee, built in 1904, is now being used as a bank (see fig.10). In 2002, GSA sold the old courthouse to the Greeneville Federal Bank for $200,000. According to a bank representative, of the building’s three former courtrooms, one is now used as an employee training room and the other two were reconfigured for lobby, teller, and conference room space.

Former U.S. Tampa Classic Courthouse, in Tampa, Florida, and The former U.S. Tampa Classic Courthouse in Tampa, Florida, built in 1905, is being converted into a hotel (see fig. 11). In 2003, after finding no other tenants or uses for the building, GSA conveyed the old courthouse to the City of Tampa as a PBC. In 2012, the city leased the building to a developer that proposed to convert the building into a hotel. According to a representative from the developer, the hotel will have 130 rooms. The representative said that the building’s two historic former courtrooms will be used for a restaurant and ballroom/banquet facility. The hotel is expected to open in 2014.

Appendix IV: Comments from the General Services Administration

Appendix V: Comments from the Federal Judiciary

Appendix VI: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Keith Cunningham, Assistant Director; Lindsay Bach; Lorraine Ettaro; Geoffrey Hamilton; Bob Homan; and James Leonard made key contributions to this report.

Related GAO Products

Federal Real Property: Excess and Underutilized Property Is an Ongoing Challenge. GAO-13-573T. Washington, D.C.: April 25, 2013.

Federal Courthouses: Recommended Construction Projects Should Be Evaluated under New Capital-Planning Process. GAO-13-263. Washington, D.C.: April 11, 2013.

Federal Courthouse Construction: Nationwide Space and Cost Overages Also Apply to Miami Project. GAO-13-461T. Washington, D.C.: March 8, 2013.

Federal Real Property: Improved Data Needed to Strategically Manage Historic Buildings, Address Multiple Challenges. GAO-13-35. Washington, D.C.: December 11, 2012.

Federal Buildings Fund: Improved Transparency and Long-term Plan Needed to Clarify Capital Funding Priorities. GAO-12-646. Washington, D.C.: July 12, 2012.

Federal Real Property: National Strategy and Better Data Needed to Improve Management of Excess and Underutilized Property. GAO-12-645. Washington, D.C.: June 20, 2012.

Federal Courthouse Construction: Better Planning, Oversight, and Courtroom Sharing Needed to Address Future Costs. GAO-10-417. Washington, D.C.: June 21, 2010.

Federal Real Property: Authorities and Actions Regarding Enhanced Use Leases and Sale of Unneeded Real Property. GAO-09-283R. Washington, D.C.: February 17, 2009.

Federal Real Property: Strategy Needed to Address Agencies’ Long- standing Reliance on Costly Leasing. GAO-08-197. Washington, D.C.: Jan. 24, 2008.

Federal Courthouses: Rent Increases Due to New Space and Growing Energy and Security Costs Require Better Tracking and Management. GAO-06-613. Washington, D.C.: June 20, 2006.

Courthouse Construction: Information on Project Cost and Size Changes Would Help to Enhance Oversight. GAO-05-673. Washington, D.C.: June 30, 2005.