St. Elizabeths Hospital: Real Property Issues Related to the West Campus
Released: 2001-04-16T00:00:00

Letter

Background

St. Elizabeths Hospital is located approximately 2 miles south of the Capitol building and is divided by Martin Luther King, Jr., Ave. into what are known as the west and east campuses. St. Elizabeths began operations in 1855 as the “Government Hospital for the Insane.” During the Civil War, St. Elizabeths was used to house soldiers recuperating from amputations, and the west campus includes a Civil War cemetery. In 1916, Congress formally changed its name to St. Elizabeths Hospital, which refers to the historic name of the old royal land grant of which the hospital was a part. According to an HHS official, during its peak use period in the early to mid-1960s, St. Elizabeths housed approximately 7,000 inpatients and employed nearly 4,000 people. As discussed in more detail below, a 1984 law authorized the transfer of part of St. Elizabeths to the District. Today, the District primarily uses the east campus for its mental health services program.

The Federal Government Owns Most of The West Campus

The west campus—61 buildings containing about 1.2 million square feet of space on 182 acres—is owned by the federal government, with the exception of 5 buildings that are owned by the District. HHS is the holding agency that is responsible for the federal portion of the west campus. The District owns the east campus, which comprises some 42 buildings containing 1.75 million square feet on 118 acres. Figure 1 is a map of the St. Elizabeths hospital complex.

Buildings on the west side of the map shaded in grey indicate ownership by the District of Columbia.

Under a use and occupancy agreement between HHS and the District, the District was, at the time of our review, using about 15 of the west campus buildings at no charge other than accepting responsibility for maintenance. The District also provides security for the west campus. West campus buildings not being used by the District are vacant. In addition, the District plans to completely vacate the west campus in 2001. On January 17, 2001, HHS officially notified GSA of its intention to declare the federal portion of the west campus excess. Under the Federal Property and Administrative Services Act of 1949 (Property Act), as amended, GSA has responsibility for federal real property utilization and disposal of excess and surplus property.

In 1984, the St. Elizabeths Hospital and District of Columbia Mental Health Services Act authorized HHS to transfer to the District all property at St. Elizabeths Hospital needed by the District to provide mental health and other services under the District’s comprehensive mental health system plan. In accordance with that provision, on September 30, 1987, the Secretary transferred to the District title to almost all of the portion of St. Elizabeths that is known as the east campus and several buildings on the west campus. The act contemplated that the remaining portion of St. Elizabeths that was not so transferred, which would include most of the west campus, would be subsequently transferred to the District after Congress approved a master plan prepared by the District for the use of such property. The act, as amended, also stated that Congress would approve and enact a law transferring the remainder of the property at St. Elizabeths within 2 years after the plan was submitted to Congress.Athough the master plan was submitted to Congress in 1993, it was never approved.

The 1993 master plan recommended renovation of the west campus, after which approximately 52 percent of the west campus would continue to be used for the District’s mental health program. The remainder of the west campus would be adapted for other institutional-type uses, retail facilities, and support buildings. The plan also included estimated costs ranging from about $116 million to $128 million for implementation. A District official informed us that the District does not intend to use the west campus at St. Elizabeths for mental health programs because it currently intends for mental health services to be community-based. Because Congress did not approve the 1993 master plan and did not enact legislation transferring the west campus of St. Elizabeths from HHS to the District, and because the District no longer needs or intends to use the west campus to provide mental health services, HHS is preparing the property to be excessed to GSA under the normal process for excessing federal real property.

The West Campus Is A National Historic Landmark

St. Elizabeths was designated a national historic landmark (NHL) in December 1990. This is the same designation given to the White House and the U.S. Capitol Building; and, according to an Advisory Council official, is granted to a very small percentage of historic properties. Agencies that hold NHL properties are responsible for preserving their historic character; and the National Historic Preservation Act (NHPA) provides that the agency responsible for the property shall, to the maximum extent possible, undertake such planning and actions as may be necessary to minimize harm to such a landmark. The NHL designation for the west campus recognized the exceptional national significance of the property and mandated the highest level of national preservation priority. The west campus comprises the oldest portion of the St. Elizabeths complex and consists of the buildings with the most historic importance. In addition to the buildings on the west campus, the NHL designation covers the landscaping and grounds, the vistas of the rivers and city, and a Civil War cemetery that is located on the property. Figure 2 shows the Center Building, which opened in 1855 and served as the main hospital building on the west campus; the Civil War cemetery, which houses the remains of about 300 Confederate and Union dead; and the vistas.

Prior to the NHL designation, St. Elizabeths was listed on the National Register of Historic Places. In 1989, HHS, the District, and the Advisory Council entered into a Memorandum of Agreement (MOA) on St. Elizabeths. The MOA detailed specific measures for preserving the historic character of St. Elizabeths in accordance with the Department of the Interior’s standards for maintaining historic properties. Despite the NHL designation and the MOA, officials from HHS, the District, and GSA said that lack of funding and the absence of a clear direction for the future of the west campus over the years have left it in a badly deteriorated condition. Figure 3 shows examples of the deterioration that has occurred on the west campus.

During fiscal year 2001 congressional budget deliberations, GSA and HHS jointly developed a cost estimate of $8.5 million for stabilizing and mothballing the federal portion of the west campus and performing various studies to start preparing it to be excessed and eventually disposed of by GSA. Table 1 shows the cost estimates that were developed and identifies who would normally be responsible for funding each item under existing laws and implementing regulations.

According to GSA officials, the $5.3 million for stabilization and mothballing would have been used to prevent further deterioration of the buildings and prepare them for approximately 5 years of nonuse while the process of preparing the property to be excessed and disposed of takes place and a plan for reuse is developed. As the holding agency for the property, HHS is responsible for funding this item. The regulations implementing the Property Act require the holding agency to be responsible for the protection and maintenance of property pending its transfer to another federal agency or its disposal. NHPA adds an additional requirement in that the heads of all federal agencies are responsible for the preservation of historic properties that are owned or controlled by the agency. Prior to the approval of any federal undertaking that may affect any NHL, the head of the responsible federal agency shall, to the maximum extent possible, undertake planning and action to minimize harm to the landmark. Mothballing and stabilization of the property are actions HHS intends to take that will prevent further deterioration and minimize harm to the historic St. Elizabeths property.

According to GSA and HHS officials, they developed this estimate by using a previous estimate HHS had developed for stabilizing and mothballing the west campus. The previous estimate was based on a detailed study of five west campus buildings that was prepared by a team of experts HHS contracted with in 1998. GSA and HHS applied the cost per square foot to stabilize and mothball these five buildings to the entire square footage of the west campus to come up with a total cost. A GSA official said they used the total square footage for the west campus, including the District- owned buildings, to add some flexibility to the estimate to compensate for inflation and additional deterioration that would have occurred since 1998. However, the official said that the $5.3 million would have been used to mothball and stabilize only the federal portion of the west campus.

According to GSA officials, there were other attempts to develop a stabilization and mothballing estimate. In March 2000, GSA estimated the cost at about $11 million. However, this estimate was not based on an analysis of actual conditions, and GSA and HHS decided to contract for an estimate in the summer of 2000. The contractor estimated a cost of $2.6 million, but GSA and HHS officials were not satisfied with the estimate because of their knowledge of the conditions of the buildings and past experience. GSA and HHS then decided to rely on the $5.3 million estimate that was derived from the 1998 HHS estimate discussed above because there was pressure to provide the estimate for the fiscal year 2001 budget deliberations. GSA officials acknowledged that the $5.3 million estimate was not as refined as it could have been because of the time constraints but said they believed it was reasonable given the circumstances under which it was prepared. GSA officials recognized that a better estimate would be based on a more thorough assessment of the conditions in all the buildings. They also said that because the $5.3 million was not funded for fiscal year 2001, the estimate might have to be adjusted to reflect additional deterioration that likely has occurred and inflation.

The Phase II environmental and archeological studies are required prior to disposal. During fiscal year 2000, GSA contracted for a Phase I environmental study of the west campus that was paid for with HHS funds. This involved analyzing records and visiting the site, but it did not include any test borings or soil analyses. The Phase I consultants concluded that a Phase II study would be needed to test various sites where sufficient evidence of hazardous wastes was found. The Phase II archeological study is a follow-up to prior work by consultants that concluded that there was sufficient evidence to warrant additional study because of the potential for finding archeological sites. If sites are found, GSA officials said they would be responsible for developing guidelines for mitigation measures, such as excavation by subsequent owners in identified areas as part of the disposal process. An Advisory Council official added that avoidance and preservation-in-place, where potential sites would remain untouched, could be another option. HHS, as the holding agency, is responsible for funding the Phase II environmental study on the basis of GSA’s implementing regulations for the Property Act. HHS is also responsible for funding the Phase II archeological study because of its responsibilities under NHPA. According to HHS officials, because they have funds available for the Phase II environmental and archeological studies, this would not require a new appropriation. GSA officials said that the cost estimates for these studies are based on prior experience with similar properties.

GSA, as the disposal agency, is required to comply with NEPA. According to GSA officials, due to the size, complexity, and historical importance of the site, this will probably mean an environmental impact statement at an estimated cost of $2 million, based on past experience. Similarly, the estimate for the land use study of $1 million is also based on GSA’s experience with these kinds of properties. GSA said it would consider hiring consultants to prepare a land use study to identify reasonable land use options and plans to coordinate this work with the District. A GSA official said that, in general, GSA will consider funding the land use study when it is needed and is not funded by a local community. However, an HHS official told us that on January 17, 2001, OMB directed HHS to provide GSA with funds for the land use study under a reimbursable work authorization and that this action was completed soon thereafter. A District planning official whom we interviewed expressed concern that $1 million may not be enough for a sophisticated, high-quality land use study.

It is important to note that these costs do not reflect all of the federal government’s costs that will be needed to prepare the west campus for reuse. For example, according to a GSA official, if industrial contaminants are found, which is likely, there will be costs associated with remediation that will be the responsibility of the holding agency pursuant to the GSA implementing regulations for the Property Act. An HHS official said that these additional costs would be unknown until the Phase II environmental study is completed in late 2001. Another item that GSA said may require funding is the preparation of historic preservation covenants to be added to the property title when it changes hands. These covenants are designed to ensure the historic preservation of the property. If needed, GSA estimates that drawing up these covenants could cost up to $500,000 given the complexities of the issues at the site. This cost was not included in the $8.5 million estimate. GSA officials also said that because the District is vacating the west campus, including the buildings it owns, it would likely have little reason to continue its maintenance and protection responsibilities for the entire west campus. GSA officials said that GSA, HHS, and the District are in the process of developing memoranda of understanding that will outline responsibilities for costs and actions during the excess and disposal process.

Much Work Needed To Facilitate a Reuse of the Property

Much work needs to be done to facilitate a reuse of the west campus. Because HHS officially notified GSA of its intention to declare the property excess, the Property Act, as amended, and related GSA regulations for disposing of excess real property govern this process. On the basis of our interviews with HHS, GSA, and District officials, we identified a number of key actions that need to take place to facilitate a reuse of the site.

Stabilizing and Mothballing the Buildings

As mentioned before, the vacant buildings on the west campus are in a badly deteriorated condition, and action is needed to prevent the situation from getting worse. The work is needed to preserve the buildings while the excess and disposal process takes place; and this work is the responsibility of HHS, the holding agency, under the Property Act and NHPA.

Protection, Maintenance, and Interim Use

The District plans to vacate the west campus and likely will have little reason to continue providing protection and maintenance services. Therefore, protection and maintenance plans and funding will need to be reevaluated for the period during the excess and disposal process. Also, GSA officials said that a well-planned interim use policy could sometimes help generate reuse of the site, but poor conditions may not make interim use a feasible option.

Environmental Issues

The extent of environmental remediation needed at the site is not yet known. However, GSA officials said that it is likely that medical wastes will be found and asbestos, lead paint, and hazardous substance conditions will be analyzed for future action. HHS is responsible for the environmental assessment and any required remediation under the GSA implementing regulations for the Property Act. In addition, GSA is required under NEPA to consider the impact of the federal government’s actions to dispose of the site. GSA said that the District would have input to this part of the process.

Historic Preservation

Given the property’s NHL designation, several historic preservation issues will need to be addressed as part of the excess and disposal process. At a minimum, HHS, GSA, the District, and the Advisory Council would be participants in a consultation process to address these issues. GSA officials told us that as the disposal agency, GSA would prepare historic preservation covenants, if needed, that will be part of the property title when it changes hands. They said that these covenants are designed to ensure the historic preservation of the property and will likely have an impact on how it is eventually used. According to an official with the Advisory Council, the covenants and the scope of restriction placed on redevelopment could be made flexible and would be a subject of discussion during the consultation process.

Land Use Study

GSA will consider hiring a consulting team to identify reasonable land use options for the west campus and intends to work with the District so that the District’s goals for the site are considered, the necessary zoning and other approvals for the proposed use can be obtained, and the issue of what to do with the five buildings the District owns can be addressed. The land use study, according to GSA officials, would include a building and infrastructure assessment, a market and economic viability analysis, an assessment of financing options, and recommendations for reusing the site.

Identifying User(s) for the Property

GSA officials said that once the land use study is close to completion and the environmental and historic preservation requirements are fully understood, a disposal strategy can be developed. To help identify user(s) for the site, GSA goes through several levels of screening that are set forth in the Property Act and related regulations as the land use study is being prepared. The first level of screening involves determining whether there are other federal uses for the site. If there are no federal uses, the next level of priority is for the site to be screened for use by the homeless under the Stewart B. McKinney Homeless Assistance Act, as amended. If the site is not used for the homeless, federal agencies can work with nonprofit organizations that may want the site for public use, such as a park, museum, or educational facility. The next level of screening involves determining if state or local governments where the property is located want to acquire the site. Finally, if none of these screening processes produce a user, the site becomes available for public sale with full and open competition. GSA officials said that the west campus is a unique property, and the entire excess and disposal process will likely take several years to complete.

A District planning official whom we interviewed had concerns with allowing the federal portion of the west campus to be disposed of through the standard excess and disposal processes outlined by the Property Act and implementing regulations. This official said that the District does not oppose HHS’ efforts to excess the site. However, the District official was concerned that the District will not have enough input on key decisions regarding what will happen to the site under the normal disposal screening processes discussed above. The District official believes that another approach could be to either obtain a waiver from GSA or obtain special legislation that would exempt the site from the screening processes so that a joint commission could be established to determine the best use for it. The regulations that implement the Property Act make reference to such a waiver. However, a GSA official informed us that the McKinney Act requirements related to consideration for use by the homeless cannot be waived.

The District official said that a possible approach could be a three-way partnership involving the federal government, the District, and possibly a private investor to develop the site as part of a public-private partnership. This official said that it is likely that the District would be willing to commit some funds to such a partnership because the site is critical to the redevelopment of that part of the District. This official said that the District’s only concern is that the disposal is properly planned and that the site ultimately enjoys its highest and best use. This official added that although the District may not be interested in gaining possession of the site, it does have the greatest long-term interest in what happens to it. An HHS official said that the federal government will review the District’s proposals while the excess process continues.

Conclusion

The west campus of St. Elizabeths is a unique property that according to HHS, GSA, and District officials, is in a badly deteriorated condition. Our evidence suggests that a significant amount of money and much work would be needed to prepare it for reuse. This work includes stabilizing and mothballing the buildings for the period of time when the excess and disposal process will take place, developing plans for protection and maintenance, addressing environmental and historic preservation issues, studying potential uses for the property, and identifying user(s). The historic significance of the property, as well as the economic implications of its reuse for the District, will be key factors to be considered in determining the future use of the property. Attaining a successful outcome that is agreeable to all the interested stakeholders and is in the best interest of the government will be a challenging and complex task.

Agency Comments and Our Evaluation

In response to our request for comments on a draft of this report, HHS’ Acting Inspector General, on behalf of the Department, informed us that HHS had no comments. Budget review staff from OMB, the Executive Officer of GSA’s National Capital Region, a Historic Preservation Specialist with the Advisory Council, and the Director of NCPC’s Office of Plans Review provided oral technical comments, which we incorporated where appropriate. The Director of the District’s Office of Planning provided written comments that are reprinted as appendix I.

The Director of the Office of Planning generally agreed with the report’s findings and said that planning for the west campus of St. Elizabeths is critical to the overall revitalization goals of the District in general and, in particular, the area of the city where St. Elizabeths is located. In commenting, the Director said that the District should be the lead entity for the planning of the site, working in close collaboration with GSA. According to the Director, this was due to the critical role community involvement will play in the ultimate reuse of the west campus, the importance of weaving west campus development into the myriad planning efforts being undertaken in that area, and the critical role St. Elizabeths can play in the District’s overall economic development goals.

As discussed in the report, the Property Act, as amended, and related GSA regulations, govern the excess and disposal process, and GSA will have the responsibility for managing it. As also discussed in the report, a GSA official said that in general, if the local jurisdiction does not fund a land use study, GSA would consider funding it, as needed, as part of the planning process. Although GSA will be responsible for the land use study because it was provided with the funds for it, the Executive Officer of GSA’s National Capital Region said that the District would have an integral role in the process. The Director of the Office of Planning also made other specific points to clarify the District’s views on St. Elizabeths and we subsequently discussed some of the Director’s comments with the Executive Officer of GSA’s National Capital Region. Our comments on some of these additional points are contained in appendix I.

We are sending copies of this report to the Chairmen and Ranking Members of several congressional committees with jurisdiction over HHS, GSA and the District; the Honorable Tommy G. Thompson, Secretary of HHS; the Honorable Mitchell E. Daniels, Jr., Director of OMB; the Honorable Anthony A. Williams, Mayor of the District of Columbia; Thurman M. Davis, Sr., Acting Administrator of GSA; Patricia E. Gallagher, Acting Executive Director, National Capital Planning Commission; and John M. Fowler, Executive Director of the Advisory Council on Historic Preservation. We will make copies available to others on request. Major contributors to this report were Susan Michal-Smith, David E. Sausville, Gerald Stankosky, and Wendy Wierzbicki. If you or your staff have any questions, please contact me on (202) 512-8387 or at ungarb@gao.gov.

Appendix I: Comments From the District of Columbia

The following are GAO’s comments on the letter from the District of Columbia.

GAO Comments

1. We recognized in our report that the $8.5 million estimate—which includes the mothballing and stabilization costs—represents what GSA and HHS believed would be needed to begin the excess and disposal process and that more funds will be needed to prepare the west campus for reuse. We did not do work to assess the 1993 estimate. However, once the land use study is completed, the stakeholders will be in a better position to assess the potential costs of different options. 2. Exploring potential financing mechanisms was outside the scope of our review. However, as stated in the report, the land use study, according to GSA officials, will assess financing options. 3. As pointed out in the report, GSA officials said that a well-planned interim use policy could sometimes help generate reuse of the site. However, they recognized that the poor conditions at the site may not make interim use a feasible option. If interim use does not take place, the District’s concern about this type of use becoming permanent would not be an issue. Furthermore, the Executive Officer of GSA’s National Capital Region told us that the land use study process would seek to identify a comprehensive solution for the site that would be agreeable to all stakeholders and that would prevent a fragmented, piecemeal approach. 4. The Executive Officer of GSA’s National Capital Region told us that it was too early to determine with more specificity how long the excess and disposal process would take, but GSA intends to work with the District soon to develop a schedule for the process.